Life insurers sees 14% growth in average policy ticket size

Private life insurers had a higher average ticket size than LIC

Life insurance industry has seen a 13.8% average growth in ticket size of policies. The average ticket size has risen to Rs 17,952 in April to May period in this financial year, compared to Rs 15,774 in the same period last fiscal, according to data from Life Insurance Council.

Private life insurers had a higher average ticket size than Life Insurance Corporation of India (LIC). The average ticket size for private sector was Rs 37,111, which saw a growth of almost 11% compared to the same period last fiscal.

Insurance companies executives said that with more focus on traditional products, the ticket sizes of large insurers may see a drop. Life insurers sell products both on the traditional platform and unit-linked platform or Ulips. Ulips are also linked to equity markets and the average ticket-sizes are higher, though short-term volatility in the market can lead to investors getting jittery and rushing in to surrender their products.

 

Manoranjan Sahoo, Chief Agency Officer, Reliance Nippon Life Insurance said that insurers target an average ticket size of Rs 30,000-40,000 for unit-linked insurance plans (Ulips) and Rs 25,000-30,000 for traditional products as the persistency is highest in this band of policyholders.

"At Reliance Nippon Life Insurance, since we predominantly sell traditional products, we plan to increase our average ticket size towards Rs 25,000 this year", he added.

The country's largest insurer LIC posted an increase of 14.1% at Rs 12,526 crore in its average premium policy. LIC predominantly sells traditional products to customers.

Sector experts said that more number of customers are opting for traditional plans than Ulips which could face volatility in short term due to markets reacting to global events like Brexit and general macro-economic indicators. "Players who are strong in Ulips may see a decline in ticket size due to customer shifting preferences," said a senior insurance executive.

For the months of April and May of this financial year (FY17), life insurers collected new premiums of Rs 18,582.64 crore compared to Rs 13650.96 crore in same period last fiscal. Private life insurers collected Rs 5342.94 crore for April and May 2016-17 compared to Rs 4267.21 crore in same period previous fiscal. LIC collected Rs 13,239.70 crore in this period, up by 41% from last fiscal same period.