State-owned Corporation LIC is confident that its strategy to rejig the by introducing more non-participating products and a sharper focus on the bancassurance channel will give it the desired results in terms of growth and share.
Chairperson M R Kumar said at the major annual general meeting on Tuesday that they intend to sharpen the focus on bancassurance to increase its volume, thereby increasing its share in our business.
Our tie-up with banks continues to be robust. We intend to work with all partner banks and strengthen the IT processes between the banks and us. He said that in 3.0 we will re-align our activities in a manner that generates exponential growth and close the second quarter ending September with enhanced share.
To drive profitability and higher margins, diversified its products by introducing more non-par products. LIC focused more on participating products, such as endowment and money-back plans. Non-par was about 7 percent of LIC's portfolio but it plans to take it up to 12 -- 15 per cent in three-four years on an annual premium equivalent APE basis.
The profits are not shared and no dividends are paid to policyholders in non-participating policies.
LIC had a single life fund until the LIC Act was amended to bring its surplus distribution mechanism on a par with private life insurers. After the amendment, the life fund has been divided into two funds - participating policyholders fund and non-participating policyholders fund. In a phased manner, the surplus distribution in the participating policyholders fund has been modified to 90: 10 wherein 90 per cent of the proceeds will go to policyholders and 10 per cent to shareholders. 100 percent of the surplus goes to shareholders.
In the April-June quarter, LIC reported a net profit of 682.88 crore, driven by its non-par business. The mainstay of the LIC has been its agency force of 1.34 million. It is trying to focus more on its bancassurance partners in order to drive its non-par business. The corporation has around 62,000 outlets on the bancassurance side. It has 14 major banks, including IDBI Bank, 13 regional rural banks, and 45 cooperative banks as partners. There are 71 corporate agents, 35 marketing agents and 63 brokers.
The opportunities of digital engagement and digitised delivery of services with the migration of the customer from physical to digital or phygital mode are widely seen. A strategy of deploying bionic agents by extending tech support to the agency force will be a long way in building the core digital sales capabilities, exploring a win model, where there's a convergence of digital along with the best human qualities of advice and engagement, Kumar said.
He stressed that LIC still holds a major market share of 63.25 per cent in the first-year premium income and 74.62 per cent in number of policies as of March 31, 2022 despite two decades of opening up the insurance sector. As of Q 1 of FY23, LIC's market share in terms of first-year premium income was 65.42 per cent.
LIC has lost 28 per cent of its value since its listing on the bourses in May. The insurer's shares closed at Rs 629.05, a 0.28 per cent drop on the BSE on Tuesday.
Since December last year, LIC has acquired a 2 per cent stake in state-owned refiner Bharat Petroleum Corporation BPCL for nearly 1,598 crore, according to a regulatory filing on Tuesday.
Life insurance major said its shareholding increased from 15,25, 08,269 to 19,61, 15,164 equity shares, increasing its shareholding from 7.03 per cent to 9.04 per cent of the paid-up capital of the company.
Shareholding must be disclosed in excess of 2 per cent, according to Sebi's regulatory norm.