Markets downturn hits insurance cos collections

BL Research Bureau The continuous downturn in equity markets and severe correction since October seems to have finally hit the collections mopped up by insurance companies.

At the start of this year, the industry’s new premium collections were growing at an impressive 118 per cent. This growth rate was down to 11.4 per cent in October. A continuous slide in market leader LIC’s collection has dragged down overall growth.

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Last October, private insurers registered double-digit growth in new premium collected.

This October, growth hovered in the single digits. According to numbers compiled by Motilal Oswal Securities, Aviva Life witnessed a decline of 33.7 per cent in October and the weighted new premium income has dropped to Rs 46.5 crore, followed by Tata AIG (minus 29.4 per cent).

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The largest private player ICICI Prudential has seen a 29.1 per cent decline in new premium collections for October. Some private players who managed reasonable growth were MetLife, which registered a growth of 91 per cent followed by SBI Life (52 per cent) and Reliance Life (48.8 per cent). HDFC SLIC and Birla Sun Life had a single digit growth.

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While October numbers aren’t heartening, year to date growth remains strong for most players. SBI Life, Reliance and Kotak OM Life all grew by triple digit. ICICI Pru’s premium collections grew by 23 per cent, year to date, followed by Tata AIG- 30 per cent (this is despite their partner AIG under going turbulent times). LIC and Bajaj Allianz were among the insurers who share, reckoned on the basis of new premium income.

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LIC’s collections declined by 30 per cent while Bajaj Alllianz, 7.9 per cent respectively. For insurance industry, the second half accounts for more than 60 per cent of the collection and the last quarter January-March accounts for 40 per cent owing to the tax planning and aggressive marketing by the insurers.

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Markets downturn hits insurance cos collections