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G. Naga Sridhar

Hyderabad, April 26 Life insurance companies have slowed down recruitment due to tardy growth in the new business and focus on cost-cutting, according to Mr S.B. Mathur, Secretary General, Life Insurance Council.

“The branch expansion and intake, especially of agents, has come down in the last six months. Though the industry had absorbed 50,000 in the first six months of last fiscal, we understand that there has been a reduction in intake for the last six months,” Mr Mathur told Business Line.

Though a couple of companies, which started operations recently, were recruiting people, it has not been ‘significant’ in number, he said.

A good sign for the industry is the continuation of renewal premium though the growth in the new business has come down.

“Last year, the growth in total business (repeal premium and new premium put together) was over 15 per cent. The growth is still there but the fact is the growth is far lower than the previous years when it had touched 50 per cent,” he said.

The insurers need to focus on ‘safe’ guaranteed products, he said, adding: “The guarantees are becoming inevitable. However, there should be no open-ended and long-term guarantees,” he said.

The products, which would bring good repeat premium with low costs, should be designed.

“It has also been observed that there is growing interest in traditional products as the investors are losing confidence in markets. This could hit growth in the unit-linked insurance plans (ULIPs).”

The industry should also be prepared for a flat growth for an uncertain period ahead, he added.

Infusion of additional capital was also a problem for the industry, Mr Mathur said, adding that the proposed insurance amendment bill may contain some enabling provisions in areas such as hybrid capital.

“The positive impact of the proposed increase in the upper cap on Foreign Direct Investment is also coming at a time when the financial sector abroad is in trouble. We need to wait and see how this brings more global players to India,” he said.

At present there are 22 life insurance companies in India, including the State-run Life Insurance Corporation.

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