Tier-3 cities and smaller towns are now driving India’s insurance growth, contributing nearly 62 per cent of all new insurance business in FY 2024-25, according to a report by Probus, a InsurTech and insurance broking firm. The trend marks a significant decentralisation in the country’s insurance landscape, with emerging regions stepping into a more dominant role traditionally held by metros.
The report highlights that the contribution from these regions has steadily increased over the past three years—from 58 per cent earlier to 62 per cent now—showing consistent year-on-year growth. The rise is attributed to the success of digital public infrastructure like UPI, deeper internet penetration, and app-based onboarding models tailored for regional markets.
“Smaller towns are no longer just peripheral markets. They have become the growth engines of Digital Bharat,” the report stated. Notably, the Motor Insurance segment posted the highest growth at 25.6 per cent in FY25, boosted by improved digital accessibility, rising consumer awareness, and an expanded Point-of-Sale Person (PoSP) network.
In terms of verticals, fresh life insurance premiums grew over 60 per cent year-on-year. Meanwhile, non-life insurance segments such as motor, health, and SME coverage also saw significant traction. SME insurance emerged as the fastest-growing category, registering a 112 per cent rise in premium volumes.
Probus attributes the growth to region-friendly features like regional language interfaces, simplified onboarding, and education-first sales approaches, which have transformed insurance from a compliance-driven product into a proactive financial planning tool for consumers in smaller cities.
Speaking on the findings, Rakesh Goyal, Director, Probus, said, “At a global level, the Indian economy has shown remarkable resilience despite external headwinds. A key reason behind this strength is the steady rise of Tier-2 and Tier-3 cities, and our latest data confirms that. At Probus, we are proud to be aligned with the Government of India’s vision of ‘Insuring India by 2047.’ We’ve built digital tools and strengthened our PoSP models to deliver seamless, contextual insurance solutions to the emerging consumer in India.”
