How did life insurance companies perform in November 2023?

8 Dec 2023 , 09:34 AM

Life insurance numbers tepid, as LIC adds to the pressure

The IRDAI has just released the full month data stack in terms of new business premium (NBP) collections for the month of November 2023, apart from the cumulative data for the first 8 months of fiscal year FY24. This data has been released at an overall level; with granular break-up of numbers pertaining to LIC and to each of the private insurers as well as private insurers as a category. Apart from the NBP, the data release also covers data on the number of policies sold and the total sum assured; both in terms of monthly numbers and the numbers for the first 8 months of FY24 from April 2023 to November 2023. In the current fiscal, there has been a subtle shift in the NBP matrix from LIC to the private insurers and November has seen that shift only accentuate. If you compare the first eight months of FY24 with the first eight months of FY23, the LIC share of new business premiums (NBP) has improved marginally to 58.78%, after falling sharply from 67.72% to 58.47% previously. It must be remembered that LIC is now a listed company, so such data releases also have larger implications for the stock price of LIC. In the same breath, the share of private insurers in FY24 versus FY23 (first eight months) stands at 41.22%. In the current fiscal FY24, private insurers have caught up in terms of the share of new business premiums (NBP).

Of course, the number of policies is still where LIC dominates the private sector, but that is little consolation for the PSU behemoth, because ultimately it is the new business premiums (NBP) that actually contributes to the bottom line of the insurance company and its valuation in the stock market. The total sum assured was already being dominated by the private insurance companies as their focus has been on the term policy business, which has a high ratio of policy value to premium value. In contrast the LIC has traditionally concentrated on the endowments, money-back and the ULIP business. In FY24, the NBP has gravitated towards private insurers, with HDFC Life and SBI Life among the big gainers. We look at the India insurance story as of the end of November 2023 on 4 counts. We look at November 2023 data on insurance NBP and the number of policies sold, vis-à-vis November 2022 (yoy comparison). In addition, we also look at the cumulative data of NBP and number of policies sold for the first eight months of FY24, from April to November 2023.

First year Premium (NBP) Growth for November 2023

The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of November 2023 in terms of first year premiums and the yoy growth in premiums over November 2022. Premiums flows, here, refer to first year premiums only.

PARTICULARS	Premium Flows  (Nov 2023)	Premium Flows  (Nov 2022)	Growth YOY (%)
Individual Single Premium	3,322.48	3,900.04	-14.81%
Individual Non Single Premium	7,658.32	7,913.60	-3.23%
Group Single Premium	14,735.49	22,334.95	-34.02%
Group Non Single Premium	126.91	604.60	-79.01%
Group Yearly Renewable Premium	651.64	705.61	-7.65%
Grand Total Premium Flows	26,494.83	35,458.80	-25.28%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,395.10	1,720.87	-18.93%
Individual Non Single Premium	5,322.61	5,360.89	-0.71%
Group Single Premium	3,085.95	3,699.02	-16.57%
Group Non Single Premium	4.61	2.87	60.63%
Group Yearly Renewable Premium	552.01	643.09	-14.16%
Private Insurer Premium Flows	10,360.29	11,426.73	-9.33%
LIC OF INDIA
Individual Single Premium	1,927.38	2,179.17	-11.55%
Individual Non Single Premium	2,335.71	2,552.72	-8.50%
Group Single Premium	11,649.54	18,635.93	-37.49%
Group Non Single Premium	122.30	601.73	-79.68%
Group Yearly Renewable Premium	99.63	62.52	59.36%
LIC Premium Flows	16,134.55	24,032.07	-32.86%

Data Source: IRDAI (Premium figures are ₹ in crore)

Here are some quick takeaways from the data points on insurance for November 2023 in terms of the first year premium collections by insurance companies.

• The overall insurance sector saw contraction in first year premiums by -25.28% in November 2023. This can be attributed to a higher base. However, the dichotomy continues to persist. The private insures saw NBP contract by -9.33% in terms of first year premium collections in November 2023 while LIC saw first year premium collections contract by -32.86% yoy; worse than the -27.47% yoy contraction in September 2023.
• If you look at the overall premium collections for the month of November 2023 at Rs26,495 crore, the contributions of LIC and private insurers. LIC has gained market share. Private insurers accounted for 39.10% in November against 41.66% in October; while LIC accounted for 60.90% in November against 58.34% in October.

