February 15, 2010
Sailing through the tougher times
In the current market scenario, when millions of rupees/dollars are drowning every day, Life insurance companies are trying to play a safe bet. We have seen the fate of global insurance companies like AIG. Indian insurance companies are also losing huge money in stock market. Nav’s of their ulip policies are falling life never before. They realize the fact that they need to respond to these crisis. Insurance companies are largely dependent upon sale of their unit link policies. All the insurers collect 85 % of their total new business premium, is from the sale of unit link policies. Most of the products offered by companies are unit link & depend upon share market to perform. There is a proportionate rise or fall in nav’s of these unit link policies with respective move of the stock market. It’s been a year since markets has started falling and has nearly lost more than 50 %. This has an adverse effect on the capital of life insurance companies. They have started rebalancing their portfolios and restructuring their strategies. Though, Their has not been significant change in investor’s interest in unit link policies, but companies have already started shuffling their investments. They are trying desperately to go through this phase of typical bear market.