Group single premiums continue to boost life insurance in May, LIC ahead of private insurers


The premium for the first year of life insurance increases to 24,480 crore in May 2022 nearly doubling from 12,977 crores in the same month last year, according to a report by CARE Edge Ratings. The year-over-year growth was 86.7% in the number of first-year bonuses. This solid performance is explained by the robust growth of collective single premiums. The country’s largest insurer, LIC, outperformed its private peers for two consecutive months in FY23, while private insurers saw faster growth in May this year.

Additionally, growth was driven by a weak base, which saw moderate levels due to pandemic-induced lockdowns (second wave of Covid-19).

In April of this year, first year life insurance premiums were at 17,940 crores.

Data from CARE showed LIC’s first-year premium continued to grow in double digits and stood at 77% for May 2022, which was lower than the 141.2% growth in April 2022 but higher. to growth of 50.6% in March 2022. and 35.4% in February 2022. The growth in May 2022 due to collective single premiums also compares favorably with the decline of 12.4% in May 2021 (base effect /disturbances of containment).

At the same time, the data highlighted that private insurers grew by 114.4% in May 2022 compared to 27.5% in April 2022, 12.9% in March 2022 and 14.2% in April 2021 (base effect/disruptions containment).

In the first two months of FY23, CARE data revealed that LIC exceeded marginal growth reported for the similar period of FY22 and its private peers gave LIC the dominant share of the group’s individual insurance business. LIC maintains its dominant share in the first-year bonus at 65% against 35% share of private companies.

In addition, in May 2022, non-premiums increased by 106.4%, while single premiums also recorded strong growth of 82.2%.

Notably, the share of single bonuses increased from 60% in FY2020 to 69% in FY22 and then to 71% in the April-May 2022 period of FY23.

In the case of single premiums, growth can be attributed to individuals seeking a predictable rate of return. Pension plans, general annuities and group gratuity plans continue to make up a large share of the group, while general annuity plans dominate individual single premiums, according to CARE.

The CARE report indicates that the private sector holds a larger share in the non-single premium sub-segment (mainly individual premiums), while LIC continues to dominate the single premium sub-segment, especially group activities.

During the month of May this year, group premiums soared 92.2%, while individual premiums rose 82%. So far in FY23, group premium growth continues to outpace individual premium growth. Meanwhile, individual bonuses continue to remain smaller than group bonuses.

In the research report, CARE expects the life insurance industry to continue to grow by around 12 to 14 percent over a three to five year horizon. Growth would be driven by strong demand for pension and protection plans. Meanwhile, ULIP’s growth may be muted given the volatile market conditions.

According to the CARE report, other factors include an intense push to increase insurance coverage, especially in the rural population, product innovations/customization and delivery channels coupled with digitized infrastructure for easier interaction. with users. However, frauds, lapse rate, any unfavorable changes in macroeconomic factors and uncertainties in the regulatory landscape could be characterized as major challenges for the growth of the industry. Overall, the outlook should be positive over the medium term.

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