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May 16, 2014
The life insurance industry in India saw an 11.6% rise in new business premiums for the financial year ended 31 March 2014 to INR 1,200 billion (US$20.25 billion), with the country’s only state-owned life insurer reporting a jump in such premiums while private-sector insurers suffered a decline.
The government-owned Life Insurance Corporation of India (LIC), which is also the country’s biggest life insurer, reported an 18% rise in new business premiums to INR901.24 million for the financial year, compared with FY2012-13. Private life insurers witnessed a 4% drop in new premiums to INR295.17 million. LIC increased its market share in first-year premiums by four percentage points to 75.33% in FY2013-14 from 71.36% in FY2012-13.
Lower renewal premium growth and lower product margins due to regulatory changes affected the profitability of some private life insurance companies in FY2013-14, reported the Financial Chronicle citing data from the Insurance Regulatory and Development Authority (IRDA).
The country’s largest private life insurer – ICICI Prudential Life Insurance – reported a 5% growth in net profit to INR15.67 billion for FY2013-14. Bajaj Allianz Life Insurance saw its profits fall by 20% to INR 10.25 billion for the same financial year while Reliance Life reported a 6% slide in net profit to INR 3.59 billion.
However, SBI Life Insurance posted a record profit of INR7.4 billion for the financial year ended 31 March 2014, an increase of 19% over the last financial year due to operational efficiency.
Mr Sam Ghosh, group chief executive officer of Reliance Capital, told Financial Chronicle: “The profits are slightly lower than FY13 as surrender profits have declined. Excluding surrender profits, profit before tax rose to INR2 billion in FY14.”
IRDA has revamped rules for unit-linked insurance plans (Ulips), traditional and variable insurance policies. It reduced the high surrender penalties, which had helped life insurers report good profits in previous years. Irda also cut charges and commissions levied on insurance products to improve returns to customers.