KOLKATA: It’s official now. The life insurance industry has registered negative growth for the first time since it was liberalised in 2001-02.
The segment reported a negative growth of 2.39% in first-premium income (FPI) during April-December 2008. In terms of the number of policies sold, the sector witnessed a 2.2% fall. The decline may be marginal in percentage terms, but it is a clear hint of the shape of things to come.
Prior to this, the life insurance segment had been growing in excess of 50% while during 2007, it witnessed a near 100% growth.
According to figures collated by the Insurance Regulatory & Development Authority (IRDA), the life insurance segment sold some 3.05 crore policies during April-December 2008 as against 3.12 crore policies in the corresponding period of the previous year - a fall of 6.87 lakh policies. Likewise, FPI for the period stood at Rs 52,299 crore (Rs 53,577 crore), a decline of Rs 1,278 crore.
Interestingly, private sector companies have maintained a positive growth of 20% in FPI, primarily supported by a decent 27% growth in FPI from individual non-single premium policies - popularly referred to as traditional products. But a large 15% negative growth in FPI witnessed by market leader Life Insurance Corporation (LIC) pulled down the industry figures.
LIC’s market share, as a result, dropped to 56.32% by December 2008, from 64.57% in December 2007. Private players, on the other hand, saw their market share touch 43.68% by the end of December 2008.
In terms of the number of policies sold, private companies witnessed a 24% growth while LIC saw a negative growth of 11% during the period, once again pulling down the entire segment growth rate to the sub-zero level.
Not surprisingly, both private insurers as well as LIC (the only public sector life insurer) witnessed a decline in FPI from individual single premium policies, bulk of which are unit-linked products. Private players, too, saw a decline of 20% in this segment while for LIC, the number stood at 21%. The industry as a whole saw FPI from this category of products decline by as much as 21%. The number of policies for this segment sold also declined by 18% and 19%, respectively, for private players and LIC.
The private players stayed afloat and registered a positive FPI growth, courtesy the rise in sales of traditional products. They saw FPI from this segment grow by as much as 18% while LIC witnessed FPI fall by 21% during the same period.
The only positive development was in terms of lives covered under group policies which actually doubled during the period for the private players while LIC saw a 39% growth. The industry as a whole saw a growth rate of 76%.
Source:Economictimes
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