With the lockdown being eased gradually, providing more and more digital solutions, for service delivery and procurement of new policies, is what the corporation is focussing on.
Life Insurance Corporation (LIC), the country’s largest life insurer, is expecting to post growth in new business premium in June after recording a contraction in the category in the past three months owing to the Covid-19 impact, even as sales of policies remain an area of concern.
With the spread of coronavirus and the subsequent lockdown imposed by the government, LIC saw its new business premium (NBP) fall 31 per cent year-on-year (YoY) in March, which otherwise is the best month for insurers because customers buy more policies towards the end of the financial year to save taxes.
Similarly, the State-owned insurance firm reported a 32 per cent YoY decline in NBP in April, and a 24 per cent fall in May.
NBP is the premium acquired from new policies for a particular year. The life insurance sector has reported a YoY drop of 30 per cent in NBP in the first two months of FY21.
“After the initial downslide in April, new business has started picking up. In the current month, LIC is having more than 30 per cent growth in first-year premium income, although sales are still having a negative variation over the previous year,” said Raj Kumar, managing director, LIC.
He is expecting year-on-year growth in first-year premium by the end of June. “Once we achieve that, we shall be focusing more on the number of policies also,” he added.
LIC has traditionally been an agency-heavy corporation, with as many as 1.22 million agents working with the company as of May 2020. With the lockdown restricting the movement of people, not only was LIC’s business severely impacted, client servicing and the settlement of claims too were hit.
Hence, maturity and survival benefit claims up to Rs 5 lakh, due in March and where national electronic funds transfer (NEFT) details were already registered with the corporation, were settled without insisting on discharge forms and policy bonds. Around 100,000 such claims were settled by LIC as of March end.
In the current financial year, LIC has settled around 3.3 million maturity claims to the tune of Rs 18,529 crore and more than 92,000 death claims amounting to Rs 1,696 crore.
Moreover, about 270 death claims due to Covid-19 have been settled by LIC so far. In FY20, it had settled more than 7.5 million death claims.
With the lockdown being eased gradually, providing more and more digital solutions, for service delivery and procurement of new policies, is what the corporation is focussing on. And, there will be increased focus on other distribution channels such as bancassurance and the direct marketing channel, which includes the online channel. LIC has sold more than 38,000 policies through various digital modes during the lockdown.
After acquiring a majority stake in IDBI Bank, LIC’s bancassurance channel has got a huge fillip.
“We are working on an IT module to provide online registration/completion of insurance proposals to our agents. Conscious efforts, to promote online new business by mechanising the entire process of new business procurement and completion, have been initiated. We are going to put systems in place shortly whereby all agents will be able to submit life insurance proposals online,” said Kumar.
“Now that relaxations in physical movements have been allowed under Unlock 1.0, our marketing teams are stepping up their activities in the market,” he added.
As of May, LIC had a market share of 67.39 per cent in terms of business premium, and 56.39 per cent in terms of the number of policies written.
Photograph: PTI Photo.
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