Data and analytics company GlobalData expects the Indian life insurance industry to contract in 2020, declining by 0.9% compared to the 8.8% growth recorded in 2019.
This revised forecast accounts for the aftermath of the global coronavirus pandemic.
As per the latest data, the country’s life insurance market is forecasted to grow at a compound annual growth rate of 5.3% during the forecast period 2019-2023.
GlobalData says the extended phase of lockdown and its related restrictions will have a negative impact on the new business premiums growth in 2020.
Premium from new business accounts for 42% of the life insurance market and, as a result of lockdown, life insurers reported decline of 32.6% in new business premium in April 2020 against the same period last year.
State-owned market leader Life Insurance Corporation of India registered a decline of 32% in premium from new business while private life insurers have seen decline of 33.3% during the same period.
“Bancassurance and agency channels account for over 90% insurers’ new business premiums in India. Due to the lockdown restrictions, sales through these channels have been severely impaired,” explained Pratyusha Mekala, Insurance Analyst at GlobalData.
“To offset the adverse impact of offline distribution channels, efforts are being made by insurance companies to accelerate online sales. For instance, Web aggregators such as Policybazaar have reported 20% growth in sales of life insurance products in March 2020.
“However, growth from online channels is unlikely to prevent contraction in the overall life insurance business.”