LIC effect: Life insurers' February new business premium rises 22%

After muted showing in December and January because of the third wave of the Covid-19 pandemic, life insurance companies reported impressive growth in new business premium (NBP) in February, driven mainly by initial public offering-bound Life Insurance Corporation (LIC) of India’s sharp jump in NBP in the same period, fuelled by 40 per cent growth in group single premiums.

NBP of life insurers rose 22.47 per cent year-on-year (YoY) to Rs 27,464.76 crore in February, with LIC’s NBP recording a jump of 35.36 per cent to Rs 17,849.34 crore, and private insurers reporting a marginal 5 per cent growth in the same period to Rs 9,975.42 crore, showed the data released by the Life Insurance Council — an industry body for life insurance companies.

NBP is the premium acquired from new policies for a particular year. Among listed players, SBI Life’s NBP was up 6.91 per cent and HDFC Life’s NBP was up 9.55 per cent. ICICI Prudential Life saw its NBP drop 23 per cent and Max Life’s NBP dropped 5 per cent. Typically, the last few months of the financial year is, perhaps, the best period for life insurers in terms of business because people tend to buy more tax-saving products.

In terms of individual annual premium equivalent, the life insurance industry grew 5 per cent YoY, with LIC growing at 8 per cent, and private insurers growing at 4 per cent YoY, down from 7 per cent YoY growth for the month of January.

So far, in the current financial year (first 11 months), life insurance companies reported NBP of Rs 2.54 trillion, up 8.43 per cent YoY from the year-ago period. Private insurers recorded 24.65 per cent growth, and LIC’s NBP just managed to be in the green, after a sharp jump in NBP in February. In the 11 months of 2021-22, LIC’s NBP was Rs 1.56 trillion — up 0.24 per cent.

In the October-December quarter, NBP of life insurers jumped 10.45 per cent to Rs 73,249.97 crore over the same period last year, mainly backed by robust growth of private insurers’ NBP. In the second quarter (July–September), they netted NBP of Rs 75,392 crore — up 16 per cent from the same period last year.LIC’s NBP was up 14 per ce­nt to Rs 51,488 crore; private ins­urers’ NBP was up 20 per ce­nt to Rs 23,904.2 crore. The April-Ju­ne quarter was marred by lockdowns and the NBP of life insurers plunged over 18 per cent.

Although LIC still holds a majority of the market in terms of NBP, since April, it has lost 800 basis points in market share to the private sector insurers. As of February, 2022, LIC commands a market share of 61.43 per cent.