LIC clarifies

With reference to the news item “Decline in new premiums of life insurance cos - Drop in sale of ULIPs, LIC numbers contributes to fall” that appeared in these columns on April 7, Mr Rajesh Kandwal, Executive Director, Corporate Communications, Life Insurance Corporation of India, writes as follows:

The said article appears to be an attempt to misinterpret the New Business figures published by the Regulator, IRDA so as to underrate and create a negative perception about the performance of LIC of India.

The correspondent had used an index, Annualised Premium Earning (APE) which is not the accepted index to determine the market share. The market share is determined based on the First Year Premium Income brought in by the Insurers. Better if the Total Premium Income becomes the index for determining the Market Share.

As per the IRDA published figures, LIC has improved its market share since October 2008 from 55% to 61% as at February 09. This fact has been ignored by the correspondent and by using the index of APE, he has commented in his story that the market share of LIC has gone down by 11 percentage point to 36%. I may clarify that the market share of LIC based on the First Year Premium Income from all the segments published by IRDA as at Feb. ’09 is 61% which may prominently be published in your newspaper. Further, it may be pointed out that our market share in P&GS as at February ’09 is 71.8%.

During the month of February ’09 the growth rate of LIC is better than the private insurers. Despite having the huge base of First Year Premium Income for the previous year, our growth rate is still better than the private insurers which registered a de-growth of 29% for the month of February ’09. Hence the caption “Drop in sale of ULIPs, LIC numbers contribute to fall” appears to be misplaced.

The correspondent has attributed the slow down to drop in sale of ULIPs – no facts and figures in this respect have been placed before the readers. It may be pointed out that as a well thought strategy, LIC has been focusing on conventional business from the beginning of the year and so as at 15th March 2009 our growth rate is more than 260% in First Premium Income for the non-linked segment.

During the month of January in order to cater to the need of our customers, in a volatile market scenario, LIC launched guaranteed returns product – ‘Jeevan Aastha’ and collected an amount of Rs 10,500 crore within a short period of 45 days which reflects responsiveness of LIC to come out with a product which fulfils the needs of the customers.

Source:Business Line