Life insurance market grows 18%

Private insurers see first premium rise 82% during April-January period.

The life insurance market grew 18 per cent between April and January this fiscal, but state-owned Life Insurance Corporation of India (LIC) saw a dip in its premium income from the sale of new policies.

Though LIC managed to improve its position in January 2008, thanks to a 110 per cent rise in first premium income, it could not make up for lost ground. January being the start of the busy season also saw private life insurers double their first premium income to nearly Rs 3,522 crore as against Rs 1,734.66 crore in January 2007. 
 

PREMIUM GROWTH First premium income in Rs crore
Insurer	January		Growth (in %)	April-January		Growth (in %)
	2007	2008		2007	2008
LIC	2,866.92	6,028.46	110.20	41,120.71	40,624.04	-1.22
ICICI Prudential	564.71	976.50	72.90	3,514.49	5,792.05	64.80
Bajaj Allianz	365.36	682.14	86.70	2,549.04	4,462.30	75.00
SBI Life	199.11	519.29	160.80	1,389.83	2,874.46	106.80
Private players	1,734.66	3,522.96	103.00	12,359.68	22,503.87	82.00
Source: Irda

The decline in LIC's new premium income has seen its market share drop from 77 per cent in April-January 2007 to 64 per cent during the first 10 months of the current financial year.

What contributed to the dip? The public sector behemoth did not manage to bag the big-ticket group insurance business as it had managed to do in the past. As a result, its first premium income from this segment fell 9.4 per cent to Rs 6,582 crore during April-January this year.

At the same time, LIC managed to hold its ground in the individual business market and its income from the sale of new policies in this segment were estimated at Rs 34,042 crore during the 10-months ended January 2008, compared with Rs 33,851 crore during April-January 2007.

In contrast, the 16 private players saw their first premium income rise 82 per cent to Rs 22,504 crore, bolstered mainly by an 88 per cent rise in individual business, which touched Rs 20641.41 crore in the first 10 months this year. In the group business space, the private players clocked a 34.2 per cent rise in first premium income, which rose to Rs 1,862 crore.

The LIC management appears hopeful of recovering more lost ground in February and March, the peak season for life insurance sales.

"It's a dynamic market and there are bound to be variations. In, January and February (the data is yet to be released), we have done well in individual policies. In the last quarter of last year, we had generated Rs 11,000 crore business and we expect more business in the last quarter of this year too," said A K Sahoo, LIC's executive director in-charge of marketing.

A senior company executive, while acknowledging the loss of the big annuity and gratuity accounts in group businesses, said LIC intends to focus on regular premium products in individual business.

"Now, individuals have started trusting the private players also with their long-term savings. Better service offered by some of them have also helped," said a senior executive with a global consulting firm.

"The two parts of the story are indeed the high-base of previous year's growth and LIC's size relative to the private player but that doesn't get us to any of the solution. It is now critical that LIC does even more on customer-centric measures that yield better growth: better customer segmentation and de-averaged sales-force management could well be two important keys to tackling this puzzle," said Nikhil Ojha, managing partner at Monitor India.