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Insurers see slower growth in individual premiums

Those with bank promoters or bancassurance pacts with large banks have been at an advantage compared to those without such partners

Life Insurance,

M Saraswathy  |  Mumbai 

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Life companies have seen slower growth in individual first year premium collections for the financial year 2015-16. While individual first year premiums saw a five per cent growth in FY16 compared to FY15, group segment premiums saw a growth of 39 per cent for the financial year. This led to a double-digit growth of 23 per cent for the financial year 2015-16.

According to provisional data from the Life Council, life insurers collected total premiums of Rs 1.38 lakh crore for FY16 compared to Rs 1.13 lakh crore. Here, Life Corporation of India (LIC) posted a 25 per cent growth in total first year premiums. Private insurers saw an 18 per cent growth and collected premiums of Rs 40,983 crore.

Individual first year premiums
Insurer First year premium (April 2014-March 2015) First year premium (April 2015-March 2016) Growth (%)
Private total 22,586 25,494 13
LIC 32,786 32,789 --
Grand Total 55,372 58,283 5
Group business
Insurer First year premium (April 2014-March 2015) First year premium (April 2015-March 2016) Growth (%)
Private total 12,254 15,488 26
LIC 45,516 64,885 43
Grand Total 57,771 80,374 39
Total First Year Premium
Insurer First year premium (April 2014-March 2015) First year premium (April 2015-March 2016) Growth (%)
Private total 34,840 40,983 18
LIC 78,303 97,674 25
Grand Total 1,13,142 1,38,657 23
Source: Life Insurance Council (Provisional Data); Figures in Rs crore unless where indicated
However, insurers saw a lower growth with respect to individual first year premiums, with private life insurers seeing growth of 13 per cent and LIC seeing similar numbers in FY16 compared to the previous fiscal. While the top five players including ICICI Prudential Life, SBI Life, HDFC Life, Max Life and Kotak Life saw double digit growth, many private insurers reported negative growth or de-growth in the first year premium collection for individual segment.

Data showed that those with bank promoters or with bancassurance agreements with large private sector, public sector and foreign bank have been at an advantage compared to those without such partners.

Industry players said that individual policy sales have remained under pressure and hence have focussed on group business. "Group business is not only easier to procure with lower distribution costs, it also helps generate adequate premium volumes," said the head of sales at a mid-size private life insurance company.

LIC saw a whopping 43 per cent growth in group business for FY16 compared to FY15 while private life insurers saw a growth of 26 per cent. The industry overall collected Rs 80,374 crore as group business premium for FY16 compared to Rs 57,771 crore in FY15.

A report by McKinsey & Company had said that Indian life insurance sector has under-performed compared to its Asian peers, said. The report 'The Life Journey India' added that none of the private insurers in India are creating value as per the market potential. The report said that this is because they are all serving a miniscule segment of consumers, mainly to meet narrow investment needs. But it added that even within this confined space, they demonstrate a significant spread in performance which is driven largely by distribution strategy.

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First Published: Fri, April 22 2016. 19:27 IST