Life insurers see 28% dip in first year premium till May

The life insurance sector continued to report a drop in their monthly first year premium collection amid nationwide lockdown till May-end. The sector reported a decline of 27.9 per cent in first year premium to Rs 20,467 crore till May 2020 compared to an increase of 41.1 per cent reported till May 2019, according to a CARE Ratings report. Further, the overall sum assured too decreased by 20.2 per cent from Rs 5.8 lakh crore till May 2019 to Rs 4.7 lakh crore till May this year.

The decline in first year premium growth for private companies has been more pronounced -- a drop of 30.7 per cent versus an increase of 46.9 per cent for the two months till May 2019. Public sector insurer LIC, which gained 1.3 per cent share in first year premium for the two months up to May 2020, has reported a drop of 26.5 per cent compared to a growth of 38.4 per cent, during the same period.

The industry reported negative growth both for May 2020 standalone and April and May 2020 put together,  but two insurance companies bucked the trend, posting a growth in their first-year premium collection, the report added. Tata AIA Life and Canara HSBC OBC Life reported a growth of 18.1 per cent and 7.2 per cent, respectively for the two months ended May 2020.

Even as the strict lockdown has been lifted in June 2020, the life insurance business could actually witness a fall in the first quarter of FY21, while growth could potentially return in the second or third quarter for FY21, the report added. Companies which have undertaken investments to build a robust digital platform could witness faster growth compared to those which have lagged behind in building an online channel.

Source: Business Today