Life Insurers’ Premium Grew At Fastest Pace In 28 Months In November: IRDAI Data
LIC gained market share by individual premium in November while private insurers lost, an analysis of IRDAI data shows.
Premium growth of India’s life insurance companies grew at the fastest pace in 28 months on a favourable base and launch of new and traditional products.
The individual annual premium equivalent—a sum of first-year premium and single-premium policies—grew at 41 percent year-on-year in November, according to data compiled by BloombergQuint from the Insurance Regulatory and Development Authority of India. That’s the fastest pace since July 2017.
New business premiums of life insurance companies grew at 2 percent in November last year and 5 percent in October 2019.
Annuity and protection products also remained the focus area for insurers, according to brokerage Nirmal Bang Securities. “These high-margin products have also seen high growth rate, thereby driving growth.”
The year-on-year premium growth of private insurers rose to its highest since May 2019.
Among the listed private insurers, SBI Life Insurance Company Ltd. outperformed peers as it sold more retail or individual policies, according to brokerages Emkay Research and Prabhudas Lilladher.
HDFC Standard Life Insurance Co. Ltd.’s growth was driven by the launch of Sanchay Plus, a new product in its insurance-cum-investment series, Emkay Research said in a report. And ICICI Prudential Life Insurance Company Ltd.’s new term plan covering disabilities is gaining momentum, the research firm said.
On the other hand, new business premium of Life Insurance Corporation of India—the nation’s largest insurer—rose at its fastest pace in five months. That, according to Emkay Research analyst Neeraj Toshniwal, is because of a push towards sale of traditional products as the deadline of eight products was extended till January 2020 by the insurance regulator.
Agreed Pritesh Bumb, equity research analyst at Prabhudas Lilladher. “Relaunch of many products in line with the regulatory guidelines aided LIC’s growth.”
Market Share
LIC gained market share by individual premium at least for the second straight month in November, while private insurers lost.
Market share of India’s largest insurer rose to 59 percent in November from 44 percent in October, while that of private companies fell to 41 percent from 56 percent.
Here’s what the brokerages have to say:
- Prabhudas Lilladher expects the favourable base for HDFC Life and ICICI Prudential to continue. It also expects a further uptick in growth of the industry in the second half.
- Emkay Research said ICICI Prudential would witness strong growth on favourable base and decent valuations. Also, strong distribution will support growth for SBI Life, although the upside will be limited.
- 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.
- Nomura forecasts lower growth for SBI Life and HDFC Life in the ongoing financial year and expects moderate growth of 4-15 percent for all insurers, barring HDFC Life. The higher growth rate in November 2019 implied that stocks would likely meet APE growth expectations, it said.