Life insurers’ new business premia up 18% in August despite large base

Life insurance companies reported an 18 per cent year-on-year (YoY) growth in new business premia in August, despite a large base, because of healthy growth in premia of private sector insurers.

The data put out by the Life Insurance Council shows life insurer’s reported new business premia (NBP) to the tune of Rs 32,856.38 crore in August. While private sector insurers’ NBP increased by 24 per cent to Rs 10,974.25 crore, Life Insurance Corporation (LIC) NBP rose 15 per cent to Rs 21,882 crore.

Private insurers witnessed strong growth in premia owing to a healthy rise in group single premia and group yearly renewable premia. LIC’s rise in premia was largely due to the increase in group single premia. NBP is the premium acquired from new policies for a particular year. It is the sum of the first-year premium and single premium accounted for during the year.

Brokerage houses earlier flagged that growth in NBP in August will not be as robust as seen in the past few months, primarily owing to a large base. NBP of life insurance companies had seen a jump of 91 per cent year-on-year (YoY) in July.

Among large private sector insurers, ICICI Prudential Life’s NBP increased by 11.3 per cent, while HDFC Life’s and SBI Life’s NBP rose by 16.80 per cent and 21 per cent, respectively.

In FY23, so far, life insurers have reported a 44 per cent YoY increase in premia to Rs 1.45 trillion, with LIC’s premium witnessing 49 per cent growth and private insurers growing 35 per cent YoY. In the April-June quarter (Q1FY23), life insurers saw their NBP rise by 40 per cent over the same period a year ago, on account of a lower base.

According to experts, premium growth of life insurers shall remain healthy this year, given it is the first year since the pandemic without any restrictions. While it is expected that demand for term, annuity, and guaranteed products will remain robust, unit-linked products may take a hit, given the volatility in the equity markets.

Non-life insurer’s premium growth

The non-life insurance companies, which include general insurers, standalone health insurers, and specialised PSU insurers, saw their premia grow 12 per cent YoY to Rs 4,471 crore in August, largely aided by robust increase in premiums of standalone health insurers (SAHI).

The SAHI companies (five) reported a 28 per cent rise in premium to Rs 2,059 crore. As for general insurers, their premia increased by 9 per cent to Rs 17,102 crore.

Among large general insurers, state-owned New India Assurance reported a 1.25 per cent drop in premia, whereas ICICI Lombard, the largest private sector general insurer, witnessed 59 per cent growth in premia. While HDFC Ergo’s premia rose over 50 per cent, Bajaj Allianz General’s premia saw a sharp drop of 24 per cent.

In FY23, so far, non-life insurers have reported a 19 per cent growth in premia to Rs 1.02 trillion, with general insurers’ posting a 19 per cent growth and the SAHI companies posting 27 per cent growth. The health segment has been driving the growth of the non-life insurance sector since the onset of the Covid-19 pandemic, but retail health growth seems to have normalised now. Motor insurance growth has picked up in sync with the pick up seen in the automobile industry and this is expected to augur well for the industry.