The Indian life Insurance segment witnessed a 6% growth in the new premium collection, Rs 7,474 crore in June 2013 against Rs 7,022 crore in the corresponding period last year.
Experts attributed this sudden increase in premium collection to the announcement about the introduction of service tax in insurance policies from October 1, 2013. Earlier, IRDA mandated that service tax shall not be included in the contractual premium, but should be collected from policyholder separately. This implies that life insurance policies would be dearer by 3% from October this year.
However, the first quarter of FY13-14 suggests a decline of 1% in new business premium collection but the downfall was marginal on an annual basis. The 24 life insurance companies have together collected Rs 19,216 crore in April-June 2013 as compared to Rs 19,451 crore last year.
The new business premium collection for LIC was Rs 14,295 crore in April-June 2013 against Rs 14,451 crore in the corresponding period last year, a marginal fall of 1%.
On the other hand, private life insurance collected Rs 4,921 crore in April-June 2013 as compared to Rs 5,000 crore in the first quarter of last year, a decline of 2%.
Among non-LIC players, SBI Life recorded a steep decline of 19% while ICICI Prudential also recorded a fall of 28%. However, Reliance Life managed to increase its premium collection by 105%.
GN Agarwal, CEO, Future Generali Life Insurance states that the sale of traditional insurance policies like whole life insurance and endowment policies have increased in the month of June after IRDA announced the imposition of 3% service tax from October. Going forward, he expects industry’s premium collection to continue to grow by 6% in the second quarter of FY13-14.