Thanks to the cap on overall charges on unit-linked insurance plans (Ulips), which was effective from the beginning of this year, life insurers posted lower incomes in January.
Although January is typically a good month for life insurers, the industry reported a fall of 40.28 per cent in sales at Rs 7,789.71 crore in January 2010, compared to Rs 13,043.72 crore in the year-ago period, mainly due to a poor show by state-owned Life Insurance Corporation of India (LIC). During the month, LIC recorded a 53.45 per cent drop in new premium income at Rs 4,841.32 crore as against Rs 10,401.13 crore in the corresponding month last year.
Private life insurance companies witnessed good growth in new income and posted an 11.57 per cent jump to Rs 2,948.29 crore as against Rs 2,642.58 crore in the same month last year.
| FALLING NUMBERS New business premium collection | |||
| Insurers | April-Jan ‘09 | April-Jan ‘10 | % change |
| LIC | 39,858.26 | 49,019.49 | 22.98 |
| SBI Life | 4,002.16 | 4,845.66 | 21.08 |
| ICICI Prudential | 5,303.49 | 4,403.15 | -16.98 |
| Reliance Life | 2,627.20 | 2,264.79 | -13.79 |
| Birla Sun Life | 2,003.30 | 2,204.72 | 10.05 |
| HDFC Standard Life | 2,027.59 | 2,264.79 | 11.70 |
| Bajaj Allianz Life | 3,346.37 | 2,896.98 | -13.43 |
| Private total | 25,479.20 | 26,327.81 | 3.33 |
| Total | 65,337.48 | 75,347.29 | 15.32 |
| Figures in Rs cr Source: Irda | |||
Having put mechanisms in place well before January 1, 2010, private biggies like SBI Life and HDFC Standard Life logged significant growth in January — 45.41 per cent and 41.65 per cent, respectively.
“We were fairly nimble footed to the changes that the insurance regulator had prescribed from January. We had trained our sales force and had disseminated information in December,” said HDFC Standard Life chief financial officer Vibha Padalkar.
“There was excitement around the new products and the revised ones. We had a focused approach that helped us to get good business during January,” said Anand Pejawar, executive director, marketing, SBI Life.
However, Reliance Life reported a fall of 22.37 per cent in new business income in January, while Birla Sun Life posted a 48.68 per cent decline. “We lost the first ten days of the month to train our sales team about the changed structure after the cap on overall charges,” said Malay Ghosh, president, Reliance Life.
After the Insurance Regulatory & Development Authority capped the difference between the gross and the net yield at 3 per cent for products with less than 10 years tenor and at 2.25 per cent for products of more than 10 years tenor, insurers relaunched their existing products in January.
The new charges were applicable to new products from October, while existing products had to comply with the changed structure from January 2010.
