Still the King: LIC dominates first-year new business premium market despite private sector competition

Insurance behemoth Life Insurance Corporation of India (LIC) has maintained its lead in the life insurance sector as of September 30, significantly outpacing private sector competitors in the first-year new business premium collection for April-September 2024.

In the first half of fiscal 2024-25 (April-September),  LIC’s first year premium surged 24.73 per cent to ₹ 1,15,549 crore (₹92,642 crore), data from Life Insurance Council showed.

On the other hand, the 24 private insurers in aggregate collected a first-year new business premium of ₹ 73,644 crore, up 12.03 per cent over ₹ 65,734 crore in same period last fiscal.

This disparity highlights LIC’s formidable market presence, even as private sector players steadily expand their footprints.

A large part of LIC’s strong show can be attributed to robust growth in Group Single premium segment.

In April-September 2024, LIC’s Individual Premium segment collection stood at ₹29,492 crore, a 17.33 per cent increase from ₹25,136 crore during H1FY24. The Group Premium segment saw a growth of 27.57 per cent to ₹84,679 crore from ₹66,378 crore the previous year. Group Yearly Premiums also grew by 22.14 per cent to ₹1,379 crore, compared to ₹1,129 crore in H1FY24.

For H1FY25, LIC issued 91.87 lakh policies and schemes, marking a 13.75 percent increase from 80.76 lakh in H1FY24. In the Individual category, policies and schemes grew by 13.77 percent to 91.70 lakh, up from 80.60 lakh in the same period last year. Group Yearly Renewable policies and schemes also increased by 3.68 percent to 14,216 in H1FY25 compared to 13,712 in the previous year, while Group schemes and policies rose by 21.49 percent to 2,685 from 2,210 in H1FY24.

September 2024 performance

However, the growth performance of the private sector was much better in September 2024 as compared to that of LIC for this month.

In September 2024, the private sector’s first year premium stood at ₹ 14,651 crore, up 16.37 percent over ₹ 12,590 crore in September 2023.

On the other hand, LIC’s first year new business premium for September 2024 grew 12.37 percent on a year-on-year basis at ₹ 20,369 crore (₹ 18,126 crore). 

The Individual Premium segment saw a 39.28 percent growth, totalling ₹ 7,095 crore in September 2024, up from ₹ 5,094 crore in September 2023. 

The Group Premium segment also a moderate rise of 4.55 percent to ₹ 12,890 crore compared to ₹ 12,329 crore in the prior year. 

For the month of September 2024, the total number of policies and schemes surged 58.74 percent to 23.51 lakh, up from 14.81 lakh in the corresponding month last year.

Why LIC continues to lead?

Several factors contribute to LIC’s leadership in new business premium. One of the primary reasons is its vast distribution network, which spans urban and rural areas across India. With over 2.8 million agents, LIC has an unparalleled reach that no private insurer can match. This extensive agent network, coupled with a strong brand legacy, has fostered trust among millions of policyholders, giving LIC an edge in acquiring new customers.

Moreover, LIC’s product mix, which includes traditional plans such as endowment and money-back policies, appeals to risk-averse Indian consumers who prioritize guaranteed returns and long-term security over the market-linked products that private insurers often promote. These traditional products are particularly popular in semi-urban and rural regions, where LIC’s brand recognition and agent presence make it the insurer of choice.

LIC’s government ownership also instills a sense of reliability among consumers. In India, public sector undertakings often enjoy an implicit trust advantage, as they are perceived as safer and more stable. This perception, combined with LIC’s aggressive marketing campaigns helps sustain its lead.

Can LIC sustain this gap?

While LIC’s dominance remains unquestionable, the gap between LIC and private insurers in first-year new business premium is gradually narrowing. Private insurers such as HDFC Life, ICICI Prudential, and SBI Life have been innovating with technology-driven solutions, expanding their digital distribution channels, and forming strategic alliances with banks (bancassurance) to tap into newer demographics. These measures are helping private players grow their market shares, particularly in urban areas where digital adoption is higher.

However, LIC’s stronghold in rural markets, its massive agent network, and its brand legacy give it a sustainable edge. To maintain its lead, LIC may need to modernize its offerings and invest further in digital transformation to appeal to younger, tech-savvy consumers, life insurance industry observers said.