The decline in growth in insurance premium collection, post the rise in inflation and global economic slowdown, has affected the state-owned Life Insurance Corporation the most.
The insurance giant witnessed a 42 per cent deceleration in the growth of its annualised premium equivalent (APE), largely comprising regular premium insurance sales, as per an Insurance Regulatory Development Authority data.
LIC’s APE stood at Rs 6,589 crore during the first five months of the current financial year, while it was Rs 11,285 crore during the same period in 2007. “We have not made any analysis as to why there has been a drop, we will do it in due course,” a senior official at LIC said, without divulging any details.
The overall APE registered in the first five months of this year was Rs 17,401 crore down from Rs 17,980 crore during the corresponding period of the previous year. This is a drop of 3 per cent.
The private insurers however managed to grow at 62 per cent during the same period with a premium earning of Rs 10,812 crore as compared to Rs 6,695 crore in the April to August period in 2007.
Analysts within the insurance industry said that though there have been a drop in premium collection, customers have opted for mostly for Unit Linked Insurance Plan for its long term investment nature. “Insurance products are long term in nature and people have shown no hesitation in going in for ULIP though there has been an overall decline in collection,” a senior official at a private insurance company said.
Industry analysts said that the appetite for insurance products is significantly low at this point due to the increase in prices. Customers going in for insurance products for the purpose of saving taxes have deferred their investments. “This has largely impacted the industry” an insider said.