Premium Income of Life Insurers Rises Almost 13% to Rs 7.83 Lakh Crore in FY23
New Delhi, Dec 27: The premium income of life insurance companies in India witnessed a significant surge, growing by 12.98 percent to reach Rs 7.83 lakh crore during the fiscal year 2022-2023, according to the annual report released by the Insurance Regulatory and Development Authority of India (Irdai) on Wednesday. In contrast, general insurers experienced an even higher growth rate, with their premium income increasing by 16.4 percent to Rs 2.57 lakh crore.
For individual life insurance policies, both public and private sector insurers contributed to the overall growth. Private sector life insurers recorded a substantial growth of 16.34 percent in premiums, while the public sector life insurer witnessed a steady increase of 10.90 percent in premiums, as highlighted in the Irdai’s Annual Report for 2022-23.
A major portion, 52.56 percent, of the total premiums underwritten by life insurers for the year 2022-23 was derived from renewal premiums. New business premiums accounted for the remaining 47.44 percent. Interestingly, the growth rate of new business premium outpaced that of renewal business, standing at 17.90 percent and 8.88 percent respectively, as per the report.
In terms of policy issuance, life insurers issued a total of 284.70 lakh new policies under individual business in 2022-23. Out of these, public sector insurers accounted for 204.29 lakh policies (71.75 percent), while private life insurers issued 80.42 lakh policies (28.25 percent).
The profitability of the life insurance industry also experienced a significant boost, with profit after tax growing more than five-fold to Rs 42,788 crore in 2022-23 as compared to Rs 7,751 crore in the previous fiscal year. Public sector insurers reported an impressive 800 percent profit growth, while private insurers collectively registered a remarkable increase of 72.36 percent during the period.
As for the non-life insurance industry, the total direct premium underwritten in India stood at Rs 2.57 lakh crore, marking a growth of 16.40 percent from the previous year. Among the 27 private sector insurers, including standalone health insurers, the total premium underwritten for 2022-23 amounted to Rs 1.58 lakh crore, compared to Rs 1.30 lakh crore in 2021-22. Public sector general insurers claimed a market share of 38.42 percent, leaving the remaining 61.58 percent to the private sector general insurers.
The report also highlighted the commission expenses and operating expenses incurred by insurers, with significant amounts being spent in these areas. The gross commission expenses for public sector general insurers, private general insurers, standalone health insurers, and specialized insurers were reported to be Rs 6,341 crore, Rs 10,192 crore, Rs 3,487 crore, and Rs 125 crore, respectively.
However, amid the positive trends observed in the insurance industry, non-life insurers faced an increase in underwriting losses, which amounted to Rs 32,797 crore in 2022-23, up from Rs 31,810 crore in the previous fiscal year, representing a 3.11 percent increase.
Additionally, the Insurance Regulatory and Development Authority of India (Irdai) highlighted a decline in the insurance penetration rate in the country. According to the Swiss Re Sigma Report, life insurance penetration reduced from 3.2 percent in 2021-22 to 3 percent in 2022-23, while the non-life insurance penetration remained at 1 percent for both years. Consequently, India’s overall insurance penetration dropped to 4 percent in 2022-23 from the previous year’s level of 4.2 percent.
The impressive growth in premium income for life insurers, along with the substantial increase in profit after tax, reflects the positive trajectory of India’s insurance industry. However, the challenges posed by underwriting losses and declining insurance penetration rates require careful consideration to sustain long-term growth and stability.
In conclusion, the latest data provided by the Irdai’s annual report for fiscal year 2022-2023 shows significant growth in premium income for both life and general insurers in India. While the industry celebrates increased profitability, attention must be given to address challenges such as underwriting losses and declining insurance penetration rates to ensure a thriving and sustainable insurance sector in the country.
Note: The facts and figures mentioned in this article are sourced from the Insurance Regulatory and Development Authority of India (Irdai)’s Annual Report 2022-23.
