The Hindu : LIC faces stiff challenge

Online edition of India's National Newspaper
Friday, Nov 15, 2002

Business

Business

LIC faces stiff challenge

By Our Special Correspondent

CHENNAI NOV. 14. The rapidly falling interest rates as also the strong competition from new entrants in the life insurance sector, posed a challenge to the growth of the world's biggest insurance corporation, LIC of India, its Chairman, S. B. Mathur, said on Wednesday.

The entire financial sector was affected by dwindling interest rates, which was changing nearly everyday and it made investment decisions of the LIC, especially in the bonds, very difficult. After the UTI bubble burst and the continuing troubles in some of the cooperative banks as well in some industrial finance institutions, were all affecting long-term investments.

Mr. Mathur said 12 new players had entered India's life insurance sector. They all had sound background and high brand equity. "They might not be very ethical in all respects, but they pose a big challenge to LIC," he told a meeting organised to mark the first anniversary of the Academy of Insurance Marketing and Agency Management, a training centre for Development Officers started by the National Federation of Insurance Field Workers of India (NFIFWI).

Mr. Mathur told the development officers that competitors would concentrate on a range of insurance products, especially areas such as pension funds, which was not being given due importance now. Also, he said `under insurance' of clients with high net worth was a big problem. "So our competitors would look for persons inadequately covered by us and we must work carefully to ensure that the people are not weaned away from LIC". He said LIC was setting apart Rs. 55 crores to be utilised for giving laptops to its 19,000 DOs countrywide.

The NFIFW's All India President, R. Jayaprakash, and its secretary general, Anand V. Tyagi, said despite all the competition, LIC was a special brand in the insurance sector. Its record and the insight that its agents possessed about Indian way of approaching insurance gave them a tremendous edge. However, they urged the DOs to turn more aggressive in the competitive era.

The Academy's Director, K. Chandrasekaran, recalled how the National Federation along with the support of the LIC founded the academy. It had so far trained 694 candidates had been held and 22 sessions conducted for agents.

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