Non-life growth rises, while life insurance falls

The non-life insurance business has grown at 14% during first two months of FY 2009 against 11.2% in the corresponding period last year on fears that de-tariff introduction will reduce industry growth. Life insurance growth, on the other hand, has fallen to just 10% from last year's 25%.

A 17% fall in LIC's business is being cited as the reason behind this fall, since private players continue to enjoy more than 70% growth in premiums.

The gross premium underwritten in the non-life insurance industry has grown to Rs6,000 crore during first two months of FY 09 against the same period last year, thanks to a 25% growth in premiums of private players. Public sector growth contributed 7%. National Insurance topped the list of public sector firms, with a 13% premium growth. ICICI Lombard and Bajaj Allianz continued to attain higher premium growth, with 23% and 30%, respectively. Reliance General's premium growth has slowed down from more than 200% from the year ago period to 17.5%.

"Non life insurance industry will maintain a steady growth rate of around 12% for the next five years" said MD, Cholamandalam MS, SS Gopal Rathnam. "New product launches, combined with variations and combinations in existing products will keep the sector growth high. After de-tarrifing, premiums in fire and engineering are likely to take another hit of 10-15% in 2009, while health insurance is likely to get dearer by 5-6%," he said.

Collections of life insurance companies crossed the Rs8,000 crore mark in the first two months of FY 2009, growing roughly 10.7% against last year's 25%, in the same period.

In the life insurance segment, LIC registered a 17% fall in premiums during Apr-May 2008. It collected Rs4,170 crore in premiums during the period, Rs879 crore less than Apr-May 2007.

"The negative growth is a result of failing to launch any successful products in the new fiscal," said a senior LIC official, who did not wish to be named. "We generally have a lean business period every year, after March. Last year, we received a good response to our 'Money Plus' product. We expect the same for the two products recently launched - 'Money Plus Fund' and 'Market Plus Fund'," this official added.

In the private sector, SBI garnered Rs546 crore in business premium in Apr-May 2008, more than double of last year's growth. ICICI Prudential and Bajaj Allianz followed, with a growth in premium collection of 50% and 19%, respectively.

Source: Gopal Modi/ DNA MONEY