New Ulip rules hurt, but premium collected by selling new policies rises 39%.
The life insurance industry recorded a 50 per cent dip in new business premium income in November. This was mainly because of changes followed by new norms for unit-linked insurance plans (Ulips) from September.
According to the latest data released by the Insurance regulatory and Development Authority (Irda), the industry collected Rs 7,282 crore by selling new policies in November compared to Rs 14,646 crore in November 2009.
“Sales have fallen compared to the pre-September days. The companies have the challenge to grow the top line and manage bottom line,” said HDFC Life MD and CEO Amitabh Chaudhary. He added the overall volume for the industry had fallen 20 per cent since September.
State-owned Life Insurance Corporation (LIC) of India reported a 17.93 per cent decline in new business income. The new premium income of most private players fell over 50 per cent.(Click for table and graph)
The private recorded a decline of 11.70 per cent in November. Among the big private players, ICICI Prudential Life registered a decline of 53.57 per cent, SBI Life a fall of 57 per cent and HDFC Life a dip of 37 per cent in new business premium income. Reliance Life and Birla Sun Life saw a decline of 65.26 per cent and 76 per cent, respectively.
The industry recorded a five per cent dip in the volume of new sales during April-November 2010. Most of this was after new Ulip norms were introduced in September. The sales of new policies fell 5.51 per cent to 2.64 million from 2.79 million during the corresponding period last year.
“The ticket size has definitely gone up. There is a lull this month but sales will be back from January. Product training will take some time. The busy season is starting from January and we expect sales to pick up,” said IDBI Federal Life Insurance Managing Director and CEO G V Nageswara Rao.
Despite the fall in sales, the premium collected by selling new policies rose 39 per cent during the period compared to the same period last year, mainly due to an increase in the minimum ticket size of Ulips. The minimum size has grown from Rs 5,000 last year to Rs 20,000.
Typically, insurance companies collect a large chunk of premium income during the last three months of the financial year. But due to revised policies that were launched in the new regime, insurers witnessed a drop in collections.
