The latest data released by the Insurance Regulatory and Development Authority (Irda) show that during April and May this year, premium from the sale of new policies rose to Rs 8,119 crore (Rs 81.19 billion) compared with Rs 7,331 crore (Rs 73.31 billion), representing a rise of 10 per cent.
In the first two months of 2007-08, the industry had reported a 25 per cent rise in the first premium income.
Insurance company executives said buyers were staying away from Ulips, which are insurance-cum-investment policies with 90-95 per cent of the corpus invested in stock markets.
Instead, people are preferring to purchase pension plans, health insurance and traditional insurance policies, they added. Irda, however, does not provide a break-up of the traditional and Ulip premium.
Premium from the sale of individual single-premium policies fell 3.2 per cent to Rs 1,508 crore (Rs 15.08 billion) as against Rs 1,559 crore (Rs 15.59 billion) in the year-ago period. In contrast, income from new individual regular-premium policies grew 8.7 per cent to Rs 4,928 crore (Rs 49.28 billion) during April-May this year.
The main reason for industry's lower growth was a 17 per cent drop in Life Insurance Corporation's first premium income. Its new business income shrunk to Rs 4,170.87 crore (Rs 41.70 billion) during April and May of this year as against a first-year premium of Rs 5,049.87 crore (Rs 50.49 billion) in 2007-08.
The 18 private players, however, managed to put up a better show with a 73 per cent rise in first premium income, which was estimated at Rs 3,948.41 crore (Rs 39.48 billion) during April-May of this year compared with Rs 2281.83 crore (Rs 22.81 billion) in the corresponding period last year.
Part of the reason for the rise in premium income is the higher number of private players this year. The growth rate more than doubled from 35.35 per cent in the first two months of the last financial year.
LIC also saw its market share drop to 51.36 per cent in the first two months, while SBI Life Insurance overtook Bajaj Allianz to emerge as the third biggest life insurer. SBI Life Insurance had a first premium income of Rs 546.34 crore (Rs 5.46 billion) as against a first premium of Rs 269.64 crore (Rs 2.69 billion) in the corresponding period.
Similarly, Reliance Life is now the fifth largest insurer with a first premium income of Rs 354.32 crore (Rs 3.54 billion) during April-May this year compared with HDFC Standard Life's Rs 287.9 crore (Rs 2.87 billion).