Life insurance: Private insurers’ premium collections fall 32% in May

By: |
June 12, 2020 1:15 AM

However, individual sum assured was up 12% y-o-y on back of traction in protection policies.

Traction in protection policies and gradual uptick in business through digital channels were the likely drivers.

Private life insurance players reported 32% year-on-year (y-o-y) decline in individual annualised premium equivalent (APE) in May 2020, better than our expectations of about 60-70% decline in Q1. Traction in protection policies and gradual uptick in business through digital channels were the likely drivers.

The APE declined 32% year-on-year (y-o-y) in May 2020 for private players; down 40% y-o-y in April 2020. Even as business growth has declined sharply on the back of lockdown-related disruptions, higher focus on cash conservation by retail customers, lower Ulips due to weakness in capital markets, strong demand for protection policies and pick-up in sourcing through digital channels provided cushion.

Overall APE declined 22% y-o-y in May 2020 on the back of 20% y-o-y decline in individual business. Private players’ individual APE was down 32% y-o-y. LIC’s individual APE was down 3% y-o-y (individual APE was down 65% y-o-y and 48% y-o-y in March 2020 and April 2020, higher than 40% y-o-y for private players).

Protection supports business
Even as individual APE declined 32% y-o-y in May 2020, individual sum assured increased 12% y-o-y. Ratio of individual non-single business sum assured to individual non-single premium remained high at 61X (81X in April 2020) compared to 32X in FY2020 and 29X in FY2019. The higher share of protection mix in overall individual business is the likely driver. Amid weakness in capital markets, lower Ulip volumes continue to drag overall individual APE.

Among major private players, Tata AIA and Max Life’s ratio is high at >100%, from 60-75X y-o-y, likely indicating strong traction in the protection business. As highlighted in our previous report titled ‘Reading Google Searches as leading indicator of business trends’ link, Tata’s protection product ‘Sampoorna Raksha’ has higher hits compared to peers. HDFC Life and ICICI Prudential Life’s ratio was robust at 54X (77X in April 2020 compared to 40-41X over FY2019-20) and 75X (93X in April 2020 compared to 33-41X in FY2019-20), respectively in May 2020. It remained low at 14X for SBI Life.

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