Life insurers see 18% growth in total premium income in '09-10
KOLKATA: The Life Insurance Council has projected 18% growth in total premium income for the life insurance industry in the financial year
2009-10.
Although final figures, released by the Insurance Regulatory Development Authority (Irda), are being compiled, Life Insurance Council secretary general SB Mathur told ET: “During 2008-09, the life insurance segment had mopped up a first premium income of Rs 88,000 crore while in 2009-10, there was an approximately 10-12% growth, which means that first premium income in the year just gone by is expected to be around Rs 1 lakh crore.”
Mr Mathur also said the industry is estimated to have garnered a total premium income of Rs 2.6 lakh crore at the end of 2009-10, against Rs 2.2 lakh crore in the previous fiscal, which means an 18% growth. Life Insurance Corporation (LIC) is expected to have earned total premium income of Rs 1.76 lakh crore in the year under review, against Rs 1.53 lakh crore in the previous financial year.
On the entire sector turning profitable, Mr Mathur said it is expected to take another 2-3 years before almost all companies turn profitable. As of now, almost all private sector companies, barring a few, showed loss on their profit and loss account.
According to data released by the Insurance Regulatory Development Authority (Irda) for 2008-09, total accumulated losses stood at Rs 14,421 crore while the total equity infused by all companies put together was Rs 18,253 till March 2009.
Ulips clock higher sales, aggravate under-insurance problem
Insurance premium is booming, according to the latest data published by IRDA. Total first-year premium underwritten by the life insurance
industry has shown a 15% growth for the February '09 to January '10 period.
This is indeed a smart recovery by the sector which had clocked in a 3.5% growth for the corresponding period in '08-09, clearly showcasing that insurance was one of the sectors least affected by the global financial crisis and ensuing market meltdown.
While these numbers may give an impression that individuals are buying more safety net to protect themselves and their families from economic uncertainty, a closer scrutiny of the insurance premium, however, suggests otherwise.
For, though, the premium is on a rise, the amount of sum assured (life cover) per policy has been extremely discouraging. This clearly hints out that while people are buying insurance, it is the unit-linked insurance plans (Ulips) which are clocking in much higher sales than traditional insurance covers, thereby aggravating the problem of under-insurance in the country.
According to the IRDA data, the total amount of first-year single premium collected by Ulips stood at Rs 15,838 crore, accounted for by about 41-lakh odd policies, while in the case of traditional life insurance plans, the premium collection for the quarter was about Rs 2,063 crore, by about 6-lakh odd policies.
When compared to the corresponding numbers for the quarter ended June '09, these statistics are indeed encouraging for the industry. In June '09, Ulips accounted for just about Rs 2,459 crore of first-year single premium collections, accounted for by about 7-lakh odd policies, while traditional plans grossed up about Rs 370 crore as first-year premium collections, accounting for by less than 1 lakh policies.
However, though sales and premium collections have shown a marked improvement from June-December '09, the sum assured per policy has gone down drastically during this period, both in the case of traditional plans as well Ulips.
In terms of Ulips, this situation is worse. In June '09, the total amount of sum assured by about 7-lakh odd Ulips was about Rs 1,067 crore, implying the average sum assured per policy to be just Rs 15,000. In December '09, about 41-lakh odd Ulips accounted for a total sum assured of just Rs 3,199 crore, resulting in sum assured per policy to a mere Rs 7,800.
Even within Ulips, the problem of under-insurance is more pronounced in the case of pension plans. For the quarter ended December '09, the total amount of life cover by about 38-lakh Ulips was just about Rs 22.5 crore or an average life cover of Rs 59 per policy.
With life insurance covers like these, one simply can't help but ponder if these unit-linked insurance cum investment plans are indeed serious ‘insurance', or simply investments camouflaged as insurance.
Court ticks off LIC for faulty clauses
NEW DELHI: The Delhi High Court on Thursday pulled up the Life Insurance Corporation (LIC) of India for not acting "fairly or reasonably" in refusing an insurance claim and harassing consumers at large.
Justice Kailash Gambhir while reprimanding the LIC, said: "LIC is not acting fairly or reasonably in insisting that no claim will be entertained for two years after the commencement of the policy."
The court was hearing the petition by Rajiv Khosla, an advocate, who had challenged LIC's Jeevan Kishor policy under which LIC is not obliged to make payment if the assured dies prior to the deferred date.
In the present case, Khosla took the policy for his daughter in 1994 of Rs.1 lakh but due to unfortunate circumstances his daughter died in 1996 and he did not pay the premium and demanded the claim from LIC.
Rejecting Khosla's claim, LIC said that since the life assured person had died within a period of two years of the commencement of the policy, only the premium paid till date was payable and nothing more.
"It appears to the court that once the LIC accepts the contract by offering to insure even the life of a child, then it obviously does do so irrespective of the age of the child," the court said.
"Insurance business is largely dependent on the analysis of risk, it is not possible to accept that the deferred date clause became necessary only on the basis of the risk that may be faced by the LIC. If the LIC chooses to insure children and collects premia, there is no justification for negativing a claim on the basis that payments thereunder should stand postponed to a deferred date," the court said.
