Life insurance new business premiums robust in January 2024

8 Feb 2024 , 09:20 AM

LIC and private insurers see strong NBP growth in January 2024

The Life Insurance Council has just released the full month data stack in terms of new business premium (NBP) collections for January 2024. The Life Insurance Council 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 the Life Insurance Council for the first 10 months of FY24. While the monthly data captures the high frequency story of insurance business flows, it is the cumulative data that captures the secular trend more effectively. One look at the recent monthly trends, and investors can figure as to why the stock of LIC has been rallying so hard in the last few weeks. It has almost doubled from yearly lows.

If the first 8 months of FY24 saw the new business gravitate towards the private insurers, the last two months saw LIC back in the game with a bang. If you compare the first ten months of FY24 with the first nine months of FY23, the LIC share of new business premiums (NBP) has stayed robust at above 58.5% in the last few months. However, it is still sharply lower from the year ago  level of 65.38% of NBP which LIC had managed to corner. A clearer high frequency picture emerges if you look at the NBP (new business premium) figure for January 2024 at 56.38%, marginally lower than the corresponding January 2023 NBP share for LIC of 57.91%.

However, New Tax Regime remains a roadblock for LIC

The number of LIC have been dwindling ever since the new tax regime (NTR) was announced in the previous budget. This year, there were expectations that the government would offer some sops for the NTR, but being an interim budget, there was nothing forthcoming. The only hope now is that the full budget in July would offer something for LIC in terms of incentives for tax payers to take life insurance. However, LIC is preparing for the new order, where insurance is sold as a standalone risk reduction product to manage uncertainties pertaining to life. That is a good sign, since that is the crux of financial planning, where investments and insurance are treated and decided upon separately.

New Business Premium (NBP) Growth for January 2024

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

PARTICULARS	Premium Flows  (Jan-2024)	Premium Flows  (Jan-2023)	Growth YOY (%)
Individual Single Premium	3,550.25	3,923.28	-9.51%
Individual Non Single Premium	9,620.40	8,271.08	16.31%
Group Single Premium	18,303.33	13,107.74	39.64%
Group Non Single Premium	1,319.10	225.48	485.02%
Group Yearly Renewable Premium	766.68	896.07	-14.44%
Grand Total Premium Flows	33,559.75	26,423.65	27.01%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	1,631.24	1,672.17	-2.45%
Individual Non Single Premium	6,489.95	5,378.65	20.66%
Group Single Premium	5,882.54	3,267.29	80.04%
Group Non Single Premium	7.07	5.98	18.23%
Group Yearly Renewable Premium	628.19	797.89	-21.27%
Private Insurer Premium Flows	14,638.98	11,121.98	31.62%
LIC OF INDIA
Individual Single Premium	1,919.01	2,251.11	-14.75%
Individual Non Single Premium	3,130.45	2,892.43	8.23%
Group Single Premium	12,420.79	9,840.45	26.22%
Group Non Single Premium	1,312.03	219.50	497.74%
Group Yearly Renewable Premium	138.49	98.18	41.06%
LIC Premium Flows	18,920.77	15,301.67	23.65%

Data Source: Life Insurance Council (Premium figures are ₹ in crore)

Here are some quick takeaways from the data points on insurance business for January 2024 in terms of the first year premium collections by insurance companies.

• The overall insurance sector saw sharp growth in first year premiums by 27.01% in January 2024. This can be attributed to a low base in January 2023 and also to genuine efforts put by the insurance company to push insurance as a standalone product, rather than as a tax-saving tag-along. However, the dichotomy of the last few months shifted in favour of LIC and the trend is broadly visible in January also, although private insurers grew at a faster rate. The private insures saw NBP expand by 31.62% in terms of first year premium collections in January 2024 while LIC saw first year premium collections expand by 23.65% yoy; a sharp contrast to contraction in the last few months.
• If you look at the overall premium collections for the month of January 2024 at Rs33,560 crore, the contributions of LIC and private insurers have been stable. Private insurers accounted for 43.62% in January 2024; higher than the last 2 months. In contrast, LIC accounted for 56.38% in January 2024; lower than the average of last 2 months.

