The data highlights a shift in the country’s insurance landscape, with rural-majority districts and smaller cities emerging as major contributors, challenging the perception that digital insurance adoption is primarily metro-driven.
Life and health insurance: 43% premium from rural-majority districts
Across life and health insurance, districts with a majority rural population—defined as areas where at least 50% of residents live in rural settings—have contributed steadily over 40% of fresh premiums.
By FY25, this share rose to 43%, up from 41% in FY23.
- Districts with ≥70% rural population contributed 24% in FY25.
- The 50–70% rural cohort grew slightly to 19%, indicating increased adoption in semi-rural and peri-urban areas.
This trend stresses the rising financial awareness and digital adoption in India’s hinterlands.
Smaller cities now account for nearly half of demand
Cities with populations under 1 million drove 47% of life and health premiums in FY25, up from 44% in FY23. The fastest-growing segment was the 1–5 lakh population band, which rose from 26% to 29%.
These emerging Tier-2 towns, with rising incomes and smartphone penetration, are becoming significant contributors to insurance demand.
Motor insurance mirrors the trend
Motor insurance shows a similar rural and semi-urban tilt:
- Rural-majority districts contributed a stable 36% of fresh Motor premiums across FY23–FY25. Within this, the 50–70% rural band accounted for 21%, while deeply rural districts (≥70% rural) contributed 15%.
- Cities with populations under 10 lakh generated 44–47% of Motor premiums, with sub-1 lakh cities holding an 8% share, slightly higher than Life and Health insurance.
This suggests that motor insurance is acting as a gateway product for wider insurance adoption in non-metro areas.
Digital distribution closing the rural gap
Policybazaar’s analysis indicates that growth in India’s insurance sector is coming from beyond metro centers. The rise in life and health premiums from smaller cities and rural districts reflects deeper digital access and rising financial literacy.
Sarbvir Singh, Joint Group CEO of PB Fintech, said, “Bharat is leading India’s insurance growth, both in scale and in behaviour. Nearly half of our life and health premiums today come from rural-majority and semi-urban India. This demonstrates that insurance adoption is happening at scale, beyond traditional urban centres.”
