Demonetisation helped life insurance industry
One of the beneficiaries of the huge inflow of money to banks after the invalidation of high-value currency notes on 8 November last year was the life insurance sector. In November 2016 the total first-year premium collected by insurers was Rs16,061 crore, a jump of 113% from a year ago and 45% from the preceding month, according to figures released by the Insurance Regulatory and Development Authority of India (Irdai).
Sandeep Batra, executive director, ICICI Prudential Life Insurance Co. Ltd, said demonetisation provided a big boost to the life insurance industry. “In the first half of FY17 the industry grew at 18%, which went up to 23% in the second half of the year. This growth trend is continuing with the industry growing at 25% in H1 of FY18,” he said. According to Batra, demonetisation, along with other steps taken to formalize the economy, will result in a structural shift towards financialization of savings.
Karni Singh Arha, chief financial officer of Aviva Life Insurance Co. India Ltd, said demonetisation also brought about a mindset shift among consumers, moving them to digital payments from cash. “Life insurance premiums are sourced in three ways: cash, cheques and online payments. Of course, soon after demonetisation the industry witnessed a sharp spike in cash payment of premiums but over time we have seen even households from Tier-2 cities that preferred cash getting comfortable with NEFT (National Electronic Funds Transfer) and ECS (Electronic Clearance Service) mandate,” he said.
“This huge behaviour change has significantly improved contactibility and will reduce unclaimed funds. Also, it has helped us step up automation,” he added.