Life Insurance industry witnesses a 4 per cent growth in FY17

The Life Insurance industry seems to be coming back to its profit making track after posting a 2 per cent marginal decline in FY16. The industry had reported a slumped growth in the previous fiscal as a result of low sales and an even lower persistency ratio. Recovering from the losses, the industry recorded a 4.5 per cent rise in its profitability for the fiscal year 2017.     
  
The industry reported a growth in its total net profit from Rs 7,408 crore in FY16 to Rs 7,707 crore in FY17.  

According to market observers, the main driver of the sales in the insurance industry is the rise in sales of traditional policies as an effect of demonetisation. While on an aggregate the insurance industry witnessed substantial growth, the 24 life insurance majors witnessed a fund inflow worth Rs 1.75 lakh in FY17, against funds worth Rs 1.38 lakh in the financial year 2016.
            
Among the top ten insurance majors on the basis of AAUM, LIC is the most profit making insurance company even after an 11 per cent decline in its profits in FY17. LIC posted a net profit of Rs 2,231 crore as compared to a net profit of Rs 2,517 crore in the financial year 2016. However, the lower profit were attributed to a one time bonus that the company distributed to its over 29 crore policyholders and a Rs 2500 crore pay off to the government for surplus business.        
  
Second to LIC, ICICI Prudential posted a net profit of Rs 1,681 crore for FY17, increasing marginally by 2 per cent from a net profit of Rs 1,650 crore in FY16. ICICI Prudentials also paid a net commission of Rs 760 crore to the distributors.

Other life insurance companies such as IndiaFirst Life and IDBI Federal posted nearly four-fold rise in their profit after tax, on the launch of innovative products, strengthened distribution channel and higher productivity.