LIC: LIC drags down life insurers’ new business by 42% in Oct

Mumbai: The life insurance industry reported a 42% plunge in individual new policies sold in October, mainly due to a 59.8% drop in Life Insurance Corp’s policy count, while the private sector saw a modest 1.1% decline.

This decline comes in the first month under new surrender value regulations effective October 1, with the updated rules creating product gaps and earlier sales push and festivals impacting demand.

“The slowdown does not come as a surprise, as in the first month following the implementation of the new surrender regulations, there were some product gaps, some channel push increased sales in September, and Dussehra and Diwali festivities were bunched up in October,” said Avinash Singh and Mahek Shah, analysts at Emkay.

Among listed players, HDFC Life and ICICI Prudential saw marginal growth in policy sales, whereas Max Life and SBI Life recorded a 6-7% decrease.

In terms of retail annualised premium equivalent (APE), growth remained subdued at 3% in October, weighed down by a 15% decline in LIC’s retail APE, while private insurers reported a 12% increase.

For FY25 to date, ICICI Prudential saw retail APE growth of 36.5%, followed by Max Life at 28.6%, HDFC Life at 27.5%, and SBI Life at 13.9%. Private insurers recorded strong individual weighted received premium (WRP) growth, which is the new premium received by an insurer and is adjusted for the policy’s term and type. This growth in the private sector was led by Aditya Birla Sun Life at 35% year-on-year. ICICI Prudential rose 22%, HDFC Life 21%, Max Life 15%, and SBI Life 10%, while LIC saw a 15% WRP decline after a 48% boost in September due to the pre-regulation channel push. Private insurers’ market share in individual WRP rose 720 basis points month-on-month to 72.4%, while LIC’s share fell from 34.8% in September to 27.6% in October, according to a Motilal Oswal report. Year-to-date, private players gained 230 basis points in market share, reaching 68.2% against LIC’s 31.8%.

Analysts expect volatile premium growth through FY25 as the industry adapts to new product and commission structures.

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