About Me

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Trichy, Tamil Nadu, India
Working as an Assistant in LIC of India, Rockfort BO, Trichy, TN. Having a strong belief that LIC's welfare is our welfare and always trying to work towards that. Also functioning as an office bearer of AIIEA Thanjavur Division.

Sunday, November 27, 2011

Wikipedia needs our support

Dear Friends,

Everyone of us cannot afford to buy an encyclopedia.
Even if you can afford one, it cannot be updated in realtime.
It is meaningless to posses an outdated encyclopedia in the today's world with fastest developments.
Wikipedia has solved all the above.
More over it has done a job like what the Linux and Free Software Foundation have done with Open Source and 'Copyleft' license against the 'Copyright' license.
Though a few drawbacks are there, one cannot undervalue the services of Wikipedia.
It needs our support as it could not and does not seek the support of the big-business.
From Wikipedia founder Jimmy Wales
Google might have close to a million servers. Yahoo has something like 13,000 staff. We have 679 servers and 95 staff.
Wikipedia is the #5 site on the web and serves 450 million different people every month – with billions of page views.
Commerce is fine. Advertising is not evil. But it doesn't belong here. Not in Wikipedia.
Wikipedia is something special. It is like a library or a public park. It is like a temple for the mind. It is a place we can all go to think, to learn, to share our knowledge with others.
When I founded Wikipedia, I could have made it into a for-profit company with advertising banners, but I decided to do something different. We’ve worked hard over the years to keep it lean and tight. We fulfill our mission, and leave waste to others.
If everyone reading this donated ₹100, we would only have to fundraise for one day a year. But not everyone can or will donate. And that's fine. Each year just enough people decide to give.
This year, please consider making a donation of ₹100, ₹200, ₹300 or whatever you can to protect and sustain Wikipedia.
Jimmy Wales
Wikipedia Founder
So, I request you to donate as huge as possible to Wikipedia. 

Saturday, November 26, 2011

No private matter

In a casual chat with a personal banker at her bank branch in early 2009, single mother Krutinica Raghunath first learnt about unit-linked insurance plans, or ULIPs. "You have to pay Rs.45,000 per annum for three years," he explained. Not convinced, especially as she already had a 'money back' policy from Life Insurance Corporation, or LIC, the 45-year-old working professional promised to get back soon. On Raghunath's next visit to the neighbouring bank in a Mumbai suburb, she got an irresistible offer from the young aggressive banker. "You pay Rs.15,000 per annum for three years and get a minimum Rs.60,000 and a maximum of Rs.80,000," he said smoothly, rolling out the stock market statistics of the justgone boom period. The 20-year ULIP he was offering, with a three-year lock-in, also had a death cover of Rs.1.5 lakh. Raghunath's remaining apprehension - the policy application didn't have the bank's name - was dismissed with a "they are our partners" rejoinder.

She fell for the deal hook, line and sinker. Critically, the stock market risk in the plan was not mentioned to her. Soon enough, the markets began to slide, and ULIPs took a major beating. A few weeks ago, forced by rising expenses to make an early exit from her ULIP, Raghunath was horrified to see her investment value at Rs35,000. The young banker had left, and the new one explained: "The stock market is down." Says a helpless Raghunath: "We also work, but we never cheat our clients."

The plight of millions, who bought ULIPs from private sector insurers, is similar to that of Raghunath's. Even a decade after the sector opened up to private companies in 2000, nobody is rejoicing except LIC, which still enjoys 69 per cent market share. Be it customers, agents, the regulator or the promoters of private life insurers, everybody has a sob story to tell.

The opening up of the sector resulted in explosive growth and the entry of global marquee names. But the accompaniments were a high-cost operating model, rampant sales malpractices, low persistency ratio - which reflect the percentage of policies that continue paying premiums - metro-focused business models and products that more resembled mutual funds than insurance. "What mattered was top line and market share," says Rajesh Relan, who

Friday, November 25, 2011

Pvt Life insurers policy issuance dips 35% since April

Source: BusinessStandard

Life insurance premium collection down 20%.
The pension saga continues to take toll on the life insurance industry, particularly for the private players, as the number of policies issued by them is down by nearly 35 per cent, in the current financial year.

During April-October period, the number of policies issued by the largest life insurer, Life Insurance Corporation (LIC) of India, too, declined by eight per cent in the same period. As a result the first year premium collection of the life insurance industry, was down by 20.04 per cent to Rs 55,737.84 crore as against Rs 69,707.92 crore in the corresponding period last year.

