Premiums up just 1% for LIC in Q1

The death of single-premium policies has dramatically impacted the Life Insurance Corporation of India's (LIC) performance in the first quarter of fiscal 2003.

Premium grew marginally by one per cent to Rs 780.37 crore, even as total business (sum assured) increased by 30.35 per cent to Rs 20,248.85 crore. LIC sold 30,01,154 policies, reflecting a 10.24 per cent growth over the corresponding quarter of last year.

The minimal rise in first-year premium income comes on the back of the 80-odd per cent fall in premium collection under single premium products like Bima Nivesh.

In the first quarter 2003, LIC mopped up about Rs 360 crore through Bima Nivesh, against which it has collected Rs 45.59 crore in Q1 of fiscal 2004.

Low sales of single-premium plans follows the budget proposal to withdraw the tax exemption under section 10 (10D) of the Income Tax Act for single premium covers.

These covers had in fiscal 2002 and 2003 sold like hot cakes, and helped the state corporation mop up the maximum premium income.

Meanwhile, LIC witnessed a healthy growth in its pension business during the first three months of fiscal 2004, with 317.71 per cent jump in premium collection to Rs 64.38 crore. It sold over 11,500 policies during the first three months of the fiscal.

LIC managing director R N Bhardwaj told Business Standard that the overall performance of LIC has been good except for the sale of single premium products, "which was expected". LIC sold 7,919 single premium plans, mopping up a sum of Rs 74.88 crore.

Aside from the immense growth in sale of pension plans, sale of individual policies showed an improvement.

LIC mopped up Rs 670.39 crore in first premium income, reflecting a rise of 27.2 per cent with the sale of 29.81 lakh policies. Sum assured increased by over 33 per cent to Rs 20,173.97 crore.