Life insurance companies saw a 48 per cent increase in new business premium (NBP) in February compared to last year, mainly due to strong growth from Life Insurance Corporation of India (LIC) and good performance from private insurers.
“Following robust growth in FY23, first-year premium numbers in FY24 have been moving in a subdued manner. However, for February 2024, first-year life insurance premiums witnessed a surge of 48.4 per cent, compared to a fall of 16.8 per cent witnessed in the same period last year. The increase can be attributed to group single premiums, especially of LIC, and strong monthly performance of the private insurers,” according to CareEdge research report
According to data from the Life Insurance Council, the new business premium (NBP) for life insurance companies reached Rs 33,913.18 crore, marking a 48.43 per cent increase from Rs 22,847.65 crore in the previous year. Life Insurance Corporation of India (LIC) saw its premium rise by 67.48 per cent to Rs 19,896.01 crore from Rs 11,879.49 crore, while private life insurance companies experienced a 27.80 per cent growth to Rs 14,017.17 crore from Rs 10,968.16 crore. NBP represents the premium from new policies in a given year, combining first-year and single premiums to show total new business.
LIC experienced growth due to a rise in group single premiums, where it dominates the market. Its group single premium nearly doubled to Rs 14,661.31 crore. Private insurers, although leading in the individual segment, also saw strong growth across all segments.
Among major private insurers, SBI Life's premium increased by approximately 32 per cent to Rs 2,648.86 crore. Other private-sector companies also showed strong growth. HDFC Life's NBP increased by 14.49 per cent to Rs 2,602.11 crore, while ICICI Prudential Life Insurance saw a growth of 32.54 per cent to Rs 1,763.33 crore. Bajaj Allianz Life's NBP grew by 12.92 per cent to Rs 1,050.04 crore, and Max Life Insurance's increased by approximately 51 per cent to Rs 1,097.09 crore.
From April to February in FY24, the NBP of life insurers declined by 0.22 per cent year-on-year (Y-o-Y) to over Rs 3.17 trillion, compared to over Rs 3.18 trillion in the same period the previous year. LIC's premium decreased by 8.35 per cent to over Rs 2.03 trillion, while private insurers' grew by 14.09 per cent Y-o-Y to over Rs 1.15 trillion.
“Meanwhile, year-to-date-FY24 new business premiums of life insurers narrowed their drop to 0.2 per cent compared to growth of 25.1 per cent growth in YTDFY23. The YoY decline can be attributed to the introduction of a new tax regime, a reduction in group premiums, and the significant momentum experienced in March 2023. While private insurance companies have maintained growth and have continued to play a mitigating role by counteracting the dip in LIC premiums, their pace has been subdued compared to the prior year,” adds the CareEdge research report.
While LIC recorded an increase of 67.5 per cent in February meanwhile as a whole, the private insurers recorded growth of 27.8 per cent which was roughly 2.8 times the rate (10 per cent) witnessed in February 2023. On the other hand, for the year-to-date period, private companies have continued their growth compared to LIC’s fall. “The aggregate decrease can continue to be attributed to higher momentum in March 2023, reduced single premiums, primarily LIC, and changes in the tax regime. However, the aggregate decrease has been narrowing as companies chase business aggressively and could end flat or marginally positive as the fiscal year draws to a close,” adds the CareEdge research report.
Non-Single Premiums: In February 2024, non-single premiums increased by 19.3 per cent, which was roughly four and a half times the 4.2 per cent rise reported in February 2023. Single premiums, mainly due to LIC, saw a significant increase of 67.0 per cent in February 2024 compared to a decrease of 26.3 per cent in February 2023 (due to LIC withdrawing a Saral Pension plan with a single premium by the end of February 2023). Despite this surge, single premiums continue to decline for the year-to-date (YTD) period but still make up a considerable portion of the overall first-year premiums.
Single Premiums: For February 2024, single premiums represented 46.7 per cent of total private players’ premiums. Larger private companies rely more on single premiums than smaller ones. In February 2024, LIC still earned over 80 per cent of its premiums from single premiums. During the YTD (year-to-date) period for private players, the proportion of single premiums has been relatively constant while LIC’s fraction hovered at above 80 percent with some fluctuations.
Group Premiums: In February 2024, group premiums increased by 79.2 percent against a drop of 30.8 percent in February 2023. This high growth was driven by the single premium segment. Also, individual premiums grew by 17.4 per cent, which was significantly better than last year’s increase rate of just about five per cent. In the FY24 YTD period group premiums have continued to decline whereas individual Premiums picked up but at a slower pace.
