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Private players eat into LIC pie

Sidhartha in New Delhi

Within 18 months of entering the market, private insurance companies have made a dent in Life Insurance Corporation of India's business in segments like individual pensions and group insurance.

LIC, however, maintained a near monopoly in the overall market with a share of about 97 per cent.

According to data for the first quarter of 2002-03 compiled by the Insurance Regulatory and Development Authority, private insurance players have cornered nearly 35 per cent of the individual pension business and have garnered 38 per cent share of the group insurance business.

While LICs premium income from new individual pension policies amounted to Rs 215.41 crore (Rs 2.15 billion) during April-June this year, the premium income of all private companies amounted to Rs 114.13 crore (Rs 1.14 billion) in the same period.

Similarly, during the first three months of the financial year, private players cornered a premium income of Rs 3.94 crore (Rs 39 million) from the group insurance business, as against LICs Rs 6.33 crore (Rs 63 million).

The nine categories of life insurance business can be split into three categories according to the progress made by the private players.

While individual pension business and group insurance can be clubbed in the most successful segments for private players, non-linked single premium falls in a category where moderate progress has been made.

The third category comprises businesses like rural, group insurance and group gratuities, linked individual business where LIC continues to be on firm ground having lost little business to the combined private sector.

Insurers explained the dip in LICs business to falling yields as also the private players initiatives to highlight some of the tax benefits available in segments like pensions.

"LIC lost a lot of business in the first quarter due to the confusion about service tax while private companies managed to perform better. Also, we have not advertised some tax benefits which the private companies have done, though all the incentives are available to us as well," said an LIC official.

While LICs new premium income from non-linked single premium policies amounted to Rs 363.45 crore (Rs 3.63 billion), the private players generated a premium income of Rs 38.08 crore (rs 380 million) during April-June 2002, accounting for 9 per cent of the market.

In the rural markets in segments, for which data is available with IRDA, the private players have not made even a marginal dent.

In the single premium category in rural areas, for instance, the dozen private players had a cumulative premium of Rs 439,000 as against LICs 10.32 crore (Rs 103 million).

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