The COVID-19 has badly impacted the life insurance sector after it reported a drop in monthly first year premium collection, reveals CARE Ratings research. The sector has witnessed a decrease of 32.6 per cent in the first year premium to Rs 6,728 crore in April 2020 from Rs 9,982 crore in April 2019. Also, the overall sum assured saw a drop of 16.4 per cent from Rs 2.72 lakh crore in April 2019 to Rs. 2.27 lakh crore in April 2020.
“The decline in first year premium growth for private companies has been more pronounced as they had reported an increase of 61.2 per cent in April 2019, compared to a drop of 33.3 per cent in April 2020. On the other hand, LIC had reported a growth of 21 per cent in April 2019, compared to a drop of 32 per cent in April 2020,” says Sanjay Agarwal, Senior Director, CARE Ratings.
Further, the private companies which reported a 32.8 per cent increase in sum assured in April 2019 also reported a fall of 9.9 per cent in April 2020. However, LIC which reported a sum assured growth of 6.3 per cent in April 2019, witnessed a significant drop of 69.5 per cent in April 2020. “If the above trend continues, the life insurance business could witness negligible growth in the first quarter of FY21 due to the extended lockdown. However, protection plans could witness an increase due to rising awareness and the online channels could see robust growth,” says Agarwal.