Q3 FY25 Insurance Insights: Shifting Gears in Growth, Margin, & Market Dynamics

Introduction

The insurance sector navigated a dynamic quarter, balancing growth opportunities with margin pressures and regulatory changes. Life insurers witnessed strong premium inflows, while general insurers adapted to evolving market conditions. The quarter highlighted key shifts in product mix, distribution strategies, and profitability drivers. Here’s a deep dive into the sector’s key performance trends.

1. Premium Growth & Market Dynamics

Life Insurance: Leading players reported strong Gross Written Premium (GWP) growth:

SBI Life: +11.3% YoY
ICICI Prudential: +23.1% YoY
HDFC Life: +11% YoY
Growth was primarily fueled by renewal premiums and new business expansion.

General Insurance: Mixed performance across players:

ICICI Lombard: Flat GDPI YoY due to regulatory changes
Go Digit: +10% YoY
Star Health: +5% YoY

2. Value of New Business (VNB) & Margins

SBI Life: VNB grew 11.3% YoY, with margins at 26.9%, though slightly compressed due to a higher ULIP mix.
ICICI Prudential: VNB margins fell 166 bps YoY to 21.2%, impacted by increased ULIP sales.
HDFC Life: VNB grew 9% YoY, with margins at 26.1%.
Max Financial: Flat VNB YoY, with a 400 bps margin contraction, reflecting product mix shifts and surrender charges.

3. Product Mix Shifts

ULIP Contribution Increased:

SBI Life: 64% of individual APE
ICICI Prudential: 50.8% of total APE
Max Financial: 44% of total mix
Higher ULIP sales led to lower margins due to regulatory fee caps, higher capital needs, and greater surrender risk.

Non-Par Segment Growth:

HDFC Life & SBI Life leveraged non-par savings products (e.g., Smart Platina Supreme) to maintain profitability despite ULIP-driven margin pressures.
Insurers are expanding their non-par savings portfolios to counterbalance margin dilution from ULIPs and provide stability amid market volatility.

4. Profitability & Expense Management

SBI Life: PAT +71.2% YoY
ICICI Prudential: PAT +43.2% YoY
HDFC Life: PAT +14% YoY
Max Financial: PAT -54% YoY
Star Health: PAT -26% YoY

5. Distribution & Persistency Trends

Max Financial: 25th-month persistency improved by 250bps to 72%.
HDFC Life: Bancassurance remains dominant at 65% of channel mix.
Star Health: Digital business grew 22% YoY, contributing 70% of collections.

6. Strategic Developments & Outlook

Max Life Rebranding & Merger: Rebranded as Axis Max Life; Max Financial to merge into Axis Max Life for public listing, aligning with IRDAI’s directive.
HDFC Life’s ₹1,000 Cr NCD Issuance: Approved to bolster financial strength.
Star Health’s Portfolio Repricing: 65% of portfolio repriced due to medical inflation, with further hikes expected.

Conclusion: Key Emerging Trends

The sector is undergoing a structural shift, balancing ULIP expansion with non-par and protection products to sustain profitability.

Life insurers are adapting to margin pressures by strategically diversifying their product mix.
General insurers are focusing on cost control, claims management, and selective reinsurance to improve underwriting results.
Persistency, digital distribution, and bancassurance remain key levers for long-term growth.
Regulatory changes, including surrender charge adjustments, are influencing insurer strategies, leading to proactive portfolio adjustments.

Overall, SBI Life and HDFC Life demonstrated steady growth with resilient margins, while ICICI Prudential and Max Financial faced challenges from ULIP-driven margin compression. Among general insurers, ICICI Lombard and Go Digit showed underwriting improvements, while Star Health struggled with higher loss ratios.

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