MUMBAI: Private sector life insurers have been eating into the market share of Life Insurance Corp. (LIC) for years now. Despite the blow from the pandemic, private life insurers have continued to corner market share as the latest data from the insurance regulator shows.
On an annualised premium equivalent basis, LIC lost 200 basis points month-on-month in market share to private sector peers in February, pointed out analysts at Nomura Financial Advisory and Securities (India) Pvt. Ltd. One basis point is one-hundredth of a percentage point. What’s more is that the insurance behemoth’s share has been falling faster in retail products. Its share in retail APE was down to 35.9% in February from 38.6% in January.
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LIC has been losing market share hand over fist to private peers and a large part of this was because of the earlier lockdowns. LIC relies on the heft of its large agency network to push products while nimble private insurers have begun to push online sales. To be sure, LIC too has bancassurance tie-ups with most banks but the share of this network in new business is lower than what its agents bring.
Interestingly, in terms of total APE within private players the top life insurers lost market share to other peers within the sector. SBI Life Insurance Company Ltd saw its market share erode to 18.3% in February from 24.6% in January. HDFC Life Insurance Company Ltd too saw its market share erode but by a smaller margin.
ICICI Prudential Life Insurance Co Ltd improved its market share significantly. ICICI Prulife reported its first monthly growth in retail APE for FY21. Its retail APE grew by 6% year-on-year. “We expect growth trajectory to continue improving for IPRU Life into FY22 on lower base, better environment for ULIPs, traction from new banca partnerships and pickup in credit protect on improving disbursals,” wrote analysts at Jefferies India Pvt Ltd in a note.
What about the full year performance? The trend here is similar but there are some differences. For FY21 so far, LIC’s business contracted 15% on retail weighted received premium (RWRP) basis. RWRP is the actual first year premium received from retail customers by the insurer. LIC’s market share dropped to 40.3%, according to analysts at Motilal Oswal Financial Services Ltd.
LIC’s market share loss comes at a time when India’s largest life insurer is preparing for a public listing. The government has said the insurer’s initial public offer will be launched in FY22. The decline in business that the insurer has seen in the past year casts a shadow over its IPO prospects.
Source: Google | Insurance News