Life Insurers’ New Business Premium Falls On Omicron Disruption
The industry’s new business premium was down 9% over the preceding month at Rs 21,957 crore in January.
India’s life insurers’ revenue declined as individual policy premiums fell amid mounting cases of the Omicron variant of the novel coronavirus.
The industry’s new business premium was down 9% over the preceding month at Rs 21,957 crore in January 2022, according to data released by the Insurance Regulatory and Development Authority of India. The revenue, however, was up 2% year-on-year and 6% over the pre-pandemic January 2020.
Individual category premiums, accounting for almost half the total industry revenue, saw a double-digit fall—single-individual premium declined 16%, while non-single dropped 22% over the previous month.
The number of policies sold, across individuals and groups, also fell 7% over December.
Pension plans, general annuity and group gratuity schemes continue to account for a significant chunk of the group premium, while general annuity plans dominate individual single premiums, CARE Ratings Ltd. said in a report.
New business premium of private companies fell 31% month-on-month to Rs 9,021 crore in January, owing to a decline across individual and group categories, barring the group yearly renewable policies. Year-on-year, it was up 10%.
IPO-bound Life Insurance Corp.—the country’s largest insurer—saw its revenue rise 17% over the previous month to Rs 12,936 crore. That came on a recovery in group single premium policy that rose 31%, contributing to more than 60% of its total revenue. Year-on-year, LIC’s new business premium fell 3%.
“The life insurance industry saw its growth momentum suffer a temporary disruption in January 2022 as Omicron-related restrictions affected mobility and overall business activities,” Emkay Global said in a report. “Notwithstanding the temporary disruptions in new business growth, the medium-term trend is very much intact for large private life insurers.”
Also, overall developments in FY22, the brokerage said, validate the long-term, gradual shift of the retail life insurance market to private players that have a strong brand and distribution reach.
Nirmal Bang remains “positive on the life insurance sector considering the mortality protection gap, potential for high sum assured vis a vis peer countries”. Latest commentary from companies, it said, suggests that individual protection has started to recover.
According to CARE Ratings, while LIC continued to maintain its dominant share in the first-year premium for 10 months in FY22 (LIC share of 61.2% vs 38.8% share of private companies), the private sector has gained market share, given that it has been growing at a faster pace compared to LIC.
“H2FY22 is expected to grow with a focus on non-participating and annuity plans,” CARE Ratings said, adding that a delay in economic recovery and a resurgence of Covid cases are key risks.
How India’s listed private insurers fared in January 2022...
HDFC Life Insurance Co.
Revenue declined 38% over the previous month to Rs 1,872 crore, led by a fall in retail and group single premium policies.
Year-on-year, it rose 10%.
The slowdown in growth, Emkay Global said, was likely due to Omicron-related disruptions, slower protection sales and a likely focus on the balanced product mix.
SBI Life Insurance Co.
New business premium fell for the second straight month.
It was down 34% over December to Rs 1,949 crore, dragged by a fall across categories. Its group non-single premiums, however, surged 1.6 times but formed less than 1% of the insurer’s overall revenue.
Year-on-year, too, the new business premium fell 2%.
SBI Life, according to Emkay Global, is on a strong growth track and offers the best risk-reward in the sector.
ICICI Prudential Life Insurance Co.
New business premium fell 6.5% over the previous month to Rs 1,257 crore. Only the group yearly renewable premiums rose during the month.
Year-on-year, the revenue rose 7.5%.
