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Shrinking Product Suite Impacting LIC’s New Business Premium Collection

LICCountry’s largest insurer, Life Insurance Corporation of India (LIC) is seeing a decline in new business premium. One of the main reasons behind declining sales is shrinking product portfolio of the insurer.

Insurance behemoth had 54 products in the market till December 2013, which had come down to mere 10 since January

The Insurance Regulatory and Development Authority (IRDA) has mandated sale of insurance products based on new product guidelines from first January 2014. IRDA has also directed insurers not to sell those policies, which are based on old guidelines. And therefore, insurers were compelled to restructure their product portfolio. Hence, insurers had to re-design their products according to new guidelines and get them approved by IRDA before launching them in the market. As a result product suite of most insurers has narrowed since the beginning of this calendar year.ry 2014.

LIC said that sales were also affected due to rise in premium amounts as service tax has now been levied on policyholders.

However, LIC is confident that sales will pick up in the second half of this financial year as more products will be available in the market by then.

Reliance Life New Business Income Up 56%

reliance-life-insurance-onlinePrivate insurer, Reliance Life Insurance has recorded a 56% surge in its new business premium income in the first nine months of this fiscal and expects further growth in the current quarter.

Helped by a significant increase in individual insurance segment, Reliance Life saw its new business premium collection rising to Rs 1,424 crores during April-December 2013 from Rs 911 crores in the year ago period.

The total income, comprising new business premium and renewal premium collection, grew by 10% to Rs 2,976 crores during April-December 2013.

Challenging market conditions notwithstanding, we have registered a robust growth in new business premium income during April-December 2013, the company said. It also said that it aims to drive growth further with a focus on traditional products, agent productivity and improved quality of business, which is reflected by the way of increased average ticket size.

The average ticket size of the company improved by 33.3% year-on-year to over Rs 20,000. Its profit for April-December 2013 stood at Rs 219 crores; up from Rs 90 crores in the same period of last fiscal.

The renewal income of the company fell to Rs 1,552 crores during April-December 2013 from Rs 1,854 crores in the corresponding period of last fiscal. To enhance renewals, Reliance Life is taking several initiatives ranging from incentive programme to overall process re-engineering.

The company’s total funds under management stood at Rs 18,073 crores as on December 31, 2013.

Reliance Life is a part of Anil Ambani-led Reliance group’s financial services arm Reliance Capital.

Aegon Religare Ties-Up With YES Bank


Aegon Religare Life Insurance has tied up with Yes Bank to use the branch distribution network for insurance premium collection from its customers.

The Aegon Religare said that the objective of this initiative is to offer its customers with another convenient mode to pay their renewal premium and new business premium across the network of YES Bank branches.

Customers can walk in to any of the 130 YES Bank branches, which will accept the premium, during the local banking hours and pay their life insurance premium by cash or through a local cheque or demand draft.

Customer need to simply fill in deposit slip, mention his policy number, name and contact number on the reverse of the instrument. The acknowledgement receipt for the premium payment is received immediately, upon payment across the bank counter.

Branches of YES Bank will accept Aegon Religare premium at no extra cost to the customer.

The bank accesses the real-time data of a particular policy and simply collects the due premium. Aegon Religare will ensure that customer’s details are secured and do not transfer from or to any of the YES Bank branches. Any new branches added by YES Bank will be made available to Aegon Religare’s customers to make the renewal premium payment.

Reliance Life New Business Up Two-Fold In Q1 FY’14


Private insurer, Reliance Life Insurance has posted a two  fold rise in its new business premium to Rs 514 crores during the first quarter of FY’14 (April-June 2013) as against Rs 251 crores in corresponding period last year.

The company reported 48% growth in new business (individual) premium at Rs 267 crores in Q1 FY’14 as against Rs 181 crores in corresponding period of previous year.

The total premium grew by 12% to Rs 914 crores in the first quarter of this fiscal as against Rs 815 crores in the same period last year.

The company increased its average ticket size by over 40% in the quarter, and touched Rs 20,000 by quarter end.

The company is now amongst the top five private life insurers in the country and hope to further increase its market share in coming quarters.

The company is continuing its focus on traditional products and agent productivity. The company’s product portfolio has undergone a significant and profitable change with 80% of business now coming from traditional products, and only 20% from Unit-Linked products.

Profits Of Top Private Life Insurers Rose 7 % In FY’13

Life Insurance

The top seven private sector life insurance companies, which account for around 70% of the first year premium income, saw their net profits rise 7% in FY’13.

However, industry as a whole saw new business premium collections dip amid a tough business environment. Apart from poor renewals of life insurance policies, the exit of some 2 lakh agents last fiscal affected the industry badly.

While Max Life and Kotak Life saw an 8% and 7% decline in their net profit, respectively, HDFC Life and SBI Life witnessed 66% and 12% rise in profits, respectively. The largest private life insurance company, ICICI Prudential Life Insurance posted an 8 % rise in net profit to Rs 1,496 crores in FY’13 as against Rs 1,384 crores in FY’12.

A Goldman Sachs report on the sector states that slower volume growth, lower cost ratios, high surrender/lapse fees have been supporting growth for companies.

However, insurers will now have to focus on efficiency and productivity levels as the share of surrender charges and lapse charges in overall profit will fall as the old policies (sold prior to September 2010) on which charges were high will run off.

Even though the surrender profits of life insurers have come down this year, they continue to constitute a major portion of their profits. Along with the drop in the number of agents, the industry also saw large-scale surrender of insurance policies and low rate of renewals (persistency) of policies.

