India's life insurance sector recorded a 6.2% year-on-year increase in new business premiums during the April-August period of this year. This growth was primarily driven by an increase in ticket sizes, even though the absolute growth in the number of policies sold remained modest.

According to data released by the Life Insurance Council, this growth stemmed mainly from the private sector, which witnessed a 10.8% rise in premiums, while the state-owned Life Insurance Corporation (LIC) recorded a 3% increase.

Overall new business premiums rose from Rs 1,54,194 crore in April-August 2023 to Rs 1,63,461 crore during the same period this year. While premium growth has accelerated, the total number of policies issued during this same period declined by 8.87%.

Insurance companies are raising the minimum ticket size of insurance policies to improve persistency. Insurers anticipate that higher ticket sizes will not only enhance persistency=as high-value policies tend to be more financially sustainable for customers and exhibit better renewal rates=but will also boost profitability.

For instance, LIC's growth in terms of premium income was influenced by an increase in the minimum ticket size of its policies. LIC has already adopted a culture of increasing minimum ticket sizes and expects to see improvements in persistency in the future.

Within the life insurance sector, individual single premiums witnessed a growth of 9.72% compared to the same period last year, while individual non-single premiums saw a growth of 4.51%.

Major listed private life insurance companies=including SBI Life, HDFC Life, and ICICI Prudential Life Insurance=witnessed an increase in premiums of approximately 10% to 14% during this period. For HDFC Life, growth was driven by all segments, ranging from single-premium products to group policies. ICICI Prudential Life, meanwhile, saw growth primarily from individual single-premium products.