Focusing on traditional products, the life insurers would be going for a re-look at the current products which is likely to offer lesser number of Unit Linked Products for customers till April 2014. Examining the changes in product mix, Executive Director of ICICI Bank Mr. NS Kannan said that the regulatory changes relating to the traditional products have resulted in lowering the ULIP’s contribution from about 68% during October-December in comparison to 60% during the last quarter. Talking about the lowering of business margins of about 10.9% in 3rd quarter, he said the company would analyze steps towards optimizing profits and evolving business.
Glancing at the profit chart of ICICI Prudential Life Insurance, during October-December 2013-14 it was Rs 428 crore after tax deduction which is 31 crore more than the year before. Whereas, in the 3rd quarter the profit came out to be 868 crore, which is 36 crore lesser than the previous year. Along with ICICI, LIC is also shifting over to traditional products and looking forward to business optimization.
Although the new guidelines implemented from 1st January 2014 has brought more transparency in terms of surrender benefits and product structure but this let to closing of current plans and launching of various new ones including money back and term plans. And, till date we haven’t seen any ULIPs being launched. Even LIC has only 10% of ULIPs in its product mix.
Talking about the current market conditions all big life insurers agreed that the exigency of ULIPs have reduced largely and all need to take cautious approach by shifting towards traditional plans. According to the new guidelines, majorly all products have been withdrawn and hence it is necessary to get basic traditional products in market in comparison to ULIPs which need to get filed with IRDA.
From 1st April 2014 we are likely to see more products and related problems might stay throughout this financial year. Even the famous ULIPs have undergone new restrictions like minimum death cover and the extended lock-in period of up to 5 years which used to be 3 years earlier. The ULIP premiums share has seen a great fall from 90% in October 2012 to 30-35% presently.
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