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Life insurance industry in India is expected to grow at a rate of 12-15% Annual Premium Equivalent (APE) basis in FY16, said ICRA in a webinar today. Annualised Premium Equivalent (APE) is a common measure of new business sales in the life insurance industry. It is calculated as annualised regular premiums plus 10% of single premiums.
In FY15, there was a 9% decline in the industry on APE basis. ICRA said the growth in this fiscal will be on the back of improved capital market scenario, initial signs of improvement in economic indicators and stronger thrust by the government on improving the insurance penetration in the country.
ICRA said that though there was a 12% improvement recorded in the total new business premium (NBP) during FY14, the industry de-grew by 5% in FY15 to Rs 1.13 lakh crore.
The decline in the NBP was on account of contraction in both single and regular premium segments. In FY2015, new business premium for private sector players rose by 18% year-on-year while for Life Insurance Corporation of India (LIC) it contracted by 13% year-on-year.
According to ICRA, general insurance Industry in India is expected to report a moderate growth rate of 13-14% in FY15 as compared to 11% in FY15. Srinivasan said that this was due to the expected recovery in the economy from the later part of the current fiscal.
The Gross Premium Written (GPW) for the general insurance industry stood at Rs 80,700 crore in FY15, registering a growth of 11% over FY14 with the public sector witnessing an improvement in growth to 10%.
The private sector, on the other hand, continued to witness declining growth rates as it fell further to 11% y-o-y in FY15 from 15% y-o-y in FY14. ICRA expects private players to report better growth rates in FY16.
While agents remain the key drivers for business for the individual business of LIC, the bancassurance channel is fast gaining ground as a key distribution and sales channel especially for the private sector players. ICRA expects this channel to continue growing as it remains a variable cost channel with the GOI/regulators renewing focus to improve insurance penetration in the country.
