Life Insurance Industry Sees 42% Plunge in New Policies Sold Amidst Regulatory Changes
Mumbai: The life insurance sector reported a sharp decline in individual new policies sold in October, with a staggering 42% drop attributed mainly to the Life Insurance Corp's significant decrease in policy count. Private insurers witnessed a modest decline of 1.1%. This downturn comes as a result of the newly implemented surrender value regulations that took effect on October 1.
The introduction of updated rules created product gaps and earlier sales strategies, such as pre-regulation channel pushes and festivities like Dussehra and Diwali being concentrated in October, led to a decrease in demand. Analysts at Emkay, Avinash Singh and Mahek Shah, have already anticipated this trend, citing some existing stock in the books of LIC and an increase in sales during September.
Among listed players, only HDFC Life and ICICI Prudential saw limited growth in policy sales, while Max Life and SBI Life reported a 6-7% decrease. The data shows that these insurers are facing a tough test.
The performance has been underwhelming when it comes to the annualised premium equivalent (APE), with growth remaining subdued at 3%. This is mainly due to a 15% decline in LIC's retail APE, while private insurers reported a remarkable increase of 12%.
ICICI Prudential holds strong among listed players, having secured 36.5% year-to-date growth for FY25, followed by Max Life with 28.6%, HDFC Life at 27.5%, and SBI Life at 13.9%.
Moreover, strong individual weighted received premium (WRP) has been reported in the private sector, marked a jump of 35% year on year by Aditya Birla Sun Life. ICICI Prudential rose to 22%, HDFC Life increased to 21%, and SBI Life saw a 10% rise respectively.
The decline in LIC's WRP resulted from a boost that experienced in September due to the pre-regulation channel push, while the industry-wide shift led private players' market share to jump by 720 basis points month on month.
At present, LIC holds 27.6%, down significantly since last month's value, whilst that of private sector gained 230 basis points at 68%. In the upcoming years, a fluctuation in premium growth can be expected as the industry adapts to new product structures along with commission systems.