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| LIC banks on traditional policies to regain market | |
| Anirudh Laskar & Shilpy Sinha / Mumbai November 4, 2008, 0:07 IST | |
 Having lost significant market share to private players in the first half of the financial year, Life Insurance Corporation of India (LIC) is banking on traditional policies to regain its share of the pie.
LIC targets to raise its market share from 54 per cent at the end of August to 65 per cent by the end of the financial year, the public-sector company’s Managing Director D K Mehrotra told Business Standard.
“Competition has claimed a lot of space, but we are sure to regain our market share by year-end. We will reposition and promote some of our best-selling policies such as Jeevan Anand, Jeevan Tarang and Jeevan Bharti-I, with an aim to refresh the benefits of these plans in the policyholders’ minds, thereby boosting our premium collections,” Mehrotra said.
“We hope to see a significant growth in sales by the end of December. By the final quarter of this financial year, we expect a year-on-year growth of at least 30 per cent in our first-year premium collections through our initiatives,” said Mehrotra.
Up to December 2007, LIC’s first-year premium stood at about Rs 34,595.59 crore. A 30 per cent growth would mean a first-year premium collection of about Rs 45,000 crore. At the end of August 2008, the company’s first-year premium was Rs 14,360 crore, which was around 29 per cent lower than Rs 20,206.66 crore in the period from April to August 2007.
“The higher premium collection last year was mainly driven by sales of one of our then highest- selling products Money Plus. This year, the markets have been sluggish, and therefore, business has been subdued for all insurers. The main premium contribution of last year came in from unit-linked insurance plans (Ulips), where the ticket size is bigger than traditional products. This year, the investors were bit cautious about equity-related investments,” Mehrotra said.
Jeevan Tarang, Jeevan Anand, and Jeevan Bharti-I have been some of LIC’s best products. Company sources said that during the April-September 2008 period, the insurer has sold about 800,000 Jeevan Anand policies, a growth of 37.48 per cent over the same period last year. During the period, first-premium income from the policy was around 42 per cent higher.
Similarly, Jeevan Tarang saw a 25.3 per cent rise in first premium income at the end of September, while Jeevan Bharti-I, which was launched in July, has sold about 15,000 policies so far.
Sources said that LIC intends to spend Rs 250-300 crore this year to promote and reposition its products. “The overall spending by the insurance industry on advertisements and promotions could be around Rs 500 crore annually. Given this, LIC is undoubtedly the highest spender in the category,” a source added.
Meanwhile, Mehrotra said the state-owned insurer is also keen on expanding its overseas footprint. While the company has already set up representative offices in south-east Asia, it has chalked a similar strategy for Australia and New Zealand.
“During September, our international operations registered a growth of over 38 per cent in first premium income. We have opened a rep-office in Singapore, which will start its operations soon. We will comply with the regulatory norms there, and if the government permits, we expect to come up with a fully operational branch in Singapore in the next two years,” he added.
White-label credit cards soon
LIC has finally decided to launch white-label credit cards, after the insurer’s proposed joint venture with GE Money failed to take shape. LIC white-label credit card will be launched by the end of the current financial year and Corporation Bank has been roped in as the issuer and distributor.
The insurance company said the credit card is being launched with an aim to extend to the policyholders the convenience of paying their premium on time through ATMs and collection centres of Corporation Bank.
The insurer intends to offer various types of white-label cards with attractive interest rates. The details, sources said, are being finalised.
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