Life Insurers Report 13 Per Cent Growth In Premiums Despite Drop In Policy Sales, Driven By Private Sector Surge

Life insurance companies saw a 13.16 per cent year-on-year (Y-o-Y) rise in new business premiums (NBP) in October, reaching Rs 30,347 crore, despite a significant drop in policy sales. This growth was largely fueled by robust performance among private-sector life insurers. Data from the Life Insurance Council showed that the state-owned Life Insurance Corporation (LIC) of India experienced a 9.48 per cent Y-o-Y rise in premiums, reaching Rs 17,131 crore, while private insurers saw an 18 per cent increase in NBP to Rs 13,216.51 crore.

On October 1, new surrender value norms were implemented, requiring life insurers to provide a higher special surrender value to policyholders after the first policy year, as long as one full year’s premium had been paid. Previously, policyholders who surrendered within the first year were not eligible for such payments. Despite insurers seeking an extension to adapt to the new norms, no extension was granted. Most insurers, however, managed to implement these regulations for around 80 per cent of their products.

Analysts suggest that growth in term and unit-linked insurance plans helped drive premium growth, even amid the updated surrender value norms. A report by Nuvama indicated that the surrender value regulation impacted growth in October 2024, though growth remained steady. "In the coming months, growth may fluctuate as the industry finds its balance," the report noted.

LIC’s individual premium segment dropped by 9.4 per cent Y-o-Y to Rs 3,712.62 crore, while group premiums rose by 15.5 per cent Y-o-Y, reaching Rs 13,267.93 crore. Group yearly premium collections surged 140.75 per cent to Rs 150.54 crore. 

From April to October, the life insurance industry’s NBP rose 18.56 per cent Y-o-Y, reaching Rs 2.19 trillion. LIC’s premiums grew 22.5 per cent Y-o-Y to Rs 1.32 trillion, while private sector insurers saw a 12.9 per cent increase to Rs 86,880 crore.

The number of policies sold in October 2024 was nearly 1.2 million, marking a 46 per cent decrease compared to the previous year, mainly due to the new surrender value norms. During the April-October period, policy sales dropped by 5.42 per cent Y-o-Y to 14.5 million.

Private Insurers: Among private insurers, SBI Life Insurance reported a slight 3.8 per cent Y-o-Y drop in NBP to Rs 2,648.38 crore, while HDFC Life saw a 28 per cent Y-o-Y increase to Rs 2,799 crore. Other notable insurers such as ICICI Prudential Life, Bajaj Allianz Life, and Max Life reported Y-o-Y growth rates of 25.29 per cent, 21.46 per cent, and 15.3 per cent, respectively.