The life insurance industry registered a healthy 77 per cent year-on-year growth in new business premium in the first quarter (April-June) of 2010-11, despite the controversy over unit-linked insurance plans (ULIPs), a major contributor of sales of life insurance companies, .
In the first quarter of 2010-11, the total new premium collection was Rs 25,522 crore against Rs 14,456 crore in the corresponding quarter previous year. In June, the life insurance industry collected new premiums worth Rs 11,556 crore.
Government-owned Life Insurance Corporation (LIC) of India accounted for 73 per cent of the new premium with Rs 18,740 crore collected during the quarter, a 107 per cent jump over the previous year.
Among private sector life insurers, ICICI Prudential Life and HDFC Standard Life posted 74 per cent growth in new premium collection during the quarter. However, the second largest private life insurance company, SBI Life, witnessed a 9 per cent drop in new premium collections mainly due to subdued collection in the group insurance premium.
Akshay Mehrotra, head, marketing, Bajaj Allianz Life Insurance, said the growth was not just because of unit-linked products. “Many insurance companies have also launched traditional plans, which are also contributing to the sales,” he added.
ULIPs contribution to total new premium collection was close to 55 per cent in 2009. It was 76 per cent in 2007.
The Securities and Exchange Board of India (SEBI) had in April 2010 barred 14 life insurance companies from selling ULIPs. SEBI said that ULIPs were mutual funds in the garb of insurance products and since a large portion of the money collected by ULIPs was invested in equities, insurance companies must seek approval from it for selling ULIPs.
Later, the issue was solved by the government, which said that ULIPs would be regulated only by the Insurance Regulatory and Development Authority (IRDA).
IRDA later announced some changes in ULIP norms, which will come into effect from September 1. It has increased the lock-in period of ULIPs for five years, raised the minimum cover from 5 times to 10 times the first year premium, put a cap on surrender charges and made it mandatory for all pension plans under ULIPs to guarantee a minimum annual return.
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