‘LIC’s growth has been better after liberalisation’

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: Life Insurance Corporation of India (LIC) was created on September 1, 1956 through an LIC Act passed by Parliament in June 1956. The purpose of such a corporation was to spread the awareness of life insurance and ensure financial covers at reasonable costs for the masses, especially the rural population. From merely being perceived as a tax-saving avenue for the middle-income group, Life Insurance Corporation of India (LIC) has grown to a size of 22 crore account-policies today. But TS Vijayan, LIC chairman, disagrees that policies were largely purchased for tax-savings rather than for investments, the reason being the number of individual policy-holders, at any given time, were much higher than those of tax-payers.

He spoke exclusively at length to OP Thomas of The Financial Express on the corporation’s future plans and challenges ahead. Excerpts:

LIC, before the sector was opened up in 2000, largely thrived on tax-saving schemes for the salaried middle-class. What is your take on this?

This is not true. We have 22 crore account-polices, of which about 12-13 crore accounts are individual policies and we don’t have that many (individual) tax payers! The corporation has been in existence for the last 60 years and has been a saving platform for the vast majority of rural and middle class population.

How is LIC coping with competition after the sector has been thrown open to private sector participation in 2000?

There are 16 players from the private sector, with or without foreign partners. However, as far as LIC is concerned, our growth has been better after liberalisation.

Why and how?

The primary reasons for the growth have been largely due to the growth rate that has increased the number of investors and the awareness of insurance products.

The fact that LIC is government-owned has also brought about the trust factor to the fore. There is also a flip side that the corporation is seen as not being ‘tech-savvy’ and that the processes are slow. These, however, are assumptions.

The comparison is made with the new companies that have a technology platform but with no legacy and no papers. LIC is tech-savvy indeed but being an old player, it had to catch up with the huge data base.

Our rollout that commenced in 1996 was completed 100% last year. We have put in appropriate systems and technology in place now.