LIC stages a smart comeback in new business in December 2023

10 Jan 2024 , 10:00 AM

New business grows in December; as LIC takes the lead

The IRDAI has just released the full month data stack in terms of new business premium (NBP) collections for the December 2023. The IRDAI has also released data on the number of policies sold by individual insurance companies and also at a macro level. In addition to these monthly numbers and the yoy comparison, there is also the cumulative performance that has been put out by IRDAI for the first 9 months of FY24. While the monthly data captures the high frequency story of insurance business flows, it is the cumulative data that captures the picture of the secular trend more effectively. 

If the first 8 months of FY24 saw the new business gravitate towards the private insurers, the month of December 2023 saw LIC back in the game with a bang. If you compare the first nine months of FY24 with the first nine months of FY23, the LIC share of new business premiums (NBP) has improved marginally to 58.90%, compared to 58.78% at the end of November. However, it is still sharply lower from the year ago  level of 65.38% of NBP that LIC had cornered. A clearer high frequency picture emerges if you look at the NBP (new business premium) figure for December 2023 at 59.56%, sharply higher than the corresponding December 2022 NBP share for LIC of 44.158%.

For a change, LIC dominated the NBP, not number of policies

In the last few months, LIC was dominant in terms of the number of sold, but not in terms of the new business premiums (NBP). For a change, the month of December has seen LIC dominating on NBP, although not so much on the number of policies. In the February 2023 Union Budget, the Finance Minister made the new tax regime (NTR) a lot more attractive for the salaried persons. Also, the NTR still allowed the tax payers to claim some of the exemptions, so it was still attractive. However, that had a major downside for LIC. For years, LIC has thrived on people buying life insurance policies to save on tax. The vast agent network of LIC had literally thrived on that. With the NTR in place, there was a sudden loss of momentum for the feet on street (FOS) agents of LIC. That impacted NBP, although December 2023 is showing the first signs that LIC is reconciling to the new reality

First year Premium (NBP) Growth for December 2023

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

PARTICULARS	Premium Flows  (Dec 2023)	Premium Flows  (Dec 2022)	Growth YOY (%)
Individual Single Premium	4,081.38	4,553.44	-10.37%
Individual Non Single Premium	11,927.50	10,889.72	9.53%
Group Single Premium	21,682.95	10,212.01	112.33%
Group Non Single Premium	225.12	449.79	-49.95%
Group Yearly Renewable Premium	666.17	733.32	-9.16%
Grand Total Premium Flows	38,583.13	26,838.29	43.76%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	2,081.19	2,183.38	-4.68%
Individual Non Single Premium	8,816.17	7,884.59	11.82%
Group Single Premium	4,080.98	4,245.14	-3.87%
Group Non Single Premium	14.62	9.29	57.37%
Group Yearly Renewable Premium	608.88	657.38	-7.38%
Private Insurer Premium Flows	15,601.85	14,979.79	4.15%
LIC OF INDIA
Individual Single Premium	2,000.19	2,370.06	-15.61%
Individual Non Single Premium	3,111.33	3,005.13	3.53%
Group Single Premium	17,601.97	5,966.87	195.00%
Group Non Single Premium	210.49	440.50	-52.22%
Group Yearly Renewable Premium	57.29	75.94	-24.56%
LIC Premium Flows	22,981.28	11,858.50	93.80%

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

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

• The overall insurance sector saw sharp growth in first year premiums by 43.76% in December 2023. This can be attributed to a low base in December 2022. However, the dichotomy of the last few months shifted in favour of LIC in December 2023. The private insures saw NBP expand by 4.15% in terms of first year premium collections in December 2023 while LIC saw first year premium collections expand sharply by 43.76% yoy; a sharp contrast to the contraction seen in the last few months.

   

• If you look at the overall premium collections for the month of December 2023 at Rs38,583 crore, the contributions of LIC and private insurers have turned. LIC gained market share. Private insurers accounted for 40.44% in December against 41.66% in October; while LIC accounted for 59.56% in December against 58.34% in October. 

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

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

The table below captures the performance of LIC, private insurers and the overall insurance sector for the first 9 months of FY24 (April 2023 to December 2023), in terms of cumulative new business premium (NBP). The comparison is with the comparable 9 months for FY23.

PARTICULARS	Premium Flows  (FY24)	Premium Flows  (FY23)	Growth YOY (%)
Individual Single Premium	31,232.40	31,176.67	0.18%
Individual Non Single Premium	68,439.44	63,526.71	7.73%
Group Single Premium	1,40,508.38	1,63,271.10	-13.94%
Group Non Single Premium	2,353.33	4,268.73	-44.87%
Group Yearly Renewable Premium	7,740.20	6,947.40	11.41%
Grand Total Premium Flows	2,50,273.75	2,69,190.60	-7.03%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	14,229.06	13,987.69	1.73%
Individual Non Single Premium	46,834.44	41,954.76	11.63%
Group Single Premium	35,312.02	30,717.89	14.96%
Group Non Single Premium	100.71	109.80	-8.28%
Group Yearly Renewable Premium	6,391.93	6,418.68	-0.42%
Private Insurer Premium Flows	1,02,868.16	93,188.83	10.39%
LIC OF INDIA
Individual Single Premium	17,003.34	17,188.98	-1.08%
Individual Non Single Premium	21,605.00	21,571.94	0.15%
Group Single Premium	1,05,196.36	1,32,553.21	-20.64%
Group Non Single Premium	2,252.62	4,158.92	-45.84%
Group Yearly Renewable Premium	1,348.27	528.72	155.01%
LIC Premium Flows	1,47,405.59	1,76,001.77	-16.25%

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

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

• The insurance sector saw contraction in first year premium collections by -7.03% for FY24 (Apr-Dec) yoy. However, the dichotomy of other months of the year still stays. The private insurers saw NBP growth of 10.39% for first 9 months, compared to contraction of -16.25% for LIC in FY24. 

