How did life insurance companies perform in October 2023?

9 Nov 2023 , 09:28 AM

LIC faces a tough market share test

The IRDAI has just released the full month data stack in terms of new business premium (NBP) collections for the month of October 2023 as well as for the first 7 months of FY24. This data has been released at an overall level; with granular break-up of numbers pertaining to LIC and to private insurers. Apart from the NBP, it 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 7 months of FY24 from April 2023 to October 2023. In the current fiscal, there has been a subtle shift in the NBP matrix from LIC to the private insurers. If you compare the first seven months of FY24 with the first seven months of FY23, the LIC share of new business premiums (NBP) has fallen from 67.72% to 58.47%, which is a rather steep fall in market share, and something to worry considering it is now a listed company. In the same breath, the share of private insurers in FY24 versus FY23 (first seven months) has expanded from 32.28% to 41.53%.

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. 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. Now even the NBP is gravitating towards the private insurers, with HDFC Life and SBI Life the big gainers. We look at the India insurance story as of the end of October 2023 on 4 counts. We look at October 2023 data on insurance NBP and the number of policies sold. In addition, we also look at the cumulative data of NBP and number of policies sold for the first seven months of FY24, ending in October 2023.

First year Premium (NBP) Growth for October 2023

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

PARTICULARS	Premium Flows  (Oct 2023)	Premium Flows  (Oct 2022)	Growth YOY (%)
Individual Single Premium	3,127.93	3,213.23	-2.65%
Individual Non Single Premium	7,252.99	6,370.47	13.85%
Group Single Premium	15,765.88	14,112.47	11.72%
Group Non Single Premium	87.90	628.39	-86.01%
Group Yearly Renewable Premium	584.29	592.02	-1.31%
Grand Total Premium Flows	26,819.01	24,916.58	7.64%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,387.86	1,344.38	3.23%
Individual Non Single Premium	4,895.34	4,069.17	20.30%
Group Single Premium	4,343.95	3,040.27	42.88%
Group Non Single Premium	22.95	7.88	191.24%
Group Yearly Renewable Premium	521.77	534.75	-2.43%
Private Insurer Premium Flows	11,171.86	8,996.45	24.18%
LIC OF INDIA
Individual Single Premium	1,740.07	1,868.85	-6.89%
Individual Non Single Premium	2,357.65	2,301.30	2.45%
Group Single Premium	11,421.94	11,072.20	3.16%
Group Non Single Premium	64.95	620.51	-89.53%
Group Yearly Renewable Premium	62.53	57.27	9.18%
LIC Premium Flows	15,647.15	15,920.13	-1.71%

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

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

• The overall insurance sector saw expansion in first year premium collections by 7.64% in October 2023 (sharply better than the negative figure in previous two months). This growth can be attributed to a higher base. However, the dichotomy continues to persist. The private insures saw impressive growth of 24.18% in terms of first year premium collections in October 2023 while LIC saw first year premium collections contract marginally by -1.71%; albeit much better than -27.47% yoy contraction last month.

   

• If you look at the overall premium collections for the month of October 2023 at Rs26,819 crore, the contributions of LIC and private insurers are gradually converging. Private insurers accounted for 41.66% while LIC accounted for 58.34%. While LIC did better in October compared to September in terms of NBP, its share of NBP has slid further in October, vis-à-vis the private insurers.

   

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

The table below captures the performance of LIC, private insurers and the overall insurance sector for the first 7 months of FY24 (April 2023 to October 2023), in terms of new business premium (NBP). The comparison is with the comparable 7 months for FY23.

PARTICULARS	Premium Flows  (FY24)	Premium Flows  (FY23)	Growth YOY (%)
Individual Single Premium	23,828.54	22,723.19	4.86%
Individual Non Single Premium	48,853.62	44,723.38	9.24%
Group Single Premium	1,04,089.94	1,30,724.14	-20.37%
Group Non Single Premium	2,001.33	3,214.34	-37.74%
Group Yearly Renewable Premium	6,422.39	5,508.47	16.59%
Grand Total Premium Flows	1,85,195.81	2,06,893.51	-10.49%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	10,752.77	10,083.44	6.64%
Individual Non Single Premium	32,695.66	28,709.28	13.89%
Group Single Premium	28,145.08	22,773.74	23.59%
Group Non Single Premium	81.49	97.65	-16.55%
Group Yearly Renewable Premium	5,231.04	5,118.21	2.20%
Private Insurer Premium Flows	76,906.05	66,782.31	15.16%
LIC OF INDIA
Individual Single Premium	13,075.77	12,639.75	3.45%
Individual Non Single Premium	16,157.96	16,014.10	0.90%
Group Single Premium	75,944.86	1,07,950.40	-29.65%
Group Non Single Premium	1,919.83	3,116.70	-38.40%
Group Yearly Renewable Premium	1,191.35	390.26	205.27%
LIC Premium Flows	1,08,289.77	1,40,111.20	-22.71%

Data Source: IRDAI (Premium figures are ₹ in crore and from Apr-Oct)

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

• The overall insurance sector saw contraction in first year premium collections by -10.49% for FY24 (Apr-Sep) yoy; better than the contraction of -12.97% reported at the end of September 2023. However, there was a dichotomy, once again. The private insures saw NBP growth of 15.16% for first 7 months, compared to just 13.75% as of the end of September. However, NBP collections of LIC contracted by -22.71%; slightly better than -25.40% contraction seen at the close of September 2023.

