Premium collection rises 13% in March 2008
Sales of life insurance premiums have seen a slowdown in March, a possible fallout of the volatile stock market. Given that nearly 90 per cent of the insurance policies sold are unit-linked insurance plans (Ulips), the premium of which is invested in equities and fixed income products, buyers appear to have turned somewhat cautious.
The growth in new business premium for private sector players slowed down to 53.6 per cent y-o-y for March 2008 compared with 90.5 per cent y-o-y for the period beween April 2007 and February 2008.
That dragged down the growth for the full year of 2007-08 to 83.7 per cent from 103.8 per cent in the prvious year. The slowdown was more marked for public sector Life Insurance Corporation. Given the somewhat subdued growth in March 2008, industry watchers are pencilling in lower new business premium growth for FY08. Against an earlier expectation of about 40-45 per cent for the year, analysts now believe the growth this year would be closer to 35 per cent.
Sales of life insurance premiums have seen a slowdown in March, a possible fallout of the volatile stock market. Given that nearly 90 per cent of the insurance policies sold are unit-linked insurance plans (Ulips), the premium of which is invested in equities and fixed income products, buyers appear to have turned somewhat cautious.
The growth in new business premium for private sector players slowed down to 53.6 per cent y-o-y for March 2008 compared with 90.5 per cent y-o-y for the period beween April 2007 and February 2008.
That dragged down the growth for the full year of 2007-08 to 83.7 per cent from 103.8 per cent in the prvious year. The slowdown was more marked for public sector Life Insurance Corporation. Given the somewhat subdued growth in March 2008, industry watchers are pencilling in lower new business premium growth for FY08. Against an earlier expectation of about 40-45 per cent for the year, analysts now believe the growth this year would be closer to 35 per cent.
Average returns from Ulips in the March 2008 quarter have been a negative 8-30 per cent. With the Sensex down about 23 per cent during this time, several schemes have underperformed the broader market.
Private life insurers improved their market share to nearly 52 per cent in FY08 from 37 per cent in the previous year, with LIC yielding ground. Among the fastest growing players in March were Birla Sun Life and SBI Life.
However, with a gain of 310 basis points to 13.7 per cent of industry share, ICICI Prudential retains the top spot among private insurers for the seventh year running. Others who have gained significant market share during the year are Reliance Life and Allianz Bajaj.
Interestingly, the average size of a policy increased sharply in March 2008 to Rs 10,592 from Rs 6,440 in March last year, with almost every insurer selling bigger policies. For FY08, the average ticket size for a policy fell marginally to Rs 9,595 from Rs 10,237 in FY07 though the size increased for the majority of the players in the industry. With life insurance firms aggressively expanding their distribution network especially in tier-II and tier-III towns, the ticket sizes were expected to fall significantly. However, that does not seem to have happened, implying that buyers in smaller towns too are picking up policies with fairly large premiums.
Source: BS Reporter / Mumbai May 15, 2008
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