Life insurance premiums dart up 62% in May

Data released by the insurance regulator on Tuesday showed a 62.07% year-on-year increase in first year life insurance premiums in May.

Life Insurance Corporation (LIC) recorded the highest growth of 82%, while HDFC Standard grew 76% and SBI Life 36%.

“LIC could have grown higher than the industry because of their single premium schemes,” said Abizer Diwanji, financial services head, KPMG. The state-owned company had launched a single premium scheme called Jeevan Nischay in October 2009.

The insurance industry as a whole indirectly benefited from the ban imposed by the Securities and Exchange Board of India (Sebi) on entry load in mutual funds from August last year.

“After the guidelines on mutual funds… marketing shifted to insurance segment instead,” said Jagannadham Thunuguntla, chief strategist, SMC Capitals Ltd.

“The main reason could be lower base effect, because during the corresponding period last year, markets were low,” said Hatim Brochwala, analyst, Khandwala Securities.

Another reason could be the seasonality. “Generally, April being the first month of the financial year, people are not aggressive on investing. It normally picks up in the second month, i.e. May,” said Thunuguntla.