   

• If you look at the overall premium collections for the period of FY24 (Apr-Dec) at Rs2,50,274 crore, the respective contributions of LIC and private insurers are almost flat as the end of November. Private insurers accounted for 41.11% while LIC accounted for 58.89%. However, if you look at the year ago share, LIC share was at 65.38%, while private insurers stood at 34.62% in that period. Clearly, the private insurers have grown in terms of NBP share in FY24, despite the positive show by LIC in December 2023.

Growth in Number of Policies for December 2023

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

PARTICULARS	No. of Policies (Dec 2023)	No. of Policies (Dec 2022)	Growth YOY (%)
Individual Single Premium	98,980	1,21,785	-18.73%
Individual Non Single Premium	25,47,648	26,28,286	-3.07%
Group Single Premium	269	124	116.94%
Group Non Single Premium	318	472	-32.63%
Group Yearly Renewable Premium	3,637	3,644	-0.19%
Grand Total No. of Policies	26,50,852	27,54,311	-3.76%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	26,559	26,562	-0.01%
Individual Non Single Premium	9,22,994	8,57,009	7.70%
Group Single Premium	216	98	120.41%
Group Non Single Premium	8	18	-55.56%
Group Yearly Renewable Premium	468	314	49.04%
Private Insurer No. of Policies	9,50,245	8,84,001	7.49%
LIC OF INDIA
Individual Single Premium	72,421	95,223	-23.95%
Individual Non Single Premium	16,24,654	17,71,277	-8.28%
Group Single Premium	53	26	103.85%
Group Non Single Premium	310	454	-31.72%
Group Yearly Renewable Premium	3,169	3,330	-4.83%
LIC No. of Policies	17,00,607	18,70,310	-9.07%

Data Source: IRDAI

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

• The overall insurance sector saw yoy contraction in number of policies sold by -3.76% for December 2023. There was a dichotomy, once again. Private insures saw growth of 7.49% in number of policies sold in December 2023 while LIC saw number of policies sold contract by -9.07%. Normally, LIC had managed to show growth in number of policies sold in the past, but the focus has perhaps shifted to NBP in December 2023.

   

• If you look at the overall number of policies sold for December 2023 at 26.51 lakhs, the contributions of LIC and private insurers are still far off. Private insurers improved their share of number of policies to 35.85% in December 2023 from 32.10% in December 2022, while LIC saw its share of number of policies fall to 64.15% in December compared to 67.90% in December 2022. 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; so, they really need to defend this turf.

Growth in number of policies for FY24 (Apr-23 to Dec-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	8,26,576	8,73,419	-5.36%
Individual Non Single Premium	1,76,56,867	1,74,87,107	0.97%
Group Single Premium	1,655	1,414	17.04%
Group Non Single Premium	3,020	4,279	-29.42%
Group Yearly Renewable Premium	26,765	23,833	12.30%
Grand Total No. of Policies	1,85,14,883	1,83,90,052	0.68%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,86,328	1,85,246	0.58%
Individual Non Single Premium	57,41,069	52,84,437	8.64%
Group Single Premium	1,337	791	69.03%
Group Non Single Premium	60	190	-68.42%
Group Yearly Renewable Premium	4,534	2,965	52.92%
Private Insurer No. of Policies	59,33,328	54,73,629	8.40%
LIC OF INDIA
Individual Single Premium	6,40,248	6,88,173	-6.96%
Individual Non Single Premium	1,19,15,798	1,22,02,670	-2.35%
Group Single Premium	318	623	-48.96%
Group Non Single Premium	2,960	4,089	-27.61%
Group Yearly Renewable Premium	22,231	20,868	6.53%
LIC No. of Policies	1,25,81,555	1,29,16,423	-2.59%

Data Source: IRDAI (Cumulative Data from Apr-23 to Dec-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 0.68% for FY24 (Apr-Dec) compared to the year ago period. However, there was a dichotomy once again. The private insures saw growth of 8.40% in terms of number of policies sold in FY24 (Apr-Dec) while LIC saw number of policies sold contract by -2.59% in the same period.

   

• If you look at the overall number of policies sold for FY24 (Apr-Dec) at 185.15 lakhs, the contributions of LIC and private insurers are still far off. Private insurers accounted for 32.05%, sharply higher than 29.76% in the year ago period. LIC saw its share slipping to 67.95% in FY24 compared to 70.24% in the year ago period. LIC still appears to have a lead here due to the strong feet on street, but the share is, once again, slipping.

Task is cut out for LIC from this point

One reason for the fall in the market share of LIC in terms of NBP is the new tax regime (NTR). However, that is done and dusted. Much of LIC’s clout came from Section 80C of the Income Tax Act and it has to now think beyond. Remember, LIC is a listed company and, despite the recent rally in the stock price, the investor confidence in the stock continues to be low.  That can only be rectified if LIC is able to get its act together on the growth front. LIC still has an enviable feet on street agent network, but they need to move from pull to push. Thet will be the big challenge for LIC!