Life insurance industry continued to see strong growth in December as private players reported higher growth at 26% year-on-year. According to the Kotak Institutional Equities Research, Life Insurance Corporation of India (LIC) saw its annual premium equivalent (APE) grow just at 8% year-on-year in December.
Experts say that growth was seen across the segment in traditional plans as well as unit-linked insurance plans (ULIPs) despite uncertain equity markets. “The life Insurance sector’s strong inflows continued in December with 26% growth in private sector individual APE. Private life insurance players had reported strong 42% growth in individual APE in December 2016 as fallout of large funds moving into banks. Strong inflow continuing in December reinforces our thesis of buoyancy in the sector due to increase in financial savings; demonisation has become a catalyst for the same,” said Kotak Institutional Equities Research report.
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In the current financial year, private players saw their APE at R18,723.5 crore at 23%, while LIC grew at R20,634.7 crore at 19% during April-December. Aegon, Metlife, Reliance Life saw negative APE in December. While others players like Aviva, Bajaj Allianz, SBI Life, India First, Max Life continued to see strong APE growth. LIC was sluggish with 5.3% y-o-y growth as compared to 38% in November 2016; the corporation had reported strong business in November due to sunset period of higher yields on Jeevan Akshay VI.
According to the Kotak Institutional Equities Research, “While we would presume that banks (key beneficiaries of demonetisation) were key business drivers during the month, two of the four large bancassunce players were muted. We believe that capitalising on the current momentum in the sector, all banks will sharpen focus on this segment over the next few months, thus fuelling superior growth for a couple of quarters.”
The data from Insurance Regulatory and Development Authority of India (Irdai) also shows that first year premiums of insurance sector stood at Rs 1,16,417 crore during April-December against R85,587.73 crore in last financial year.