MUMBAI: The life insurance industry in April managed to achieve nearly two-thirds of the sales it recorded a year ago despite the lockdown. In terms of total premium income, the private industry and the LIC recorded a year-onyear dip of 33% and 32% respectively. However, in terms of number of policies, the industry was down 67%, largely because of an 80% drop in the number of policies sold by LIC, while private companies were down 34%.
“While April is expected to be a washout for many segments of the economy, life insurance companies were able to deliver 60% of April 2019 individual annual premium equivalent (APE). This is better than our expectation of 90-95% decline for large players,” said a report by Kotak Institutional Equities.
Industry insiders say it is a bit early to celebrate as a lot of the April sales may have been a spillover from the sales process initiated in end-March. Sale of insurance policies is highest in March before the fiscal closing as many taxpayers wait until the last day to make their tax investment. This year, because of the lockdown, many of these sales could not be concluded. With insurance being notified as an essential service, many banks and intermediaries were able to conclude their sales.
The impact of the Covid-19 crisis is expected to be relatively lower on the life insurance industry because demand for protection is expected to grow. While savings products add to the top line of insurance companies, protection products improve their bottom line.
On total premium basis, SBI Life matched last year’s performance by selling policies worth Rs 917 crore as against Rs 913 crore in the previous year. Bajaj Allianz Life grew sales 43% to Rs 314 crore from Rs 218 crore from the year-ago period. Among large listed companies, HDFC Standard Life saw premium collections worth Rs 668 crore, 52% lower than the previous year. While ICICI Prudential Life saw its premium collection drop 60% to Rs 260 crore.
Analysts, however, compare the APE to even out the impact of sales of single-premium policies on the top line. Under single-premium policies, the premium for the term of the policy is booked up front instead of instalments. According to the Kotak report, HDFC Life reported a 28% decline in individual APE in April 2020, while ICICI Prudential Life reported a 55% decline. SBI Life, which has a high share of unit-linked insurance plans (ULIPs) and depends on the bancassurance channel, saw its individual APE decline 73%. Tata AIA reported 37% growth in the individual business, most likely on the back of strong increase in protection products.