New business premiums income of life insurers increased 26% in the year to March 2017, with the biggest state-run behemoth spearheading the industry’s expansion through individual single-premium policies amid falling deposit yields and surging liquidity.
State-run Life Insurance Corporation outpaced private insurers with 27% growth, compared with 24% for its rivals, aided by an 84% expansion in LIC’s single-premium revenue in the period.
According to the latest data collated by the Life Insurance Council, new business premium for the industry was at `1.75 lakh crore in FY17, up from `1.35 lakh crore in the previous financial year. Private insurers saw new business premium at `50,625 crore, up from`40,983 crore in FY16.
However, the private sector has seen around 21% growth in income from both individual single premium and individual regu lar premium products. Growth in individual regular premium is considered more beneficial for the industry, as income flow is for a longer tenor and cost of acquisition is spread out over the life of the policy.
For LIC, annuity plan Jeevan Akshay saw good inflows when the interest rates started falling.
LIC saw its individual sing le new business premium expand 84% to `23,412 crore.
SBI Life witnessed the highest expansion among large life insurers, registering a 42% growth in total new business premium to `10,145 crore, aided by sales mium policies and group in in regular premium policies and group individual policies. It has become the first private life insurer to cross `10,000 crore in generating new business premiums.
ICICI Prudential Life Insurance saw a growth of 16% to `7,863 crore as the company focused on mostly retail business -both single and regular. Its individual single premium income grew faster at 46% than regular income at 29%.
Other large private insurers, including like HDFC Life, Max Life, and Kotak Life, recorded growth of 27%-35% in the last financial year. Increase in premium income is partly due to the higher ticket size as the number of policies sold in the period declined by 1.06%, data by Life Insurance Council showed. The number of policies fell to 2.64 crore in FY17, against 2.67 crore in the year-ago period.
The industry saw good inflows post demonstration, when banks were flush with excess liquidity.
In an earlier interview, Arijit Basu, MD and CEO of SBI Life Insurance, had said that the agency channel contributed to the overall growth in income in a big way.
“What helps us is also our agency channel, which is growing at 28%. It contributes 40% of our total business. In the private sector, there are only 7-8 companies that are managing good growth. We are having a good run,“ Basu had said.