LIC Loses Market Share To Private Players
The Life Insurance Corporation of India (LIC)”s contribution to monthly new business premium (NBP) in the life insurance sector is shrinking. LIC currently accounts for 58.50% of monthly NBP in the life insurance sector, down from 68.25% in September 2022. This represents a fall of 975 basis points due to product failings and distribution side issues.
However, LIC”s market share has seen a marginal rise from the 57.37% logged in August this year. According to the monthly business data published for September 2023 by the Life Insurance Council, LIC”s NBP up to September 2023 was Rs 92,462.62 crore, as compared to about Rs 1.25 trillion in the same period a year ago. With this, the life insurance industry”s NBP dipped almost 13% over the first six months to about ?1.59 trillion.
According to insurance analysts, decreased sales of participating products, the absence of competitive non-participating products, and product features and pricing modifications are the factors that affected LIC”s NBP.
Meanwhile, private life insurers” NBP has gained traction, keeping its gradual growth to 41.50% in September 2023 from 31.75% in September 2022. The market share of HDFC Life Insurance jumped to 8.31% from 6.07%, while SBI Life Insurance saw a rise in its NBP share to 10.27% from 7.19%.
ICICI Prudential Life Insurance, Bajaj Allianz Life Insurance, and Max Life Insurance also increased their market share by almost 1%.
According to the Annual Report 2022-23, the LIC had 16 participating products, 0 non-participating products, 11 group products, and eight riders. Concerning the new policies generated in this period, 94.39% of the policies were participating products and 5.61% of policies were non-participating products.
Meanwhile, on the supply front, LIC has shown higher dependence on agent-led networks, rather than bancassurance and other alternative methods. Analysts foresee growth in life insurance premium as the country”s young generation selects their policies online. This is where LIC has lost momentum, as it has relied more on traditional methods, which has affected its premium. In addition, LIC has incurred high costs by paying higher commissions to agents.
The report shows that during 2022-23, more than 96% of LIC”s first-year premium was generated through agents and insurance advisors. In contrast, the majority of private insurers, such as SBI Life Insurance Company and HDFC Life Insurance Company, made only 18% and 20%, respectively, of their business through agents.
According to Manogna Vangari, insurance analyst at GlobalData, private insurers have an edge over LIC as they rely on digital initiatives rather than traditional methods.
