Chennai, April 30 For the first time, the life insurance industry's new premium income from regular policies (non-single premiums) reported a negative growth since the industry was privatised in 2000. Pan industry non-single premium earnings declined 10 per cent in 2008-09. Single premium policies, where the customer pays a one-time lump-sum premium, also declined (by 14 per cent), but this segment has shown negative growth before.

Mr S.B. Mathur, Secretary-General of Life Insurance Council and former Chairman of Life Insurance Corporation, attributed the decline in premium to the loss in investor confidence due to the economic scenario, uncertainty about job and income levels.

Since investor confidence was low, the ability to save has come down drastically be it insurance, mutual funds or housing, he said.

Mr U.S. Roy, Managing Director, SBI Life Insurance, said that the fall in premium income is the reflection of the economic downturn.

While a number of companies such as SBI Life, Birla Sun, Reliance, TATA AIG and HDFC Standard, have managed to post positive results, the industry average was pulled down by biggies such as ICICI Prudential and Bajaj Allianz, which reported decline of 22 per cent and 33 per cent respectively, on their non-single premium earnings.

SBI Life was able to grow by 12 per cent, as the company had a good business mix of 60 per cent of premiums coming from ULIPs (unit-linked insurance policies), said Mr Roy.

It is not as though, as some believe, that those companies that had a high proportion of unit-linked policies, suffered the most. While ICICI Prudential, 80 per cent of whose portfolio consisted of ULIPs, suffered a negative growth, there are other companies with high proportion of ULIPs in their portfolio that have done well. Birla Sun, for example ” 90 per cent of its portfolio consists of ULIPs, but the company grew 42 per cent in 2008-09.

Mr Mathur said that ULIPs indeed took a beating in 2008-09, compared with the previous years. However, it cannot be said for certain the negative growth of insurance players can be attributed to them, he said.