People below the poverty line require new forms of social security and should benefit from corporate social responsibility while there is a need for cost-effective and tax-exempt products for the lower-middle class, according to M R Kumar, chairman of state-owned Life Insurance Corporation (LIC).
Addressing the 21st C D Deshmukh memorial seminar on Friday at the National Insurance Academy, Pune, the LIC chairman said although life insurance had been one of the fastest-growing sectors in India since it opened up in 2001, the vast uninsured population and market potential put the achievement of insurance players in the shade.
India has the highest protection margin in the Asia Pacific region, at 92.2 per cent, which means for every $100 needed for protection, only $7.8 of saving and insurance is in place for a typical Indian household, leaving a mortality protection gap of $92.2.
For the life insurance industry to increase its business and cater for the under-penetrated market in India, banks need to sell insurance aggressively and leverage their customer base. Also, all insurance companies need to recruit agents extensively and provide them professional training, Kumar said.
Kumar pointed out despite the online channel for distributing products on company websites or web-aggregators for over a decade now, the mode is yet to see any traction.
However, banks, corporate agents, and brokers have managed to hold their own, contributing 14 per cent of the sale of new policies, which is still small considering the reach these entities have.
Effectively, individual agents do 80 per cent of the sales. There are 2.1 million individual agents as of now.
“We will require roughly 4 million people in the next couple of years,” Kumar added.
“Our sales of policies are not growing in number. We are selling more or less 20 million policies every year. We are targeting at least 20 per cent growth in the number of policies and reach 25 million by March this year,” Kumar said.
“The Reserve Bank of India has given us 12 years to pare our stake in IDBI Bank. And we have not heard anything from the Insurance Regulatory and Development Authority of India. We have always wanted to have a bank. We have had tie-ups with many banks. Now that we have a bank, it is working very well. IDBI Bank is leading this year among all banks with almost Rs 500 crore of premium collection for LIC in FY20.”