Life insurers report 70% growth in March premium collections SUBRATA PANDA

7.5% increase in new business premium in FY21 over previous year

Life insurers have seen an impressive growth in premium collection in March and ended the financial year on a positive note, defying expectations of a contraction in FY21.

In March, the new business premium (NBP) of life insurers — 24 in total — grew 70 per cent to ~43,416.69 crore compared to ~25,409.30 crore.

March is one of the most important months for the sector as insurers gain a lot of business from people buying policies last minute to save on income tax.

The unusual rise in NBP in March may also be attributed to last year’s low base when the insurers had lost a fortnight of their most crucial month to a nationwide lockdown.

Last year in March, the NBP of life insurance companies had declined 32 per cent. In FY21, the NBP of such insurers rose 7.5 per cent to ~2.78 trillion compared to ~2.58 trillion in FY20. This is still lower than the growth the industry had seen in FY20. In FY20, life insurers had seen NBP grow 20.6 per cent to ~2.58 trillion compared to ~2.14 trillion in FY19.

In March 2021, private insurers — 23 — saw their NBP grow at 83.52 per cent to ~15,310.76 crore. And, for the full year (FY21), the NBP of private insurers recorded a 16 per cent growth to ~94,103.41 crore.

Similarly, state-owned insurance behemoth Life Insurance Corporation (LIC) in March recorded 65 per cent growth in NBP to ~28,105.92 crore while for FY21, LIC’S NBP rose 3.5 per cent to ~1.84 trillion.

“The growth was driven by the private sector who grew at a much faster pace compared to the public sector,” said CARE Ratings. Single premium policies drove growth in FY21.

“In FY22, along with the increased awareness of insurance, a digital push for insurance and an increase in term plan premiums could drive the life premiums.”