   

• If you look at the overall premium collections for the period of FY24 (Apr-Oct) at Rs1,85,196 crore, the respective contributions of LIC and private insurers are almost the same as the end of September. Private insurers accounted for 41.52% while LIC accounted for 58.48%. However, if you look at the last 1 year, the LIC share at 58.48% is 924 bps lower compared to 67.72% as of the close of October 2022.

   

Growth in Number of Policies for October 2023

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

PARTICULARS	No. of Policies (Oct 2023)	No. of Policies (Oct 2022)	Growth YOY (%)
Individual Single Premium	78,781	86,210	-8.62%
Individual Non Single Premium	19,74,621	16,27,974	21.29%
Group Single Premium	214	91	135.16%
Group Non Single Premium	334	371	-9.97%
Group Yearly Renewable Premium	2,978	2,814	5.83%
Grand Total No. of Policies	20,56,928	17,17,460	19.77%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	17,730	16,503	7.44%
Individual Non Single Premium	6,16,754	5,21,437	18.28%
Group Single Premium	163	67	143.28%
Group Non Single Premium	9	14	-35.71%
Group Yearly Renewable Premium	432	324	33.33%
Private Insurer No. of Policies	6,35,088	5,38,345	17.97%
LIC OF INDIA
Individual Single Premium	61,051	69,707	-12.42%
Individual Non Single Premium	13,57,867	11,06,537	22.71%
Group Single Premium	51	24	112.50%
Group Non Single Premium	325	357	-8.96%
Group Yearly Renewable Premium	2,546	2,490	2.25%
LIC No. of Policies	14,21,840	11,79,115	20.59%

Data Source: IRDAI

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

• The overall insurance sector saw growth in terms of number of policies sold by 19.77% for October 2023 as compared to the year ago period. However, there was a dichotomy. The private insures saw growth of 17.97% in terms of number of policies sold in October 2023 while LIC saw number of policies sold grow by an impressive 20.59%. However, compared to the gap enjoyed in growth in September, the numbers of LIC and private insurers in terms of number policy growth has converged in October 2023.

   

• If you look at the overall number of policies sold for October 2023 at 20.57 lakhs, the contributions of LIC and private insurers are still far off. Private insurers accounted for 30.88% while LIC accounted for 69.12%. LIC still appears to have a lead here due to the strong feet on street, but private insurers are improving rapidly on this front.

   

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

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

PARTICULARS	No. of Policies (FY24)	No. of Policies (FY23)	Growth YOY (%)
Individual Single Premium	6,45,531	6,44,698	0.13%
Individual Non Single Premium	1,31,51,679	1,28,17,302	2.61%
Group Single Premium	1,183	1,157	2.25%
Group Non Single Premium	2,408	3,295	-26.92%
Group Yearly Renewable Premium	19,910	17,205	15.72%
Grand Total No. of Policies	1,38,20,711	1,34,83,657	2.50%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,42,668	1,35,259	5.48%
Individual Non Single Premium	41,74,899	37,91,468	10.11%
Group Single Premium	970	595	63.03%
Group Non Single Premium	44	156	-71.79%
Group Yearly Renewable Premium	3,652	2,316	57.69%
Private Insurer No. of Policies	43,22,233	39,29,794	9.99%
LIC OF INDIA
Individual Single Premium	5,02,863	5,09,439	-1.29%
Individual Non Single Premium	89,76,780	90,25,834	-0.54%
Group Single Premium	213	562	-62.10%
Group Non Single Premium	2,364	3,139	-24.69%
Group Yearly Renewable Premium	16,258	14,889	9.19%
LIC No. of Policies	94,98,478	95,53,863	-0.58%

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

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

• The overall insurance sector saw growth in terms of number of policies sold by a 2.50% for FY24 (Apr-Oct) compared to the year ago period. However, there was a dichotomy. The private insures saw growth of 9.99 in terms of number of policies sold in FY24 (Apr-Oct) while LIC saw number of policies sold contract by -0.58% in the same period.

   

• If you look at the overall number of policies sold for FY24 (Apr-Oct) at 138.21 lakhs, the contributions of LIC and private insurers are still far off. Private insurers accounted for 31.27% while LIC accounted for 68.63%. LIC still appears to have a lead here due to the strong feet on street, but private insurers are rapidly catching up

   

LIC may have to do some soul searching

One reason for the fall in the market share of LIC with respect to new business premium (NBP) could be due to the changed tax rules pertaining to the new tax regime (NTR). The government encouraging the shift to the new tax regime where nominal rates of tax will be charged, if the tax payer gave up exemptions. Normally, when individuals give away Section 80C benefits, it is likely to hit life insurance premium collections and that is visible. However, that is not cast in iron, since private insurers are still seeing growth.

Today, LIC is a listed company and the sharp fall in market share of NBP by nearly 10% percentage points is not good news. That explains why the stock of LIC continues to languish at lower levels. While LIC still has an enviable feet on street agent network, they are too engaged in push strategy of selling insurance policies to save tax. That narrative has outlived its utility and LIC needs to look ahead. Today, life and health, are moving more into the realm of financial planning, as people are getting more organized about their finances. This is the shift that LIC must see and prepare itself for. Like any intelligent organization, LIC is working on Plan-B. How it handles this shift will dictate the future of LIC and the stock price.