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Thursday, October 30, 2014

Hamstrung by the limited number of products: LIC chairman

Life insurance Corporation, the country’s largest insurer, is facing a challenge due to the limited number of products in its basket after the new regulatory guidelines came into force in January 2014, said a top company official.

The Insurance Regulatory and Development Authority put in place a new set of guidelines for life insurance products which involved changes in product structure, and required insurers to phase out all old products and re-file all their existing products.

LIC Chairman SK Roy said that, at present, the company has only 22 products in the market as compared with 60-odd products earlier. He was speaking at the Asia Insurance Post seminar in Mumbai.

“For an organisation of our size with an agency force of 1.2 million, 27,000 unit managers and a huge marketing team, there is a very large appetite for products, and we are struggling to meet the demand. We cannot escape the reality that products are a major challenge for the life insurance industry,” said Roy.

On being asked about the insurer’s investment during the first half of the current fiscal, Roy said the company has Rs20,000 crore in equity investments in the period.

“We have had a very long bull run so this has been an opportunity for us to book some profit. We are long-term investors, so we have to do a balancing act so that we don’t liquidate all our assets and yet book profits to pass on to the policy-holders. So we do a tightrope walk on that,” said Roy.
Investment plans

Asked about the insurer’s plans to invest in public sector companies in line with the Government’s divestment plans, Roy said, “Contrary to what is believed, we have done well on this front, so if an opportunity comes, we will look at it. Right now there is no opportunity.”

Roy said the insurer’s design team was working on a product on the unit-linked platform, where it is currently not present, and the insurer would launch a Ulip product by the year end.

Source : The Hindu


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