Life insurance industry sees 13.8% growth in average ticket size for May

COIMBATORE: The average ticket size or the average premium of the life insurance industry rose 13.8% year-on-year (y-o-y) to Rs. 17952 in May. State-run Life Insurance Corporation (LIC) of India posted an increase of 14.1% y-o-y at Rs. 12526 in its average premium. The average ticket size of private insurers increased 10.6% y-o-y to Rs. 37111.
While private players such as Bajaj Allianz, Max Life, HDFC Life, Birla Sun Life saw growth between 20% and 40%, other players such as Shriram and Reliance Nippon Life saw a sluggish growth of 4.1% and 2.7% respectively.
Incidentally, the country’s largest private-sector life insurer, ICICI Prudential, saw a fall of 29.3% in average ticket size followed by Kotak Mahindra, which dropped by 11.8%. The highlight was the decline of ULIPs or unit linked insurance plans (ULIPs) aggressively promoted by companies through their bancassurance partners.
“Insurers target an average ticket size of Rs. 30000-Rs. 40000 for ULIPs and Rs 25000-Rs. 30000 for traditional products as the persistency is highest in this band of policyholders,” said Manoranjan Sahoo, chief agency officer, Reliance Nippon Life Insurance.
The insurance industry has been facing challenges since the 2008 global financial meltdown. But the government's decision to raise the FDI (foreign direct investment) limit to 49% came as a huge relief for the industry. “The industry now seems poised for a fresh round of growth. It also presents an opportunity to cross-sell new and customised product portfolios and to explore untapped market potential, particularly in smaller towns and cities across the country,” analysts said.