Increase in insurance penetration is top agenda
Finance Minister P Chidambaram has asked the country's largest insurer Life Insurance Corporation of India (LIC) to open 1,800 new offices this fiscal. These offices would have to cover all towns with population of more than 10,000 people, said financial services secretary Rajiv Takru, on the sidelines of a meeting between the LIC Board and the FM.
LIC has to achieve a total target of 3,867 offices this year, he said, adding that the life insurer already has about 2,067 offices.
"This has to be established and this we are going to be chasing up on a regular basis to ensure that LIC's own man other than an agent is present in each of these towns," he said.
It has been decided that they would start off as very small offices and later on they will be scaled depending on economies of scale and operations.
"LIC is a 83% market holder in life sector which means that there is no competitor in the market, so it has to show the way to everybody else," said Takru.
He added that keeping that in view, there are three thrust areas which have been identified and are going to be followed. Takru explained that it was decided that those areas which have low penetration of insurance will be addressed on priority. This is becauseIndia
"Insurance, as a method of saving and as a method of security, should be encouraged in those areas where insurance is not there," he said.
It was pointed in the meeting whileDelhi Central India and Northeast will have to have insurance coverage.
Takru added that a strategy has to be worked out for the same, in the short
term.
To ensure that there is no mis-selling, the finance minister called for niche marketing for target groups. Takru said that therefore, there would be no mis-selling and there would be targeted and proper selling to those groups. It was further decided that there should be targeted promotional drives for niche markets, designed to hit the audience and the area which LIC was aiming.
The investment strategies of LIC were also discussed in the meeting and it was opined that there should be proper assessment-based investment as LIC is sitting on a poll of resources, which are growing exponentially.
"Lakhs of crores has to invested by LIC, it is the big boy and therefore development of in-house capacities to the extent necessary for proper assessment of where to make those investments and to, as the phrase goes--get the biggest bank for your buck. They must optimise their returns because only then they can pay the policyholders, as per expectations," Takru added.
With respect to the increase in equity cap of 30% for LIC, Takru said that no final decision has been taken.
"Discussions are ongoing on this and was addressed in the recent Insurance Regulatory and Development Authority (Irda) board meeting," he said. Among other issues, the linking of insurance with banking sector was also discussed in the FM's meeting with LIC's Board of Directors.
Finance Minister P Chidambaram has asked the country's largest insurer Life Insurance Corporation of India (LIC) to open 1,800 new offices this fiscal. These offices would have to cover all towns with population of more than 10,000 people, said financial services secretary Rajiv Takru, on the sidelines of a meeting between the LIC Board and the FM.
LIC has to achieve a total target of 3,867 offices this year, he said, adding that the life insurer already has about 2,067 offices.
"This has to be established and this we are going to be chasing up on a regular basis to ensure that LIC's own man other than an agent is present in each of these towns," he said.
It has been decided that they would start off as very small offices and later on they will be scaled depending on economies of scale and operations.
"LIC is a 83% market holder in life sector which means that there is no competitor in the market, so it has to show the way to everybody else," said Takru.
He added that keeping that in view, there are three thrust areas which have been identified and are going to be followed. Takru explained that it was decided that those areas which have low penetration of insurance will be addressed on priority. This is because
"Insurance, as a method of saving and as a method of security, should be encouraged in those areas where insurance is not there," he said.
It was pointed in the meeting while
To ensure that there is no mis-selling, the finance minister called for niche marketing for target groups. Takru said that therefore, there would be no mis-selling and there would be targeted and proper selling to those groups. It was further decided that there should be targeted promotional drives for niche markets, designed to hit the audience and the area which LIC was aiming.
The investment strategies of LIC were also discussed in the meeting and it was opined that there should be proper assessment-based investment as LIC is sitting on a poll of resources, which are growing exponentially.
"Lakhs of crores has to invested by LIC, it is the big boy and therefore development of in-house capacities to the extent necessary for proper assessment of where to make those investments and to, as the phrase goes--get the biggest bank for your buck. They must optimise their returns because only then they can pay the policyholders, as per expectations," Takru added.
With respect to the increase in equity cap of 30% for LIC, Takru said that no final decision has been taken.
"Discussions are ongoing on this and was addressed in the recent Insurance Regulatory and Development Authority (Irda) board meeting," he said. Among other issues, the linking of insurance with banking sector was also discussed in the FM's meeting with LIC's Board of Directors.
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