New premium collection of the life insurance industry may improve in the October-March period, says the Life Insurance Council, industry body for life insurers in India. However, insurers need to introduce new products at regular intervals to sustain consumer interest, it adds.
According to the council, during the April-September period, the total premium collected, which includes new premiums and renewal premiums, decreased two per cent to Rs 1, 22,661 crore from Rs 1, 25,179 crore. The fall can be attributed to a drop in new business premium collection, down 22 per cent in the same period.
Cartoon: The government's inflation confession
In the same period, the renewal premium collection grew 17 per cent to Rs 73,575 crore, as against Rs 62,818 crore in the corresponding period last year.
"The growth in renewal premiums is indicative of the fact that at a time when there is risk aversion among savers and the market sentiment is totally negative, policy holders have continued to have faith in life insurance products," the council said in a release.
The council attributed the fall in new premium collection to the low sales of unit linked products, especially individual pension products.
"The individual pension segment, which was a major contributor of new premium for life companies, and on which policyholders have traditionally placed trust during the accumulation stage, has fallen drastically to 1.2 per cent this year, compared to an average 26 per cent for the earlier two years. It is evident from the data that voluntary contribution from retail investors under the individual pension segment has dried up", said S B Mathur, the council's secretary general. The recent guidelines on compulsory annuitisation by the Insurance Regulatory Development Authority (Irda) may hamper the industry's growth, he added.
However, he welcomed Irda's new circular on pensions, and felt that companies needed to widen their products offerings. He added there was a need to offer non-guaranteed pension products to investors with a larger risk appetite.
Till September 30, promoters of life insurance companies had infused more than Rs 32,720 crore as capital and infrastructure investment had also crossed Rs 2 lakh crore, the release said.