There has been some consolation for LIC in November 2023 in terms of NBP, but that is little respite for the huge loss of market share, they have seen in FY24 so far.

First year Premium Growth for FY24 (Apr-23 to Nov-23)

The table below captures the performance of LIC, private insurers and the overall insurance sector for the first 8 months of FY24 (April 2023 to November 2023), in terms of cumulative new business premium (NBP). The comparison is with the comparable 8 months for FY23.

PARTICULARS	Premium Flows  (FY24)	Premium Flows  (FY23)	Growth YOY (%)
Individual Single Premium	27,151.01	26,623.23	1.98%
Individual Non Single Premium	56,511.94	52,636.98	7.36%
Group Single Premium	1,18,825.43	1,53,059.09	-22.37%
Group Non Single Premium	2,128.24	3,818.94	-44.27%
Group Yearly Renewable Premium	7,074.03	6,214.08	13.84%
Grand Total Premium Flows	2,11,690.65	2,42,352.31	-12.65%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	12,147.87	11,804.31	2.91%
Individual Non Single Premium	38,018.27	34,070.17	11.59%
Group Single Premium	31,231.04	26,472.75	17.97%
Group Non Single Premium	86.11	100.51	-14.33%
Group Yearly Renewable Premium	5,783.05	5,761.30	0.38%
Private Insurer Premium Flows	87,266.33	78,209.04	11.58%
LIC OF INDIA
Individual Single Premium	15,003.15	14,818.92	1.24%
Individual Non Single Premium	18,493.67	18,566.81	-0.39%
Group Single Premium	87,594.39	1,26,586.33	-30.80%
Group Non Single Premium	2,042.13	3,718.42	-45.08%
Group Yearly Renewable Premium	1,290.98	452.78	185.12%
LIC Premium Flows	1,24,424.31	1,64,143.27	-24.20%

Data Source: IRDAI (Premium figures are ₹ in crore and for the period Apr-Nov 2023)

Here are some quick takeaways from the data points on insurance for FY24 (Apr-Nov) in terms of the first year premium collections by insurance companies.

• The insurance sector saw contraction in first year premium collections by -12.65% for FY24 (Apr-Nov) yoy. However, there was a dichotomy, once again. The private insurers saw NBP growth of 11.58% for first 8 months, compared to contraction of -24.20% for LIC in FY24.
• If you look at the overall premium collections for the period of FY24 (Apr-Nov) at Rs2,11,691 crore, the respective contributions of LIC and private insurers are almost the same as the end of November. Private insurers accounted for 41.22% while LIC accounted for 58.78%. However, if you look at the last 1 year, the LIC share at 58.48% is 895 bps lower compared to 67.73% as of the close of October 2022.

Growth in Number of Policies for November 2023

The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of November 2023 in terms of growth in the number of policies. The comparison is, once again, between November 2023 and November 2022.

PARTICULARS	No. of Policies (Nov 2023)	No. of Policies (Nov 2022)	Growth YOY (%)
Individual Single Premium	82,065	1,06,936	-23.26%
Individual Non Single Premium	19,57,540	20,41,519	-4.11%
Group Single Premium	203	133	52.63%
Group Non Single Premium	294	512	-42.58%
Group Yearly Renewable Premium	3,218	2,984	7.84%
Grand Total No. of Policies	20,43,320	21,52,084	-5.05%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	17,101	23,425	-27.00%
Individual Non Single Premium	6,43,176	6,35,960	1.13%
Group Single Premium	151	98	54.08%
Group Non Single Premium	8	16	-50.00%
Group Yearly Renewable Premium	414	335	23.58%
Private Insurer No. of Policies	6,60,850	6,59,834	0.15%
LIC OF INDIA
Individual Single Premium	64,964	83,511	-22.21%
Individual Non Single Premium	13,14,364	14,05,559	-6.49%
Group Single Premium	52	35	48.57%
Group Non Single Premium	286	496	-42.34%
Group Yearly Renewable Premium	2,804	2,649	5.85%
LIC No. of Policies	13,82,470	14,92,250	-7.36%

Data Source: IRDAI

Here are some quick takeaways from the data points on insurance for November 2023 in terms of the number of policies sold.

