Nirmal Bang: Life Insurance Sector Outlook - Private Players Keep The Momentum

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Nirmal Bang Report

Going by the August 2020 numbers, we believe that new business sales in the life insurance industry seem to be holding the momentum we have seen post re-opening of the economy.

Latest numbers and the recent new business trends have been in line with our expectation of a generally improving industry scenario.

For August 2020, total industry-wide individual annualized premium equivalent (APE) was down 2.3% YoY compared to an 18% decline in Q1 FY21.

Life Insurance Corporation of India continued to outperform the industry, growing by 2.1% YoY (individual APE).

The private industry individual APE was down 5.8% YoY, though much better when compared to the 23% YoY decline in Q1 FY21.

We remain extremely positive on the long-term growth prospects of the life insurance industry given the insurance penetration levels in India as well as the protection gap.

Earlier, our expectation was that FY21 would see subdued demand for investment-related products on the back of prospective customers choosing to wait out the market volatility and economic uncertainty.

Our view was also supported by the fact that at the industry level, demand for equity-linked products had contracted.

However, given the run-up in equity prices in the recent months, we think that unit linked insurance plans (ULIPs) could see better traction compared to earlier months.

At the same time, we would remain wary of volatility in the near future.

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Nirmal Bang Life Insurance Sector Update-9 September 2020.pdf

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