Post-demonetisation, some insurers see steep growth

Chennai: With demonetisation severely clamping down on investments into real estate and gold, consumers seem to be putting their money in insurance as per the latest data released by the IRDAI.

ICICI Prudential, the only public insurer, posted a growth as high as 48% year-over-year with premium of Rs 884.98 crore for the month of February. Peers such as HDFC Standard Life (14%), Birla Sun Life (26%) and Max Life (12.6%) also saw good growth for the month.

But others such as Bajaj Allianz, Reliance Nippon Life, Bharti Axa Life, Canara HSBC OBC life saw a sharp decline in sales, even as ICICI Prudential increased its marketshare. The sole-publically listed insurer saw its overall marketshare go up to 13.1% this February from 12% last year. Excluding LIC, ICICI Prudential's market share went up to 24.5% from 23.5%.

"At a macro level, the investment climate is looking positive and better. We are seeing a noticeable shift from large physical assets like real estate, gold, towards liquid assets like bank deposits, insurance, MFs, PPFs. With demonetisation this shift has become more pronounced; insurance sees the second largest inflows after bank deposits," said Suresh Agarwal, chief distribution officer, Kotak Life Insurance Co.

ICICI Prudential (Rs 884.98 crore), HDFC Standard Life (Rs 660.06 crore), Kotak Life Insurance (Rs 229.58 crore) seem to have particularly benefited from their bancassurance channels for their strong performance in the month of February. Other insurers, who did not fare as well, are said to be facing changes in their distribution network, top management and business structure, said industry observers.

The upbeat sentiment might get reflected in the life insurance penetration numbers. Insurance penetration had risen to 3.4% in 2015-16 after it hit a 10-year low of 3.3% in 2014-15, according to a Swiss Re report.

"We see that the economy is growing, household income and mean disposable income has increased. So it is fair to say that going forward we might see life insurance penetration increase to 4-5% range," said Agarwal.

Canara HSBC OBC Life Insurance, despite being backed by two banks with extensive networks, saw premium collection more than halve to Rs 82.11 crore. Reliance Nippon Life saw its premium decline by 24% in February 2017 to Rs 77.46 crore from Rs 102.24 in February 2016. "The company has particularly faced a lot of more uncertainty when it came to its business plan, network expansion, fund allocation, given the management changes," said an LIC official.

Ashish Vohra took over in October 2016as chief executive, after the company's board asked former CEO Anup Rau to step down on non performance. "Rau was asked to resign after the company posted a Rs 200 crore loss. And this month's numbers are worse than how the company performed last year," said the official.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.