Life Insurers’ Premium Growth Remains Muted In October

Premium income of Indian life insurers rebounded in October led by Life Insurance Corporation even as premium growth for private insurers remained muted.

Private insurers’ individual annual premium equivalent—a sum of first-year premium and single-premium policies—grew 4 percent year-on-year in October, according to data compiled by BloombergQuint from the Insurance Regulatory and Development Authority of India’s website. That compares with 3 percent growth in September. Private insurers’ APE grew above 10 percent in the first five months of the current financial year, the data showed.

The APE for the industry grew 5 percent in October compared with a 3 percent contraction in September.

According to Nomura, the first half of this fiscal had a favorable base impact which is masking the slowdown.

For LIC, India’s largest life insurer, premiums grew 6 percent compared with a decline of 11 percent in the previous month.

Private Players

ICICI Prudential Life Insurance Company Ltd.’s annual premium equivalent grew 18 percent in October after falling in the previous three months. The pickup in APE was partly driven by a favorable base, according to Morgan Stanley. Its APE had contacted by 17 percent in October last year.

For HDFC Standard Life Insurance Company Ltd. and SBI Life Insurance Company Ltd., premium continued to contract in October. The continuing stress in sales of unit-linked insurance plans affected APE growth of both the insurers.

HDFC Life’s premium growth was further affected by a moderation in sales of annuity products, according to Morgan Stanley. A high base also impacted the private insurer’s premium growth, Nomura said.

While the two listed players’ growth moderated, the other unlisted private players grew this month as well. Future Generali, Bajaj Allianz, Star Union Dai-ichi and Tata AIA continued to report growth well above 10 percent.

Market Share

LIC’s market share by total premium rose to 44 percent in October compared with 37 percent in the previous month. The market share of private players fell to 56 percent compared with 63 percent in September.

Nomura lowered its FY20 growth forecast for SBI Life and HDFC Life. The brokerage expects moderate growth of 4-15 percent for insurers except HDFC Life, which, according to Nomura, will have a favorable base from November 2019.

UBS expects premium growth for private life insurers to be in the mid teens in the next three-four years. Higher protection penetration will help drive insurers’ margins, the brokerage said.

Morgan Stanley expects premium growth of the private sector to be in mid-teens over the next two years compared with 9 percent in FY19. Better macro situation, improving financial inclusion and a stabilising regulatory environment may help the insurers, the brokerage had said in a note in August.