Life Insurance Corporation of India (LIC) continued to see a decline in individual new business premium during April-July, losing 7.4 per cent market share to private players. On an individual adjusted first year premium (APE) basis that gives full weightage to regular premium but takes into account 10 per cent of single premium, LIC’s first year premium fell by 14 per cent to Rs 5,386 crore during the four months ended July. Its market share on APE basis stood at 52 per cent during the four months of the current financial year compared with 59.4 per cent during the corresponding period last year.
LIC’s individual first year premium has been declining since product regulations kicked in from January 2014. A significant reason was the absence of a Unit-linked insurance plan (Ulip) in its product portfolio when customer preference shifted towards Ulips with the stock markets reviving. During 2014-15, LIC individual first year premium on APE basis was Rs 20,774 crore, a fall of 27 per cent compared with Rs 28,520 crore in 2013-14. Last month, LIC has launched its new Ulip product, New Endowment Plus, to drive its market share. Senior officials of LIC were unavailable for comment. “It would be interesting to see if its recently launched Ulip can improve its business momentum,” said an analyst.
“Since January 2014, LIC did not have a Ulip in its product portfolio. Secondly, LIC has lost a large number of agents that has also impacted its business. While private players too have lost their agency force, they have managed to make up the loss from bancassurance business. However, LIC despite having more than 30 large banks as distribution partners has not been able to leverage them and use them efficiently,” said a top official of a private life insurer.
Interestingly, LIC has been aggressively increasing its group business, which grew by 34 per cent to Rs 19,317 crore during the April-July period. Private life insurers’ group business grew by 39 per cent to Rs 4,382 crore during the first four months of the current year. Due to higher group business, LIC’s total first year premium that takes into account individual as well as group business grew by 10 per cent to Rs 26,849 crore during the four months of the current year.
Private life insurers reported 17 per cent growth during four months of April-July in individual first year premium at Rs 4,987 crore on the back of Ulip sales. ICICI Prudential Life had a first year premium of Rs 1270 crore, a growth of 33 per cent during April-July . HDFC Life Insurance grew by 11 per cent to Rs 743 crore while SBI Life grew by 45 per cent to Rs 732 crore.
