India’s Leading BFSI and FinTech Companies 2021

43 Benefits Paid & Commission Expenses 0 400 800 1200 1600 2000 Death claim Mat ur ity Surrender/ wi thdrawal Others Death claim Mat ur ity Surrender/wit hdrawal Others FY19 FY20 ` bn Benefits paid by life i nsurers LIC Private Sector The life insurance industry paid benefits to the tune of ` 3.5 trillion in FY20, which constituted 61.2% of the gross premium underwritten. While private insurers paid benefits of 50.6% of the premium underwritten in FY20, LIC paid benefits to the extent of 66.6% of the premium underwritten. Despite a 6.1% increase in total commission expense of life insurers in FY20, the commission expense ratio (CER) (commission as percentage of premium) declined marginally to 5.1% in FY20 from 5.5% in FY19. The marginal decline in CER can largely be attributed to the higher growth of 12.8% in total premium of life insurers in FY20. CER for both LIC as well as private sector insurers underwent a marginal decline to 5.4% and 4.6%, respectively in FY20. CER for first year premium declined substantially to 15.4% in FY20 from 20% in FY19. In terms of commission expenses, while all the segments witnessed deceleration in growth, growth in single premium commission slumped to 6.9% in FY20 from 24.3% in the previous year. 0 10 20 30 40 50 60 70 FY19 FY20 ` bn Profi tability of l ife i nsurers LIC Private Sector Profitability During FY20, the aggregate net profit of life insurers declined by around 8.4% to ` 77.3 bn as against ` 84.4 bn in the previous year. This was the result of a 12.7% decline in the aggregate net profit of private sector insurers, while LICwitnessed a marginal growth of 0.9% in its net profits in FY20. About 17 out of 24 life insurers reported profits during FY20. Dun & Bradstreet