Page 15 - Insurance Times February 2022

officials, reinsurers have taken a tough However, in the October-December close inter-relationship of banks with
stance with the new Omicron variant quarter (Q3), NBP of life insurers the insurance sector and other
adding to the uncertainty. jumped 10.45 per cent over the same financial investment companies,
This is the second round of price period last year, mainly backed by the causes opaque monopolies that distort
robust growth of private insurers' NBP. the market and concentrate risks
increases in the current fiscal that the
life insurance industry is witnessing. In Q3 of FY22, insurers earned NBP to dangerously for the bondholders,
According to distributors, ICICI the tune of Rs 73,249.97 crore, lenders, depositors, home borrowers,
Prudential Life Insurance and HDFC Life compared to Rs 66,318.76 crore persons taking out an insurance claim
Insurance have sounded them off earned in the same period last year. and shareholders. The recent takeover
about the likelihood of an upward While private insurers' NBP grew by 33 of Reliance Capital by the RBI is an
revision in the fourth quarter. per cent, LIC's NBP contracted by 2.6 example of where the sector as a
per cent. NBP is the premium whole should not be heading.
HDFC Life Insurance chief financial Insurance and banking are at their
officer Niraj Shah said protection prices acquired from new policies for a
particular year. core two very different businesses.
in India are a lot lower than in some Insurance is a 'long term' stand-alone
of the developed countries with In December, private insurers' NBP business in which companies have to
superior healthcare facilities and rose 30 per cent year-on-year (YoY) to wait for long periods to break even and
higher life expectancy. "Historical Rs 13,032.33 crore, surpassing that of make profits. It is liquidity rich. Capital
increases in India have been lower LIC at Rs 11,434.13 crore. LIC's NBP gets locked up for longer cycles than
than inflation growth. We should dipped 20 per cent largely due to a 35 banking. Insurers do not usually raise
expect pricing and underwriting norms per cent fall in group single premium. debt to purchase financial assets to
to evolve in line with expanding Among large private life insurers, NBP cover claims.
geographical and demographic of HDFC Life reported 56 per cent YoY
coverage over time," said Shah. growth, while SBI Life saw 27 per cent It is a business that is required to be
responsive to its customer base.
IndiaFirst Life Insurance MD & CEO R M growth, and Max Life reported 32 per Despite the need for skilled leadership,
Vishakha said, "Global reinsurers follow cent growth. ICICI Prudential, on the the Boards of insurance companies
business considerations in revising their other hand, reported a 6 per cent dip tend to be populated with the nominee
rates. Domestic insurers are dependent in NBP for December. members of promoters, investors and
on their support for providing cover and In Q2 of FY22, Indian insurers netted owners.
have to increase rates whenever NBP to the tune of Rs 75,392 crore, up
reinsurance rates are revised." 16 per cent from the same period last Banks, in contrast, are institutionally
interconnected through the interbank
HDFC Life is currently engaging with year. LIC's NBP was up 14 per cent to market and are more exposed to
reinsurers to refine underwriting Rs 51,488 crore and private insurers' liquidity risk. Banks' interest in lending
practices, deploy new technologies NBP was up 20 per cent to Rs 23,904.2 and credit-creation is not conducive to
such as deep-learning underwriting crore. the cash flow dynamics of the
models and address the protection Marred by pandemic-induced insurance companies.
opportunity through our group lockdowns and NBP of life insurers had Banks as corporate agents, obtaining
platform (Credit Life) apart from the plummeted more than 18 per cent. commissions, are interested in selling
individual business, which will distribute
For first nine months of FY22. life the insurance packages to customers
risks more evenly. insurers's NBP rose 7.4 per cent to Rs who are frequently unaware of the
2.05 trillion. terms and conditions, leading to the
Life insurers' new business closure of the policy within a short time

premium flat in Dec, but Ensuring the safety of though the premiums are not
returned. The conflicts in objectives
rises 10.5% in Q3 insurance sector have an impact on the ability of those
The new business premium (NBP) of life The RBI recently proposed to reduce sitting on the Board of insurance
the ownership by banks over insurance
insurance companies was largely flat companies to make optimal decisions
companies at a maximum of 20 per
in December. This is owing to a 20 per about reliably selling insurance,
cent from a present 50 per cent.
cent fall in Life Insurance Corporation's making investments and managing
(LIC) NBP. This move is to be welcomed, as the cash flows. T

The Insurance Times, February 2022 15