ICICI Securities: Term Pricing - Insurers Weighing Volumes Versus Margins
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ICICI Securities Report
Term protection pricing has witnessed periodic revisions in FY21-to-date against the backdrop of higher reinsurance rates and higher consumer demand.
We witnessed price hikes of 10-41% by ICICI Prudential Life Insurance Company Ltd., 6-39% by HDFC Standard Life Insurance Company Ltd., 9-18% by Max Financial Services Ltd. and no price change by SBI Life Insurance Company Ltd., between April and August 2020.
Starting September 2020, ICICI Prudential Life Insurance has introduced a lower-priced product with fewer features.
Key observations are:
In the absence of any price hike, relative pricing-driven positioning continues to be most attractive for SBI Life (traditionally it has operated at a premium to peers).
Insurers will face a volume vs margin conundrum; those that experience weaker volume growth can lower pricing, and vice versa.
Absolute value of new business will depend on a combination of growth and margin.
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