LIC logs 50% rise in new premia mop-up

NEW DELHI: Life Insurance Corporation of India (LIC) has become the country’s only insurer to come out of the financial crisis smelling like a rose as investors preferred the security of the state-run institution at a time of global panic.

LIC posted a 50% growth in new premium collection in the first nine months of this fiscal, bumping up its market share to 65% from 56% a year ago, indicating that investors are not yet ready to forget the panic sown by the bankruptcies of many venerated global names.

LIC’s staggering growth is in contrast to the slouching growth of the country’s 22 private insurers that are still struggling to regain the momentum of 2007. Private insurance firms saw an almost flat growth of 3%, dragging the overall industry growth rate to 29% in the April-December period of this fiscal.

"The global turmoil, which saw many financial behemoths seeking their governments’ help, has affected investor sentiment," said a CEO of a private insurer. “As insurance is a long-term product taken for old-age security purpose, a state-owned company is a more preferred destination for investment,” he said on condition of anonymity.

LIC’s mostly conventional products, too, could be a reason as risk-averse investors are shying away from the 70% unit-linked products, or Ulips, of private insurers.

"LIC’s growth reflects the traditional comfort that consumers enjoy with the stateowned company," said Monish Chatrath, executive director of Mazars India, an international firm specialising in audit, accounting, tax and advisory services.

LIC’s new premium collection touched Rs 44,178 crore in the April-December period while the combined business of 22 private insurers grew to Rs 23,379 crore from a year ago, as per data collated by the Insurance Regulatory and Development Authority (IRDA).

Private insurance firms recorded a 74% growth in new premia in 2007-08 , seen as the golden period in their business.