Page 17 - The Insurance Times September 2024

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Life insurers to move IRDAI for extension on LIC drives new biz
implementing surrender value norms premium growth of life

Life insurance companies are planning to seek a three-month deadline insurers in July
extension from the regulator on the implementation of surrender value The new business premium of life
norms, said multiple people aware of the development. insurers increased 14.19 per cent year-
New product launches could slow down due to the new norms, which need on-year (Y-o-Y) at Rs 31,823 crore in
to be implemented before September 30, 2024. July, primarily driven by strong growth
in Life Insurance Corporation of India's
According to sources, the insurers will need more time since revising all the (LIC's) business.
traditional products and renegotiating commercials with the distributors on
the revised products is a logistical challenge. According to the latest data from Life
Insurance Council, LIC's premium rose
In June, IRDAI issued the 'Master Circular on Life Insurance Products',
20 per cent Y-o-Y to Rs 18,431 crore,
wherein it introduced norms to ensure better payouts to customers who while private insurers posted a 7 per
exit policies prematurely.
cent rise in their premiums at Rs
According to the revised norms, life insurers have to pay an enhanced special 13,392 crore. Analysts said high base
surrender value (SSV) after the completion of the first policy year, provided effects limited the growth of private
the customer has paid one full-year premium. Currently, companies do not life insurers.
pay such an amount to customers surrendering their policies in the first year.
LIC's premium growth in July was
driven by a 22.74 per cent Y-o-Y
LIC's refusal to assign The Supreme Court of India in 2015 increase in its group business that
reached Rs 12,838 crore.
policies to CESO may be upheld the judgement by the division
bench of the Bombay High Court, The industry's individual business grew
contempt of court, says stating that insurance policies issued by 20.69 per cent, with individual single
founder LIC "are transferable and assignable in premiums rising by 24.82 per cent at Rs
Life Insurance Corporation's (LIC) accordance with the provisions of the 4,611 crore and non-single premiums
increasing to Rs 9,171 crore in July.
refusal to assign policies to ACESO may Insurance Act, 1938, and in terms of
be tantamount to contempt of court, the contract of life insurance." Among private sector life insurers, SBI
said Ketan Mehta, Director & Founder Established in 2018, ACESO monetises Life Insurance, the largest in the
of ACESO, citing a 2015 Supreme Court segment, reported a 26.3 per cent
the assets of LIC policyholders to
judgement that allowed the transfer decline in first-year premiums at Rs
and assignment of LIC's policies in ensure maximum financial benefits, 2,996 crore, while HDFC Life clocked
accordance with the provisions of the especially in cases where the policies 33.7 per cent growth at Rs 2,699
Insurance Act, 1938. are surrendered or lapsed. crore.

16 September 2024 The Insurance Times