The performance of LIC of India in New Business as at 31/12/2014 showing a decline of over 58% in Number of Policies and about 28% in First Premium Income is no doubt sending out alarms for not only the Corporation but also the life insurance industry as a whole.
While the market share of LIC has stabilised over 70% in First Year Premium Income and over 78% in number of policies, the high negative growth in new business is a significant cause for concern for the life insurance industry as a whole. But LIC as a dominant long standing player for over 58 years has a tremendous staying power with all its valuable resources at its command and its brand image.
The present turbulence in the life insurance industry seems to be a result of regulatory interventions over the past few years with a more recent intervention requiring of LIC besides other players, withdrawal of popular traditional plans and putting in place new plans after regulatory approval. This regulatory move seems to have created not only a temporary vacuum in product offer to the insuring public but also the challenge of speedily reaching out and educating them about the new plans introduced and their benefits.
Thus for LIC it is a phase of consolidation, but a more valuable opportunity available for LIC compared to private insurers is that of retaining the existing customers and ensuring growth in renewal premium income by conservation of existing business and reviving/reinstating lapsed policies taken under the withdrawn traditional plans educating the policyholders about the value of such policies in the present environment. Perhaps LIC may have a lot to gain in this effort by engaging in a special revival campaign in the crucial last quarter of
the current financial year (if it has already not been undertaken by now) by offering special incentives for revival of lapsed policies.
My assessment of the present situation is that LIC is presently not in a position
of weakness, but in one of challenge.
With greetings,
C H Mahadevan
While the market share of LIC has stabilised over 70% in First Year Premium Income and over 78% in number of policies, the high negative growth in new business is a significant cause for concern for the life insurance industry as a whole. But LIC as a dominant long standing player for over 58 years has a tremendous staying power with all its valuable resources at its command and its brand image.
The present turbulence in the life insurance industry seems to be a result of regulatory interventions over the past few years with a more recent intervention requiring of LIC besides other players, withdrawal of popular traditional plans and putting in place new plans after regulatory approval. This regulatory move seems to have created not only a temporary vacuum in product offer to the insuring public but also the challenge of speedily reaching out and educating them about the new plans introduced and their benefits.
Thus for LIC it is a phase of consolidation, but a more valuable opportunity available for LIC compared to private insurers is that of retaining the existing customers and ensuring growth in renewal premium income by conservation of existing business and reviving/reinstating lapsed policies taken under the withdrawn traditional plans educating the policyholders about the value of such policies in the present environment. Perhaps LIC may have a lot to gain in this effort by engaging in a special revival campaign in the crucial last quarter of
the current financial year (if it has already not been undertaken by now) by offering special incentives for revival of lapsed policies.
My assessment of the present situation is that LIC is presently not in a position
of weakness, but in one of challenge.
With greetings,
C H Mahadevan
