LIC sails strong in rough weathers

The country's life insurance behemoth, Life Insurance Corporation of India (LIC) has worked on multi-pronged strategy so as to deal with the Covid 19 pandemic. While focusing on its online platform, it has also allowed its employees to work from home. The corporation has increased its focus on ULIP products so as its market savvy customers could reap higher returns. This all has resulted in garnering good chunk of business. For the month of October, in individual first year premium (FYP), LIC has a growth of more than 100% over previous year. "In fact, till date the corporation is far ahead in terms of overall investment as compared to last year. LIC is all set to bring down its gross NPA level by the fiscal end, at the same level where it was as on 31st March", R Kumar, Chairman, LIC, tells Kumud Das

On coping up with Covid disruptions Our approach to cope up with the challenges relating to Covid disruptions can be broadly classified as a three-step process - increasing awareness about life insurance, expanding distribution reach through innovative interventions and offering suitable product.

For creating more awareness, in consultation with Insurance body, LIC carried out extensive awareness campaigns in Newspapers, TV channels, social/digital media and radio programmes targeting pan India customers

LIC embarked on implementing innovative interventions keeping in mind various restrictions and social distancing norms. Its main focus is on online platforms to ensure premium, renewal premium collections and claims settlement. Taking up recruitment and training process through online platform to reduce attrition. Allowing employees to work from home with latest technology to provide seamless operations. Increasing the contributions from banking channels which are playing a vital role in sale of life insurance after the Central Government launched various financial schemes. IDBI Bank is playing a major role in our banc assurance business. Digitisation of Agency Channel with virtually nil physical interface Offering a suitable product LIC will continue to focus on developing products based on customer segmentation to increase penetration and density.

To reap in higher returns from the recent turmoil in stock market. LIC has very innovative ULIP products like LIC's SIIP, Nivesh Plus and New Endowment Plus which cater to the needs of market savvy customers. And keeping in mind the huge demand for our pension products which will increase further in coming years due to drastic fall in bank interest rates, our annuity products New Jeevan Akshay and Jeevan Shanti have become highly popular.

Also to bridge the huge protection gap in India, we have two very competitively priced term insurance plans Tech Term and Jeevan Amar.

Will complete digitization be a permanent feature?

Yes, going digital will be an everlasting feature for the organizational functioning, as in this digital age, it is an effective way to reach out to customers and field forces for ensuring seamless processes, whether it is buying of insurance policies or post purchase policy servicing. We want to ensure that customers to get all the without requiring them to visit the branches. Digital approach is the way forward in the post-pandemic new normal

On measures to make LIC a fully technology-driven organisation

LIC enhanced the focus on digital delivery of services to customers in a self-service mode like making online requests for change of address, NEFT, PAN etc. digitizing policy purchase. Now customer can directly purchase the policies in a digital way, do paperless e-KYC and upload scanned documents, based on which the policies are completed. The entire process is done online with even VIDEO MER of the customer being carried out, for medical requirements, Digital NB platform for all sales channels of LIC, Digital ecosystem of eSign, eKYC, Online PAN Validation, NEFT is being leveraged to make the processes completely digital, safe and secure, and online microinsurance platform has been developed for MI agents to ensure insurance penetration to the remotest areas and low-income class segment, integration of payment systems like PAYTM, Google Pay, PhonePe for convenient premium payment to customer.

Will it lead to downsizing of manpower?

No, in insurance, physical interaction and servicing at some levels will still continue for some time for those not very comfortable with the digital medium.

On growth or recovery in terms of business by this year end

The Covid 19 pandemic fallout cast its shadow on the life insurance industry. But after the unlock process in June the business gradually started looking up. LIC's resilient and quick response in meeting the expectation of the market and the people of the nation has brought us results and as on October 3, we have collected a total FYP of Rs 103566.08 crore as compared to Rs 101402.37 crore last year with a growth rate of 2.14 percent. In Individual FYP we have registered a growth of more than 100 percent over the previous year in October.

With Covid pandemic creating more awareness on the importance of life insurance, LIC expects the life insurance business to continue to grow steadily over the rest of the current fiscal and backed by our digital innovations and marketing initiatives , we are confident to returning to double digit growth by the end of the fiscal.

On stock market going up further

As a long-term investor, we are bullish on Indian stock market in the long term. We believe that the growth story of the market is intact. Covid 19 has definitely impacted the consumer behavior and hence the business. Therefore, in our view this provides an opportunity for rebalancing of the equity portfolio. There is stock specific and sector specific opportunity in the market. We hope that economy is resilient while improving demand and expenditure would go up. At the same time, we should be cautious while taking investment decisions at this moment and looking for balanced and diversified portfolio

On ensuring healthy bonus for the customers in volatile equity markets and falling interest rates

A significant proportion of LIC's business portfolio comprises participating business and it has always been the policy of the Corporation to be fair to its policyholders and to conduct the business with prudence to meet their reasonable expectations. Customer centricity is in the forefront of our decision- making processes.

The year 2019-20 witnessed not only a general reduction in investment returns but here was also a steep decline in the unrealized capital gains at the year-end due to sudden, unprecedented and unexpected crash of equity markets largely due to Covid effect. The market has since recovered partially from that stage, though overall yields appear to be headed southwards.

It is important that the levels of discretionary benefits to the policyholders are aligned to the current and long-term expectations related to the various experience items that impact these benefits. It is also important to always ensure the actual solvency to remain above the stipulated control level of regulatory solvency as prescribed under the regulations.

In the backdrop of these, LIC endeavors to ensure optimization of returns and value to the customers to treat them fairly. The bonus levels are hence accordingly reviewed and aligned in line with past experience and future expectations.

On investment in equities in the current fiscal

LIC has invested about Rs 55,000 crore in the equity market since April 2020 as against Rs 32,900 crore during last year corresponding period.

Total Investments in FY 2020-21 will depend on investible surplus available with Corporation. We mention that till date we are far ahead in terms of overall investment as compared to last year.

How much profit has been booked by LIC by sale of equities?

During FY 20-21, as of October 2020, we have booked a profit of about Rs. 18,800 crore by sale of equities

On Non-Performing Assets (NPAs)

LIC's Gross NPA as on March 31, 2020 is Rs 36,608 crore (8.17%). All the NPA accounts have been adequately provided for 91.09% of Gross NPA. About 60% of Gross NPAs is being dealt by IBC process under NCLT for resolution/ recovery. All other NPAs are being followed up at appropriate legal levels for recovery. At the close of current FY 2020-21, the Corporation will be able to bring down below the level of Gross NPA as on March 31, 2020 i.e. 8.17%.