The Indian life insurance sector is expected to contract by almost 1% during 2020, caused by disruption to its biggest sales channel.
As people stay at home while the country is in lockdown, GlobalData insurance analyst Pratyusha Mekala said the bancassurance and agency channels, which account for over 90% of insurers’ new business, have been “severely impaired” by the affects of Covid-19.
“Premium from new business accounts for 42% of the life insurance market. 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,” she added.
“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 a decline of 33.3% during the same period.”
India’s life insurance market is still expected to grow by 7.7% in 2020, but this would be a drop on 2019’s 8.8% figure – a 0.9% decrease.
Mekala said insurance companies are attempting to push online sales to offset the adverse impact, but that their efforts are unlikely to make a huge difference.
“Web aggregators such as Policybazaar have reported 20% growth in sales of life insurance products in March 2020,” she said.
“However, growth from online channels is unlikely to prevent contraction in the overall life insurance business.”