There has been some consolation for LIC in the last 3 months in terms of NBP share, although the ball is still in LIC’s court to consolidate on these gains.

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 10 months of FY24 (April 2023 to January 2024), in terms of cumulative new business premium (NBP). The comparison is with the comparable 10 months for FY23.

PARTICULARS	Premium Flows  (FY24)	Premium Flows  (FY23)	Growth YOY (%)
Individual Single Premium	34,782.64	35,099.95	-0.90%
Individual Non Single Premium	78,059.84	71,797.79	8.72%
Group Single Premium	1,58,811.71	1,76,378.84	-9.96%
Group Non Single Premium	3,672.45	4,494.21	-18.28%
Group Yearly Renewable Premium	8,506.88	7,843.47	8.46%
Grand Total Premium Flows	2,83,833.52	2,95,614.25	-3.99%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	15,860.30	15,659.86	1.28%
Individual Non Single Premium	53,324.39	47,333.41	12.66%
Group Single Premium	41,194.56	33,985.18	21.21%
Group Non Single Premium	107.79	115.79	-6.91%
Group Yearly Renewable Premium	7,020.12	7,216.56	-2.72%
Private Insurer Premium Flows	1,17,507.15	1,04,310.81	12.65%
LIC OF INDIA
Individual Single Premium	18,922.35	19,440.09	-2.66%
Individual Non Single Premium	24,735.45	24,464.37	1.11%
Group Single Premium	1,17,617.15	1,42,393.66	-17.40%
Group Non Single Premium	3,564.65	4,378.42	-18.59%
Group Yearly Renewable Premium	1,486.76	626.90	137.16%
LIC Premium Flows	1,66,326.37	1,91,303.44	-13.06%

Data Source: Life Insurance Council (Premium figures are ₹ in crore and for period Apr-23 to Jan-24)

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

• The insurance sector saw contraction in first year premium collections by -3.99% for FY24 (Apr-Jan) yoy. However, the lag effect of earlier months still stays. The private insurers saw NBP growth of 12.65% for first 10 months, compared to sustained contraction of -13.06% for LIC in FY24.
• If you look at the overall premium collections for the period of FY24 (Apr-Jan) at Rs2,83,834 crore, the respective contributions of LIC and private insurers are almost flat as the end of January 2024. Private insurers accounted for 41.40% while LIC accounted for 58.60%. However, if you look at the year ago share, LIC share was at 64.71%, while private insurers stood at 35.29% in that period. Clearly, the private insurers have grown in terms of NBP share in FY24, despite the positive show by LIC in last 3 months.

Growth in Number of Policies for January 2024

The table below captures the performance of LIC, private insurers and the overall insurance sector for the month of January 2024 in terms of growth in the number of policies. The comparison is, once again, between January 2024 and January 2023.

PARTICULARS	No. of Policies (Jan-2024)	No. of Policies (Jan-2023)	Growth YOY (%)
Individual Single Premium	1,02,206	1,04,285	-1.99%
Individual Non Single Premium	26,87,164	24,30,436	10.56%
Group Single Premium	377	131	187.79%
Group Non Single Premium	360	408	-11.76%
Group Yearly Renewable Premium	3,288	3,906	-15.82%
Grand Total No. of Policies	27,93,395	25,39,166	10.01%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	26,901	23,772	13.16%
Individual Non Single Premium	7,36,669	6,38,635	15.35%
Group Single Premium	148	95	55.79%
Group Non Single Premium	7	12	-41.67%
Group Yearly Renewable Premium	439	474	-7.38%
Private Insurer No. of Policies	7,64,164	6,62,988	15.26%
LIC OF INDIA
Individual Single Premium	75,305	80,513	-6.47%
Individual Non Single Premium	19,50,495	17,91,801	8.86%
Group Single Premium	229	36	536.11%
Group Non Single Premium	353	396	-10.86%
Group Yearly Renewable Premium	2,849	3,432	-16.99%
LIC No. of Policies	20,29,231	18,76,178	8.16%