According to the data collected by the Insurance Regulatory Development Authority (Irda), during 2011-12, life insurance industry sold close to 19.6 million policies, 15.31 per cent lower, compared to 23.14 million policies sold in the same period last year. In the same period, number of policies issued by the private players came down to 4.15 million from 6.34 million.
“Pension plans, which consisted of about 30 per cent of the sales, specially for the private players till the new regulations came into force in September 2010, now account for only 1.7 per cent of sales. Hence, the sales are down,” said S B Mathur, secretary of the Life Insurance Council.
The Council says premiums collected from pension plans dwindled to Rs 600 crore in the first

Friday, November 18, 2011

LIC likely to introduce four new products

In view of the stable market scenario at present and sound economic conditions, LIC (Life Insurance Corporation) has planned to introduce at least four more products in the conventional and non-conventional category.
The insurance giant is planning to introduce a new pension system on pilot basis to encourage people from the unorganised sector to voluntarily save for their retirement. The insurance major will not enter banking business but its subsidiary is in process of obtaining banking license.

Speaking to Business Standard, LIC managing director AK Dasgupta said, “It is the right of every investor to enter the market, it is not going down further. The fundamentals of the market are very strong. Market conditions are very favourable for investors if they want to stay for long. They can invest in conventional and non-conventional products, provided they have a proper strategy.”

In view of the favourable conditions, he said, it was the right time for LIC to introduce new products. Without naming the products he said, “There will be at least four products in both the categories and at least one for women, though we have one of the best products for women, Jeevan Bharti, available in the insurance sector.”
When asked if it was a strategy to mitigate the lower premium figures, he said LIC’s premium income was down since

Federal Bank, LIC tie up for e-transfer of maturity proceeds

Source: BusinessLine

Federal Bank has signed an agreement with Life Insurance Corporation of India for paying maturity proceeds of LIC policies.
Hitherto the maturity proceeds were paid by cheques from the respective branch offices of LIC across the country and sent to the beneficiaries one month prior to the due date. Now the proceeds will be credited directly to the beneficiary's account by way of NEFT (National Electronic Funds Transfer) on the due date. This move will be cost effective for LIC and improve the payment system.
Clients need not wait for the cheque to get cleared as the payment is credited directly into the account. Problems such as cheques getting lost in transit, fraudulent encashment, and so on, will not arise.
Federal Bank is among the few banks which have signed agreements with LIC as the bank has systems in place to ensure that NEFT payments from each Divisional Office, numbering to more than 10,000 daily, can be sent smoothly.
Mr Antu Joseph, Deputy General Manager, Federal Bank, said that the alliance will create a win-win situation for all parties involved, giving the customers a hassle-free and convenient claims option.
According to Mr V. K. Kukreja, Executive Director, Finance and Accounts, LIC, “We are excited about the potential of our tie-up with Federal Bank, which is one of the leading banks with a strong focus on asset quality, excellence in banking technology and delivery of service quality.” 

Sunday, November 13, 2011

LIC to Invest Rs. 45k Crore in Stock Markets

Source: MedIndia
Life Insurance Corporation (LIC) plans to invest Rs. 45,000 crore of its total investment kitty of Rs. 2.15 lakh crore in the stock markets this year. LIC has already invested Rs. 5000 crore since April. 

DK Mehrotra, acting chairman of India’s biggest insurance company says, “Existing regulations stipulate that 50% of the funds have to be deployed in government securities. That apart, we will invest around Rs. 45,000 crore in equities, slightly more than the Rs. 43,000 crore that we had put in last year.” Mehrotra says LIC booked a profit of close to Rs. 17,000 crore during 2010-11 by selling stocks. The corporation, which invested around Rs. 1,83,000 crore in 2010-11 in other securities earned income to the tune of Rs. 90,000 crore. “We believe the market, after experiencing some volatility, could be stabilising and despite high inflation and rising interest rates, we could add to our portfolio if there is an opportunity,” he observes. 

Mehrotra says premium incomes have been picking up in the last two months. LIC currently has just under a 70% share of the life insurance premium market with private sector players together accounting for the rest. LIC will focus on traditional products that provide assured returns to the policy holders and also commission to the agents. 

