After reporting moderate growth over the past few months, the premium collected by private life insurance companies declined 9% year-on-year (y-o-y ) in September. The poor show impacted the performance of private insurers during the first half of the current financial year.
The premium mobilized by private players dropped 2% yo-y to Rs 7,095 crore in April-September, data showed. Public sector behemoth LIC saved the day for the industry recording a robust 24% y-o-y growth in premium collections to Rs 15,532.7 crore during the period.
Higher mobilization by LIC helped the industry to post a 15% y-o-y growth in premium collected in the first half of the current financial year. The premium collected by private insurers in April-September has been marginally lower than historic trends. The ticket size in regular premium business however has increased during the period. While operating expenses ratio has increased for almost all the private players, they also paid a higher first year commission to intermediaries. Large players such as HDFC Standard Life and ICICI Prudential Life Insurance however recorded only a marginal decrease in premium collections.
Private insurers garnered higher market share in individual premium business in September with ICICI Prudential, HDFC Standard and Max Life Insurance registering gains. But their share in group business remained at 20% levels during the month. While LIC’s premium collections grew 2% to Rs 2,231.4 crore in September, private insurers mobilized Rs 1,480.8 crore during the month.
Single premium business, which reported a high growth in the past two years, has stabilized with the segment accounting for 25%-30 % of premium collections for private players. Though the individual breakup in unit-linked insurance plans (ULIP) business is not known for the first six months of the current financial year, large players are increasingly turning aggressive in this segment, industry observers said.
“The momentum in capital markets will drive higher ULIP business for insurance companies,” analysts at Kotak Institutional Equities said.
