The average premium from group insurance appears to be declining. While the number of lives covered under group insurance schemes by life insurers has gone up by more than 60 per cent in the first quarter of the present financial year, the total premium collected has grown by a little less than 25 per cent.

The total number of lives covered went up from 56.13 lakh to 89.90 lakh in the April-June quarter against the same period last year. However, the premium collected in the first quarter of this year under group insurance schemes was Rs 4,147.94 crore against Rs 3,324.20 crore in the corresponding

period last year, according to a data released by

the Insurance Regulatory & Development Author-

ity (Irda).

Insurers say this difference in the number of lives covered, vis-à-vis premium collected, is because of cutthroat competition among insurance companies, wh-ich has resulted in the premium hitting the rock bottom. “Group insurance premium has fallen drastically. Even though some correction has taken place last year, still prices are low,” said a senior official of a private life insurance company who did not want to be named.

Group insurance covers a group of people in an organisation where the employer pays the premium, and is an attractive business for insurance co-mpanies, as this involves minimal operational expenses and brings bulk bu-siness to insurance companies. Senior industry executives attributed the growth of group insurance to the rising number of both public and private sector companies.

The insurance regulator has in recent times expressed concerns on many insurance companies quoting lower than the ‘risk’ premiums to achieve top line growth through aggressive selling of group insurance policies.

The group insurance ca-tegory, especially health, has been traditionally a loss-making portfolio, as there has been under-pricing of premiums by the insurers. The claims ratio is as high as 140 per cent.

The General Insurance Council is also working with the non-life firms to ensure best practices for sale and premium calculation of gro-up insurance products.

ICICI Prudential, SBI Life, Bajaj Allianz and Life Insurance Corporation (L-IC), among others, have grabbed big business in the group insurance category.

New players have also started launching group insurance plans. There are 22 life insurance companies operating in the country.