New policies help out life insurance companies develop 8%

Despite an uncertain regulatory environment, the life insurance industry reported a growth of 8% in total premium income to Rs 286,500 crore in 2010-11 from Rs 265,450 crore in 2009-10 mainly because of increase in income by new policies. Total income is a combination of new and renewal premium.

During the period, renewal premium went up marginally by 3% to Rs 160,700 crore while new business premium income went up by 14.5% to Rs 125,800 crore. Insurance companies took various initiatives to curtail the expenses. According to the data released by Life Insurance Council, the number of direct employees has reduced from 2.67 lakh in 2009-10 to 2.42 lakh in 2010-11.

The number of agents has also reduced by 29.78 lakh to 26.47 lakh. They have shut down 553 branches to trim down costs. In addition, commission paid to agents has come down.

After completing 10 years of opening up, eight insurance companies have reported profit, including ICICI Prudential, SBI Life, Bajaj Allianz Life Insurance, Max New York Life and Kotak Life Insurance.

The industry paid a total death benefit of Rs 10,270 crore against Rs 8,385 crore in 2009-10. Also, as on March 2011, the number of in-force policies stood at Rs 32.54 crore, arguably the highest in the world.

The industry is high capital-intensive with Rs 31,437 crore capital deployed. Net investment by insurance companies has dropped to Rs 336,684 crore in 2010-11 from Rs 61,125 crore in the previous year. The industry invested Rs 506,895 crore in equity and Rs 952,993 crore in fixed income instruments.

The Life Insurance Council expects the industry boom in the coming decade with favorable demographic structure, increasing incomes and financial inclusion.

As per UN population division projections, India's population by 2015 will constitute of 30% individuals under age 14 and a whopping 60% in the age group of 15 to 59 years, indicating a potential high-growth prospect for the Indian Life Insurance industry. Household savings constituted 23% of India's gross domestic savings in 2009-10, compared with 5% in Brazil and 15% in China.