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Life insurance: private players win, helped by increasing ticket sizes

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This indicates that the share of Ulips and outstanding savings has increased in the sole proprietorship.

The life insurance industry experienced strong growth in September 2021, with Retail Weighted Received Premium (RWRP) increasing 30% year-on-year (year-on-year). The strong growth in September 21 boosted the growth of RWRP YTD FY22 which stood at 19.6% from 16.7% in August 2021.

LIC’s RWRP growth rebounded to 22% on September 21, helping its YTDFY22 growth to reach 3.7%. Private players maintained their growth momentum and posted RWRP growth of 35% yoy on September 21, pushing YTD FY22 growth to 32% yoy. On a two-year basis, the industry’s RWRP recorded a 5.2% CAGR for fiscal year YTD 22, up from 2.4% as of August 21, driven by an 8.1% CAGR for the industry. private and 0.9% for the PFR.

During these two years, private players increased their market share in RWRP to 62.2% from 59%. Overall, FY22 developments validate the long-term trend of a gradual shift from the retail life insurance market to private players, with strong brand and distribution reach.

Private actors are gaining momentum
Growth for private players appears to be largely driven by an increase in ticket sizes, with the new number of retail policies increasing by a meager 3.4% year-on-year. The increase in the size of the banknotes probably reflects the changes in the product line towards ULIPs and products without nominal savings. LIC rebounded with 22% year-on-year growth in RWRP on September 21, pushing YTD RWRP growth to 3.7% year-on-year.

The number of individual policies for LIC increased 19.7% year-on-year for fiscal year 22. Weak sales of high priced annuity products and lower concentration on Ulips appear to be hurting LIC’s growth. These elements corroborate the long-term trend of a gradual shift in the retail life insurance market towards large private players with a strong brand and a large bancassurance network.

HDFC Life posts modest growth
For fiscal year YTD FY22, HDFC Life reported RWRP growth of 22% year-on-year and WRP growth of 24% year-on-year. These growth rates appear moderate compared to top peers, but this corresponds to a 2% year-on-year growth in RWRP in September 20 for fiscal year YTD 21. The 2-year RWRP CAGR was strong at 11.6%. The growth in RWRP appears to be largely driven by growth in note size, as the number of individual policies fell 8% year-on-year. This indicates that the share of Ulips and outstanding savings has increased in the sole proprietorship.

Edited excerpts from the Emkay report on the insurance sector

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