A Study on the Financial Sustainability of Public and Private Life Insurance Companies in India

Abstract

Life insurance occupies a central place in India's long-term savings and social security architecture, and the financial sustainability of the insurers that underwrite this promise is therefore a matter of public interest as much as of corporate performance. This paper undertakes an empirical, ratio-based comparison of the financial sustainability of the Life Insurance Corporation of India (LIC), the sole public sector insurer, with a purposive sample of five leading private life insurers, using secondary data published by the Insurance Regulatory and Development Authority of India (IRDAI) and company disclosures for the period 2020-21 to 2025-26. Sustainability is operationalised through four indicators that jointly capture capital adequacy, persistency of business, claims-paying reliability and market competitiveness: the solvency ratio, the thirteenth-month persistency ratio, the claim settlement ratio and new business premium (NBP) market share. The analysis finds that both ownership groups comfortably exceed the IRDAI-mandated minimum solvency margin of 1.50, though private insurers report a marginally higher average solvency ratio than LIC; LIC, however, retains a decisive lead in market share and claims volume while private insurers outperform on persistency and grievance intensity. The study concludes that public and private life insurers in India are pursuing financial sustainability through distinct strategic pathways rather than converging on a single model, and it offers policy and managerial implications for regulators, investors and insurer management.