DEVELOPING MARKETS

Metlife pumps capital into India

Metropolitan Life Insurance ( Metlife) is to inject an additional $100 million in capital over the next two years to fund aggressive growth plans in India. The US insurer has a 26 percent interest in Metlife India, a company formed in 2002 as a joint venture between itself, J&K Bank, industrial group M Pallonji and private investors. Plans include a doubling of the number of Metlife India’s branches.

Saudi Arabia’s Council of Ministers has approved a request from the Minister of Commerce and Industry to license 13 new insurance companies, ending the monopoly held by the National Company for Co-operative Insurance (NCCI). The activities of the newly licensed companies will be regulated by the Saudi Arabian Monetary Agency.

PREMIUM INCOME

Rates continue to slide steadily downwards

Premiums for individual life insurance in the US will fall by 4 percent in 2007, predicts the Insurance Information Institute (III). This decline is expected to be seen in universal life products, which pay a death benefit no matter when the insured person dies, and term life products. A 4 percent decline would be in line with the average 5 percent per year drop since 2000 and continue a trend that began several decades ago, said III economist Steven Weisbart.

He explained that life insurance rates are dropping because death rates for the 25 to 44 age group – the primary age range for purchasing life insurance – have decreased significantly over the past ten years.

Weisbart noted that in 1996 the death rate per 100,000 for the 25 to 44 age group was 177.8; by 2004 it had dropped to 161.8, based on preliminary data from the National Vital Statistics Reports.

“That is nearly a 10 percent drop in the death rate in less than a decade for the prime insurance-buying ages,” he stressed.

The result is that, in 2006, premiums are less than half of what they were just over a decade ago.

Providing an example of expected premiums for term policies in 2007, the III said it estimates that the annual premium for a 40-year-old male non-smoker buying a $500,000 20-year level term life insurance policy will be $615 if he qualifies as a “standard risk” and $340 if he meets the more stringent requirements of a “preferred risk”.

Rates for women, younger people and for larger amounts of insurance would be lower.

A landmark piece of legislation, the US Gramm-Leach-Bliley Act was supposed to create the one-stop, do-everything financial services company when the bill became law in late 1999. All of the regulatory barriers that had kept insurance, banking and brokerage separate came tumbling down, and the result was to be bancassurance – just like in Europe.

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Marketing and research organisation Limra International’s survey of first quarter 2006 US individual life insurance sales reveals sales of $2.7 billion, up 15 percent compared with the corresponding period in 2005.

An international coalition of nine insurance and commerce associations has called on the Japanese government to ensure “fair and open opportunities to compete” during the privatisation of Japan Post, an organisation that includes the world’s largest financial institutions: Kampo (life insurance) and Yucho (savings bank).