LIC targets 3 crore new policy sales this year, Q1 premia up 31 per cent

LIC targets 3 cr new policy sales this yr, Q1 premia up 31%

Sounding bullish about a better show this year, chairman S K Roy said, "We are fully geared up and are confident of putting up a better show in the current fiscal year."

  • Mumbai,  July 5, 2015  
  • |  
  • UPDATED   18:26 IST
LIC targets 3 crore new policy sales this year, Q1 premia up 31 per cent
Picture for representation purpose only. (Source: Reuters)

Life Insurance Corporation, which has seen its market share steeply falling below the 70 per cent mark last fiscal for the first time, has set an ambitious target of selling as many as 3 crore new policies worth around Rs 31,000 crore this fiscal year.

"The Corporation has set first premium income target of Rs 31,000 crore and 3 crore policies for 2015-16. We have already clocked a healthy 31 per cent growth at over Rs 5,700 crore in the first quarter of the current fiscal year," chairman S K Roy told PTI in an interview on completion of his two years at the helm of the nation's largest financial powerhouse.

To achieve this, the Corporation "will be focusing on adding the number of marketing intermediaries, increase competency and professionalism of our field force and launch innovative products apart from periodical review of our marketing strategies," Roy said.

However, he added that the tied channel shall continue to be the core distribution channel. The Corporation is open to exploring other channels depending as well.

Sounding bullish about a better show this year, he said, "We are fully geared up and are confident of putting up a better show in the current fiscal year."

It can be recalled that LIC's market share in new premium business fell to 69.21 per cent in 2014-15 as the Corporation did not have any Ulips in the market.

This was for the first time since the industry was opened to private players that LIC lost so badly, losing a full 5 per cent of new premium market and taking their combined share to 30 per cent in 2014-15, according to annual data from the Life Insurance Council.

The Corporation could not introduce new products during the year, especially Ulips, after the regulator Irda forced its hand to withdraw many of its existing offerings.

Due to this, LIC saw a whopping 14 per cent decline in its new premium collection and a still steeper 42 per cent plunge in the number of policies during the year, pulling down its overall market share to 69.21 per cent from 75 per cent in 2013-14.

All the 23 private sector players closed 2014-15 with Rs 34,382 crore of premium, up from Rs 29,517 crore in 2013-14, the data showed.

LIC collected a premium of Rs 78,308 crore in 2014-15, a decline of 14 per cent against Rs 90,645 crore in 2013-14. Its number of policies too fell much more drastically to 2.07 crore during the year from 3.45 crore in 2013-14.

However, Roy said, "The new business performance in FY15, if compared to the unusual and historical performance of FY14, when all the existing products went off the shelf, was not below par.

"The effect of new product guidelines on our new business sales continued in FY15. The de-growth in the number of policies during FY15 was more compared to the de-growth in first premium income, the major reason being compulsion to design products with sum assured of Rs 1,00,000 and above under the new product guidelines", he said.

"Thus, a large segment that bought individual life insurance for sum assured Rs 50,000 or so is finding it difficult to go in for higher sum assured policies," Roy explained.

Exuding confidence to perform better, the chairman said the Corporation has already chalked out an action plan to revive its performance this year, he said LIC will soon launch a Ulip.

"We shall soon be coming out with a Ulip. Also we have the largest selling products in our basket and do not see limitation in the variety of products offered by it. Ulips per se have not impacted the new business," Roy said.

When asked whether private players are better placed today, he said there is a level playing field for private sector as well as us.

"Despite 23 players competing with us we continue to have major market share with the No 2 being way behind us--with a margin of over 64 per cent in first year premium as of end March," Roy said.