Annual Premium Equivalent (APE) in the insurance sector declined by around 11% in April 2023.
Non-single premiums fell by 2.1% in May 2023 compared to a growth of 106.4% in May 2022.
Single premiums fell by 4.9% in May 2023 compared to an increase of 82.2% in May 2022.
Private insurance companies continue to lead in the individual non-single premium segment.
Year-to-date first-year premiums of life insurers dropped by 15% to Rs 36,043.1 crore in May 2023 after an 86.7% increase in May 2022.
LIC's first-year premium reduced by 11.3% in May 2023 compared to an increase of 77.0% in May 2022, while private insurers grew at 9.0% in May 2023 compared to 114.4% in May 2022.
The decline in premiums can be attributed to factors such as a fall in single-group premiums, the base effect of high growth in May 2022, the new tax regime, and increased momentum in March 2023.
Finance Minister Nirmala Sitharaman announced in the Budget 2023 that proceeds from life insurance (except for ULIPs) with an annual premium of Rs 5 lakh would be taxed.
The long-term prospects of the insurance sector remain strong, with people considering insurance schemes as a risk mitigation necessity.
Private life insurance companies reported 11-69% YoY APE growth in Q4FY23, with the impact of one-off sales during the sunset period of tax-free non-ULIP insurance policies.
Private companies have a larger share in the non-single sub-segment, while LIC dominates the single premium sub-segment, especially in the group business.
Private companies are focusing on term plans, with the sum assured increasing by over 25% in May 2023.
APE growth (excluding one-offs in March) is expected to remain strong in FY24, with flat margins.
HDFC Life, ICICI Pru Life, Max Life, LIC, and SBI Life reported varying levels of growth in Q4FY23.