Insurance cos put up a good Q1 show

MUMBAI: Never before has regulatory tightening thrown up such a window of opportunity for insurance companies. In the first quarter, usually a lean period for policy sales, Life Insurance Corporation (LIC) recorded an income of over Rs 8,000 crore from sales of individual policies, a growth of 247% over last year. Private companies also had sales growing by over 100%.

The contra-seasonal growth is a result of buyers rushing in to purchase single premium policies ahead of their closure on June 30. Past experience has created a sentiment that they were being exposed to a limited period investment opportunity among buyers.

Insurers, however, say that the polices that replace the ones that are closed are same in all respects except that they have a longer lock-in period and a higher level of insurance built in.

LIC’s total premium for the first quarter works out to more than Rs 9,000 crore after including the premium from group policy sales in the first quarter, which has grown over 100%.

The business figures were disclosed by LIC chairman, TS Vijayan at the launch of the corporation’s bancassurance partnership with Bank of Maharashtra. He said that it would not be possible to sustain the trends in the first quarter, since most of the purchases got bunched up in the first quarter.

Post-June 30, sales have slowed down as LIC has replaced only one of the three products that it has withdrawn. Bank of Maharashtra chairman, MD Mallya said that his bank was targeting sales of life insurance of Rs 70 to Rs 75 cr during the current year.

Private companies have also recorded exceptional growth. Bajaj Allianz Life Insurance and ICICI Prudential Life have said that their business has grown by over 100% during the first quarter.