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LIC still leads the NBP road in July 2024, but private insurers catch on

13 Aug 2024 , 09:21 AM

LIC CONTINUES TO OUTPERFORM ON NBP

The Life Insurance Council released the full month data stack in terms of new business premium (NBP) collections for July 2024 and for the cumulative four months from April 20 July of FY25. The news is that in July 2024, it is once again LIC that continues to dominate in terms of growth in new business premium. Apart from the NBP growth data, the Life Insurance Council also puts out the data on the growth in number of policies. On this measure, it is the private sector insurers that have done better than LIC in July 2024. In the last few months, LIC has clearly changed its focus more to growth in new business premium than on number of policies sold. Not surprisingly, the impact of this performance is visible in the stock price of LIC, which has more than doubled in the last on year. Finally, the investors in the LIC IPO are sitting on pretty profits and can celebrate that. More on that later!

Amidst this melee of numbers, the big question is do the insurance companies need to take up a strategic shift. Effective the fiscal year FY24, the new tax regime (NTR) has already become the default. In the full budget presented on July 23, 2024, the finance minister added benefits like higher standard deduction only to those taxpayers who follow the new tax regime. These moves by the government are likely to drive more people to adopt the NTR and that means less of tax-driven investments in life insurance. However, today life insurance to provide security to your family is not just a choice, but the absence of choice.

LIC SHOWS ROBUST NBP GROWTH IN JULY AND IN FY25

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

PARTICULARS	NBP (Jul-2024)	NBP (Jul-2023)	Growth YOY (%) Jul-24 / Jul-23	Growth YOY (%) FY24 / FY23
Individual Single Premium	4,610.66	3,693.77	24.82%	17.89%
Individual Non Single Premium	9,170.53	7,724.76	18.72%	19.55%
Group Single Premium	16,435.24	14,957.75	9.88%	23.17%
Group Non Single Premium	684.77	251.79	171.96%	29.36%
Group Yearly Renewable Premium	921.49	1,239.03	-25.63%	-10.72%
Grand Total Premium Flows	31,822.69	27,867.10	14.19%	20.50%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,843.54	1,701.47	8.35%	11.85%
Individual Non Single Premium	6,458.08	4,940.40	30.72%	26.19%
Group Single Premium	4,272.91	4,739.84	-9.85%	3.63%
Group Non Single Premium	8.97	9.71	-7.62%	25.63%
Group Yearly Renewable Premium	808.57	1,089.11	-25.76%	-12.89%
Private Insurer Premium Flows	13,392.07	12,480.53	7.30%	12.37%
LIC OF INDIA
Individual Single Premium	2,767.12	1,992.30	38.89%	23.07%
Individual Non Single Premium	2,712.45	2,784.36	-2.58%	7.16%
Group Single Premium	12,162.34	10,217.92	19.03%	30.10%
Group Non Single Premium	675.80	242.08	179.16%	29.46%
Group Yearly Renewable Premium	112.92	149.92	-24.68%	18.82%
LIC Premium Flows	18,430.63	15,386.57	19.78%	25.98%

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

What do we read from the data on insurance business for July 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 14.19% in July 2024. Since the new tax regime (NTR) was announced last year, the insurance companies have been trying to fine tune a model of insurance selling that is independent of the tax benefits. It may be recollected that the new tax regime (NTR) does away with exemptions like Section 80C, which covers life insurance premiums. Thus, life insurance has to be now sold as a personal financial planning tool, rather than as a tax saving tool. However, it is just the low-hanging fruit that has gone away, because there is still a robust market for life insurance as an uncertainty management tool. What is material about the performance of insurers in terms of new business premiums (NBP), is that the undertone since December 2023 had shifted in favour of LIC and the trend has continued till July; although private insurers are starting to show better NBP growth traction in July 2024. The private insurers saw first year NBP expand by 7.30% in July 2024 while LIC saw first year NBP expand by a just 17.78% yoy. LIC has done a lot better in July 2024 in terms of growth as compared to June 2024. Even on a cumulative basis, the trend is the same. Overall NBP for FY25 (Apr-Jul) has grown 20.5%, but the dichotomy is again favouring LIC. For the first four months of FY25, private insurers have shown 12.37% growth in NBP while LIC grew at 25.98% on yoy basis.
If you look at the overall premium collections for the month of July 2024 it is lower than June 2024 at ₹31,823 Crore. Once again, it is the contribution of LIC, which has improved compared to the private insurers. For instance, private insurers improved their share to 42.08% in July 2024; compared to 33.15% in June 2024, 38.26% in May 2024, 38.87% in April 2024, and 39.71% in March 2024. This is the best show in FY25 for private insurers. In contrast, LIC accounted for just 57.92% of total NBP in July 2024; compared to 66.85% in June 2024, 61.74% in May 2023, 61.13% in April 2024, and 60.29% in March 2024. It looks like private insurers may have actually curtailed LIC dominance in terms of NBP market share in the month of July 2024.

