MUMBAI: The New Business Premium (NBP) of LIC plunged by 41.15 per cent year-on-year (Y-o-Y) to Rs13,523.87 crore in December 2024, contributing to an overall 21.7 per cent drop in the life insurance industry’s premium collections, which stood at Rs30,218.71 crore. Meanwhile, private insurers saw a 7 per cent Y-o-Y increase in NBP, reaching Rs16,694.85 crore, as they continued to gain market share amid challenges faced by LIC.
The steep fall in LIC’s premium was primarily attributed to a significant drop in its group single premiums, which halved to Rs8,191.29 crore from Rs17,601.97 crore in December 2023. Additionally, individual non-single premiums also saw a decline, dropping to Rs2,628.74 crore from Rs3,111.33 crore in the same period.
While this sharp decline in LIC’s premiums might seem alarming, industry experts suggest that it is a normalisation after a spike in group single premiums in previous years. “Although the fall appears dramatic, compared with two years ago, this shows slight growth over the years,” said Saurabh Bhalerao, Associate Director at CareEdge Ratings in its report.
Private insurers’ growth
Despite the overall drop in the industry’s premiums, private life insurers showed resilience. The largest private life insurer, SBI Life Insurance, saw a 15.2 per cent growth in premiums, reaching Rs5,307.98 crore.
Other major players also saw positive movements, with Bajaj Allianz Life Insurance posting a 9.7 per cent growth, while ICICI Prudential Life Insurance saw a slight increase to Rs3,221.56 crore.
However, not all private insurers fared equally well. HDFC Life experienced a 4.55 per cent Y-o-Y dip in premiums, settling at Rs2,713.49 crore. Axis Max Life Insurance, on the other hand, recorded a 13.1 per cent drop in premiums, highlighting the varied performance among private players.
Sector performance
The third quarter of FY25 (Q3FY25) saw a decline of 6.55 per cent in total premiums, which amounted to Rs85,872.87 crore. LIC’s premium collection for the quarter dropped by 22.56 per cent to Rs 42,406.07 crore.
Conversely, private insurers collectively reported a growth of 17.05 per cent, reaching Rs43,466.81 crore, further illustrating the divergent paths of the two segments.
In the April-December period of FY25, the life insurance industry posted a 9.9 per cent growth in NBP, amounting to Rs2.75 trillion. LIC recorded a more modest 7.16 per cent growth, totaling Rs1.58 trillion. In contrast, private insurers saw a higher growth rate of 13.86 per cent, reaching Rs 1.17 trillion.
Shifting dynamics
Despite LIC’s struggles in December, it is important to note that the overall life insurance sector continues to experience growth. However, the shifting dynamics between LIC and private players indicate that the competitive landscape is evolving, with private insurers gaining ground in key areas.
LIC’s 41.15 per cent drop in new business premiums is a major point of concern for the company, though industry experts suggest that it reflects a return to normal levels rather than a deeper structural issue.
On the other hand, private insurers continue to see growth, with a strong 7 per cent increase in new premiums for the month of December. The differing performances highlight the challenges and opportunities facing the life insurance sector, as private players continue to innovate and capture more market share, while LIC seeks ways to regain its momentum.
