Insurers likely to report robust growth amid market tailwinds

The life insurance industry experienced muted growth in Q1FY24 due to a surge in high-value non-par policy sales in the preceding quarter before the change in taxation policies. From April 2023, the government removed tax benefits from all non-par policies with aggregate premiums of ₹5 lakh and above per year.

Insurers are likely to report APE growth, mostly driven by significant ULIP sales. However, this will result in compression due to lower non-par sales. State-run is expected to buck this trend, with a 15% growth in APE and an improvement in margins to 15%, driven by increased sales of non-par products.

"APE growth is likely to be driven by strong ULIP sales, led by buoyant equity markets," said Avinash Singh and . "Given the higher contribution of ULIPs to the product mix and some pressure on group term policy pricing, we expect VNB margins for the private sector to contract during Q1FY25."

is expected to report 17-18% growth in APE and a 50 basis points compression in VNB margins to around 25%. A basis point is one hundredth of a percentage point. is projected to see 40% growth in APE, driven by ULIP growth. is likely to report 18% growth in APE with a VNB margin of 27%, while Max Life Insurance is expected to show 19% APE growth and a 20% VNB margin.

General insurers are likely to report around 20% growth in gross premium for the quarter ending June 30, 2024.