File photo of the LIC building at Nariman Point. 

Private Life Insurers’ Share In New Business Spikes

The share of private life insurers in the new business jumped in June as they continue to gradually eat into the share of Life Insurance Corporation of India.

Private players now have a 55.7 percent share in the new business premium compared with 50 percent in May. India’s largest life insurer LIC’s share declined from 49.1 percent to 44.3 percent during the period, according to data available with the Insurance Development and Regulatory Authority of India.

The overall growth seems to be moderating partially due to base effect, said the brokerage Edelweiss. “We maintain that predisposition towards financial savings will persist and the industry will regain momentum.”

Brokerages said the shares of private insurers will lead the rally in the sector, riding on tie-ups with banks. Nomura said growth has been led by higher ticket sizes.

Most bank-based private life insurers witnessed muted premium growth, given their strong base, said Morgan Stanley. ICICI Prudential Life Insurance Company Ltd., for instance, which has the highest market share 20.7 percent among private players as on June 2017, saw a yearly contraction of 5 percent, compared with a 30 percent decline in May.

In terms of premium received, SBI Life Insurance Company Ltd. and HDFC Standard Life Insurance Company Ltd. posted a growth of 8 and 4 percent, respectively.

Agency-led insurers such as TATA AIA Life Insurance Co. Ltd. and Aditya Birla Sun Life Insurance Co. Ltd. grew at an annualized rate of 40 percent, while Bajaj Allianz Life Insurance and Reliance Life Insurance Co. grew by over 16 percent each in June.

Life Insurance Corporation Ltd. share in the overall life insurance market reduced for the fifth straight year, staying below 50 percent for the second year in a row, according to data with the Insurance Regulatory and Development Authority of India.

Brokerages’ Take

Motilal Oswal

  • Among private players, growth was led by Birla SunLife, TATA AIA Life Insurance Company Ltd., Kotak Life Insurance Ltd. and Max Life Insurance Company Ltd.
  • Large listed players (SBI Life Insurance Company Ltd., HDFC Life Insurance Company Ltd. and ICICI Prudential Life Insurance Company Ltd.) reported tepid growth.
  • Weighted received premium to grow 16 percent in year ended March 2019 and drive market share to 53 percent against 51 percent in year ended March 2018.

Morgan Stanley

  • Expects growth in the private sector to moderate to mid-teens over the next couple of years (compared with 25 percent annual growth in the last two years).
  • Bank-based insurers to grow faster than agency-backed insurers.

Nomura

  • Expects 15 percent growth for industry; private insurers to grow 16-18 percent.
  • Industry growth impacted by high base, but trending strong on a two-year CAGR.
  • Private sector growth led by higher ticket sizes.
  • ICICI Prudential Insurance remains top pick.

Edelweiss

  • Growth momentum in quarter ended June 2019 was softer due to base effect.
  • Expect momentum in bank-led insurers to normalize.
  • Expect disposition of financial savings to persist and industry to gain momentum.
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