Insurance industry expects growth to moderate to 20-25 pc

NEW DELHI: Economic slowdown has started taking toll on the insurance sector too with most life insurance players expecting moderation in new business premium collection in the remaining fiscal.

"The growth in first premium income collection in the remaining five months would moderate as given the negative sentiment, Max New York Life Insurance Senior Director and CFO Sunil Kakar said.

Generally, he said, most of the insurers receive about 60-70 per cent of the total business in the second half of the year.

As a result, the private sector would wrap the year with a growth of 20-25 per cent against 40 per cent in the first 7 months of 2008-09, he added.

Echoing similar view SBI Life Insurance Managing Director and CEO and U S Roy, the first premium income till November has gone up by 100 per cent. In the remaining months it is likely to moderate.

"So overall, we expect 80 per cent growth in the new business by the end of March 2009," Roy said.

Spelling reason for the moderation, Kakar said it is sentiment which is affecting the insurance business. Most of the prospective clients are postponing buying decision.

However, he said, the insurance is long-term investment and the current crisis would have no impact on the returns on assets.

Bearish mood is expected to continue 6-9 months, he said, adding it is temporary phase and by this time next near think would look up.

Even the Reliance Life Insurance expects the growth in new business premium to be about 100 per cent as compared to 200 per cent registered last fiscal.