Life insurers increase in group insurance sales

Life insurance companies have seen an increase in group insurance business, while they continue to report negative growth in individual insurance category in last eight months.

Group insurance consists of life insurance bought by companies for their employees. So, while individuals are deferring buying insurance, companies have not reduced investment in insurance for their employees.

During April-November 2011, premium collected from group insurance grew by 16 per cent to Rs 29,466.01 crore, from Rs 25386.66 crore in the same period a year ago.

Both, Life Insurance Corporation (LIC) and private insurance companies, reported growth in group insurance sales. During April-November 2011, LIC premium collected from group insurance increased by 11.9 per cent to Rs 24,567 crore, from Rs 21, 631 crore in the previous year. Whereas, new business premium for private insurers from group insurance sales jumped by over 30 per cent to Rs 4,898 crore, from Rs 3,754 crore in the previous year.

“Normally, group single premium policies consist of group gratuity and super annuity (pension) plans. This year, there was an overall trend of positive appraisals and salary hikes that pushed the employer contribution to such policies. Considering the same trend to follow next year, we expect this segment to grow consistently,” said GV Nageswara Rao, chief executive officer, IDBI Federal Life Insurance Company.

Business from sale of insurance to individuals saw declined by over 36 per cent to Rs 32,962 crore, from Rs 51,603 crore during same period in the previous year.

However, despite growth potential, some of the companies like Aegon Religare Life Insurance, Bharti Axa Life Insurance, DLF Pramerica Life Insurance and Edelweiss Tokio Life Insurance, have stayed away from group insurance business or have very low portfolio. These companies are also non-bank funded insurance joint venture companies.

P Nandagopal, chief executive officer, IndiaFirst Life Insurance Company said, “Bancassurance channel (banks selling insurance products) helps insurance companies to cater to a vast number of corporate clients who are in need of group regular premium policies such as term insurance policies. Group insurance business has a high potential of growth if the insurer provides good and efficient service to their customers.”

Companies that have reported significant growth in their group insurance portfolio include ICICI Prudential Life Insurance, Reliance Life Insurance, Canara HSBC OBC Life Insurance and IndiaFirst Life Insurance.