84 per cent year-on-year, it came on the back of a steep increase in the premium rates of Ulips.Domestic life insurance firms are in no hurry to hit the market with their initial public offerings (IPOs) even if Copper Tapes Manufacturers the manager announces the guidelines now, according to a research report by HSBC.
However, it believes only a brave Indian insurer will come out with an IPO now, given the impact of the new regulations on unit-linked insurance plans (Ulips) and the pending direct tax code (DTC) bill. Besides, the insurers’ corporate tax liability will also increase to 30 per cent from 14 per cent.7 per cent from 1,05,67,140 to 81,68,782. However, it will be difficult for private insurers to compete on profitability because the Life Insurance Corporation of India is able to fund higher policyholder participation rate with free reserves accumulated over past generations.
Though the premium income (of private players) from new policy sales during April-January rose 5.78 per cent to 88,45,283 till the end of January this economic from 1,11,65,771 a year ago.
The current DTC proposal will strip Ulips of all tax advantages and also does not provide relief to existing Ulips.
The refuse in the sale of individual regular premium policies was sharper at 22..
According to the report, the hitches such as limits on foreign direct venture, a 10-year track record and the absence of IPO guidelines that have prevented floats by domestic life insurers will be removed this year.
The latest published draft proposals for DTC provide for only Rs 50,000 tax deduction for life insurance premium, medical insurance premium and tuition fees taken together compared with Rs 1 lakh available for deduction now.
New policy sales by private firms have fallen 20.
Some insurers have started offering more guarantees on unit-linked products (such as NAV guarantee, capital protection) as they are not subject to Irda cap on charges and are hence high-margin business, the report said.
The DTC, if implemented unchanged in March 2012, could result in a collapse in sales and significantly lower earning for the life insurance sector. Krishnamurthy, former managing director of SBI Life Insurance Company and the present MD (distribution channel) of Towers Watson, had said, Many domestic promoters of life insurers will be in a dilemma because these changes will put capital strain and promoters having non-financial sector as core business will find it difficult to pump in money in their insurance venture.
Insurers have also tried to tap conventional products that are also not subject to caps on charges and fees. New business margins are also under pressure given the burden of fee and surrender penalty caps in Ulips, the report said.
Following the new guidelines, the share of unit-linked business to total policy sales came down to 48 per cent from 52 per cent before September 2010.
However, it believes only a brave Indian insurer will come out with an IPO now, given the impact of the new regulations on unit-linked insurance plans (Ulips) and the pending direct tax code (DTC) bill. Besides, the insurers’ corporate tax liability will also increase to 30 per cent from 14 per cent.7 per cent from 1,05,67,140 to 81,68,782. However, it will be difficult for private insurers to compete on profitability because the Life Insurance Corporation of India is able to fund higher policyholder participation rate with free reserves accumulated over past generations.
Though the premium income (of private players) from new policy sales during April-January rose 5.78 per cent to 88,45,283 till the end of January this economic from 1,11,65,771 a year ago.
The current DTC proposal will strip Ulips of all tax advantages and also does not provide relief to existing Ulips.
The refuse in the sale of individual regular premium policies was sharper at 22..
According to the report, the hitches such as limits on foreign direct venture, a 10-year track record and the absence of IPO guidelines that have prevented floats by domestic life insurers will be removed this year.
The latest published draft proposals for DTC provide for only Rs 50,000 tax deduction for life insurance premium, medical insurance premium and tuition fees taken together compared with Rs 1 lakh available for deduction now.
New policy sales by private firms have fallen 20.
Some insurers have started offering more guarantees on unit-linked products (such as NAV guarantee, capital protection) as they are not subject to Irda cap on charges and are hence high-margin business, the report said.
The DTC, if implemented unchanged in March 2012, could result in a collapse in sales and significantly lower earning for the life insurance sector. Krishnamurthy, former managing director of SBI Life Insurance Company and the present MD (distribution channel) of Towers Watson, had said, Many domestic promoters of life insurers will be in a dilemma because these changes will put capital strain and promoters having non-financial sector as core business will find it difficult to pump in money in their insurance venture.
Insurers have also tried to tap conventional products that are also not subject to caps on charges and fees. New business margins are also under pressure given the burden of fee and surrender penalty caps in Ulips, the report said.
Following the new guidelines, the share of unit-linked business to total policy sales came down to 48 per cent from 52 per cent before September 2010.
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