Servicing 31 crore policy holders is no simple task for any organisation, but Life Insurance Corporation of India (LIC) Chairman MR Kumar says the purpose for which the corporation was created has not been achieved in the last 63 years of its existence. In an interaction with BusinessLine , he said: “We have covered only about 30 per cent of the populace. We have a long way to go. This is one reason why we are looking at the number of policies this year, rather than the premium.” Excerpts:

Is LIC’s life cover adequate? How do you propose to create awareness?

No, it is highly under-covered. Nobody talks of life value in India, and people are not looking at insurance primarily as a finance product. To create awareness, all the 24 life insurance companies in India have joined hands to launch a campaign with the slogan, ‘ Sabse Pehle Life Insurance’ . This would be the industry’s first joint media campaign; there will be no competition here for it is aimed at urging Indians to first build a shield of protection by securing their future with a life insurance cover before building a robust financial plan. This campaign is expected to take off during the second week of November.

What kind of response are you expecting from such an initiative, considering the current economic situation?

Insurance has generally done well when there is a slowdown, because people run for safer assets. Markets, anyway, have not done well, and interest rates are on a downward slide. We have declared bonus on all our products this year. The total bonus allocation is ₹53,000 crore, and this is a significant achievement in a declining interest rate scenario.

LIC has shown higher growth momentum. We have a 72 per cent market share in premium; we gained 6 per cent market share during the first half of the current fiscal. Our first-year premium target for the current fiscal is ₹56,500 crore; we achieved 50 per cent of the target before September-end.

Which zone has stood out in terms of performance?

South zone has topped in growth — both premium and number of policies. While the number of policies is growing by 10 per cent, premium growth is 31 per cent. The zone has achieved 55 per cent of the target and is in the lead. It has topped in settlement of claims with 93 per cent maturity claims, amounting to ₹14,600 crore and 94 per cent death claims amounting to ₹482 crore.

What are your plans to achieve the ambitious target?

We will ramp up our sales force. We will recruit 16,600 people this year — officers, development officers, and assistants — to match the growth. LIC has already recruited 8,000 development officers. They are expected to come on board in a month’s time. These officers will, in turn, recruit agents. Our agency force is close to 11.80 lakh. We are hoping to close this year by adding another three-four lakh agents to our network.

Do you plan to launch new products?

We have recreated our entire product range in the last decade (after 2012-13 when regulations came in and we had to start afresh). Prior to that, we were selling around 3.85 crore policies a year. We have not been able to touch that number yet. We need to reach at least three crore policies this year, if not more. Meanwhile, product regulations keep changing.

We are working on some products now. We were a little weak on term products. We have, with the launch of Jeevan Amar, a low-cost product, tried to address this issue. The online variation is tech term, the cheapest in the term assurance product space. We are seeing some traction here; we hope to match the industry average in term products in the coming days.

What about unit-linked insurance plans?

We have filed one with the insurance regulator and hope to get the approval in the next two to four weeks.

How is LIC’s bancassurance business doing?

Bancassurance business accounts for 3.5-4 per cent of our total business; 1.5 per cent is from the direct marketing channel. Chief Life Insurance Advisors Group brings in 10-12 per cent, a minuscule comes from the online channel, and the agency channel contributes around 79 per cent. We have a micro insurance channel. This used to be a big segment for us prior to 2012-13.

Around one lakh individuals took these small-ticket policies as they did not mind taking a policy for ₹20,000-30,000. Now, the micro budget policies are coming back, but it starts from ₹50,000. We have been a little careful about selling these till now by restricting the sale from the divisional office level.

A couple of weeks back, we resolved to allow the sale of micro insurance policies from the branches as well, and this is growing at more than 1,000 per cent. The government has allowed the sale of micro-insurance without imposing GST.

What about your investment plans?

Investment is like a daily job. We made a profit of ₹13,500 crore this year from equity investments. Eighty per cent of our investment is in Government Securities and that is where we keep contributing, helping out State governments.

Our total cumulative investment in Tamil Nadu, Kerala and Puducherry (State Development Loans) is ₹73,891 crore, ₹56,560 crore and ₹1,869 crore, respectively. During the current year, we invested ₹7,326 crore in Tamil Nadu and ₹3,884 crore in Kerala. We are trying to reach out to other State governments.

What kind of challenges do you see, going forward?

We have to file more products and understand the interest of people, which keeps changing from time to time. Youngsters look for seamless (financial) products. We have to be ready with such products.

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