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Two Factors That Aided Life Insurers In August

Life insurers' new business premium rose 42.2% over the preceding month to Rs 27,820.7 crore in August: IRDAI

<div class="paragraphs"><p>A job seeker fills out an application form at the Job Links Career Center, part of the North Carolina Employment Security Commission, in Raleigh, North Carolina, U.S. (Photographer: Jim R. Bounds/Bloomberg)</p></div>
A job seeker fills out an application form at the Job Links Career Center, part of the North Carolina Employment Security Commission, in Raleigh, North Carolina, U.S. (Photographer: Jim R. Bounds/Bloomberg)

New business premiums of India’s life insurers rose in August as the number of policies sold increased and on higher group policy renewals.

New business premium, or a measure of revenue, increased 42.2% over the preceding month to Rs 27,820.7 crore in August, data released by the Insurance Regulatory and Development Authority of India showed. Year-on-year, it rose 15.5%.

When compared to the pre-pandemic level two years back in August 2019, the industry’s new business premium jumped 43.3%.

  • The number of policies sold during the reported month rose 13.1% over July, with group single policies registering a jump of 33.8%.

  • Year-on-year, the total number of policies sold were up 26.6%.

“The traditional savings business (especially non-participation policies, or the policies where insurer does not share profits with policyholders) continues to do well; unit-linked product sales have also picked up, while protection continues to struggle given the supply-side issues, conservative underwriting by insurers and demand impact by multiple price increases in the past 12 months,” Nomura said.

Nirmal Bang expects non-par savings and protection sales to grow at a higher rate.

  • Life Insurance Corp.’s new business premium surged 67.1% over the previous month to Rs 18,960.8 crore in August. Year-on-year, its premium rose 13.9%.

  • Group single premiums for the nation’s largest life insurer jumped 90% month-on-month, its group yearly renewable premiums witnessed a 154.8% increase.

  • Private life insurers’ new business premiums rose 6.8% over the preceding month to Rs 8,860 crore in August. Year-on-year, it grew 19.2%.

  • Group single premiums of private insurers saw a 6.3% rise, while their group yearly renewable premiums increased 12.1% month-on-month.

On a two-year basis, the industry’s retail weighted received premium—a measure of total premium collected through individual retail policies—saw a YTD compounded annual growth rate at 2.4%, according to Emkay Global. That, the brokerage said in a note, was driven by a 5.3% annualised growth rate of the private insurers. LIC, however, witnessed a contraction of 1.8% during the period.

In these two years, private insurers, according to Emkay, have increased their market share in retail weighted received premium to 61.4% from 58.0%. “The developments in FY22 validate the long-term trend of a gradual shift of the retail life insurance market toward private players.”

How India’s listed private life insurers fared in August…

HDFC Life

  • Its new business premium fell 14.7% over the preceding month to Rs 1,790.5 crore in August.

  • Year-on-year, too, the premium declined 12.7%.

  • The drop was due to a fall in group single premiums.

SBI Life

  • The company’s new business premium rose 29.8% over July to Rs 2,237.8 crore in August.

  • On an annual basis, the premium rose 19.4%.

ICICI Prudential Life

  • Its new business premium rose 14.1% over the preceding month to Rs 1,276.4 crore in August.

  • The premium jumped 44.8% over a year earlier.

  • The strong year-on-year growth, according to Nirmal Bang, was “on the back of aggressive focus on non-par savings along with a favourable environment for linked products”.