“As of now

Sunday, November 6, 2011

LIC's operating cost is far lower than the international standard

Source: Business Line
LIC's operating cost was 6.58 per cent of premium in 2009-10 which is far lower than the international standard of 10-15 per cent.
With cost-consciousness and divergent distribution channels, more insurers are likely to make profits and the industry may head for brighter days ahead.
Life insurance sector has witnessed rapid growth in the past decade with private players entering the fray. Assets managed by the insurers have grown manifold in this period, even outpacing the mutual fund industry and the insurers have become a force to reckon with even in stock market. When the life insurance sector was opened up in 2000, the premium collected to the gross domestic product (GDP) was 1.77 per cent; this has risen to 4.6 per cent by 2009-10.
LIC, the only player in the life insurance sector in 1999-2000, collected Rs 34,897 crore that year. According to the Insurance Regulatory and Development Authority (IRDA), total premium underwritten by the life insurance sector was Rs 2,65,450 crore in 2009-10.
Although the topline of the insurers grew at double-digit till 2009-10, the bottomline of several private insurers are in the red, despite a decade of operation. The total accumulated losses of private life insurers was over Rs 20,143 crore by March 2010.
However, the silver lining is that according to

Thursday, September 29, 2011

Govt may relax LIC's equity exposure cap

Source: Business Standard
The government is set to relax the equity exposure norms for Life Insurance Corporation (LIC), the largest institutional investor in the country, albeit with some riders. A finance ministry official said LIC would be allowed to increase its exposure to more than 10 per cent in corporate entities. At present, LIC can invest up to 10 per cent of capital employed by the investee company, or 10 per cent of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.
The caveat, however, is the insurance behemoth would have to prune its book in illiquid stocks and unlisted investments, which constitute around Rs 5,000 crore, or two per cent of its total equity investment corpus.

LIC’s total investment corpus stood at nearly Rs 11 lakh crore as on March 31, 2011, of which 20 per cent, or Rs 2.2 lakh crore, was in equity. During 2010-11, LIC invested Rs 1.96 lakh crore, of which Rs 43,000 crore was invested in equities. In the current financial year, the insurer has plans to invest a similar amount in equities.
To be sure, LIC currently has equity stakes more than 10 per cent in 37 listed companies. Three years ago, the insurance regulator, Irda, proposed bringing down LIC holdings to under 10 per cent in all listed companies. However, it did not follow up on the proposal, given the anaemic state of the markets at that time.
There are around 100 listed companies in which LIC currently holds five to 10 per cent stake. Irda (Insurance Regulatory and

Thursday, September 8, 2011

LIC keeps the economy healthy

LIC: The big daddy

Source: Business Today

  • LIC is the industry leader, with a 69 per cent market share in 2010/11
  • Compared to 2.6 per cent annual growth in fi rst-year premiums for private insurers, LIC recorded growth of nearly 22 per cent in 2010/11
  • LIC has the largest sales force of 1.34 million advisors, as of March 2010
  • LIC's 13.1 per cent expense ratio (including advisor commission) is lowest in the world
  • With total investments of Rs 10.96 trillion, LIC was India's largest institutional investor as of March 2010

"The guarantee does not come free"

As a home loan officer with a private sector bank, Yatindra Pathak says he has often heard people say: "Mere pass ICICI ka hi LIC hai" (I have ICICI's LIC). LIC, or the Life Insurance Corporation of India, is practically synonymous with insurance in the country. And with good reason: despite 22 private entrants into the industry since it was liberalised in 2000, LIC has the lion's share.

At Rs 86,445 crore, it notched up an overwhelming 69 per cent share of first premiums in 2010/11 - nearly 22 per cent more than in the previous year. By contrast, private insurers garnered a cumulative Rs 39,831 crore, which worked out to an annual growth of 2.56 per cent.

The sailing has not been all smooth, though. In 2009/10, 75 per cent of LIC's new business came through unit-linked insurance policies, or ULIPs. But regulators questioned the governance of these products. The Securities Exchange Board of India wanted to

LIC net actuarial surplus up 10% to Rs 22,716 cr in FY11

Source: ZEEBIZ.com

Rs.1,135 Cr. dividend for Govt.'s Rs.5 Cr. investment!
22700% (yes, 22,700%!) return on investment!!

Rs.21,580 Cr. (95% of surplus) distributed 
to policyholders as bonus!
No Doubt!
LIC...8th wonder of the world!

State-owned life insurance giant LIC has recorded a 10 percent jump in net actuarial surplus for the 2010-11 fiscal at Rs 22,716 crore which has helped it declare an additional bonus for seven of its 'with-profit plans.'
Life Insurance Corporation will be paying a bonus of Rs 21,580 crore to the policyholders, up from last fiscal's Rs 19,557 crore, while Rs 1,135 crore has been allocated as government's share against Rs 1,029 crore the year before, its Executive Director (Corporate Communications) Vipin Anand told reporters here.
It has increased the bonus component for seven 'with profit plans' like

Saturday, September 3, 2011

Private insurers see drop in market share

Source: Money Guru

The surge was primarily driven by 62.3 per cent year-on-year growth in premium collections by LIC.

