The life insurance industry continued to post strong growth in September as private players reported higher growth at 30% year-on-year. According to a Kotak Institutional Equities Research report, Life Insurance Corporation of India (LIC) saw its annual premium equivalent (APE) grow lower than private players at 29% year-on-year in September.
Senior officials in the industry say that with a rise in equity markets more growth is coming from unit-linked insurance plans (ULIPS) rather than pure traditional plans. “Life insurance companies across the board (most large players, small players and LIC) delivered strong growth in September 2016. Increase in ticket size seems to suggest that growth is driven by shifting focus on ULIPs, which typically have higher ticket sizes. It appears that household savings are making strong headway into capital markets through mutual funds and life insurance companies,” said the report.
In the first six months of current financial year, private players saw their APE at Rs 11,145.5 crore at 20%, while LIC grew at Rs 13,588.7 crore at 21% in the month from April-September. Several players like Aviva, DHFL Pramerica, Reliance Life among others saw negative APE in the month of September. While others players like Bajaj Allianz, SBI Life, Kotak Life Insurance, TATA AIA and Birla Sun Life continued to see its APE growth in positive. “In the past few months we have seen pick-up in the individual insurance segment, but even now most of the premiums is flowing into group policies,” added a top official from the leading insurance company.
According to the report, Bajaj Life reported high (83%) growth in individual APE following about 40-70% yoy growth in the past three months. The company has restructured its agency channel, focused more on ULIPs which has driven this improvement on a low base for the company. Its ticket size is up 51% yoy to about `36,000.
The life insurance industry reported 20% growth in overall APE in 1HFY17; with both private players and LIC delivering similar growth. Performance of large players was mixed — SBI strong at 60% in the first half, and Max Life moderate (up 18% yoy), while HDFC was muted (up 5% yoy). LIC was weak in the initial months, but caught up recently, the report added.