The Hindu : Business : NRIs, rural markets promising segments for life insurance

Online edition of India's National Newspaper
Wednesday, May 04, 2005

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Business

NRIs, rural markets promising segments for life insurance

Special Correspondent

Need to monitor guaranteed returns on products, says LIC Chairman

KOLKATA: Protecting the market share in metro areas, maintaining the brand image, aligning returns with market rates and adjusting to the regulatory environment are some of the biggest challenges before the Life Insurance Corporation, according to R. N. Bharadwaj, Chairman of the LIC.

Addressing members of the Confederation of Indian Industry on `Life insurance-competition and challenges', on Tuesday he said the insurance industry as a whole would have to meet the challenge of increasing insurance penetration and density by effectively tapping the rural markets and through micro-insurance.

Competition has altered the market scenario, bringing into focus lower margins and increased product options for customers and better services, he said. Citing the instance of unit-linked products, Mr. Bharadwaj said this was an example of the change.

He said LIC which was aiming at a 48 per cent growth in first premium income this fiscal (against 42.5 per cent in 2003-04), planned to introduce six new policies, including unit-linked policies and policies aimed at women and children.

While pension and group insurance were providing opportunities to every player, the vast and ever-expanding NRI market and the rural and unorganised sector were promising segments, he said.

Elaborating on the adjustment with regulatory environment, he said LIC was required to provide reserves for meeting the required solvency margin limits as per the Insurance Regulatory and Development Authority's (IRDA) regulations even for the business it had transacted in the past. It also had to train its mammoth agency network as part of an IRDA stipulation.

On aligning returns with market rates, the chairman said in the falling interest regime it was necessary to monitor guaranteed returns on products.

The compulsion before the industry was to innovate products and distribute them through smart strategies for multichannel networks while ensuring customer satisfaction, Mr. Bharadwaj said.

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