Non-life sector enjoys premium growth of 15% in Jan 2010
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India's general insurance industry saw premium collection grow by 15 % to Rs29.98 billion (US$650 million) in January as compared to the same month a year ago, according to monthly data released by the insurance sector watchdog, the IRDA.
Last month, private sector general insurers underwrote premium of Rs13.25 billion, up 20.5% compared to January last year. The country's four public sector general insurers collected premiums totalling Rs16.72 billion in January, representing a year-on-year increase of 11.6%.
The more rapid premium growth of the 13 privately-run nonlife insurers has allowed them to capture a 44.2% share of the market in January.
Among the government-run players, United India Insurance registered the highest growth at 21% to Rs4.24 billion while New India Assurance registered the lowest at 4% to Rs4.73 billion.
Largest life insurer eyes US$38 bln in premiums for FY09/10
The Chairman of India's largest life insurer, the Life Insurance Corporation of India (LIC) has said that the company is on track to meet its target of Rs1.76 trillion (US$38 billion) in premiums for the fiscal year ending 31 March, despite new rules governing unit-linked insurance products that came into effect on 1 January.
In an exclusive interview with CNBC-TV18, Mr TS Vijayan, LIC Chairman, said: "We have set a target of Rs176,000 crore (Rs1.76 trillion) for the entire year. We are on path, we have collected nearly Rs130,000 crore till January end. With the new premium also it is quite good, around Rs49,000 crore has come from new premium till January."
For the month of January alone, however, the state-owned life insurer posted a 53.5% fall in new premium income at Rs48.4 billion as against Rs104 billion in the corresponding month last year. Sales were affected by the implementation at the start of the year of a cap on overall charges on unit-linked insurance plans.
LIC's performance contributed to an overall fall in premium revenue for the country's life insurance sector. The industry reported a fall of 40.28% in sales at Rs77.9 billion last month, compared to Rs130.4 billion for the same month a year ago.
However, private life insurance companies witnessed good growth in new income and posted an 11.6% increase to Rs29.5 billion in January. Some of the players like SBI Life and HDFC Standard Life even logged growth in January of 45.4% and 41.7%respectively. "We were fairly nimble footed to the changes that the insurance regulator had prescribed from January. We had trained our sales force and had disseminated information in December," HDFC Standard Life's chief financial officer Vibha Padalkar told the Business Standard.
The Indian government is set to launch a Rs7.3 billion (US$158 million) crop insurance scheme for the plantation sector, most likely in the Union Budget to be unveiled today (26 February), reports the local media.
Under the proposed scheme, the central government could provide a subsidy amounting to half of the insurance premium, while the plantation growers will bear the remaining half. This means that the scheme would need budgetary support of over Rs3.5 billion. The total plantation area covered under the scheme is around 2.3 million hectares and the insurance scheme is for a five-year period.
While the country already has a National Agriculture Insurance Scheme (NAIS) for crop insurance, the Commerce Ministry wants a separate insurance scheme for plantation crops to help plantation farmers fetch a better price for their produce, including their exports, by taking more risks and maintaining or increasing their cultivation area.
The plantation sector is regarded as crucial because it employs 1.7 million workers and sustains 1.5 million small growers. Plantation crops constitute around 3% of India's exports.
Last-minute talks at central and state-level are being held on the scheme to decide funding of the premium subsidy. The Agriculture and Finance Ministries want the premium subsidy to be borne equally (25% each) by the central government and the states because they see agriculture as a state issue. However, state governments are reluctant to pay for the premium subsidy saying that plantation crops are governed by central laws.
Life insurers lobby for service tax only on fund management charges
Life insurers have called on the government to levy service tax only on fund management charges in unit-linked insurance products (ULIPS), ahead of the annual Union Budget which is to be unveiled today (26 February), reports the Press Trust of India.
For mutual funds, service tax is levied only on fund management charges,. In contrast, life insurers have to pay the tax on fund management charges, administration charges and premium allocation fees, among others, in ULIPS.
"Today, service tax is applicable on all charges under ULIPS. It should only be on fund management charges," said Tata AIG Life Insurance Chief Financial Officer Vivek Sood. The move would help cut ULIP costs.
The life insurance sector is also asking the government to allow separate tax deductions for long-term saving products like insurance and pensions. At present, an umbrella deduction is allowed for both long-term and short-term saving instruments like mutual funds.
On their part, general insurers are calling for greater clarity on taxation on investment income. "Clarity on how investment income and unrealised gains are to be taxed will go a long way towards fostering sustainable growth and development," said ICICI Lombard General Insurance CEO and Managing Director Bhargav Dasgupta.
Securities regulator to study global practices on unit-linked insurance products
The Securities and Exchange Board of India (SEBI), the securities industry watchdog, has said that it would decide on the regulation of unit-linked insurance products (ULIPS) after studying global practices.
SEBI's statement comes amidst its tussle with insurers over whether or not the securities regulator has jurisdiction over ULIPS.
In January, SEBI issued a show-cause notice to insurance firms asking why ULIPS, being equity investment products similar to mutual funds, should not be brought under its supervision and why insurance firms had not sought its permission before
launching ULIPS.
IRDA is protesting at what it sees as an encroachment on its domain. The insurance regulator's position on ULIPS is that its regulation of such products is well laid down and that it does not agree with SEBI's contention that insurers need a certificate of registration from the market regulator for dealing in ULIPS. An IRDA official, Mr R Kannan, said: "ULIPS globally are managed by insurance regulators, and under no circumstance will we let ULIPS to be taken over by SEBI."
In its reply to IRDA, an official with the securities regulator said: "SEBI wants to look at the international practice. It wants to examine how ULIPS are governed in other countries." A final decision on the jurisdiction for ULIPS would likely be made in a month, he said on condition of anonymity.
