Traditional plans and annuity policies accounted for 83% of the total life insurance AUM.
Thanks to healthy growth in new business premium collection and improved persistency ratio, the AUM of life insurance industry went up by 12% in FY 2013-14 - from Rs 17.4 lakh crore in FY 2012-13 to Rs 19.6 lakh crore in FY 2013-14, shows an annual report published by IRDA.
The growth was primarily driven by traditional policies and pension products. The AUM of life fund (like traditional policies) and pension & general annuity witnessed a growth of 15% and 20% respectively in FY 2013-14. While the AUM of life fund went up from Rs.11.2 lakh crore in FY 2012-13 to Rs.12.9 lakh crore FY 2013-14, pension & general annuity & group funds AUM grew to Rs. 3.4 lakh crore during the same period. Both accounted for 83% of total industry AUM.
Distributors attributed this growth to aggressive sales pitch before implementation of new product guideline. IRDA data shows that the growth of new business premium of life insurance industry went up sharply by 22% in April-December 2013. The new product guideline came into effect from January 1, 2014. A Mumbai based financial adviser said that a few companies had promoted their traditional policies by putting misleading advertisements. “I had come across a hoarding of LIC carrying a punch line ‘last time to buy your favorite product.’ Such misleading promotions and huge commission payouts to agents helped a few players garner healthy inflows,” he said.
However, the AUM of ULIPs continued to decline. Its AUM slipped to Rs.3.3 lakh crore in FY 2013-14 from Rs.3.4 lakh crore in FY 2012-13. Experts said that rampant mis-selling of ULIPs in the past and negative publicity resulted in outflow from ULIPs.
A National Sales Head of a large private life insurer is of the view that improved persistency ratio has helped the industry. “AUM is not only driven by new business premiums but also renewals – actually renewals plays a larger role in AUM growth. Renewal premiums grew by 8% in 2013-14 which is higher than the previous year and would have contributed to this growth.”
AUM of top ten life insurers
|
Life Insurance Companies |
AUM as on FY 2013-14 in Rs. crore |
AUM as on FY 2012-13 in Rs. crore |
Change in % |
|
LIC (Public total) |
1574296 |
1402991 |
12% |
|
ICICI Prudential |
79399 |
73371 |
8% |
|
SBI Life |
58195 |
51819 |
12% |
|
HDFC Standard |
50253 |
40108 |
25% |
|
Bajaj Allianz |
38613 |
37978 |
2% |
|
Birla Sun Life |
24677 |
22779 |
8% |
|
Max Life |
24633 |
20458 |
20% |
|
Reliance |
18284 |
18198 |
0% |
|
Tata AIA |
17405 |
15987 |
9% |
|
Kotak |
12004 |
10862 |
11% |
|
Private total |
383169 |
341903 |
12% |
|
Total |
1957466 |
1744894 |
12% |
Source: IRDA
In terms of AUM, LIC maintained its dominance by capturing 80% of market share in the life insurance industry. The AUM of state owned life insurance company recorded a growth of 12% or from Rs 14.02 lakh crore in FY 2012-13 to Rs 15.74 lakh crore in FY 2013-14. LIC has alone contributed Rs. 90,124 crore to the industry’s new business premium kitty in FY 2013-14 compared to Rs. 76,488 crore.
Similarly, the AUM of private life insurers too grew by 12% to Rs.3.83 lakh crore in the preceding fiscal. Among the top ten private insurers, ICICI Prudential retained its top position with AUM of Rs 79,339 crore, a growth of 8% while SBI Life stood at second position with AUM of Rs 58,195 crore (12% growth). HDFC Standard and Max Life Insurance recorded the highest growth of 25% and 20% respectively in their AUMs.