Private life insurance companies had a bumper March driven by a surge in sale of high value policies ahead of the implementation of the new tax norms.

Private life insurers reported 53 per cent APE (annualised premium equivalent) growth in March, translating to 24 per cent growth for FY23. Individual APE was up 56 per cent for March and 24 per cent for the year, as per industry data.

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“Growth has been driven by higher ticket size policies ahead of the new tax rules from April 1,” said Suresh Ganapathy, Head of Financials and Equity Research, Macquarie Capital, adding that mid-tier players such as Tata AIA Life and Aditya Birla Sun Life saw the highest ticket sizes and strong growth in March.

Life insurers aggressively sold non-par policies above ₹5 lakh in February-March to benefit from the tax advantage during the sunset period, as income from policies is now liable to income tax. This led to 14-76 per cent YoY increase in average ticket sizes in March.

“All companies, with either a strong customer base on the private side like HNI customers, and all the businesses which are primarily agency driven, have done really well. Overall momentum has been very strong,” said a senior insurance official.

As such, the last two months of a financial year see higher policy sales as investors look to park their money in tax-saving policies. However, this time, the spike was much higher than unusal, industry players said.

They added that a lot of the players that have shown such high growth could have advanced some of their business, by convincing customers to take advantage of the tax arbitrage. However, those backed by PSU banks are likely to have seen less of an impact and more normalised growth.

Of the four listed players, HDFC Life posted 94 per cent APE growth, whereas for SBI Life it was the lowest at 13 per cent. Max Life reported 60 per cent growth and  ICICI Prudential Life 57 per cent. Including unlisted players, Tata AIA Life saw the strongest growth at 97 per cent, and Aditya Birla Sun Life of 73 per cent.

Kotak Institutional Equities expects listed insurers to deliver 15-60 growth in VNB (value of new business) for Q4 FY23 owing to 9-54 per cent growth in APE. VNB margin expansion is pegged at 50-226 bps led by increase in share of non-par business, inch up in term business and improved operating leverage.

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