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Manish Basu

Kolkata, Oct. 30 Life Insurance Corporation of India is eyeing business growth through the bank-delivery route as its bancassurance partners are expected to push harder third-party insurance products to its customers when loan disbursements are slow, according to LIC sources.

Bancassurance is a mode of selling insurance products through banks.

Nearly 70-80 per cent of LIC’s business from banks is expected to come from non-single premium insurance products this fiscal, the sources say, as the sale of single-premium products will be affected due to the ill-performance of unit-linked products.

Last year, single-premium products contributed nearly 45 per cent of LIC’s business through banks when the stock markets were on the rise. “We have been in talks with our bancassurance partners about business growth recently and they are very enthusiastic about increasing third-party sale of insurance products this year,” said a senior LIC official.

The decline in loan disbursements to corporate as well as retail customers this year will make banks focus more on fee-based incomes, which attaches higher commissions, he said.

“Deposit rates being high, the banks are left with a mere one per cent margin on loan disbursals. However, sale of non-single premium products can fetch them as high as 35 per cent margins and single-premium products, two per cent margins,” he said.

LIC’s Eastern Zone has registered a growth of 39.9 per cent in the number of policies sold through banks as on September 30 this fiscal, up from 47,600 policies sold in the same period last year. Its first premium income through banks during the period rose by 35.8 per cent from Rs 29 crore last year.

LIC is also planning to tie up with 7-8 banks in the zone this fiscal in an effort to increase the number of policies sold through bancassurance and other alternative channels to 5 per cent of total business, up from 2.1 per cent in 2007-08, the official said.

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