The life insurance industry saw a 25.28% decline in new business premium income, totalling Rs 26,494.83 crore in November 2023 compared to the previous year’s Rs 34,588.8 crore. Both the state-run Life Insurance Corporation of India (LIC) and private insurers experienced a downturn, primarily due to decreased group premiums and changes in taxation norms affecting policies with higher ticket sizes.
LIC’s group premium experienced a significant drop of 37.48%, registering Rs 11,649.54 crore in the reported month compared to Rs 18,635.93 crore previously. This decline had a substantial impact on the overall group premium of the industry, which saw a 34.02% decrease to Rs 14,735.49 crore from Rs 22,334.95 crore.
Private insurers observed a 9.33% year-on-year decrease in premiums, amounting to Rs 10,360.29 crore from Rs 11,426.73 crore. This reduction resulted from a strategic shift in the product mix to counter the impact of taxes on premiums exceeding Rs 5 lakh. Conversely, LIC’s premiums saw a sharp decline by 32.86%, reaching Rs 16,134.55 crore from Rs 24,032.07 crore, primarily due to a decrease in group premiums.
Group premiums drop most
The majority of the fall occurred in group premiums, both single and non-single. LIC’s dominance in the group segment meant that a decline in their business had broader implications for the entire industry.
Among private insurance companies, SBI Life Insurance, the largest private insurer, reported a 9.84% decline in premiums to Rs 2,381.73 crore. HDFC Life Insurance witnessed a 20.70% year-on-year fall, reaching Rs 2,159.73 crore.
The individual single premium of insurance companies witnessed a decline of 14.81%, totalling Rs 3,322.48 crore from the previous Rs 3,900.04 crore. Private insurers experienced an 18.93% reduction in premium in this category, reaching Rs 1,395.1 crore compared to Rs 1,720.81 crore in the corresponding period. The prevailing theme impacting the life insurance segment in the current year is the shift in taxation norms, influencing the product mix and affecting private insurance players.