New business premium income of life insurers declined in the first two months of the current fiscal as stringent regulations on sale of Unit-Linked Insurance Plans (Ulips) continued to weigh on the industry.
Life insurers’ income from selling new po LIC )ies declined 12.3% year-on-year in April-May to Rs 12,253 crore, according to data from Insurance Regulatory and Development Authority (Irda). In April, new business income had fallen 12%.
The insurance industry has witnessed a drop in income from new business after regulatory changes on Ulip , in September, drove life insurers to traditional products that have regulator-designated investment norms. “Sale of traditional products will not compensate for the fall in Ulips,” said GV Nageswara Rao, MD and CEO of IDBI Federal .
Ulips are hybrid financial products in which a part of the premium paid goes towards insurance cover and another portion is invested in equities. State-owned Life Insurance Corporation of India (LIC) posted a fall of 8% in new business premium income, while private sector insurers witnessed 23.3% fall. ICICI Prudential’s new business income fell 29%, while HDFC Life’s fell 27%. Reliance Life saw 52% decline, while Bajaj Allianz saw a 42% fall.
Insurers expect the industry to return to normal growth in six months. “We expect things to change in another six months,” said Mr Rao.
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Tags: Insurance, LIC, LIC Policy, ULIP, ULIPS