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

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

• The overall insurance sector saw yoy growth in number of policies sold by 10.01% for January 2024. There was a dichotomy, once again. Private insures saw growth of 15.26% in number of policies sold in January 2024 while LIC saw number of policies sold grow by just 8.16%. Normally, LIC had managed to show growth in number of policies sold in the past, but the focus has perhaps shifted to NBP in recent months.
• If you look at the overall number of policies sold for January 2024 at 27.93 lakhs, the contributions of LIC and private insurers are still far off. Private insurers saw their share of number of policies sold drop sharply to 27.36% in January 2024, compared to above 30% levels in previous months. LIC saw its share of number of policies climb to 72.64% compared to around 65% average in the recent months. LIC still appears to have a lead here due to the strong feet on street. It is in individual policy numbers that LIC is really making a dent on the share of private insurers.

Growth in number of policies for FY24 (Apr-23 to Jan-24)

The table below captures the performance of LIC, private insurers and the overall insurance sector for FY24 (Apr-23 to Jan-24) on the basis of the number of policies sold.

PARTICULARS	No. of Policies (FY24)	No. of Policies (FY23)	Growth YOY (%)
Individual Single Premium	9,28,782	9,77,704	-5.00%
Individual Non Single Premium	2,03,44,031	1,99,17,543	2.14%
Group Single Premium	2,032	1,545	31.52%
Group Non Single Premium	3,380	4,687	-27.89%
Group Yearly Renewable Premium	30,053	27,739	8.34%
Grand Total No. of Policies	2,13,08,278	2,09,29,218	1.81%
PRIVATE INSURANCE COMPANIES
Individual Single Premium	2,13,229	2,09,018	2.01%
Individual Non Single Premium	64,77,738	59,23,072	9.36%
Group Single Premium	1,485	886	67.61%
Group Non Single Premium	67	202	-66.83%
Group Yearly Renewable Premium	4,973	3,439	44.61%
Private Insurer No. of Policies	66,97,492	61,36,617	9.14%
LIC OF INDIA
Individual Single Premium	7,15,553	7,68,686	-6.91%
Individual Non Single Premium	1,38,66,293	1,39,94,471	-0.92%
Group Single Premium	547	659	-17.00%
Group Non Single Premium	3,313	4,485	-26.13%
Group Yearly Renewable Premium	25,080	24,300	3.21%
LIC No. of Policies	1,46,10,786	1,47,92,601	-1.23%

Data Source: Life Insurance Council (Cumulative Data from Apr-23 to Jan-24)

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 1.81% for FY24 (Apr-Jan) compared to the year ago period. However, there was a dichotomy once again. The private insures saw growth of 9.14% in terms of number of policies sold in FY24, while LIC saw number of policies sold contract by -1.23% in the same period.
• If you look at the overall number of policies sold for FY24 (Apr-Jan) at 213.08 lakhs, the contributions of LIC and private insurers are still far off. Private insurers accounted for 31.43%, sharply higher than 29.32% in the year ago period. LIC saw its share slipping to 68.57% in FY24 compared to 70.68% in the year ago period. LIC still appears to have a lead here due to the strong feet on street, but the share is slipping once again.

LIC has reasons to smile

For over 60 years, LIC made the best of the Section 80C provisions. Even after private insurers entered the fray, LIC continued to hold sway. That has changed in the last one year since the introduction of the new tax regime (NTR). However, LIC appears to have got its act together in the last few months, with tangible growth in NBP and in number of policies sold. There is greater aggression in LIC and that is also evident in the stock price of LIC doubling from the lows of the year. With massive equity gains, LIC surely has reasons to smile.