Insurance sales soar despite tight rules
Life insurance sales for the second quarter of ‘06-07 continued to record an exceptional growth despite tighter prudential norms for unit-linked policies coming into force from July ‘06.
By TNN |
MUMBAI: Life insurance sales for the second quarter of ‘06-07 continued to record an exceptional growth despite tighter prudential norms for unit-linked policies coming into force from July ‘06.
Premium from new policies for the industry jumped 161% to Rs 29,664 crore, driven by record growth from LIC which pushed new business premium up 178% in the first half.
Premium from sales of new insurance policies during Q2 (June to September ‘06) amounted to Rs 15,927 crore — 131% higher than Rs 6,885 crore in Q2 last year. Premium from new policies in H1 was a record Rs 29,664 crore up from Rs 11,323 crore in H1 last year.
While this is a slowdown from the growth rate of 210% in Q1, when the industry generated over Rs 13,736 crore through sales of new policies, it’s still higher than the trendline growth in new business premium. Insurance companies went on an overdrive in Q1, selling ULIP products ahead of the new guidelines which required them to have a minimum lock-in period of over three years and insurance cover of five times the premium.
There have been several reasons for these record sales. The overall improvement in the economy and salary levels has led to higher purchases of insurance. Besides, the rise in equity markets has prompted investors to channelise savings into equities through unit-linked schemes.
Insurance sales also rose because of a renewed thrust on sales by LIC — the largest player which has come out with new products such as Bima Gold II as part of its 50th anniversary celebrations.
LIC has generated first premium income of Rs 23,435 crore in H1, which is an increase of 278% over the new business premium of Rs 8,409 recorded during H1 last year. Most of the new business premium came through one-time sales with sales of single premium policies amounting to Rs 10,7812 crore for H1 — accounting for 45% of total sales of LIC.
The share of LIC has shot up to 79% of the total industry’s premium for H1 due to rise in sales. The Corporation may, however, find it difficult to retain its share considering the huge share of single premium in new business.
An interesting feature of the growth in H1 of ‘06-07 has been the slowdown of companies in the middle of the league tables to double-digit growth from triple-digit growth.
Top companies continue to record triple-digit growth, despite their higher bases. Industry sources say with this record growth, India’s share of the global life insurance market is expected to rise sharply.
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