LIC has consistently lost market share in retail segment, says brokerage

Private sector insurance companies have gained 8 per cent market share from LIC in the last 2 years.

On a 2-year CAGR basis, the retail weighted received premium (RWRP) growth in YTDFY22 is 10.2 per cent for the private life insurers and (-) 6.6 per cent for LIC. This divergent growth trend has led to the private sector gaining 8 per cent market share from LIC in the last 2 years, Emkay Global Financial Services said in a report.

LIC is struggling in the retail segment, the report said. After the rebound in November '21, LIC's growth in retail in December '21 slowed, and was materially lower than the private sector. This sustained undergrowth by LIC has meant that it has consistently lost market share in retail.

With its unchanged way of doing business over decades, LIC may lose its stronghold in the retail life segment, particularly in the high-ticket segment, the report said.

With the bank channel increasingly becoming important for savings product distribution and digital channels becoming important for retail protection, LIC may witness turbulent times in terms of growth due to its heavy reliance on the agency-led distribution mix. The sustained growth outperformance by Top-4 private players (SBI Life, HDFC Life, ICICI Pru and Max Life) meant that the RWRP market share of these four together has crossed LIC's market share for YTD FY22 again in December 2021, the report said.

Notwithstanding the temporary disruption, the overall, developments in FY22 validate the long-term trend of a gradual shift of the retail life insurance market to private players with strong brand and distribution reach, it said.

Maintaining strong momentum, RWRP for private insurers increased by 29.4 per cent YoY in December '21, leading to YTD FY22 RWRP growth of 30 per cent YoY. Growth for private players seems to be largely driven by an increase in the ticket sizes, as the new retail policy count grew by just 13.3 per cent YoY in December '21.

LIC's RWRP saw a YoY growth of meagre 6.2 per cent in December '21 and 5 per cent for YTD FY22. The individual policy count for LIC grew by 9.7 per cent YoY for YTD FY22. On 2-year basis, the private sector delivered 10.6 per cent CAGR, whereas LIC's RWRP declined at 3 per cent CAGR.

Growth driven by increased ticket size is reflected in the shift of product mix toward ULIPs and non-par products. These factors corroborate the long-term trend of a gradual shift of the retail life insurance market to large private players with strong brand and a wide banc assurance network.

The life insurance industry saw its growth momentum suffering a temporary disruption in January '22 led by Omicron surge led restrictions affecting mobility and overall business activities. The retail weighted received premium (RWRP) growth slowing to 6.9 per cent YoY in January '22 from 21.2 per cent seen in December '21. Despite this slowness in January '22, the YTDFY22 RWRP growth for the sector remains strong at 18 per cent YoY.

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