Lic Single-Premium Products Sales Plunge

Life Insurance Corporation (LIC) has seen the sales of its single premium products nose-dive owing to reduced returns. In the first four-and-a-half months of the current fiscal, LIC could mop up just 50 per cent of what single-premium policies such as Bima Nivesh alone generated in the corresponding period last year.

While LIC has managed a first premium income of Rs 1,687.69 crore between April and August 15 this year, it had amassed Rs 3,207 crore from the sales of single-premium policies such as Bima Nivesh in the same period last year. The drop in the company's first premium income is estimated at 67.92 per cent from Rs 5,151.92 crore during the first four and half months of the last fiscal.

 

What is worse is that none of the seven zones of LIC posted overall growth in business though there were certain zones which did manage to grow in some segments.

The most significant drop is witnessed in the first premium income from single premium policies which have dipped by 77.49 per cent to Rs 721.88 crore. In number terms, the drop is even more significant with sales of such policies numbering 72,769 against over 3.69 lakh single premium covers sold between April and August 15 last year. Insurance industry observers attribute the loss in the business to a significant drop in returns on single premium policies.

The worst affected in the three category of products sold by LIC is individual pension plans where first premium income in the first four and a half months of the financial year dropped 95.6 per cent to Rs 26.44 crore against Rs 953.59 crore in the corresponding period last year.

Between April and August 15 this year, LIC sold only 9,952 individual pension plans against the over 2.26 lakh such products sold in the corresponding period last year. Analysts attributed the decrease in sales to the more aggressive sales pitch of private players such as ICICI Prudential and HDFC Standard Life, who they said have been harping on the tax breaks available on pension plans. Also, LIC had witnessed a huge spurt in the sale of these products last year, with first premium from the segment growing 582 per cent in the first four months last year.

In terms of first premium, individual assurances were the least affected segment in the four and half months, with revenue from sales of new products dipping 5.27 per cent to Rs 939.35 crore against Rs 991.21 crore in the corresponding period last year. In volumes, this segment posted a growth of near 15 per cent with LIC selling 46.48 lakh new individual assurance covers against 40.54 lakh in the corresponding period last year.