Better deal sought for women LIC agents

9:35 pm welfare schemes for LIC women agents, Women LIC agents

The first State-level meet of Life Insurance Corporation Agents’ Organisation of India (LICAOI) held in Mangalore on Monday highlighted the demands of benefits for women LIC agents.It includes providing a Provident Fund, pensions, health schemes, pensions and welfare schemes for women LIC agents.Of the 1 lakh LIC agents in the State, 40,000 are women. 

“We have never heard of people saying they lost money they spent on LIC,” said S.K.Geetha, State leader, All India Insurance Employees Association (AIIEA).The Life Insurance Corporation of India (LIC) is standing strong today 12 years after the Indian economy’s privatisation began she said. Much of the credit for the steadfastness of the organisation depended on the agents, including women agents, she said.She said the insurance bills that are being tabled in Parliament were significant for the sector as they would allow higher foreign direct investment.‘Address the issues’ Ms. Geetha said that the issues facing women LIC agents should be addressed as they were working in addition to their work at home, which is not seen as economic activity as it earns no money.If they get their spouse's support, they consider themselves lucky. 

However, no man is considered 'lucky' because his spouse works, she said. B. Madhav, Secretary, district unit of CPI(M), said that the conference of women LIC agents to highlight their problems was welcome and that the organisation must be strengthened.The discussions at the meeting must be followed up with concrete resolutions.Gurudutt, Secretary, Udupi Sub division, AIIEA, said the strength of the LIC agents was growing stronger with the support of other workers unions.

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LIC embarks on ambitious plan to cover all Indians

9:32 pm LIC for all, LIFE INSURANCE CORPORATION OF INDIA

State-owned Life Insurance Corporation of India (LIC) wants every Indian to have life cover by 2020. The country’s largest insurer has formed a team that’s working on the ambitious expansion strategy, which could cost as much as Rs.2 trillion to execute, two top LIC officials said.

“We will stretch ourselves to any extent to meet the target,” said one of the two officials. “There will be new recruitments, the sales force will be expanded, and more branches and satellite offices will be added. There will also be new tie-ups with banks, post offices and others.”

The group working on the plan is expected to finalize the blueprint in the next two months for submission to the LIC board. “Fifty members of the strategy implementation group are working on it with seven sub-groups. Many executive directors are part of the group,” the second person said.Both officials did not want to be named because the plan is yet to be formally announced.India has 24 life insurers with combined assets of at least Rs.16.18 trillion. LIC is the largest, with at least Rs.13 trillion in assets.With at least 300 million policies in force, about 250 million people are covered by LIC in a nation of some 1.2 billion people.
According to a report by global consulting firm McKinsey and Co., life insurance premiums as a percentage of gross domestic product in India is about 4%, much lower than developed market levels of 6-9%. “In several segments of the population, penetration is lower than potential.

For example, in urban areas, penetration of life insurance in the mass market is about 65%, and it is considerably less in the low-income unbanked segment. In rural areas, life insurance penetration in the banked segment is estimated to be about 40%, while it is marginal at best in the unbanked segment,” said the report titled India Life Insurance 2012 by McKinsey.

In the June quarter, LIC collected Rs.14,451 crore in new business premiums. The industry’s new business premium income has been declining over the past three years in the backdrop of stricter regulations and weak market sentiment. In fiscal 2012, LIC’s first-year premium collection fell to Rs.81,514.49 crore from about Rs.86,444.72 crore in fiscal 2011.LIC is targeting a total new business premium collection of around Rs.1 trillion in the current fiscal, said the first person cited above.“Keeping all other parameters constant and excluding capital infusion, it may take at least Rs.2 trillion to grow LIC’s business in line with its target,” said the second official.Ashvin Parekh, a partner and national leader (financial services) at audit and consulting firm Ernst and Young India (E&Y), said LIC can achieve the target, but it has to work on product design.“LIC has to spend time on products. Merely launching one product after another may not help. There has to be a larger underlining concept behind every product,” Parekh said.The insurance regulator is working on new guidelines for insurance products, which are likely to be announced in the next few weeks. According to Parekh, the new norms may facilitate greater insurance penetration and help LIC, too.“LIC will also have to stop its overdependence on agency channel and work on multi-channel plans. A complete overhauling is required. LIC must come out of its comfort zone and work on segment-wise products and services,” said Parekh.

The state-run insurance company has been on overdrive over the past three years. In 2010, it appointed consulting firm Accenture Plc to suggest ways for speeding up growth. Accenture’s recommendations—on distribution and branding—are being implemented in a phased manner.The plan to ensure all Indians have insurance coverage is not part of Accenture’s recommendations.Currently, LIC has around 3,200 branches, including satellite offices. It has 1.28 million agents, and distribution tie-ups with at least six banks.Between December 2011 and June 2012, the insurer raised its equity stake in 11 state-owned banks, at the behest of the government, to reinforce their capital base.


