ANNUAL REPORT 2007-08
prevailing prior to opening up of the sector. The life insurance market has become competitive benefiting the policyholders. Simultaneously, insurance industry has been evolving and improving its underwriting and risk management abilities. The reduction of term rates has facilitated increase in the level of sum assured for policies. This higher level of protection implies that customers are more conscious of the need for risk mitigation, greater security, and about the future of their dependents. However, given the level of sum assured in the developed countries and other emerging economies, there is further scope to tap the need for additional cover even amongst the insured population.
Life insurance companies have also been quick to recognize the larger need for structured retirement plans and have leveraged their abilities for long-term fund management towards building this segment. Pension is recognized as a necessity and presents an opportunity for growth in the country, and forms a significant part of portfolio of life insurers. More recently, private life insurers with their expertise in long-term mortality and morbidity introduced annuities.
The growth in group insurance business has also been impressive. The superannuation and gratuity business has grown on the strength of professional fund-management and a host of value-added services. Given such scope for innovations, the life insurance sector in India is expected to maintain the growth momentum of new premium in future.
New policies underwritten by the industry were 508.74 lakh in 2007-08 as against 461.52 lakh during 2006-07 showing an increase of 10.23 per cent. While the private insurers exhibited a growth of 67.40 per cent, (previous year 104.64 per cent), LIC showed a decline of 1.61 per cent as against a growth of 21.01 per cent in 2006-07
Note: Figure in brackets indicate growth rate (in
TABLE 6 NEW POLICIES ISSUED : LIFE
The market shares of private insurers and LIC, in terms of number of policies underwritten, were 26.07 per cent and 73.93 per cent as against 17.17 per cent and 82.83 per cent respectively in 2006-07.
Life insurance industry recorded a premium income of Rs.201351.41 crore during 2007-08 as against Rs.156075.85 crore in the previous financial year, recording a growth of 29.01 per cent. Regular premium, single premium and renewal premium in 2007-08 were Rs.54888.16 crore (27.26 per cent); Rs.38824.36 crore (19.28 per cent); and Rs.107638.89 crore (53.46 per cent), respectively. It may be recalled that in 2000- 01, when the industry was opened up, the life insurance premium was Rs.34,898.48 crore which comprised of Rs.6966.95 crore (19.96 per cent) of regular premium, Rs.2740.45 crore (7.86 per cent) of single premium and Rs.25191.07 crore (72.18 per cent) of renewal premium.
The first year premium (comprising of single premium and regular premium) amounted to Rs.93712.52 in 2007-08 as against Rs.75649.21 crore in 2006-07 recording a growth of
per cent as against a growth of 94.96 per cent in 2006-
The first year premium growth in 2007-08 over a higher
growth in 2006-07 has been on account of continued popularity of unit linked products. It is observed that LIC too has shifted its marketing strategy in favour of unit linked products since 2006-07 though LIC’s performance has slowed down in 2007- 08. While at the industry level, there has been a growth because of slow down in the premium underwritten by LIC the growth levels in 2007-08 were lower than 2006-07. LIC reported growth of 24.17 per cent in single premium individual policies and decline of 6.48 per cent in non-single premium individual policies. LIC reported a growth of 9.11 per cent in Group Single Premium. As against these, private insurance companies reported growth of 39.45 per cent and 69.93 per cent in individual single and non-single policies respectively. The growth in the number of policies underwritten in the Group Single and Non-single segments by the private insurers stood at 54 and 1 per cent respectively. A shift in the shares of first year premium and renewal premium to the total premium was observed in 2007-08. In 2007-08 renewal premium accounted for 53.46 per cent of the total premium underwritten slightly higher than 51.53 per cent in 2006-07.