How did life insurance companies perform in July 2023?

11 Aug 2023 , 09:41 AM

This report by IRDAI encompasses data on first year premium collections, number of policies sold and total sum assured. The macro comparison that IRDA offers on a monthly basis gives a rapid data insight into the monthly performance of life insurers as well as the year-to-date (YTD) performance of the insurance business. It covers LIC and the private insurers separately, but also gives consolidated view of all life insurers.

In terms of first year premium, LIC reverted back to its negative growth story. Even the cumulative number of policies sold up to July 2023 in the first 4 months of FY24, by LIC was lower on a yoy basis. For the month of July 2023, the overall first year premiums contracted by -28.69%, largely due to LIC first year premiums contracting by -47.16% compared to private life insurers growing at 25.28%. For FY24 YTD i.e., up to July 2023, the weak LIC numbers pulled overall growth to negative zone, despite positive show by private insurers.

What we read from the First year premium numbers of July 2023

The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of July 2023 and for FY24 to date, on first year premiums.

Insurer	FIRST YEAR PREMIUM
Jul-22	Jul-23	YOY  (%)	FY23  (YTD)	FY24  (YTD)	YOY  (%)	Market  Share (%)
Private Total	9,962.22	12,480.53	25.28	35,435.75	40,648.20	14.71	40.30
Individual Single Premium	1,536.35	1,701.47	10.75	5,130.61	5,620.63	9.55	46.14
Individual Non-Single Premium	4,269.58	4,940.40	15.71	14,650.18	16,142.94	10.19	65.10
Group Single Premium	3,321.97	4,739.84	42.68	12,643.68	15,500.91	22.60	26.19
Group Non-Single Premium	13.41	9.71	-27.56	52.42	26.34	-49.75	2.38
Group Yearly Renewable Premium	820.91	1,089.11	32.67	2,958.85	3,357.38	13.47	93.17
LIC of India	29,116.68	15,386.57	-47.16	77,317.69	60,223.77	-22.11	59.70
Individual Single Premium	1,903.02	1,992.30	4.69	6,536.27	6,560.55	0.37	53.86
Individual Non-Single Premium	2,436.92	2,784.36	14.26	8,720.36	8,655.29	-0.75	34.90
Group Single Premium	24,285.57	10,217.92	-57.93	60,429.43	43,683.48	-27.71	73.81
Group Non-Single Premium	435.71	242.08	-44.44	1,487.07	1,078.34	-27.49	97.62
Group Yearly Renewable Premium	55.45	149.92	170.35	144.56	246.12	70.25	6.83
Grand Total	39,078.91	27,867.10	-28.69	1,12,753.43	1,00,871.97	-10.54	100.00
Individual Single Premium	3,439.37	3,693.77	7.40	11,666.88	12,181.18	4.41	100.00
Individual Non-Single Premium	6,706.50	7,724.76	15.18	23,370.53	24,798.23	6.11	100.00
Group Single Premium	27,607.54	14,957.75	-45.82	73,073.12	59,184.38	-19.01	100.00
Group Non-Single Premium	449.12	251.79	-43.94	1,539.49	1,104.68	-28.24	100.00
Group Yearly Renewable Premium	876.37	1,239.03	41.38	3,103.41	3,603.49	16.11	100.00

Data Source: IRDAI

Even a cursory glance at the above table would tell us that LIC continues to be the problem in July 2023 after a brief respite in June 2023 in terms of first year premiums. On the other hand, the private players have grown at a faster clip compared to the previous months. Here are some of the key takeaways from the table above.

• For the month of July 2023, first year premium collections overall contracted by -28.69% to Rs27,867 crore. However, respective performances diverged. LIC reported -47.16% contraction in first year premiums for July 2023 at Rs15,387 crore while private life insurers saw 25.28% growth in first year premium collections for the month of July 2023 at Rs12,481 crore. It is the first time that private insurers have collectively come so close to LIC in terms of premium collections of first year.

