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Bancassurance tie-up with Bank of Maharashtra

BANCASSURANCE PACT: Mr M. D. Mallya (left), CMD, Bank of Maharashtra, and Mr T. S. Vijayan, Chairman, LIC, at a press conference in Mumbai on Wednesday. - Paul Noronha

Mumbai , July 26

Life Insurance Corporation of India has registered a growth of 217-per cent in its new business premium for the first quarter, driven by the sale of unit-linked insurance plans (ULIPs).

The corporation's total new business premium in Q1, including group business stood at Rs 9,204 crore, up by 217 per cent from Rs 2,899 crore in the previous year. In terms of individual business, the company raked in new business premium of Rs 8,192 crore in Q1, up from Rs 2,300 crore last year.

ULIPs

Mr T.S. Vijayan, Chairman, Life Insurance Corporation of India, said that the company's first quarter performance was influenced by the fact that the guidelines for revised ULIPs were to be implemented by July 1.

"Customers felt that ULIPs were the right choice. Almost 90 per cent of the new business premium came from ULIPs, but this kind of growth cannot be sustained," said Mr Vijayan.

The two unit-linked products that have brought the bulk of the business were Future Plus - a pension plan which was available with options for payment as single or regular premium and Jeevan Plus - a whole life unit-linked plan.

Almost 70 per cent of the business came from single premium policies, Mr Vijayan said.

Since, July 1, LIC has replaced and modified Future Plus with Market Plus. The replacement of Jeevan Plus has not yet been made and the Chairman said that the corporation would wait before launching a new product.

As per the guidelines, ULIPs should now have a minimum lock-in period of 3 years and the death benefit payable or sum assured under the single-premium product has to be at least 125 per cent of the premium paid.

Govt guarantee

On the issue of the Government withdrawing the guarantee on LIC policies, Mr Vijayan said that there had been a debate on the issue but the Government had not indicated to LIC about such a decision.

"As per the Insurance Act, the Government stands guarantee for providing the sum assured and bonus on policies but it is in an academic sense. We are financially strong enough to do without guarantees," he said.

LIC has settled 78 claims from the recent Mumbai blast, Mr Vijayan said.

Bancassurance

He was speaking to reporters at the announcement of a bancassurance tie-up with Bank of Maharashtra. With this tie-up, LIC now has 39 bank partners for distributing its products. The corporation has set a target of Rs 700 crore in new business from bancassurance, the Chairman said.

Mr M.D. Mallya, CMD, Bank of Maharashtra, said the bank would deploy 100 employees to market LIC's products.

He also said the bank had set a target of Rs 70 crore-75 crore in new business premium by the end of the fiscal.

Mr Mallya said that Bank of Maharastra had set a target of 22 per cent growth in deposits and 28 per cent in credit and was yet to take a decision on a hike in interest rates.

More Stories on : Life Insurance | Public Sector Banks

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