Uncertainties around regularity & tax clarity hang heavy over life insurers

Adjustments to the new surrender regulations, uncertainties surrounding the Insurance Amendments Bill, and potential direct tax reforms in the upcoming Budget may pose short-term challenge

Life insurance activity was soft in November 2024. Individual annual premium equivalent (APE) grew 7 per cent year-on-year (Y-o-Y) (two-year CAGR: 1 per cent) at industry level. New surrender value guidelines were applicable from Oct’24.

 

Private players saw 15 per cent Y-o-Y growth in November 2024 (two-year CAGR: 7 per cent) (vs 12 per cent /-1 per cent in Oct-24/Nov-23). Public sector major, Life Insurance Corporation’s (LIC’s) APE declined by 12 per cent Y-o-Y (two-year CAGR: -11 per cent). Private players’ market share has risen to 69 per cent (vs ~66 per cent in Nov-23).

 

The year-to-date (YTD) financial year 2025 (FY25) growth came in at 16 per cent and 21 per cent Y-o-Y for the industry and private players respectively (vs 7 per cent /11 per cent Y-o-Y in FY24 over the same period).

 

SBI Life witnessed a growth of 9 per cent Y-o-Y in Nov-24 (vs 10 per cent in Oct-24 and -3 per cent in Nov-23) and lost market share in FY25 YTD. SBI Life recorded a two-year CAGR of 3 per cent. It registered individual and total APE growth of 13 per cent and 8 per cent Y-o-Y in YTD FY25. This resulted in a market share loss of 47bp to ~16 per cent in FY25 YTD. 

Also read: Star Health & Allied Insurance eyes 18% GWP growth this financial year

 

ICICI Prudential Life’s (IPRU’s) growth came in at 28 per cent Y-o-Y (vs 22 per cent in Oct-24 and -3 per cent in Nov-23), resulting in market share gain of 98bp in FY25 YTD. IPRU recorded a two-year CAGR of 12 per cent. For YTD FY25, individual and total APE growth was at 35 per cent and 54 per cent Y-o-Y for the company. IPRU Life’s market share stood at 7 per cent in FY25 YTD (up 98bp).

 

HDFC Life grew 3 per cent Y-o-Y (vs 21 per cent in Oct-24 and -4 per cent in Nov-23), with market share gain of 66bp Y-o-Y in FY25 YTD. Max Life saw 25 per cent Y-o-Y growth (vs 15 per cent in Oct-24 and 8 per cent in Nov-23) and gained market share of 59bp in FY25 YTD.

 

HDFC Life recorded two-year CAGR of -0.5 per cent in Nov-24. For YTD FY25, growth came in at 24 per cent and 20 per cent Y-o-Y in terms of individual and total APE, with market share increasing to 11 per cent in FY25 YTD (up 66bp Y-o-Y).

 

Max Life saw individual APE growth at 25 per cent and 28 per cent Y-o-Y in Nov-24 and YTD FY25 respectively. The total APE was up 26 per cent Y-o-Y in YTD FY25. Max Life saw its market share increasing to 6.5 per cent in FY25 YTD (up 59bp Y-o-Y). Individual APE recorded a two-year CAGR of 16 per cent in Nov-24. 

 

On a two-year CAGR basis, the industry reported 1.3 per cent retail APE growth, with the private sector growing 6.7 per cent and LIC declining 10.6 per cent.

 

For YTD-FY25, Retail APE growth for the industry stood at 16.5 per cent led by the private sector clocking a strong 21.2 per cent Y-o-Y growth and LIC growing 7.3 per cent.

 

The private sector posted robust growth in Group APE, led by significant growth in IPRU, while LIC saw a 32 per cent decline in Group APE during Nov-24.

 

The overall APE for the industry grew 20 per cent Y-o-Y, with the Private sector growing 44 per cent and LIC declining 19 per cent. LIC saw a sharp decline of 41 per cent in the number of individual policies sold during Nov-24.

 

Overall, Nov-24 growth trends may be explained by slowdown in the Banca channel, and implementation of New Surrender Regulations leading to reduction in policy count. The focus moves to persistency.

 

Adjustments to the new surrender regulations, the uncertainty of Insurance Amendments Bill and Direct Tax reforms in the upcoming Budget may negatively impact in the near term. Share prices could come under more pressure until the regulatory and tax regime is clarified.