Private players drives India’s life insurance growth in August

This comes from a low base in July.

First Year Premium of life insurers grew at a modest rate of 2.9% year-on-year (YoY) growth in August 2021 to reach $3.78b (₹278.21b) after a significant double-digit drop of 11.1% in July, according to a report by CARE Ratings.

The report attributed the growth in a rise in the group single premiums for August 2021. 

“For the year-to-date (YTD) August FY 2022, the life insurance sector eked out a low growth rate of 1.6% compared to the drop of 6% for YTD August FY 2021. Due to the COVID-19 pandemic lockdown and resultant impact, premiums were lower in the first quarter of FY 2021 and resultant different growth after the same, base effect may also be possible in monthly FY 2022 numbers. Hence, if we look at the two-year [compound annual growth rate] performance, private players have shown strong momentum,” CARE Ratings said.

Meanwhile, the Life Insurance Council’s first-year premium decreased by 3.8% in August 2021 compared to strong growth of 15.2% in August 2020, whilst private companies grew by a robust 20.9% in August 2021 after witnessing a slower growth rate of 13.7% in August 2020. A similar trend continued for YTD August FY 2022, where LIC reported a drop of 6.8% vs. the significantly higher growth of 23.1% reported by the private companies.

LIC continues to maintain its dominant share in the first-year premium for YTD August FY 2022. However, LIC has continued to cede ground to the private sector given that the private sector has been growing at a faster pace.

“We have seen a gradual pick-up in growth over the past few months, and August 2021 has witnessed robust growth trends across the industry with a focus on Annuity, non-par and ULIPs. Given the demographics and market under penetration, continued easing of restrictions and opening of the economy, the life insurance premiums are expected to witness significant movement over FY 2022. Key risks such as a delay in the economic recovery and resurgence of COVID-19 cases i.e., a third wave could negatively impact premium growth, and rise in the premium rates of term plans,” CARE Ratings added.