KOLKATA: Tight liquidity situation prevailing in the market seems to have hit the Life Insurance Corporation of India (LIC) more than private life insurers.
During April-November 2008, the PSU suffered a 14% decline in both first premium income (FPI) and the number of policies (NoP) sold. In contrast, private players witnessed 31% growth in FPI and 27% growth in sales of NoP.
According to figures released by the Insurance Regulatory & Development Authority (Irda), LIC lost 10% market share to private players in FPI and 8% in NoP sold during the same period. The life insurance segment, during the period, saw a dismal 1.44% rise in FPI, while NoP sold declined by about 3.6%.
LIC’s market share of FPI declined to 55.6% as against 65.8% in the same period last year. “For LIC, the fall in FPI as well as NoP sold in April-November 2008 was largely due to the decline in individual single premium policies as well as individual non-single premium policies sold.
However, private companies witnessed a 28% rise in first premium income from traditional products and a 12% fall in premium income from single-premium policies during the period year-on-year,” said an insurance analyst.
In November, private players saw a 10% decline in FPI growth while LIC witnessed a fall of 4%. LIC, in fact, managed to improve its market share by a marginal 1.64% during the month. Also, LIC managed a 16% increase in the number of policies sold while private players witnessed a 14% rise.
General insurers least hit
Recessionary trends, it seems, did not affect the general insurance industry, the way it has affected the life insurance sector. According to a data released by the Insurance Regulatory & Development Authority (IRDA), the general insurance sector witnessed a marginal 2% fall in the growth rates during April-November 2008 at 9.57%, against 11.77% achieved in the previous corresponding period.
The private sector with as many as 12 companies, including three new ones that started operation in the current financial, however, registered a 15% growth in premium income, while the public sector general insurance companies managed a 5.86% growth rate.
The public sector firms managed to increase their growth rate marginally from 3.81% in the previous corresponding period, while the private sector companies saw a decline in the growth rate from 26.49% during April-November 2007 to 15% during April-November 2008.
The growth in the general insurance sector, despite recessionary trends may have been achieved due to a fall in premium, as the industry was detariffed during early-2008. Premiums for retail products fell by as much as 10-15% and this led to increased volumes (number of policies).Source : Economic Times
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