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The Insurance Regulatory and Development Authority (IRDA) is concerned about the growth of group single-premium policies.
Even as the life insurance business in general has slowed down, the group single-premium policies segment is witnessing growth.
“This is a problem and how we define groups needs to be looked into,” Mr J. Hari Narayan, Chairman, IRDA, told Business Line in an interaction here.
As per the regulator's data, the group single-premium collected by private life insurers and Life Insurance Corporation in 2011-12 was Rs 5,023 crore and Rs 28,200 crore, respectively, against Rs 3,467 crore and Rs 22,889 crore in the year-ago period.
The same trend has been continuing in April 2012, the first month of the new fiscal.
In most cases, the person insured does not know what he is being offered and also receives poor service.
The reasons for the growth of group insurance policies are varied. “The cost of group policies has come down due to competition, which is also driving growth,” Mr Hari Narayan said.
Fund-based biz
According to a senior functionary of Bajaj Allianz Life Insurance , said the growth in group insurance policies was also being driven by the increase in fund-based business.
“You might expect this to continue as many companies are outsourcing their fund-management to insurance companies,” he said.
Industry experts, however, say that the increase in group policies might not actually lead to higher profitability. It might simply shore-up the top-line, but the lower rates would not make any positive impact on profits.
nagsridhu@thehindu.co.in
Even as the life insurance business in general has slowed down, the group single-premium policies segment is witnessing growth.
“This is a problem and how we define groups needs to be looked into,” Mr J. Hari Narayan, Chairman, IRDA, told Business Line in an interaction here.
As per the regulator's data, the group single-premium collected by private life insurers and Life Insurance Corporation in 2011-12 was Rs 5,023 crore and Rs 28,200 crore, respectively, against Rs 3,467 crore and Rs 22,889 crore in the year-ago period.
The same trend has been continuing in April 2012, the first month of the new fiscal.
In most cases, the person insured does not know what he is being offered and also receives poor service.
The reasons for the growth of group insurance policies are varied. “The cost of group policies has come down due to competition, which is also driving growth,” Mr Hari Narayan said.
Fund-based biz
According to a senior functionary of Bajaj Allianz Life Insurance , said the growth in group insurance policies was also being driven by the increase in fund-based business.
“You might expect this to continue as many companies are outsourcing their fund-management to insurance companies,” he said.
Industry experts, however, say that the increase in group policies might not actually lead to higher profitability. It might simply shore-up the top-line, but the lower rates would not make any positive impact on profits.
nagsridhu@thehindu.co.in
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