Pension plans give new life to insurers

Tuesday 13, February, 2007 More people are planning for their old-age, at least, in terms of contribution as premium for pension policies. Data released by IRDA suggests that Indians are increasingly contributing a larger chunk of their income to buy pension policies vis-à-vis regular insurance policies. Contribution of pension premium to overall premium income for life insurers has increased by 10% in the first nine months of 2006-07, over total premium income from pension policies in 2005-06. In a year’s time — from December 2005 and December 2006 — the rise is about 7%. According to premium income figures registered by life insurers in the first nine months of 2006-07, Life Insurance Corporation of India (LIC) and 12 private companies’ share of premium income from pension stood at about 32.21%. In 2006-07, pension premium contributed about 22.11% to total premium income of these insurers. Interestingly, the figure in the first nine months to December 2005 was 25.22%. In fact, insurers have already witnessed a 98% rise in premium income from pension policies to Rs 15,734.37 crore in the first nine months of the 2006-07, against Rs 7,928.52 crore for the entire year of 2005-06. While the growth in premium for such policies stood at 209% if it is compared to the period April-December 2005, when the absolute number was Rs 5,077.29 crore. This is more than the growth of the entire insurance industry, which registered a 146% growth in the same period. For LIC, contribution by pension policies to total premium income for the period April-December 2006, was as high as 38% at Rs 14,530.78 crore. In 2005-06, the insurance behemoth registered a premium income of Rs 7,285.86 crore. This was about 28% of the their total premium income. Contribution of pension premium, in fact, increased 10% in the first nine months of 2006-07 over the entire year of 2006-07. In absolute terms, premium income from pension products for LIC rose by about 99% in the first nine months of the current fiscal over the entire financial of 2006-07. Pension policies also contributed a larger proportion of premium income for the 12 private insurers. Pension contributed about 11.36% of the total premium income at Rs 1203.59 crore in the period April-December 2006, against a contribution of 6.29% from pension at Rs 642.66 crore for whole of 2005-06. In absolute terms, premium income has almost doubled in the first nine months of the current fiscal against the entire year of 2005-06.

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