Double-Digit Premium Growth For Life Insurers Continues In December

New business premiums of India’s life insurance companies grew at double digits for the second straight month, albeit at a slower pace, aided by higher sales of savings and other newly launched products.

The individual annual premium equivalent—a sum of first-year premium and single-premium policies—grew at 16 percent year-on-year in December, according to data compiled by BloombergQuint from Insurance Regulatory Development Authority of India. That compares with 41 percent growth in November 2019, mostly because of a favourable base, and 15 percent in December 2018.

The industry’s annual premium equivalent is expected to grow at an annualised rate of 16 percent over financial years 2018-19 to 2020-21, according to JM Financial. That, according to the brokerage, will be aided by low insurance penetration, investments into online/direct distribution channels and lower competition among other saving products on the back of a fall in interest rates.

While HDFC Securities remains positive on long-term prospects of life insurers, strong sales growth in last three financial years, it said, has set the companies up with a high base.

Private insurers have reported higher year-on-year premium growth than the industry in five of the nine months in the ongoing financial year.

HDFC Standard Life Insurance Company Ltd. reported the highest premium growth among listed peers in December. That, according to Emkay Global, was because of its newly launched Sanchay Par Advantage Product—that offers survival benefit payouts from as early as first policy year, life cover to protect the family’s future and tax benefits.

Higher sales of savings products aided growth of ICICI Prudential Life Insurance Company Ltd., while large distribution network of SBI Life Insurance Company Ltd. helped despite high base, HDFC Securities said in a report.

Among non-listed private insurers, Indiafirst Life insurance Company Ltd. continued to lead the pack for second month in a row, followed by Canara HSBC Oriental Bank Of Commerce Life Insurance Company Ltd. and Kotak Mahindra Life insurance Company Ltd.

Tata AIA Life Insurance Company Ltd. witnessed a strong growth because of its bancassurance tie-up with HDFC Bank Ltd., brokerage HDFC Securities said.

Morgan Stanley expects premium growth of private insurers to be in mid-teens over the next two years compared with 9 percent in 2018-19. Better macro situation, improving financial inclusion and a stabilising regulatory environment may help the insurers, it said in a note.

Premium growth of India’s largest insurer, Life Insurance Corporation of India, was driven by higher sales through bancassurance, or banking channels, aggressive pricing for protection policies and relaunch of its certain traditional plans, according to JM Financial.

Market share

LIC’s share of individual new business premium fell to 35 percent in December from 59 percent in November, while that of private companies rose to 65 percent from 41 percent.

(Corrects an earlier version that misstated share of individual new business premium as market share.)