Insurers see first-year premium growth dip 33%

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Published: May 12, 2020 8:14 AM

Data from the Insurance Regulatory and Development Authority of India (Irdai) showed that first-year premium for the life insurance industry stood at Rs 6,727.74 crore in April compared to Rs 9,981.88 crore in April 2019.

Life insurance players, novel coronavirus, Irdai, insurance premium growth, Bancassurance companies, IndiaFirst Life, Bajaj Allianz Life Insurance, Kotak Mahindra LifeRushabh Gandhi, deputy chief executive officer of IndiaFirst Life, says the life insurance industry has de-grown in April due to the extended lockdown in the country.

Life insurance players in India saw first-year premiums decline 32.60% year-on-year (y-o-y) in April as India continued to remain under lockdown to contain the spread of the novel coronavirus. Insurers which were focused on selling term plans fared better in April compared to players dependent of bancassurance channel, industry experts said. Data from the Insurance Regulatory and Development Authority of India (Irdai) showed that first-year premium for the life insurance industry stood at Rs 6,727.74 crore in April compared to Rs 9,981.88 crore in April 2019. State-run Life Insurance Corporation of India (LIC) also saw its first-year premium down 32.01% to Rs 3,581.65 crore in April.

Rushabh Gandhi, deputy chief executive officer of IndiaFirst Life, says the life insurance industry has de-grown in April due to the extended lockdown in the country. “Bancassurance companies were adversely affected as banks were guided to conduct select core banking activities only. Branch walk-ins have also fallen thereby limiting cross-sell opportunities,” said Gandhi.

Players like Bajaj Allianz Life Insurance, Edelweiss Tokio Life and Tata AIA Life, among others, saw growth in the range of 26-47% in first-year premium in April. Aditya Birla Sun Life Insurance saw its first-year premium at Rs 261.75 crore against Rs 118.83 crore in April last year, clocking a growth of 120.28%.

While players like HDFC Standard Life, ICICI Prudential Life and Kotak Mahindra Life saw first-year premium decline 53-62% in April. But SBI Life Insurance saw a flattish growth in April.

According to a Kotak Institutional Equities report, SBI Life’s individual annualised premium equivalent (APE) declined 73% (y-o-y). “The company has a high share of ULIPs and dependence on bancassurance channel.

Additionally, protection product is yet to pick up pace through the agency channel. SBI Life’s ability to manage end-to-end digital product delivery will remain crucial in the current environment,” said the report. APE is a measure of new business written by a life insurance company. It is computed as the sum of annualised first-year premiums on regular premium policies, and 10% of single premiums.

While there is a lot of attraction towards term plans and guaranteed products, investors prefer to stay away from ULIPs.

“For saving and investment plans, investors are deferring their plans and waiting for the situation to normalise. We are hopeful that the demand for unit-linked plans will pick up once the market stabilises over the next few months. The announcements made in the Budget are not the reason for the low April numbers — the drop is purely because of the lockdown,” added Gandhi.

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