   

• Let us turn to the cumulative picture for the first 4 months of FY24 (April to July). Overall, first year premium collections for the industry contracted by -10.54% over the corresponding period last year. Here again there is divergence. While LIC saw cumulative first year premiums for FY24 contract by -22.11%, private players saw the cumulative first year premiums expand yoy by 14.71%.

   

• What were the positive and negative growth drivers for the insurance industry. For July 2023, individual single premium policies, individual non-single premium policies, and group renewable policies showed growth while the group non-single premium policies and the group single premium segments saw contraction in July 2023. For LIC, Individual single, individual non-single premium, and group yearly renewable premium policies showed positive growth. In the case of private insurers only group non-single premium policies saw contraction with the other 4 showing expansion in premiums.

   

• How does that leave the cumulative market share of LIC and the private insurers for FY24 so far? In terms of share of cumulative first year premiums, LIC share stands at 59.70% while private insurers have a share of 40.30% for the first 4 months of FY24 up to July 2023. LIC has seen one of the lowest cumulative shares in memory.

It looks like the LIC is yet to recover from the change to the new tax regime, which appear to have taken away a good deal of the sheen from LIC business performance. While LIC did show some recovery in the month of June, after a disappointing April and May 2023, it is back to negative growth in July 2023, which is fairly disappointing. However, LIC would be most worried about the sharp fall in its cumulative share of overall premiums in FY24.

What we read from number of policies sold in July 2023?

The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of July 2023 and for FY24 to date, based on number of policies sold.

Insurer	NO. OF POLICIES / SCHEMES
Jul-22	Jul-23	YOY  (%)	FY23  (YTD)	FY24  (YTD)	YOY  (%)	Market  Share (%)
Private Total	5,81,980	6,65,232	14.30	20,98,173	22,40,603	6.79	31.45
Individual Single Premium	19,682	21,731	10.41	75,444	75,891	0.59	23.32
Individual Non-Single Premium	5,61,843	6,42,733	14.40	20,21,146	21,61,995	6.97	31.86
Group Single Premium	93	116	24.73	320	439	37.19	82.67
Group Non-Single Premium	16	12	-25.00	70	39	-44.29	2.87
Group Yearly Renewable Premium	346	640	84.97	1,193	2,239	87.68	21.34
LIC of India	17,07,444	16,60,121	-2.77	53,94,830	48,82,678	-9.49	68.55
Individual Single Premium	78,694	77,857	-1.06	2,72,986	2,49,520	-8.60	76.68
Individual Non-Single Premium	16,25,421	15,78,852	-2.87	51,12,893	46,23,490	-9.57	68.14
Group Single Premium	51	28	-45.10	358	92	-74.30	17.33
Group Non-Single Premium	493	369	-25.15	1,739	1,322	-23.98	97.13
Group Yearly Renewable Premium	2,785	3,015	8.26	6,854	8,254	20.43	78.66
Grand Total	22,89,424	23,25,353	1.57	74,93,003	71,23,281	-4.93	100.00
Individual Single Premium	98,376	99,588	1.23	3,48,430	3,25,411	-6.61	100.00
Individual Non-Single Premium	21,87,264	22,21,585	1.57	71,34,039	67,85,485	-4.89	100.00
Group Single Premium	144	144	0.00	678	531	-21.68	100.00
Group Non-Single Premium	509	381	-25.15	1,809	1,361	-24.77	100.00
Group Yearly Renewable Premium	3,131	3,655	16.74	8,047	10,493	30.40	100.00

Data Source: IRDAI

Here is what we read from the IRDAI data on policies sold by LIC and the private players? Here are some key takeaways.

• Overall number of policies showed an expansion of 1.57% for July 2024 but for the cumulative FY24 period, the number of policies had contracted by -4.93% yoy. This is for all the life insurers combined i.e., private sector and LIC. However, the divergence was visible here also. LIC saw -2.77% contraction in number of policies sold in July 2023, while the private insurers have seen 14.30% growth. That trend is approximately replicated even if you look at the cumulative trend for FY24. In this case, the number of policies sold by private insurers has contracted by -9.49% while that of private insurers has expanded by 6.79%.

