With robust double-digit growth in June in individual insurance, state-run behemoth Life Insurance Corporation (LIC) of India is optimistic of steady growth by the end of the first half of this fiscal. In an interview with BusinessLine, TC Suseel Kumar, Managing Director, LIC, said the insurer has taken proactive steps to settle Covid-related death claims, and has worked out a three-pronged strategy to drive growth in the ‘new normal’ world. It has also invested ₹14,000 crore in equity in the first quarter of this fiscal and has generated reasonable returns. Edited excerpts:
How has LIC fared in the current Covid crisis?
We had 17 per cent growth in June in individual insurance compared to the industry growth of 9 per cent-plus. At the end of the first quarter of this fiscal, the market share of LIC in premium jumped by 530 basis points to 74.04 per cent compared to last fiscal. The composite first-year premium collected has been over ₹36,530 crore, and the sale of new policies is about 20 lakh. There has been no adverse impact on renewal premium collection as our online digital payment channels were kept functional 24X7. Digital collections for the year grew 31.5 per cent, and the total collection grew 2.16 per cent.
How have LIC’s investments performed in the current market?
Though the current equity market showed large fluctuations, LIC’s cautious and timely equity investments have generated reasonable returns. We invested around ₹14,000 crore in equity during the first quarter. Being a long-term investor, LIC is usually sector-agnostic and focus on diversified investments. However, due to the current pandemic situation, the focus was on large caps, and the sectors that are badly affected were avoided.
What steps have LIC taken to settle Covid-related death claims?
Instead of passively waiting for the death claim to be reported to us, we obtained the list of people who died due to Covid-19 from government sources. This was matched with our database of policyholders to identify if the people who died due to Covid-19 had an LIC life policy. Wherever the data matched, the families were contacted to verify the information. We have contacted 4,907 families, and have been able to identify 467 policyholders among the deceased due to Covid-19, and the claims have been settled or are in the process of being settled.
How are the digital channels working? What are the new initiatives?
In the first quarter of the current fiscal, our online transactions have grown by over 50 per cent. Over 70 per cent of the premium transactions of LIC today are outside a branch cash counter. Going forward, we will enable policy service requests such as PAN validation, alterations and upload of NEFT particulars to be registered and validated on our web portal, comprehensive enquiry options to take care of customer queries at the call center, and empower customers to validate credentials through e-signature.
LIC has a huge agency force. How is it working in the current system of social distancing?
Life insurance in India is mainly agency-driven, with a contribution of 62.26 per cent of new business premium of the industry as a whole. Despite nationwide lockdown during April and May, LIC had a net addition of 13,740 agents to its agency force, while private insurers saw a net erosion of 6,316 agents in this period. At the end of the first quarter, we have a net addition of 32,586 agents. In the current scenario where job cuts are rampant across the sectors, youngsters may prefer to choose agency as a career.
Going forward, what is LIC’s strategy in the post-Covid world?
Our target is not only about market share but also increasing insurance penetration and density. LIC is taking a host of initiatives, and we hope to have steady growth by the end of the first half of the fiscal. We believe that any shortfall in life insurance premium is temporary, and the life insurance industry will play a big role in the economic upturn of our country. We will get steady growth in business for the fiscal through a three-step process of increasing awareness about life insurance, expanding distribution reach through innovative interventions, and offering a suitable product.
Can you tell us more about these initiatives?
For increasing awareness, LIC has started campaigns through digital, print and social-media campaigns, website, chatbot, and the ‘Sabse Pehle life insurance campaign’. Expansion of distribution reach through innovative interventions will also be a key focus area. We already sell six products online and through advertisements in print and digital media and the Direct Marketing team of LIC to convert the leads in the online platform. LIC is also digitising agency channel business model, where many processes from proposal registration to completion of the proposal will be done virtually. In red zones, LIC will use video calls and video conferencing to educate the sales force about business and customer-centric Initiatives. We will also look to expand bancassurance channel by increasing the contribution of all our banking partners.
What kind of products are you looking at? Will LIC come with a special Covid product?
LIC willintroduce a product for Covid 19 cover, and it’s on the drawing board. In fact, the IRDAI has asked all insurance companies to come out with a product. The recent turmoil in share market is an excellent opportunity for ULIPs to reap higher returns, and we will focus on selling these. There is already a huge demand for our pension products, which will increase further in the coming years, keeping in mind the drastic fall in bank interest rates. To increase insurance density, special focus will be given to HNI segments. LIC will also introduce simple to understand Point of Sales Products to increase insurance penetration in rural- and semi-rural areas.