HDFC Life witnessing encouraging insurance trends

Mumbai: COVID-19 led lockdown had impacted the near term growth of the insurance companies. Q4 which is usually the best quarter for life insurance companies was impacted due to deferment in renewal premiums by IRDAI. The adverse impact could be felt in Q1FY21 as well. However, the growth has been improving on a month-on-month basis.

HDFC Life reported a better than expected profit growth of 6% to nearly Rs 451 crore in the June quarter but the other key parameters witnessed a de-growth on a YoY basis indicating the challenges faced in the current quarter.

Value of New business (VNB) was down by 43% YoY partly due to the high base effect and margins moderated to 24.3% compared to 29.8%, however, the margins in Q1FY20 were an aberration due to higher sales of newly launched Non-PAR product. The company wishes to maintain a balanced product mix with a focus on the protection segment.

The management is confident of growth in the protection business especially the strong growth of 50% witnessed in the individual protection segment during Q1. Vibha Padalkar, MD & CEO commented on the current scenario and the trends that the insurance business is seeing, “As the economy is coming to terms with the effects of the pandemic, we are increasingly witnessing encouraging on-ground trends.

The business has started to pick up on a month-on-month basis and we are seeing higher traction, especially in the individual protection business. As the situation begins to normalise, we expect life insurance to emerging as an important avenue for both protection as well as long term savings, and consequently help attract a higher quantum of inflows from Indian households.”  

Vibha Padalkar in her interaction with ET NOW mentioned that the business is seeing green shoots with people willing to engage through non-face-to-face modes of communication. But at the same time, they remain cautious on the persistency trends given cash conservation remains strong among the customers.

She further adds that given the current scenario it is difficult to predict the VNB growth outlook but states that VNB growth range of 20-25% for FY21 seems achievable.

Source: Times Now News