LIC Outpaces Private Insurers In APE Growth In September
"Our analysis suggests that higher growth for LIC is also on the back of a strong push from its agency channels before the commission changes," HSBC said.
Life Insurance Corp. of India's growth in annual premium equivalent outpaced those of private insurers in September as sales were preponed ahead of changes in commission structure from October, according to analysts.
The industry's APE grew by a healthy 23.8% year-on-year in September 2024, compared to a growth of 10.5% in August, according to HSBC. In individual APE, private insurers grew 27.8% year-on-year while LIC outpaced them growing at 48% year-on-year, the brokerage said.
"Our analysis suggests that higher growth for LIC is also on the back of a strong push from its agency channels before the commission changes," said the brokerage while noting that the insurer reduced its first-year commissions by 700 basis points.
In June, the Insurance Regulatory and Development Authority of India issued a master circular introducing norms to ensure better payouts for customers who exit their policies prematurely. The norms require life insurers to pay an enhanced special surrender value after the completion of the first policy year, provided the customer has paid one full-year premium. These norms are effective Oct. 1.
HSBC reported that the number of policies, or NoP, sold remained healthy in September, growing by 45.5% year-on-year for the industry and 18.7% year-over-year for private insurers.
Tata AIA Life Insurance Co., Bajaj Allianz Life Insurance Co., Max Life Insurance Co., and HDFC Life Insurance Co. reported healthy growth in NoP, while SBI Life Insurance Co. and ICICI Prudential Life Insurance Co. reported muted growth.
"Driven by trends in NoP sales, buoyant equity markets, new product launches, and deepening of distribution, the industry growth outlook remains healthy," the brokerage said, adding that any reduction in indirect taxes would be positive for industry growth.
The industry individual retail weighted received premium was up 34% year-on-year with two-year annual growth at 21%, Morgan Stanley said. The September quarter saw a 21% growth, compared with a 13% growth in the same period last year.
The private sector reported 28% year-on-year and 20% average growth in two years. The growth in the second-quarter of fiscal 2025 was 24% against 16% in the year-ago quarter.
In September, Birla Sunlife and Tata AIA Life's retail weighted received premium grew the most by 65% and 60% year-on-year, respectively, followed by Max Life by 38% and Reliance Nippon Life by 35%.
HDFC Life’s value of new business is likely to fare better than peers, as it expects HDFC Life to deliver 20% year-on-year growth in value of new business in the September quarter, higher than LIC, ICICI Prudential, and SBI Life, according to Citi Research. It has also forecasted a 70, 400, 85, and 180 basis points year-on-year decline in VNB margin for HDFC Life, ICICI Prudential Life, Max Life, and LIC, respectively.