After continuous decline in premium inflows, the annual premium equivalent of the life insurance industry grew 10.6 per cent in July 2011 and surged 50.6 per cent on a sequential basis. The surge was primarily driven by 62.3 per cent year-on-year growth in premium collections by Life Insurance Corporation of India (LIC) whereas private sector players reported a decline of 37.6 per cent in premium collections in July. 

"On a year-till-date basis (April-July 2011), the APE of the industry declined 14 per cent year on year with the private players reporting a decline of 38.8% in collections for the same period. The market share of private players declined sequentially to 29.1 per cent from 51.7 per cent in July 2010. Among private players, Max New York Life Insurance’s market share increased to 7.7 per cent from 5.0 per cent in July 2010 while HDFC Life’s market share expanded to 14.6% compared with 11.3% as on July 2010," brokerage Sharekhan said in a report. Among private players, Reliance Life Insurance witnessed an APE contraction of 65.5 per cent YoY followed by

LIC market share up at 72.4% in July

Source: Hindustan Times

Life Insurance Corporation (LIC), India's largest life insurance player, has tightened its grip in life insurance sector by increasing its market share in first premium income to 72.4% at the end of July 2011 from 68.7% at the end of March 2011. The insurer also increased it market share in number of policies sold to 78.4% at the end of July 2011, from 76.9% at the end of March 2011.

"Our diversified product portfolio and strong field force of agents who have strong relationship with the policyholders are the major drivers of growth,” said S Roy Chowdhury, executive director (marketing), LIC.
It has 53 products in its portfolio, has sold around 80 lakh policies till the end of July. LIC has set the target of Rs 54,000 crore as a first premium income for 2011-12. During 2010-11, the insurer sold around 3.7 crore individual policies and covered more than 3.5 crore lives through its group schemes, said Chowdhury

Thursday, September 1, 2011

PFRDA plans to rope in LIC agents to sell NPS Lite

Source: Economic Times

The interim pension regulator is looking to rope in the 1.4-million strong army of Life Insurance Corporation agents to sell the low-cost variant of its flagship retirement plan, the New Pension Scheme, or NPS. 

The NPS Lite is an NPS carve-up for the poor that has failed to attract many investors so far. The Lite version works on a 'group' model and, therefore, needs aggregators to bring individual subscribers together. Interim regulator Pension Fund Regulatory Development Authority, or PFRDA, oversees the NPS but needs the Insurance Regulatory Authority of India's permission to engage the services of LIC agents. 

"The modalities of roping in LIC are being worked out. It has around

LIC first premium income to grow by 12.5% in FY-12

Source: Economic Times
Country's largest insurer LIC today said it expects 12.5 per cent growth in new business income during 2011-12.

Last fiscal, the Corporation collected first premium income of Rs 48,000 crore while the target is Rs 54,000 crore in FY'12, LIC Senior Divisional Manager R K Jha said here.

While the market share of LIC in terms of first premium income was 72.4 per cent, for the number of policies sold, it was 78.4 per cent at the end of July this year, he said.

The asset under management ( AUM) of the insurer stood at 13.17 lakh crore at the end of March 2011. 

Wednesday, August 24, 2011

Aastha again?!

LIC to harness volatile markets via new policy
Source: NDTV Profit

Volatile markets are giving way to products, which offer relief to investors and open new avenues to park their funds. Gauging market sentiments, Life Insurance Corporation of India (LIC) is all set to launch its best-selling product in the form of a single premium policy.
It's been two and half years since the last single premium policy from LIC Jeevan Astha came into the market. Response to Jeevan Astha showed that investors prefer policies, which involve a one-time premium payment even though that premium payment is much higher.

Jeevan Astha in 2009 garnered around Rs. 10,235 crore in 45 days with around 1.8 million policies being sold.
Sources have told NDTV that LIC is waiting to get the final approval from Insurance regulator IRDA and intends to launch this product in the first week of September.

LIC is launching a single premium policy after a gap of two and a half years and sources say that the insurance giant is expected to offer a fixed return in the range of 7-8 per cent per annum with insurance cover added to the product.
The single premium policy, which offers

Thursday, July 21, 2011

Foul Play of Nanayam Vikatan

Nanayam Vikatan’s false ratings…

Nanayam Vikatan, a fortnightly business magazine in Tamil, has recently started a new article series with title ‘Insurance Rating’.  It claims itself as, ratings are there for almost all products, but not available for insurance and hence it took up the job to rate insurance.  So far, 3 articles in this series were published. 

