Insurance industry, major investor in equity markets

The life insurance industry was the largest investor in the Indian equity markets, ahead of foreign
institutional investors and mutual funds, according to figures released by the Life Insurance Council.
While the net inflow from life insurance companies into equity stood at Rs 55,000 crore till March 31, 2008,
foreign institutional investors and mutual funds invested Rs 53,403 crore and Rs 16,305 crore respectively.
Even for the five-month period from April to August this year, the insurance industry was the largest
investor in the equity markets, having made net investments worth Rs 20,000 crore during the period (when
foreign institutional investors have been net sellers).
Stabilising factor
Mr U. S. Roy, Managing Director and CEO, SBI Life, said Indian life insurance companies are the
stabilising factor in the capital markets, channelising retail investments into equity markets.
According to the Life Insurance Council, new business premium increased by 23 per cent to Rs 92,990
crore in FY 08, from Rs 75,400 crore in FY 07.
There is an increased demand for ULIPs, which accounted for over 80 per cent of the life insurance
business garnered in FY 08.
The total assets managed by the life insurance industry has gone up to approximately Rs 10,00,000 crore
till August this fiscal, from Rs 8,47,000 crore in FY 08, said Mr S. B. Mathur, Secretary General, Life
Insurance Council. The infrastructure investment also increased to Rs 90,200 crore.
'Health' potential
The life insurance industry sees tremendous growth opportunities in health insurance, as over 85 per cent
of the population is uninsured.
"In the post-detariffing scenario, the market has moved to sustainable pricing. The companies can now
reprice their products depending on the morbidity figures. Besides, in the present scenario of medical
inflation and the fact that 70 per cent of the total Rs 2 lakh crore spent on health comes out of the pockets
of the consumers, there is tremendous scope for long term health insurance provided by life insurance
companies", said Ms Shikha Sharma, Managing Director, ICICI Prudential Life Insurance Company.
Pension plans
The industry also sees itself as best suited to provide pension plans to all the sections of the society. "It has
become an increasingly attractive option with the current demographic scenario wherein the young
generation does not subscribe to provident funds", said Mr. Nandagopal, Chief Executive Officer, Reliance
Life Insurance.
According to the figures released by the Life Insurance Council, around 35 per cent of the new business
premium collected in 2007-08 was for pension plans.