Even though in the first year the rate of renewals of life insurance policies is about 65%, it goes down to 25% by the third year. The low rate of persistency is a huge issue with the life insurance industry.

Life insurers have also cut down on the number of branches. From over 11,100 branches in 2011, the total number of branches fell to 10,300 by end of 2012, as cost pressure hit the branch expansion and existing non-performing offices were shut.

Life insurance is still viewed largely as a savings and investment product. With other financial savings products offering better returns and in an environment of tighter regulatory norms, insurance agents have not been able to push Unit-Linked Insurance Plan (ULIPs), which, among other factors, has contributed to the muted profitability of the life insurance company’s last fiscal.

IDBI Federal Posted Maiden Profit Of Rs 9.24 Crores In FY’13


IDBI Federal Life Insurance has posted a maiden profit of Rs 9.24 crores for the financial year 2012-13, its fifth year of operations. In FY’12, the company has posted a loss of Rs 69.8 crores.

Focus on long term traditional life insurance products and lower cost, helped the company to post a profit.

The company’s new business premium collection grew by 23% during FY’13 compared to a negative growth of 15% reported by the industry.

The company will continue to focus on traditional insurance products with an average premium paying term of more than 12 years.

Currently, long term traditional products account for more than 83% of the company’s product portfolio.

Reliance Life Eyes Higher Profits In FY’14


After clocking full-year profit for two consecutive fiscals, Reliance Life expects to clock much higher profits in the current financial year. The company reported a net profit of Rs 380 crores in FY’13 as against Rs 373 crores in FY’12.

The company had recorded its first full-year net profit in the financial year ended March 31, 2012.

Though profits of the company have been flat and new business premium as well as renewal has shrunk, its new business profit margins have grown over 20%. This is a positive sign.

The company expects a 10% growth in total premium income on the back of growth in regular premium policies and better policy renewals.

Company’s continued focus on selling more traditional policies, productive agents and quality customer servicing have helped the company to maintain profitability. Company will continue to address the under and un-insured opportunities in medium and smaller towns and cities.

The total funds under management of Reliance Life as on 31 March 2013 stood at Rs 18,189 crores.

Reliance Life is the only company among the top ten private insurers which achieved profits without having a bank partner. Its distribution network continues to have a gap in terms of the absence of any bancassurance tie-up, which enables banks to sell the products of partner insurance firm.

Private insurer, Reliance Life is a part of Anil Ambani led Reliance group’s financial services arm Reliance Capital. Nippon Life, Asia’s largest private life insurer and seventh biggest globally, holds 26% stake in the company.

Shriram Life Posted Profit Of Rs 82 Crores In FY’13

shriram insurance

Private insurer, Shriram Life Insurance has posted a profit after tax (PAT) of Rs 82 crores for FY’13 as against Rs 56 crores in FY’12.

The company’s gross premium collection stood at Rs 618 crores in the year ended 31 March 2013.

The new business premium stood at Rs 421 crores in FY’13 as against Rs 391 crores in FY’12.

The company sold 1.54 lakh policies in FY’13 as against Rs 1.31 lakh policies in FY’12.

The company’s pre-tax surplus has grown by 50% over last year to Rs 100 crores.

The company aims to sell more than 2 lakh policies and achieve a 30% growth in new business premium in the current financial year.


SBI, Reliance Witnessed Steep Fall In Life Insurance Premium

Life Insurance

The life insurance industry witnessed a drop of 6% in premium collection during the financial year 2012-13, with large private sector life insurers like SBI Life and Reliance Life recording a steep fall in premium income.

The total premium collection by 24 life insurers during FY’13 stood at Rs 1, 07,011 crores, and a decline of 6% over the same period last year.

Among the private sector life insurance companies with premium income of over Rs 1,000 crores, SBI Life’s premium collection fell by 20% to Rs 5,184 crores during FY’13. Reliance Life saw its premium income dip to Rs 1,376.58 crores during the fiscal, down by 23.92%.

Country’s largest life insurer, Life Insurance Corporation of India (LIC) reported a 6.4% drop in its premium collection to Rs 76,246 crores in FY’13 as against Rs 81,515 crores in FY’12.

Among other major private players –ICICI Prudential Life and Birla Sun Life saw premium income dropping by 5.2% and 4.6%, respectively.

However, HDFC Life and Bajaj Allianz Life bucked the industry trend registering a growth of 15.7% and 10.2%, respectively.

ICICI Prudential collected a premium of Rs 4,809 crores, followed by HDFC Life at Rs 4,435 crores and Bajaj Allianz Life at Rs 2,292 crores, during financial year 2012-13.

Another private sector life insurer, Max Life, saw a meager 0.4% drop in premium income at Rs 1,899 crores.

Private sector life insurers together netted Rs 30,765 crores in FY’13 as against Rs 32,718 crores in FY’12, a decline of 6.3%.

New Business Premium Of Life Insurers Declined 6.3% In FY’13

Life Insurance

The life insurance sector saw a 6.3% drop in new business premiums for the financial year 2012-13 at Rs 1,07,001 crores as against Rs 1,14,233 crores in FY’12.

Country’s largest insurer, Life Insurance Corporation of India (LIC) saw a 6.4% drops in new premium collection in FY’13 at Rs 76,246 crores.

Private life insurer’s new business premium collection for FY’13 stood at Rs 30,765.03 crores, a decline of 5.9%.

The drop in new business premium is mainly due to the slowdown in the economy, resulting in lower disposable income.  With this, number of policies purchased has also come down.

However, with the change in regulatory guidelines and expectation of higher economic growth, insurers believe they would be able to achieve better numbers in new business premiums in the current financial year.