The premium collections in ULIPs declined by 23% to Rs. 37,550 crore in FY2013-14 from Rs, 48,000 in FY 2012-13.
Unit linked insurance plans (ULIPs), which were in the news for all the wrong reasons due to reported mis-selling, continue to lose sheen. Their premium collection declined by 23%, slipping to Rs. 37,550 crore in FY 2013-14 from Rs, 48,000 in FY 2012-13. Experts said that rampant mis-selling of ULIPs in the past and negative publicity resulted in outflow from ULIPs. ULIPs market share in the industry has also declined to just 12% from 17%.
However, thanks to increase in renewal premium of life insurance policies and a slew of launch of single premium policies, life insurance companies witnessed a growth of 9% in premium income in FY 2013-14, shows IRDAI’s annual report. The premium income went up from Rs. 2.87 lakh crore in FY 2012-13 to Rs. 3.14 lakh crore in the preceding fiscal.
In FY 2012-13, the growth in premium income was just 0.05% due to a massive decline in renewal of policies and high attrition of agents.
While private sector insurers posted 1% decline in their premium income, LIC recorded 13% growth in the previous fiscal. LIC mopped up Rs. 2.37 lakh crore in FY 2013-14 compared to Rs. 2.09 lakh crore in FY 2012-13. The 23 private insurers collected Rs.77,341 crore in FY 2013-14 as against Rs.78,400 crore in FY2012-13.
The growth was largely driven by renewal premium income which accounted for 62% of the total premium received in FY 2013-14. There was 8% growth in renewal premium income compared to just 4% in FY 2012-13. The trend is likely to continue in future as the sales of regular premium policies has recorded a growth of 1% in FY 2013-14 after witnessing a decline of 16% in FY 2012-13.
Similarly, the remaining portion i.e. 38% was collected through first year premium. First year premium can be collected in both single premium policies like ULIPs and a few endowment policies and regular premium policies like traditional life insurance policies and pension products.
At a growth of 16% in premium income, traditional products continued to remain the flavor of season. With a market share of a whopping 88%, traditional policies mopped up Rs. 2.77 lakh crore in FY 2012-13 as against 2.38 lakh crore FY 2013-14.
On the basis of total premium income, the market share of LIC increased from 73% in FY 2012-13 to 75% in FY 2013-14. As a result of this, the market share of private insurers declined to 25% in FY 2013-14.