Strong Premium Growth Puts Indian Life Insurers In A Sweet Spot
Total revenue from life insurance premium went up 29 percent in September 2016.
Indian life insurance companies, including state-owned Life Insurance Corporation of India (LIC), have seen robust growth in annual premiums.
The total revenue from the life insurance business for all insurance companies combined went up 29 percent in September to Rs 5,305.6 crore, compared to a year ago, according to a Kotak Institutional Equities report. On a year-to-date basis (YTD), life insurance premiums rose 21 percent to Rs 24,734.2 crore.
The report attributed a large part of this growth to increasing ticket sizes as insurance companies shifted focus to Unit-Linked Insurance Plans (ULIP) which typically have higher ticket sizes. Unit-linked insurance plans, unlike regular insurance, offer both insurance and investment under an integrated plan.
Some players have picked up significantly in FY17 year-to-date likely due to increase in the share of ULIPs – Bajaj Life was up by 43 percent year-on-year, Exide by 38 percent, India First by 67 percent and Tata AIA by 98 percent year-on-year.Kotak Institutional Equities Report
The average ticket size in the individual, non-single segment in September 2016 improved by 14.2 percent to Rs 37,440 from Rs 32,780.7, from the same month a year ago.
Mixed Growth In Private Sector
For private insurers, the individual premium business grew 24 percent in September on a year-on-year basis. In the first nine months of this year, these insurers registered an individual premium growth of 19.8 percent compared to 17.8 percent growth for the industry as a whole.
Most large players, except HDFC Life and Reliance Life, reported solid growth numbers. Interestingly, small players like Star Union Daichi and Indiafirst also reported strong (75-125 percent) growth likely due to activation of their banking channels.Kotak Institutional Equities Report
Though private insurers have seen volatility in the premium revenue growth individually, on a consolidated basis, their annual premium equivalent increased at 14 percent to Rs 24’,100 crore in the last fiscal year.
Private insurance companies have also managed to capture higher market share in the group business since the start of this fiscal year. In September their market share stood at 30 percent from 15 percent in August.
Birla SL, HDFC Life and SBI Life saw substantial rise in market share.
In the single premium business, LIC continues to enjoy the highest market share with 83 percent of the total premium.
Private players have generally been selective in this segment; the share of single premium increased to 45 percent in September from 36 percent in August but lower than 50 percent in the first two months of FY17.Kotak Institutional Equities Report
Inflows To Mutual Funds Grow
Acccording to Kotak, the second quarter saw the highest inflows to equity mutual funds in the past three quarters. Net inflows increased almost 30 percent to Rs 12,700 crore from Rs 9,500 crore sequentially.
It appears that household savings are making strong headway into capital markets through mutual funds and life insurance companies.Kotak Institutional Equities Report