Life Insurers See 'Promising' Start With Growth Momentum In Sight, Say Analysts

The life insurance sector saw a "promising" start to the year, with growth momentum witnessing signs of improvement, according to analysts, as private players grew despite the overall fall in premiums in January.

The industry witnessed an 8% year-on-year decline in total premiums for January 2025, falling to Rs 30,825 crore from Rs 33,559 crore, as per Life Insurance Council data.

Life Insurance Corp. of India saw a steep 14% drop to Rs 16,292 crore, while SBI Life tumbled 37% to Rs 3,275 crore. However, private insurers showed resilience—HDFC Life surged 25% to Rs 3,011 crore, ICICI Prudential grew 13.61% to Rs 1,777 crore, and Aditya Birla Sun Life jumped 22% to Rs 616 crore.

The growth momentum is witnessing signs of improvement, with the growth of private insurance players outpacing the overall industry during the month, Nomura said in a note. Growth trends improved month-on-month in January despite a correction in equity markets, it noted.

The growth of bancassurance-led players was relatively lower than that of agency-led players, Nomura said. "(We) Believe the impact of slowdown in the bancassurance channel on growth would be a key monitorable going ahead."

The life insurance industry saw a "promising start to the year", with recovery in annualised premium equivalent in January, after a sluggish third quarter, according to analysts.

Growth has come on the back of an increase in average ticket size and less from an increase in a number of policies, the brokerage said. "This also indicates that much of the growth is still coming from the sale of linked products, where the ticket size is usually higher than non-linked and protection products."

Incrementally, HSBC continues to estimate growth normalisation in individual APE at the industry level. Underlying trends like the number of policies sold should improve, while new product launches and deepening distribution should aid growth, it said.

ICICI Prudential and HDFC Life have a relatively low ask rate for residual fiscal 2025 growth while Life’s individual APE growth is improving, and sustained momentum could act as a key catalyst for further upside, it said.

Jefferies said the growth improvement is led by private players like HDFC Life and SBI Life. Trends stayed divergent as private firms grew 20% year-on-year, while LIC fell 7%, it said.