The Hindu Business Line : Life insurers unfazed by high interest rates

New Delhi April 13 The hardening of interest rates in the economy does not portend sharp decline in life insurance industry's premium collection growth rates in the current fiscal, say captains of the private insurance companies.

The popular view is that rising interest rates would not hurt industry growth although some slowing down may happen during the current fiscal.

The life insurance industry recorded a 120.41 per cent growth in new premium collection for the period April-February 2007 to Rs 57,937 crore from Rs 26,286 crore in the same period in the previous year.

"There will be some reallocation of savings pool. The share of insurance in the savings is unlikely to drop. We expect more flow into fixed deposits. At the same time, asset allocation in property, gold and mutual funds will come down and some will come into insurance. Net-net, there will be no hit on insurance," Ms Shikha Sharma, Managing Director, ICICI Prudential Life Insurance Company, said.

She said that the life insurance industry was "crowded" and the current fiscal would see growth rate of 30-40 per cent. "The over 100 per cent growth seen last fiscal (up to February) is clearly unsustainable. You can't grow at the same rate on this higher base. Last financial year, a number of insurance companies expanded their distribution footprint. Moreover, a lot of people bought into ULIPs in the first quarter," Ms Sharma said.

HDFC Standard Life Insurance's Managing Director, Mr Deepak Satwalekar, told Business Line that rising interest rates would not affect growth rate of life insurance industry in the current fiscal. "It would affect the mutual funds industry more. I don't see it affecting insurance industry. One can expect close to last year growth (over 100 per cent). In fact, investment return of insurance companies will get affected positively (better returns)," he said.

Mr Bert Paterson, Managing Director, Aviva Life, said that he saw rising interest rates having only marginal impact on the growth rate of life insurance industry.

"I don't think so. If so, it would only be marginal," he said, when asked whether hardening interest rates would hurt life insurance industry's growth rate this fiscal.

Bajaj Allianz's Chief Executive Officer (CEO), Mr Sam Ghosh, however felt that hardening interest rates would have some impact on the life insurance industry's growth this fiscal. "The industry is likely to grow about 60 per cent this fiscal. We will grow at the industry rate," he said.

More Stories on : Life Insurance | Interest Rates

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Mumbai as international finance hub — Reality check on bankers' dream

Banks stick to 2-year average maturity profile

`$200 b forex no reason to rejoice'

Rupee gains 32 paise

Textile exporters' concern over hardening rupee

Reverse mortgage sans reverses

LIC premium income doubles

Life insurers unfazed by high interest rates

Andhra Bank hikes lending rate

Bond prices fall

BSE, NSE get SEBI nod for corporate bond trading

Crisil sees slowdown in credit growth

Call rates close higher

Reverse mortgage plan from PNB

Forex leaps over $200-b mark