Despite increase in first year premium collection by life insurers, from Rs 8,301.19 crore

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in January 2011 to Rs 8,877.74 crore in February 2011, as per latest data from Insurance Regulatory Development Authority (Irda), a longer-term analysis by FC Research Bureau indicated that February actually saw collections decline in income from individual single premium continued consecutively for the second month.

The government-ow­ned Life Insurance Corporation of India (LIC), collected Rs 1,085.38 crore by selling single premium individual policies in February, which is 60 per cent lower than the average monthly premium collected in the previous 11 months between March 2010 and January 2011. The premium collected from individual non-single premium policies also slid 45 per cent, and accounted for only Rs 1,187.30 crore.

LIC, however, thrived on the group policies, which earned Rs 3,713.61 crore, more than 62 per cent of the total premium collection of Rs 5,986.29 crore.

“The drop in collections from individual single premium policies is not specific to LIC, it depicts the overall market trend. LIC offers a lot of single premium Ulip and traditional policies to individual and as a result of the present market scenario, we are witnessing the low premium collection,” said Gorakh Nath, chief actuary at Future Generali India Life Insurance Company.

Private insurers managed to increase their individual single premium to Rs 895.73 crore in February, 56.13 per cent above the average premium collected during March 2010 to January 2011.

February witnessed significant decline of 71.6 per cent and 22.67 per cent in group life insurance policy premium and individual non-single premium, respectively in comparison to previous 11 months for private insurers.

“Private insurers are under a lot of pressure due to the competition which is encouraging them to come up with new policies and efficient distribution channels. Also, the new norms have changed the product portfolio of all insures, now the customers are more inclined towards regular premium traditional plans and single premium Ulips rather than regular premium Ulips,” said Suresh Agarwal, executive VP with Kotak Mahindra Old Mutual Life Insurance.

However, the analysis revealed that total premium of Rs 1,0945.47 crore collected by all insurers in February is approximately 19 per cent lower than the average of past 11 months.

Also, as per previous year data, in March 2010 the insurers collected almost three times the premium collected in February 2010, which shows the dependence on tax exemption provisions in the insurance industry.