Did note ban helped LIC?

Demonetization: Boon or Bane for Auto India?
How Eateries Joined the Note Ban Revolution?
Show all

The prime ministers dazzling move in withdrawing the legal tender for 500 & 1000 rupee currency might be well praised by some institutions, who enjoyed the surprise perks out from thin air. After November 8th your relation with your bank might have experienced newer bonds, however, apart from thebank some others also enjoyed the warmth of money flow and its none other than our mighty ‘Life Insurance Corporation’. The monetary figures clearly indicate that LIC had their home run way beyond any one’s expectation. Even under acash crunch, LIC & other private insurance sectors seems to have embraced firmly into the economy. There was an estimated Rs.13 trillion flow into the formal system, of which a decent percentage of money found their way into insurance sector, which might give a satisfactory explanation for this sudden hike.

But you shouldn’t think that LIC was relaxed along with other emergency services in accepting demonetized denominations. But there was no secret agenda though, from the perspective of a common chap LIC might have been one perfect institution in the current scenario to hold an investment. There were no advertisement archeries, neither any campaigns, but people thought LIC might be legally the best possible solution, which earned them a slight upper hand among other investments. Not insurance alone, mutual and futures saw a steep growth in the past two months and climbing. Shifting money to thebank doesn’t appreciate its value other than adding up interests, but many thought insurance sector might be a good choice that offers a better return than a banking system, at the same time the money doesn’t flow out of the legal monetary web.

Diffusing through the monetary breakdown of insurance, figures might speak how well it was for the LIC and other Insurance companies in India, after demonetization. November alone bagged Rs6600 crores from individual premiums which is a whopping 507%hike compared to  2015 November. Comparing it with October, still a 107% upsurge from Rs2481 crore, evidently is perceptible. The first year premium has grown 113% year-on-year (y-o-y), which is 45% than previous month of demonetization. The typical trend of insurance growth suggests a 28% on month-on-month (m-o-m) basis, however, the November of 2016 alone witnessed a 40% on m-o-m. So what it was apparently a collapse turned out to be a revitalization for Insurance Companies.  Obviously, when we hear insurance none other than LIC might pop in our head, indeed they made a mammoth growth this November hitting a mind-boggling 616% on individual premiums. While the private sector companies managed a 49.05% growth, LIC stacked their goodwill and business by a staggering 141% on y-o-y basis.

Digging through the economy after November 2016, one could find a number of reasons to justify this economic fantasy on the insurance sector. The tension in the economy helped with the liquidity of third party products, which offered a stable platform to boost the sales of those products, doubling it in the nick of a month. Apart from that, this year witnessed therise of individual single premiums which finally ended in an upsurge on November-December month. The vigorous sales pitch coupled with demonetization played a game in the Annuity market too, which indirectly is a factor of theboom in theinsurance sector. In the bottom line, the experts point their fingers towards ‘falling interest rates’ which might get a facelift in the 2017 -18 annual year with an estimated 6% growth!

Comments are closed.

Visit Us On TwitterVisit Us On FacebookVisit Us On Google PlusVisit Us On Linkedin