In FY21, the life insurance industry registered 7.5 percent growth in first business premiums at Rs 2,78,277.9 crore over the previous year, data released by Life Insurance Council showed.
The country’s largest life insurer, Life Insurance Corporation (LIC), posted a growth of 196 percent in individual weighted received premium (WRP) from a decline of 65 percent in the year ago period in March. In FY21, LIC’s WRP declined 3.2 percent.
LIC’s new business performance (NBP) was at Rs 1.84 lakh crore and it settled claims worth Rs 1.34 lakh crore during the year.
This was primarily on account of a low base – individual WRP for private players — as the industry had seen a decline of around 44 percent in the year-ago period, weighed by the COVID outbreak and subsequent lockdown.
However, insurers witnessed a healthy uptick in March (seasonally strong quarter), led by a focus on non-participating products with Unit linked insurance plans (Ulips) showing signs of recovery. Private players’ individual WRP grew 7.5 percent in FY21, while that of the industry was up 3.0 percent YoY.
“The life insurance industry showcased resilience, agility and responsiveness across its stakeholder groups – customers, employees, partners and the large base of agents, in the year gone by that was a challenging year for everyone alike. This approach helped the industry keep its promise to its customers, resulting in good growth,” said Tarun Chugh, MD & CEO, Bajaj Allianz Life insurance (BALIC).
Commenting on its performance during the period under review, Chugh said, “At BALIC, our focus remained in ensuring our customers kept their life goals on track. Towards this, we introduced a host of measures – from rapid digitisation of services, to product interventions and introduction of digital assets.”
Among the listed players, SBI Life posted growth of 119 percent in March as against a decline of 42 percent in the year-ago period. ICICI Prudential Life Insurance reported a growth of 98 percent over 49 percent de-growth and HDFC Life grew 75 percent against a decline of 28 percent).
Max Life continued to deliver a resilient performance with 56 percent growth while it had seen a de-growth of 36 percent in the year-ago period.
In this quarter, Annual Premium Equivalent (APE) of ICICI Prudential Life (IPRU Life) insurance grew by 27percent year-on-year with the month of March posting the best ever monthly sales for the Company in any year since inception.
“We were able to capitalise on opportunities to build a well-diversified product portfolio on the back of 114.1percent and 214.7 percent year-on-year growth in the traditional savings and annuity product segments respectively in Q4 of FY2021. The strong performance was driven in equal measure by over 100 valuable partnerships forged this year, as part of our strategy to deepen and widen distribution,” Kannan said.
As a result, value of new business of ICICI Prudential Life grew by 26 percent year-on-year to Rs 591 crore for Q4. The value of new business margin for the year improved to 25.1 percent while the Embedded Value (present value of future profits plus adjusted net asset value) also grew 26.4 percent to Rs 29,106 crore during the year.
“Throughout the pandemic-affected year, we focussed on putting in place the building blocks for growth. Our resilient balance sheet with zero NPAs since inception, robust risk management strategies and a strong solvency ratio of 217 percent provide a solid foundation for future growth,” Kannan said.
“Together with our growth momentum in Q4 and our well diversified product and distribution mix, we believe we are well poised to achieve our stated objective to double our FY2019 value of new business by FY23,” he added.
In March, mid-sized players reported strong growth, with TATA AIA and Bajaj Allianz reporting growth of 116 percent and 104 percent respectively. Kotak Life and Birla Sun Life reported growth of 63 percent and 61 percent respectively.
“We expect strong traction in premium growth over FY22, with the focus on the Non-PAR and Protection segments continuing,” a Motilal Oswal report said.
On an un-weighted basis, SBI Life was the largest private insurer (with market share of 7.4 percent), followed by HDFC Life (7.3 percent) and IPRU Life (4.7 percent).
“Both LIC and private players reported strong growth, pointing to a recovery in ULIPs and non-par products in the seasonally strong fourth quarter. We expect the growth trend to remain superior in upcoming months with the base effect of last year (lockdowns due to Covid-19) coming into play,” says a study by Emkay.
Suresh Agarwal,Chief Distribution Officer, Kotak Mahindra Life Insurance Company, said, “Life insurance industry saw robust growth in March. We clearly see demand coming back strongly, on the back of economic activity picking up and higher awareness of the need for insurance.”
“We expect the momentum to continue into the current financial year,” Kotak’s Agarwal added.
Agarwal added that Kotak Life saw growth more evenly spread out during the year, with March growing at 63 percent and full year FY21 at 11 percent.
(Kumud Das is a Pune-based teacher and freelance journalist, who writes on insurance, banking and human interest stories)