Mumbai: Life insurance companies grew by 10.73 per cent year-on-year in first year premium to Rs 2.14 lakh crore in 2018-19. The growth was largely driven by private life insurers that grew by 22.2 percent to Rs 72,481 crore while public sector behemoth Life Insurance Corporation of India (LIC) grew by 6 per cent to Rs 1.42 lakh crore.

Despite an agency force of over 9 lakh agents and having tie-ups with most public sector banks, LIC witnessed a drop in first year individual single premium by 8 per cent to Rs 24,393 and was able to grow the individual regular premium by mere 5.87 per cent to Rs 26,618 crore, however it aggressively lapped up the risky group business to boost its topline. During April-March 2019, LIC’s new business premium from group single premium was a whopping Rs 86,527 crore, a growth of 8 per cent while the first year premium from group non single premium grew by 66 per cent to Rs 3,464 crore.

LIC lost market share to private players and its market share stands at 66 per cent during 2018-19 compared to a market share of 69 per cent in 2017-18.

Life insurers offer products such as gratuity, leave encashment, superannuation, group saving linked insurance, group credit life and group term insurance products to companies for their employees. While group term life and group credit life insurance are profitable, leave encashment, gratuity and superannuation are loss making as insurers have to maintain a solvency of 4.5 per cent of the fund size. As a result group insurance business offers low margins or ends up in losses.

Says Karni Singh Arha, an Independent Insurance Management Consultant, “Even though the industry has grown by 10 per cent, its largely on account of the growth witnessed by private players in the regular premium segment while LIC has de-grown in this segment. However LIC’s growth is coming from the group business where it enjoys a large market share.”

Among the private players, ICICI Prudential grew by 12 per cent to Rs 10,251 crore, HDFC Life by 31 per cent to Rs 14,972 crore, SBI Life by 25 per cent to Rs 13,792 crore. Tata AIA witnessed the highest growth 66.28 per cent to Rs 2,476 crore, Aditya Birla Life insurance grew by 47 per cent to Rs 3,916 crore.

However, Aegon Life, Aviva Life Insurance, DHFL Pramerica Life, IDBI Federal Life, Insurance, Star Union Daiichi Life reported a drop in new business premium for FY19.