Value of new business margin

The value created by the policies sold during the year, as a percentage of the annualised premium equivalent. It is the measure of whether new business is worth writing.

An insurer generating ₹840 crore of new business value on ₹3,000 crore of annualised premium equivalent reports a 28% margin, which sits in the strong range of 25% to 30% and above.

Product mix drives the number more than anything else. Protection and non-participating savings products carry high margins; unit-linked products carry low ones, because the investment risk and most of the return sit with the policyholder.

A margin falling while premiums grow means the company is selling more of the wrong thing.

Read margin and mix together, always.

Product mix drives it more than anything else, which is why the margin and the mix disclosure are always read together. Protection and non-participating savings products carry high margins because the insurer keeps the risk and the return; unit-linked products carry low ones because the policyholder does. A margin falling while premium grows means the company is selling more of the wrong thing.