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Insurance Sector Faces Challenges: Premiums Decline, Private Companies Take the Lead



  • 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.

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