Life Insurance Data: Premiums Drop 22% In December

The life insurance industry reported a 22% year-on-year drop in premiums, reaching Rs 30,218 crore in December, compared to Rs 38,583 crore in the same month last year. During the same period, the number of policies and schemes dropped by nearly 20%, totalling 21,24,729.

LIC's total premium decreased by 41% year-on-year, reaching Rs 13,523 crore in December. Individual single premiums saw a higher growth rate, rising by 26% to Rs 2,522 crore, compared to Rs 2,000 crore in the same month last year.

SBI Life Insurance Co. reported a total premium of Rs 5,307 crore in December, a 15% growth year-on-year, compared to Rs 4,606 crore in the same month last year. Individual non-single premiums saw a rise of 17% year-on-year, rising to Rs 3,416 crore in December from Rs 2,927 crore in the same month last year.

HDFC Life Insurance Co. saw a decrease in premiums at Rs 2,713 crore, a decrease of 4.5% year-on-year. This was Rs 2,842 crore in the same month last year.

The insurer saw its individual non-single premiums rise by 12% year-on-year in December, reaching Rs 1,281 crore, compared to Rs 1,139 crore in the same month last year.

The insurer also saw its group single premium lose by 21% year-on-year in December, reaching Rs 1,065 crore, compared to Rs 1,345 crore in the same month last year.

ICICI Prudential Life Insurance's premiums rose 4% year-on-year to Rs 1,555 crore. The insurer's individual non-single premium increased 9% year-on-year in December, reaching Rs 694 crore compared to Rs 635 crore in the same month last year.

The life insurance industry reported muted growth in December 2024, with retail annual premium equivalent growing by just 4.8%. The retail APE was primarily driven by a 13% decline in LIC's retail APE, which offset the 11.4% year-on-year growth recorded by private sector players.

In the group APE segment, the private sector achieved modest growth of 7.4%, while LIC experienced a significant 51% decline, resulting in a 31% drop in the industry's overall group APE.

Among private players, SBI Life emerged as the fastest-growing company, achieving 16% growth in retail APE and capturing a market share of 27%, significantly higher than LIC's 22%.

Overall growth trends for December 2024 were also affected by regulatory uncertainties in the bancassurance channel and the implementation of new surrender regulations, which impacted lower-ticket-size policies.

Citi reported that individual APE growth for private insurers slowed to 11% YoY in December 2024, compared to 15% YoY in November 2024. For Q3 FY25, SBI Life's individual APE market share increased by 155 bps YoY to 22.1%, while LIC’s business has yet to recover, following the introduction of new products in October 2024.

Citi expects Value of New Business to vary significantly across companies, ranging from -35% to +20% YoY. The key factors to look for in the upcoming Q3 results will be ongoing discussions with regulators regarding the potential curbing of distribution volumes in select partnerships, the full impact of new surrender norms on VNB margins, and changes in the product mix during the quarter.

HSBC highlights that APE growth in December fiscal quarter remained subdued, largely due to the implementation of new product regulations effective from October 2024 and weak equity market conditions. Private insurers heavily reliant on bank channels faced greater challenges compared to those with more diversified distribution networks.

However, the outlook remains positive as underlying trends, such as the currently muted number of policies (NoP) sold, are expected to improve. Additionally, new product launches and efforts to deepen distribution networks are likely to support growth in the coming quarters.

SBI Life reported a strong growth of 16% on-year in individual APE in December, higher than our expectations. For the first time, SBI Life conducted more monthly business than LIC, based on individual APE. Overall, large insurers continue to gain market share at the expense of LIC and smaller insurers

HSBC expects that margin compression to continue given:

(i) change in product mix towards linked products,

(ii) impact of the revised surrender value norms on margins will be visible starting this quarter, and

(iii) pricing pressure.

However, the pace of margin compression should moderate as:

(i) insurers incrementally focus on better product mix,

(ii) margin drags from credit life business should be slower, and

(iii) insurers partially pass the impact of higher surrender value through changes in commission structure, reducing the margin pressure