Max New York Life expects new Ulip norms to dent its margins

Max New York Life Insurance, a private insurer, is expecting a significant fall in business margins and profitability after the new unit-linked insurance plan (Ulip) norms became operative beginning September 2010.
“At a time when the industry is struggling with regulatory changes, we have done very well. But, certainly, there will be an impact on margins. Even though we have done better than the industry, we expect margins to fall from 19 per cent last year to 13 per cent,” said Rajesh Sud, CEO, Max New York Life Insurance.
In a bid to put a break on the rampant misselling of Insurance products by companies and insurance agents, the Insurance Regulatory and Development Authority (Irda) tightened the guidelines for Ulips.
These guidelines made previous Ulip schemes sold in the market redundant and the insurers were asked to launch Ulips based on revised norms. Till last year, 90 per cent of new business sales of life insurance industry came from Ulips. Now, share of Ulips in overall sales has fallen to 70-75 per cent. These new guidelines squeezed excess margins from insurance companies and forced insurers to look beyond Ulips.
Max New York Life Insurance received total new business premium of Rs 2,059.33 crore in financial year 2010-11, compared with 1,847.77 crore in the previous year. Max New York Life has done better than the life insurance industry due to lesser dependence on Ulips. The company gets more than 40 per cent of new business premium from traditional plans.
Max New York Life is also expecting to wipe out its accumulated losses of Rs 800 crore and break even by 2013.

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Life Insurance | Health Insurance | Ulips | Term Plan