New business income growth slows to 20 per cent in September.
The insurance regulator’s new rules for unit-linked insurance plans (Ulips) have taken a toll on the business of life insurance companies.
The industry registered a decline of 48 per cent in the new business income in September compared with August this year.
The new business income growth slowed to 20 per cent in September compared to growth in the same month last year, according to data collected by the industry.
NEW BIZ PREMIUM COLLECTED DURING THE 1ST HALF (Rs CRORE)
||Up to Sep ’09
||Up to Sep ’10
|Source: Insurance companies
According to data collated by the industry, life insurers collected premium of Rs 9,613 crore by selling new policies in September as compared to Rs 18,500 crore in August.
The growth on a month-on-month basis was largely on account of a 32 per cent increase in Life Insurance Corporation’s first premium income which rose to Rs 6,006 crore in September. LIC is the only insurer to have launched a pension product under the new guidelines.
In contrast, private players, which were mainly depending on Ulips, reported a marginal growth of 0.13 per cent in the first premium income.
Insurers spent the month training their agents and educating staff about the new norms. They say the impact would be seen in the coming months. September should not be the barometer since there was a spillover of sales from the previous month.
“Policies which were sold in the second half of the month were remitted in September,” said a senior executive of a large life insurance company.
SBI Life, the second-largest private sector insurer, collected Rs 781 crore and ICICI Prudential collected Rs 424 crore.
Bajaj Allianz, which saw a decline of over 10 per cent in the new business income in September, says it will take 12-18 months to redesign their business model.
“We expect a flat to medium growth in new business sales since we will need 12-18 months to redo our distribution model,” said Bajaj Finserv MD and CEO Sanjiv Bajaj. Other private players like Reliance and Birla Sun Life also registered a fall of 32 per cent and 39 per cent respectively in the month.
“Our Ulips did not sell in the first 15 days of September. We invested initial days in training our agents,” said Reliance Life Executive Director and President Malay Ghosh.
During the first half of the financial year, the industry reported 60 per cent increase in collection from new business income to Rs 62,361 crore as against Rs 39,046 crore in April-September 2009 (see table).