Life insurance sector declines marginally in 2011-12: IRDA

The life insurance industry has declined only marginally in 2011-12 compared to the year-ago period, according to IRDA.

“The overall business during last financial year may decline only by about one per cent,” Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority, told Business Line here on Wednesday.

The first-year premium, however, has declined by about 14 per cent, he added.

“About 75 per cent of the income of companies comes from renewal premiums and group sales. So, some decline in new business cannot impact the overall growth of the industry significantly,” the IRDA chief said.

In 2010-11, the total premium collected by the life insurance industry was Rs 2,86,500 crore as against Rs 2,65,450 crore in the previous year.

OUTLOOK

On the expected growth during 2012-13, he said it would depend on a variety of factors, including the tax laws.

“At present, tax laws are more oriented towards young people with standard health patterns. They are not sympathetic to others,” he said.

The industry had represented the issue to the Finance Minister, who has assured proper consideration, he added.

THIRD-PARTY PREMIUM

When asked whether there would be any revision in the motor third-party premium rates announced by regulator recently, he said they were “final”.

“We have used a particular formula to determine new rates. There can be no further scope for any changes.”

He justified the inclusion of tractors in the goods-carrier category, which has increased the premium rates for tractor-owners, including farmers.

Most of the tractors are being used for commercial purposes and not entirely for agriculture, he said.

Terming health insurance as a growth segment, Mr Hari Narayan said consumers were set for more benefit as companies are increasingly offering more day-care products.

The regulator has been encouraging health insurers to expand the range of ailments covered under day-care treatment.

COMPLAINTS

On the nature complaints, he said the comprehensive grievance redressal system put in place by the IRDA has been receiving good response.

“For most part of last financial year, majority of the complaints pertained to policy administration issues. It was only towards the end, we noticed a surge in complaints of mis-selling,” he said.

The IRDA will soon release a report on the nature of complaints and their redressal, he added.

nagsridhu@thehindu.co.in