India's rural and semi-urban regions are emerging as important growth drivers for the country's insurance sector.
According to a new study by insurance aggregator policybazaar, 43% of life and health insurance premiums now come from districts where a majority of the population resides in rural areas, which is-an increase of 2% from FY2023.
Data from the study for the period between FY2023 to FY2025 shows that districts with a majority rural population have consistently contributed over 40% of all new life and health premiums, highlighting sustained momentum rather than a short-term spike.
Cities with populations of less than 1m now account for nearly half of new life and health insurance premiums. The study further said that, when premium is mapped against population size, sub-1m cities account for 47% of all fresh life and health premium in FY2025, from 44% in FY2023. Smaller cities and towns with a population between 100,000 and 500,000 have emerged as key contributors.
A similar pattern is visible in motor insurance, where districts with high rural concentration have maintained a stable 36% share of new motor insurance premiums over the past three years, indicating consistent demand. Meanwhile, cities with populations under 1m contributed between 44% and 47% of motor premiums during the same period.
The findings challenge the long-standing perception that India's insurance growth is primarily driven by metro cities. Instead, the report highlights that rural and semi-urban markets are now central to the sector's expansion.