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COVERING WITH A ZEAL By Hemant Bhargava, Zonal Manager (EZO), LICI.

The life insurance industry has passed through many crossroads. India's life insurance sector is the world’s largest. Since liberalization of insurance sector in year 2000 the industry has grown in many ways with new players entering the fray. However, this frenzied activity also brought in its wake issues related to product design, market conduct, complaints management and the necessity to make course correction for the long term health of the industry. Several regulatory changes were introduced during the past few years and life insurance companies adopted many new customer centric practices in this period. Product related changes, first in ULIPs in September 2011 and now in traditional products will have the biggest impact on the industry. There have also been number of product and operational innovations necessitated by consumer needs and increased competition among the players. Changes in the regulatory environment also had path-breaking impact on the development of the industry. While the insurance industry still struggles to move out of the shadows cast by the challenges posed by economic challenges of the last few years, the strong fundamentals of the industry augur well for a roadmap to be drawn for sustainable long-term growth.

 The inroads made by the LIC into rural and neglected sectors since the nationalization of the industry in 1956 is quite significant and praiseworthy. The LIC started in the year 1956 with a subscribed capital of Rs. 5 crore while the capital holding of Govt. of India has increased to only Rs. 100 Crore, the life fund with LIC have increased to Rs.16.08 lakh crore in 2013-14, with the asset under management Rs.17.69 lakh crore. To review the progress of life insurance industry in retrospect, the Life Insurance Penetration (premium as a percentage of GDP) reached 4.67 in the year 2014. Similarly the Life Insurance Density Per Capita Premium (in US $) reached 59 in the year 2014. Thus the progress of life insurance industry in respect of the reach is quite impressive. LIC now has 1346 satellite offices and 1243 mini offices apart from 2048 Branches to spread its reach to every nook and corner of the country. In addition there are 25928 premium points by empowered agents and 2380 Life plus offices by Senior Business Associates to enhance the reach further.

Even after having 36 crores of policy holders, the insurance penetration in India is still low. The contribution of insurance in GDP in India is still very low in comparison to the developed countries of the world. For example, the contributions as percentage of GDP are 11.8% in USA, 8.1% in Japan, 11.4% in Hong Kong, and 7% in Singapore, whereas in India it is only 4.67%, Similarly, premium per capita in US $ is 4535 in UK, 3846 in USA, 5169 in Japan, 3904 in Hong Kong, 398 in Brazil, 163 in China, but only 59 in India.  Thus there is much to be done in this sector and there is ample scope for growth for every one.

The life insurance sector at present is adjusting to the strict regulatory environment. The product vacuum is being slowly filled; many initiatives are being taken towards customer awareness. The main areas of expansion will be in health and pension sector, and the child segment as well. Major chunk of population in India residing in urban and rural areas, easy-to-understand policies will help greater penetration of the market. We are trying to do just that with our newly launched “Jeevan Rakshak” policy. This is a traditional policy with No Medical Examination necessary. The policy is easy to understand & administer and shall participate in profit by way of loyalty additions.

The key issues before life insurance industry today will be ensuring better penetration by creating customer awareness, strengthening the distribution channels, instant and zero-error customer servicing, and optimizing the return on investment of the customer.

    We have recently taken a lot of initiatives in Eastern Zone. Besides a strong presence of Brand LIC buttressed with our multiple campaigns, we have also taken some unique endeavours to reach people. We have positioned ourselves as an employment generator, and we are conducing education seminars in a massive scale to make our young generation aware of he benefits of the LIC agency profession where income is boundless. We are reaching the rural areas with our publicity vans. To recognize the young talents and encourage the bright minds of future about 10000 students across the Zone are being awarded “LIC Students of the Year” award. We are strengthening our alternate distributions, and empowering performer agents through our supervisory CLIA scheme. There is a plethora of activities here, all focused to improve the lives of people through financial literacy and economic security. As said before, we have opened 106 mini offices in places with population around 10,000 where no LIC office existed earlier, to ensure our presence among people even in deep rural areas.

Our business in the North Eastern states is on the growth path. We are committed to the people of North Eastern states for providing hassle-free service. Our efforts have been acknowledged by the people there, as a consequence of which we are winner of the “Most Preferred Life Insurance Brand of North-East” for last three years at a stretch. We are also an active partner in the growth of this region. LIC’s composite investment in the North Eastern states as on 2013-14 is Rs.10628.60 Crore.  We are also supporting various benevolent projects in that region through our CSR activities under LIC Golden Jubilee Foundation. Till date 16 such projects have been approved, and Rs. 2.52 Crore has been invested under various programs

The insurance sector future is bright, specially on the back of India’s favourable demographic pattern, greater awareness, supportive regulatory environment, policies that improve customer-centric products, and practices that help businesses grow. India's insurable population is projected to touch 75 crore in 2020, with life expectancy reaching 74 years. Life insurance will continue to supplement household financial savings, and is projected to be 35 per cent of total savings by the end of this decade, as against 26 per cent in 2009–10. The life insurance industry in the country is bound to increase at good growth rate in the next five years. The industry aims to hike penetration levels to ten per cent by 2020, and has the potential to touch US$ 1 trillion over the next seven years. Keeping this in view we have launched our dream project VISION 2020: a LIC policy in every pocket.

A lot is being said and commented on the Government’s recent policy about FDI in insurance sector. We are one of the players in the market, not the policy maker. A player improvises himself according to the set of rules and situations, and a great player performs best when there is true challenge. LIC has the spirit embedded in its value system, and therefore, we shall only wait to observe and review or redesign our strategies according to the need. But whatever we shall do, we shall keep in mind the best interest of our valued customers.

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