Mumbai Life Insurance Corporation of India (LIC), which is likely to go public soon, has steadily handed over market share to private insurance companies, especially those owned by banks, after the pandemic hit India.
According to data from the Insurance Regulatory Authority of India (Irdai), the insurance giant recorded a market share decline of around 10 percentage points since October 2020 and around 8% between December 2020 and December 2021. Between December 2020 and now, LIC’s market share in terms of premium income declined from 68.05% to 61.4%. Furthermore, the market share has declined by 13 per cent since June 2020, when it controlled nearly three-quarters of the market.
Latest data indicates that the state-run insurer has failed to attract enough new retail customers, especially after the announcement of LIC’s IPO in February 2021. However, a major part of the decline may be triggered by the pandemic and how LIC generates new business.
After the pandemic hit India in early 2020, insurance companies had to rework their strategy, including digitizing their processes, retraining their agents and physically contacting customers for fear of infection. To address the problems involved increasing our reliance on the banking channel. Experts said unlike private insurers, which rapidly adapted to new conditions, LIC, which relies on its millions-strong agents to bring in new customers and renew premiums, found it challenging to cope with the change. .
An LIC spokesperson did not immediately respond to an email seeking comment.
According to IRDA data, private life insurance companies, especially those controlled by banks and selling policies mainly through bancassurance channel, grabbed market share at the expense of the public sector giant. Between June 2020 and December 2021, bank-owned private life insurance company SBI Life Insurance’s market share increased from 6.2% to 9.16%, HDFC Standard Life’s market share increased from 5.35% to 8.38%, ICICI Prudential Life’s market share increased from 5.35% to 8.38%. The stake increased from 3.04% to 3.04%. 5%, Kotak Mahindra Life’s market share increased from 1.15% to 1.8% and PNB Met Life’s market share increased from 0.48% to 0.75%.
LIC also saw a sharp drop in premium collection through its primary route- agency channel. This is because LIC relies on its 1.2 million-odd agents for policy sales and premium collection.
With bank channels becoming increasingly important for savings product distribution and digital channels for retail security, experts said heavy reliance on agency-led distribution channels, lack of bancassurance and failure to provide LIC There may be turbulent times in terms of development. Changing itself enough to adapt to the rapid digitization of consumer-centric processes.
24 life insurance companies in the country collected new business premium of 2.05 trillion during the April-December period. But LIC’s market share in terms of premium income has fallen sharply since June 2020 despite no new insurance players entering the life insurance industry.
Unlike LIC, private insurance companies, which have been able to reduce their dependence on physical agents, strengthen their bancassurance channel, substantially digitize their processes and transform the way they serve customers as per their needs or the evolving market. enabled, has shown a clear increase in performance. As per IRDA data, in the last one year and also from June 2020.
A closer look at the IRDA data reveals that LIC’s loss in premium-income market share is primarily accrued to customers under individual single premium policies, group-single policies and group non-single premiums of the state-run insurer. due to failure to perform and maintain policies
In the last one year, LIC’s new business under individual single premium policies (targeted at retail customers) declined by 27.5% 16,671.3 crore and under group non-single premium policies, this is a steep decline of 62% 1,909 crores. On the other hand, in these two key segments, private insurers grew their new business by 32.4% and 30% respectively in the last one year. LIC’s new business in Group Single Premium segment grew by 3.9% 87,331 crore, while private insurance companies increased it by 30% 27,072 crore as compared to the previous year.
The government is relying heavily on the non-tax revenue generated from the sale of its stake through LIC’s mega IPO, which is expected to provide greater value to the insurer According to some news reports, 15 trillion.
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