LIC pulls down overall industry growth rate

Friday, 09 May , 2008

High growth in previous years including FY 2007, volatile markets in the last quarter of fiscal 2008, which accounts for a large chunk of business, and a mere 6% in new business collections by the Life Insurance Corporation of India have cut the industry’s growth rate to 23% in fiscal 2008, from last year’s 110%.

The growth rate of private insurers has also declined to 74% from 90% a year ago. Reliance Life, Birla Sun Life and SBI Life were the top performers in attracting new business. The industry collected Rs 92,989 crore of new business premium in FY 2008, registering growth of 23%. LIC new premium collection was Rs 59,182 crores, up just 6% from last year’s Rs 55,935 crore.

Private insurers contributed Rs 33,807 crore in new business, up from Rs 19,472 crore last year. Reliance Life recorded the most growth in new business — 196% more than the previous year’s. ICICI Prudential’s new business grew 58% year-on-year, while Bajaj Allianz life registered y-o-y growth of 52%.

LIC has taken a hit in the 'individual non-single premium’ segment. While private insurers managed 90% growth in new business, LIC’s collection was less than last year’s.

In this segment, private players collected Rs 26,198 crore in the year ended March, while LIC collection dropped to Rs 23,583 crore from Rs 23,899 crore a year ago. In the 'individual single premium’ segment, LIC managed 21% growth.

An LIC official said the company collected more than Rs 1.5 lakh crore of regular premium in fiscal 2008 and attributed the drop in growth of new business to LIC's high growth in previous years. The official indicated the firm needed to increase its network of agents, which currently numbers 12 lakh, to match private insurers, some of which have more than 10 lakh agents, despite being operational for just seven to eight years.

SBI Life registered an increase of 87% in premiums from a year ago. “Our growth is a result of SBI's brand strength, capital efficient multi-distribution model and customer-centric approach. We will continue to balance high growth with profitability,” said U S Roy, MD, SBI Life Insurance. New policies issued by private insurers grew 67% from a year ago, while LIC registered a drop in new policies.

“Volatility in the stock markets in the last quarter of the financial year, which is the most important period for business, has affected business of life insurance companies,” said senior vice president-agency west and south, Max New York Life Insurance, Rajendra Sud.

Source: DNA