The first-year business premium of life insurers rose 18.3 per cent in June 2023 compared to a decline of 4.1 per cent in May and 30 per cent in April this year, the Insurance Regulatory Development Authority of India (IRDAI) said in a “new business statement” on Tuesday. In June 2022, the growth rate was 4.1 per cent.
“This movement can be attributed to steady growth in private sector companies and recovery in single premiums, more specifically to LIC, which partially offset the new tax regime, and high momentum in March 2023. The private insurance companies continue to extend their lead in the individual non-single premium segment,” the CareEdge Ratings said in a separate report.
Movement In Quarterly First Premium
6.9 per cent
39.7 per cent
-0.9 per cent
-39.6 per cent
-32.4 per cent
-28.0 per cent
Source: Life Insurance Council, IRDAI.
Meanwhile, Q1FY24’s new business premium of life insurers saw a marginal drop of 0.9 per cent and stayed nearly the same compared to Q1FY23. This comes on the back of a 39.7 per cent growth in Q1FY23. The y-o-y decline can be attributed to group premiums (primarily LIC). Private insurance companies continued their growth momentum as they witnessed growth in the individual space. Further, in Q1, after the strong momentum of Q4 last year, as can be seen in the above figure, the sequential reduction has been smaller compared to earlier quarters.
Movement In Monthly First-year Premium (Rs Crore)
Premium in FY22
Premium in FY23
Premium in FY24
FY22 vs FY21 (%)
FY23 vs FY22 (%)
FY24 vs FY23 (%)
Source: Life Insurance Council, IRDAI
LIC’s first-year premium increased by 21.0 per cent in June 2023 compared to a drop of 5.3 per cent in June 2022 on the back of single premiums, while private insurers continued their growth momentum at 13.0 per cent in June 2023 compared to 29.2 per cent in June 2022. The aggregate decrease can be attributed to higher momentum in March 2023, reduced single premiums, primarily LIC, and the new tax regime made more attractive and the default tax regime for individual taxpayers.
For June 2023, the non-single premiums rose by 4.5 per cent versus. 15.8 per cent reported in June 2022, while single premiums recovered by 22.8 per cent in June 2023 versus a flattish increase of 0.8 per cent in June 2022. Single premiums continue to account for a substantial portion of the overall first-year premiums. The private sector has a larger share in the non-single sub-segment (mainly individual premiums), while LIC continues to dominate the single premium sub-segment, especially the group business. Pension plans, general annuity and group gratuity schemes account for a significant chunk of the group, while general annuity plans dominate individual single premiums.
For June 2023, the group premiums rose by 23.6 per cent, compared to a drop of 1.5 per cent in June 2022. Meanwhile, the growth of individual premiums moderated to 6.7 per cent compared to the last year’s rate of 18.8 per cent.
Meanwhile, for Q1FY24, the fall in group premiums has continued while individual premiums have risen. Individual premiums continue to remain smaller in size compared to group premiums.
“For FY23, the top line of life insurers has been healthy as it was the first full year without any Covid-related restrictions, an increase in non-par business during Q4FY23, increase in term policies (protection plans) while the demand for annuity has continued in the near term coupled with cost management. The new tax regime has come into force for the insurance sector, which explains the activities in March 2023 and subdued activities for April and May 2023,” according to the CareEdge Ratings report.
“Q1FY24 new business premium of life insurers has stayed flattish, showing resiliency post the regulatory changes. The sector is expected to continue its trajectory after companies tweak their policy mix to drive growth; however, the growth momentum would need to be monitored in FY24. However, given the protection gap, supportive regulatory landscape, and insurance requirements, the long-term growth of the life insurance segment remains intact,” adds the CareEdge Ratings report.