New business of India’s life insurers declined nearly 4.5% in November to ₹25,306.56 crore, marking the first such dip this financial year, likely driven by consumers deferring purchase of policies amid mounting expectations of a reduction in the Goods and Services Tax (GST) rate on insurance policies.
Meanwhile, a declining trend in the stock markets and tight liquidity conditions, flagged by the Reserve Bank of India at its monetary policy review last Friday, also hit mutual fund inflows last month as fresh equity fund investments slipped 14% from October to a tad under ₹36,000 crore, and debt-oriented schemes clocked huge outflows led by liquid funds. “Net inflows into income- and debt-oriented funds fell to ₹12,916 crore compared with ₹1,57,402 crore in October, down 92% on the back of huge outflows in liquid funds due to tighter liquidity conditions and possible tax payments,” reasoned Deepak Ramaraju, senior fund manager, Shriram AMC.
State-owned Life Insurance Corporation of India reported a 27.17% decline in first year premium payments to ₹11,751.11 crore from ₹16,134.55 crore last November. The GST Council is expected to discuss a proposal to pare the GST levies on health and life insurance products on December 21.
The number of polices sold by life insurers were 27.24% lower at almost 14.87 lakh last month from 20.43 lakh in November 2023, while the number of lives covered under group schemes dropped 7.02% to 1.9 crore from 2.04 crore — this was also the first month after the new policy surrender norms came into force.
Private life insurers fared better with premium for the month increasing 30.84% collectively to ₹13,555.45 crore (₹10,360.29 crore).
The Life Insurance Council said the year-to-date (April-November) performance remains robust, reflecting a 15.67% growth in the new business figures compared to the same period last fiscal. “This positive trend underscores the resilience and ongoing expansion of the life insurance industry, even as it navigates various market challenges”.
In the first eight months of the fiscal, the new business of the life insurers stood at ₹2,44,868.20 crore (₹2,11,690.65 crore) indicating a strong underlying demand for insurance products as consumers and corporate clients seek enhanced protection, it said in a release.
LIC reported a 16.08% growth in new business premium during the eight months to ₹1,44,432.09 crore (₹1,24,424.33 crore).
During the same period, private life insurers mobilised ₹1,00,435.12 crore new business, an increase of 15.09% ₹87,266.33 crore in the previous fiscal.
Published - December 10, 2024 09:40 pm IST