LIC wants to increase its market share in non-participating policy segment

2 Sep 2022 , 07:36 AM

Largest insurer in the nation, LIC, plans to expand its distribution channels and increase its market position in non-participating insurance products, according to a senior business executive.

The state-owned life insurer, which holds a market share of 65%, offers 17 individual participating plans, 17 individual non-participating products, 11 group products, and 7 products with rider benefits.

No incentives or extras, such as dividends, are provided to policyholders of non-participating life insurance plans. A pure term life insurance policy offers a set cover in exchange for the payment of the policy premium. It is a non-participating product.

In the company’s annual report for FY22, LIC chairman M. R. Kumar stated, “We plan to enhance our market share in the non-par business and broaden the channel mix while ensuring that our agents remain the key distribution pillars of our products.”

With 13.3 lakh agents, the insurance has a substantial portion of them operating in rural parts of the nation. According to Kumar, it has secured a presence across all socioeconomic sectors in India.

The source of more than 95% of the individual business (in terms of premium) for LIC is agency force. Through bancassurance channels, it is around 3%. The insurance recorded a roughly 40% rise in its standalone net profit at Rs 4,043 crore in 2021—2022, after becoming listed on the bourses throughout the year.

It has proposed an Rs1.50 per share dividend, subject to shareholder approval. “Consumer awareness of the importance of insurance for unforeseen life events is at an all-time high. Keeping in mind the evolving demands of our clients, we will continue to research and enter new markets.

The chairman stated that in order to meet the preferences of the numerous segments with both current and emerging demands, “digital interventions, data analytics, and process flow modifications to exploit the potential of the changing times would be embarked upon.”

He said that the business is certain that aggressive diversification with the addition of more subpar items tailored to client wants would produce the required outcomes. Within that framework, we intend to intensify our attention on Bancassurance in order to steadily and significantly raise its volume and, consequently, its percentage of our overall business. Our connections with banks are still strong.

The IT processes between the banks and the LIC will be strengthened as we engage with all of our partner banks. The participating business makes up the majority of the insurer’s business mix (par products). In terms of annualised premium equivalent (APE), the share of par business within the total individual business for the fiscal year that ended in March 2022 reached 93%.

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