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Pure retail life protection business is expected to sustain a growth momentum (25%+CAGR) over the next five years, says the stockbroking firm YES Securities (India) [YSL], a wholly owned subsidiary of YES Bank.

Premiums in this class of business have seen a growth of 45-50% in the past three years for players such as HDFC Life, SBI Life and ICICI Pru Life, the securities firm says in a report on the Indian life insurance sector.

Growth has been driven by aggressive pricing of the private sector players and emergence of the online channel as a key avenue for distribution of protection products. Also, the industry has evolved significantly to meet the customer demand for value proposition with return of premium and limited pay products.

Going ahead, YSL expects the upward trajectory to be sustained led by

  1. increased demand driven by “fear for life” sentiment amidst the COVID-19 pandemic and

  2. reinsurance rate hikes passed on by insurers.

The low life insurance penetration rate in the country is due to preference for insurance as a financial savings product rather than as a protection product. Nevertheless, there is an increasing trend of millennials spending to protect their dependents.


Over the years the pricing of protection products in the country have trended down.

Although private players target more affluent customers, the insurers have also diversified their customer base by targeting those in lower income brackets in less developed towns and cities. Considering this, the pricing of protection products by private players as compared to state owned LIC has been significantly lower despite conservative assumptions.

However, YSL expects the pricing of protection products to move up further in the medium term. One reason is that reinsurers are likely to raise costs. Another reason is that with the perception of higher mortality in lower income markets, the pricing for term policies is expected to move up further.  



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