After a gap of two years, Life Insurance Corporation of India (LIC) has raised bonus by up to 15 per cent for 2010-11.
The country’s largest life insurer, which reported a 10.3 per cent rise in net actuarial surplus at Rs 22,716 crore for 2010-11, compared to Rs 20,586 crore in the previous year, allocated Rs 21,580 crore for paying annual bonus to policyholders.
“The bonus rates have gone up after a gap of two years. We will be providing higher bonus rates under seven plans like Jeevan Anand, Jeevan Tarang, Jeevan Madhur, Child Future Plan, Jeevan Shree I, Jeevan Bharti I and Jeevan Pramukh. This apart, we have also brought in seven other plans under loyalty additions,” a LIC spokesperson told reporters.
For the rest of the schemes, there is no change in the bonus rates. Last year the bonus payout of LIC stood at Rs 19,557 crore. In a bid to arrest the slide in its premium collection, LIC is planning to come up with new products, both under the unit-linked and traditional portfolios.
The insurance behemoth saw a 29 per cent dip in premium collection during April-June of this financial year at Rs 13,342 crore, compared to Rs 18,740.4 crore in the previous corresponding period. In the same period, private insurers saw a 28 per cent dip in premium collection.
“During the same period last year, we had successful products like Market Plus, which generated good revenues. So, going forward, we will be launching similar products, both on linked and non-linked platforms. In the second half of the year, we will see good growth in premium collection,” said S Roy Chowdhury, executive director - marketing, LIC.
In the traditional plans category, which accounts for more than 60 per cent of its incremental sales, the insurer will launch cheaper products, in line with the rates offered by private insurance companies. “Currently, our traditional plans are costlier than offered by the competition. So, we will come out with plans with competitive rates,” he said.
In 2010-11, LIC collected Rs 86,444.7 crore by selling new policies, 22 per cent more than Rs 70,891.5 crore garnered in the previous corresponding period. Total investment in debt and equities stood at Rs 2,00,000 crore and the solvency margins improved to 154.07 per cent from 153.96 per cent.
LIC is also looking to generate five per cent of its new business income from the bancassurance channel. The corporation has tie-ups with more than 20 banks for selling insurance products, and the bancassurance channel accounted for 1.5 per cent of the first-year premium collection.
“During 2010-11, we collected Rs 1,281 crore as premiums from the bancassurance channel. In the current financial year, we expect this channel to contribute around five per cent to the new premium collection,” an LIC official said.