Life insurance new business story for February 2023

9 Mar 2023 , 10:17 AM

While yoy growth for February 2023 is negative, the first 11 months of FY23 are still showing growth across private insurers and LIC. The monthly new business numbers on life insurers are announced by the Life Insurance Council and later published by the IRDAI. 

Big picture on new life insurance business in February 2023

Overall the new business premium for the life insurance sector as a whole fell by 16.8% in February 2023, led by a 32.1% fall in the new business premium for LIC. This is actually surprising, since the last quarter is considered to be a busy quarter for the life insurance business due to the tax implications. One argument is that the new tax regime could have dissuaded the demand for long term life insurance commitment, but these are still early days. However, it was not just a fall in the new business premiums, but also a 15.3% fall in the number of policies sold that was the real issue. In the case of LIC, the APE (annual premium equivalent) fell sharply on a monthly and year-to-date basis. 

Key readings from NBP of life insurance – February 2023

We look at the new business premium (NBP) collections for February 2023 on a yoy basis and also the cumulative NBP numbers for first 11 months of FY23. We take a more granular break-up of the life insurance data between LIC and private insurers on policy types.

PARTICULARS	Feb-23 Month	Feb-22 Month	Growth (%)	FY23 upto  Feb 2023	FY22 upto  Feb 2022	Growth (%)
PRIVATE SECTOR TOTAL	10,968	9,975	9.95%	1,15,279	98,213	17.38%
Individual Single Premium	1,534	1,580	-2.95%	17,194	14,709	16.89%
Individual Non-Single Premium	5,465	4,594	18.97%	52,799	44,705	18.10%
Group Single Premium	3,416	3,093	10.45%	37,402	32,529	14.98%
Group Non-Single Premium	19	66	-71.09%	135	356	-62.12%
Group Yearly Renewable Premium	534	641	-16.82%	7,750	5,913	31.07%
LIC OF INDIA TOTAL	11,879	17,489	-32.08%	2,03,183	1,56,441	29.88%
Individual Single Premium	1,906	2,189	-12.96%	21,346	20,787	2.69%
Individual Non-Single Premium	2,473	2,527	-2.14%	26,937	24,515	9.88%
Group Single Premium	7,092	12,062	-41.20%	1,49,486	1,07,298	39.32%
Group Non-Single Premium	342	556	-38.52%	4,721	2,672	76.66%
Group Yearly Renewable Premium	67	154	-56.82%	693	1,169	-40.69%
TOTAL LIFE INSURANCE	22,848	27,465	-16.81%	3,18,462	2,54,654	25.06%
Individual Single Premium	3,439	3,770	-8.76%	38,539	35,496	8.57%
Individual Non-Single Premium	7,938	7,121	11.47%	79,736	69,220	15.19%
Group Single Premium	10,509	15,155	-30.66%	1,86,887	1,39,827	33.66%
Group Non-Single Premium	361	623	-42.00%	4,856	3,029	60.32%
Group Yearly Renewable Premium	600	796	-24.56%	8,444	7,082	19.22%

Data Source: IRDAI

Here are some of the key takeaways from the NBP numbers for February 2023.

1. For the month of February 2023, the new business premiums (NBP) of LIC contracted by 32.1% even as the NBP of private life insurers expanded by 9.95%. The overall premiums for the life insurance sector overall contracted 16.8%.

    

2. On a cumulative basis for the first 11 months of FY23 ending February 2023, the new business premiums (NBP) of LIC grew 29.9% even as the NBP of private life insurers expanded by just 17.4%. The overall premiums for the life insurance sector overall expanded by 25.1%.

    

3. If one looks at the February 2023 data for LIC and compares on a yoy basis, there was contraction in NBP across all categories viz. individual single premium, individual non-single premium, group single premium, group non-single premium and group yearly renewable premium. LIC is normally strong in the group premium segment. Private insurers saw 18.97% growth in individual non-single premium NBP and 10.5% in group single premium, while the other categories saw contraction.

