Domestic’s Total New Business Premium life insurance companies Domestic rating agency Icra said in a report on Monday that it is likely to grow 14% to Rs 3.18 lakh crore in the current financial year. During the first seven months of FY22, the overall new business (NB) premium growth for the life insurance industry remained at 4% or Rs 1.53 lakh crore in the first quarter of FY22 due to the localized lockdown.

The agency said the report is based on an analysis 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.

These companies collectively represented over 98% of the new business written off in the domestic life insurance industry during FY21.

“NS nbp Estimated to grow 14% to Rs 3.18 lakh crore in FY 2022, as nominal Gross Domestic Product Projected to grow by 16%. We expect NBP growth to pick up in H2, as Q4 in general has always been the strongest quarter for the growth of the life insurance business,” said Sahil, Assistant Vice President and Sector Head (Financial Sector Ratings), ICRA married said in the report.

Total Sum Assured (SA) for both private sector and LIC In FY2021 and in the seven months of FY2022 there was an increase from the year-ago period.

Total SA for the private sector stood at Rs 4.04 lakh crore in FY21, up one% year-on-year, while it grew 7.5% YoY to Rs 8.9 lakh crore for LIC.

While profitability for select private players remains at the same level in FY21 to Pat At Rs 5,960 crore, the average ROE (return on equity) for select private players was declining since FY2018 due to losses of some smaller players and decline in profits of larger players.

Select private players reported cumulative losses 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 profitability of private players to remain low in FY22 due to higher claims in the first quarter.

LIC’s profitability improved in FY21 with a PAT of Rs 2,900 crore, supported by both higher premium underwritten and improved investment income in FY21.

Udani said that while the current solvency remains comfortable, the level of solvency for the industry will depend on the loss of underwriting due to the COVID-19 pandemic.

The reserve buffer, as measured by total technical reserves / total previous annual claims paid, for private players has gradually increased over the past five years.

With higher COVID claims in Q1FY2022, the reservation ratio is expected to decrease in FY22, he said.