The Hindu Business Line : LIC looks to big jump in biz via bancassurance route

Mr R.N. Bhardwaj (right), Chairman, LIC, and Mr T. S. Narayanasami, CMD, Andhra Bank, at a press conference in Hyderabad on Thursday. - - A. Roy Chowdhury

Hyderabad , May 19

LIFE Insurance Corporation of India expects a four-fold increase in its first premium income through alternate channels of distribution, especially the bancassurance route, during the current fiscal year, its Chairman, Mr R.N. Bhardwaj, said.

Interacting with the media here on Thursday after entering into a strategic alliance with Andhra Bank for developing bancassurance, he said the corporation earned a first premium income of Rs 15,840.67 crore during the last fiscal, while its total income (provisional) stood at around Rs 1,06,540 crore.

"The alternate channels of distribution have contributed Rs 194.4 crore, with a major share of Rs 140 crore coming from bancassurance. Thanks to our growing partnership with 32 banks, we expect the alternate channels to contribute nearly five per cent of our total business during the current fiscal as against little over one per cent in the last fiscal. Of the alternate channels income, we expect bancassurance to constitute nearly 80 per cent," Mr Bhardwaj said.

Stating that LIC distributes over Rs 7,000 crore as commission to its agents every year, he said, even if banks succeeds in capturing 10 per cent of it they would have revenue opportunities in the range of Rs 700 crore. According to the Andhra Bank Chairman and Managing Director, Mr T.S. Narayanasami, changes in the financial markets during the last decade have caused shrinking of revenues to banks from traditional business streams. Stating that the focus has now shifted to fee-based income rather than fund-based income, he said taking up bancassurance as a new business line could be a logical extension to the existing services of Andhra Bank.

"We aim to collect Rs 100 crore of premium, earning an income of Rs 17 crore, during the first year of our operations as LIC's corporate agent," Mr Narayanasami, said.

Andhra Bank plans to take up bancassurance initially at 200 out of 1,168 of its branches, mainly through rural and semi-urban branches, the bank Executive Director, Mr R. Balakrishnan, said.

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