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In the year before, in FY11, the total inflows into policyholders account had stayed stagnant, with a nominal 0.2 per cent increase, while the total outflows from it had shot up by 35.7 per cent, on a YoY basis. These past two years have been difficult for LIC as compared with the preceding two years. During FY10 and FY09 total inflows had recorded a 49.2 per cent growth and a 2.9 per cent de-growth respectively while total outflows had seen a 39.7 per cent rise and a 2.9 per cent decline respectively. Fall in premium from linked policies, popularly known as unit-linked insurance plans (Ulips) and fall in net investment income has been the two biggest strain factors for LIC as far as inflows are concerned. Higher quantum of claim payouts on maturity and surrender of policies have been the two biggest adverse factors on the side of the outflows. Ulip premium receipts have declined for every insurer in the life insurance industry since the regulator, Irda, clamped down on the obscene commission levels being handed out to insurance agents for selling Ulips. Even in LIC’s case, 31.6 per cent of all net premium inflows were through Ulips in FY08. In FY12 this ratio is down to just 7.3 per cent. However, LIC, which commanded a 70 per cent industry share of all net premium receipts on all types of life insurance policies in FY12, amounting to net premium income of Rs 2,02,800 crore, saw a lower YoY decline of 0.27 per cent as compared to the rest of the industry’s 4.5 per cent fall in the same in FY12 to Rs 84,272 crore.
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