Page 17 - Insurance Times June 2024

financial year ended March 31, 2024, insurance industry has a market share insurance products, the banking and
compared with Rs. 3,70,543 crore in of 41.13 per cent. while LIC has 56.87 insurance regulators are questioning
the previous financial year. per cent. the need to forcefully bundle life
As per Insurance Regulatory and The sum assured for the life insurance insurance products with loans offered
Development Authority of India industry grew 21.55 per cent to Rs. by small finance banks (SFBs).
(IRDAI) data, Life Insurance 88,48,606 crore (Rs. 72,80,103 crore). It was recently brought to the
Corporation's (LIC's) first-year Commenting on the growth in life attention of the Reserve Bank of India
premium declined 4 per cent to Rs. insurance industry, the Life Insurance that SFBs were forcing individual
2,22,522 crore against Rs. 2,31,899 Council, a forum to coordinate borrowers to get a life insurance
crore in the previous financial year. It discussions between all stakeholders in product and the loan amount
witnessed decrease in segments of the Indian life insurance industry, said: disbursed to borrowers was net of
individual single premium, individual "The life insurance industry in India has premium.
nonsingle premium, group single been powering ahead by improving
premium and group non-single insurance access and reaching out to While MFIs (micro finance institutions)
premium the uninsured section of the country's are permitted to sell insurance
The 25 private insurers registered population." products in JLG, or joint liability group,
loans, it is not permitted in the case of
12.11 per cent growth in first-year
premium at Rs. 1,55,437 crore (Rs. RBI, IRDAI lens on SFBs for loans sold to individuals.
1,38,643 crore). The highest growth forcing insurance products "It has come to a stage where banks
was in the group single premium at 22 threaten to cancel the sanctioned loan
per cent at Rs. 53,719 crore (Rs. on borrowers if a borrower declines to buy an
43,748 crore). The private life Cracking down on misselling of insurance product. Since MFI loans
have an impact on the livelihood,
HDFC Life declares highest ever bonus of Rs. 3,722 borrowers end up taking insurance
whether they need it or not because
crore they won't be able to get the loan
Private sector life insurer HDFC Life Insurance announced its highest-ever bonus otherwise," said a senior executive of
of Rs 3,722 crore on participating plans to nearly 22.23 lakh policyholders. an SFB aware of the development.
In participating or 'par' policies, life insurance companies share the benefit Microfinance (MFI) loans are largely
of profit in the form of bonuses with policyholders. These plans allow small-ticket unsecured loans. Both the
policyholders to share the company's profits, reflecting a mutual partnership regulators, the RBI and IRDAI are
between the insurer and policyholders.
probing SFBs and insurance companies
Out of the total bonus amount, Rs 2,798 crore will be disbursed to policies for making life insurance products
in the current financial year (FY25), either in the form of maturity bonuses mandatory along with such loans.
or cash bonuses. Whereas, the remaining bonus will be payable in the future
upon policy maturity, death or surrender. "On a Rs. 40,000 loan if 10 per cent
must be reduced because it should go
Speaking on the development, Vibha Padalkar, managing director and chief towards the premium for a life
executive officer of HDFC Life, said, “We are delighted to announce an
increase in the bonuses for our valued policyholders this year. Life insurance insurance product, how would it
policies are designed for the long term, and bonuses serve as a reward for benefit the borrower?
the loyalty of policyholders throughout the policy term. We are committed "The banking regulator has been
to providing the best products and services to our policyholders, ensuring warning SFBs for the last two years to
value for all our stakeholders.” review such products because they
HDFC Life had posted a 14.7 per cent year-on-year (Y-o-Y) growth in net may not be beneficial to anybody - the
profit to Rs 411.66 crore for the quarter ended March 31, 2024, from Rs borrower, the bank or the insurance
358.66 crore in the corresponding year-ago period, driven by profit company. But with malpractices
emergence in the back book. In April 2024, the private life insurer clocked continuing, the regulator is coming
a 4.31 per cent growth in New Business Premium (NBP) to Rs 1,575.17 crore down on a few banks," said a highly
from Rs 1,510.08 crore in the year-ago period. placed source aware of the matter.

16 June 2024 The Insurance Times