Having rolled out new products based on the revised guidelines issued by the insurance regulator earlier this year, private sector life insurers have been able to grow their business, reports Malyaban Ghosh in Mumbai. While first-year premiums for the industry as a whole contracted close to 2% year-on-year in the six months to September, private players reported a smart rise in collections of nearly 10% y-o-y. The state-owned insurer Life Insurance Corporation’s collections fell 5% y-o-y.
First-year premiums are important for insurers and in fact their bread and butter; in the three months to June, premiums of private insurers grew15.5%, while the industry grew 2.5%. Although the new lot of products is more long-term in nature, customers have not been averse to buying these policies given there is a higher insurance cover, a larger minimum surrender value and death benefits. The Irda’s new guidelines have also reduced commissions on short-term policies and linked the quantity of commissions to the premium-paying period for all products. However, the number of policies issued in H1FY15 dropped over 50% indicating a rise in the ticket sizes. Insurers appear to be selling more single-premium products averaging R50,000. First-year premiums for group policies grew 2% during the period.
By Malyaban Ghosh