Money & Banking

‘The current year is going to be very good for LIC’

K Ram Kumar Beena Parmar | Updated on January 24, 2018

SK ROY, LIC Chairman

New premium inflow is growing at more than 30%, says Chairman SK Roy

To win back the market share that it lost, insurance behemoth Life Insurance Corporation is planning to boost its agency force by almost three lakh to fifteen lakh this year. Besides, it will launch about half-a-dozen products, including a unit-linked insurance plan and a health insurance policy. Though the State-owned life insurer’s market share went down from 74 per cent to 69 per cent last year, its Chairman SK Roy is confident of regaining lost ground this year itself. In an interview with BusinessLine, the chief of India’s largest life insurance company said this will be possible on the back of innovative products, customer service, technology and claims settlement record. Excerpts from the interview:

With 23 other life insurers vying for business, how does LIC view competition?

Competition itself is a source of energy. We have seen LIC when it was a monopoly and now when it is in competition with 23 other players. So, we have seen the great transformation which the organisation has undergone. I think competition is one of the greatest stimuli for growth and success.

And the performance of the corporation in the last 25 years gives ample evidence of that. We have radically transformed ourselves. But the important thing is that whilst we have transformed ourselves radically in these last one-and-a-half decades, our core values have not changed. Rather, I would say our core values are extremely customer- and society-centric, have undergone reinforcement and reiteration at every moment.

But your competitors are smart and agile

Agility and smartness of our competitors are very important because they spur us into more action. So, in a sense, it is always a case of who will be ahead of whom as far as innovation and managing change are concerned.

As for innovation, I believe that our products are extremely innovative because to succeed for such a long time you need to be able to deliver value to customers. It cannot happen on smartness alone, it cannot happen on agility alone. Ultimately, the value proposition to the customer will decide how commercial entities perform. My belief is that we have added value to our customers.

Further, take the example of distribution. Today, we can say that virtually all the modes of distribution known in the insurance industry or the financial sector have very strong roots in the Corporation. We have a very enviable, if I may use the term, tied agency system of nearly 1.20 million agents. I think it’s a very major asset.

Historically, we have been very strong on technology. Otherwise I think the type of efficiencies that we have in the system would not be possible when you are servicing 30 crore policies.

So, I agree with you that our competitors may be very tech savvy, very agile, very smart, but I feel maybe we are better at their game than they are.

How was the year that was?

For a variety of reasons, financial year 2015 was not a very good one for us as far as new business is concerned. It was a good year on virtually all other parameters. As for new business, it was not a good year because we were not able to show good growth in premium or in the number of policies sold. Last year, we sold a little more than two crore policies. Our first premium income on the individual life side was ₹29,000 crore. The group side saw new business premium of around ₹46,000 crore.

What is the outlook for business in FY16?

The current year, luckily, has started very well. Our new premium inflow is growing at more than 30 per cent. Our new inflow in terms of number of policies sold is increasing by around 25 per cent. So, we are very clear that the current year is going to be a very good year for us. The figures are suggesting it to be so. The feedback we are getting from the market is that our agency team has now become better accustomed to and trained on the new products that we launched in January 2014 and thereafter. So, given the combination of all this, the current year is going to be a very good year.

What new products will LIC launch this year?

We should be coming out with a ULIP in the current quarter. Hopefully, there should be one more health insurance product. And other conventional products could (also) be launched during the course of the year.

Why should the young generation insure with LIC?

For the same reason that their parents got attracted to us. Whatever may have changed in LIC but our core values have not changed. Rather, they have been reinforced and reiterated. So, we are still very, very customer-centric. Nobody settles more claims in percentage terms than us. This is as high as 99.48 per cent. And this can be verified from the IRDAI’s annual report as on March-end 2014.

We have made about 30 basis points improvement last year on settlement of claims. Ultimately, you buy a product to get service. So, what is the service? The claim should be settled as and when it falls due. And on that we have an impeccable record in the country and the world. No insurance company in the world, whatever be its size, technology platform, (or) product profile, can match us on this parameter.

What are LIC’s investment plans in the equity and bond markets this year?

We don’t have any sort of money allocated for different types of investments. Investments are largely driven by the opportunities available. In the current year, on the equity markets front, there is more opportunity to buy, so we are buying.

Till such time this opportunity is available we will take advantage of it. If the situation changes, we may take up a strategy of sell also. So, it depends on the situation. Our decisions are highly situational.

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Published on July 01, 2015
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