 "Usha Sangwan")
Life Insurance Corporation of India (LIC) has continued to maintain its lead in the new business premia of the life insurance industry. It had a 7.2 per cent growth in first premia for the April-September period, compared with 6.5 per cent growth of the industry. In an interview, Usha Sangwan, the first woman managing director of LIC, speaks to M Saraswathy about the growth targets for the next few quarters. Excerpts:
The life insurance industry will be implementing new product guidelines from January next year. Will the transition to the new regime be smooth?
It is our immediate need to ensure that we manage the transition in a smooth manner. Our performance in September was excellent. Earlier rules had said the new product regime would be implemented from October onwards, and September was supposed to be the last month in the old regime. In September, we had 91 per cent market share in number of policies. We had 100 per cent increase in business, despite volatility in the market. We collected Rs 6,000 crore of new business premia for September. With old products being phased out, we are expecting a huge rush in December too.
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Another challenge at this point would be to prepare our agents and educating the customers about our new products, once the changes are made. From the LIC's point of view, the priorities will be looked upon as the top-line, as well as the bottom-line, and keeping the customer focus in place.
Several products of LIC have already gone off the market. Will you introduce an equal number of policies?
The lower-selling products have gone off the shelf. But some of the products that are being phased out are excellent ones. However, we will keep adding products and this is a part of our regulatory compliance. We had come out with a revival campaign after three-four years. It is valid till November 30. Lot of concessions are being given, so that people can get the benefits of risk coverage. While there has been a good traction from customers, renewal premiums have also come in. In the last week of the campaign, we are expecting a much higher response.
You have seen a healthy premium growth for the April-September period, which has beaten industry averages. Do you expect similar figures for the third and fourth quarters too?
In September, we had a 91 per cent market share in terms of number of policies. For the quarter ending December 31, we are looking at a 91 per cent market share in new business premia too.
We are preparing ourselves for the fourth quarter. Tax planning and other initiatives from customers happen in the fourth quarter and hence it is an important quarter from a life insurance business perspective. Almost 60 per cent of LIC's total business comes from the fourth quarter. However, the same ratio may not be seen due to the regulatory changes. But, since traditionally, customers are in a savings mode in the fourth quarter (Q4), we expect business to be robust. Q4 is demand-driven. We are looking at launching our high-selling products with very little variations.
LIC has plans to invest Rs 40,000 crore in equity this financial year. How has the corporation progressed on this front?
We have already invested Rs 33,000 crore. We have also booked profits of Rs 14,000 crore, since there has been a continuous churn in the portfolio.
LIC has now taken a conscious effort to focus on traditional products, rather than unit-linked plans (Ulips). Will you be launching any Ulips in the future?
Currently, Ulips are more or less out. This is because customers are not comfortable with the products. The Ulip era is not as glorious as it was earlier. But in the traditional product segment, we are seeing a divide between single and non-single premium. The younger generation and professionals prefer single premium products, while others look at regular/non-single premium.
A blockbuster product every year has become a regular practice for LIC. Will there be such a product this financial year?
Our blockbuster products that are launched every year had been closed-ended products. However, one particular policy - Bima Bachat - has been our evergreen blockbuster product with risk coverage and decent returns. So, we did not feel the need for any blockbuster product this year. We will be looking at launching a variant of this product.
With Pension Fund Regulatory and Development Authority (PFRDA) being given regulatory powers and responsibility to launch new pension products, does LIC see this as a threat?
Pension is a niche product. While the PFRDA scheme is good and has been managed well, there is a problem of distribution of those products. With a total distribution force of 1.2 million agents all over the country, we do not see much competition in the pension market. Further, nobody has been able to come up with a guaranteed product like LIC has done. It has been popular, especially since it is available online too.
