Comments
The idea of buying a pension policy through insurance companies seems to be losing charm.
The new business premium generated from individual pension policies during the last financial year (2011-12) declined to Rs 1,139 crore from a high of Rs 19,257 crore in the previous year.
This drastic drop assumes significance as new business premium generated from pension policies generally formed a major chunk of total new business premium of insurance companies.
In 2009-10, individual pension accounted for Rs 26,389 crore of the total new business premium of Rs 1,06,453 crore. And in 2010-11, it was Rs 19,257 crore out of a total of Rs 1,25,618 crore.
When asked about the possible reasons for the dip, the managing director of a life insurance company said the regulatory environment was “not conducive” to offer pension plans.
Last year, the Insurance Regulatory and Development Authority brought in new regulation for pension plans which mandated, among others, that the pension products should carry an assured benefit which should be disclosed by the insurers at the time of sale. In a recent interaction with Business Line , Mr J. Hari Narayan, Chairman, IRDA, took a critical view of insurers by saying: “If a company is offering pension plan, it only means you give me money, you accumulate and pay the annuity. The concept of insurers providing a monthly income (annuity) is mostly missing.”
The regulator is of the view that these companies should ideally offer annuity products instead of directing their customers to Life Insurance Corporation of India.
Withdraw products
Of the 23 life insurers, only a few, which include LIC, are offering pension plans now. The rest have withdrawn their products last year.
However, according to Dr P. Nandagopal, Managing Director and Chief Executive Officer, IndiaFirst Life Insurance Company, things may change in future.
“The IRDA has recently revised some of the regulations concerning pension plans. We are examining them. I expect that some more pension plans products will be launched going forward,” he said.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.