   

• How does market share look like for LIC versus private players in FY24 (April to July)? Here LIC still has a dominant 68.55% market share with private players taking away the balance 31.45% market share. The picture has moved in favour of LIC in the last one month. For now, it looks like the feet on street sales force is doing a good job for LIC in terms of the market share in number of policies sold. However, the NTR (new tax regime) has clearly taken a big toll on policy accretion numbers for LIC. That trend looks set to continue, unless LIC is able to pull a rabbit out of its hat.

LIC has maintained a semblance of dominance in number of policies, but the pressure of the tax shift is clearly showing on the monthly numbers of LIC. The bottom line is that, LIC is still losing out to private insurers in terms of the key metrics of first year premium collections.

What we read from the sum assured data for July 2023

The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of June 2023 and for FY24 to date, based on total sum assured.

Insurer	SUM ASSURED
Jul-22	Jul-23	YOY  (%)	FY23  (YTD)	FY24  (YTD)	YOY  (%)	Market  Share (%)
Private Total	4,35,141	5,84,297	34.28	16,27,822	24,58,534	51.03	81.73
Individual Single Premium	1,587	1,508	-4.99	5,743	4,876	-15.09	55.23
Individual Non-Single Premium	1,11,297	1,51,101	35.76	3,95,331	5,13,554	29.90	77.88
Group Single Premium	1,21,922	1,67,103	37.06	4,27,411	6,81,865	59.53	99.96
Group Non-Single Premium	18,568	7,744	-58.29	48,816	26,557	-45.60	69.87
Group Yearly Renewable Premium	1,81,767	3,11,936	71.61	7,50,520	12,31,682	64.11	76.04
LIC of India	1,54,118	3,87,878	151.68	3,60,671	5,49,675	52.40	18.27
Individual Single Premium	1,475	1,312	-11.02	4,916	3,952	-19.61	44.77
Individual Non-Single Premium	50,584	48,131	-4.85	1,67,076	1,45,891	-12.68	22.12
Group Single Premium	97	74	-24.01	330	263	-20.31	0.04
Group Non-Single Premium	1,198	4,873	306.76	6,052	11,451	89.20	30.13
Group Yearly Renewable Premium	1,00,764	3,33,489	230.96	1,82,297	3,88,118	112.90	23.96
Grand Total	5,89,259	9,72,175	64.98	19,88,493	30,08,209	51.28	100.00
Individual Single Premium	3,061	2,820	-7.89	10,659	8,828	-17.18	100.00
Individual Non-Single Premium	1,61,882	1,99,231	23.07	5,62,407	6,59,444	17.25	100.00
Group Single Premium	1,22,019	1,67,176	37.01	4,27,741	6,82,128	59.47	100.00
Group Non-Single Premium	19,766	12,617	-36.17	54,869	38,008	-30.73	100.00
Group Yearly Renewable Premium	2,82,531	6,45,424	128.44	9,32,817	16,19,800	73.65	100.00

Data Source: IRDAI

Here are some of our major takeaways from the sum assured data for July 2023 for the private insurers and for the LIC.

• Private sector has always dominated the sum assured space due to their focus on term policies and less on endowments. Hence their ratio of sum assured to premiums has always been higher compared to LIC. Sum Assured for July 2023 was up 64.98% for the industry as a whole. However, while private insurers grew sum assured by 34.28%, LIC grew its sum assured by a whopping 151.68% yoy. LIC also now appears to be focusing more on the term insurance game.

   

• In terms of market share for FY24, private sector had a dominant 81.73% share of sum assured while LIC gets just 18.27% share. However, it must be said that LIC has increased its share of sum assured in a big way in July and that could be the trend going ahead.

The July numbers surely leaves LIC with a lot of food for thought. Its performance has fallen in terms of first year premiums as well as in terms of number of policies sold. However, LIC has done better in terms of garnering a bigger market share of the sum assured. It remains to be seen, how this impacts the LIC stock price.