ICICI Prudential Life Insurance Company (IPru Life), a private life insurer, is seeing growth in its annuity business ahead of growth in its savings insurance plans this fiscal year thanks to heightened awareness and sentiment towards the annuity product line. among customers who want to secure their income in their golden years, said Amit Palta, director of distribution.
“If the overall insurance on the savings side goes up 17% or 18%, then the annuity can go up about 25-30%,” Palta told BusinessLine when asked about expectations. IPru Life growth rate for annuities this year.
The private life insurer had recorded a 31% growth in its annuity business in the last financial year to ₹300 crore in annualized premium equivalent (APE).
“We want to take a very active role in accumulation and not just limit ourselves to products that qualify as retirement products. We want customers to start buying our full range of savings products with the goal of accumulation for annuity,” he said.
“If you were to look at the overall retirement space, it is divided into two elements, one is when you accumulate money, and second is when you deaccumulate money…deaccumulation is called an annuity. So I don’t want to limit myself only to the deaccumulation stage”.
Synergy with the subsidiary
Palta also said that IPru Life wants its synergy with its wholly owned subsidiary ICICI Prudential Pensions Fund Management Company – which is still in its infancy – to materialize in the coming days.
He sees strong synergistic opportunities in selling IPru Life’s annuity products to every NPS subscriber of the pension fund company at retirement or even on early retirement. ICICI Prudential Pension Fund Management is a pension fund manager that manages subscribers’ NPS funds. It is also registered as an annuity service provider with the pension regulator PFRDA.
“So every maturing NPS subscriber from our pension fund company is an opportunity for us to sell an annuity. So, I’m sure you know, every NPS subscriber today will eventually become an annuity customer and want to invest in that company where they’ve made their accumulation,” he said.
Palta pointed out that low awareness and high awareness of income protection, not only for the present time, but also for the future and also for retirees, has led to a natural and positive outcome for the Annuity product line.
Penetration of rents “low” in India
Life insurance companies have intensified their focus on annuity business given the low penetration of these products in India. In India, the penetration of protection as well as annuities is “very, very low” and overall pension assets under management represent only 14% of gross domestic product (GDP), Palta pointed out. This is at a time when pension assets under management exceed 100% of gross domestic product (GDP) in most developed countries.
IPru Life currently offers a full range of annuity products, including deferred annuities as well as immediate annuities.
Asked what accounted for the strong growth in annuity business for IPru Life over the past financial year, Palta said the life insurer’s annuity business grew following its decision to fill all product spaces. .
“And that was supported by the sentiment that was to protect income for a long time and people are much more conservative about planning their income, not just during their working years but also for income after retirement. So there’s this kind of softer acceptance that post-retirement income protection is also a priority in the minds of consumers,” he added.
Previously, the annuity was considered only as a product purchased by retirees; Now, there are options being created for people to plan for their golden years long before they retire.
For a client who may not have a lump sum to invest for their retirement income, IPru Life has now introduced a product which is a regular premium Flexi plan, where clients can set aside annual money in the phase of a stage of life, which is approaching retirement.
June 18, 2022