Group Cover Renewals Lift Life Insurers’ Premium In June

Life insurers saw their new business premiums surge in June, aided by group policy renewals.

New business premium for the industry jumped more than twofold over the preceding month to Rs 30,009.48 crore in June, data released by the Insurance Regulatory and Development Authority of India showed. Year-on-year, it rose 6.19%.

When compared to the pre-pandemic level two years back in June 2019, the industry’s new business premium fell 8.54%.

• Private life insurers’ saw their premium jump 111.1% over May to Rs 8,213.2 crore in the reported month. Over the prior year, it rose 38.58%.

• Group yearly renewable premium for private companies increased 265.5% over the preceding month, while individual non-single premium rose 100.51%.

• Life Insurance Corporation of India saw its new business premium surge 148.01% over May to Rs 21,796.28 crore in the reported month. Year-on-year, its business premium dipped 1.83%.

• Group single premiums for the nation’s largest life insurer jumped 168.70% over the previous month. Its individual single premiums witnessed a 93.93% rise.

BloombergQuint had earlier reported that life insurers are either refusing to renew group covers or have increased prices as claims spiked during the pandemic.

Industry-wide Quarterly Performance

• New business premium for the industry contracted 39.19% sequentially, while rose 6.89% over the year earlier to Rs 52,725.26 crore in the three months ended June.

• LIC contracted 33.42% over the preceding quarter and 1.98% year-on-year to Rs 35,600 crore.

• Private insurers saw a 48.97% sequential decline but a 33.68% increase over the year earlier to Rs 17,124.58 crore in the April-June 2021 period.

According to Morgan Stanley and Kotak Institutional Equities, individual annual premium equivalent for all the three listed life insurers—SBI Life Insurance Co., HDFC Life Insurance Co. and ICICI Prudential Life Insurance Co.—are down on two-year CAGR basis. Some unlisted companies have reported positive two-year APE CAGRs in the first quarter.

“Lockdown-related disruptions and social-distancing norms have led to moderation in business [over the last two years], but agent additions remained robust,” Kotak Institutional Equities said in its report.

According to KRChoksey Research, given the spike in death and morbidity rates caused by the pandemic, the insurance industry’s profitability is expected to be a cause of concern in the short term. “We anticipate ULIPs will continue to provide a boost to growth since this segment has seen growth momentum from H2FY21. Non-par and protection segment will continue to grow, bolstered by better investment in bancassurance.”

How the listed private insurers fared...

HDFC Life Insurance Co.

• New business premium rose 89.29% over May to Rs 1,685.66 crore in June. Year-on-year, it rose 33.94%.

• For the quarter ended June, its new business premium fell 43.55% sequentially, while it rose 49.62% over the year earlier.

SBI Life Insurance Co.

• New business premium surged 181.03% over the preceding month to Rs 1,767.05 crore in June. Year-on-year, it jumped 16.30%.

• For the quarter ended June, it contracted 47.02% sequentially but rose 4.58% year-on-year.

ICICI Prudential Life Insurance Co.

• New business premium increased 113.54% over May to Rs 1,263.19 crore in the reported month. Year-on-year, it surged 147.54%.

• For the April-June 2021 period, it fell 50.73% sequentially, while rose 60.75% over the prior year.