India's life insurance APE grows 22% YoY in April

New business premiums surged by 61.2%.

India’s life insurance industry reported a 22% year-on-year (YoY) Annual Premium Equivalent (APE) growth in April 2024, rebounding from a weak April 2023 when demand was frontloaded to March, Life Insurance Council (LIC) data showed.

The two-year (April 2022-April 2024) compound annual growth rate (CAGR) was 7.1%. 

LIC's APE growth was higher than private players, boosting its market share, which may decline as private insurers' growth accelerates. 

Private insurers saw 16.2% APE growth in April 2023 and a 31.4% rise for LIC in April 2024. Over two years, private players had an 11.4% CAGR, outperforming LIC's 1.6%. 

New business premiums surged by 61.2%, reversing a 30% fall in April 2023 caused by post-March 2023 tax law changes. 

This sharp YoY growth was driven by group single premiums, with LIC and private insurers increasing by 113.1% and 16.6% respectively, compared to April 2023's 50.4% decline for LIC and 8.6% growth for private insurers. 

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The industry's two-year growth rate was 6.3%, with private companies at 12.5% and LIC at 2.8%. 

Following a challenging fiscal year 2024 ending with a slight positive note due to regulatory initiatives, CareEdge Ratings expects the life insurance industry to rebound in FY25, growing by 11% to 13% over the next three to five years. 

Key growth drivers include prudent underwriting, high GDP growth, rapid urbanization, demand for protection plans, a younger demographic, initiatives to increase rural insurance coverage, product innovation, rising demand for retirement products, and enhanced digital distribution channels. 

Companies may focus more on the agency channel as banks prioritize deposits and explore increasing term insurance rates. Challenges include fraud, lapse ratios, macroeconomic factors, and regulatory uncertainties. Overall, the medium-term outlook is positive, reassured the rating agency.