Private life insurers clock 14% fall in new business in Apr-Sept

Tags: Insurance

Premium collection by individual agents drops for top players

Private sector life insurance companies’ new business fell by 13.7 per cent during the first half of financial year 2012-13 (FY13) mainly on account of sharp decline in premium collection from individual agents. An FC Research Bureau analysis of five large private life insurers reveals that they collectively witnessed sharp decline in new business premium collection by individual agents in the April–September period, compared with the same period last year.

Premium collection by five large private life insurers from individual agents stood at Rs 1,763.47 crore in the April–September period, compared with Rs 2,229.28 crore during the same period last year, fall of Rs 466 crore, or 21 per cent. As a proportion of total premium collection, individual agents managed 41.4 per cent in the April–September period, compared with 45.9 per cent in the corresponding period last year.

The insurers that were considered for the analysis are ICICI Prudential Life Insurance, HDFC Standard Life Insurance, SBI Life Insurance, Bajaj Allianz Life Insurance and Reliance Life Insurance.

Premium collection by corporate agents has also come down by 9.5 per cent. While collection stood at Rs 2,008.68 crore in the April–September period, it was Rs 2,219.99 crore in the corresponding period last year. However, as a proportion of total premium collection, corporate agents witnessed growth of 47.2 per cent in the April–September period, compared with 45.7 per cent in the corresponding period last year.

“As the industry has shown overall negative growth, distribution channels like individual and corporate agents, have been significantly impacted. Banks and brokers have performed reasonably well. Depending on the equity market conditions, we feel that growth will come back in life insurance business,” said Malay Ghosh, president and executive director of Reliance Life Insurance.

Reliance Life witnessed the steepest fall of 31.5 per cent in premium collection by individual agents, while Rs 262.77 crore were collected in the April–September period, collections stood at Rs 383.48 crore the period last year. Collection by individual agents of SBI Life also came down by 30.2 per cent. While Rs 459 crore were collected during April–September, Rs 658 crore were collected in the corresponding period last year.

Bajaj Allianz Life was the only insurer to witness growth in premium collection through individual agents. It collected Rs 395 crore during April–September, compared with Rs 380 crore in the same period last year, growth of almost 4 per cent.

Premium collection by corporate agents of Bajaj Allianz Life, however, fell by 54.4 per cent. While they collected Rs 113 crore in the April–September period, collections stood at Rs 248 crore in the corresponding period last year. Collection by corporate agents of SBI Life also came down by 49.4 per cent. It collected Rs 317 crore during April–September, compared with Rs 626 crore in the same period last year.

“After the industry moved to new Ulip regulations, sale for traditional plans picked up, despite it being difficult for agents to sell. Also the sale for protection policies have increased, for which the premium is low,” said A S Narayanan, chief distribution officer at Bajaj Allianz Life Insurance.

ICICI Prudential, however, saw a growth of 50.7 per cent in premium collection through corporate agents. While it collected Rs 656 crore during April–September, Rs 435.2 crore was collected in same half-yearly period last year. HDFC Standard Life also witnessed growth of 3.2 per cent in premium collection by corporate agents. In the April–September period, Rs 834 crore was collected, against Rs 808 crore collected in the same period last year.

Premium collected by brokers, who are allowed to sell insurance policies of multiple insurers, grew by 6.1 per cent. However, their contribution to total premium remains as low as 6 per cent.

sagarsen@mydigitalfc.com

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