Life cover sales grow flat, ticket sizes rise

MUMBAI: Life insurance companies recorded flat growth in policy sales in the financial year 2018-19 but new premium incomes headed north, indicating a sharp rise in ticket size.

In the year ended March 31, 2019, new business income grew 10.73% from a year ago to Rs 2.1 lakh crore, according to data released by the Insurance Regulatory and Development Authority (Irdai). Life Insurance Corporation’s premiums grew 5.68%, while its private peers together logged 22% growth.

The number of policies sold rose merely 1.7% during the year as companies focused on high ticket savings business. Group cover policy purchases, particularly those involving regular premium payment, rose 40%.

The companies are working to ramp up distribution channels with a focus on digital to improve productivity. Business mix for the insurers has shifted towards higher protection in both retail and credit sectors. The core profitability of protection business, however, will be under pressure due to competitive intensity.

Life insurers, typically averse to the single-premium business as it suppresses market valuation, saw a 40% increase as they tried to grab a share of household savings that are otherwise finding their way into the capital markets through systematic investment plans. The spike in individual single business growth in the financial year was driven by a sharp increase in ticket size. While income from selling single premium grew 40%, the number of policies sold declined 51%.

In the past year, HDFC Life grew the annuity business very fast and reported 32% growth in income from selling new policies to Rs 14,971 crore. SBI Life reported 26% growth and ICICI Prudential 12.48%. Tata AIA and Aditya Birla Sun Life reported healthy growth driven by the bancassurance partnership with HDFC Bank. Tata AIA grew 66%, while Aditya Birla Sun Life posted 47% rise. With 6.97% market share, HDFC Life was the largest private sector insurer followed by SBI Life at 6.42%, data from Irdai showed.

In regular individual business, LIC’s market share fell further to 40%, with the private sector claiming 60% of the pie.

This year, the regular savings business growth is expected to be much slower. Analysts believe that growth could remain soft till there is more stability in the capital market that is expected only after the elections.