Life insurers report 11% YoY decline in new business premiums in July

When compared to the pre-pandemic period (July 2019), NBP of the life insurance industry witnessed a drop of 5 per cent

After witnessing a marginal year-on-year (YoY) rise in new business premiums (NBP) in June, following a dip in May due to the second wave of the Covid-19 pandemic, the life insurance industry’s NBP has again dropped in July.
 
This is mainly due to the contraction in business seen by the state insurance behemoth — Life Insurance Corporation (LIC) of India.
 
In July, life insurers — 24 in total — earned an NBP of Rs 20,434.72 crore, down 11-per cent YoY from last year. While private insurers managed to report a 7.53-per cent increase in NBP in July over last year, LIC saw its NBP contract almost 21-per cent YoY to Rs 12,030.93 crore.
 
In June, LIC reported an NBP of Rs 21,796. 28 crore, down 4.13 per cent on a YoY basis. Sequentially, i.e., on a month-on-month basis, LIC’s NBP contracted 44.8 per cent. The dip in LIC’s NBP was on account of a steep fall in individual single premium and group single and non-single premium.
 
NBP is the premium acquired from new policies in a particular year.
 
When compared to the pre-pandemic period (July 2019), the NBP of the life insurance industry witnessed a drop of 5 per cent, with LIC NBP declining 21.42 per cent and private insurers’ NBP posting a stellar growth of 35 per cent.

On a year-to-date basis, the life insurance industry saw a marginal 1.16-per cent YoY growth in NBP to Rs 73,159.98 crore. While LIC’s NBP till July totalled Rs 47,631.62 crore, down 8-per cent YoY, private insurers saw their NBP rise 24-per cent YoY to Rs 25,528.26 crore.
 
In the first quarter of 2021-22 (FY22), the premium collection of the life insurance industry was up almost 7 per cent to Rs 52,725.26-crore YoY, aided by a stellar 33.73-per cent growth registered by private insurers. How­ever, LIC’s NBP in Q1FY22 declined 2.5-per cent YoY to Rs 35,600.68 crore.
 
Due to the second wave of the pandemic, life insurers saw a muted first quarter (Q1), but business has since picked up — at least for private insu­rers. However, supply-side constraints remain and are expected to ease as soon restrictions lift.
 
Among the largest private-sector life insurers, while SBI Life insurance reported a 5.67-per cent YoY decline in NBP in July, HDFC Life saw a marginal 4-per cent YoY increase in NBP.
 
On the other hand, ICICI Life reported a 36.31-per cent jump in NBP. Max Life’s NBP was up 22.14 per cent in July on a YoY basis.
 
The life insurance industry has seen a spike in death claims in Q1FY22 due to a debilitating second wave, resulting in companies taking a huge hit on their profitability to set aside reserves to mitigate the impact of elevated levels of claims. While the claims burden has come down since Q1, the possibility of a third wave has kept insurers on tenterhooks.