| Insurance firm may use reserve funds to keep bonus rate at present level.
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| Life Insurance Corporation of India (LIC) is about to bring smiles on the faces of its policyholders. The insurance behemoth has decided not to reduce the rate of bonus this year as against the reduction in the past three years.
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| “There have been instances of reduction in bonus during the past years, as softening of interest rates had an adverse impact on LIC’s earnings. However, the scenario has changed now and the rates have almost stabilised and this may help the company keep rates constant this year,” said LIC chairman and managing director T S Vijayan.
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| Vijayan said the insurance company may also use its reserve funds to keep the bonus rates at the present level. “If there is any growth in income, it would be passed on as terminal bonus paid to policyholders,” he assured. Terminal bonus is the amount due to a policyholder after the term of the policy has matured.
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| The LIC chairman also maintained that LIC may take added exposure on the bourses. Of the total assets of Rs 5,25,000 crore as of March 2006, around Rs 1,00,000 crore has been invested in equity instruments. “The amount may increase with time, as a large number of unit-linked insurance plans (ULIPs) is being sold these days and most ULIP-holders opt to have funds invested in equity,” he said.
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| Vijayan said there is no fixed proportion for investment in any type of instrument, either debt or equity, and that the dynamism of the marketplace demands a churning of portfolio at shorter intervals now.
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| LIC hopes to increase its asset base by 20 per cent during the current financial year, taking it close to Rs 7,00,000 crore, said Vijayan.
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| The company clocked a 38 per cent growth in premium income up to August this year as compared with that in the same period last year. The premium collections as of August 2006 stood at Rs 38,713 crore as against Rs 27,945 crore in the same period last year, he said.
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| Vijayan attributed the growth to a larger number of ULIPs being subscribed to during the year. LIC has sold around 19 crore policies as on date, he added.
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| LIC is also planning to begin an information technology project this year for making it a paperless organisation.
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| Spread over a period of five to six years, this would enable clients access the details of their accounts through computers in any of LIC’s branches all over the country. Parleys are under way with various IT companies for implementing the project, Vijayan revealed.
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| Talking about the Nagpur division, he said it has posted a record business by garnering a new business of Rs 4,656.10 crore through the sale of 4,96,248 policies during the current year.
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| A branch in the backward and Naxalite-infested Gadchiroli region topped in Nagpur division in terms of number of policies sold, equalling to 34,587 policies.
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| The D&C branch in Nagpur achieved the highest amount in sum assured and first premium income at Rs 339.32 crore and Rs 19.7 crore respectively.
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| The Nagpur division covers all the six districts of Vidarbha. Bharat Parekh, an insurance agent of the city, has once again topped in the country by garnering first premium income of Rs 5.82 crore and a sum assured of Rs 83.79 crore. |
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