    

4. If one looks at the cumulative picture for 11 months of FY23 up to February 2023 for LIC and compares on a yoy basis, there was expansion in NBP across all categories except the group yearly renewable premium, which saw NBP contraction of 40.7%. Private insurers saw growth across all categories except the group non-single premium category, which saw contraction of 60.1%. At an overall insurance industry level, the cumulative NBP grew across all the five categories.

    

5. Let us finally look at premium share. For the month of February 2023, out of the total life insurance NBP of Rs22,848 crore, LIC accounted for Rs11,879 crore (52%) and private life insurers accounted for Rs10,968 crore (48%). For the cumulative 11 months of FY23 up to February 2023, out of the total life insurance NBP of Rs254,654 crore, LIC accounted for Rs156,441 crore (61.4%) and private life insurers accounted for Rs98,213 crore (38.6%).

In the months running up to February 2023, the LIC share of new business premium (NBP) has been consistently falling and is now inching closer to the 61% mark, one of the lowest levels it has seen. As stated earlier, the sharply lower numbers can be attributed to the New Tax Regime, where exemptions are done away with and that would take away one of the most important selling points used by LIC agents and feet-on-street to sell life policies. 

Key readings from number of life policies sold – February 2023

Having seen new business premium (NBP) collections for February 2023, let us turn to the number of policies sold. That is normally a better picture of retail spread. We will also look at the number of policies sold on a cumulative basis for the 11 months of FY23 and the break-up between LIC and private insurers.

PARTICULARS	Feb-23 Month	Feb-22 Month	Growth (%)	FY23 upto  Feb 2023	FY22 upto  Feb 2022	Growth (%)
PRIVATE SECTOR TOTAL	6,69,481	6,62,577	1.04%	68,06,098	62,64,889	8.64%
Individual Single Premium	25,475	30,458	-16.36%	2,34,493	2,45,388	-4.44%
Individual Non-Single Premium	6,43,351	6,31,825	1.82%	65,66,423	60,15,665	9.16%
Group Single Premium	107	101	5.94%	993	942	5.41%
Group Non-Single Premium	11	16	-31.25%	213	181	17.68%
Group Yearly Renewable Premium	537	177	203.39%	3,976	2,713	46.55%
LIC OF INDIA TOTAL	16,16,048	20,36,642	-20.65%	1,64,08,649	1,68,54,304	-2.64%
Individual Single Premium	70,566	83,160	-15.14%	8,39,252	8,12,797	3.25%
Individual Non-Single Premium	15,42,612	19,50,815	-20.92%	1,55,37,083	1,60,09,879	-2.95%
Group Single Premium	19	32	-40.63%	678	513	32.16%
Group Non-Single Premium	472	518	-8.88%	4,957	6,124	-19.06%
Group Yearly Renewable Premium	2,379	2,117	12.38%	26,679	24,991	6.75%
TOTAL LIFE INSURANCE	22,85,529	26,99,219	-15.33%	2,32,14,747	2,31,19,193	0.41%
Individual Single Premium	96,041	1,13,618	-15.47%	10,73,745	10,58,185	1.47%
Individual Non-Single Premium	21,85,963	25,82,640	-15.36%	2,21,03,506	2,20,25,544	0.35%
Group Single Premium	126	133	-5.26%	1,671	1,455	14.85%
Group Non-Single Premium	483	534	-9.55%	5,170	6,305	-18.00%
Group Yearly Renewable Premium	2,916	2,294	27.11%	30,655	27,704	10.65%

Data Source: IRDAI

Here are some key takeaways from the new policy sales numbers for February 2023. Once again, it is LIC that has seen a contraction in new policies issued in the month of February 2023 and for the FY23 year-to-date. For February 2023, new policies issued contracted by 15.3% to 22.85 lakh policies overall. Out of that LIC saw 20.7% contraction in policies while private sector insurers saw life policies grow by 1.04% in February.

For the cumulative 11 months of FY23 up to February 2023, total new policies issued were flat with 0.41% growth. However, private insurers saw growth of 8.64% while LIC saw contraction in number of policies issued by 2.64%. Overall, LIC has seen a contraction of retail volumes in terms of number policies in the current fiscal overall. A lot of the problems could be stemming from the new tax regime, but we need more data points for now.