Life insurance companies in India have shown a huge jump in business in the first 5 months of the financial year – overall a jump of 70% increase in premium collection as compared to the last financial year. LIC showed the maximum gain with an increase of 88% while the private life insurance companies collected showed an increase in premium collection of 34%.
This period from April to August is typically the least active for life insurance companies as people do not buy in this period for tax planning. But the catalyst here seems to be the new ULIP norms which came into effect from 1st September 2010. Since the companies knew that the new ULIP guidelines would be far less attractive in the new avatar, companies seem to have pushed for maximum sales from April to August 2010. And this is the reason for such a large increase in premium collections in the first 5 months.
Life insurance companies collected Rs.52,749 crores in April to August 2010 compared to Rs.31,040 crores in the same period last year. Among the private life insurance companies ICIC Prudential Life collected Rs.2,591 crores and SBI Life collected Rs.2,390 crores. HDFC Standard Life came in next.
The coming months will be the test for life insurance companies as the new products are not as attractive and the challenge will be to convince the insurance agents and distributors to continue sales with the same vigour. The agents and distributors will see a dip in commissions though as most insurance companies has cut down on commissions.
Goes without saying – September to December 2010 will be a testing time for life insurance companies.
