The Life Insurance Corporation headquarters in South Mumbai, India. (Photographer: Vijay Sartape/BloombergQuint) 

Private Insurers Grow At More Than Double The Rate Of State-Run LIC

Premium collections for private life insurers grew at more than double the rate of India’s largest insurer in the financial year ended March 2018.

The first year premium for private players grew at 18 percent year-on-year to Rs 59,314 crore, as per the data released by the Insurance Regulatory and Development Authority of India. That’s more than double the pace of Life Insurance Corporation of India which grew at 8 percent to Rs 13,455 crore in fiscal year 2018. Among the private players, the top three listed insurers — ICICI Prudential Life, HDFC Standard Life and SBI Life – accounted for more than half of the premiums collected.

LIC’s new business premium growth was also lower than the overall life insurance industry growth which stood at 11 percent in the year ended March 2018, compared to the same period last year.

This led to a 167 basis points drop in LIC’s market share based on new business premium, which stood at 69.4 percent. This is line with the recent trend. According to a report published by Nomura on Jan. 5, private players have gained nearly 160 basis points of new business each year from LIC over the past decade. Deutsche Bank and Nomura Research, in two separate reports, said this trend will continue over the next five years as well. (One basis point is equal to a 100 percentage points.)

Despite the slower growth rate, LIC continued to command more than two-thirds of the market share of total premiums in the industry due to a large renewal base. “This, however, does not diminish the fact that private life insurers have seen a consistent and robust growth in their first year premiums for the past three years due to increasing customer confidence,” said Joydeep Roy, partner and leader, insurance and allied businesses, at PwC India.

“Most private players have now caught up with LIC in terms of brand presence, reasonable market experience and death claim settlement ratio, which has helped elevate their reliability perception closer to LIC’s level,” said the Deutsche Bank report published in February.