The life insurance industry, comprising 23 private sector insurers and LIC of India, has posted an 18.64 per cent decline in first-year premium for the period ended June 30, 2020.

A combination of factors such as lack of sales through physical channels such as bank branches and agents, insufficient liquidity and shifting of focus towards term policies rather than investment led to the decline. Total first-year premium collected during the period was Rs 49,335.44 crore compared with Rs 60,637.22 crore during the same period a year ago.

Number of policies at 31,05,611 was 35.4 per cent down from 48,07,717 in the same period a year ago.

While private sector insurers saw a 19.17 per cent decline in first-year premium overall barring a few who managed to grow, LIC saw an 18.45 per cent decline in first-year premium during the period.

“The 18 per cent decline is much lower than what was originally anticipated. The fall in growth rates was expected because of the Covid-19 situation and the lockdown. Life insurance (new policies) is mostly sold through physical introduction and most of the sale for the private sector was earlier happening through banks and for LIC through agents. What has helped improve the situation is the transition from physical to digital channels,” Santosh Agarwal, chief business officer, life insurance, Policybazaar.com, told The Telegraph.

“The next quarter is expected to be strong. There is an increased demand for insurance in uncertain times. The demand for protection products has shot up not just in term insurance but also in health insurance,” she said.

Within the segments, pure term policies were in demand because of easier availability online. But long-term guaranteed products and Ulips were relatively less popular because of low interest rate and volatile capital market.