The ongoing financial year is expected to be challenging for life insurers, given the slowdown in economy and change in traditional product norms, data from the Insurance Regulatory and Development Authority (Irda) has shown.
According to Irda data, the life insurance sector saw a 6.3 per cent drop in new business premiums for the 2012-13 financial year. Life insurers collected new premiums of Rs 1,07,010.68 crore for the year ended March 31 against Rs 1,14,232.72 crore collected in corresponding period of the previous financial year.
Irda has recently brought out new guidelines on traditional product structure, which requires that almost 70-75 per cent of the product portfolio of life insurers be re-filed to conform to the regulations.
Segments like group non-single segment have seen among the highest fall in new premiums. Life insurers collected Rs 6,610.56 crore for FY13 against Rs 16,505.64 crore in FY12 for group non-single segment.
Sector experts said insurance penetration to rural areas would be a critical strategy to bring in business numbers.
Insurance penetration, measured as percentage of insurance premium to gross domestic product, stood at 4.1 in 2011 against 5.1 per cent in 2010. This has been attributed to slower rate of growth in the life insurance premium against the rate of growth of the economy. For this, Irda is bringing out a micro-insurance regulation to decide on pricing and structure of insurance products in the rural areas.
Similarly, experts pointed boosting renewals would be another way of bringing in additional premiums. According to the Irda annual report for 2011-12, while the renewal premium accounted for 60.31 per cent (56.66 per cent in 2010-11) of the total premium received by life insurers, first year premium contributed the remaining 39.69 per cent (43.34 per cent in 2010-11). During 2011-12, renewal premium accounted for Rs 52,102.91 crore for private life insurers, out of total premium of Rs 84,182.83 crore.