Life insurers see impressive 22% YoY growth in new business premium in Sept

While private insurers, 23 in total, saw their NBP go up over 42%, LIC saw a 12 per cent rise

With the ill-effects of the second wave of the pandemic behind and urgency among consumers to buy insurance before the premium hike, life insurers showed impressive growth in new business premiums (NBP) in September over the same period last year. The NBP of life companies was up more than 22 per cent year-on-year (YoY) in September to Rs 31,001 crore.

While private insurers, 23 in total, saw their NBP go up more than 42 per cent, state-owned insurance behemoth Life Insurance Corporation (LIC) saw a 12 per cent rise. The top three private insurers--SBI Life, HDFC Life, and ICICI Prudential Life--recorded a NBP growth of 30.5 per cent, 37.5 per cent, and 20.8 per cent in the same period.

NBP is the premium acquired from new policies in a particular year.

Rushabh Gandhi, Deputy CEO, Indiafirst Life Insurance said, “Life insurance industry’s YoY growth has picked up admirably in the recent months. The economy has been faring well with the gradual receding of Covid-19. Increasing interest and awareness about insurance amongst people is also aiding growth. The growth can also be partially attributed to the base effect of H1 last year which was marred by the lockdown. Also, there is speculation around an increase in mortality premiums and this is causing customers to fast track their decision to buy”.  

Experts have also pointed out that typically the quarter-ending month sees higher premiums because bancassurance partners of life companies push the sale of insurance products aggressively to shore up their fee income.

In Q2FY22, the industry recorded a 5 per cent YoY growth in NBP over the same period last year, with private insurers growing at 24 per cent and LIC recording a 4 per cent contraction in premium. However, on a sequential basis, the industry recorded 37 per cent growth in NBP as private insurers grew by 73.6 per cent and LIC grew by 39 per cent.

Growth in Q1FY22 was muted due to the second wave of the pandemic and also because the first quarter of any financial year is generally slow for the industry. To add to the misery, the sector witnessed significant claims because of the devastating second wave, and profitability suffered as companies shore up their reserves to alleviate the impact of the claims. But, the sector has seen green shoots since August with a focus on annuity, non-par, and ULIP products.

And, Q2FY22 has ended somewhat better than Q1FY22. Given the increasing share of digital channels, the demographics, and market under penetration, continued easing of restrictions, and opening of the economy, the life insurance premiums are expected to witness improvement in FY22, said Care Ratings in a note.

As far as H1FY22 is concerned, the life insurance industry has recorded 5.8 per cent YoY growth in NBP to Rs 1.31 trillion, with LIC recording a 3.3 per cent drop and private insurers growing by 28 per cent.