Life insurers log 36% rise in first premium income

The life insurance industry has registered a large 36 per cent growth in first-premium income in 2004-05 against a 11 per cent growth in the previous year.

Figures released by Insurance Regulatory and Development Authority (IRDA) showed that number of policies sold by insurers has however declined by as much as 8.27 per cent last year against a 12.83 per cent growth in the previous year.

Decline in number of policies sold was solely due to a large 11 per cent fall witnessed by Life Insurance Corporation of India (LIC) that pulled down the industry number from 2.86 crore in 2003-04 to 2.62 crore in 2004-05.

LIC also lost as much as 9 per cent market share to the private players in the last fiscal in terms of premium income, while it lost a small 3 per cent market share in terms of numbers of polices sold.

The largest hit was taken by LIC on individual non-single premium income (IN-SP) which traditionally accounted for more than 70 per cent of its premium income in 2003-04. Last year however this category accounted for only 56 per cent of its total income.

Premium income for IN-SP category in fact declined marginally by 0.03 per cent to Rs 11,195.69 crore in 2004-05 against Rs 11,195.69 crore in the previous year.

Individual Single Premium policies sold by LIC in fact helped in arresting the a decline in premium income to a large extent by witnessing a large 249 per cent rise to Rs 4888.82 crore against Rs 2374.01 crore in the previous year.

LIC however has registered a 22 per cent increase in premium income in 2004-05 against 1.93 per cent growth in the previous year. In absolute terms LIC sold Rs 19785.93 crore of policies in 2004-05 against Rs 16240.42 crore in 2003-04.

"This translates into the fact that the average premium income per policy has increased last year which was reflected in enhanced premium income but declining number of policies. This was true, however ," explained industry analysts.

The private players together however more than doubled income from policies sold to Rs 5557 crore in 2004-05 against Rs 2429 crore in 2003-04.

In terms of number of policies sold LIC sold around 2.40 crore policies in 2004-05 against 2.70 crore policies sold in 2003-04. The private insurers however sold 0.2 crore policies against 0.17 crore in the previous year. The industry as a whole sold insurance policies worth Rs 25342.87 crore in 2004-05 against Rs 18669.39 in 2003-04.