After a dismal first quarter, Life Insurance Corp. of India (LIC) clocked a sharp 40% month-on-month growth in individual premiums in July and August, led by a jump in the sales of big-ticket pension and term assurance plans.
LIC witnessed negative growth in new business in the first quarter as its agents could not meet customers due to the lockdown restrictions. Given continuing curbs, LIC has shifted focus to fewer but bigger policies, which are being sold at 50% higher size than in the last fiscal year, managing director Vipin Anand said in an interview. With assets of more than 34 trillion, LIC is India’s largest life insurer.
“Apart from high net-worth individuals (HNIs) who are buying big-ticket policies, customers belonging to the middle class too are now buying policies with 12-15 lakh sum assured, which was earlier at around 7-10 lakh," Anand said, adding even people close to retirement are buying large pension products to ensure long-term interest rates are protected so that they get sufficient returns at maturity.
Concerns over longevity and future earning capacity in the wake of covid are prompting people to buy big-ticket term assurance and pension products.
“Uncertainty of life due to covid has spur-red the demand for insurance products and fast falling interest rates for fixed-return annuities," he said. People aged 50-70 are buying large annuities to freeze returns before interest rates fall further.
“The public’s newfound interest in pure protection products has substantially improved sales in our term products, offline Jeevan Amar and online Tech Term, especially now that private companies have increased their term insurance premiums and our products are comparatively better priced," he said.
During July, LIC’s new business individual single premium was 68.59% higher at 3,305.95 crore against 1,961 crore in July 2019.
Between April and July, this grew by 13.47% to ₹6,961.19 crore as against 6,134.96 crore during the same period of last year. LIC’s overall new business premium during the April-July period was slightly lower at 15,170.95 crore as compared to 15,311.87 crore a year ago.
LIC expects to garner new business premium worth 18,800 crore for August, which is about 10% higher than in August 2019.
Given continued movement curbs and the need for social distancing, LIC—which depends largely on agents—witnessed a drop in its new business premium in the range of 13-32% during April, May and June.
