LIC's premium collection from sale of new policies fell 13.62% to Rs 78,302 crore in the fiscal year ended on March 31, 2105, compared with Rs 90,644 crore the previous year.
"Last year (2013-14) was an extraordinary year," said an LIC executive who didn't wish to be named.
"Many blockbuster products were withdrawn and new products were introduced this year (2014-15). This has affected sales."
Overall, the life insurance industry reported a 5.84% fall in new business income collection Rs 1.13 lakh crore, mainly because of LIC's weak performance. Private-sector companies posted an 18% increase in new business income, aided mainly by sale of unit-linked insurance plans.
Private-sector insurers capitalised on a surge in investor in terest in stocks by launching unit-linked plans and marketing them well.
LIC, the country's largest insurer, didn't have a unit-linked product, which was the flavour of the season. Unit-linked insurance plans are instruments where a part of the premium goes for insurance cover and the rest is invested in a fund. As much as 100% of the fund can be invested in equities.
LIC has predominantly relied on its traditional products. All insurance products have been re-launched this year in accordance with new rules, which offer policyholders guaranteed surrender value and lower commission charges.Traditional policies are debtoriented products in which the bulk of the underlying investment is in government and corporate bonds, with a maximum of 15% deployed in equities.
Agents push sales in the last quarter of the fiscal year as investments in life-insurance schemes with sum assured of at least 10 times the annual premium are eligible for tax deduction within the Rs 1 lakh limit under I-T rules.
Source : Economic Times