New business premiums (NBP) of Life Insurance Corporation of India (LIC) fell 50.41% YoY to Rs 5,810.1 crore in April 2023 due to a sharp drop in group single premiums, according to a report by Business Standard.

New business premiums across the life insurance industry also fell 30% in April from a year earlier. Private sector companies, however, posted a growth rate of 8.5%.

Earlier this year, LIC chairman MR Kumar said some insurance-related tax rebates were necessary as it was not luxury items such as jewellery or perfume that could be taxed heavily. Until 4-5 years ago, life insurance was not considered profitable thanks to section 80C of the tax code, which only applied to policies.

In Union Budget 2023-24, Finance Minister Nirmala Sitharaman has proposed a levy on insurance premiums above Rs 5 lakh from 2023-24.

Analysts believe that this greatly reduces the attractiveness of returns on such products that were previously exempt from duty.

Linked Insurance Plans (ULIPs) with annual premiums above Rs 2.5 lakh lost this exemption in Budget 2021.

Single premiums for the state-owned insurance giant fell 65.76% to Rs 2,899.63 crore in April, while individual premiums fell 23.07% to Rs 1,014.47 crore.

The insurance business usually remains sluggish in the first few months of the financial year, but the sharp drop in premiums this year may be due to the government’s decision to impose a tax on high-value insurance products from this financial year onwards.

However, group single premiums for private sector insurers surged by 15%, while their group non-single premium components fell by 50.47%.

Among listed life insurers, SBI Life’s new business premiums soared 8%, but its group single premiums fell 11.4% and group non-single premiums fell 59.12%.

NBP is the premium from a new policy within one year. This includes first-year premiums and single premiums, which give an idea of ​​the total premiums received from new businesses.

After completing a one-year listing on May 16, LIC recorded slow growth in terms of its stock market performance. Shares of the country’s largest life insurer fell 40% to Rs 567 per share from its issue price of Rs 949. In comparison, the Sensex has gained 14% over the past year.