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Interview
of Mr. K Sridhar,
Managing
Director of LIC of India
(Date: 1st February 2006)
The IRDA has come up with new guidelines for ULIPs,
what effects do you see on the performance of the unit linked
products especially, ‘Jeevan Plus’ which is LIC’s new ULIP
launch?
IRDA guidelines are comprehensive. Almost all our products
are matching with various guidelines issued by IRDA. Training
of the agents, imparting specific training on ULIP and authorizing
them for training is one of the guidelines of IRDA that
we have to adopt.
Our Jeevan Plus Plan is a whole life unit linked product,
which can be used as endowment product also, by surrendering
in time during the period of contract after initial 3 years.
The new guidelines do not have any effect on ULIP business
of LIC.
Private Insurance Companies have completed five
years of their existence in the insurance sector and have
acquired more than 26% of the market share. How is LIC prepared
to keep in pace with these fast growing companies?
After the opening up of Insurance Industry as many as 13
companies have opened their offices in India. At the end
of November, 2005 LIC’s market share is 73.91% on premium
and 87.61% on Policies. It is but natural that market share
will change when so many players are operating. The Insurance
Industry as a whole is growing at a rate of 46.45% on premium
and 24.15% on policies as at 30.11.2005. The Corporation
as at 31.12.2005 is growing at a rate of 73.41% in premium
and 23.51% in policies. Our aim is to grow consistently
month after month and year after year.
In fact, LIC has taken the battle into the camps of the
Private Insurers and has increased its market share marginally
from 73.82% to 73.91% as on 30th November 2005. Many new
initiatives have been taken in the course of the year and
many more are in the offing. Launching of new plans like
Bima Bachat, Bima Gold etc. and opening of Satellite Sampark
Offices inhereto unrepresented areas are some of them. We
are the market leaders and will remain so and hope to close
the year by increasing our market share over last year.
How has the introduction of Fringe Benefit Tax
affected the ‘Group superannuation policies’?
LIC is having a huge portfolio of Group Superannuation
Scheme servicing around 6125 schemes with a total fund of
10,923 crores as on 31.03.2005. During the year 2004-2005
a total superannuation premium of Rs.1893.93 was collected
under New Business and Renewal.
FBT, which was, introduced w.e.f. 01.04.2005 has affected
both our NB as well as Renewals.
NEW BUSINESS:
As on 30th November 2005, we have collected a premium
of Rs.393 crores only as against the corresponding figure
of Rs.536 crores as at 30th November 2004.
RENEWAL:
As on 31st October 2005 a good number of schemes have
not been renewed. The likely total premium under these
non-renewed schemes is around 160 crores.
Further we learn from our units that many employers have
decided to rework the employees’ package where they have
decided to pay the benefit along with the salary. Some of
the employers have asked for a premium holiday for a year
or so. In some extreme cases, the schemes have been surrendered
by the trustees.
LIC has plans to enter health insurance sector
via a Joint Venture - which options are being considered
for this venture?
We are actively exploring the possibility of venturing
into health insurance sector in collaboration with reputed
international health insurance company for which we will
be seeking guidance and help of Re-insurers for identifying
the most suitable partner.
LIC is soon going to relaunch two of its policies,
‘Bima Nivesh’ and ‘Jeevan Akshay’, what would be the new
changes?
‘Jeevan Akshay’ is a non-profit plan and ‘Bima Nivesh’ provides
higher guarantees. Both the plans are single premium plans.
Such products are repriced frequently. Certain improvements
under these plans also take place from time to time in view
of the feedback/experience.
The insurance penetration is very low in rural
areas, how does LIC intend to promote it?
In fact, this question should be addressed to the new entrants.
LIC has an all India presence with a network of 2048 branches
in almost every nook and corner of India. We have also designed
policies like Bima Gold with lower sum assured to further
penetrate rural areas. LIC has more than 50% branches in
the rural areas.
Could you elaborate on LIC’s international venture?
At present LIC operates in international markets through
its Branch Offices in Fiji, Mauritius and UK and has set
up overseas Joint Venture Companies Viz; LIC (International)
BSC Bahrain, LIC (Nepal) Ltd. LIC(Lanka) Ltd. and LIC Mauritius
(Offshore) Ltd.
In terms of new business, the performance has been significant
with completion of 54625 policies with First Premium Income
of $ 19.5 million (Rs. 85 crores) for the year ended 2004-05
from a level of 14457 policies and FP of $ 4.1 million in
2000-01.
LIC has decided to give a thrust to its international
operations and has prepared a strategy for phase wise expansion
of operations. Towards this end, LIC has also set up a Strategic
Business Unit for International Operations.
Considering the growing interest in ‘Takaful’ products,
will this be extended to the Muslim population in India?
No comments.
What strategies are being looked into to encourage
micro insurance on a larger scale?
LIC is already a very active player in providing low cost
large scale insurance cover through group insurance schemes.
With the promulgation of IRDA Micro Insurance Regulations
2005 we are drawing plans to provide very affordable insurance
solutions with both life and non-life components in mind.
In this regard LIC is already in discussions with handful
of
non-life insurers for a tie-up.
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