A 140-year-old policy puts its stamp on postal department’s life insurance biz
NEW DELHI : India’s purportedly dormant postal department has been alive and kicking successfully in an unexpected quarter—life insurance. The Postal Life Insurance scheme, a policy first introduced in 1884, has grown at 14.5% year-on-year so far this financial year—in terms of premium income between April and February. It’s grown in double digits for the first time since FY21, far outpacing the rest of the industry.
Apart from a sense of security for funds invested in a state-run insurance plan, a key factor that has allowed the postal department to compete in India’s highly competitive and yet underpenetrated market has been its digital push. “The reformative steps taken by India Post have helped in pushing the growth story of postal life insurance. Now, the beneficiaries have the option to pay their premiums online, which was not happening a few years ago.
Besides, claim settlement has also now become seamless," a senior postal department official said, asking not to be identified. Overall, the postal department’s life insurance business has edged out its private-sector competitors. Factoring in the much younger Rural Postal Life Insurance scheme as well, the department’s insurance business has grown at nearly 16% until February this financial year, show postal department data accessed by Mint.
India’s private life insurance sector has grown by 14% up to February in FY24, while industry behemoth Life Insurance Corporation’s premium base contracted by 8% during the period, according to CareEdge Ratings. The overall industry’s growth this financial year until February is 0.2%. The report attributed the slow pace to reduced single premiums, primarily from LIC, and changes in the tax regime.
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