New business premiums of life insurance firms decline by 10% in June

Development is a sign that things are picking up after govt decided to gradually unlock because life companies had seen their NBP decline 32.6% and 25.4% in April and May, respectively

While the new business premiums (NBP) of life insurance companies contracted 10.46 per cent year-on-year (YoY) in June, it is, however, indicative of recovery signs after the government decided to gradually unlock. Life insurers had seen their NBP decline 32.6 per cent and 25.4 per cent in April and May, respectively.

In June, life insurers earned NBP to the tune of Rs 28,868.68 crore, compared to Rs 32,241.33 crore in the same period a year ago. NBP is the premium acquired from new policies for a particular year.

In the first quarter (Q1) of the current financial year (2020-21, or FY21), life insurers saw their NBP decline 18.46 per cent to Rs 49,335.43 crore versus Rs 60,637.22 crore in Q1 of 2019-20 (FY20), owing to a strict lockdown enforced by the authorities to contain the spread of the contagion. State-owned insurance behemoth — Life Insurance Corporation (LIC) of India — also saw its NBP contract 12.65 per cent in June to Rs 22,736.84 crore, but in the previous months, the extent of decline was far severe.

LIC saw its NBP fall 31 per cent YoY in March, 32 per cent in April, and 24 per cent in May.  In Q1FY21, its NBP figures have seen a decline of 18.45 per cent to Rs 36,530 crore, compared to Rs 44,974.78 crore. It was, however, expecting to post positive growth in June.

The private insurers, on the other hand, have done well. Their NBP contracted just 1.27 per cent in June to Rs 6,131.84 crore. In Q1FY21, the NBP of private insurers — 23 in total — declined 19.17 per cent to Rs 12,805.41 crore, compared to Rs 15,842.44 crore in Q1FY20.