New business premiums of life insurance companies fell 12% year-on-year in February. This marks the fourth consecutive month of decline since the new surrender value guidelines came into effect in October 2024.
Data from the Life Insurance Council showed that the industry’s new business premium stood at Rs 29,985.58 crore in February, down from Rs 33,913.18 crore a year ago. The drop was led by Life Insurance Corporation of India (LIC), the country’s largest life insurer, whose monthly premium declined 22% to Rs 15,513.95 crore.
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During third quarter earnings call, LIC managing director and CEO Siddhartha Mohanty acknowledged that new surrender value norms of the Insurance Regulatory and Development Authority (Irdai) had impacted premium collections as the insurer revamped all its products and adjusted agent commissions to mitigate the effect. He added that collections were expected to improve in the fourth quarter.
However, LIC’s premium de-growth worsened in February, following a 14% YoY decline in January to Rs 16,292.67 crore.
The Irdai implemented the new surrender value norms, requiring insurers to pay a higher amount to policyholders who exit before maturity. The guidelines also extended surrender value eligibility to policies surrendered within one year, down from the two-year threshold.
To counter the impact, life insurers have been adopting various measures, including reducing first-year commissions on new policies and clawing back agent commissions if policies are surrendered within the first two years.
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Meanwhile, the private life insurance industry posted a modest 3% year-on-year growth in new business premium to Rs 14,471.62 crore in February. HDFC Life Insurance saw a 24% rise in NBP to Rs 3,213.76 crore while SBI Life Insurance recorded an 18% decline to Rs 2,174.53 crore. ICICI Prudential Life Insurance grew 5% to Rs 1,857.05 crore and Bajaj Allianz Life Insurance reported a 3% increase to Rs 1,080.33 crore.
The industry sold 1.9 million policies during the month, down from 2.2 million in the same period last year.
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