LIC using bancassurance channel poorly: Irda
My Digital FC, 01 January, 2012
Lic Using Bancassurance Channel Poorly: Irda
Place : Mumbai
Despite having a tie-up with several large public sector banks, more than 150 brokers and top corporate agents to distribute its insurance policies, Life Insurance Corporation of India (LIC) has failed to use these channels effectively, and instead, relies largely on its agents to bring in business.
According to the Insurance Regulatory and Development Authority (Irda) annual report for 2010-2011 released this week, of the Rs 52,732.09 crore individual new business premium underwritten by the public sector behemoth, LIC, 97.45 per cent of the new business premium came from its 13.37 lakh agents. Banks brought in 1.81 per cent of the new business premium, corporate agents brought 0.59 per cent, brokers brought 0.04 per cent, while direct selling contributed only 0.11 per cent.
The country's largest life insurer has a tie up with banks with a large branch network such as Corporation Bank, United Bank of India, Bank of Maharashtra and UCO Bank. In fact, LIC is also a large public shareholder in Corporation Bank holding 23.75 per cent as of end September, 2011.
On the other hand, private insurers in aggregate wrote Rs 30,441.94 crore individual new business premium. Around 13 lakh agents of all private insurance companies
put together brought in 46.89 per cent of the new business premium, while banks accounted for 33.21 per cent. Corporate agents contributed 8.7 per cent, brokers brought 4.77 per cent, while direct selling contributed 6.43 per cent to the new business premium, according to the Irda.
"Over the years, there has been a shift away from the individual agency channel for the industry. The new business premium procured through individual agents has decreased to 78.95 per cent during 2010-11 from 79.61 per cent reported during the previous year. The share of corporate agents, which was 14.55 per cent during 2008-09 and 14.87 per cent during 2009-10, increased to 16.86 per cent in the year 2010-2011," said the annual report. The increasing dominance of banks is being reflected in the desire by life insurers to enter into exclusive distribution tie-ups and also give such banks a minority stake in the insurer with an eye on getting greater focus on sale of the policies to the bank customer base.
Among the various corporate channels, the share of banks in total new business underwritten increased from 10.6 per cent in 2009-2010 to 13.3 per cent in 2010-2011, pointed out Irda's annual report.