Compared to June 2024, the private insurers have actually put up a relatively better show in July 2024. We need to see if they can sustain or LIC manages to snatch more market share.

LIC STRUGGLES ON GROWTH IN POLICY NUMBERS JULY 2024

If new business premiums (NBP) is about fresh money flows into the insurer, the number of policies are about the retail spread and the future funnel of growth. To offer an analogy, NBP deepens the wallet share while number of policies widens the client base; and eventually both matter to the insurer. The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of July 2024 in terms of growth in the number of policies; compared to the base of July 2023.

PARTICULARS	Policies (Jul-2024)	Policies (Jul-2023)	Growth YOY (%) Jul-24 / Jul-23	Growth YOY (%) FY24 / FY23
Individual Single Premium	1,30,517	99,588	31.06%	20.65%
Individual Non Single Premium	22,53,715	22,21,586	1.45%	8.34%
Group Single Premium	305	144	111.81%	84.18%
Group Non Single Premium	456	378	20.63%	4.71%
Group Yearly Renewable Premium	3,727	3,539	5.31%	4.51%
Grand Total No. of Policies	23,88,720	23,25,235	2.73%	8.90%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	24,964	21,731	14.88%	19.45%
Individual Non Single Premium	7,35,240	6,42,734	14.39%	13.95%
Group Single Premium	244	116	110.34%	76.08%
Group Non Single Premium	12	9	33.33%	2.78%
Group Yearly Renewable Premium	651	524	24.24%	9.42%
Private Insurer No. of Policies	7,61,111	6,65,114	14.43%	14.14%
LIC OF INDIA
Individual Single Premium	1,05,553	77,857	35.57%	21.02%
Individual Non Single Premium	15,18,475	15,78,852	-3.82%	5.71%
Group Single Premium	61	28	117.86%	122.83%
Group Non Single Premium	444	369	20.33%	4.77%
Group Yearly Renewable Premium	3,076	3,015	2.02%	3.25%
LIC No. of Policies	16,27,609	16,60,121	-1.96%	6.49%

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

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

The overall insurance sector saw yoy growth in number of policies sold at just 2.73% for July 2024. There was a minor dichotomy. Private insures saw growth of 14.43% in number of policies sold in July 2024 while LIC saw contraction in the number of policies sold at -1.96%. Generally, growth in number of policies is dominated by private insurers and the month of June 2024 was a relative exception wherein LIC had the upper hand in terms of growth in the number of policies. If you look at the cumulative data for the 3 months of FY25, it is the private insurers who continue to lead the growth stakes, but in this case, the performance of LIC is a lot better than what it was in July.
If you look at the overall number of policies sold for July 2024 at 16.28 Lakh policies, the contributions of LIC and private insurers are still far off. However, private insurers saw their share of number of policies taper further to 31.87% in July 2024; compared to 32.79% in June 2024, 33.03% in May 2024, and 35.17% in April 2024. In contrast, LIC saw its share of number of policies at 68.13% in July 2024; compared to 67.21% in June 2024, 66.97% in May 2024 and 64.83% in April 2024.

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

NBP TRENDS: KEY PRIVATE LIFE INSURERS BUILD HEFT IN JUNE 2024?

In the month of July 2024, private insurers saw better growth in new business premium (NBP), although it was still LIC that made the best of its first mover advantage. Even in number of policies, the private sector dominated the LIC, although their share of policies actually fell. Here is a look at the 5 major private life insurers, whose NBP accounts for 71.5% of the total NBP collected by private insurers in July 2024. Let us begin with SBI Life Insurance.

SBI LIFE INSURANCE COMPANY	Jul-24 NBP (₹ in Crore)	Jul-23 NBP (₹ in Crore)	YOY Growth (in %)
Individual Single Premium	704.51	644.94	9.24%
Individual Non Single Premium	1,580.88	1,302.90	21.34%
Group Single Premium	637.68	2,056.91	-69.00%
Group Non Single Premium	3.35	0.16	1993.75%
Group Yearly Renewable Premium	69.19	62.47	10.76%
Total	2,995.61	4,067.39	-26.35%