Driven by a 119% growth in sales (first-year premium income) of life insurance policies, Life Insurance Corp. of India Ltd, the largest life insurer in the country, announced a 22% growth in the surplus income, for the financial year ended 31 March.
The surplus income grew from Rs12,405 crore in the financial year 2005-2006 to Rs15,127 crore in 2006-2007. Like its private sector competitors, who have grown on the back of sale of unit-linked insurance policies (Ulips), LIC also has increased its focus on such policies. As of 31 March, LIC’s market share stood at 74% against private insurers’ 26%.
Ulips are those where there is no assured or fixed payout, but the returns of the policy are linked to the stock markets.
During the five moths of this calendar, LIC has generated Rs15,126 crore from sale of the new policies and out of this 80% came from Ulip sales.
However, by the end of the financial year, the insurance provider hopes to bring the mix of market-linked and non-linked policies to 60% and 40%.
A higher valuation surplus has also enabled the company to declare higher bonuses for its policyholders.
LIC said 95% of this amount—Rs14,371 crore—will be given to policyholders as a bonus and the balance 5% or Rs756 crore will go to the Union government.
Higher bonuses will help in increasing sales from the traditional policies, said Thomas Mathew T. managing director, LIC.
LIC declared a bonus of Rs20-25 for every Rs1,000 of sum assured in its new micro insurance policy, Jeevan Madhur.