Capitaline

Insurance 21-Apr-23

Life Insurance companies new business premium income down at 12% in March

Contrary to expectations, new business premium (NBP) of life insurance companies declined by 12.62% year-on-year (YoY) in March 2023 as Life Insurance Corporation of India (LIC) saw a 32% decline in premiums despite higher base.

According to data released by the Life Insurance Council on Thursday, the industry's NBP stood at Rs 52,081.12 crore in March 2023, as against Rs 59,608.98 crore in the same period last year.

While private life insurance companies reported healthy growth of over 35% in NBP during this period to Rs 23,364 crore, aided by a 57% jump in individual non-single premiums and a 24% increase in group single premiums, state-owned LIC saw its premium dip 32% to Rs 28,716 crore. LIC had earned premiums of Rs 42,319.22 crore in the year-ago period.

For LIC, group single premiums and group non-single premiums were the dampeners, dragging down its NBP. Data shows the insurance behemoth saw its group single premium contract 41% over the same period last year and group non-single premiums drop 82% during the same period.

The corporation witnessed a similar drop in NBP in February when group single premiums dropped 40%.

Generally, the last quarter (January-March) of a financial year is the busiest period for life insurance companies as customers look to buy savings and term products to reduce their tax liability.

In January, the industry reported a 20% jump in premiums, assisted by private sector companies' performance (23% YoY growth), while LIC saw its premium go up 18% YoY.

February saw the NBP of insurers dropping 17% over the same period last year due to a fall in LIC premiums, while the private sector saw its premium go up 10%.

Industry insiders suggested that high-value policies (Rs 5 lakh and above premiums) showed pick-up after mid-March, which explains why private sector insurers posted robust growth in premiums that month.

The government, in the FY24 Budget, proposed to tax income from all non-ULIP products i.e. par and non-par, where aggregate insurance premium paid in a year exceeds Rs 5 lakh. The proposal came into effect from April 1.

Of the listed private players, HDFC Life witnessed a robust jump of 83% in premiums in March. ICICI Prudential saw its NBP increase by 30.77%. SBI Life's premiums were up 23.14%. Max Life's premiums were up 42% during the same period.

For the full year (2022-23), life insurers have reported a 17.91% growth in NBP to Rs 3.7 trillion, with LIC premiums increasing 16.67% to Rs 2.31 trillion, and private sector premiums growing 20.03% to Rs 1.39 trillion.

NBP is the premium acquired from new policies in a year. It is the sum of the first-year premium and single premium, reflecting the total premium received from new businesses.

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