In January 2017, the growth in total premium was Rs 13,138 crore, against Rs 10,284 crore in January 2016, a growth of 28 per cent.
Demonetisation has come as a boon for the life insurance sector. The move led to a sudden spike in premium, though a temporary one.
According to figures published by the Insurance Regulatory and Development Authority of India, November 2016 saw a surge in total premium collection, especially in the individual single-premium segment.
In November, the growth in total premium was Rs 16,061 crore, against Rs 7,533 crore in November 2015, a growth of 113 per cent.
In the period, individual single premium grew by Rs 6,692 crore against Rs 1,103 crore in the year-ago period, growth of over 500 per cent.
This growth saw a moderation in December, indicating a lot of the money that came into bank deposits found its way to insurance products as well.
In December 2016, the total premium for the life insurance sector grew by Rs 13,012 crore, from Rs 11,027 crore in December 2015, a growth of 18 per cent.
Of this, individual single premium grew by Rs 1,627 crore, against Rs 1,533 crore in the year-ago period, growth of six per cent.
While growth picked up again in January 2017, that is more a case of consumers buying insurance policies in order to save tax and is seen typically every year.
In January 2017, the growth in total premium was Rs 13,138 crore, against Rs 10,284 crore in January 2016, a growth of 28 per cent.
In the same period, individual single premium grew by Rs 1,611 crore, against Rs 1,353 crore in January 2016, a growth of 19 per cent.
According to Pankaj Razdan, CEO and MD, Birla Sun Life Insurance, demonetisation had a positive impact on life insurance companies, especially those that have large driven distribution systems.
“What happened in demonetisation is that money which was out of the system started coming back and suddenly banks were flush with money. Today, credit growth is limited and money is not getting deployed. Some of this money lying in the bank found a way into investments and towards protection products,” he said.
R M Vishakha, MD and CEO, IndiaFirst Life Insurance, agreed that demonetisation helped growth in premium.
“The average ticket size of insurance policies went up in November. But going ahead it is unlikely that more money will come into insurance on account of demonetisation,’’ she said.
IndiaFirst Life Insurance is promoted by two banks, Bank of Baroda and Andhra Bank, along with UK-based Legal and General Group.
However, Arijit Basu, MD and CEO, expects more money to come into insurance during the year, as banks still have a high share of current account savings account (Casa) deposits.
As of December 2016, State Bank of India, the founder of SBI Life Insurance and the country’s largest bank, had a Casa ratio of 46 per cent.
“In the medium term, impact of demonetisation will be positive. Lot of savings deposits are coming into banks and customers are looking for opportunities,’’ Basu said.
Illustration: Uttam Ghosh/Rediff.com.
