Group business segment brings good news for top life insurers in FY 19-20

In the first two months of FY19-20, top life insurance players reported a record premium collection. This was largely due to strong growth in their group business segment, which tends to be commercial in nature, shows IRDAI data.

For this article, we analysed premium collection of top four life insurers - LIC of India, HDFC Life, SBI Life, and ICICI Prudential Life - as together they account for over 85% market share.  

Usually, premium collection in the first two months of a financial year tends to be low. In FY 2018-19, premium collection grew by 7% (year-on-year) during April and May, while in FY 2017-18, the growth was a mere 1%.    

However, this year, the top four insurers collected premium of Rs.24,558 crore, a whopping 43% growth over the corresponding period a year ago.       

This sharp uptick is largely due to growth in the group business segment. This year premium collected in the group segment stood at Rs. 15,869 crore, 65% higher than premium collection of Rs. 9,613 crore a year ago.

The 65% increase in premium collection of group segment is sharply higher this year, given that it had grown by 3% (year-on-year) in FY 18-19, and declined by 10% on year in FY 17-18.   

Meanwhile, the individual segment registered a moderate increase in premium collection in April and May. It stood at Rs.8,689 crore this year, 15% higher than the Rs.7,567 crore a year ago. In FY 18-19, the growth rate was 12% and in FY 17-18, it was 20%.

Kapil Mehta, Co-Founder, SecureNow Insurance Broker, said that while on an overall basis the group segment is driving the growth in premium collection, the story differs from insurer to insurer.

With 243% increase in its group segment premiums, ICICI Prudential Life recorded the highest rise in percentage terms. However, it recorded only 1% growth in premium collection of individual segment. 

HDFC Life, on the other hand, recorded 51% increase in individual segment premiums and topped the chart among the four insurers. The private life insurer’s group segment business saw an increase of 86% (year on year) in April and May of 2019.   

Source: IRDAI