How did life insurance companies perform in September 2023?

10 Oct 2023 , 09:39 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 September 2023 as well as for the first half of FY24. This data has been released at an overall level as well as specific to LIC and the 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 first half numbers for FY24. 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 half of FY24 with the first half of FY23, the LIC share of new business premiums (NBP) has fallen from 68% to 59%, which is a rather steep fall in market share, and something to worry considering it is now a listed company. 

Of course, the number of policies is still where LIC dominates the private sector, but that is little consolation for the PSU behemoth. 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. Here is a quick look at the insurance narrative on four counts. We look at September 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 half of FY24, ending September 2023.

First year Premium (NBP) Growth for September 2023

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

PARTICULARS	Premium Flows  (Sep 2023)	Premium Flows  (Sep 2022)	Growth YOY (%)
Individual Single Premium	4,548.47	4,058.22	12.08%
Individual Non Single Premium	8,504.08	7,758.27	9.61%
Group Single Premium	16,077.93	23,250.51	-30.85%
Group Non Single Premium	260.98	586.46	-55.50%
Group Yearly Renewable Premium	1,324.83	713.07	85.79%
Grand Total Premium Flows	30,716.29	36,366.52	-15.54%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	2,035.59	1,939.40	4.96%
Individual Non Single Premium	5,922.33	5,263.17	12.52%
Group Single Premium	3,992.41	3,534.59	12.95%
Group Non Single Premium	17.92	18.75	-4.43%
Group Yearly Renewable Premium	621.73	619.37	0.38%
Private Insurer Premium Flows	12,589.97	11,375.26	10.68%
LIC OF INDIA
Individual Single Premium	2,512.89	2,118.83	18.60%
Individual Non Single Premium	2,581.75	2,495.10	3.47%
Group Single Premium	12,085.52	19,715.92	-38.70%
Group Non Single Premium	243.06	567.71	-57.19%
Group Yearly Renewable Premium	703.10	93.70	650.37%
LIC Premium Flows	18,126.32	24,991.26	-27.47%

Data Source: IRDAI

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

• The overall insurance sector saw contraction in first year premium collections by -15.54% in September (marginally better than -18.47% for August 2023). However, the dichotomy continues to persist. The private insures saw growth of 10.68% in terms of first year premium collections in September 2023 while the LIC saw first year premium collections contract by a rather steep -27.47%.

   

• If you look at the overall premium collections for the month of September 2023 at Rs30,716 crore, the contributions of LIC and private insurers are gradually converging. Private insurers accounted for 40.99% while LIC accounted for 59.01%. However, for LIC, the NBP numbers for September are surely better than the numbers in August. 

   

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

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

PARTICULARS	Premium Flows  (FY24)	Premium Flows  (FY23)	Growth YOY (%)
Individual Single Premium	20,700.60	19,509.96	6.10%
Individual Non Single Premium	41,600.63	38,352.91	8.47%
Group Single Premium	88,324.06	1,16,611.67	-24.26%
Group Non Single Premium	1,913.43	2,585.95	-26.01%
Group Yearly Renewable Premium	5,838.09	4,916.47	18.75%
Grand Total Premium Flows	1,58,376.81	1,81,976.95	-12.97%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	9,364.91	8,739.06	7.16%
Individual Non Single Premium	27,800.32	24,640.11	12.83%
Group Single Premium	23,801.14	19,733.47	20.61%
Group Non Single Premium	58.54	89.76	-34.78%
Group Yearly Renewable Premium	4,709.27	4,583.47	2.74%
Private Insurer Premium Flows	65,734.19	57,785.88	13.75%
LIC OF INDIA
Individual Single Premium	11,335.70	10,770.90	5.24%
Individual Non Single Premium	13,800.30	13,712.80	0.64%
Group Single Premium	64,522.92	96,878.20	-33.40%
Group Non Single Premium	1,854.88	2,496.19	-25.69%
Group Yearly Renewable Premium	1,128.82	332.99	239.00%
LIC Premium Flows	92,642.62	1,24,191.08	-25.40%

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

Here are some quick takeaways from the data points on insurance for H1-FY24 (Apr-Sep) in terms of the first year premium collections by insurance companies.

• The overall insurance sector saw contraction in first year premium collections by a rather steep -12.97% for FY24 (Apr-Sep) as compared to the year ago period. However, there was a dichotomy, once again. The private insures saw growth of 13.75% in terms of first year NBP collections in FY24 (Apr-Sep) while LIC saw first year premium collections contract by a rather steep -25.40% in the first half on a yoy comparison.

   

• If you look at the overall premium collections for the period of FY24 (Apr-Sep) at Rs1,58,377 crore, the contributions of LIC and private insurers are starting to converge gradually. Private insurers accounted for 41.50% while LIC accounted for 58.50%. Ironically, over the last 1 year, the LIC share fell from 68.25% to 58.50%.