Nanayam Vikatan says that it wants to rate not only insurance products but also rate the companies and give that weightage to the products’ rating.  Some ratings were given to the life insurance companies in its 2nd article based on Claims performance and solvency ratio.  It argued that solvency ratio can reflect the health of the company and claims performance can reflect the quality of service and security for policyholders’ money.  But in both the ratings LIC had been rated as if a very poor performer.  I immediately wrote a letter to the editor pointing out some of the data, but it is to be replied yet.  But one of our agents, Mr.Meenakshisundaram of Srirangam BO, called them over phone and inquired about my letter.  They sent a reply to him.  I would like to expose the biased attitude of Nanayam Vikatan here, both from the articles and the reply.

First in the case of claims performance, the writers argued that they considered only the settled claims because possibility of repudiation is there for pending claims.  They took the data pertaining to the quarter ended September 2010, and I don’t know the rationale behind it.  But I also took the same data from IRDA, and it contains the repudiation ratio also.  Please see the repudiation ratio and the Nanayam Vikatan’s ratings.

There is the possibility of repudiation in pending cases. Right, we accept.  But what is the position of claims already repudiated?  Nanayam Vikatan’s ratings very openly tells that its ratings are biased and in favour of private insurance companies.

I have pointed out this in my letter.  They, in their reply to Meenakshisundaram, argue that if the rejection ratio only is considered, the companies which take long time to process the claims will get better ratings.  I never asked them to consider rejection ratio only.  Just pointed out another angle and wanted to tell them that their analysis is not exhaustive.  The writers are too novice to understand our argument and also to understand the insurance business! 

Another rating, which is to value the strength of the insurance companies, considers only the solvency ratio.  Here I pointed out that several companies rated with ‘A’ are having very huge losses and hence their rating do not fulfill their aim of valuing the strength.  See the table, created by me to compare the profit and loss position and ratings.  It explicitly shows that Nanayam Vikatan’s or the writers’ motive is not giving a neutral rating but it is to propagate as if private companies are good.

I also pointed out that expense ratio of private companies for the year 2009-10 is 20.86% whereas LIC’s for the same period is 6.58% and asked which should be considered as efficient.  Is policyholders’ money safe after spending one fifth of it?  I also pointed out that TATA AIG, rated as ‘A’ grade company by Nanayam Vikatan, was fined in November 2010, for not maintaining its expense ratio.  Its expense ratio was 117.28%.

The reply for this argument openly shows the immaturity of the writers.  Writers argue that LIC was also fined for not fulfilling rural obligations and considering fines is not right.  They are speaking about irrelevant fines while I was mentioning the fine to show their financially inefficient functioning.   Either they are that much illiterate about the industry or predestined to support private companies at any cost. 

Nanayam Vikatan does not even have the honesty to publish my letter and continued to publish the third part of the series. 

We are open to rectify ourselves, if they point out genuine weakness, if any.  But at the same time if anybody tries to spoil the image of LIC with partial statistics, can we keep silent?


Now we have the duty to fight against the false propaganda of Nanayam Vikatan.   What should we do?  Record our objection in a firm manner through the following:

  1. Write letters to Nanayam Vikatan, 757, Anna Salai, Chennai-2.
  2. Send emails to nav@vikatan.com
  3. Send SMS to 562636
  4. Send Fax to 04428512929
  5. Call over phone to 044-28511616,28545500,28545588,28543300
  6. Do all the above and ask all your friends, relatives and policyholders to do the same.
We should make Nanayam Vikatan to understand its fault.  We should show that all LICians have the respect and care over LIC. 

It is our LIC!  We are the people to protect LIC from any attack in any manner!!


Wednesday, July 20, 2011

LIC's market investments to exceed Rs 2 lakh crore in FY '12

Country's largest insurer, Life Insurance Corporation has said that its total investments in the market will cross Rs 2 lakh crore this fiscal. "Our investments will be more than last year... We will top last year's total investment of Rs 2 lakh crore this year," said LIC Managing Director Thomas Mathew . 

