Life insurers’ new business premiums see 14.8% growth in August

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September 10, 2020 8:50 AM

Categories such as individual single premiums and individual non-single premiums recorded a decline in August.

Life insurers, Life insurers new business premiums, New business premiums,Kotak Institutional Equities,LIC, Irdai The NBP for Life Insurance Corporation of India (LIC) stood at Rs 19,714.21 crore, a rise of 15.19%.

New business premiums (NBP) of life insurers saw a growth of 14.79% in August at Rs 27,039.79 crore, against Rs 23,554.94 crore in the same month last year, led by a surge in the group single premium business. Categories such as individual single premiums and individual non-single premiums recorded a decline in August.

According to Kotak Institutional Equities, individual annualised premium equivalent (APE) declined 6% y-o-y for private players in the month under review, broadly similar to the past two months. “Staggered lockdowns disrupting physical channels, weakness in capital markets, focus on cash conservation and moderation in protection business post rate hikes dampened the pace of recovery,” said the Kotak report.

APE is the sum of annualised first year premiums on regular premium policies and 10% of single premiums, written by insurance companies during any period from both retail and group policyholders. The data from Insurance Regulatory and Development Authority of India (Irdai) show that private life insurers saw the growth of 13.74% in their NBP at Rs 7,325.59 crore in August. The NBP for Life Insurance Corporation of India (LIC) stood at Rs 19,714.21 crore, a rise of 15.19%.

Kotak in its report also said LIC’s strong growth was likely driven by traction in endowment and annuity-based products. However, officials from insurance companies said lack of participation from individual investors can be a cause for concern for the industry. Irdai data show that the NBP of individual single-premium and individual non-single premiums delivered negative growth of 9.74% and 1.33%, respectively, in August.

“In August, growth came due to the group single premium business, while individual investors are still staying away. We expect the individual business to pick up in the months to come as situation improves on the economic as well as on the pandemic fronts,” said an industry official.

Private life insurers saw the NBP for individual single premium at Rs 1,097.79 crore, a growth of 59.52% against the same period last year. However, LIC saw its NBP for individual single premium down by 17.02% at Rs 5,429.57 crore in August, compared to Rs 6,543.35 crore in the year-ago period.

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