Listed private life insurers see moderation in Ulip business in Q1

After new surrender value regulations, insurers have scaled back on Ulips in portfolios

Listed private sector life insurers witnessed a moderation in their unit-linked business growth in the April–June quarter of the financial year 2025-26 (Q1FY26), amid volatile equity markets.

 

In the same period last year, these companies had aggressively pushed unit-linked products (ULIPs). However, following the implementation of new surrender value regulations, insurers have consciously reduced the share of ULIPs in their portfolios to protect margins, shifting focus towards non-participating products, which are more margin-accretive.

 

SBI Life Insurance – largest private sector life insurer – reported a drop in share of ULIPs to 57 per cent of their total Annualised Premium Equivalent (APE) in Q1FY26, from 61 per cent in Q1FY25.

 

Similarly, for ICICI Prudential Life Insurance, the share of ULIPs in total APE dipped to 46.8 per cent in Q1FY26, compared to 51.4 per cent in the same period last year.

 

While, for HDFC Life, the share was flat at 38 per cent as compared to the same period last year.  

 

In an interview to Business Standard, Amit Jhingran, MD & CEO, SBI Life, said, “…the contribution of ULIP has come down as per our strategy and our focus on the products in the non-participating, participating and protection products has improved.”

 

“We are not discouraging sales of ULIP, there is a large segment of the customers who are equity oriented, and we do not want to deny them a good product and ULIP has always been one of the strengths of SBI life. But at the same time, we want to tap the customer segment which is looking for guaranteed returns, and the protection segment as well,” he added. 

 

SBI Life also witnessed an improvement in their value of new business (VNB) margin to 27.4 per cent in Q1FY26 from 26.8 per cent in the corresponding quarter last year, partially due to an improvement in product mix focused towards non-participating plans and away from ULIPs and growth in the share of protection products.

 

According to ICICI Pru’s management, the slowdown in ULIP over this quarter is because of the market volatility and that has impacted their direct business.

 

On the other hand, the insurer witnessed a surge in the non-linked segment as customer preference started shifting towards guaranteed products, given the volatility in equity markets. The share of the non-linked segment rose to 21.5 per cent in the quarter under review from 16.9 per cent.

 

Meanwhile, HDFC Life’s share of ULIP was broadly flat compared to Q1FY25. However, the company expects a gradual shift towards traditional products during the year, owing to the offerings and macroeconomic uncertainty.

 

“Contrary to initial expectations, demand for ULIPs remained strong, supported by sustained strength in equity markets. However, our ULIP mix remains lower than the industry and broadly range-bound. We anticipate a gradual shift, rather than a sharp swing in favour of traditional products over the course of the year,” the management said during the analyst call.

 

The share of protection in the overall product mix stood flat at 6 per cent in the quarter compared to the same period last year. While the share of non-participating products nearly halved to 19 per cent from 35 per cent in Q1FY25, the share of participating products doubled from 16 per cent to 32 per cent in Q1FY26.