First-year life insurance premiums grew at 43.8% in Dec: CareEdge

Life insurance premium: Following robust growth in FY23, first-year premium numbers in FY24 have been moving in a subdued manner. However, for December 2023, first-year life insurance premiums witnessed a significant jump of 43.8 per cent compared to the increase of 9.7 per cent witnessed in the same period last year, a report by CareEdge said.

“The sudden jump can be attributed to group single premiums, especially of LIC along with modest growth of the private sector. On the other hand, YTD. FY24's new business premiums of life insurers narrowed their drop to 7.0 per cent compared to the fall of 12.7 per cent reported last month and the growth of 31.2 per cent growth in YTDFY23,” the report added further.  

Reason behind the rise and fall

According to the report, the YoY decline can be attributed to a substantial reduction in group premiums, the introduction of a new tax regime, and the significant momentum experienced in March 2023. 

“While private insurance companies have maintained growth and have continued to play a mitigating role by counteracting the dip in LIC premiums, their pace has been comparatively subdued in comparison to the previous year,” the report added further. Larger private companies witnessed better growth compared to their smaller counterparts.

The report added further that most companies including LIC have grown for December 2023. LIC recorded a sudden spike of 93.8 per cent in December (attributable to a large client group) meanwhile as a whole, the private insurers recorded growth of 4.2 per cent which was roughly a third of the rate (14.9 per cent) witnessed in December 2022. 

Story of single premium 

On the other hand, for the year-to-date period, private companies have continued their growth compared to LIC’s fall. The aggregate decrease can continue to be attributed to higher momentum in March 2023, reduced single premiums, primarily LIC, and changes in the tax regime. Larger private companies have grown faster than their smaller counterparts. 

For December 2023, the non-single premiums rose by 6.2 per cent which is half of the 12.4 per cent reported in December 2022, while single premiums rose by a substantial 74.5 per cent (driven by LIC) in December 2023 vs. an increase of 7.6 per cent in December 2022. Despite this jump, single premiums continue to fall for the YTD period but continue to account for a substantial portion of the overall first-year premiums.