   

Growth in Number of Policies for September 2023

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

PARTICULARS	No. of Policies (Sep 2023)	No. of Policies (Sep 2022)	Growth YOY (%)
Individual Single Premium	1,24,090	1,05,059	18.11%
Individual Non Single Premium	20,83,709	18,97,589	9.81%
Group Single Premium	246	215	14.42%
Group Non Single Premium	362	558	-35.13%
Group Yearly Renewable Premium	3,291	3,410	-3.49%
Grand Total No. of Policies	22,11,698	20,06,831	10.21%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	27,949	23,416	19.36%
Individual Non Single Premium	7,01,607	6,59,485	6.39%
Group Single Premium	210	112	87.50%
Group Non Single Premium	7	31	-77.42%
Group Yearly Renewable Premium	470	369	27.37%
Private Insurer No. of Policies	7,30,243	6,83,413	6.85%
LIC OF INDIA
Individual Single Premium	96,141	81,643	17.76%
Individual Non Single Premium	13,82,102	12,38,104	11.63%
Group Single Premium	36	103	-65.05%
Group Non Single Premium	355	527	-32.64%
Group Yearly Renewable Premium	2,821	3,041	-7.23%
LIC No. of Policies	14,81,455	13,23,418	11.94%

Data Source: IRDAI

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

• The overall insurance sector saw growth in terms of number of policies sold by 10.21% for September 2023 as compared to the year ago period. However, there was a dichotomy. The private insures saw growth of 6.85% in terms of number of policies sold in September 2023 while LIC saw number of policies sold grow by an impressive 11.94% in the same period. LIC appears to have got its act right here.

   

• If you look at the overall number of policies sold for September 2023 at 27.12 lakhs, the contributions of LIC and private insurers are still far off. Private insurers accounted for 33.02% while LIC accounted for 66.98%. LIC still appears to have a lead here due to the strong feet on street, but private insurers have done better than in August.

   

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

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

PARTICULARS	No. of Policies (FY24)	No. of Policies (FY23)	Growth YOY (%)
Individual Single Premium	5,66,750	5,58,488	1.48%
Individual Non Single Premium	1,11,77,058	1,11,89,328	-0.11%
Group Single Premium	970	1,066	-9.01%
Group Non Single Premium	2,081	2,924	-28.83%
Group Yearly Renewable Premium	17,142	14,391	19.12%
Grand Total No. of Policies	1,17,64,001	1,17,66,197	-0.02%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,24,938	1,18,756	5.21%
Individual Non Single Premium	35,58,145	32,70,031	8.81%
Group Single Premium	808	528	53.03%
Group Non Single Premium	42	142	-70.42%
Group Yearly Renewable Premium	3,430	1,992	72.19%
Private Insurer No. of Policies	36,87,363	33,91,449	8.73%
LIC OF INDIA
Individual Single Premium	4,41,812	4,39,732	0.47%
Individual Non Single Premium	76,18,913	79,19,297	-3.79%
Group Single Premium	162	538	-69.89%
Group Non Single Premium	2,039	2,782	-26.71%
Group Yearly Renewable Premium	13,712	12,399	10.59%
LIC No. of Policies	80,76,638	83,74,748	-3.56%

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

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

• The overall insurance sector saw contraction in terms of number of policies sold by a marginal -0.02% for FY24 (Apr-Sep) compared to the year ago period. However, there was a dichotomy. The private insures saw growth of 8.73% in terms of number of policies sold in FY24 (Apr-Sep) while LIC saw number of policies sold contract by -3.56% in the same period.

   

• If you look at the overall number of policies sold for FY24 (Apr-Sep) at 117.64 lakhs, the contributions of LIC and private insurers are still far off. Private insurers accounted for 31.34% while LIC accounted for 68.66%. LIC still appears to have a lead here due to the strong feet on street, but private insurers look to be catching up rapidly.
   

Bigger question for LIC from hereon

The pressure on LIC from multiple fronts is obvious. 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 a more nominal rate of tax will be charged, but that would also mean that people give up on the plethora of 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 entirely true since private insurers are still seeing growth.

While the LIC has an enviable feet on street agent network, they are still too engaged in push strategy of selling insurance policies to save tax. That narrative apparently needs to change. Most private insurers have learnt the art of weaving insurance as a product into the financial plans of people, and that is the way ahead. LIC needs to adapt its model accordingly. Life insurance, today, is a necessity irrespective of whether there are tax benefits or not. That is the approach that investors must take and that is the kind of a mindset that LIC needs to tap. It needs a new thinking, but like any intelligent organization, LIC is already actioning Plan-B on these lines. How it handles this situation will have a major bearing on the stock price in the coming days.