Decline in new premiums of life insurance cos

Chennai, April 6 For the first time since the life insurance industry opened to private players, the Annualised Premium Earnings (APE) for players has seen a decline. For April-February 2009, APE has seen a decline of 7 per cent, according to figures from the Insurance Regulatory and Development Authority (IRDA).

This decline came even as the number of policies sold (individual non-single premium) was fractionally higher than last year.

The lower premium numbers were partly due to a slowdown in the numbers of the industry leader Life Insurance Corporation.

LIC reported a 28 per cent decline in new individual regular premium collections. It witnessed a negative growth even as some private players achieved double-digit growth in this period.

APE, the more accepted form of viewing new premium income, attaches a 10 per cent weightage to the new single premium received. Industry sources say that the lower premiums are due to drop in the sale of ULIPs, affected to some extent because of the decline in the equity market. But if one goes by the total new premium collected without such weightage, the new premium witnessed a minimal growth of 0.063 per cent (Rs 72,017 crore in FY09 (up to Feb 2009) compared with Rs 71,971 crore for the same period last year).

Bajaj Allianz Life Insurance, Aviva Life, ICICI Prudential Life and LIC have registered a decline in new premium collection in the range of 4-28 per cent. The decline for Bajaj and ICICI was on account of drop in the single premium and non-single premium collections. LIC, which mopped up decent collections in the single premium product launched in January, failed to register growth in non-single premium and this segment witnessed a drop in collection to the tune of 28 per cent. The sharp drop in this important segment had a cascading effect on the overall collection numbers of the industry.

There were a dozen private players who witnessed double-digit growth. Bharti AXA Life, Birla Sun Life, Shriram Life have registered growth over 50 per cent. With a small base, Bharti AXA Life registered a growth of 186 per cent followed by Shriram Life at 82 per cent.

As per the APE, LIC market share has gone down by 11 percentage points to 36 per cent.

Source:Business Line