Life insurance sector has once again registered a dip of 6 percent in new premium collection in April-May 2013as compared to April-May 2012. Insurance Advisers attributed this decline to shift of investors’ money from financial assets to physical assets, plummeting saving rates and underperformance of ULIP products.
Unlike general insurance sector which grew by a robust 19 percent in April-May 2013, the life insurance sector has shrunk with the premium collection of Rs 11,743 crore in April-May 2013 against Rs 12,429 crore in the corresponding period last year.
Last month, private life insurers registered a healthy growth of 18.5 percent in premium collection while LIC witnessed a fall of 4.7 percent in its premium collection.
IRDA data shows sharp decline in premium collections of private sector as well as LIC from April to May 2013. The premium collection of LIC has fallen by 5 percent while the private underwriters recorded 8 percent fall. The new business premium of private life insurers saw a sharper dip than LIC.
LIC’s premium collection stood at Rs 8782 crore in April-May 2013 as against Rs 9215 crore in the corresponding period last year. The private insurers have collected Rs 2961 crore in April-May 2013 against Rs 3214 crore in the two months last year.
However, the premium collection in group single and non-single recorded a robust growth of 23 percent as Rs 6375 crore was collected under the category in April-May 2013 compared to Rs 5203 crore in the corresponding period last year. LIC has also recorded growth in premium collection of 34 percent in its group segment.
Among non-LIC players, SBI Life recorded a steep decline of 31 percent in its premium collection from April to May 2013 while ICICI Prudential also recorded fall of 30 percent. However, Reliance Life has managed to increase its premium collection by 87 percent.
Vishal Dhawan of Plan Ahead Wealth Advisors believes that the investors are moving from financial assets to physical assets due to the underperformance of ULIPs. “Many investors redeemed their investments from ULIPs.ULIPs have created negative impression in the minds of the investors,” says Vishal. He believes that declining trend in life insurance business will continue for the next four to six months.
Rajesh Dedhia, MD of Vantage Corporate Service Limited observes that declining household savings rate has affected the new premium collection of life insurance companies.