Insurance Regulatory and Development Authority of India- IRDAI- Chairman Mr Debasish Panda has given a call for Insurance for all in India by 2047. It is a desirable and necessary goal but is it achievable? This is a question in the minds of insurance people including me and I have attempted to analyze the different parameters for completing this task in this article.
Insurance Industry in India
India has overtaken China and UK to become the world’s 10th largest life insurer and third strongest Brand as per Global Insurance Brand Study 2021.
The insurance market here is expected to reach 200 Billion USD by 2027.
The Insurance penetration which was 3.76% in 2020 has touched 4.2% by 2021 with reference to the country’s GDP, although it is still lower when compared to the world’s average of 7%.
The total life insurance business for the year 2021-22 is Rs 314263 crores, out of which LIC alone procured Rs 198759 crores and the balance Rs 115503 crores by the Private Insurers.
A Close Look at the position of the Monolith- LIC of India
As on 31-03-2022, LIC has one Central Office, 8 Zonal Offices, 113 Divisional Offices, 2048 Branch Offices, 77 Pension & Group Schemes Units, 4 Salary Savings Scheme Units and 1546 Satellite Offices. No other Insurance company has so much presence in both Urban and Rural areas.
The total strength of employees is 104079.
The total strength of Agents is 1326000.
The First Year Premium for the financial year 2021-22 is Rs 198759 crores with a market share of 63.25%.
The number of Individual policies is 217.55 lacs, occupying 74.6% of the market.
Total Business in Force is 8.52 crore policies.
LIC settled Rs 192568 crores on 267 lac policies as claim settlement during the year, achieving 90.9% under Maturity Claims and 98.76% under Death Claims.
Total Income of the Corporation is Rs 7.21 crores.
Only Premium Income out of this is Rs 4.27 crores.
Total Payments is Rs 3.57 crores.
Total Life Fund as on date is Rs 37.35 crores.
Total Assets of the Corporation is Rs 42.30 crores.
Among the world top 500 companies LIC occupies the 98th position surpassing the Reliance Industries- position number 104- and the State Bank of India holding the position number 236 as on 31-03-2022.
The business of the top 5 Private Insurers is given below for the purpose of comparison with LIC of India=
SBI Life Insurance company- Rs 25458 crores- market share 8.1%.
HDFC Life Insurance company- Rs 24301 crores- 7.73%.
ICICI Prudential Life Insurance company- Rs 15035 crores- 4.78%.
Bajaj Allianz Life Insurance company- Rs 9135 crores- 2.9%.
Aditya Birla Life Insurance company- Rs 5665 crores- 1.8%.
Total Group Insurance Business during the year in question is Rs 189004 crores with LIC annexing 76.16% of it- Rs 143938 crores and the balance Rs 45065 crores- 23.8%- having been done by the Private Players.
With LIC being in a commanding position in the industry, it is its major responsibility to realize the objective of the IRDAI Chairman- Insurance for All by 2047. Let us now focus on a few initiatives to achieve this.
A Few Steps for the Future
A stand for Agent. Yes, there is no future for insurance without the complete and full cooperation of the agency force. It is the duty of each insurer to encourage the young agents. These enthusiastic persons should be identified and given a lot of incentives to improve their business year after year. The present number of the MDRT- Million Dollar Round Table- 16564 has to be enhanced manifold. Agent is the backbone of any organization. Lady agents have to be encouraged specifically especially house wives since they can only tap the inner resources in every family and they can more easily win the confidence of the lady at home than by an outside male agent. The insurer should begin working on a Startup model in its initiative, enterprise and risk taking. Then only results can be seen fast. Skill development among the employees is a must for this objective. Rural thrust is one of our important aims for increasing our business, especially we should spot both unemployed rural youth and the senior Panchayat Leaders to do our business. Rural Career Agency scheme should be revived expeditiously. The rental value of the vast buildings of LIC has to be increased manifold particularly in the Metropolitan cities and Urban areas. Much attention has not been given to this aspect so far. Digitalization has become the buzzword now. 5G Introduction promises high speed Internet Connectivity. Insurance industry too should utilize this situation and bring in Digital reforms in order to procure more business and improve the quality of services to its customers. This kind of digital solutions will enhance the ease of doing business since this modern approach will bring in changes in the attitude of consumers.
Simplification of existing products and innovation of new products are the requisite of the present times. Some old products which are not sold much by the agents should be removed from our books. This is what the public expects from the industry as it will help in the realization of their financial security.
The two Government Schemes- PMJJBY & PMSBY have got wide response from the public. Pradhan Mantri Jeevan Jyoti Bima Yojana- PMJJBY- has been taken by 6.4 crores of people and Pradhan Mantri Suraksha Bima Yojana- PMSBY- attracted 22 crores of our population. These schemes have settled claims worth Rs 14144 crores- PMSBY- and Rs 2513 Crores- PMJJBY. Hence these welfare measures must be further popularized among the public, especially the poor and the rural.
Under 3.0 stage of LIC of India- 1.0 stage being the Nationalization of life insurance in 1956 and stage 2.0 being the opening of the sector to the Private in 2020- the Chairperson of LIC Mr MR Kumar has declared a slogan called PROMPT- P- Product Mix, R- Reinforce or Relevant Initiatives, O- Operational Efficiency or Improvement, M- Multichannel approach to Marketing, P- Proactive Digital Push and T- Training. This approach will further consolidate the primary position of LIC among the insurance companies and help in tapping large business.
Role of the Regulator
Insurance for All by 2047 is the call and desire of the IRDAI Chairman. It is an excellent objective for our nation. Already the Chairman is paving the way for it by liberalization of procedures in approving the new products, bringing in the system of ‘ use and file’ instead of the present protocol of ‘ file and use’ and cutting down unnecessary statements to be submitted by the insurers. He has also formed a few Committees headed by insurance veterans to bring about improvements in the functioning of the insurance companies as well as achieving more ease of doing business.
IRDAI is working on BIMA SUGAM- a one stop shop for insurance. It is a new on line platform approved by the Regulator where different types of insurance products will be sold. Those policies will be in the digital form and thus buyers need not worry about the safe keeping of their documents. Besides selling and servicing of policies, Bima Sugam will make it possible for the customers to port their policies from one provider to another. I am sanguine that with these positive approaches, insurance industry will be able to stand up to the target and dream of the insurance Regulator.
