Life Insurance Corporation of India (LIC) is looking to ramp up its bancassurance channel by increasing the share to 8-10 per cent of its total premium in the next 4-5 years. Bancassurance currently accounts for 3.6 per cent of the total premium.
According to information available in the draft red herring prospectus filed by LIC, for the nine months period ended December 31, 2021, the bancassurance and alternate channels collected a new business profit (NBP) of around ₹917 crore accounting for close to 2.56 per cent of total sales. Individual agents collected new business premium of around ₹34,464 crore, accounting for a little over 96 per cent.
“We will be looking to focus more on bancassurance moving forward,” Siddhartha Mohanty, Managing Director, LIC told BusinessLine on the sidelines of its IPO press conference here on Friday.
LIC follows an omnichannel distribution platform for individual products comprising individual agents, bancassurance partners, alternate channels (corporate agents, brokers and insurance marketing firms), digital sales (through a portal on the corporation’s website) and micro-insurance agents among others.
It has the largest individual agent network among life insurance entities in India, comprising approximately 1.33 million individual agents as at December 31, 2021, which was 6.8 times the number of individual agents of the second-largest life insurer.
LIC currently has 70 bancassurance partners, comprising of eight public sector banks (Central Bank of India, Union Bank of India, Indian Overseas Bank, Punjab National Bank, Bank of Maharashtra, Indian Bank, Punjab & Sind Bank and UCO Bank); five private sector banks (Karnataka Bank, Tamilnad Mercantile Bank Limited, Axis Bank, City Union Bank and IDBI Bank); one foreign bank; 14 regional rural banks; and 42 co-operative banks.
“(We will look at) increasing our market share of the bancassurance channel by tying up with more bank partners and improving their productivity by providing them with digital solutions for on-boarding customers for our products,” LIC said in the DRHP.
LIC had a market share of around 62 per cent in terms of premiums or gross written premium, around 61 per cent in terms of new business premium, 72 per cent in terms of the number of individual policies issued, and 89 per cent in terms of the number of group policies issued, for the nine months ended December 31, 2021.
For the overall Indian market, the share of new business generated for individual life insurance through bancassurance channels increased from 24 per cent in FY2016 to 29 per cent in FY2021. Private players have a relatively higher dependence on bancassurance for new business, with their share increasing from 52 per cent in FY2016 to 55 per cent in FY2021.
“While the agency channel will remain the bedrock of distribution for most life insurers, with accelerated digital adoption and technological advancements, life insurers in the next few years will focus on improving productivity and efficiency by focusing using an omnichannel strategy, and leveraging both digital and physical sales methods,” it said in the DRHP.
The proposed maiden public offer by state-owned LIC has received interest from more than 25 anchor investors both foreign and domestic, an official said. The anchor book will be opened on May 2.
Nearly 50 per cent of the offer is reserved for QIPs, including anchor investors, while retail investors’ share would be around 35 per cent of the net issue, another 15 per cent for high net worth individuals and ten per cent for policyholders.