• The overall insurance sector saw contraction in number of policies sold by -5.05% for November 2023 yoy. There was a dichotomy, once again. Private insures saw flat growth of 0.15% in number of policies sold in November 2023 while LIC saw number of policies sold contract by -7.36%. Normally, LIC had managed to show growth in number of policies sold in the past, but that edge appears to be missing this month.
• If you look at the overall number of policies sold for November 2023 at 20.43 lakhs, the contributions of LIC and private insurers are still far off. Private insurers improved their share of number of policies to 32.34% in November from 30.88% in October while LIC saw its share of number of policies fall to 67.66% in November compared to 69.12% in October 2023. LIC still appears to have a lead here due to the strong feet on street, but private insurers are improving rapidly on this front. This is one of the last frontiers that LIC has dominated in the past.

Growth in number of policies for FY24 (Apr-23 to Nov-23)

The table below captures the performance of LIC, private insurers and the overall insurance sector for FY24 (Apr-Nov) on the basis of the number of policies sold.

PARTICULARS	No. of Policies (FY24)	No. of Policies (FY23)	Growth YOY (%)
Individual Single Premium	7,27,596	7,51,634	-3.20%
Individual Non Single Premium	1,51,09,219	1,48,58,821	1.69%
Group Single Premium	1,386	1,290	7.44%
Group Non Single Premium	2,702	3,807	-29.03%
Group Yearly Renewable Premium	23,128	20,189	14.56%
Grand Total No. of Policies	1,58,64,031	1,56,35,741	1.46%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,59,769	1,58,684	0.68%
Individual Non Single Premium	48,18,075	44,27,428	8.82%
Group Single Premium	1,121	693	61.76%
Group Non Single Premium	52	172	-69.77%
Group Yearly Renewable Premium	4,066	2,651	53.38%
Private Insurer No. of Policies	49,83,083	45,89,628	8.57%
LIC OF INDIA
Individual Single Premium	5,67,827	5,92,950	-4.24%
Individual Non Single Premium	1,02,91,144	1,04,31,393	-1.34%
Group Single Premium	265	597	-55.61%
Group Non Single Premium	2,650	3,635	-27.10%
Group Yearly Renewable Premium	19,062	17,538	8.69%
LIC No. of Policies	1,08,80,948	1,10,46,113	-1.50%

Data Source: IRDAI (Cumulative Data from Apr-23 to Nov-23)

Here are some quick takeaways from the data points on insurance for FY24 (Apr-Nov) in terms of the number of policies sold.

• The overall insurance sector saw marginal growth in terms of number of policies sold by 1.46% for FY24 (Apr-Nov) compared to the year ago period. However, there was a dichotomy once again. The private insures saw growth of 8.57% in terms of number of policies sold in FY24 (Apr-Nov) while LIC saw number of policies sold contract by -1.50% in the same period.
• If you look at the overall number of policies sold for FY24 (Apr-Nov) at 158.64 lakhs, the contributions of LIC and private insurers are still far off. Private insurers accounted for 31.41%, slightly higher than the 31.27% as of end of October 2023. LIC saw its share slipping marginally from 68.73% in October to 68.59% in November 2023. LIC still appears to have a lead here due to the strong feet on street, but private insurers are rapidly catching up on number of policies too.

LIC must really rethink on its customer strategy

One reason for the fall in the market share of LIC with respect to NBP could be due to the new tax regime (NTR). However, that is something, LIC must live with. Much of LIC’s clout came from Section 80C of the Income Tax Act and that is gradually being phased out. However, LIC has a bigger problem to contend with. It is a listed company and the stock still trades below its IPO price, even 19 months of listing. That can be largely attributed to the loss of market share and negative growth in the NBP. LIC still has an enviable feet on street agent network, but they need to move from pull to push. Section 80C cannot be a reason and LIC must reconcile itself to the new order. The sooner they do it, the better it will be!