Economic and geopolitical uncertainty is beginning to weigh on household savings and insurance demand in India, with LIC reporting pressure on long-term policy persistency and caution in premium growth even as its first-quarter profit and value of new business rose quite sharply, according to Business Today. Speaking after the company's results announcement on Thursday, LIC MD & CEO R Doraiswamy said uncertainty in the macro environment could affect policyholders' ability to pay renewal premiums on time.
Persistency ratios slip year on year
For Q1FY27, the persistency ratios on a number-of-policies basis for the 13th month and 61st month stood at 66.5% and 48.7%, respectively, the report said. The comparable persistency ratios for the corresponding period ended June 30, 2025 were 64.4% and 51.1%, respectively. On a premium basis, persistency was 75.3% and 61.1% for the 13th and 61st months, versus 75.6% and 63.9% a year earlier.
| Persistency metric | Q1FY27 | Q1FY26 (ended Jun 30, 2025) | Change |
|---|---|---|---|
| 13th month, policies basis | 66.5% | 64.4% | +2.1 pp |
| 61st month, policies basis | 48.7% | 51.1% | -2.4 pp |
| 13th month, premium basis | 75.3% | 75.6% | -0.3 pp |
| 61st month, premium basis | 61.1% | 63.9% | -2.8 pp |
The pattern indicates that lapsation was concentrated among low-value policies, according to Business Today.
Doraiswamy: macro uncertainty pressures renewal premiums
"When macro environments present uncertainty, short-term pressure can affect policyholders' ability to pay renewal premiums on time," Doraiswamy said.
He attributed the decline in long-term persistency to seasonal economic factors and tighter household savings, and said LIC was following up with customers to revive lapsed policies, the report added.
Premium growth reflects "somewhat cautious environment"
Caution is also visible in new-business flows. LIC's total premium income rose 6.8% to Rs 1,27,250 crore in the first quarter, while annualised premium equivalent (APE) stood at Rs 13,692 crore. Doraiswamy said premium and APE growth reflected a "somewhat cautious environment" despite the company's strong quarterly performance.
Key figures from the quarter:
- Total premium income: Rs 1,27,250 crore, up 6.8% year on year
- Annualised premium equivalent: Rs 13,692 crore
- 13th-month persistency (policies): 66.5% versus 64.4%
- 61st-month persistency (policies): 48.7% versus 51.1%
Implications for finance executives and investors
For CFOs, treasury directors and investors tracking emerging markets, LIC's persistency and premium data offer a concrete read on Indian household savings capacity, a factor closely monitored in consumption-driven economies. The company's explicit link between macro uncertainty, tighter household savings and renewal premium payments — as reported by Business Today — provides a reference point for assessing consumer financial stress in India's broader economic picture. LIC's own response, following up with customers to revive policies, underscores the operational steps insurers are taking as global turmoil pressures the industry, according to the report.
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