CHENNAI: State-owned LIC of India
pipped private life insurers in underwriting new policies. The first-year
premiums of life insurers during the last fiscal rose 12% to 1.19 lakh crore
as against 1.07 lakh crore, on the back of LIC's 18% growth.
Industry observers said that regulatory changes effected to equalize all
non-linked and market-linked plans resulted in private players posting poor
numbers. "This resulted in a lot of policies being withdrawn from the
market. Premiums were reworked and introduced in the market again,"
Kalyani Narayanan, president and CEO of insurance broking outfit,
EasyInsuranceIndia said.
For instance, HDFC Life saw a drop
of 9% in first-year premiums last fiscal when compared to 2012-13. First-year
premium collections by the company at the end of FY14 was 4,037.18 crore as
compared to 4,436.07 crore during FY13. The company introduced new processes
last fiscal, which hampered customer acquisition.
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"On the new business front,
we introduced measures to check the quality of sale to customers at the
proposal login stage. This was a new experience for many
of our distributors and it took them a few quarters to adjust to these
changes," Vibha Padalkar, executive director and chief financial
officer, HDFC Life said
Bajaj Allianz Life Insurance saw a
drop of 13.2% in first-year premium collections to 2,592.53 crore during last
fiscal as against 2,987.90 crore during 2012-13. The company attributed this
to a bleak economic environment and regulatory changes. "The industry
itself has gone through a tough phase during the last fiscal and the fourth
quarter of the fiscal in particular, owing to major regulatory changes.
Filing and approval of products also impacted the product portfolio of
several insurers including ours as we had to now contend with the lesser
suite of products than what was available earlier," Anuj Agarwal, MD and
CEO, Bajaj Allianz Life Insurance, said.
Some private insurers, however,
seemed to have bucked the trend. Max Life saw its first-year premiums grow
19% to 2,261.03 crore as against 1,899.34 crore during 2012-13. "We
continued to differentiate in the marketplace through advice-based sales,
balanced product portfolio, multi-channel distribution and superior customer
experience through superior claims and complaint management," Rajesh
Sud, CEO & MD, Max Life Insurance, said.
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Topping them all, LIC recorded a
growth of 18% in its first-year premium collections to 90,123.75 crore last
fiscal as against 76,487.59 crore during FY13. In fact, LIC still continues
to dominate first-year premium collections in the life insurance space
accounting for 75% of the total (1,19,641.13 crore) at 90,123.75 crore.
"LIC continues to have a large agency network and the government
sovereignty continues to be a big catch especially in tier-II, tier-III and
rural areas. Many customers in those areas still have a feeling of distrust
towards non-LIC policies," EasyInsuranceIndia's Narayanan said.
However, private life insurers say
that with product-related changes behind them now, better numbers can be
expected this fiscal. "We are awaiting a final regulatory view on open
architecture in bancassurance and direct tax code. Also, if business
confidence and economic sentiment improves in the next few months after the
budget by the Central government, new business growth momentum could be
better than anticipated," Padalkar said.
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