Life insurance premium collection down 20%.
The pension saga continues to take toll on the life insurance industry, particularly for the private players, as the number of policies issued by them is down by nearly 35 per cent, in the current financial year.
During April-October period, the number of policies issued by the largest life insurer, Life Insurance Corporation (LIC) of India, too, declined by eight per cent in the same period. As a result the first year premium collection of the life insurance industry, was down by 20.04 per cent to Rs 55,737.84 crore as against Rs 69,707.92 crore in the corresponding period last year.
According to the data collected by the Insurance Regulatory Development Authority (Irda), during 2011-12, life insurance industry sold close to 19.6 million policies, 15.31 per cent lower, compared to 23.14 million policies sold in the same period last year. In the same period, number of policies issued by the private players came down to 4.15 million from 6.34 million.
“Pension plans, which consisted of about 30 per cent of the sales, specially for the private players till the new regulations came into force in September 2010, now account for only 1.7 per cent of sales. Hence, the sales are down,” said S B Mathur, secretary of the Life Insurance Council.
The Council says premiums collected from pension plans dwindled to Rs 600 crore in the first six months of the 2011-12, compared to Rs 18,000 crore during 2010-11. "With the commissions on unit-linked plans (Ulips) coming down, many agents have left the industry, which has impacted the sales of private life insurance companies,” said, K Sahay, CEO of Star Union Dai-ichi Life.
During April-October, the premium collection of LIC fell 18.5 per cent; for its private peers, the collection was down 24.2 per cent. While LIC collected Rs 41,259 crore by writing new policies, the private insurers collected Rs 14,479 crore.
Considering the choppy equity market and the high inflation scenario, Ulip sales are unlikely to pick up this financial year and experts fear growth of the life insurance industry is likely to remain subdued over the next six to 12 months. In a recent report on the sector, McKinsey predicted the current slowing in premium collection might continue for 12-18 months, as insurers would be looking to adapt their business model to the regulatory changes.
As for the general insurance industry, the gross written premium grew 23.8 per cent during 2011-12, compared to the year before. According to data collated by insurers, the industry collected premiums worth Rs 33,047 crore by writing new policies during April-October, as against Rs 26,700.5 crore last year.
While, private insurers registered 24.9 per cent growth to Rs 13,690.7 crore, the four state-owned general insurance companies' collection was higher by nearly 23 per cent, to Rs 19,356.6 crore.