Life insurance companies reported strong growth in business in June, with a 23% rise in annualised premium equivalent (APE) and to sale of insurance products by banks.
APE is typically calculated as annualised regular premium plus 10% of single premium and is an indicator that is used to compare revenue of life insurance companies.
“Most large private players reported 15-20% year-on-year growth...Life insurance companies with large bank assurance partnerships have seen strong growth over the past two months,” said a report by Kotak Institutional Equities Research.
For the June quarter, total new business premium rose 33% to Rs 31,393 crore, according to Life Insurance Council data. Life Insurance Corporation of India (LIC) remained the market leader by a wide margin with its total new business premium rising 38% to 22,594 crore. The private sector put together, saw its new business premiums rise 23% to Rs 8,798 crore.
Among private life insurers, some players saw a sharp increase, while a few others saw their business decline. For instance, SBI Life Insurance saw its new business premiums rise 79%, Edelweiss Tokio Life Insurance gained 77% Tata AIA Life Insurance rose 49%, Shriram Life Insurance grew 46%, Future Generali India Life Insurance saw 43% growth and HDFC Life’s new business premiums rose 29%.
However, new business premiums at ICICI Prudential Life Insurance grew just 3%, PNB Metlife only saw 9% growth, while Anil Ambani’s Reliance Life saw new business premiums decline 39%, the life insurance council data showed.
At LIC, individual business volumes rose 9%, 22% and 4% in April, May and June respectively. Private players, meanwhile, saw 6%, 27% and 24% for the three months.
LIC has lost market share to private players over the last three months in the individual business. Its market share declined from near 56% in April, to 49% in June. Private sector market share rose from 44% to 51%.
The growth was driven by unit linked insurance plans, where the private sector players have a high market share, said market experts. ULIPs are seeing good demand amid the overall rise in equity markets and increase in mutual fund investments.
According to Kotak Institutional Equities Research, ULIPs accounted for 54% of SBI Life’s APE in the year-ended March. For ICICI Prudential the contribution was as high as 83%.