October 17, 2021

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Strong growth momentum continues for private life insurers in September 2021

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Private life insurance companies have maintained their growth momentum in September 2021. The life insurance industry posted a growth rate of 5.8 percent in the first half of FY22 against 0.8 percent in the first half of FY21.

As the first half of FY21 was hit by the covid-induced lockdown and given the resultant base effect, a better picture of growth emerges from a two-year compound annual growth rate or CAGR performance, where private life insurance companies have shown strong growth momentum.

New premium of life insurers grew at a rate of 22.2 percent in September 2021 compared with 2.9 percent in September 2020. Collections topped off at Rs 31,001 crore in September 2021 versus Rs 25,366 in September 2020.

According to CARE Ratings, this growth can be attributed to a rise in individual non-single premiums and group single premiums for September 2021.

Private players lead

Private players posted a robust growth of 32 percent and 35 percent in September in terms of total APE and individual APE, respectively.

APE is annualised premium equivalent, a measure used to determine business sales in the life insurance industry. It is the total regular annualised premium from new business in addition to 10 percent of the first single premium.

On total APE, Bajaj Allianz Life Insurance reported the highest growth of 85 percent followed by Aditya Birla Sun Life at 79 percent, SBI Life at 51 percent and HDFC Life at 27 percent in September 2021. On the individual APE front, Bajaj Allianz posted the highest growth of 63 percent, followed by SBI Life at 56 percent, ICICI Prudential Life at 41 percent and HDFC Life at 20 percent. Max Life posted single-digit growth at 8 percent.

The largest life insurance company, Life Insurance Corporation of India’s first-year premium increased by 11.5 percent in September 2021 compared to 30.1 percent growth in September 2020. Private companies saw a growth rate of 42.4 percent in September 2021 after witnessing a slow growth rate of 20.1 percent in September 2020.

In the first half of FY22, LIC reported a drop of 3.3 percent compared with the high growth of 27.7 percent posted by private peers.

H2FY22 Outlook

The industry is in a healthy shape and most players are recording impressive growth and overall, the industry is in full momentum, said Prashant Tripathy, MD & CEO, Max Life, in a recent interview with Moneycontrol.

“I wouldn’t be surprised if growth in H2 remains pretty robust. It may be a bit lower now, but we are still expecting a robust growth rate in the second half of FY22,” Tripathy added.

According to CARE Ratings, key risks for life insurance companies’ premium growth include delay in the economic recovery, resurgence of covid cases or a third wave.

While a rise in the premium rates of term plans is anticipated given the claims experience and pushback from reinsurers, it is likely to be passed on in a staggered manner, CARE Ratings said in a note.

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