Life Insurance - ‘Cleansing’ Underway; No Longer 'Nudge And Push': HDFC Securities

HDFC Institutional Equities

Contrary to expectations of relief in the Union Budget, life insurers are expected to be adversely impacted by the first-order and second-order changes proposed in the Finance Act 2023.

Conversation with industry experts suggest that the top four private life insurers are likely to witness 20-27% adverse impact on FY24E annual premium equivalent; predominantly on account of the impending transition to the new tax regime.

We flag 'high ceding charges' in guaranteed non participating savings as the next potential target as policymakers look to protect policyholder interest and improve life insurance penetration. While the demand for retail term protection remains subdued and the April 2023 growth print was soft, we await evidence of medium-term growth momentum.

While we are constructive on the long-term growth prospects of the life insurance sector, we believe major tectonic shifts will create near-term challenges, albeit preparing the industry for a cleaner insurance penetration.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.