Aviva Life Insurance said on Tuesday that the full impact of insurance regulator IRDA's new norms on unit-linked insurance plans (ULIPs) will be clear only by the middle of 2011.

The new guidelines, which came into effect in September last year, have led to a 30 per cent drop in the company's sales in the October-December period (industry sales fell 40 per cent). This is largely on account of ULIP sales coming to a halt, the company said.

Between April and September, Aviva's new business had grown 13 per cent (industry grew 15 per cent).

“The new rules will take 3-9 months to play out. We will see more specific trends by the middle of this year,” said Mr T R Ramachandran, CEO and MD, Aviva Life India.

With insurers launching revised ULIPs and agents' commissions falling, the popularity of traditional products has sharply gone up to 40 per cent of sales from 20 per cent in April last year, an official said. With a higher mix of traditional policies, Aviva hopes to post a 15-20 per cent growth in new business in 2011.

Online sales

The private insurer, which launched its first online term insurance policy ‘i-Life', expects term policies to account for 10-12 per cent of overall sales in 2011. In the last few years, term insurance policies had accounted only for 2-3 per cent of sales.

“We see huge potential for growth in online sales, especially for term based products which have small ticket sizes and are simpler to understand versus ULIPs. Most customers who prefer term policies are also computer savvy and can compare products online,” said Mr Ramachandran.

“Online distribution is about 15-17 per cent cheaper, so the benefit will be passed on to the customer as well,” he added.

Aviva launched two other products on Tuesday – a ULIP called Young Scholar Advantage and a traditional product Young Scholar Secure. The three new products are aimed at parents investing to secure their children's future education needs.

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