Invest wise with Expert advice

LIC again scores brownie points over private insurers in May 2024

12 Jun 2024 , 10:15 AM

LIC DOES BETTER IN A ROBUST MAY 2024

The Life Insurance Council has just released the full month data stack in terms of new business premium (NBP) collections for May 2024. The Council not only discloses data on monthly NBP, but also on monthly policies sold as well as cumulative NBP and policies sold in the month compared to the year-ago period. This allows readers to get a 360-degree perspective of how life insurers performed in the month. May 2024 is just the second month of fiscal year FY25 (Apr-May 2024), hence the YTD data is not too reflective of what could be the full year trend. It only becomes meaningful after about 4-5 months of data are factored into the calculations. The story is that; once again LIC takes the cake in May 2024.

Apart from the NBP data, the Life Insurance Council has also released data on the number of policies sold by individual insurance companies as well as by private insurers overall, LIC and the life insurance industry, as a whole. Apart from the monthly numbers and yoy comparison, the data of cumulative performance of private insurers and LIC for fiscal year FY25 is also provided. While the LIC has done distinctly better in terms of new business premium (NBP) growth on a yoy basis in May 2024, it is the private insurers that have an edge in terms of the number of policies sold. LIC appears to have got over the setback of the new tax regime (NTR) and has started looking at life insurance as a financial planning tool.

LIC AGAIN RULES THE NBP GROWTH STORY IN MAY 2024

The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of May 2024 in terms of first year premiums and the yoy growth in premiums over May 2023. Premiums flows, here, refer to first year premiums only.

PARTICULARS	NBP (May-2024)	NBP (May-2023)	Growth YOY (%) May-24 / May-23	Growth YOY (%) FY24 / FY23
Individual Single Premium	3,350.77	2,832.33	18.30%	21.49%
Individual Non Single Premium	6,916.67	5,826.50	18.71%	20.14%
Group Single Premium	15,976.07	13,690.39	16.70%	47.09%
Group Non Single Premium	102.19	381.54	-73.22%	-67.88%
Group Yearly Renewable Premium	688.45	747.04	-7.84%	-15.78%
Grand Total Premium Flows	27,034.15	23,477.80	15.15%	31.21%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,528.24	1,329.66	14.93%	14.54%
Individual Non Single Premium	4,681.07	3,721.63	25.78%	25.47%
Group Single Premium	3,497.31	3,635.37	-3.80%	5.76%
Group Non Single Premium	11.69	5.03	132.41%	109.07%
Group Yearly Renewable Premium	625.44	729.83	-14.30%	-22.03%
Private Insurer Premium Flows	10,343.75	9,421.51	9.79%	12.62%
LIC OF INDIA
Individual Single Premium	1,822.53	1,502.68	21.29%	28.00%
Individual Non Single Premium	2,235.60	2,104.87	6.21%	10.59%
Group Single Premium	12,478.75	10,055.02	24.10%	65.96%
Group Non Single Premium	90.50	376.51	-75.96%	-70.47%
Group Yearly Renewable Premium	63.01	17.21	266.12%	156.73%
LIC Premium Flows	16,690.39	14,056.29	18.74%	46.35%

Data Source: Life Insurance Council (New Business Premiums – NBP figures are ₹ in Crore)

What do we read from the data on insurance business for May 2024 in terms of the first year premium collections by insurance companies?

The overall insurance sector saw robust yoy growth in first year premiums of 15.15% in May 2024. This is despite an elevated base in the comparable month of May 2023; which can be attributed to the genuine efforts by the insurance industry to push insurance as a standalone product. With the new tax regime (NTR) doing away with exemptions like Section 80C, which covers life insurance premiums, the scope for pushing LIC as a tax saving product is diminishing. The market for life insurance is still there. However, the low hanging fruit of pushing insurance for year-end tax savings is gradually diminishing. The undertone of the last few months (since December 2023) has shifted in favour of LIC and the trend has continued in May 2024 also. The private insurers saw NBP expand by just 9.79% in terms of first year premium collections in May 2024 while LIC saw first year premium collections expand by a more impressive 18.74% yoy. This is in contrast to the trend through most of last year, when LIC was continuously witnessing NBP contraction on a yoy basis. The cumulative numbers for the 2 months of FY25 also depict a similar trend.
If you look at the overall premium collections for the month of May 2024 at ₹27,034 Crore, the contributions of LIC has improved compared to the private insurers. For instance, private insurers accounted for38.26% share in May 2024; compared to 38.87% in April 2024, 39.71% in March 2024, 41.33% in February 2024, and 43.62% in January 2024. In contrast, LIC accounted for 61.74% in May 2023; against 61.13% in April 2024, 60.29% in March 2024, 58.67% in February 2024 and 56.38% in January 2024. The calendar year 2024 has seen a steady progression in the NBP share of LIC. Consequently, the NBP share of the private insurers has been gradually eroding.

