New Delhi: Rising home loan rates and a recent surge in stock markets are weaning away household savings from the life insurance industry, which has witnessed a nine per cent drop in total premium collection during the first quarter of this fiscal.
The total premium fell to Rs 12,511.8 crore during the quarter ended June 30, as against Rs 13,737.4 crore in the corresponding period last fiscal.
The industry posted a 110 per cent growth in total business at Rs 75,406.52 crore in 2006-07 from Rs 35,897.96 crore in the previous year.
Home loan interest rates have risen by about two per cent in the last one year. Barring the 514 points crash on the Bombay Stock Exchange on July 27, the markets have been on an upswing.
The BSE 30-share index touched an intra-day high of 15,868.85 on July 24. It closed at a new peak of 15,794.92 points on the same day.
According to a senior LIC official, a hike in interest rates on home loans has resulted in an unexpected rise in the equated monthly installments (EMIs). As a result, many people have deferred their plans to save in insurance policies.
Besides, the surge in stock market over the last few months has also attracted people to invest in equities and mutual funds.
During the first quarter this fiscal, single premium collection on polices dipped more than 57 per cent at Rs 3,137.35 crore as compared to Rs 7,312.99 crore in the same period a year ago.
Source: PTI
Saturday, August 4, 2007
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