By admin at 20 September, 2009, 9:38 am
Consumers continued to put in money in their existing unit linked insurance plans (ULIPs) expecting better returns from the stock market as the Indian economy recovers. Premium collection from renewal of ULIPs jumped 44 percent during the first three months of the current fiscal over the year-ago period even as the insurance sector has been seeing a slowdown.
The industry collected Rs 12,698 crore as renewal pre [...]Consumers continued to put in money in their existing unit linked insurance plans (ULIPs) expecting better returns from the stock market as the Indian economy recovers. Premium collection from renewal of ULIPs jumped 44 percent during the first three months of the current fiscal over the year-ago period even as the insurance sector has been seeing a slowdown.
The industry collected Rs 12,698 crore as renewal premium for ULIPs during the April-June period this fiscal, against Rs 8,793 crore in the corresponding period last year, as per estimates of the Life Insurance Council of India, the industry body of 22 life insurance companies in India.
ULIPs are long-term investment products that come with an insurance cover for the holder of the policy. The money collected as premium for ULIP is invested in the stock market and the value of the investment changes daily, based on the movement of stock prices of companies in which the investment has been made.
The high growth in renewal premium for ULIP has come about at a time when the overall insurance industry has seen a slowdown in growth in terms of new premium collection. Moreover, sale of new ULIP products has actually dipped by about 10 percent during the period. This implies even though new consumers are still wary of putting in money in ULIPs fearing volatility in stock market, old ULIP customers are putting in more money.
ULIPs are the biggest products for private insurers who derive 70-80 percent of their premium collection from sale of new ULIPs. The country's largest life insurer, the government owned LIC derives a little more than half of its total new premium collection from ULIPs.
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