‘LIC will reduce but not fully exit its stake in IDBI Bank, which remains an important bancassurance partner,’ says LIC of India’ MD and CEO R Doraiswamy.
Illustration: Dominic Xavier/Rediff
Key Points
- GST exemption improved affordability and boosted Q3 policy sales.
- Market share stands around 57%; LIC aims to move back above 60%.
- Focus remains on sustainable, profitable growth rather than chasing numbers.
- Margins improving; annual at 18.8%, quarterly above 21%.
- Real estate monetisation is a key profitability lever.
- LIC to reduce but not exit its stake in IDBI Bank.
- FY26 premium growth expected to match or exceed industry growth.
R Doraiswamy, managing director and chief executive officer of Life Insurance Corporation of India (LIC), says policy sales have gathered momentum after the goods and services tax (GST) rationalisation on individual life insurance premiums, increasing affordability for customers, during an interaction with Aathira Varier, Subrata Panda and Manojit Saha of Business Standard in Mumbai.
GST Relief Lifts Q3 Policy Sales
Did GST rationalisation play a big role in the pickup in policy sales in the third quarter (Q3)?
The decision of the GST Council to make individual lines of insurance business exempt from GST has reduced the prices that the end customer has to pay.
To that extent, affordability has increased. Compared to what the customer actually paid and what he gets back, returns have improved.
It has certainly resulted in increased interest in life insurance and reduced resistance to buying insurance.
If you look at the number of policy sales, there has been growth in Q3 of the current year over Q3 of last year, and a good part of it can be attributed to the GST exemption.
We had changes brought in because of the master circular issued by the Insurance Regulatory and Development Authority of India (Irdai).
Products were realigned, and the commission payable in the first year was also realigned. So there was a reduction in the number of policies sold.
LIC Targets 60%+ Market Share
Market share of LIC has again gone down to about 57 per cent. Do you want to maintain a certain level of market share?
Market share depends on how many companies are in the market and how they perform.
If you look at the entire financial year, it is somewhat cyclical. LIC traditionally does well in the fourth quarter (Q4). We are continuing to focus on improved sales.
In the current year, particularly Q3, has seen a good increase in the number of policies we have sold, and we expect that momentum to continue in Q4 as well.
We expect LIC’s market share to improve in the last two months, too.
We are looking at sustained, profitable growth as our main focus. As I have repeatedly said, I am not looking at a particular number for market share.
We want to protect the market share we have and remain a clear market leader, with performance at a much higher level than the rest of the competition.
On overall market share, I would like it to be more than 60 per cent consistently.
Yes, whatever the earlier figures were, we would try to regain them. But our main focus will be growth, and that too at a sustainable level.
Photograph: Dado Ruvic/Reuters
Product Realignment Impacts Retail Growth
Growth in retail non-single premium products has been in single digits. What is LIC doing to correct this?
From October 2024, we withdrew most of our individual policies and relaunched them with modified features to comply with the Irdai master circular.
This caused a decline in policies sold, and we have been recovering since then. However, Q3 alone showed decent growth.
Our focus has been to increase premium income across all segments.
Since going public, we have directionally shifted to increasing the share of non-participating (non-par) business.
Most products launched since 2022 are in the non-par segment. There has also been strong growth in annuities and unit-linked insurance plans.
That is why growth in conventional non-single policies appears lower, but overall, we are trying to grow across all segments.
We focus on growth in both individual and group segments. We remain the market leader in individual non-single business as well and are working to increase our market share further.
Real Estate Monetisation in Focus
How are you looking to leverage your real estate assets?
LIC has always focused on augmenting its revenue from all possible sources.
We have been working on improving our income and rationalising expenditure so that our bottom line continues to improve.
One of the areas we focus on is getting better returns from our real estate assets.
We are one of the largest property owners among institutions in the country, and increasing revenue from these assets has always been a focus.
After the Budget mentioned asset monetisation, we started receiving questions on this, and we reiterated our resolve to ensure our properties contribute to profitability.
We are continuously trying to increase revenue from our properties.
We are taking several steps and exploring how to leverage existing assets to generate the best possible returns.
Balanced Investment Strategy Continues
The corporate bond market has been relatively muted this year as state development loan (SDL) rates have gone up. Has your investment strategy changed?
Our strategy is, first, to ensure asset-liability management and, second, to maximise returns for policyholders based on the investments we make.
We also have investment regulations that must be adhered to. We need to balance all three.
Government securities and SDLs are part of our mandatory investments under the regulations, so we necessarily have to invest a portion in these instruments.
Whenever corporate bonds with acceptable ratings and better returns are available, we invest in them.
Our focus is on the best possible instruments permitted under regulations. We need to match asset duration with liability duration.
We are not shying away from corporate bonds. Whenever they present a good opportunity, we lap them up.
In fact, we have made considerable investments in corporate bonds as well.
Would you consider a 100-year bond?
If it is issued, we will certainly examine it closely.
Photograph: PTI Photo from the Rediff Archives
Margins Show Steady Improvement
The Reserve Bank of India (RBI), in a recent report, mentioned conservative returns by insurers. What changes are required?
Insurance includes both risk and savings components.
Returns apply to the savings portion, while the risk portion covers insurance benefits and associated costs such as underwriting, medical examinations, and intermediation.
Insurance is also a push product, which adds to costs. Returns on annuities, for example, are comparable to long-term fixed deposits.
Given the long-term guarantees involved, a balanced investment approach is required. Insurance cannot be directly compared with other financial products.
IMAGE: R Doraiswamy.
Photograph: Courtesy, LIC
Will RBI’s mis-selling guidelines impact insurance companies?
Such guidelines are in the right direction, as they prioritise customer interest.
Complaints against LIC for mis-selling are minimal, so we are not very affected by the proposed guidelines and will continue strengthening trust in policy sales.
Industry-wide, there may be some impact, but proper due diligence and other measures proposed in the guidelines can address these issues.
With commissions being in focus lately, is there a plan to revise your commission structure?
We have already rationalised commission structures. After the 2016 regulatory changes, LIC did not increase commissions, unlike some others.
With the 2024 master circular, we realigned commissions along with product changes.
Currently, no further changes are planned, but we will comply with any future regulatory requirements.
IDBI Stake to Be Reduced, Not Exited
Will you continue to hold some stake in IDBI Bank following the disinvestment process?
We currently hold 49.24 per cent in IDBI Bank. As part of the government’s disinvestment process, we will reduce our stake but will not exit completely.
IDBI remains an important exclusive bancassurance partner for LIC.
When will margins be on a par with private sector players?
Margin improvement is continuous and influenced by external factors. We are improving our product mix and rationalising expenditure.
Margins were 18.8 per cent for the year and over 21 per cent for the quarter. Sustaining such levels annually will bring us closer to market benchmarks.
Also Read: ‘Government is selling people’s trust in LIC’
FY26 Growth to Match Industry
Will the non-par share increase beyond 35 per cent?
It will increase slightly, but we will maintain a balanced product mix and ensure the par business also grows.
How much new business premium growth do you expect in 2025–26?
Our focus is on premium income growth to match or exceed industry growth. That has always been the focus. We will try our best.
If market share has to grow, our growth should be equal to or better than the industry.
Feature Presentation: Rajesh Alva/Rediff
