The life insurance industry has reported a lacklustre performance in the first six months of the financial year 2023-24 (FY24) with the new business premium falling 12.97 per cent, mainly due to the decline in premium mobilisation by Life Insurance Corporation (LIC) and the changes in the tax structure in high value policies.
Total premium collection (new business) declined to Rs 158,376 crore during the six months as against Rs 181,976 crore in the same period a year ago. LIC’s premium collection fell to Rs 92,642 crore during the period from Rs 124,191 crore. LIC’s group single premium for the six months witnessed the maximum decline at Rs 64,522 crore as against Rs 96,878 crore a year ago.
The poor performance of the industry is also evident from the number of policies which remained flat at 11.764 million during the six months ended September 2023 as against 11.766 million policies a year ago. “At this rate, the life industry won’t be able to achieve the last year’s new business premium of Rs 3.70 lakh crore. The poor show is despite the regulator launching several initiatives to increase insurance penetration,” said an insurance official.
A pivotal development impacting the industry has been the imposition of the new tax regime. This regulatory change, effective from April 01, 2023, has had visible implications on the sector’s activities during this period, consequently leading to a subdued performance in the first half of FY24. Consequently, in the first half, the new business premium for life insurers has witnessed a contraction. This downturn can be attributed to the deceleration in group business, according to a Care Ratings report.