The branch networks of these banks will come in handy in selling insurance. LIC bought a large equity stake in Corporation Bank in 2002. At that time, the objective was to use the bank’s branch network to distribute its policies. It holds a 25.49% stake in the bank.One of the LIC officials cited above said it may use the branch network of cooperative banks as well for the distribution of policies.Indian banks have at least 93,000 branches and 101,000 ATMs.“We sold at least 32 million policies last year. We should now be able to sell 80-100 million policies a year,” said the first person.With 300 million policies, LIC has what’s possibly the largest customer base for an insurer in the world, said a top official at ICICI Prudential Life Insurance Co. Ltd.“The unique identification number and the permanent account number are changing the ecosystem, and this will enable LIC to reach its target,” said the official on condition of anonymity. “It will have to expand its distribution network and that will benefit the private sector as well.”


Over the past few years, regulatory changes have slowed the growth of the life insurance industry. The industry’s new business premium income declined to Rs.1.14 trillion in 2012 from Rs.1.25 trillion in 2011. Experts say the industry is poised for consolidation.If LIC succeeds in achieving even close to what it is targeting, the private sector will react by consolidating businesses to compete, said Parekh of E&Y.In line with its plan, on 1 September, LIC announced the launch of a micro-insurance policy meant for the financially weaker sections. It plans to sell insurance cover to people below the poverty line under social security group schemes such as JanaShree Bima Yojana and Aam Admi Bima Yojana. It will offer free add-on scholarship benefit plans for the children of those covered under such schemes.

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LIC targeting Rs 50,000 cr investment in equities

9:27 pm equities, LIC, sharemarket

Life Insurance of India (LIC) is planning to scale up its investment in public sector units (PSUs) as government has instructed it to prepare for divestments. LIC has earmarked Rs 20,000 crore for upcoming PSU share sale, reports CNBC-TV18.

LIC, meanwhile, is targeting to invest Rs 50,000 crore in equities in FY13.

According to the Insurance Act, equity exposure in a single entity is capped at 10%. LIC can invest up to 10% of the capital employed by the investee company, or 10% of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.

As on March 31, 2011, LIC’s investment corpus stood at nearly Rs 11 lakh crore, of which 20% (Rs 2.2 lakh crore) was equity. Of that, investments in state-run stocks stood at Rs 85,031 crore, while exposure in banks stood at nearly Rs 59,586 crore.

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Insurance norms may be tweaked for infrastructure push

9:45 pm CHIDAMBARAM, INSURERS, IRDA, NORMS

NEW DELHI: Finance minister P Chidambaram met insurers on Tuesday to discuss steps to channelise their long-term savings into infrastructure sector and other issues relating to the sector.

"For that what changes are to be made in the regulations by the government of India or by Income-Tax department...everything has been looked at," Financial Services secretary DK Mittal said after the meeting, adding that no decision was taken and another meeting would be held shortly.

India needs about a trillion-dollar investment in the infrastructure sector during the 12th Five-Year Plan (2012-17).

"It was basically to understand, as a part of a series of meetings that the finance minister is holding," said Mittal.

IRDA's chairman J Hari Narayan said that the regulator is already working towards easing the norms of investment for insurance firms.

"There is a need to revisit investment norms for insurance companies. We will look at revising investment regulations over the next month," he said.

Finance ministry is also examining the option of letting life insurance companies invest up to 50% of their debts investments in AA-rated paper.

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Eastern zone tops LIC's most expensive policy sale list

4:09 pm Kolkata, lic eastern sector, policy sale

KOLKATA: Economically backward eastern zone springs a surprise for the country's largest insurer Life Insurance Corporation (LIC) of India. The region where per capita income is much lower than the national average has contributed onefourth of the sales of LIC's most expensive insurance policy currently in the market for middle income group with an entry level premium of Rs 1 lakh.

The policy in question is Jeevan Vaibhav, which was launched in May for a limited period. "We had great doubts about the prospect of this policy in the eastern zone when it was launched," said SK Roy, LIC's zonal manager for east. "To our wonder, this zone stood first both in terms of number of policies sold and premium income collected, ahead of the western zone," he said.

The company's eastern zone covers West Bengal, Sikkim, the difficult parts of the seven North East states and the far-flung Andaman & Nicobar Islands. These states, with low industrial activity, generate much lower income than the country's developed states like Gujarat or Tamil Nadu. Central Statistical Office estimated that India's per capita income rose to Rs 53,331 in 2010-11 at current prices, 15.6% more than previous year's Rs 46,117.

West Bengal, the largest state in the East, had recorded a per capita income of Rs 41469 last year and its contribution to the national GDP has dipped to 6.5% in 2009-10 from 7.8% in 1980-81. Roy said the eastern zone sold 10,000 Jeevan Vaibhav policies with an average ticket size of Rs 1.40 lakh.

LIC sold a total of 40,000 policies across the country. "The policy seems to have attracted the lower middle income group more," said US Roy, former managing director of SBI Life Insurance.

"Going by demographic distribution of surplus income, eastern region has more number of lower middle income group than any other part of the country." LIC's Jeevan Vaibhav is a close-ended single premium endowment assurance policy with guaranteed benefits on death and maturity. The insurer will close the 10-year policy on September 17.

Holders of this policy who paid Rs 1 lakh premium, including service tax, will get a life cover of Rs 2 lakh. When analysed over a 10-year period, the returns generated by the scheme during the entire term works out to 7.7-8.0% per annum. The company employs 13 lakh agents while bancassurance partners contribute to less than 5% of the sales. West Bengal alone contributes over 50% of total sales in the eastern zone.

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