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The Insurance Regulatory and Development Authority (IRDAI) recently has set growth targets for life insurance as well as general insurance companies. IRDAI intends to take the general insurance penetration in India to 2.5 percent by 2026-27 fiscal from the current present 1 percent.
The insurance penetration is the ratio of premium top gross domestic product (GDP) and here the insurance regulator wants to take the premium collected by the general insurance industry from Rs 2.2 lakh crore all the way up to Rs 11.7 lakh crore.
While speaking to CNBC-TV18, Raj Kumar, Managing Director at Life Insurance Corporation of India said, “The targets, which are given, look to be a little stiff, but now we will be working towards that to put all these strategies in place to try to achieve those targets.”
The life insurance penetration in the country is just 3.2 percent, which is comparatively low even by many Asian countries' standards. Thus, the scope of growth is immense.
In the first quarter, LIC had a very high premium coming from the funded schemes. "In the funded schemes the margins are a little lower than the other business which has impacted the margins," said Kumar.
The annual premium equivalent (APE) has seen a 28 percent year over year (YoY) rise and the assets under management (AUM) are also up around 7 percent.
“We are looking towards increasing our non-par business in future plus, we are also working on the non-single premium. Both of these will be contributing to the APE,” said Ku.
The company is sticking to its value of new business (VNB) margin guidance at 20-25 percent by 2027 though this quarter has seen a dip to 13.6 percent versus 15 percent in FY22.
“Non-par products are not new to LIC. Our teams are aware of it. Strategically, we will be putting more focus on the non-par side... We are expecting more than 100 percent growth in the non-par side,” he said.
For the full interview, watch the accompanying video