January, February and March are crucial months for the life insurance industry. The new business premium collection for January was 20% lower than December 2010 for individual single premium policies, while it was 10% lower for individual non-single premium policies
January, February and March are crucial months for the life insurance industry. It is surprising to note that new business premium (NBP) for January was 20% lower than the NBP of December 2010 for individual single premium policies. NBP for January was 10% lower than the NBP of December last year for individual non-single premium policies.
Insurance companies are coming out with new traditional plans due to business shifting away from ULIPs (Unit-linked Insurance Plans). However, this does not explain why NBP has dropped substantially. Even the behemoth Life Insurance Corporation (LIC) of India was not spared.
According to GV Nageswara Rao, managing director and chief executive officer, IDBI Federal Life Insurance, "The mix of ULIP to traditional policies is currently 60:40, earlier it was 80:20. The ticket size of traditional policies is smaller when compared to current ULIPs and that also leads to lower premium collection. January sales were disappointing, but we are optimistic about the balance of this fiscal year. March is the biggest month for insurance companies."
Dr P Nandagopal, managing director and chief executive officer, IndiaFirst Life Insurance, told Moneylife, "The tax pitch for selling insurance products is no longer completely applicable. Today, people are buying insurance spread over all months. There are more sales in JFM because lot of part-time agents work rigorously in these months. Our company has no agents till now and relies solely on bancassurance of Bank of Baroda and Andhra Bank."
He added, "There has been a slowdown in business after Insurance Regulatory and Development Authority (IRDA) regulations and insurers filing for new products. The industry may be coming out of traditional plans, but we are not giving any preference for traditional plans over ULIPs due to commissions. We have kept the same level of commission. Another reason for the slowdown is that the pension market has dwindled. We are waiting for new regulations for pension ULIP products. A 4.5% guaranteed pension ULIP is not in the best interest of the customer too."
It is possible that customers do not see any major benefits from the new IRDA guidelines on ULIPs post 1 September 2010. Moneylife had earlier written how the charges have increased for ULIPs instead of decreasing over the period of five or more years. (See: 'The New Old ULIPs' ).
According to the information Moneylife collected while talking with industry personnel, insurance companies that grew inorganically during the lucrative days of ULIPs closed down many branches and downsized a number of agents. Life insurance companies are on a cost-cutting spree.
Again, the agents who got into the ULIP selling business for securing high first year commissions have moved on to other careers.
The instant gratification of hefty commission in the first year is no longer present as the commissions are spread over the years and depend on renewal of policies. Insurance in India is sold and not bought. Insurance companies now lack good sales agents.
Here is an email text we recently received from a disgruntled insurance company agent (name withheld) who disclosed names of a couple of insurance companies: Please note, these comments do not apply for all insurance companies.
"Life Insurance companies are on an expense-management drive, I would like to share with you something which companies have done in the last six months to cut expenses.
- Closed down branch offices (so-called non performing branches to the tune of 10%).
- Removed the security staff in the existing branches after 8:00pm.
- Removed all the vending machines serving tea & coffee in all the branch offices. The head office has all the facilities.
- Done away with hand soap in the toilets of branch offices.
- Done away with bus facility to pick up & drop employees.
Employees are resigning due to loss of morale, employees spend more time in the office than their home and such steps are having a negative impact on their performance. Insurance business is tough, but January, February and March are our peak selling season and they are nowhere near their targets. The irrational exuberance which existed has vanished. It's an irony how will companies who are not sensitive to their employees would be sensitive to their customers."
S-Tel's application was cancelled earlier on grounds of threat to national security. The apex court also asked the agency to investigate the antecedents of the UAE-based Etisalat against which the home ministry had expressed reservations earlier
New Delhi: The Supreme Court today ordered the Central Bureau of Investigation (CBI) to probe the restoration of second generation (2G) spectrum licence to Chennai-based telecom operator S-Tel after its cancellation earlier on grounds of threat to national security, reports PTI.
The apex court also asked the agency to investigate the antecedents of the UAE-based Etisalat against which the home ministry had expressed reservations earlier to the Department of Telecommunication (DoT) and the Union finance ministry regarding the foreign direct investment made by it in the telecom sector.
A bench of justices GS Singhvi and AG Ganguly asked the CBI to apprise it of their findings on 15th March.
Senior advocate KK Venugopal, appearing for the CBI, however, said as the issues concerning the two firms did not directly relate to the 2G spectrum allocation, the agency may take some more time to complete the probe.
Attorney general Goolam E Vahanvati, meanwhile, explained to the bench about the telecom policy adopted since 1994 and said the spectrum was allocated on the basis of the policy decision which does not envisage its allocation by auction.
He further said the licences cannot be cancelled only on the ground that the policy of auction was not followed. He said if there was any fault or gaps in implementation of the policy, it is for the court to take a view.
Justice Vahanvati said that a joint parliamentary committee and the Public Accounts Committee (PAC), too, were looking into the issue of the spectrum allocation and were also examining the Comptroller and Auditor General (CAG) report on it.
The attorney general said the matter was also being probed by the CBI on the direction of the apex court, which is also monitoring the investigation.
The Supreme Court had detected yesterday the cancellation and subsequent restoration of 2G spectrum licence to S-Tel, while examining a relevant government file on the matter.
The file was placed before the bench on its direction after it was alleged by the petitioners, Centre for Public Interest Litigation (CPIL) that the Centre had adopted "arm- twisting" policy against the company for challenging DoT's policy in 2G spectrum allocation in the court.
"File placed by the additional solicitor general (ASG) says something more. It tells about a new dimension which is all together different," the court had remarked yesterday, while asking additional solicitor general Indira Jaising to bring the file on 3rd March as well during the hearing on a PIL by the CPIL for probe into the 2G spectrum allocation during former telecom minister A Raja's tenure.
Ashok Leyland reported a 24.53% jump in commercial vehicle sales to 9,800 units in February 2010, compared to the same month of the previous year
Hinduja Group flagship firm Ashok Leyland Ltd reported a 24.53% jump in commercial vehicle sales to 9,800 units in February 2010, compared to the same month of the previous year.
The company sold 7,869 units in February 2010, Ashok Leyland said in a statement.
Domestic sales stood at 8,984 units in February as against 7,092 units in the same month of the previous year, translating into a 26.67%, it added.
Exports increased by 5.01% to 816 units in February from 777 units in the year-ago period.
The company also reported a 28.18% rise in total domestic sales of medium and heavy commercial vehicles to 8,954 units in February 2011, from 6,985 units in the same month of the previous year.
On Thursday, Ashok Leyland ended 1.83% up at Rs53 on the Bombay Stock Exchange, while the benchmark Sensex gained 0.23% at 18,489.76.