Page 18 - Insurance Times July 2024

also gives the life insurers the
opportunity to moderate the impact of Max Life plans to hire 30000 agents, open up to 100
higher payouts to the surrendering offices in FY25
policyholders or the other Max Life Insurance plans to hire 30,000 agents and open 50 to 100 new
stakeholders." offices in the financial year 2024-25 (FY25) to drive premium growth, said

The Insurance Regulatory and Prashant Tripathy, managing director and chief executive officer of the
Development Authority of India (IRDAI) company.
in its 'Master Circular on Life Insurance The private insurer's total agent count will rise to 1,30,000 in FY25. It added
Products' issued prescribed enhanced 47,957 agents in FY24, 54 per cent more than the year before.
Special Surrender Value (SSV).
"Last year we opened close to 100 offices in new areas, new cities where
As per the circular, life insurers will we were never present. So, we are trying to expand to those cities where
have to ensure that the SSV is at least we are not present. "Currently, we have close to about 466 office units. We
equal to the expected present value of want to increase by adding 50-100 offices," said Tripathy in a video interview.
the paid-up sum assured, paid-up
Proprietary distribution channels - directly created, owned, and maintained
future benefits, and accrued or vested by the company - accounted for 40 per cent of Max Life's new business
benefits, duly allowing for survival
(annualised premium equivalent, or APE) in FY24. The channel's business
benefits already paid.
grew by 28 per cent in FY24 to Rs 2,957 crore from Rs 2,307 crore in FY23.
Surrender value will be applicable
after the first year if the first-year In FY24, VNB margin of the largest Wage revision impact caps
annual premium has been paid. The private sector life insurer - SBI Life -
guidelines provide for discounting of slipped to 28.10 per cent compared to LIC Q4 net profit at Rs.
benefits at 10-year G-sec with a 30.10 per cent in the year-ago period. 13,762 crore
cushion of 50 basis points (bps) as
During the post earnings analyst LIC reported a marginal 2.5 per cent
compared to the draft, which increase in its standalone profit after
proposed discounting at 10-year G-sec meeting, the life insurer attributed the tax at Rs 13,762 crore in the quarter
rates. fall in margin to higher share of Ulip
business as compared to previous year. ended March 2024 as against Rs
Listed private life insurers' The share of Ulip business for the 13,427 crore in the year-ago period.
company increased to 60 per cent from The board of LIC recommended a final
FY24 margins fell on rise in 55 per cent in FY23. dividend of Rs 6 per share for FY24.

Ulips share According to analysts at Motilal Oswal, Earlier, during the year an interim
dividend of Rs 4 was declared. The flat
All the four listed private life insurance VNB margins for all life insurance profit in the quarter due to the impact
companies recorded a drop in value of players declined from the year-ago of wage revision.
new business (VNB) margin in the period due to adverse product mix and
financial year 2023-24 (FY24) as pressure on non-par margins. For the year ended March 31, 2024,
compared to FY23. This is because of HDFC Life also witnessed a drop in VNB profit after tax was Rs 40,676 crore as
a higher share of unit-linked insurance margin to 26.3 per cent as the share compared to Rs 36,397 crore for FY23.
plans (Ulips) in the product mix. of Ulip in its overall business touched LIC said it changed its accounting policy
VNB is a measure of the economic 35 per cent. In addition, for the life in September 2022 regarding transfer
of amount pertaining to the accretion
value of profits expected to emerge insurer, the tax imposed on policies on the available solvency margin from
from a new business. VNB margin is the with a premium of over Rs 5 lakh has non-participating policyholders account
profit margin of the companies. also impacted margins. to shareholders account.

According to insurance companies, the The private life insurer witnessed a Accordingly, it transferred a total
demand for Ulip products has surged surge in sale of high value (aggregate amount of Rs 29,518.75 crore (net of
among customers due to strong premium is over Rs 5 lakh) in March tax) in FY24 compared to Rs 27,240.75
performance of the equity market. The 2022 after the government imposed crore in the FY23, which included an
product is considered to have a lower tax on the segment during the Union amount of Rs 4,542.31 crore pertaining
profit margin. Budget of 2022-23. to the quarter ended March 31, 2022.

The Insurance Times July 2024 17