First year premium of life insurance sector in India increased 3.5% as the tax season is approaching and people are increasingly seeking for insurance products.
The Insurance Regulatory Development Authority (IRDA) revealed in its report for January 2009 that the Indian life insurance sector witnessed 3.5% growth in its first year premium during April 2008-January 2009, as reported by economictimes.
Total premium income stood at Rs 13,043 Crore ($2.6 Billion) in January 2009 whereas it was recorded at Rs 65,337 Crore ($13.1 Billion) during April 2008-January 2009. Private insurance companies witnessed a decline of 24% in FPI in January 2009 while Life Insurance Corporation of India (LIC) posted 72.53% FPI growth during the same month. Life insurance sector is projected to grow 20% in the current year, driven by soaring demand for both single premium and unit-linked policies.
The prime factor for the exponential increase in India’s FPI is that the period spanning from January to March is regarded as the period of heavy sales for the life insurance sector. Insurance companies that trail behind during the initial period of any fiscal have been relying upon this crucial period of the year to meet their targets for that particular fiscal year. Since every individual focuses on his/her tax planning during this time period, sales of insurance products increase considerably.
Moreover, all the insurance companies are making efforts to end this fiscal year on a high note. Consequently, they have intensified their field activities to get the optimum productivity from the distribution channels, leading to the increase in FPI during the review period.
Furthermore, the introduction of new products, such as “Jeevan Aastha” launched by LIC, received wide customer acceptance and thus, helped LIC to register huge premium income in a short term.
According to a Research Analyst at RNCOS, “Indian insurance sector remains hugely untapped as its life insurance sector is still young and under-penetrated. Besides, more than 50% of the Indian population lies within the age group of 20-60 years. Indians take insurance products as investment tools and buy these policies from the perspective of long-term investments.”
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