Life insurance companies are witnessing rise in lapsation & forfeiture of non-linked life insurance policies as per the data published by Insurance Regulatory and Development Authority (IRDA) in its latest annual report for FY12 ( 2011-12 ). While the public sector insurer Life Insurance Corporation of India (LIC of India) registered a lapse ratio of 5% during FY12, 23 private sector life insurer saw a lapse ratio of 24%.
LIC had a lapse ratio of 4.9% in FY11, while the ratio for private sector insurers was 22.2%.
Lapse Ratio Indicates.!
Lapse ratio indicates how many of the total life insurance policies of an insurer get lapsed before the maturity date.
Mr. G. V. Nageswara Rao, MD and CEO, IDBI Federal Life Insurance said, “ The main reasons for non-linked business to lapse may include lack of liquidity of a policyholder, in which case, he chooses to lapse the policy. Another reason might be the mismatch between the policyholder's requirement & actual policy, in which case, he / she may forgo the benefits of sum assured“
A year before, in FY10 (2009-10), lapse ratio for LIC of India was 4% and private sector insurers had witnessed a lapse ratio of 30.2%. In the same year, 97 lakh policies of LIC of India and 0.26 lakh policies of private sector insurers got lapsed.
In FY11 (2010-11), 1.14 crore policies of LIC of India and 26 lakh crore policies of private insurers got lapsed. In FY12 (2011-12), the total number of lapsed polices increased to 1.61 crore and LIC of India accounted for 1.25 crore policies, while private sector witnessed 35 lakh policies getting lapsed.
Mr. Vikas Gujral, Senior VP and head of operations and customer service, Max Life Insurance, said, “In non-linked insurance plans, lapsation is high in term insurance & health business segment. Typically policyholders go for value hunt in term policies that is why industry sees a lot of movement from one pure protection plan to another. Non-linked endowment policies are low ticket size policies compared with unit-linked insurance plans (ULIPs). This also impacts the sum assured of those life insurance companies where the lapse ratio is high“ said
No comments:
Post a Comment