{"id":2895,"date":"2026-01-01T15:00:00","date_gmt":"2026-01-01T09:30:00","guid":{"rendered":"https:\/\/tradebrains.in\/money\/?p=2895"},"modified":"2026-01-01T12:08:07","modified_gmt":"2026-01-01T06:38:07","slug":"how-tier-2-and-tier-3-cities-are-driving-indias-insurance-market-growth-what-reports-say","status":"publish","type":"post","link":"https:\/\/tradebrains.in\/money\/how-tier-2-and-tier-3-cities-are-driving-indias-insurance-market-growth-what-reports-say\/","title":{"rendered":"How Tier-2 and Tier-3 Cities Are Driving India\u2019s Insurance Market Growth: What Reports Say"},"content":{"rendered":"\n
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Synopsis: <\/strong>This article explores a landmark shift in India’s insurance landscape, where Tier II and Tier III cities have overtaken metros to become the primary growth engines, accounting for 62% of all new health insurance policies sold by insurers so far in 2025-26 (FY26) according to a report by Policybazar. <\/em><\/p>\n<\/blockquote>\n\n\n\n

The health insurance environment in India is experiencing a sea change and Tier II and Tier III cities become the growth engine in FY26. Due to the growing awareness, medical inflation, and availability of easily available financing options, these areas have already sold 62 percent of new policies in November 2025, indicating the democratization of coverage outside of the metros.<\/p>

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Sales Share Trends<\/strong><\/h2>\n\n\n\n

Tier II and Tier III cities currently have the highest percentage of new health policy of 62% compared to the previous years where Tier I metros had bigger shares. As per Policybazaar data, Tier I decreased to 38% in FY26 compared to 46% in FY22 and Tier III increased to 38% compared to 31%.<\/p>\n\n\n\n

Financial Year<\/strong><\/td>Tier I<\/strong><\/td>Tier II<\/strong><\/td>Tier III<\/strong><\/td><\/tr>
FY22<\/strong><\/td>46%<\/td>23%<\/td>31%<\/td><\/tr>
FY23<\/strong><\/td>45%<\/td>22%<\/td>34%<\/td><\/tr>
FY24<\/strong><\/td>44%<\/td>22%<\/td>33%<\/td><\/tr>
FY25<\/strong><\/td>41%<\/td>23%<\/td>36%<\/td><\/tr>
FY26<\/strong><\/td>38%<\/td>24%<\/td>38%<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Rising Coverage Levels<\/strong><\/h3>\n\n\n\n

In Tier II and Tier III cities almost half of the policyholder selects sum insured of 10-15 lakh with Tier II city recording a 47 percent increase in the sum insured of 10-14 lakh cover against 27 percent in the past. Tier III reflects the same growth of 49 percent in the same range as well as 13-14 percent growth in covers above Rs 15 lakh as a result of medical inflation and post-Covid awareness. Tier III buyers make premiums on monthly EMIs more than 40 percent.<\/p>