Small BusinessCommission expenses of life insurers up 5.64%
Spurred by growth in the number of policies renewed, commission expenses of the life insurance industry grew by 5.64 per cent in 2008-09 to Rs 15,533 crore as against Rs 14,704 crore in the corresponding period last year.
- "Green shoots are now becoming trees & plants" - Government sets up schedule to provide relief to accident victims - ING Life aims 15% growth in new biz premiums - Mumbai attacks may cost insurers Rs 500 cr - Web exclusive: Inclusive growth in the financial sector - Hit-and-run claims triple in a year
However, the increase in commission expenses was lower than the increase in the gross premium collected by the insurers. The total premium income of the life insurance industry grew by 10.15 per cent.
As the sales of new polices had dropped last year, the commission paid towards regular, single premium and first year premium declined. To curb lapses, the Insurance Regulatory and Development Authority (Irda) had mandated 75 per cent of the premium from the second year on regular premium policies.
GAINING SHARE
Commission expense of life insurers (Rs crore)
Scheme
LIC
Private Sector
Total
% chg
2007-08
2008-09
2007-08
2008-09
2007-08
2008-09
Regular
4459.48
4350.91
4460.49
4559.30
8919.97
8910.21
-0.11
Single premium
504.33
432.81
50.65
37.81
554.98
470.62
-15.20
First year
4963.81
4783.72
4511.15
4597.11
9474.95
9380.83
-0.99
Renewal
4650.89
5271.37
578.46
880.78
5229.35
6152.15
17.65
Total
9614.69
10055.09
5089.61
5477.89
14704.30
15532.98
5.64
Source: Irda
The commission expenses ratio, which is the ratio between commission expenses and the premium underwritten, declined to 7 per cent in 2008-09 from 7.30 per cent of 2007-08.
Operating expenses of both private as well as Life Insurance Corporation of India increased to Rs 25,723.89 crore as against Rs 20,298.66 crore in 2007-08.
“As the industry continues to expand and companies seek permissions to widen their office network, it is expected that there can be further strain on the expenses in the current year as well,” said Irda in its annual report.