Strong Performance Despite Policy Sales Decline
Key Highlights:
- Overall Growth: Life insurance companies posted a 13.16% year-on-year (Y-o-Y) increase in new business premium (NBP), collecting ₹30,347 crore in October 2024. However, the number of policies sold saw a significant decline.
- Performance by Sector: The growth was led by private sector insurers, which recorded an 18% Y-o-Y rise in premiums to ₹13,216.51 crore. The state-owned Life Insurance Corporation (LIC) contributed ₹17,131 crore, reflecting a 9.48% Y-o-Y increase.
Revised Surrender Value Norms Impact Industry
- New Regulations: Revised surrender value norms implemented on October 1, 2024, require insurers to pay enhanced special surrender values to policyholders after one full premium payment. Previously, surrender payouts were unavailable during the first year of the policy.
- Industry Adjustment: Despite seeking an extension from the insurance regulator, insurers adapted to the new rules for over 80% of their products without significant disruption.
Growth Drivers Amid Challenges
- Segment Insights:
- For LIC, the individual premium segment declined by 9.4% Y-o-Y to ₹3,712.62 crore.
- The group premium segment rose by 15.5% Y-o-Y to ₹13,267.93 crore, with group yearly premium collections surging by 140.75% to ₹150.54 crore.
- Product Growth: Analysts attributed the rise in premiums to increased demand for term insurance and unit-linked insurance plans (ULIPs), despite the implementation of new surrender norms.
Outlook for the Insurance Industry
- Short-Term Fluctuations Expected: According to a Nuvama report, while the new surrender value norms affected growth in October, the industry remained stable. “In the coming months, growth may fluctuate as the industry finds its balance,” the report noted.
- Continued Optimism: The insurance industry’s resilience in adapting to regulatory changes, coupled with growing customer demand, suggests a positive trajectory for the sector.
Conclusion
Life insurers demonstrated robust growth in October, underpinned by private sector performance and product innovation. As the industry adjusts to new surrender value norms, fluctuations in growth are expected in the short term. However, the strong foundation laid by term insurance and ULIPs signals sustained growth potential for the life insurance sector.
