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Journalism of Courage
Retired government employee P. K. Gopalakrishnan was in for a shock when he received a cheque of Rs 1.50 lakh from Life Insurance Corporation—a day before his policy matured! It used to take weeks and months to get the payment from LIC earlier. The situation was worse in the case of death claims. The insurance monolith is changing with the times.
It was unthinkable of policy-holders getting their matured amount on the maturity day till two years ago. The sign of resurgence is visible all around—across its offices in the country. “No doubt competition is one factor which is driving us these days. We cannot be complacent now,” says LIC chairman Sunil Behari Mathur. Though a dozen foreign multinationals have entered the life insurance business in India, LIC still dominates the market with nearly 91 per cent share of new business.
There’s an all-round improvement in the services as LIC employees have shed their complacency seeing the writing on the wall. A visit to Yogakshema, the head office of the LIC in Mumbai, will confirm this fact. “You can make out this from the declining number of dharnas and agitation outside the head office,” said Vivek Rao, an LIC agent.
Mathur says the corporation witnessed a higher growth in the last two years, that too after a host of MNCs entered the country. “Strong institutional commitment” is what Mathur says about the corporation’s success in the last two years.
LIC witnessed a 65 per cent surge in premium income in 2000-01 and a whopping 137 per cent rise in 2001-02. “Competition is not the only factor. During this period, stock markets were in bad shape and interest rates were falling…. there was no other suitable and safe investment avenue,” the LIC chief said.
The higher growth happened Last year LIC settled 87.67 lakh claims which amounts to Rs 14,519 crore. This means LIC settled 30,336 claims amounting to Rs 50.24 crore every working day.
What’s his gameplan for the corporation? Mathur says he is targeting a growth rate of 25 per cent in the next two years. “We’ve achieved a growth of 20 per cent in the last ten years. I’m hopeful of getting a higher growth,” he said.
A reason for transformation in LIC is due to the fact that now it is competing with global giants like AIG, New York Life, Allianz, Metlife etc. “Globally they manage assets worth hundreds of billions of dollars. LIC may be a pygmy when compared to them globally. But in India, as of now foreign players are pygmies in front of LIC,” said an insurance industry observer.
Take, for example, SBI Life, the 74:26 joint venture between State Bank of India and French insurer Cardif SA. The company has so far sold 3,68,000 policies with a total sum assured of Rs 3,220 crore and a premium income of Rs 76 crore since inception. This fiscal, the company earned a premium income of Rs 64 crore.
LIC, on the other hand, has a sum assured of Rs 811,011 crore and 1,259 lakh policies as of March 2002. Its total premium income was Rs 48,963 crore for the year ended March 2002.