Mathew said that LIC will take a final call on this year investments depending on

Reliance, ICICI Pru, Max on top of complaint chart

Source: Financial Chronicle

Reliance Life Insurance, ICICI Prudential Life Insurance and Max New York Life Insurance have received the highest number of complaints from policyholders in 2010-11. Of these, Reliance got 64,282 complaints, ICICI Prudential 48,802 and Max New York Life 25,590.
As per an Irda mandate, insurers have to reveal complaints related to unfair business practices, which come under sales-related complaints.
“Typically, sales-related issues arise when customers complain that they were not aware of certain features of the product they bought or were unaware of the charges or the policy was mis-sold to them,” said Snehil Gambhir, COO of Aviva Life Insurance.
At 89,112, sales-related complaints accounted for 30.81 per cent of the total. ICICI Prudential policyholders alone registered 36,212 or 40.64 per cent of such complaints. Complaints related to

Wednesday, July 6, 2011

Jobless growth in pvt life insurance

Source: Business Standard

Jobless growth has found a new home — India’s life insurance companies. In the last financial year, private life insurers reduced headcount by 27 per cent to achieve profitability.
The number of people employed by these companies as on March 31, 2011, was 60,215, as against 81,507 in the corresponding period last year. They closed down more than 900 branches. Also, 174,000 agents went out of the system.

In the same period, they shored up their bottom lines. For example, ICICI Prudential and Bajaj Allianz, the top two private life insurers in terms of profitability, reported net profits of Rs 810 crore and Rs 1,060 crore, respectively, for the year ended March 31. The two reduced their combined headcount by 12,000 and closed down 650 branches.

Similarly, Max New York Life and Tata AIG Life reported profit for the first time, while HDFC Life and Reliance Life reduced operating losses significantly.
The insurers said the number of people who lost their jobs was negligible and the reduction in headcount was mainly due to

Saturday, July 2, 2011

A few highlights about LIC...

LIC's Assets
 LIC's Growth
 LIC's strength
 LIC's reach
LIC's capacity

Compiled by Arivukkadal

(To be continued...)

Sunday, June 19, 2011

LIC Jeevan Arogya - Better medical cover for your parents

Source: Businessline

Hospitalisation and surgery expenses, flexible premium and quick cash facility are some of the benefits you can avail

Escalating medical expenses are a cause for concern not only for the elderly, but also for those in their middle age. As health awareness increases not just regular insurance companies, but life insurance companies too are coming up with new health policies.
LIC has recently launched Jeevan Arogya, a non-linked health insurance plan that provides health insurance cover against specified

Tuesday, May 31, 2011

Pitfalls of insurers: Elusive profits, expensive distribution

Cumulative losses of the top 10 private players in the past decade is in excess of Rs 16,000 crore.
Industry was privatised about a decade back, but profit returns are still tough for most of the life insurers. 
Several insurers are still trying hard to reach the break-even point.
Insurers have shut about 1,000 branches and released about 4 lakh inactive agents after the regulatory changes.

Life insurance industry is struggling to find the right selling channel which can increase their profitability. The industry was privatised about a decade back, but profit returns are still tough for most of the life insurers. Several insurers are still trying hard to reach the break-even point. According to the Life Insurance Council, as on March 31, 2011, there were about 32.54 crore in-force insurance policies in India, one of the highest in the world. However, if we look at the profit and loss account of the industry, the cumulative losses of the top 10 private players in the past decade is in excess of Rs 16,000 crore, according to the IRDA annual report. The biggest issue of finding the “right” distribution channel by the industry remains unresolved, leading to low productivity.
Agency model
The expense ratio for the agency model is high due to

Sunday, May 29, 2011

LIC should be one-stop destination for all household needs

Our desire is to make LIC a one-stop-shop for all kinds of financial products
DK Mehrotra, 58, has taken over as the acting chairman of the Life Insurance Corporation. He was heading the marketing operations of the corporation for last three years. In an exclusive interview with FE’s Sitanshu Swain and Kumud Das, he outlines strategies to expand the business of the corporation. Excerpts:
Do you think the recent developments where the activities of LIC investment department and LIC Housing Finance has come under CBI scanner has created crisis of confidence?
I don’t think so. LIC has been fully cooperating with the government agencies. All I can say is that  though we have already got a robust system in place for investment operations , there was always scope for improvement. I can assure all the policyholders that their money is in safe hands.
What will be your agenda for the LIC ?
LIC should be one stop destination for all household needs of the  country, in matter of financial products. We want to create a formidable synergy among our different operation. We want to create a platform where our agent can cross- sell all these products . We have also tied up with various agency channels for expanding our marketing net-work..
Is the MF business doing well?
With Nomura’s entry, we are getting

LIC to invest R45k crore in stock mkts

LIC has invested around R1,83,000 crore in 2010-11 in other securities & earned R90,000 crore income 

Life Insurance Corporation(LIC) plans to invest R45,000 crore of its total investment kitty of R2.15 lakh crore in the stock markets this year. LIC has already invested R5000 crore since April.

