LIC outperforms private peers in new premium mop-up in August

The life insurance industry saw a robust rise in new business income in August, driven primarily by strong growth from the state-run Life Insurance Corporation, which outpaced the private sector in annualised premium equivalent (APE) growth.

The industry collected ₹32,644 crore in total premiums in August, an expansion of 22% compared with August 2023 and ₹1.54 lakh crore during the April-August period, a growth rate of 20.78% compared to the same period a year ago, according to data collated by the Life Insurance Council.

In terms of APE, which is calculated by adding regular premiums and 10% of single premiums, the private sector saw a 9% growth in premiums to ₹7,715 crore in August compared to ₹7,065 crore the previous year.


LIC reported a 13% growth, with premiums rising to ₹4,936 crore from ₹4,376 crore.

LIC's total premium collections grew by 28%, aided by an increase in group yearly renewable premiums, although its APE growth was more moderate at 13%.

HDFC Life Insurance saw an 8% rise in APE for August, with a 12.42% increase in total premiums for the April-August period. In contrast, ICICI Prudential reported a 20% increase in APE for August and a 16.6% rise in total premium for the year-to-date period on a low base. Max Life Insurance also saw growth among private insurers with a 16.66% APE growth in August and total premium growth on a year-to-date basis of 16.45%.

SBI Life recorded a 2% decline in APE for August and a 5% drop in total premiums for the April-August period, mainly due to a decrease in group insurance business.

From October 1, insurers expect sales and margins to be impacted after the new surrender rules are implemented and agent commissions are changed. The insurance regulator has introduced new rules for higher Special Surrender Value, allowing policyholders to receive surrender value as early as the first year, even if the policy is surrendered after paying just the first annual premium.

These changes are expected to impact commission structures, leading companies to redesign their sales strategy, thereby impacting sales.

Insurers expect yields on non-participating products to drop by around 25 basis points due to the new rules, which require guaranteed surrender value from the first year on these products.