While the impact of the government’s move to demonetise high denomination currency notes is still being evaluated, the insurance sector seems to have benefited in the immediate aftermath. According to the monthly business figures for life insurance companies released by the Insurance Regulatory and Development Authority of India (Irdai), individual single-premiums collected in November—for all the life insurers—was Rs 6,692 crore; 507% more than the Rs 1,103 crore collected in November 2015. Even on a month-on-month basis, the segment grew 170% from Rs 2,481 crore in October. The total first-year premium (regular plus single premium) has grown 113% year-on-year (y-o-y) and 45%, compared to October 2016. “The industry on an average was growing at 28% month-on-month. But in the month of November, it grew over 40%, which is quite a pleasant surprise,” said Anoop Pabby, managing director and chief executive officer at DHFL Pramerica Life Insurance Co. Ltd. Unexpected kitty According to industry experts, demonetisation has had a significant role to play in this, since about Rs 12.44 trillion has come into the formal system, some of which is bound to make its way into financial assets. “As a lot of money has come into the formal channel, the financial industry will see a lot of inflows. Not just insurance but even mutual funds would see a huge growth. This trend is here to stay... till the money stays in the banking system,” said Vighnesh Shahane, chief executive officer and whole-time director, IDBI Federal Life Insurance Co. Ltd. The added liquidity has given banks an opportunity to sell third-party products. “In November alone banks have sold twice of what they usually sell in a month of third party products,” said Pankaj Razdan, managing director and chief executive officer, Birla Sun Life Insurance Co. Ltd.
