1. LIC Plans Micro-risk Products for Rural Poor:
The Life Insurance Corporation of India (LIC) is planning to forge an alliance with the four state- owned general insurance companies to jointly develop micro-insurance products affordable for the rural poor.
The new Insurance Regulatory and Development Authority (Irda) regulations permit life insurance companies for offer non-life micro-insurance products, provided the life insurer has a tie-up with a non-life insurance company. Similarly, nonlife insurance companies can also offer life products if they have a tie-up with a life insurer.
“LIC would prefer to have an arrangement, preferable with all the government owned general insurance companies, but a final decision would depend on Irda’s views.” T.S. Vijay an, managing director of LIC, told reporters on the sidelines of a seminar on corporate governance organised by the Indian Merchant’s Chamber.
LIC would be able to distribute micro-insurance policies through its existing agent network and will also appoint agents only to hawk micro-insurance products. Besides servicing policies, the micro- insurance agents would also collect premium.
Vijay an said LIC would have to rework its organisational network to make the business of micro-insurance cost-effective and also make it serve the target customer segment.
The minimum and maximum cover for accident, health and endowment policies would range between Rs. 5,000 to Rs. 50,000 per policy.
The remuneration or commission to agents would be a maximum of 10 per cent for single premium life product and 20 per cent for other products. For non-life products, the commission to micro-insurance agents would be upto 15 per cent of the premium.
2. LIC to Add Corporate Agencies :
The 10 lakh plus army of individual agents has been one of the core strengths of the Life Insurance Corporation but now the life insurer is looking at corporate agencies to complement this channel, “We are looking at tying up with as many banks as possible to reach out to more customers.
As of now the banking channel accounts for a small per cent of our business but in the next five-10 years this will go to about 20-25%”, S. Viswanathan, executive director (marketing-bancassurance and alternate channels) said.
The bancassurance channel currently brings in premium of Rs. 200 crore out of a total Rs. 12,000 crore for LIC. LIC has tied up 38 bancassurance deals with the latest being the MoU with Bank of maharashtra which was signed in pune on Wednesday.
Ashok Kumar Dugade, ED, Bank of Maharashtra said bancassurance would be introduced in 200 select branches and gradually rolled out across its network of 1,300 branches.
In the first year the bank is looking at an income of Rs. 10 crore through selling of life insurance. Mr. Viswanathan said LIC had, tied up with nine PSU banks and 21 cooperatives banks and it had and it had a good equation with PSU banks.
Two PSU banks come to us after they severed ties with private insurance companies and some more will come in the near future.
He said “Apart from the alternate channels, LIC is currently working on its foray into micro- insurance products for the rural markets and low-income groups through NGOs, SHGs and banks,” he said.
3. LIC to Hire Consultant for Credit Card biz :
The country’s largest life insurer, Life Insurance Corporation Ltd. (LIC) will appoint a consultant soon for weighing the credit card business options. Many banks are approaching LIC for tying up offers. LIC has decided to appoint a consultant before diversifying into such ventures.
Speaking to FE, TS Vijay an, managing director, LIC said, “Lot of banks is approaching us for entering into the business. We are in the process of appointing a consultant in January for this purpose. The report would be expected in another six months.
The consultant would provide views on two issues: one, what are the value addition LIC’s customer would get from such a product and second, what are the stand-alone profitability and break even points from the business, “We would like to see that by a venturing into this new business what are the value addition we would be able to provide for our customer for example, if the customer could pay the premium through the card and other aspects.
In addition, the consultant will also measure the stand alone profitability of the new entity and the breakeven point,” Mr. Vijay an added. If LIC, finally, launches such card, it would be the first insurance firm in India to enter the plastic money business.
The industry expects that the insurance grant can change the rules of the game by offering lower interest as compared to the existing card issuers.
4. LIC Plans to Foray into New Zealand :
Plans composite company in Riyadh
The Life Insurance Corporation of India plans to start a composite company in Riyadh, the capital of Saudi Arabia soon and also make a foray into the insurance sector in New Zealand.
Talking to reporters here recently, its Managing Director, K, Sridhar, said the LIC was working out a strategy to establish itself in New Zealand. The decision on whether to establish a subsidiary or a branch or take up joint venture would hinge upon the result of the ongoing survey, he said.
The LIC owned subsidiaries in Bahrain, Sri Lanka and Nepal and had overseas branches in Fiji, Mauritius and London. The Zonal Manager, G. Prabhakara, said till November-end, the Southern Zone achieved 41.43 per cent of annual target in selling policies and 51.06 per cent in premium income mobilisation and stood number two in the country in performance.
5. BOM, LIC Tie up for Bancassurance :
The giant insurer, Life Insurance Corporation of India has signed Memorandum of Understanding (MOU) with Bank of Maharashtra (BoM). Putting its plan into action, the insurance products will be initially made available at selected 200 branches, which will move to 500 branches later on. The expansion levels are aimed to be achieved within a span of two years.
This is the 35th tie up of bancassurance for LIC, It had earlier tied up with a couple of public and private sector banks. It has also aped in 22 cooperative banks for its bancassurance venture.
Other options like NGOs are also being considered. For non insurance products, BoM will approach United India Insurance Company.