• Rajasthan

    Cong 102
    BJP 72
    RLM 0
    OTH 25
  • Madhya Pradesh

    BJP 110
    Cong 109
    BSP 5
    OTH 6
  • Chhattisgarh

    Cong 67
    BJP 15
    JCC 7
    OTH 1
  • Telangana

    TRS-AIMIM 84
    TDP-Cong 24
    BJP 3
    OTH 8
  • Mizoram

    MNF 26
    Cong 5
    BJP 1
    OTH 8

* Total Tally Reflects Leads + Wins

Life Insurance: Protection policies drive new premium

Published: July 20, 2018 1:11 AM

This year will be moderate for ULIP inflows though focus on the protection business will continue to drive value of new business for large insurers.

Life Insurance, Protection policies, premium, money, personal financeThis year will be moderate for ULIP inflows though focus on the protection business will continue to drive value of new business for large insurers.

Private life insurance companies reported 9% growth in individual premium in June 2018, somewhat better than 4% during May 2018. We expect FY19 to be a moderate year for ULIP inflows though focus on the protection business will continue to drive value of new business (VNB) for large players; in that sense, monthly annual premium equivalent (APE) data is incrementally less relevant.

Better growth

Private sector APE was up 12% yoy in June 2018, leading to 6% yoy growth for 1QFY19. With 3% yoy growth in LIC for the month (21% in May 2018, 7% in 1QFY18), the overall industry growth was 8% yoy in June (6% in 1QFY19). Excluding two key players, viz ICICI Prudential Life and SBI Life that carry a large base and have been moderating for the past few quarters, the rest of the industry was up 19% yoy (18% in 1QFY19).

Moderation in capital markets

Moderation in capital markets and rise in interest rates will likely reduce the intensity of inflows to capital market financial savings — equity inflows to mutual funds were down to Rs 10,700 crore from `13,200-13,600 crore in the previous two months. Most large insurance companies are increasingly balancing their portfolios and shifting towards traditional policies. More importantly, all large players are focussing on the high-margin protection business, which will improve their VNB even as APE growth may be lower. As such, monthly APE trends are increasingly getting irrelevant.

Edited excerpts from Kotak’s report on life insurance

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