COVID-19 to hurt life insurance industry's new biz premium in FY21: IDBI Federal
The life insurance industry had a growth in most part of 2019-20 till the COVID-19 pandemic struck in March 2020, it said in its annual report.
By the end of FY20, the life insurance industry had witnessed a growth of 3.9 per cent (6.5 per cent growth in FY19) in individual new business and 34.5 per cent (14.9 per cent FY19) in group new business, IDBI Federal said.The insurer said the growth in individual new business segment among private players was higher than overall growth consecutively for past three years.
All the distribution channels are affected by total or partial lockdown and also social distancing norms which are expected to continue for a longer period, it added."The adverse effect will also be observed on renewal premium," said the IDBI Federal.
However, in the long-term, the industry is expected to gain with increased demand for protection plans due to this pandemic and also because of the new tax regime, which lowers the attractiveness of traditional savings plans, it added.Talking about financials, IDBI Federal said company's business operations resulted in a profit after tax of Rs 147.83 crore in fiscal ended March 2020, up from Rs 132.77 crore in the previous fiscal. However, the company said it has not proposed any final dividend for the year 2019-20 in view of the emerging market conditions and to conserve capital of the company in the interest of the policyholders and the economy at large.
Whereas the total premium income of the company fell to Rs 1,842.51 crore in FY20 from Rs 1,932.52 crore a year ago, renewal premium increased by 14 per cent to Rs 1,282.01 crore from Rs 1,125.90 crore.
The new business premium fell to Rs 560.50 crore from Rs 806.62 crore.The company's asset under management as on March 31, 2020 increased to Rs 9,775 crore from Rs 9,107 crore in the year-ago period.
The private sector insurer said the retail life insurance market is expanding at a pace lower than anticipated, insurers are chasing a smaller globe and trying to increase their pie.
It changed its course from sale of unit linked products to traditional products, increasing a share of protection business.The board of directors had distributed interim dividend of Rs 37.20 crore out of its accumulated profits till December 31, 2019.
"We shall make the best use of our distribution network available to us through our bancassurance partners, while we rapidly develop our own proprietary channels."Optimising persistency, costs, surrenders, claims, PAT, product profitability and solvency margin will remain key to a healthy bottom line as we look for new tie-ups and new avenues to improve the top line," he said.
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