Private life insurance companies recorded a 10% annual premium equivalent (APE) growth in May, following a stagnant April, even as Life Insurance Corporation (LIC) recorded a 6% decline. In absolute terms, SBI Life and HDFC Life recorded the largest growth.
One of the reasons for the slowdown last month has been the high base effect, with insurance companies recording 101% growth in May 2022 as the economy opened up after the Covid pandemic. Among individual insurers, ICICI Prudential Life, HDFC Life and SBI Life showed similar growth rates of 8-10%, while Max Life’s growth remained weak.
“Private life insurers delivered 10% APE growth in May 2023. Overall APE growth was 3%, with a 6% decline at LIC. The strongmomentum in March led to lower business momentum in April (0. 5%). The business momentum seems to have picked up gradually since,” said Kotak Institutional Equities in a research report. On a four-year CAGR basis, private sector APE growth in May 2023 remained moderate at 12%, similar to April 2023.
Individual new business sum assured for private players witnessed a growth of 25% in May 2023 and 26% in April 2023, surpassing the individual APE growth of 10% and a decline of 1%, respectively. This trend, coupled with subdued growth in average ticket size during the first two months, ranging from -2% to +4%, indicates a potential increase in retail protection, which had been relatively slow in the previous fiscal year (FY23).
Newer players in the industry showcased more robust performance. Bajaj Life experienced a strong 18% growth in individual APE, although group business witnessed a decline of 58%. Aditya Birla Sun Life Insurance and Tata AIA reported 33% and 21% growth in individual APE, respectively.
The life insurance industry recorded a total premium of Rs 36,043 crore for the first two months of the current fiscal, a decline of 15% over last year. The decrease was due to a big jump in growth in the previous quarter of FY23.
