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After three years of decline, life insurance business is back on the growth path, according to the Insurance Regulatory and Development Authority (IRDA).
“After September 2013, all companies have shown positive growth. The feel-good factor has come back, driven by the new product regime,” Sudhin Roy Choudhury, Member (Life), told Business Line on the sidelines of the convocation at the Institute of Insurance and Risk Management (IIRM) here on Thursday.
The new product design norms for traditional products, which are being implemented, are more ‘customer-friendly’ and helping in the revival of new business. They also provide for death benefit of at least ten times of the premium.
“There is greater business being done by agents as we have relaxed some of the norms for agents’ appointments. Bancassurance is also doing well,” he said, explaining the drivers of growth.
The industry witnessed a steep fall in business after the introduction of new guidelines in September 2010 for unit-linked insurance plans, stipulating, among others, lower commission for agents and higher lock-in periods .
Unit-linked plans, at that time, accounted for over 80 per cent of business of private life insurers. The overall premium income declined from Rs 2.91-lakh crore in 2010-11 to Rs 2.87-lakh crore in 2011-12, mainly due to a fall in Ulip sales, which are yet to recover.
The first year premium underwritten by life insurers declined 6.32 per cent to Rs 1,07,013 crore in the financial year ended March 31, 2013, from Rs 1,14,234 crore in the previous year.
This resulted in substantial downsizing of the industry, including a reduction in workforce and closure of branches.
“We have cleared about 400 new life products as per the new design norms, and only a few are pending,’’ Choudhury said, adding that sales would go up in the remaining quarters.
“After September 2013, all companies have shown positive growth. The feel-good factor has come back, driven by the new product regime,” Sudhin Roy Choudhury, Member (Life), told Business Line on the sidelines of the convocation at the Institute of Insurance and Risk Management (IIRM) here on Thursday.
The new product design norms for traditional products, which are being implemented, are more ‘customer-friendly’ and helping in the revival of new business. They also provide for death benefit of at least ten times of the premium.
“There is greater business being done by agents as we have relaxed some of the norms for agents’ appointments. Bancassurance is also doing well,” he said, explaining the drivers of growth.
The industry witnessed a steep fall in business after the introduction of new guidelines in September 2010 for unit-linked insurance plans, stipulating, among others, lower commission for agents and higher lock-in periods .
Unit-linked plans, at that time, accounted for over 80 per cent of business of private life insurers. The overall premium income declined from Rs 2.91-lakh crore in 2010-11 to Rs 2.87-lakh crore in 2011-12, mainly due to a fall in Ulip sales, which are yet to recover.
The first year premium underwritten by life insurers declined 6.32 per cent to Rs 1,07,013 crore in the financial year ended March 31, 2013, from Rs 1,14,234 crore in the previous year.
This resulted in substantial downsizing of the industry, including a reduction in workforce and closure of branches.
“We have cleared about 400 new life products as per the new design norms, and only a few are pending,’’ Choudhury said, adding that sales would go up in the remaining quarters.
SUSTAINABLE?
But will the growth trend sustain? Industry seems confident it would.
“What is important is the underlying mood of the market which is positive,” said Sandeep Bakshi, Managing Director, ICICI Prudential Life Insurance Company. The better understanding of Ulip products and attractive traditional products now being offered would boost business,” he said.
Manoj Kumar Jain, Chief Executive Officer, Shriram Life Insurance, also believes that the industry is set to grow. “We are also expecting 10 per cent growth in business this year,” he added.
naga.gunturi@thehindu.co.in
Source: thehindubusinessline
“What is important is the underlying mood of the market which is positive,” said Sandeep Bakshi, Managing Director, ICICI Prudential Life Insurance Company. The better understanding of Ulip products and attractive traditional products now being offered would boost business,” he said.
Manoj Kumar Jain, Chief Executive Officer, Shriram Life Insurance, also believes that the industry is set to grow. “We are also expecting 10 per cent growth in business this year,” he added.
naga.gunturi@thehindu.co.in
Source: thehindubusinessline
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