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Private Life Insurers Grow At Fastest Pace In Nine Months, Return To Pre-Covid Levels

Premium collection of private life insurers grew at the fastest pace in nine months aided by reopening of the economy.

An agent selling insurance products to customers. (Photographer: Brendon Thorne/Bloomberg)
An agent selling insurance products to customers. (Photographer: Brendon Thorne/Bloomberg)

Premium collection of private life insurance companies returned to pre-pandemic levels, aided by reopening of the economy.

Total new business premium—individual plus group policies—returned to pre-covid levels in October with Rs 22,776 crore worth of policies underwritten, according to BloombergQuint's calculation based on disclosures. This was the highest in nine months.

Annualised premium equivalent of private life insurers rose 14% year-on-year, also the most in nine months, while the Life Insurance Corporation of India, the nation’s largest life insurer, saw an increase of 6%. Overall, the industry witnessed an 11% growth in first-year premiums.

The performance was aided by higher sales through bancassurance or banking partners, the biggest distribution channel for life insurers, as business returned to normal. After the lockdown, bank branches weren’t fully operational, walk-ins fell and insurers pushed digital distribution. Online sale of life policies has risen consistently since the Covid-19 pandemic struck.

CARE Ratings expects the industry to grow in the single digits for the year as compared to a double-digit growth witnessed last year. “Overall, the outlook is expected to be stable in the medium term," it said.

The business is picking up because the pandemic also increased awareness about insurance, multiple insurers had said in their post-earnings statements. While demand across product categories has risen, protection business comprising term plans is driving growth.

“Apart of term plans, there is demand for savings plans—non-participating guaranteed returns as well unit-linked and annuity products," Sangramjit Sarangi, SBI Life Insurance Co. Ltd.’s chief financial officer, had told BloombergQuint after the second-quarter earnings. "There is demand for protection products, guaranteed returns products, retirement plans followed by annuities. Initially, ULIP products faced the heat of market volatility but as the market stabilises, interest in ULIPs is building up.”

How Private Life Insurers Fared

Max Life Insurance Co. Ltd. saw the biggest jump in APE in October, followed by HDFC Life and SBI Life. ICICI Prudential Life Insurance Co.'s premium collection contracted due to sluggishness in ULIP demand.

“This impressive growth was possible due to robust performance in the bancassurance and e-commerce channels,” Prashant Tripathy, Max Life Insurance's managing director and chief executive officer, said. “The steady uptake of protection products and the customers’ growing focus towards securing the future of their loved ones during uncertain times has acted as a catalyst for impressive performance in the month.”

Share In Individual APE

LIC gained share in individual APE at the expense of private players. SBI Life continued to remain the largest private player with 14% share, followed by HDFC Life and ICICI Prudential Life.