Life insurers had a 13% increase in new business premiums in FY22, compared to a 7.5 percent increase in FY21.
Life insurers saw a 37% increase in new business premiums (NBP) in March, thanks to the exceptional performance of the IPO-bound Life Insurance Corporation (LIC), whose NBP increased 51% over the same month the previous year.
Furthermore, despite reporting single-digit growth in FY21, the first full year of the pandemic, the sector is back to double-digit growth in FY22, with the NBP increasing by 13%.
In FY22, private sector insurers increased their NBP by 23% to Rs 1.15 trillion, while LIC increased its NBP by more than 8% to Rs 1.98 trillion, bringing the industry’s NBP to Rs 3.14 trillion.
LIC’s market share in terms of NBP was at 63.5 percent at the end of FY22, a decline of 293 basis points since March 2021.
However, growth in FY22 was smaller than in FY20, when the NBP increased by more than 20%. In FY21, growth was 7.49 percent.
Typically, March is the strongest month for life insurance firms since sales of tax-saving plans increase during this time. The month’s NBP for the sector increased to Rs 59,608.92 crore, according to figures released by the Insurance Regulatory and Development Authority of India (Irdai).
NBP refers to the premiums collected from new policies for a given year.
“The robust growth in monthly numbers can be attributed to an increase in single premiums for both individual and group segments in the final month of the fiscal year (with individuals undertaking tax planning measures), with LIC significantly outpacing its private peers for the second month in a row,” Care Edge said in a report.
“LIC reported significant growth of 51% year on year, owing primarily to a 60% year on year increase in group new business premium.” In comparison, the private sector grew by 13% year on year, with both individual and group sectors expanding at 13% and 12%, respectively,” said Rushabh Gandhi, deputy CEO of IndiaFirst Life Insurance.
Among listed players, SBI Life’s NBP increased 11%, while HDFC Life’s NBP increased 6%. According to the statistics provided by Irdai, ICICI Prudential Life had a paltry 1.56 percent increase.
Max Life had a 15% increase in NBP in March, while Bajaj Allianz Life Insurance witnessed a 29.5% increase.
“Despite the disruption caused by the third wave of Covid-19, which impacted productivity in January and February, we were able to demonstrate resilience in our operations,” N S Kannan, managing director, and chief executive officer of ICICI Prudential Life Insurance said following the insurer’s Q4 results. In March, we had the greatest monthly sales of any year since the company’s founding. This contributed to a 33% year-on-year increase in our value of the new business to Rs 2,163 crore for FY22, with a solid VNB (value of the new business) margin of 28%.”
When the pandemic struck, growth rates plunged due to supply-side concerns, and just as they were beginning to stabilize, the second wave hit insurers hard since a huge number of death claims ate into their earnings. However, growth resumed after the second wave, with supply-side difficulties alleviated.
Life insurers have paid out over 225,000 Covid-related death claims totaling more than Rs 17,000 crore.
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During the year, the sector enjoyed considerable growth in the protection business as consumer awareness and risk perception increased as a result of the epidemic. Guaranteed and annuity products also witnessed a significant increase over this time span. While unit-linked products had limited growth as a result of equities market volatility, they are likely to eventually rebound.
LIC, which has typically offered more par goods, has shown a desire to expand its non-par business, which is likely to bode well for the sector given its vast reach.
Care Edge anticipates that the life insurance sector will continue to expand at a rate of 12-14 percent over the next three to five years.
