India’s life insurance business saw a 22.66-per cent jump in new premia in the first four months of this fiscal, thanks to better distribution channels, low returns from bank deposits, innovative policies and better expectations from unit-linked products.
The net first year (new business) premia for the 24 insurance companies stood at Rs 45,247 crore in the first four months of the fiscal, against Rs 36,888.11 crore during the same period a year ago. In fact, the new business premium grew at 33.2 per cent in the April to June period.
Life insurers remain bullish of the positive trends continuing in the months to come, maintaining the fast clip in premia growth of 22.5 percent in the previous fiscal at Rs 138,657 crore, against Rs 113,142 crore in 2014-15.
As per the latest data of the Insurance Regulatory and Development Authority of India (IRDAI), the first year premia collection in July was Rs 13,854.44 crore, up four per cent from the Rs 13,319.97 crore in the corresponding month last year.
We have been able to see a strong growth in the industry because of the strong, multi-channel distribution system, innovative new products and good customer service, SBI Life Insurance’s Managing Director and CEO Arijit Basu told IANS.
The growth, however, has varied from company to company on the basis of their ability to reach out to customers with their products and services.
The state-run Life Insurance Corp’s first year premia during the April-July period grew 24 per cent to Rs 33,332.14 crore.
The interest rates in bank deposit have fallen on an average to sub-8 per cent. Savers have been looking for alternatives.
They’re finding insurance products, particularly annuity plans, better options to park their savings, said Bajaj Capital’s Group CEO and Director Anil Kumar Chopra.
This is one of main reasons people are inclined to buy fresh policies, Bajaj told IANS.
During the four-month period under review, the first year premia of 23 private players clocked Rs 11,914.86 crore 18.68 per cent higher than Rs 10,038.88 crore in the corresponding period of the previous year.
Growth for bank-led players can be attributed to the success of bancassurance (selling insurance products through banks) channels with the focus on ulip business, Max Life’s Director (Product Solutions and Customer Marketing) Aalok Bhan told IANS.
Within the traditional products segment, the industry looked to focus on the growth of long term savings and pure protection segment.
With the stock markets performing better, Ulip products tend to do well as their value goes up, he said, adding: It boosts the sentiment of the investors and they start buying new policies in such positive environment for future protection.
Life insurers also found online sales steadily contributing in the overall business and also to new business premia. Basu said: At SBI Life, we have seen a growth of 45 per cent in terms of its contribution in the total new business premia.
Online sales at Max Life Insurance is growing at 70-80 per cent on a year-on-year basis. The focus in online business has largely been on term plans which account for only a fraction of total business, said Bhan.
In view of positive macro economic factors, insurers are optimistic that the growing trend will continue over the rest of the fiscal.
At a micro level, with the increasing level of customer awareness, simplification of products and increasing the digital influence, we feel the industry will only grow from here on, Bhan said.
SBI Life’s Basu said: In the first quarter, our growth surpassed the industry figure. In 2015-16 the company grew at 33 per cent in its individual new business premium; this year we aim at a growth of 40 per cent.
Looking ahead, Chopra said the first year premium is expected to grow anywhere between 15-25 per cent during the current fiscal on a year-on-year basis.
Curated from New premia in life insurance maintain 22.5% growth