For the second consecutive month in FY21, new business premium of life insurance companies have recorded negative growth due to the coronavirus outbreak. In May, new business premium of life insurers contracted 25.39 per cent to Rs 13,739 crore from Rs 18,414 crore in the same period a year ago. In the first two months of FY21, life insurers saw their new business premium fall almost 30 per cent to Rs 20,466.76 crore compared to Rs 28,395.90 crore in FY20.
New business premium is the premium acquired from policies for a particular year.
While private life insurers, 23 in total, recorded 28 per cent drop in new business premiums in May, state owned insurance behemoth – Life Insurance Corporation (LIC) – recorded a 24 per cent drop in its new business premiums. In absolute terms, private insurers earned Rs 3,527.48 crore in May 2020 as opposed to Rs 4,917.34 crore in the same period a year ago. Similarly, LIC’s premium collection dropped to Rs 13,739 crore in May as opposed to Rs 18,414 crore.
For the most part of April and May, the country was in a lockdown and businesses found it difficult to conduct their operations, despite some relaxations from the government. The private life insurers focused more on digital distribution as traditional mode of distribution — agency force, bancassurance etc – was not possible amid the lockdown.
In the first two months of FY21, new business premium of private life insurers plummeted 30.71 per cent to Rs 9,631.27 from Rs 6,673.58 crore in the same period a year ago. Similarly, LIC’s new business premium in the first two months of FY21 dropped 26.49 per cent to Rs 13,793.18 crore from Rs 18,764.63 crore a year ago.
The top private life players – ICICI Prudential, SBI Life, HDFC Life, Bajaj Life Insurance and Max Life – reported drop in their new business premium (NBP) numbers for May. While ICICI Prudential’s NBP dropped 2.3 per cent in May, SBI Life recorded a 31.29 per cent drop, HDFC Life’s NBP plummeted almost 47 per cent, Bajaj Life’s NBP also contracted 46 per cent and Max Life’s numbers dropped 18 per cent.
Only a few private insurers – Aviva Life Insurance, Canara HSBC OBC Life Insurance, TATA AIA Life Insurance and Future Generali Life Insurance — recorded positive growth in NBP in the month of May.
As of May, LIC has the largest share in the life insurance market with 67.39 per cent of the pie. The 23 private life insurers make up for 32.61 per cent of the life insurance market.