Life insurers, 24 in all, have recorded a 15 per cent growth in new business premiums in August. This is the second consecutive month of positive growth in new business premiums (NBP) for life insurers after a contraction for four straight months.
NBP is the premium acquired from new policies for a particular year.
In August, life insurers earned NBP to the tune of Rs 27,039.79 crore, compared to Rs 23,554.94 crore in the same period last year. Private life insurers' NBP grew 13.74 per cent to Rs 7,325.59 crore in August 2020, as opposed to Rs 6,440.62 crore in August 2019. State-owned insurance behemoth Life Insurance Corporation, on the other hand, recorded 15.19 per cent jump in NBP to Rs 19,714.21 crore compared to Rs 17,114.32 crore.
Despite a growth in NBP in July and August, the cumulative NBP for life insurers in April – August period of FY21 showed a 6 per cent decline at Rs 99,361.32 crore, compared to Rs 1.05 trillion in the same period in FY20. Similarly, LIC’s NBP in the said period declined 7.5 per cent to Rs 71,415.18 crore, compared to Rs 77,220.97 crore. The private insurers also saw their NBP decline almost 2 per cent in the same period in FY21 over the last financial year.
As the business recovers gradually from the initial drop, due to the lockdown, insurers are seeing increased demand for pure protection products from consumers. This has also prompted the insurers to have a re-look at their product mix. There is a remarkable shift to the term side. Guaranteed return products are also doing extremely well at a time when interest rates are falling. Unit linked products on the other hand, have suffered.