Life insurers’ premium rises 23% on new biz

Life insurers’ premium rises 23% on new बिज़

Chennai: The total premium of life insurance industry rose by 23% to Rs 1,25,254 crore as of September 2010 against the same period in the previous year, said Life Insurance Council, the official representative body of life insurers in the country. The growth is due to an increase in the new business premium, which rose by 60% and also a strong show put up by Life Insurance Corporation.

The growth is all the more noticeable since the said period was marked by significant changes in product profile of unit-linked insurance plans. However, the renewal premium continues to remain flat with a marginal increase in traditional business.

As a consequence of changes made in Ulip policies, there has been an increase in average annual premium and average sum assured per policy. The average premium per policy for non-single product has increased from Rs 10,233 (September 2009) to Rs 12,887 (September 2010).

Single-premium products...have also shown healthy growth of 123% from Rs 7,732 crore as of September 2009 to Rs 17,267 crore as of September 2010. Private sector life insurers pruned man power base, branch network and agency force in a bid to cut down their expenses. While private sector insurers opted for austerity drive in order to meet changed environment of low margins under Ulip products, state-owned Life Insurance Corporation added 70 offices to network, said Life Insurance Council.

During the six months ended September 2010, private sector insurers shut down 90 offices, laid off 5,480 employees and slashed their agency force by 1,56,675. This was reflected in the cost and overall cost ratio, which came down from 10.34% as of September 2009 to 9.48% as of September 2010. Commission ratio also came down from 6.23% to 5.43% in the said period.

Sounding cautiously optimistic about the future, S B Mathur, secretary general,...Life Insurance Council, said, “While the numbers reflect well, it is better to be cautious about immediate future. Some of the private players might take some more time to get adjusted to the new regulatory framework.