The financial year has begun with signs of recovery for public sector behemoth Life Insurance Corporation of India (LIC) whose first premium income — an indication of new policies sold — has grown by a handsome 20 per cent year-on-year in the April-June first quarter with first premium income at Rs 9,088.68 crore.
That was so strong that it overpowered the slump among private players. As a result, overall industry growth was 0.95 per cent in the first quarter from a year ago.
Private insurance firms, short on capital and headcount, saw their first premium income plummeting by 20.13 per cent at Rs. 5,427 crore.
“LIC is focussing a lot on agency training. We have trained 50,000 agents during the post recruitment orientation training programme in the last three months and will train around three lakh agents by December 2009,” said a senior LIC official.
“Secondly, since people are not comfortable with Unit Linked Insurance Plans (Ulips), we are focussing on selling more of traditional plans,” he added.
“Big private players will continue to show a negative growth this year as they are going in for a consolidation, shutting down branches, undergoing a cost cutting exercise, letting go of inactive agents,” said Rajiv Jamkhedkar, CEO of Aegon Religare Life Insurance.
The LIC official said private firms are facing capital constraints and are constrained in launching traditional plans that require a large amount of capital to meet solvency norms.
“Besides they will also have to declare bonuses that matches the bonuses declared by LIC,” he said.