LIC sharply improves its market share in July 2022

When the Insurance Regulatory Development Authority of India (IRDAI), published the life insurance numbers for July 2022, there were two positive cues for the insurance industry. On the whole, the sector had seen a sharp spike in premium income during the month of July 2022. At the same time, the month of July 2022 was entirely dominated by LIC, which saw its market share of first year premium collections improve by over 300 basis points as compared to June 2022. The table below captures life insurance premiums for July 2022.

That is the macro picture. On a yoy basis, the premium income of the insurance sector has almost doubled. But the real takeaway is that the tepid growth of the private insurers in July 2022 is more than compensated for by the frenetic growth of 142% in the premium incomes of LIC during the month. Let us look at the LIC story in greater detail and how they grew to dominate the insurance business growth in July 2022.

July 2022 was all about LIC stamping its life insurance leadership

For the month, LIC saw robust growth in premium income and improvement in market share of premium income and sum assured. Here is the story of LIC in July 2022.

    a) For the month of July 2022, the market share of LIC in total premium income is up by a full 250 bps at 68.57% over June. This came at the cost of lower incomes reported by the private insurers. Out of the total premium income pool of Rs39,079 crore for the quarter overall, LIC cornered Rs29,117 crore while private life insurers Rs9,962 crore. Most of the growth in the overall pie was captured by LIC.

    b) For July 2022, LIC had a market share of 82.7% in group single premium and 96.59% in group non-single premium. Traditionally, due to its strong institutional relationships and the long pedigree, the group business has logically gone to LIC. However, the situation differs if you look at individual policies. In the case of individual non-single premiums, private insurers had a market share of 62.69% and in individual single premium, their market share was 43.98%.

    c) Generally, private insurers have always dominated the share of sum assured. That is largely because private insurers sell more of term products where the ratio of sum assured to insurance premium is too large. While private insurers still have a market share of 81.86%, LIC has seen its share of sum assured improve to 18.14% in July 2022.

    d) Growth in premiums is where LIC scores some real points in July 2022. The industry growth in premiums for July 2022 over July 2021 was a very healthy 91.24%. However, the private life insurers saw premium growth of just 18.54% while LIC saw premium growth of a hefty 142.02%. 

The private insurance space appears to be consolidating with about 6-7 names taking almost the entire cake. However, the big story of July 2022 has been the sharp revival in performance of LIC. Now, the million dollar question is whether this would translate into price performance for LIC. As of date, the stock of LIC is still stuck at Rs682/share. It is still closer to recent lows and remains to be seen if these numbers can really enthuse markets