Life premium income jumps 16.6% in H1

Ulip renewals take the lead.

The economic downturn might have affected the sale of new policies, but it has not prompted individuals from renewing their life covers.

According to insurers, renewal premium went up by 18.6 per cent to Rs 62,429 crore during the first half (H1) of the current financial year, as against Rs 52,606 crore during April-September 2008. The increase was higher in case of unit-linked insurance products (Ulips), which rose by 34 per cent to Rs 25,433 crore during the period as against Rs 19,024 crore a year ago.

The total premium income, which includes renewals and fresh sales, rose 16.6 per cent to Rs 101,500 crore during the period from Rs 87,047 crore a year ago. An increased focus by insurers on renewals has helped increase the flow of funds. Besides, executives at these companies said policyholders have become aware of the long-term nature of Ulips and are not surrendering policies mid-way.

 

“We are making every effort to improve our renewal premium. We have set up a different vertical to focus on this area, which got operational this year,” said HDFC Standard Life Chief Financial Officer Vibha Padalkar.

Policyholders have continued to put money in Ulips since stock market continued to move up after the election results were declared.

“There is a clear shift in priorities of insurance companies. They have started focusing on persistency as the cost of acquiring a new customer is more than retaining the existing one,” said IDBI Fortis Managing Director and Chief Executive Officer GV Nageswara Rao.

Renewal premium for non-linked products rose 10.2 per cent to Rs 36,996 crore during the first half, as against Rs 33,582 crore a year ago.

Last December, the Insurance Regulatory and Development Authority (Irda) had put a minimum cap of 75 per cent on renewal premium for Ulips that were effective from April 2009. For instance, if a policyholder pays Rs 10,000 in the first year, he has to pay at least Rs 7,500 in the second year. This has helped insurance companies collect higher renewal premium.