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Radhika Menon

Mumbai, May 4 The sale of stock market investment-linked insurance policies has shown a sharp decline in growth in 2007-08. This has led to deceleration of growth of new business premium of the life insurance industry to 23 per cent last fiscal from 110 per cent in the earlier year.

Leading insurer LIC’s growth fell to 5.8 per cent from 118 per cent last year.

The industry received Rs. 92,989 crore in new business premium in the fiscal currently ended.

LIC raked in new business premium of Rs 59,182 crore during the year, against Rs 55,934 crore in the previous year, according to the latest IRDA figures.

Mr T.S. Vijayan, Chairman, LIC, said that the corporation had seen an unprecedented growth in 2006-07, until which the annual growth had been in the range of 30-40 per cent. “We did not expect to grow as much in 2007-08 over and above the previous year’s 118 per cent, which was mainly on account of the sale of Unit Linked Insurance Plans.”

And, although six per cent growth is slower than the growth seen by the private insurers, it is an achievement for the corporation, Mr Vijayan said.

The corporation’s market share has been trimmed to 64 per cent from 74 per cent earlier.

In 2007-08, the contribution of unit-linked insurance plans has fallen in terms of premium as well as policies for LIC. The Chairman said that in terms of the number of policies, ULIPs contributed 54 per cent of the business while traditional plans brought in the balance 45 per cent.

“We plan to launch several new products in both the unit-linked and non-unit-linked insurance segments by May. We are thinking of new strategies,” he said.

LIC has set itself a target of Rs 70,000 crore in new business premium for the current fiscal, which is a planned growth of 19 per cent.

The volatility in the stock market, particularly in March, has also dented the growth of private life insurance companies.

The private life insurance industry grew at 74 per cent, lower than the earlier year’s 90 per cent.

As the bulk of the policies sold by private life insurers is unit linked, the downward movement in the stock market has meant a dip in sales.

Ms Shikha Sharma, CEO and MD, ICICI Prudential Life Insurance, said that but for March, the company would have raked in around Rs 600-700 crore more of new premium.

“March usually contributes around 20 per cent of the business. But this time, it has been lower at 14-15 per cent,” she said.

The company, the largest private life insurer, has registered a new business premium growth of 58 per cent in 2007-08 at Rs 8,305.85 crore. In the previous year, the company had grown by around 99 per cent.

Mr U.S. Roy, MD and CEO, SBI Life Insurance, said, “We had expected to grow at around 120 per cent, but ended at just 90 per cent in 2007-2008 because of the downturn in the domestic stock market.”

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