The Life Insurance Corporation of India (LIC) has mopped up Rs 10,679.74 crore in first year premium in the nine and half months of the current fiscal.
The increase in mobilisation of premium till January 15, 2002 reflects a growth of 279.52 per cent over the corresponding period last fiscal -- when LIC mopped up a little under Rs 2,814 crore.
In contrast, the growth in term deposits for scheduled commercial banks has been only 16.1 per cent for the year to January 11, 2002, according to the Reserve Bank of India data.
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The growth in LIC's performance, which exceeds its budgeted target for the entire current fiscal (2001-02), is a result of the high returns that were being offered by LIC on several of its schemes, and the rush to avail of the high returns before withdrawal of the plans.
LIC has since withdrawn various plans -- Bima Nivesh (December 15, 2001), New Jeevan Akshay, New Jeevan Dhara and Jeevan Suraksha (December 24).
Senior LIC officials admitted that the growth in premium income and number of policies issued stems from the state insurer being forced to withdraw its assured return products in light of the decreasing interest rate regime.
The growth has been maximum in individual pension plans, with LIC mopping up over Rs 2,558.61 crore in first premium income, reflecting a growth rate of 1,067 per cent. It sold more than 6.87 lakh policies during the period ended January 15, 2002.
Under its single premium plans, in particular Bima Nivesh, LIC reported a growth rate of 704 per cent in the number of policies sold and 826 per cent in first premium income, amounting to Rs 4,848.26 crore. LIC has already crossed its targeted expectation by 60-70 per cent.
LIC mopped up Rs 326.20 crore in premium in the last fortnight of its single premium product -- Bima Nivesh II. Just before withdrawing the plan, a total of 44,557 policies were issued during the period December 1 to 15, with minimum investment of Rs 25,000 per proposal.
In the beginning of July this fiscal, the high rate of return on LIC's single premium product attracted investments of Rs 4,487.28 crore in first premium income till December 15. LIC officials stated that Bima Nivesh and other single premium products have seen growth rates of 825.67 per cent in first premium income.
However, after LIC slashed the rate of the return for Bima Nivesh, the growth in demand has fallen, with just Rs 39 crore mopped up in the first premium income from December 17, 2001 till January 15, 2002.
Since the beginning of the current fiscal, LIC has been withdrawing its assured return products as it has experienced more than 300 basis points reduction in the rate of return on investments.
LIC is yet to get the final mobilisation figures for Jeevan Shree, which closed on January 31. However, agents state that the demand has been encouraging considering the guaranteed returns.