DK Mehrotra,acting chairman of India’s biggest insurance company says, “Existing regulations stipulate that 50% of the funds have to be deployed in government securities. That apart, we will invest around R45,000 crore in equities, slightly more than the R43,000 crore that we had put in last year.” Mehrotra says LIC booked a profit of close to R17,000 crore during 2010-11 by selling stocks. The corporation, which invested around R1,83,000 crore in 2010-11 in other securities earned income to the tune of R90,000 crore. “We believe the market, after experiencing some volatility, could be stabilising and despite high inflation and rising interest rates, we could add to our portfolio if there is an opportunity,” he observes.
Mehrotra says premium incomes have been

Tuesday, May 24, 2011

LIC remains the benchmark in settling claims

LIC scores best in claims settlement during 2010-11
Source: Business Standard

Maximum Protection only by LIC!
At a time when customer service and satisfaction is becoming the key to success for life insurance companies, the claim repudiation ratio (in case of death claims) has improved over the last financial year. According to data from company sources, the Life Insurance Corporation of India (LIC) still remains the benchmark when it comes to settling death claims. However, major private players are also fast catching up.

A repudation ratio is a measure of claims rejected.

During 2010-11, LIC improved its repudiation ratio for death claims to 1.09 per cent from 1.21 per cent in the previous year. In the same period, the public sector insurance behemoth settled 97.5 per cent of death claims, whereas claims pending stood at 1.47 per cent.

“Overall, we have settled 99.6 per cent of the total claims in the last financial year. And 95 per cent of the death claims were settled within 15 days of intimation,” said a senior LIC official.
In total, during the 2010-11, LIC has settled around 18.3 million claims amounting to Rs 53,000 crore, which includes survival benefits, maturity and death claims. Of this, Rs 6,000 crore accounted for 721,000 death claims.
Among the

Sunday, May 22, 2011

Insurance agent not liable if due care taken

Source: Law et al. news

An agent with Life Insurance Corporation (LIC) of India cannot be held liable for suppression of facts by the insured, if the agent takes due care in verifying details of the insured. Ruling thus the Gujarat High Court allowed an appeal by an agent on the ground that in this case the agent had taken steps to verify the claim of insured who however had concealed his medical history.

The Bench comprising Chief Justice SJ Mukhopadhaya and Justice JB Pardiwala was hearing a petition of one Geetaben Modi. Modi had challenged termination of her agency and forfeiture of renewal commission by LIC. LIC claimed that Modi had suppressed the fact that an insured, SB Gorange, who was suffering from cancer was issued an insurance policy.
Modi claimed that she was unaware of the fact that Gorange was suffering from cancer and claimed to have taken proper care in verifying

Tuesday, May 17, 2011

Pvt. Life Ins. Cos Close Offices; Downsize employees & Agents

Profit Pressures force (Pvt.) Life Insurers to Downsize

Private Life insurance companies have started to cut down their workforce and branch network following tougher norms that came into force in September and exerted pressure on their bottomlines. More than half a dozen life insurance companies — that are operating for nearly a decade now — have cut their branch presence significantly in the last six months in a bid to cut cost and increase efficiency.
ICICI Prudential Life, the largest private sector life insurance player in the country, has closed down more than 500 branches over the last one year. Currently, it has 1,404 branches as against 1,923 on March 31, 2010.

In the same period, Max New York Life reduced the number of branches by 200, whereas others like HDFC Life, Birla Sun Life, Aviva Life, Tata AIG Life and Bharti AXA Life have reduced 35-75 branches. SBI Life, the second largest private life insurance player, is an exception. It has increased its network from 494 (as on March 31, 2011) to 629 branches. Rough estimates suggest nearly 300,000 of the 2.4 million life insurance agents have shifted out of the industry after the new regulations.

Following the downsize, most of the

Saturday, May 14, 2011

What is actual market share of LIC?

Market share of Life Insurance Companies is always quoted in terms of Premium collections and that too on First Premium Income only.  Actually the First Premium Income is used as a magnifying glass to show the presence of Private Insurance Companies, otherwise they couldn’t find place in statistics with their miniscule business.  Whatever the other count you consider, be it the Gross Premium Income, which includes renewal premium, be it the No. of Policies sold for the current year or gross Policies sold from the inception of the company, you will certainly need a magnifying glass to locate the place of the private insurance companies and that’s why IRDA, media and the private companies themselves are always speaking about first premium income. 
They are speaking in terms of their strength!  The word strength is also not a right term as they are actually projecting their better face and that too is not strong!  We have to show our strengths, which are actual strengths!

