Source: Money Guru
After continuous decline in premium inflows, the annual premium equivalent of the life insurance industry grew 10.6 per cent in July 2011 and surged 50.6 per cent on a sequential basis. The surge was primarily driven by 62.3 per cent year-on-year growth in premium collections by Life Insurance Corporation of India (LIC) whereas private sector players reported a decline of 37.6 per cent in premium collections in July.
"On a year-till-date basis (April-July 2011), the APE of the industry declined 14 per cent year on year with the private players reporting a decline of 38.8% in collections for the same period. The market share of private players declined sequentially to 29.1 per cent from 51.7 per cent in July 2010. Among private players, Max New York Life Insurance’s market share increased to 7.7 per cent from 5.0 per cent in July 2010 while HDFC Life’s market share expanded to 14.6% compared with 11.3% as on July 2010," brokerage Sharekhan said in a report. Among private players, Reliance Life Insurance witnessed an APE contraction of 65.5 per cent YoY followed byICICI Prudential and Birla Sunlife, which showed a contraction of approximately 56 per cent YoY and 45 per cent YoY respectively. Bajaj Allianz also reported a decline of 43 per cent YoY in its APE for July 2011. Barring this month, the APE of the life insurance industry has contracted significantly over the past 10 months as the new unit-linked insurance plan (Ulip) guidelines set in and insurers awaited the clearance from the Insurance Regulatory and Development Authority (Irda) for launching new products. After contracting by 39.2 per cent YoY in June 2011, the APE for the life insurance industry grew by 10.6 per cent YoY in July 2011 mainly contributed by the sharp jump in the APE of LIC. The private players witnessed an APE contraction of 37.6 per cent YoY whereas LIC saw its APE growing by 62.3 per cent YoY. On a sequential basis, the industry APE grew by 50.6 per cent. However, on a month-on-month basis the private players witnessed an APE growth of 10.1 per cent while LIC saw its APE growing by 50.6 per cent. Private players saw their APE contract by 37.6 per cent YoY as several of them awaited IRDA clearance for new products. Notably, amongst the private players Reliance Life Insurance witnessed a contraction of 65.5 per cent YoY followed by ICICI Prudential (contraction of 56 per cent YoY), Birla Sunlife (contraction of 45 per cent) and Bajaj Allianz (contraction of 43 per cent YoY). DLF Pramerica and Aegon Religare saw a strong growth in their premiums in July 2011 but the same was due to a low base in the corresponding period of the previous year. The private players lost market share to LIC during the month. The market share of the private players contracted from 39.9 per cent in June 2011 to 29.1 per cent in July 2011. ICICI Prudential remains the market leader among private insurers with a market share of 15.6 per cent followed by HDFC Life with a market share of 14.6 per cent. They are followed by SBI Life (12 per cent market share), Bajaj Allianz (7.8 per cent market share) and MNYL (7.7 per cent market share). The premium collections reported a strong bounce back in July led by a strong growth by LIC and a reasonable growth by other private players. The insurers are in the process of launching new products and revamping their distribution structure (bankassurance tie-ups, realignment of agent force) to curtail their expenses. The IRDA’s recent proposal to scrap the 4.5 per cent guarantee clause in pension products is a positive development and would result in the launch of new products.