The Indian life insurance industry has begun to recover and is likely to report 12-15% growth in financial year (FY) 2016-17, according to an ICRA paper analysing the performance of nine life insurance companies in India, one in the public sector and eight in the private sector. Together, they represent over 87% of the total annualised premium equivalent (APE) of the life insurance industry during first nine months (April-December) of FY16.
The companies analysed are: Life Insurance Corporation of India (LIC), ICICI Prudential Life Insurance Corp. Ltd, Bajaj Allianz Life Insurance Co. Ltd, SBI Life Insurance Co. Ltd, Birla Sunlife Insurance Co. Ltd, Max Life Insurance Co. Ltd, Reliance Life Insurance Co. Ltd, Kotak Mahindra Old Mutual Life Insurance Ltd, and HDFC Standard Life Insurance Co. Ltd.
During the period, the industry APE grew 6% year-on-year (y-o-y), as against a contraction of 9% y-o-y in FY15 to stand at Rs.37,300 crore (it was Rs.35,000 crore in the first nine months of FY15). The growth for private companies was 13% y-o-y during the period. LIC witnessed an improvement to 1% y-o-y during April-December FY16 from a contraction of 24% in FY15.
During the last few quarters, LIC reported poor APE performance following the contraction in its regular premium collections and the weakness in its unit-linked insurance plan (Ulip) portfolio against the backdrop of an upbeat domestic stock market. In FY15, the regular segment contracted by 27% y-o-y and reported volumes of Rs.23,000 crore. However, in first nine months of FY16, contraction in the regular premium segment reduced to 4% y-o-y.
