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The country’s largest insurer, Life Insurance Corporation (LIC), has seen a 10 per cent decline in individual regular new business premium growth during the first six months of this fiscal year, with collections dropping to ₹8,115 crore from ₹8,890 crore during the same period last year.
At the same time, the private life insurance industry saw its individual regular premium income grow 15 per cent to ₹8,422 crore from ₹7,322 crore, according to data released by the Insurance Regulatory and Development Authority (IRDA). This is attributed mainly to a sudden surge in sales of unit-linked insurance plans (ULIPs).
“The shift towards financial assets has definitely benefited the life insurance industry. Customers are steadily beginning to believe in the proposition and flexibility offered by ULIPs,” said Sandeep Batra, Executive Director, ICICI Prudential Life Insurance.
LIC’s individual first-year premium has been declining since product regulations kicked in from January 2014. A significant reason for the drop is the absence of a ULIP in its portfolio, even as private insurers shifted towards selling ULIPs with the stock markets reviving.
“After the new regulations were implemented, insurers had to re-file all their products with the regulator and LIC was slow on the rollout of new products. The private life insurance industry has seen big growth in ULIPs, especially the bank-promoted private life insurers, whereas LIC has only recently introduced its ULIP product,” said the CEO of a leading private life insurer.
In August, LIC had launched its new ULIP product, called New Endowment Plus, to arrest its falling market share in individual premium collection.
Incidentally, on an overall basis (group and individual), LIC saw new premium collections rise 10 per cent to ₹39,161.78 crore in the first six months of the current fiscal due to a big jump in group premium collections, where the state-owned insurer continues to be dominant.
28% growth for pvt insurersOn overall new business premiums, the private life insurance industry reported 28 per cent growth to ₹17,125.81 crore in the first six months of the current financial year, against ₹13,346.91 crore in the corresponding period of the previous financial year.
The new product regulations have brought positivity in the industry, particularly in ULIPs, said Tarun Chugh, Managing Director and CEO of PNB Metlife.
He added that the industry has been working on streamlining policy issuance processes, using technology that is yielding improved productivity.
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