LIC of India (Life
Insurance Corporation of India) still dominates the sector with a 73 per cent
share in all new premiums collected.
Of the total 34 odd
crore policies in force in 2012-13, 29 crore are from LIC of India
In the last five
years, LIC of India has gained 2% in market share from private players. After
the 2008 stock market debacle, unit linked plans that private players offered
suffered a setback, with investors moving back to traditional plans - an LIC of
India stronghold.
While the LIC of
India towers over the life insurance market, 23 private players fight intensely
to divide up the rest of the pie.
The largest of them,
ICICI Prudential, has a 4.7% share in new premiums. Only 5 other players have
more than 2% market share. Trust, access and safety seem to be paramount in the
customer’s mind when choosing an insurance product; and LIC of India seems to
score well on all these.
LIC of India has the
largest number of offices and feet on the street in the market. LIC has on its
rolls, more individual agents than all private insurers put together.
In 2012-13, LIC of
India employed 11.72 lakh field agents, while private insurers together
employed no more than 9.49 lakh.
LIC of India receives
about 96% of its new business from its individual agents. For private insurers,
nearly half their new business comes from corporate agents and only 40% through
individual agents.
The other big factor
favouring LIC of India, of course, is the implicit sovereign guarantee backing
up its policies.
As life insurance
products are long term in nature, with investors paying premia for terms as
long as 30 years, they obviously value staying power.
But in spite of such
a sizeable business, LIC of India is no more profitable than its next biggest
rival - ICICI Prudential. LIC of India reported a net profit of Rs. 1,437 crore in 2012-13, while ICICI
Prudential Life Insurance earned Rs. 1,496 crore.
The total assets
under management for all life insurers is about Rs. 30 lakh crore, of which LIC
manages Rs. 26 lakh crore.
Despite managing such
a large corpus, LIC has a modest capital base. While ICICI Prudential has a
share capital base of Rs. 1,429 crore, even after adding its reserves and
surpluses, LIC sports just Rs. 500 crore
of net worth.
That’s not surprising
given that LIC distributes nearly all its earnings as dividends to the
Government of India, year after year.
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