Tier-III Cities Drive 62% of New Insurance Premiums: India’s insurance landscape is undergoing a seismic shift, and at the forefront of this transformation are Tier-III cities. According to the latest report released by Probus, one of India’s leading InsurTech and insurance broking firms, 62% of the total new insurance premiums for the current fiscal year (FY 2024–25) now originate from Tier-III cities and beyond. This marks a clear decentralisation of India’s insurance growth, signaling that the future of financial services is no longer limited to metros but is thriving in the heart of Digital Bharat.
These smaller cities, once overlooked, are now emerging as robust drivers of financial participation. With rapid advancements in internet accessibility, the expansion of UPI (Unified Payments Interface), and the penetration of smartphones and digital literacy, Tier-III cities are leading in digital adoption. According to the report, the bulk of UPI transactions today come from non-metro areas, reflecting a deep integration of fintech into rural and semi-urban lives. This wave of digital engagement is further supported by targeted outreach, PoSP networks, and increased insurance awareness, especially in the Motor Insurance sector, which alone witnessed a 25.6% growth in FY 2024–25.
Probus emphasizes that this is not a one-off event or a short-lived trend. The upward movement in new premium contributions from Tier-III regions has shown a steady rise over the past three fiscal years, climbing from 58% to 60%, and now to 62%. This consistent pattern reflects a significant behavioral shift in how individuals across India approach insurance — now seeing it not just as a safety net but as a fundamental financial necessity.
Who Can Apply for Insurance in Tier-III Cities?
Insurance products are now more accessible to all income segments, especially in Tier-III cities. Thanks to improved outreach and digitization, anyone with a basic smartphone and internet connection can now buy insurance. The following groups are eligible:
- Salaried and self-employed individuals
- Small business owners and traders
- Gig workers, farmers, and daily wage earners
- Students and homemakers (for personal insurance like health and term plans)
Even those with no formal income documentation can apply for basic insurance policies with the help of certified PoSP agents or via user-friendly digital platforms.
Also read: CTI Raises Alarm Over Soaring Health Insurance Premiums: Urges Government Intervention for Relief
Insurance Premiums & Fees in Tier-III Cities
Probus’s report suggests that insurance premiums are kept affordable to increase penetration in these areas. Here’s a general breakdown:
| Type of Insurance | Starting Premium | Popular in Tier-III |
|---|---|---|
| Motor Insurance | ₹1,200/year | Yes |
| Health Insurance | ₹3,000/year | Yes |
| Life Insurance | ₹5,000/year | Yes |
| Term Plans | ₹2,500/year | Yes |
| Travel Insurance | ₹500/year | Limited |
Additional discounts are often provided through digital platforms, group plans, and Government-subsidized schemes like PM-JAY, PMFBY, and others.
How to Use Insurance: Benefits for Tier-III Customers
Once insured, policyholders in Tier-III cities enjoy the following benefits:
- Cashless Claims in local hospitals and garages.
- Mobile App Access for policy documents, renewals, and claim tracking.
- 24/7 Customer Support in regional languages.
- Tax Benefits under Sections 80C, 80D, and 10(10D).
- Coverage for family including elderly parents and children.
Digital platforms have simplified usage through apps and WhatsApp bots, making insurance accessible and manageable.
How to Apply for Insurance Online or Offline
Online Process:
- Visit a trusted insurance provider’s website (e.g., Probus).
- Choose your desired policy type (Motor, Health, Life, etc.).
- Enter basic details like name, age, vehicle/health info.
- Get an instant premium quote.
- Upload necessary documents (ID, proof of address).
- Make payment via UPI, debit card, or net banking.
- Download the policy instantly. Probus Official Website
Offline Process:
- Approach a certified PoSP agent or local branch.
- Fill out the proposal form.
- Submit documents and passport-size photo.
- Make payment through offline or assisted digital mode.
- Receive policy via email or hard copy.
Important Dates
| Event | Date |
|---|---|
| Probus Report Release | June 26, 2025 |
| FY2024-25 Insurance Growth | Ongoing |
| PoSP Enrollment Deadline | December 31, 2025 |
| Awareness Camps (Next Phase) | July – September 2025 |
Disclaimer
The information provided in this article is based on the Probus report dated June 26, 2025. While every effort has been made to ensure accuracy, users are advised to verify details with official sources or consult a certified insurance advisor before making any financial decisions. Policies, premiums, and benefits may vary by insurer, location, and policyholder profile.
Tier-III Cities Drive 62% of New Insurance Premiums Conclusion
The Probus report marks a significant milestone in India’s insurance journey, highlighting that the future of insurance is not just urban — it is universal. Tier-III cities are not only contributing significantly but are also reshaping how insurance is consumed, understood, and managed.
This growth reflects broader socio-economic changes taking root in Bharat. The deepening of digital infrastructure, the availability of low-cost smartphones, and the government’s push for financial inclusion are aligning perfectly to make insurance a household term even in remote areas.
Motor insurance continues to lead the way due to rising vehicle ownership and road safety awareness. However, other segments like health and life insurance are also showing robust growth, especially as pandemic-era lessons remain fresh in people’s minds.
As India continues its journey toward becoming a $5 trillion economy, the role of Tier-III cities in democratizing insurance cannot be overstated. They are no longer just participants — they are primary architects of the new financial India.
Tier-III Cities Drive 62% of New Insurance Premiums FAQs
1. What is a Tier-III city in India?
A Tier-III city is typically a smaller city or town with a population of less than 1 million. These cities are not metropolitan but are rapidly developing. Examples include Saharanpur, Guntur, Warangal, and Bhiwadi. These areas are seeing increased economic activity, digital adoption, and financial participation.
2. Why is insurance growing faster in Tier-III cities?
Insurance growth in Tier-III cities is fueled by factors such as better internet access, awareness campaigns, affordable digital policies, UPI payment ease, and active PoSP networks. People now understand the importance of protection and are embracing technology to secure their future.
3. What is a PoSP and how does it help in small cities?
PoSP stands for Point-of-Sale Person — a certified insurance agent who sells insurance policies in local communities. They are trained to assist in policy selection, documentation, and claims. In Tier-III cities, PoSPs bridge the digital and knowledge gap, making insurance more accessible.
4. Can people with no regular income get insurance?
Yes, many insurance providers offer low-cost, flexible insurance plans that don’t require regular income proof. Group insurance and government-subsidized schemes are ideal for such individuals. PoSPs and digital KYC tools make it easy to onboard such customers.
5. Is online insurance safe for people in rural areas?
Absolutely. With secure platforms like UPI, OTP verification, and encrypted portals, buying insurance online is safe. Probus and other reputed platforms also provide support in regional languages and have simple, easy-to-use mobile apps to make the process user-friendly.
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