Life insurance companies witnessed a 7% growth in the new business premium collection in the first half of current fiscal due to aggressive marketing by agents and companies to garner inflows ahead of the proposed changes in commission payouts by IRDA.
The 24 players mopped up Rs.50057 crore in first half of FY 2013-14 against Rs 46963 crore in the corresponding period last year.
LIC’s announcement to introduce a service tax of 3% in all policies from October 1, 2013 had pushed its sales, said industry officials. Earlier, IRDA had mandated that service tax will not be included in the contractual premium and has to be collected from policyholders separately.
“Keeping in mind the low commission pay-outs and increased transparency in life insurance policies from October 1, 2013, many insurance agents and companies pushed their products by misguiding people saying that‘new policies will have high premium structure and low bonuses from October. I have seen a hoarding ad claiming that insurance policies will get costly after October 1, 2013,” says Pankaj Mathpal of Optima Money.
GN Agarwal, CEO, Future Generali Life Insurance said that the sale of traditional insurance policies had increased till September due to implementation of new product guidelines which was later pushed by 3 months.
Ritesh Sheth of Tejas Consultancy says that the sales of policies increased after LIC announced the imposition of 3% service tax.
LIC collected Rs.37,906 crore in new premium during April-September 2013 as against Rs.35,342 crore in the corresponding period last year.
On the other hand, private life insurance premium collections grew by 5% to Rs 12150 crore in April-September 2013 as compared to Rs 11621 crore in the first half FY 12-13.Surprisingly, the growth is largely on account of contribution by small players like India First Life Insurance and Edelweiss Tokio which recorded a healthy growth of 336% and 175% respectively. Except Reliance Life (79% growth), a majority of large insurance players like SBI Life, ICICI Prudential, Bajaj Allianz recorded a steep fall in their new business premium collection.