Chennai: Rankings of domestic life insurers turns topsy- turvy when one looks at the average premium per policy (APPP).

For instance, Life Insurance Corporation of India's (LIC) ranking as number one in terms of total premium income and the number of policies issued goes down to 12th place on the basis of its average premium per policy (APPP) of Rs.8,322

So is the case with ICICI Prudential Life Insurance Company Limited, the private sector leader and next to LIC (new premium income upto August 2004: Rs399.77 crore. The company goes down to number four position with an APPP of Rs22,009.

On the other hand the last and 13^th ranked MetLife India Insurance Company Private Limited (new premium income Rs15.22 crore) with an APPP of Rs14,518 jumps to 9^th rank.

Interestingly, the ranking order changes when one measures the APPP of the individual single premium policies (ISPP) and individual non-single premium policies (INSPP).

While SBI Life Insurance Company Limited ranks first in the case of ISPP with an APPP of Rs1.78 lakh, Birla Sun Life Insurance Company Limited claims the top spot in the case of INSPP with a APPP of Rs36,125.

The high APPP in the case of individual policies only shows the skew in favour of unit linked policies and the kind of customers that the private insurers target. Not long ago the private players took pot shots at LIC saying that they weere in the business of selling risk cover, not saving schemes and that they were around to spread the concept of insurance amongst the masses.

The life insurers are happy selling the unit linked policies as the investment income risk is transferred to the policyholders unlike the traditional insurance polices where the insurer has to invest funds and generate income to pay bonus.

The LIC with a humble APPP of Rs8,322 selling 70.23 lakh policies (upto August 2004) seems to be doing that. The 12 private players have sold 6.41 policies till August 2004 this fiscal.

Meanwhile the heads of life insurance companies that lag behind in terms of total premium income have one grouse against the media. That is, the players are ranked on the basis of the total premium income.

Such a ranking, according to them, does not show the true picture of operations, they aver. Some industry officials are of the view that the Insurance Regulatory and Development Authority (IRDA) should stop publishing the monthly premium bookings as it results in the insurance CEOs looking at their topline growth while neglecting quality and other crucial aspects of life insurance underwriting.

Given the fact that almost all the private players classify their annual reports as a confidential document the media has to report on the basis of the figures provided by IRDA. Some of the other criteria are persistency ratio, embedded value, productivity per agent, etc.

Table 1

APPP of private sector including group policies Rs.19,578
Industry's APPP (including LIC) Rs.9,264

Table 2