LIC has edge over private insurers: Gains market share in FY23

Life Insurance Corporation (LIC) of India has gained almost 4.5 percentage points market share in the current financial year (2022-23, or FY23) in new business premium (NBP) from private players, mainly on account of robust growth in its group business segment.

According to the latest data released by the insurance regulator – the Insurance Regulatory and Development Authority of India – LIC improved its market share by 67.72 per cent as of October, a gain of 447 basis points (bps), while private sector insurance companies’ market share dropped to 32.28 per cent.

At the end of 2021-22, private players had 36.75 per cent share of the life insurance market, while LIC had 63.25 per cent.

At the end of 2020-21, LIC’s market share was 66.18 per cent; private players took up 33.82 per cent of the market.

NBP is the premium acquired from new policies for a particular year. It is the sum of first-year premium and single premium, reflecting total premiums received from the new business written.

Among top private players, SBI Life shed 82 bps in market since the beginning of FY23; HDFC Life’s market share dropped 157 bps; and ICICI Prudential Life’s market share dropped 64 bps during this period.

The volatility in markets, resulting in muted growth in the unit-linked segment, weak growth in the retail protection business, and the push by banks to acquire deposits, contributed to private sector insurers’ growth moderating.

In contrast, the robust growth seen by LIC in group business, which has been the main driver of its growth and margins, resulted in the state-run insurance behemoth reporting healthy growth in premiums.

In individual non-single premium, private players have a market share of 64.19 per cent as of October this year, while LIC’s market share was 35.81 per cent.

In FY23 so far, life insurers’ have reported a 34.71 per cent year-on-year (YoY) increase in premiums to Rs 2.06 trillion, with LIC’s premium witnessing 42 per cent growth and private insurers growing 21.48 per cent YoY.

LIC’s group single premium was up 53 per cent YoY during this period and individual non-single premium up 14.6 per cent.

Alternatively, private players have seen decent growth in individual single premium, group single premium, and individual non-single premium.

“LIC has been aggressive on group single premiums. Optically, private players have lost market share. Private players have shown decent growth, but are not very big in the group single premium business. For private players, unit-linked insurance plans have seen muted growth and the base effect has normalised as well,” says Sanjay Agarwal, senior director, CareEdge.

In a report earlier this month, the credit rating agency said LIC continues to dominate the single premium sub-segment, especially group business, while the private sector has a larger share in the non-single sub-segment (mainly individual premiums).

Vighnesh Shahane, managing director and chief executive officer, Ageas Federal Life Insurance, says, “While the private sector is slowly gaining market share in individual premium, LIC is very active and aggressive in the group premium segment and tilts the scale slightly in its favour in market share in total premium.”