Favorable seasonality and tax-rule transform regarding high-ticket, non-unit-linked savings instruments from April 1 could have ensured robust sales for Indian insurers in the March quarter. The government's decision to withdraw tax exemptions on maturity proceeds of non-unit linked insurance policies (non-ULIP) with an annual premium exceeding Rs 5 lakh led to a surge in pre-booking of high-value non-linked policies before March 31, resulting in an overall increase in the average ticket size for retail regular premium policies across the insurance industry.
While segments such as annuity, non-PAR (non-participating), and credit life are expected to perform well, the protection segment is expected to improve, while the ULIP (Unit-Linked Insurance Plan) segment may face muted trends due to volatile markets in the past quarter. In terms of premium growth, Motilal Oswal Investment Services expects HDFC Life, ICICI Prudential Life, and Max Financial Life Insurance to post annualized premium equivalent growth of 35%, 35%, and 30% respectively, while SBI Life is expected to see more modest growth of 11% year-on-year (YoY) basis.
The Value of New Business (VNB) growth is projected to be approximately 58% YoY for SBI Life Insurance and 34% YoY for HDFC Life Insurance while VNB margins are expected to remain healthy for all players. On the other hand, the general insurance industry is expected to deliver robust growth as it continues the momentum in the fourth quarter of FY23, with a cumulative growth of 20% YoY in gross written premiums (GWP) for January and February 2023.
ICICI Lombard is expected to experience growth in its auto insurance segment due to improved auto sales. PB Fintech is also expected to deliver strong premium growth of 67.5% YoY and revenue growth of 63.3% YoY, according to Nuvama Institutional Equities. However, recent regulatory changes in the insurance industry, including commissions, expense of management (EoM) rules, and the potential introduction of a composite insurance license, are expected to impact the growth of the industry in the new financial year.