)
Life insurance companies’ new business premiums for April 1, 2013, to March 31, 2014, would not be impacted by the new product guidelines implemented from January 1, 2014, onwards, say those in the sector.
“With transparency being facilitated by the new product guidelines, there is an increased interest in customers to buy traditional products. While it is difficult to quantify the increase in new premiums, double digit growth will be continued,” said the chief distribution officer of a private life insurance firm.
The Insurance Regulatory and Development Authority (Irda) implemented the traditional product guidelines from January, after several delays as opposed to its earlier implementation date of October 1, 2013. These guidelines enabled new insurance policies to disclose all benefits and fund value calculations upfront. This was to ensure customers were buying the products they needed.
The new guidelines categorised life insurance products into three broad categories — traditional insurance plans, variable insurance plans and unit-linked plans. The new traditional products will have a higher death cover, which industry players said, had customers interested.
According to the chief executive of a small life insurance company, there was an anticipation that the new products that were filed would not be approved on time, leading to lesser number of products for prospective customers. “The approval process was smooth and each player has at least 7-10 products in place. New premiums have also been growing at a healthy pace since January, hence the phase of contraction is far away,” he added.
On one hand, while new premiums are healthy, industry players also said that since there was a sudden spike in premiums during the December quarter, the industry ended the financial year with a positive year-on-year premium growth. The chief financial officer of a private life insurer said that since both, public and private life insurers saw a good December quarter for new premiums, overall growth would be in the range of 10-15 per cent for the sector.
Data by Irda showed that the life insurance sector saw a 6.3 per cent drop in new business premiums for the 2012-13 financial year. Life insurers collected new premiums of Rs 1,07,010 crore for the year ended March 31 against Rs 1,14,232 crore collected in the corresponding period of the previous financial year. For the April to December 2013 period, life insurers collected new premiums of Rs 84,725 crore, up by 22.4 per cent from the previous year.
The January guidelines by Irda required almost 75-80 per cent of the product portfolio of life insurers to be re-filed to conform to the regulations.
