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Motilal Oswal Report
The insurance industry has seen sharp decline in total annualised premium equivalent (APE), largely led by decline in Unit Linked Insurance Plan (ULIP) sales. However, protection growth remained strong.
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In Q1 FY21, life insurers (barring Max Life) reported a 30-44% plunge in total APE. Absolute value of new business (VNB) declined across insurers in the range of 16-43%, affected by the drop in APE.
However, VNB margins expanded for ICICI Prudential Life Insurance Company Ltd. and SBI Life Insurance Company Ltd., while they declined for HDFC Standard Life Insurance Company Ltd., weighed by decline in credit life and high growth in the low-margin participating segment.
On the other hand, Max Life's margins were impacted due to interest rate movement despite strong protection trends. Persistency declined in ULIPs, but improved in the protection segment.
As the share of the market-linked savings business stands significantly higher, we remain watchful of the persistency. The renewal premium declined during the quarter as customers utilised the grace period in making premium installments.
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