Demonetisation has benefitted insurance companies not only in premium growth but also to post higher profits. While rushing in to deposit old notes, individuals have brought higher ticket products boosting revenue growth and in turn profits.
On November 8, Prime Minister Narendra Modi had announced that notes in denominations of Rs 500 and Rs 1000 will no longer be legal tender from the midnight of that day. Public was asked to get it exchanged or deposit in bank branches.
Insurance sector officials said those with large bank partners largely benefitted from this move since they were able to buy the products from the bank branches itself after depositing the cash.
ICICI Prudential Life Insurance, the largest private sector life insurer posted a profit after tax of Rs 1274 crore for nine month period ended December 2016 compared to Rs 1247 crore on a year-on-year basis. Their new business premiums stood at Rs 5382 crore for the nine-month period ended December 2016, showing a growth of 58 percent over a year ago.
Similarly, DHFL Pramerica Life posted new business premium growth of 23.6 percent over the corresponding period last year. During the quarter, the insurer’s net profit grew 24 percent to Rs 15.4 crore over the corresponding period last year.
Even general insurance companies have benefitted. Bajaj Allianz General Insurance posted profit after tax of Rs 197 crore for Q3 of FY17 as compared to Rs 68.5 crore in Q3 of previous financial year. They had a gross written premium of Rs 1722 crore in Q3 of FY17 compared to Rs 1348 crore in same quarter of previous fiscal.
Insurers consider the third quarter as a slow period for business since the festive season coincides with these three months where the other discretionary spends are higher, leaving little room for insurance purchase. The fourth quarter on the other side, is considered as the most active season for insurers as individuals rush to purchase products as an investment tool before the close of the financial year.
The life insurance industry saw a growth of 36 percent in premium growth during April to December period on a year-on-year basis. For December alone, the industry saw 18 percent growth collecting premiums of Rs 13012.39 crore. The country’s largest insurer Life Insurance Corporation of India collected premiums of Rs 8261.31 crore for December 2016, showing a growth of 13 percent.
The general insurance market direct premium up to the month of December 2016 was at Rs 9747.84 crore, showing a growth of 31 percent.
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