Marred by weak sentiment and low investor confidence,the life insurance industry registered a drop of 21.62 per cent in the first-year business premium collection in December 2008. The industry collected Rs 6,961.09 crore during the last month of 2008 compared with Rs 8,880.95 crore in December 2007.
The private sector,which comprises 20 companies,contributed Rs 2,724.59 crore while the remaining Rs 4,236.61 crore was contributed by Life Insurance Corporation of India. Of the 17 life insurance companies that started their operations more than a year ago,11 witnessed a drop in their first year premium collections.
While premium collection figures for the lone public sector company plummeted by more than 18 per cent,it still managed to pull up its dwindling market share to over 60 per cent in December 2008. LIC had launched its guaranteed return plan Jeevan Aastha last year to pull up sales.
In the private sector,ICICI Prudential Life Insurance the biggest player in the private sector booked a drop of 54.13 per cent in its collections. It was followed by Bajaj Allianz Life Insurance which registered a fall of 51 per cent and Aviva Life Insurance whose premium collection figures nosedived 48 per cent.
Birla Sun Life Insurance,on the other hand,showed an impressive performance. The firms collections were up 30 per cent at Rs 260.34 crore compared with Rs 200 crore in the same period a year ago.
Loss of jobs all over is creating some sort of fear psychosis among people and they do not want to commit their money to any long-term investment, says SBI Life managing director and chief executive officer U S Roy,
For the first nine months of financial year 2009,the first year premium collection dropped by 2.39 per cent to Rs 52,298.86 crore. The industry had garnered Rs 53,576.72 crore during April-December 2007.
It is not just the insurance industry but the entire financial service industry that is feeling the heat. If earlier people bought unit-linked insurance plans for long term investment and insurance,today they are taking time to make investment decisions and want to explore new products. In December,nearly 75 per cent of our sales were in non-ulip products, says Max New York Life Insurance vice-president (corporate communications) Abhinav Rahul.
However,the industry is still hopeful of getting good collections in the last quarter of this financial year. The tax season makes the January-March quarter quite lucrative for life insurance companies. It accounts for more than 50 per cent of yearly sales and,this year too,the industry is banking on this quarter for a robust business.
We usually register good growth in this quarter. This year too we expect to make up at least 40-45 per cent of the years sales from this season, says Bajaj Allianz Life Insurance head (marketing) Akshay Mehrotra.