Life insurance companies in India focused on controlling costs and renewal business which enabled them to make higher profits in 2010-2011 as compared to the previous year.
Last year, when insurance companies were worried about the new guidelines on Unit Linked Insurance Plans (ULIPs) and how they would affect their business, Insurance Regulatory and Development Authority (IRDA) suggested they cut down on costs in order to stay profitable. This suggestion hinted towards redesigning insurance products, slashing their administrative costs, travel expenses, management costs, etc.
There are 24 life insurance companies in India which include LIC. The remaining 23 are private life insurers which include the latest entrant Edelweiss Tokio Life Insurance. Edelweiss recently received R3 approval from IRDA and has not yet started its operations.
Eight life insurance companies recorded profits last fiscal. The list includes LIC, ICICI Prudential Life Insurance – net profit of Rs 808 crores, SBI Life Insurance – net profit of Rs 366 crores, and Kotak Life Insurance – net profit of Rs 101 crores.
Max New York Life Insurance increased its profits by 12-fold with a net profit of Rs 283 crores in 2010-11 over Rs 24 crores in the previous year.
According to data from Life Insurance Council, in a bid to cut costs, companies reduced the number of direct employees to 2.42 lakh from 2.67 lakhs. The number of insurance agents also reduced to 26.47 lakhs from 29.78 lakhs.
Life insurers like ING Vysya and HDFC Life are expecting to break even this fiscal. HDFC Life has drastically cut down its losses from Rs 299 crores in 2009-10 to Rs 99 crores in 2010-11. On similar lines, ING Life also cut down its losses from Rs 137 crores in 2009-10 to Rs 70 crores in 2010-11.
HDFC Life Insurance Company’s MD & CEO, Amitabh Chaudhry said that an increase in premium collections and a reduction in their operating costs will help them to break even this fiscal.
Last fiscal companies reduced their number of branches in an effort to further bring down their expenses.