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Credit rating agency ICRA in its latest report has said that the new business premium (NBP) of domestic life insurance companies is likely to grow to Rs 4.06-4.14 trillion in FY2024 and Rs 4.49-4.66 trillion in FY2025, up from Rs. 3.71 trillion in FY2023, translating into an industry-wide NBP growth of 9-12% for FY2024 and 11-13% for FY2025 respectively. It noted that with steady growth in renewal premium income, the gross premium written (GPW) is expected to increase to Rs. 8.56-8.64 trillion in FY2024 and Rs. 9.37-9.55 trillion in FY2025, from Rs. 7.86 trillion in FY2023E.

According to the report, the individual NBP for the industry expanded at a sharp 15.4% year-on-year (YoY) in FY2023 (4-year CAGR of 10.3%) to Rs. 1.45 trillion, partly attributed to the significant growth in the guaranteed non-par individual segment. The expansion was also driven by the levy of taxes on the returns from these policies if the annual premium paid exceeded Rs. 5 lakh per annum. This change was applicable from April 2023 onwards leading to sharp increase in premium in FY2023 resulting in a moderation in the industry’s individual NBP growth to 7.7% on YoY basis during H1 FY2024. ICRA expects the individual NBP to rise by 8-10% in FY2024 and 10-12% in FY2025.

It further said contrary to the individual segment, the group NBP for the industry witnessed a contraction by 22.6% in H1 FY2024, because of shrinkage in LIC’s group business. Given that the latter accounted for 75% of LIC’s NBP in FY2023 and LIC accounted for 63% of industry NBP, the revival in its group business will be critical for the overall NBP growth of the industry. In the absence of this, the NBP for the industry is likely to contract.