Life insurance distributors see 54% drop in Ulip commission

Tags: Insurance

New norms and volatile market cited as the main deterrents

Life insurance distributors have witnessed a drop of 54 per cent in commission earned from unit-linked insurance policies (Ulips) to Rs 1,733 crore in the financial year 2011-12 (FY12), compared with Rs 3,748 crore in FY11. Ulip commission as a proportion of the total commissions also saw a decrease of 11.13 percentage points to 9.37 per cent in FY12, from 20.5 per cent a year ago.

Distributors earned a commission of Rs 16,752 crore on traditional policies in FY12, against Rs 14,532 crore in the preceding year, witnessing a growth of 15 per cent.

Total commission paid by insurers saw a rise of just 1.12 per cent to Rs 18,486 crore in FY12 over Rs 18,280 crore in FY11.

“New Ulip norms and volatile markets have played an important role in fall of Ulip sales and consequently commissions earned on them. Low commissions might have impacted distributors’ motivation to sell Ulips,” said Anisha Motwani, director and chief marketing officer of Max Life Insurance.

Public sector insurer Life Insurance Corporation of India (LIC) paid a total commission of Rs 14,036 crore in FY12, against Rs 13,309 crore in FY11, registering a rise of 5.46 per cent. In Ulip segment, LIC paid a commission of Rs 361 crore in FY12, compared with Rs 1,018 crore in FY11, registering a dip of 5.08 percentage point to 2.57 per cent in FY12, from 7.65 per cent a year ago. Commission on traditional policies stood at Rs 13,675 crore in FY12, compared with Rs 12,291 crore in FY11, growth of 11.26 per cent.

Among private insurers, ICICI Prudential Life Insurance paid highest total commission of Rs 607 crore in FY12, compared with Rs 561 crore in FY11, a rise of 8.25 per cent. Commission on Ulips came down by 40.1 per cent to Rs 246 crore in FY12, against Rs 411 crore in FY11.

Max Life Insurance paid a total commission of Rs 580 crore in FY12, compared with Rs 540 crore in FY11, registering a rise of 7.4 per cent. HDFC Standard Life paid commission of Rs 578 crore in FY12, against Rs 477 crore in FY11, witnessing a 21.15 per cent growth. SBI Life Insurance paid a total commission of Rs 518 crore in FY12, compared with Rs 671 crore in FY11, regiatering a drop of 22.75 per cent. Ulip commission for these insurers fell by 64.39 per cent, 30.93 per cent and 41.1 per cent, respectively.

These four private insurers paid commission of Rs 783 crore to Ulips, which formed 34.29 per cent of total commission of Rs 2,283 crore in FY12, while in FY11, Ulip commission formed 59.91 per cent and stood at Rs 1,347 crore in FY11 out of the total commission of Rs 2,248 crore.

The total commission paid by these four insurers stood at Rs 974 crore in the first half of FY13.

sagarsen@mydigitalfc.com

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