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LIC Highlights Impact of Macro Uncertainty on Policy Persistency Despite Q1 Growth

Life Insurance Corporation of India (LIC) has reported an increase in first-quarter profit and value of new business, alongside total premium growth, even as macroeconomic and geopolitical uncertainty places pressure on household savings and policy renewals.

What Happened

Following the release of the company’s financial results, LIC Managing Director and Chief Executive Officer R Doraiswamy stated that broader economic conditions are affecting insurance demand and policy persistency. While the insurer registered sharp gains in first-quarter profit and new business value, management highlighted caution across premium growth and renewal collections.

According to the company, total premium income rose 6.8% to reach Rs 1,27,250 crore during the first quarter. Meanwhile, the annualised premium equivalent (APE) stood at Rs 13,692 crore, reflecting what leadership described as a somewhat cautious operating environment.

Key Highlights

  • Total Premium Income: Grew by 6.8% to Rs 1,27,250 crore in the first quarter.
  • Annualised Premium Equivalent (APE): Reached Rs 13,692 crore for the quarter.
  • Persistency by Number of Policies: For the 13th month, persistency stood at 66.5% (compared to 64.4% in the corresponding period ended June 30, 2025). The 61st-month persistency was 48.7% (compared to 51.1% previously).
  • Persistency on Premium Basis: Stood at 75.3% for the 13th month and 61.1% for the 61st month, compared to 75.6% and 63.9% in the prior corresponding period.
  • Lapsation Profile: The comparison between policy count persistency and premium persistency indicates that policy lapses were concentrated among low-value policies.

Why This Matters

Persistency ratios track the percentage of policies that remain active over specific periods, serving as an indicator of whether customers are continuing to pay renewal premiums. The figures reported by LIC indicate that longer-term renewals (61st month) faced pressure, which management attributed to tighter household savings and seasonal economic factors. Because persistency remained higher on a premium basis than on a policy count basis, the data shows that smaller-ticket policies accounted for the larger share of discontinued payments.

What to Watch Next

To address the dip in renewals, LIC is actively conducting follow-ups with customers to revive lapsed policies. Future reporting periods will show the effectiveness of these revival efforts and whether broader economic pressures continue to influence renewal rates and new business flows.

Frequently Asked Questions

What drove the caution in LIC’s premium growth?

LIC MD & CEO R Doraiswamy attributed the cautious environment to macroeconomic uncertainty and tighter household savings, which can temporarily affect customers’ ability to pay renewal premiums on schedule.

How did LIC’s persistency ratios change?

On a policy-count basis, 13th-month persistency improved to 66.5% from 64.4%, while 61st-month persistency fell to 48.7% from 51.1%. On a premium basis, 13th-month persistency was 75.3% (down from 75.6%) and 61st-month persistency was 61.1% (down from 63.9%).

What is LIC doing to address policy lapses?

According to the MD & CEO, the insurer is following up directly with policyholders to facilitate the revival of lapsed policies.

Source: Times of India