Average premium per policy up 79% during Apr-Dec at `17,320
While business is not growing for the life insurance industry, the ticket size or the average premium per policy is on the upswing. According to data analysed by Financial Chronicle, the average premium per policy in case of regular policies grew 79 per cent to Rs 17320 during April-December 2014.
Surprisingly, while players such as ICICI Prudential Life Insurance and HDFC Life Insurance that have a higher proportion of sales coming from Unit Linked Insurance Plans (Ulips) through their bancassurance partners registered double-digit growth in ticket sizes, those insurers that were focussed on traditional policies, too, reported higher growth in ticket sizes.
For instance, the average premium per policy for public sector behemoth Life Insurance Corporation of India (LIC), which does not have any Ulips in its product basket, grew 62 per cent to Rs 11582 during April-December 2014. Similarly, for Bharti Axa Life Insurance, the average premium per policy increased 44 per cent to Rs 39357. Reliance Life Insurance saw the average premium per policy for regular premium policies grow 40 per cent to Rs 24670. The ticket size for private life insurers grew 30 per cent to Rs 35288 during the nine months ended December 31, 2014.
Rajesh Sud, chief executive officer and managing director of Max Life Insurance, told FC, “During the current financial year the sales of ULIPs has gone up across all the leading companies and significantly in the case of some companies. This has been driven by a general mood of optimism due to a stable government at the centre and a significant upside in stock markets. It has been observed that the ticket size is always higher in the case of ULIPs as compared to traditional products. Optimism about a stable future also gives confidence to consumers to make larger commitments in regular pay life insurance solutions.”
Arnav Pandya, a certified financial planner, said, “A higher tax exemption limit from Rs 1 lakh to Rs 1.5 lakh has helped increase the average ticket size of life insurance policies. As a result those tax savers that have a fondness for insurance are buying a higher amount of insurance. Therefore, while the overall insurance collection is not growing, the ticket sizes are growing.”
Sandeep Ghosh, managing director and chief executive officer, Bharti Axa Life Insurance, said, “In our case it is not Ulips or the tax limits that have helped us increase the ticket size. We are consciously working with our distribution partners targeting the middle income and affluent segments. Besides, we are also focussing on need based selling and technology that has helped increase the ticket size.”
Anup Rau, managing director and chief executive officer, Reliance Life Insurance, said, “Need based selling has helped in higher growth in ticket sizes for us.”
The growth in individual first year premium adjusted for 10 per cent single premium during April-December 2014 for the life insurance industry was -20 per cent to Rs 26362 crore. LIC’s growth fell by 36 per cent to Rs 13791 crore during April-December 2014. The private players saw individual first year premium grow by 11 per cent to Rs 12571 crore.