What has LIC done differently in the current year? The single-minded focus of LIC on improving its NBP appears to have worked well in the last 4 months; even though it means that LIC is trailing the private insurers in terms of number of policies sold. It remains to be seen, how much more NBP share the LIC can eke out of the private insurers.

LIC LAGS PRIVATE INSURERS IN POLICIES SOLD IN MAY 2024

If NBC is about how much fresh money comes into the company, the number of policies are about how much you are investing in future customers. NBP is about deepening the wallet share while number of policies is about widening the wallet base. Having seen the NBP story in elaborate detail, let us shift to the story of number of policies sold by life insurers in May 2024, compared to May 2023. The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of May 2024 in terms of growth in the number of policies; compared to the base of May 2023.

PARTICULARS	Policies (May-2024)	Policies (May-2023)	Growth YOY (%) May-24 / May-23	Growth YOY (%) FY24 / FY23
Individual Single Premium	93,441	74,812	24.90%	22.46%
Individual Non Single Premium	17,71,631	15,84,073	11.84%	11.20%
Group Single Premium	203	135	50.37%	58.01%
Group Non Single Premium	357	373	-4.29%	-0.16%
Group Yearly Renewable Premium	2,464	1,931	27.60%	22.61%
Grand Total No. of Policies	18,68,096	16,61,324	12.45%	11.72%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	20,928	17,235	21.43%	22.89%
Individual Non Single Premium	5,95,352	5,10,638	16.59%	15.17%
Group Single Premium	153	110	39.09%	42.49%
Group Non Single Premium	10	10	0.00%	5.26%
Group Yearly Renewable Premium	582	568	2.46%	4.39%
Private Insurer No. of Policies	6,17,025	5,28,561	16.74%	15.44%
LIC OF INDIA
Individual Single Premium	72,513	57,577	25.94%	22.30%
Individual Non Single Premium	11,76,279	10,73,435	9.58%	9.23%
Group Single Premium	50	25	100.00%	136.84%
Group Non Single Premium	347	363	-4.41%	-0.33%
Group Yearly Renewable Premium	1,882	1,363	38.08%	31.32%
LIC No. of Policies	12,51,071	11,32,763	10.44%	9.90%

Data Source: Life Insurance Council (Number of Policies are absolute figures)

Here are some quick takeaways from the data points on insurance for May 2024 in terms of number of policies sold.

The overall insurance sector saw yoy growth in number of policies sold at 12.45% yoy for May 2024. There was a dichotomy, once again. Private insures saw growth of 16.74% in number of policies sold in April 2024 while LIC saw number of policies sold grow by 9.90%. One must admit that this gap has substantially narrowed in the last few months. If you look at the cumulative data for the 2 months of FY25, the trend is still the same with private life insurers leading the number of policies game.
If you look at the overall number of policies sold for May 2024 at 18.68 Lakh policies, the contributions of LIC and private insurers are still far off. However, private insurers saw their share of number of policies taper to 33.03% in May 2024; compared to 35.17% in April 2024, 24.31% in March 2024, 27.36% in February 2024, and 31.14% in January 2024. In contrast, LIC saw its share of number of policies at 66.97% in May 2024; compared to 64.83% in April 2024, 75.69% in March 2024, 72.64% in February and 68.86% in January 2024.

Let us now turn to how the five largest private life insurers saw NBP growth adding up in the month of May 2024.

NBP TRENDS OF KEY PRIVATE LIFE INSURERS IN MAY 2024?

In the month of May 2024, private insurers struggled for growth in new business premium (NBP), compared to LIC. Here is a look at the 5 major private life insurers, whose NBP accounts for 71.4% of the total NBP collected by private insurers in May 2024. Let us begin with SBI Life Insurance.

SBI LIFE INSURANCE COMPANY	May-24 NBP (₹ in Crore)	May-23 NBP (₹ in Crore)	YOY Growth (in %)
Individual Single Premium	618.04	527.56	17.15%
Individual Non Single Premium	1,072.51	856.46	25.23%
Group Single Premium	647.74	1,009.65	-35.85%
Group Non Single Premium	0.25	3.20	-92.19%
Group Yearly Renewable Premium	15.79	17.26	-8.52%
Total	2,354.33	2,414.13	-2.48%