Mumbai: The total new business premium of domestic life insurance companies is likely to grow 14 percent to Rs 3.18-lakh crore in the current financial year, domestic rating agency ICRA said in a report today.

During the first seven months of fiscal 2022, the total new business (NB) premium growth for the life insurance industry continued to remain subdued at four percent or Rs 1.53-lakh crore due to the localized lockdowns in the first quarter of FY2022, it said.

The report is based on the analyses of the performance of 16 life insurance companies in India, of which one is in the public sector while the rest are in the private sector, the agency said.

These companies collectively represented over 98 percent of the new business written in the domestic life insurance industry during FY2021. "The NBP is estimated to grow 14 percent in FY2022 to Rs 3.18-lakh crore, as the nominal GDP is projected to grow by 16 percent. We expect the NBP growth to accelerate in H2, as typically Q4 has always been the strong- est quarter for life insurance business growth." ICRA's Assistant Vice-President and Sector Head (Financial Sector Ratings) Sahil Udani said in the report.

The total sum assured (SA) for both the private sector and LIC had increased in FY2021 and in the seven months of FY2022 from the year-ago periods.

The total SA for the private sector was Rs 4.04-lakh crore in FY2021, up to one percent year-on-year while for LIC it had increased 7.5 percent y o-y to Rs 8.9-lakh crore. While the profitability for select private players remains at similar levels in FY2021 with a PAT of Rs 5,960 crore, the median ROE (return on equity) for select private players had been declining since FY2018 due to losses at certain smaller players, and a decline in profitability for the bigger players. The select private players reported a cumulative loss of Rs 570 crore in Q1 FY2022 due to high claims during the second wave of the pandemic, the report said.

The agency expects the private players' profitability to remain subdued in FY2022 due to high claims in the first quarter.

LIC's profitability improved in FY2021 with a PAT of Rs 2,900 crore supported by both higher premiums underwritten and an improvement in investment income in FY2021, it said.

Source- PTI