Here is the market share of Life Insurance Companies
based on the number of policies sold during 2010-11.
LIC holds 76.91% and
the 22 private companies share
the remaining 23.09%. 

LIC holds 76.91%
Next in the list holds just 3.95%

Don’t be like an elephant;
Know your strength!

Monday, May 2, 2011

Indians' trust is with LIC

 Brand LIC got a 100% recall  
 in a recent nationwide study 
 by a market research agency 

When a leading private insurance company recently commissioned a market research agency to do a survey on India’s most famous brands, the findings didn’t come as a surprise.

There was a cent per cent recall (which means 100 out of 100 Indian consumers know it) for only one Indian brand – LIC. And 93 per cent of those surveyed said if they buy insurance, it has to be from LIC. So much for private sector competition.

Numbers justify this mega presence. LIC still accounts for nearly 70 per cent of the life insurance market and is also the largest domestic institutional investor in the country.
So what makes brand LIC tick? Why is it that the private sector peers have not been able to come anywhere near this public sector behemoth despite spending huge amounts of money on promotions?
A combination of factors, say ad agency heads. Jude Fernandes, executive director, Mudra Group and chief executive officer, Mudra India, says

Wednesday, April 27, 2011

Pvt life insurers' first year premium down 4 pc in FY11

The private life insurance sector saw a decline of four per cent to Rs 30,451 crore in the first year premium income during the 2010-11 fiscal. 

As many as 10 companies, of the total 22 private players accounting for 36.8 per cent of the total life insurance industry, witnessed a decline in first year premium income, as per an analysis of data released by IRDA . 

At the end of fiscal 2010-11, the private sector life insurance companies mopped up Rs 30,451 crore, against Rs 31,618 crore in the April-March period of previous fiscal. 

In terms of policy sales also, the private players saw a huge decline of 23 per cent for the year ended March 2011 at 1.11 crore. 

The companies which witnessed a surge in the first year premium figures include

LIC regains market share, private players slip

Private life insurers have seen their new business growth slow down to a mere 2% even as Life Insurance Corporation regained market share with a 23% jump in premium collections to Rs 86,444 crore for the financial year 2010-11. Life insurers have found it a challenge to grow business after new regulations came into effect from September 2010. 

According to data collated by the Insurance Regulatory and Development Authority, private life companies' growth came from group insurance. They posted new business premium collection of Rs 39,281 crore. Premium from individuals, which excludes

Saturday, March 26, 2011

LIC beats private insurers, posts 35% growth in Apr-Feb

LIC holds a Market Share of 70.39%
Next nearest competitor (SBI Life, the leader of Private Cos.!) holds just 5.63% 
Bajaj Allianz, Reliance Life, Birla Sunlife, Met Life, Aviva, ING Vysya, Future Generali, Bharti Axa Life and Sahara Life have posted negative growth
Source: The Financial Express

Public sector insurer Life Insurance Corporation of India (LIC) continued to maintain its market share for the 11-month period ended February 2011.
LIC has notched up a total premium of R73,122 crore as against R54,320 crore reported during the same period in the previous financial year, recording a growth of 35%. On the other hand, private sector companies together recorded a meagre growth of 4% during the same period with a total premium of R30,756 crore. The insurance major notched a total premium of R5,986 crore in February 2011 and holds a total market share of 70.39%, according to a latest data.
However, the ticket size (calculated on individual non-single premium basis) of LIC stood at R7,597 for the period ended February, the data said.
Private sector companies together hold a market share of 29.61%. For the month of February 2011 alone the total premium notched up by the 22 companies was estimated to be around R2.891.50 crore, the data maintained.
In total, life insurance companies together as an industry, reported a healthy growth of 24% for the 11-month period of the current financial year to R103,878 crore when compared with R83,891 crore achieved during the same period in the previous financial year.
On the private sector side, except companies such as Bajaj Allianz, Reliance Life, Birla Sunlife, Met Life, Aviva, ING Vysya, Future Generali, Bharat Axa Life and Sahara Life, other companies reported a positive growth during the said 11-month period.
Among the private sector, SBI Life is leading the pack with a total premium of R5,845.31 crore for the 11-month period ended February 2011 when compared with R5,266 crore achieved during the same period of the previous financial year, witnessing a growth of 11%. The company holds a market share of 5.63% as of February 2011. Next in the line is ICICI Prudential with a total premium of R5,710.54 crore (R4,972.23 crore) with a growth of 14.85% and with a market share of 5.5%.