The Hindu Business Line : LIC targets 48% rise in premium income

LIFE Insurance Corporation of India (LIC) hopes to record a 48 per cent increase in first year premium income , up from 42 per cent registered in the previous year. As much as 35 per cent of its premium collections will be on account of unit-linked insurance plans.

The estimate, said Mr R. N. Bhardwaj, Chairman, is part of the corporation's overall calculations for the fiscal during which better performance numbers are expected to be achieved. LIC plans to back its performance with a number of service-oriented initiatives, aimed at meeting the changing needs of its customers, he said. Mr Bhardwaj was addressing a meeting organised by the Confederation of Indian Industry in Kolkata on Tuesday.

"There is scope for increasing insurance density. This can be achieved with the improvisation of products and the charting of new territories for business growth," Mr Bhardwaj observed, adding that LIC faced the challenge of protecting its market share (especially in metros) and expanding its base of high net worth customers.

The corporation is trying to use technology to improve client servicing. LIC has recast its business processes and introduced a single-window concept for addressing service issues faced by customers. Simplification of claims settlement and modification of underwriting standards are also a part of its strategy. Insurance penetration up: Four years since the opening up of the sector, insurance penetration has increased to 12.9 per cent, while insurance density has risen to 2.26 per cent, Mr Bharadwaj pointed out.

The life insurance industry recorded a premium income of over Rs 66,000 crore in 2003-04 as against the over Rs 55,000 crore in the previous year — a "commendable" growth of nearly 19 per cent. A closer look at the figures, however, will indicate that LIC has recorded a 70 per cent growth in the four-year period. This represents a 15.3 per cent compounded annual growth rate.

In India, life insurance premium is a mere 2.3 per cent of the gross domestic product GDP as compared to 4.5 per cent in the US and 8.5 per cent in the UK. "LIC has partly thrived on increased awareness spread by brought in by the private players and played a large role in expanding the market," Mr Bhardwaj said.

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