Lic Plans Fresh Reduction In Bima Nivesh Yield

Life Insurance Corporation (LIC) is planning to further reduce the yield on its popular Bima Nivesh scheme as well as other products including the pension plans to bring the returns in line with the market rates.

"We will begin profit testing and rationalise the rate of returns over the next few months," LIC managing director N C Sharma said on the sidelines of the sixth Insurance Summit organised by CII.

The first Bima Nivesh scheme offered about 10.5 per cent assured return while the second scheme offered about 9.3 per cent. The new schemes are expected to assure a lower than 9.3 per cent return.

 

Bima Nivesh continues to be the largest selling product of LIC with the state-owned life insurer garnering about Rs 3,600 crore as first premium income from the scheme during April to mid-October this year. LIC had targetted to mop up Rs 3,000 crore from the scheme in the fiscal, Sharma said.

Of the Rs 6,658 crore first premium income till October 15, pension plans like Jeevan Dhara, Jeevan Suraksha and Jeevan Akshay have accounted for around Rs 1,200 crore.

In case of pension schemes, Sharma said, LIC which currently offered 10-11 per cent return had mopped up Rs 12,000-13,000 crore. It had sold over three lakh pension plans since they were first launched. "The returns on the pension schemes are among the highest offered by any one in this market situation. We will revise the rates for these schemes also," he added.

The state-owned insurer has targetted sale of 2.4 lakh policies during the current fiscal and has managed to sell about 79 lakh so far. Sharma said that LIC would be able to meet the target.

He said that LIC has also made significant progress in selling covers to high net worth individuals. In the first half of the fiscal, the PSU has sold 752 polices of over Rs 1 crore against 865 sold in 2000-01 fiscal and 380 in the previous financial year.

Sharma also said the Jeevan Shree policy has also received good response with LIC selling five lakh policies so far. In the first half of this fiscal, LIC sold 1,47,168 policies as against 39,788 policies in the corresponding period last fiscal.

About its rural commitments, he said LIC would stick to the norms prescribed by Insurance Regulatory and Development Authority (Irda). "The mandate for LIC this year is to sell more than 35.33 lakh polices in rural areas," he said. As per the earlier norms, LIC had sold 1.07 crore polices in rural areas at the end of 2000-01.

"Over half (55.53 per cent) of our new policies during 2000-01 would have to be sold in rural areas. But with the definition of rural having undergone a change, the percentage has come down drastically to 18.18 per cent," he said.