Nandini Goswami

Kolkata: Blame it on market volatility or the huge growth piled on already, the life insurance industry grew just 23% in 2007-08, garnering a first business premium of Rs 93,000 crore.

And there are indications the red-hot business may just cool down a tad further this year.

“We believe the life insurance industry is potentially headed for a slowdown,”A recent Deutsche Bank report said, adding, “Weaker equity markets are primarily responsible for the slowdown, but the sheer extent has taken us by surprise.”

A look at the year-end figures of life insurance business tracked by the Insurance Regulatory and Development Authority (Irda) in 2006-07 and collated by DNA Money shows that the scorching pace of growth witnessed earlier was tempered in 2007-08, with significant changes in market shares between LIC and private players.

The state-run Life Insurance Corp (LIC), for example, grew premium collections by a mere 6% in 2007-08.What is really surprising, tough, is that this sluggish growth came after LIC grew a whooping 118% a year before!

A break-up of the un-audited data shows that LIC registered a de-growth in its individual nonsingle premium plans and group single premium plans during the year, although its portfolio mix in the respective years remained almost the same. As a conscious strategy, LIC grew its single premium plans by 21.3% during the year.

In the private sector, the picture is slightly different. For one thing, all segments registered growth. While single premium income grew 28%, individual non-single premiums grew 86.82%. In the group category, group single premiums grew by 28%, whereas group non-single premiums recorded a 69% growth.

As of March 31, the first premium income with private life insurers stood at Rs 33,806 crore.

The figures with Irda also reveal the see-saw battle between LIC and the private players when it comes to market share. In 2006-07, the life insurance industry grew 110%. LIC grew 118% in the year, and increased its market share to 74.2%, driven mainly by a massive 136% growth in single premium policies. The private sector on the other hand, had 25.8% market share.

Now, LIC’s market share has dropped to 64%, while the private sector, which grew 74%, has notched up a market share of 36%.

Source : DNA