Global slowdown seems to be hurting LIC as well

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As per IRDA for the first five month of current financial year (Apr-Aug) data LIC witnessed 42% drop in growth of the annualized premium equivalent (APE), largely comprises regular premium insurance sales.

It is Rs, 6,589 Crore in the first five month compared to Rs, 11,285 Crore previous year.

Overall APE for LIC stood at at Rs, 17,401 crore down 4% from previous figure of 17,980.

Although 4% decrease is nothing for LIC as there is still 7 months left in the current financial year. However it is also very important that inflation as well as Global Slowdown should start their respective reverse path as high prices could reduce the in hand capital of traditional middle class Indian, which are backbone for LIC and prolonged Global Slowdown might hurt entire economy very badly.

There are many good signs coming up for LIC to increase its premium collection now as

1) Most of the countries are now taking steps to increase liquidity and bail out their banking system.

2) Inflation index for India is now coming down.

3)Tax saving season is about to come.

However one very interesting thing came out during the same eriod as private insurers rises 62% with the premium earning of 10,812 crore compared to Rs. 6,695 Crore. This growth is mainly because of strong selling of ULIP policies by private insurers, where most of their premium collection came from ULIP.

LIC is able to maintained healthy difference between ULIP and traditional insurance products.

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