Home Loan Rates Rise Affect Insurance Cos.

July 31, 2007: Soaring interest rates on Home Loans in India and a recent rise in stock markets are forcing borrowers to take away their savings from the life insurance industry.

Life insurance companies say to have witnessed a sharp decrease of 9% in total premium collection during the first quarter of the current fiscal. Total premium collection was estimated to stand at Rs 13,737.4 crore in the last fiscal whereas it has slipped to Rs 12,511.8 crore in the current fiscal.

The industry had experienced a growth of almost 110% in total business in 2006-07. It had been making rapid strides since for the past two years with moving to Rs 7,406.52 crore in 2006-07 from Rs 35,897.96 crore in the previous year.

An increase in interest rates made the equated monthly installments too expensive for a common man. Consequently, it forced them to either postpone or cancel their plans to invest in insurance policies.

People nowadays prefer to park their funds in stock markets which have emerged as another lucrative investment option.