Data Focus

Number of life insurance policies dips in FY21; group covers lead the fall

Surabhi | | | Updated on: Dec 06, 2021

But the industry ended the year on a positive note with growth in premium


Breaking a three-year streak, the number of life insurance policies and schemes in 2020-21 registered a decline even though the industry ended the year on a positive note with growth in premium.

Industry figures with the Life Insurance Council reveal that the total first year premium for life insurers increased by 7.49 per cent to ₹2,78,277.98 crore in 2020-21, from ₹2,58,896.49 crore in 2019-20.

This growth was however, not commensurate with the number of policies and schemes, which contracted by 2.49 per cent to 2.81 lakh crore in 2020-21, from 2.88 lakh in 2019-20.

The last time the number of life insurance policies declined was in 2016-17, which was by 1.06 per cent on an annual basis.

Group policies hit

The data reveal that for the private insurers, group single premium policies and schemes contracted by 50.42 per cent, group non-single premium policies by 6.3 per cent in 2020-21.

“Individual business has grown quite significantly for all insurers but it is the group business that has been impacted,” said the head of a life insurance company.

For LIC, the number of policies for individual non-single premium degrew by 5.01 per cent, group single premium policies by 51.95 per cent and group yearly renewable premium policies by 9.52 per cent on an annual basis in 2020-21.

Both public, private players hit

The decline in number of policies was registered by both Life Insurance Corporation of India as well as a number of private insurers.

While LIC witnessed a 4.19 per cent decline in the number of policies and schemes in 2020-21 compared to a year ago, others like Bharti AXA Life Insurance registered a 43.72 per cent drop and Aegon Life Insurance saw a 48.59 per cent contraction in the same period.

The numbers are surprising given that term insurance and protection plans have seen increased interest from customers amidst the ongoing pandemic.

Pointing out that the data once again highlights the under penetration of life insurance in India, insurers attributed the decline in number of policies to various reasons.

“We need to do a lot of work in terms of penetration on the number of policies,” said NS Kannan, Managing Director and CEO, ICICI Prudential Life Insurance, adding that there supply side constraints may have impacted the policy growth in the period even though demand is quite high.

Companies have also become stricter in terms of underwriting for life insurance policies and there are problems in medical check ups for high value policies also.

Looking ahead

Insurers are, however, more upbeat about the new fiscal and believe the life insurance industry will do better despite the second wave of Covid-19 infections.

“We expect life insurance companies to report strong growth in individual APE in 2021-22 (on a low base) driven by revival in ULIPs, continued traction in non-par, pension and annuity based products; the market remains poised for growth due to dearth of high-yield fixed income instruments, pick-up in credit life from trough levels in 2020-21 and high risk aversion pushing demand for individual protection in the latter part of the year −sales of protection policies tend to pick up post a pandemic,” said Kotak Institutional Equities in a recent report.


Published on April 22, 2021
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