“Field agents are finding it extremely difficult to sell new products,” S B Mainak, managing director of LIC, told reporters here on Tuesday.
The Insurance Regulatory and Development Authority (Irda), the regulator for the insurance sector in India, had mandated sale of insurance policies based on new product guidelines from January 1, 2014. The regulator had also directed insurers not to sell those policies, which are based on old guidelines.
The move prompted insurance companies to restructure their product portfolio. The insurers had to re-design their products according to the new guidelines and get them approved by Irda before launching them in the market. As a result, the product suite of most insurers has narrowed since the beginning of this calendar year.
“We had 54 products in the market till December. But since January we have around 10 products. Similarly, for the private players the number of products has come down to 5-6 from 15-20 earlier,” Mainak said, adding this was one of the main reasons behind the decline in sales growth.
Mainak added that sales were also affected due to rise in premium amounts as service tax was now levied on policy holders.
LIC reported 17.8 per cent year-on-year growth in new premium collection during financial year 2013-14 (April-March). However, Mainak said it was driven by sale of old policies, which were active till December.
But he remained confident that sales will pick up in the second half of the current financial year as more products will be available in the market by then.