New Delhi [India], April 5 : Rural and semi-urban regions are emerging as key growth drivers for India's insurance sector, with a rising share of premiums originating outside major metropolitan areas, according to a study by Policybazaar.
The report finds that 43% of Life and Health insurance premiums now come from districts where a majority of the population resides in rural areas--an increase from 41% in FY23.
The study noted that "43 per cent of Life and Health premium comes from rural-majority districts -- and the share is rising."
This steady rise underscores a structural shift in demand toward non-metro markets.
Data spanning FY23 to FY25 shows that rural-majority districts 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 10 lakh now account for nearly half of new Life and Health insurance premiums.
"When premium is mapped against population size, sub-10 lakh cities account for 47% of all fresh Life and Health premium in FY25," the study said, up from 44 per cent in FY23.
Within these smaller cities, towns with a population between one lakh and five lakh have emerged as key contributors.
"The 1-5 lakh population band is the standout mover: its contribution rose from 26% in FY23 to 29% in FY25," reflecting growing insurance adoption in emerging tier-2 towns.
A similar pattern is visible in motor insurance. Rural-majority districts have maintained a stable 36% share of new motor insurance premiums over the past three years, indicating consistent demand. Meanwhile, cities with populations under 10 lakh 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.
According to Sarbvir Singh, Joint Group CEO of PB Fintech, the shift reflects broader changes in financial awareness and digital accessibility.
"Bharat is leading India's insurance growth, both in scale and behaviour. Nearly half of our Life and Health premiums today come from rural-majority and semi-urban regions," Singh said. He added that increasing digital access and growing awareness are enabling consumers beyond traditional urban centres to actively seek financial protection.