Hyderabad:
Due to the disruptions caused by the Covid -19 pandemic nationwide lockdown, the domestic life insurance industry, consisting of 24 players led by the state owned Life Insurance Corporation(LIC),has degrown by 32 per cent in its new premium income to Rs 25,409 crore in the month of March, the most crucial priod for the industry.The number of policies,at 1843069,the life insurers have sold during the month has fallen by 67 per cent.
In fact, in 2018-19, the industry had seen a growth of 30 per cent in the new premium income in the month of March.
According to the annual premium figures released by the IRDAI on Thursday, the LIC has seen its March mobilisation of new premium shrinking by 31 per cent to Rs 17,000 crore and its number of policies sold during the month have declined drastically by 73 per cent.Similarly,the private sector life insurers led by the HDFC Life, at Rs 8,342 crore of new premium, has recorded a 34 per cent fall in the month of March.23 private sector life insurers,at 671407,have also sold 41 per cent less policies in the month of March
However, despite the business disruption in March, the industry for the whole fiscal -2019-20, at Rs 2,58,896 crore of new premium income, has managed a growth of 20 per cent.The industry, at 2,88,86,569(as against 2,86,87,812) has also managed to sell marginally larger number of policies during 2019-20.The total sum assured of industry's new business grew by 11.36 per cent to Rs. 48.26 lakh crore in 2019-20.
The IPO bound LIC,with an agency force of 11 lakh,has grown its annual new premium by 25 per cent to Rs 1,77,977 crore in 2019-20.The life insurance behemoth like earlier years, at Rs 98,247, up 14 per cent, has received its largest amount of new premium from group single premium.It is one of the most opted pension products by India Inc for its employees.The LIC’s Individual Non-Single Premium portfio grew by 10 per ent to Rs 29,260 in FY 2019-20.
The corporation,facing tough competition from the private sector players,after many years,has improved its market share,in terms of new premium income to 68.74 per cent in 2019-20 against a market share of 66.24 in 2018-19.
The corporation also after many years has also managed to sell higher number of policies,at 2,19, 25, 000, up 2.30 per cent, in 2019-20, and has gained market share in this segment to almost 76 per cent in 2019-20 from 74.71 per cent in 2018-19,in the domestic life insurance market.
The private sector, again led by the HDFC Life, at Rs 80,919 crore has mopped up 11.64 per cent higher new premium in FY 2019-20 .
HDFC Life, at Rs 17,396 crore has grown its annual new premium by 20 per cent in 2019-20. The listed company, at Rs 8,439 crore,has got its highest new premium income from group single premium portfolio and has a market share of 6.72 per cent in 2019-20.
SBI Life, the largest bancassurance player in the country, with a market share of 6.41 per cent, at Rs 16,591 crore, has increased its new annual premium by 20 per cent in 2019-20. The life insurer, however unlike HDFC Life, at Rs 9,607 crore , has seen its portfolio of Individual Non-Single Premium, the core of the life insurance business, as the largest portfolio during fy 2019-20.The portfolio has expanded by 8 per cent during the year.
The ICICI Prudential Life, another major life bancassurance player in the country, with a market share of 4.77 per cent, at Rs 12,348 crore, has collected 20 per cent higher annual new premium in 2019-20.Like SBI Life, the life insurer’s individual non-single premium, at Rs 6506 crore, has contributed the largest share to its annual new premium kitty, though the segment has fallen by 6.77 per cent during the period.
Tarun Chugh, MD & CEO, Bajaj Alliaz Life Insurance said “March, which typically is the key month for insurers, turned out to be tougher as the world went into the lockdown mode. This impacted the industry growth, as it also got busy with realigning to the new normal. our efforts will be to increase customer engagement via digital access points, offering products that suit the existing environment and help customers be prepared better of any unprecedented crisis. Life insurance is a long term investment and we continue to encourage customers to stay invested in their policies, and prepare slowly for their life goals, as the environment changes around us.”
According to Kotak Institutional Equities, the domestic private life insurers reported 40% yoy decline in individual Annual premium equivalent (APE) in March 2020 as the business was practically shut for crucial parts the month. Lower volumes will bring down operating leverage and impact quarterly value of new business (VNB) margins.
“This, coupled with a large negative investment variance reflecting equity MTM hit, leads us to cut our FY2020 embeded value (EV) estimates by 2-5 per cent''said research house.
All the large players reported a sharp slowdown in individual business: ICICI Life was down 49 per cent yoy, SBI Life was down 42 per cent yoy and Max Life was down 36 per cent yoy. HDFC Life reported 28 per cent yoy decline in individual business with 25 per cent yoy decline in overall APE for the month. It remains to be seen if some of the pent up demand will likely spill over to 1QFY21.
“We expect Covid-19-related disruptions to continue for the next quarter with an increase in demand for protection products over the next few months providing some support.
APE is a measure used for comparison of life insurance revenue by normalising policy premiums into the equivalent of regular annual payments. This is particularly used when the sales contain both single premium and regular premium business.
Value of New Business a measure of profitability and is calculated by discounting present value of future profits expected for a given period of time. New business strain is the strain on the business created due to inadequate premium amounts in initial years.