The total premium of life insurers dropped by 3 percent to Rs 2,83,315 crore for 2011-12 compared to Rs 2,91,605 crore in the year ago period, as per the provisional data released by Life Insurance Council, the industry body for all life insurance companies.
The total new business premium collected by the industry for FY 2011-12 declined by 9.5 percent at Rs 1,13,678 crore from to Rs 1,25,618 crore last year. Linked new business saw a significant drop of 67 percent to Rs 17,455 crore against Rs 52,739 crore last year.
However, Non-Linked new business premium showed a growth of more than 32 per cent to Rs 96,224 crore as on March 31, 2012, compared to Rs 72,878 crore in 2010-11. The total assets under management (AUM) of life insurers also increased by 9 percent to Rs 16,18,544 crore as on 31 March, 2012, compared to Rs 14,82,549 crore in the previous year, despite the apparent slow-down in the industry.
“This drop in total premium can be attributed to change in regulatory road map, declining number of products and disappearance of pension business in the individual segment,” Life Insurance Council Secretary General S B Mathur said.
If the individual pension business is considered, which forms a major segment of the new premium for Life Insurance companies, and on which policy holders have traditionally placed trust during the accumulation stage, has fallen drastically in FY12 to a meagre 1.80 percent of total new business premium, he said.
New Business Premium garnered from individual pension policies during FY12 shrunk considerably to paltry Rs 1,139 crore compared to Rs 19,257 crore in the previous fiscal and Rs 26,389 crore in 2009-10. This virtual disappearance of pension premium and declining new business unit linked premiums had wide repercussions on the overall investment done by life companies in the Indian equity market.
Net investment done by life insurers in equity markets also showed a steep decline. In FY12, the net buying by life insurers in equity stood at Rs 26,990 crore against to Rs 30,565 crore last year. LIC’s share of equity investment in last few years has seen a sharp declining trend with a drop of over 50 percent.
In tandem with declining new business premiums, the number of individual new business policies this year too declined to 4.41 crore from 4.81 crore last year. Companies underwrote more than 1.40 crore rural policies and covered more than 1.31 crore socially vulnerable lives. In FY 2011-12 life insurance companies paid more than Rs 11,105 crore as death claims including Rs 2,500 crore from private life companies, compared to Rs 10,258 crore last year including Rs 2,200 crore from private insurers.
Despite the slowdown in the life insurance sector, the total cumulative investment by life insurance companies in the infrastructure sector grew by 43 percent to Rs 2,20,866 crore against Rs 1,54,558 crore last year.