Life insurance products sales fall 38 percent in October

December 8th, 2008 - 6:35 pm ICT by IANS  

Chennai, Dec 8 (IANS) After growing at breakneck speed for the past several years, the Indian life insurance sector has hit the speed breaker with the industry witnessing a premium fall of nearly 38 percent in October over the September figures this year. Even the number of policies sold by the industry players has gone down by 407,494 in October as compared to the previous month.

According to the figures released by the Insurance Regulatory and Development Authority (IRDA), the life insurance sector earned a new premium of Rs.50.87 billion (Rs.5,087 crore) selling 33,35,418 policies last month, against Rs.81.48 billion (Rs.8,148 crore) from 37,42,912 policies in September.

The average premium per policy (APPP) for the industry in October is Rs.15,252, down from Rs.21,770 the month before.

“The Indian economy is affected by the developments in the world economy. Life insurance industry cannot escape the cascading impact,” Harpal Karlcut, chief executive of Canara HSBC Oriental Bank of Commerce Life Insurance (Choli), told IANS.

Added Reliance Life Insurance chief executive P. Nandagopal: “The two months - September and October - had a lot of festivals and many sales people were on leave. This, and the general economic slowdown, led to the life sector posting lower sales.”

Nandagopal said he did not expect any drastic increase in high value policies lapsing as it happened when the dotcom companies bust in the early 1990s.

“We are growing 100 percent year-on-year and will maintain that this year as well,” the Reliance Life CEO said.

The 20 private players earned around Rs.23.04 billion (Rs.2,304 crore), selling 10,90,103 policies with an APPP of Rs.21,141 in October.

In September they earned around Rs.34.17 billion (Rs.3,417 crore) from 13,00,710 policies with an APPP of Rs.26,271.

On the other hand, the Asian life insurance giant Life Insurance Corp of India (LIC) sold 22,45,317 policies and earned around Rs.27.82 billion (Rs.2,782 crore) in October as against a premium of around Rs.47.31 billion (Rs.4,731 crore), selling 24,42,202 policies the previous month.

LIC’s APPP in October was Rs.12,393, down from Rs.19,373 the previous month.

Among the private players, ICICI Prudential Life Insurance Co. Ltd continued its lead over others in October, earning around Rs.4.06 billion from 158,071 policies.

It is followed by Bajaj Allianz Life Insurance Co. Ltd (Rs.3.44 billion from 227,006 policies), SBI Life Insurance Co. Ltd (Rs.3.25 billion from 73,983 policies), Reliance Life (Rs.2.39 billion from 178,932 policies) and HDFC Standard Life Insurance Co. Ltd (Rs.2.07 billion from 66,981 policies).

When it comes to APPP, there are many surprises as several smaller companies have overtaken their bigger rivals.

Standing atop is Choli with an APPP of Rs.90,982 in October (total premium Rs.283.5 million from 3,116 policies).

Asked if the APPP would come down once the shareholding banks - Canara Bank and Oriental Bank of Commerce - start selling Choli’s policies, company CEO Karlcut said: “We are well ahead of our plans. We expect the APPP to stabilise in course of time.”

Others on the top five list are SBI Life (APPP Rs.44,046), MetLife India Insurance Co. Ltd (Rs.40,598), IDBI Fortis Life Insurance Co. Ltd (Rs.35,295) and HDFC Standard Life (Rs.30,965).

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