Financial Daily from THE HINDU group of publications
Wednesday, Apr 24, 2002
Money & Banking
Jeevan Shree brings chunk of first premium
MUMBAI, April 23
LIFE Insurance Corporation of India (LIC), has ended the financial year 2001-02 with growth of 137 per cent in first premium income at Rs 14,844 crore against Rs 6,262 crore in 2000-01, buoyed mainly by sales of its popular single-premium policy, Bima Nivesh, and individual pension plans.
LIC's high-return plan, Jeevan Shree, has accounted for 40 per cent of the first premium income.
Mr A. Ramamurthy, Managing Director and acting Chairman, LIC, told presspersons here that sales of Bima Nivesh grew 248 per cent year-on-year to Rs 5,365 crore and individual pension plans grew 355 per cent year-on-year to Rs 2,561 crore. Individual assurances stood at Rs 6,918 crore, a growth of 66.4 per cent.
Mr Ramamurthy said the growth is significant as it happened in the "first full competition year". Until last year LIC was a monopoly player in the life insurance sector. Private players started operating in the current year.
He said the total income of the corporation for fiscal year 2001-02 is likely to be about Rs 72,000 crore, of which Rs 50,000 crore would come from premia and about Rs 22,000 crore from profit from investments.
The total number of policies sold during 2001-02 stood at 2.32 crore and the sum assured was Rs 1,92,575 crore. The average sum assured in fiscal year 2001-02 has gone up 34.86 per cent to Rs 85,413 from Rs 63,332 in 2000-01 and first premium per policy has increased to Rs 3,166 from Rs 2,138.
Mr N.C. Sharma, Managing Director, said Gujarat riots had badly affected LIC's year-end business. "Gujarat has actually shown a negative growth of 9.3 per cent in March, which is normally the most productive month. Had it not been for the riots, we would have done much better business there," he said.
Mr Sharma said the insurer is working on structuring products that can be offered in collaboration with Corporation Bank in which LIC holds 26 per cent stake. "We are working on some individual policies to cover outstanding liabilities such as housing loans. The policies are mainly in the nature of covering default risk in case of an emergency," he said.
LIC would also focus on pushing Jeevan Anand and Bima Plus, which is an NAV-based investment policy currently offering returns upwards of 20 per cent, he added.
Commenting on LIC's competitors' term assurance offerings, Mr Ramamurthy said the corporation's experience with term assurance has not been good.
"We are not pushing pure term assurance because the Indian psyche does not accept it readily. Even though term assurance policies cover is high, the premia is forfeited if the person survives the policy term. This does not go down well with Indian customers," he said. Mr Ramamurthy said LIC would, however, aggressively market the new Bima Kiran, which is a variant of term assurance. "At the end of the term, the new Bima Kiran holder would get back the premium paid without interest," he said.
He added that LIC's total corpus now stands at Rs 2,20,000 crore. He expected the life insurance market to grow at the rate of about 26-30 per cent.
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