Insurance industry records growth in Q1, courtesy LIC

Largest insurer’s sales rise 20%.

Though marginally at 0.95 per cent, the life insurance industry has managed to grow during the first quarter of the current financial year, thanks to Life Insurance Corporation of India (LIC).

While the Insurance Regulatory and Development Authority (Irda) has not released the data so far, sources told Business Standard that the industry’s first premium income during April-June 2009 was estimated at Rs 14,456 crore, as against Rs 14,320 crore in the corresponding period last year.
 

FACTS & FIGURES New premium income for Q1 ended June in Rs crore
Company	2008	2009	% change
LIC	7,524.56	9,028.00	19.98
All pvt players	7,524.56	5,428.00	-27.86
SBI Life	1,149.00	1,073.00	-6.61
ICICI Prudential	1,590.00	807.07	-49.24
Bajaj Allianz Life	828.00	577.00	-30.31
Birla Sun Life	502.00	440.00	-12.35
HDFC Standard Life	490.00	412.64	-15.79
TOTAL	14,320.21	14,456.00	0.95

LIC, the country’s largest insurer, registered a 19.98 per cent increase in premium collected from the sale of new policies, thanks to the proper mix of products.

In contrast, the country’s top five private sector insurance companies registered a fall in the first premium income during the quarter. Even SBI Life, which was seeing an increase in premium collections from the sale of new policies, joined the likes of ICICI Prudential Life which have continuously seen an erosion in their first premium income.

SBI Life, which had become the largest private life insurance company, recorded a decline of 6.67 per cent in new collections to Rs 1,073 crore in the first quarter of 2009-10, as against Rs 1,149 crore in the corresponding period last year. “We are focusing on other areas such as renewal premium as the market has not picked up yet,” said SBI Life CEO U S Roy, who superannuates at the end of this month.

Stung by the volatility in the equity market and aversion of individuals to purchase unit-linked insurance plans (Ulips), private players reported a near 28 per cent fall in first premium income during the quarter.

On the other hand, group single premium for LIC accounted for around 33.33 per cent of the total premium collected at Rs 3,065 crore, while individual single premium stood at Rs 2,490 crore in the overall premium.

Insurance companies are, however, looking at the silver lining. Generally, the first half is lean season for the industry as people start investing in the second half of the financial year in order to get tax benefits, executives said.

“We have focused on the proper mix of products. Because of over-reliance on Ulips, the industry has suffered in the last financial year. This is a universal phenomenon. Investors are now looking at the financial strength of the company,” said LIC’s Managing Director D K Mehrotra. The insurance giant plans to grow by 35 per cent in 2009-10. A slew of products ranging from traditional to unit-linked to single premium were in the offing, Mehrotra added.

In 2008-09, LIC earned 85 per cent of its total premium from unit-linked plans and the rest by selling traditional products. This year, the insurance major aims at reducing the ratio to 70:30.

The country’s second-largest private sector insurer, ICICI Prudential, recorded a dip of 49.24 per cent in the new business premium at Rs 807.07 crore during the quarter under review.

During the first quarter, HDFC Standard Life recorded a 15 per cent drop in new business premium, while Bajaj Allianz Life, an arm of Bajaj Finserv, reported a fall of over 30 per cent at Rs 577 crore as against Rs 828 crore in the corresponding quarter last year.