India’s life insurance industry is entering a new growth phase as regulatory reforms, tax rationalisation and capital liberalisation reshape the sector’s operating landscape. According to Pramerica Life Insurance MD and CEO Pankaj Gupta, the recent GST overhaul has triggered a sharp rise in demand for term insurance products, with industry-wide growth accelerating to nearly 30 percent while average ticket sizes have risen by around 15 percent.

The improvement follows the government’s decision to reduce GST on individual insurance products, a move that materially lowered acquisition costs for customers and improved affordability for long-term protection products. Industry executives believe the pricing relief has widened accessibility at a time when India’s insurance penetration remains below several global benchmarks.

The latest momentum comes alongside another major policy shift — the opening up of 100 percent foreign direct investment in the insurance sector under the proposed Insurance Act reforms. Gupta said the combination of lower taxes and greater foreign participation could significantly deepen the industry over the next decade by bringing long-duration capital, product innovation and global expertise into the Indian market.

For insurers, the reforms arrive at a critical point. Rising household financial awareness, post-pandemic protection demand and increasing digitisation have already expanded the addressable market for life insurance companies. Lower GST has now added a direct affordability trigger, particularly in protection-led categories where pricing sensitivity remains high.

Gupta indicated that customers are not only buying more policies after the tax reduction but are also opting for larger insurance covers. This is an important shift for the industry because higher-ticket protection policies improve persistency, profitability and embedded value creation over time.

Within this backdrop, Pramerica Life Insurance is consciously repositioning its business strategy away from heavy dependence on non-participating products. The company is expanding its focus on ULIPs and participating products as it attempts to diversify revenue streams and build a more balanced retail franchise.

According to Gupta, the company’s ULIP business doubled in FY26 over FY25 and currently contributes about 10 percent of the overall product mix. The insurer expects the segment to double again in FY27. The company is also preparing to launch new participating products aimed at addressing broader customer needs.

This shift reflects a larger industry trend. Many insurers are attempting to reduce concentration in guaranteed-return products amid changing interest rate cycles, capital requirements and evolving customer preferences. Market-linked and participating products offer insurers greater flexibility while allowing customers to participate in long-term wealth creation.

Pramerica’s growth strategy has also become increasingly retail-focused. Gupta said the company has deliberately moderated group business expansion despite sacrificing near-term premium growth targets. The insurer ended FY26 with gross written premium of Rs 2,340 crore, below its earlier guidance of Rs 3,000 crore.

Management said the moderation was intentional and linked to financial discipline and long-term sustainability rather than demand weakness. Retail business, however, continued to expand strongly with approximately 30 percent CAGR over the last three years. Individual annualised premium equivalent growth stood at 34 percent during FY26.

The company is also widening distribution beyond traditional bancassurance models. Alongside partnerships with larger institutions, Pramerica is targeting cooperative banks and regional rural banks under its “community banking” initiative. The strategy aims to capture underpenetrated insurance demand in semi-urban and rural geographies where formal protection products still have low adoption.

Its defence-focused business verticals, including the “Prabhal” and “Param” brands catering to army and paramilitary personnel, also continued to report steady traction despite operational disruptions during the year.

From a broader market perspective, the developments reinforce expectations that India’s insurance sector could witness sustained structural growth over the medium term. Lower tax incidence, rising financialisation of household savings and increased foreign capital participation could improve sector valuations and long-term growth visibility for listed insurance companies.