India’s Life Sector Optimistic About Growth
India’s life insurance industry is expected to grow by 15% for this financial year ending in March 2010, supported by growing new and renewal businesses and a rebound in unit-linked renewals.
India’s Life Insurance Council projected total premium income will reach 2.55 trillion rupees (US$55.2 billion) for this financial year, up from the previous year’s 2.21 trillion rupees. The industry is “optimistic” about the growth momentum of insurance business in India, said S.B. Mathur, secretary general of the council, in an interview.
A surge in single premium insurance policies has contributed to overall industry growth. Life insurers saw a 36.4% rise in the sale of single premium products, to 180.2 billion rupees, for the first half ended Sept. 30.
“Despite the slowdown in the economy, life insurance has continued to grow as policyholders are realizing the value of insurance,” said Mathur in a statement.
Renewal premiums, an indicator for policyholders’ value on insurance products, increased 21% to 629.9 billion rupees. Unit-linked insurance products posted a 40.2% rise in renewal premiums to 259.5 billion rupees. Non-linked insurance saw a 10.5% rise in renewal premiums to 370.4 billion rupees.
However, total regular premiums dropped 1.6% to 209.7 billion rupees, as unit-linked policies reported a 26.3% fall to 108.4 billion rupees. Total regular premiums for non-linked policies rose 53.1% to 101.4 billion rupees in the first half.
A recent proposal to eliminate commission loads on all insurance products by 2011 will impede the growth of insurance sector, according to the council. The government move aims to lift the standard of insurance sales by shifting the focus from price to quality of services.
“The percentage of agent commission [a percentage of the premium paid by the policyholder] is already crashing, and it is almost 6% of total premium now, as compared to 12% in 1999, due to competition,” said Mathur.
Also, in this first half, commission expenses — part of management’s expenses — stood at 63.5 billion rupees, up from 56 billion rupees a year earlier.
Total deployed capital of the life insurance sector grew to 265.3 billion rupees in the first half, up from 212.5 billion rupees.
—Iris Lai
IAG Completes Investment in India Nonlife Insurance Venture
Insurance Australia Group Ltd. [86837] said it has completed its A$126 million (US$117 million) investment in its India nonlife insurance joint venture with State Bank of India.
The new nonlife venture, SBI General, is expected to commence business in the first half of 2010. It is still subject to final approvals from the Insurance Regulatory and Development Authority.
IAG will initially hold 26% of the joint venture, with an option to increase its stake to 49%, depending on regulatory conditions, said the Australian insurer in a statement.
The investment will be funded from internal resources, said IAG. The capital has been invested directly into the joint venture and no further capital is expected to be required until at least the fourth year of operation.
IAG’s joint venture investment in India is “a strategic highlight” for the group and it is expected to provide “strong growth and returns” during the coming decades, said Justin Breheny, chief executive officer of Asia at IAG. “We are focused on building a stable of high growth insurance assets in Asian markets — Thailand, Malaysia, India and China,” said Breheny in IAG’s 2009 annual review.
—Iris Lai
MALAYSIA-LISTED JERNEH ASIA BERHAD and Paramount Corporation Berhad said that they have applied for the local regulator’s approval to begin preliminary negotiations with certain parties for the sale of the issued and paid-up share capital of Jerneh Insurance Berhad [86751]. According to the companies’ joint statement, both Jerneh Asia Berhad and Paramount Corporation Berhad received expressions of interests from certain parties to acquire their equity interests in Jerneh Insurance Berhad in November (BestWire, Dec. 1, 2009)

PICC PROPERTY AND CASUALTY INSURANCE CO. [77633] said it has exclusively underwritten construction on phase one of the largest onshore petroleum and natural gas Sino-foreign cooperation project in China — Chuandongbei natural gas field — with the underwriting amount at US$480 million (BestWire, Nov. 30, 2009).

STARR INTERNATIONAL INSURANCE (ASIA) LTD. [90772] said it received regulatory clearance to provide several classes of general insurance products in and from the Hong Kong region. Hong Kong’s Office of the Insurance Commissioner cleared Starr International Insurance Asia to do business from the city, the insurer said (BestWire, Nov. 30, 2009).