Rising home loan EMIs hit insurance biz

Rising home loan rates and a recent surge in stock markets are weaning away household savings from the life insurance industry, which has witnessed a 9% drop in total premium collection during the first quarter of the current fiscal.

Total premium collection fell to Rs 12,511.8 crore during the quarter ended June 30 as against Rs 13,737.4 crore in the corresponding period last fiscal.

Single premium collections dipped more than 57% to Rs 3,137.35 crore as against Rs 7,312.99 crore in the same period last year.

The industry had posted a 110% growth in total business at Rs 75,406.52 crore in 2006-07 from Rs 35,897.96 crore in the previous year.

According to a senior LIC official, a hike in interest rates on home loans has resulted in an unexpected rise in the equated monthly instalments (EMIs). As a result, many people have deferred their plans to invest in insurance policies. Besides, the surge in stock markets over the last few months has also attracted people to invest in equities and mutual funds.