Covid: Life insurance sector sees 18.6% drop in first-year premium, says report

Hit onerous by the coronavirus pandemic, the life insurance coverage sector witnessed an 18.6 per cent drop within the first yr premium to Rs 49,335 crore within the April-June quarter of the present monetary yr, in accordance with a report by CARE Ratings.

The general sum assured additionally declined 12.9 per cent to Rs 8.Eight lakh crore within the June 2020 quarter, in contrast with Rs 10 lakh crore (which was a rise of 17.6 per cent) within the corresponding interval of the earlier yr.

The sector had seen their first-year premium declines of 32.6 per cent and 27.9 per cent in April 2020 and May 2020, respectively, the report stated including that the June 2020 quarter figures are indicative that the sector is shifting in the direction of restoration.

“The life insurance sector continues to report a drop in their first-year premium collection as businesses have been severely impacted by the Covid-19 pandemic. The sector reported a decrease of 18.6 per cent in the first-year premium to Rs 49,335 crore in Q1FY21 from Rs 60,637 crore in Q1FY20,” it stated.

Attributing the decline in enterprise within the first quarter of the present fiscal to lockdown and enterprise disruption, the report stated, “Growth could potentially return in the second or third quarter of 2020-21. Distribution channels could see significant realignment, with digital rising at the cost of individual agents/ bancassurance.” It added that the first-year premium for Life Insurance Corporation (LIC) noticed a drop of 18.5 per cent in first quarter of 2020-21, towards a rise of 81.2 per cent a yr in the past.

Private sector firms in the course of the first quarter until May 2020 witnessed a fall of 19.2 per cent, in contrast with a development of 32 per cent within the April-June interval of 2019-20, the report stated.

“LIC continues to maintain its dominant share in the first-year premium for Q1FY21 (LIC share of 74 per cent as against 26 per cent share of private companies); the share in sum assured has remained mostly flat in Q1FY21 when compared with Q1FY20,” the report stated.

The report additional stated that even because the trade reported damaging development for the primary quarter of the monetary yr, 5 insurance coverage firms (Aditya Birla Sun Life, Tata AIA Life, Canara HSBC OBC Life, Edelweiss Tokio Life, and Aviva Life) truly reported a development of their first-year premium assortment.