If you cannot sell to those who are alive, tap the family when the breadwinner is dead. This seems to be the new mantra for the Life Insurance Corporation of India when it comes to canvassing fresh pension business.
As part of this new strategy, while presenting the settlement cheque on death claims, the LIC agent will advice the family members to invest the sum in pension plans.
"LIC is targeting the proper demographic profile of Indians who will be receptive to buying a pension plan," said R K Vashishtha, the newly appointed LIC managing director, in his first interview to the press.
The corporation is giving a special thrust to pension products. It has increased its agency force to over 750,000 in the first seven months of the fiscal.
The insurer also hopes to push pension products through its bancassurance partner -- Corporation Bank. "We will sell simple existing products over the bank counters, with maximum focus on pension products," said Vashishtha.
"The total quantum of pension business done by LIC and the new players is just peanuts, looking at the population of the country," said Vashishtha. According to latest statistics, only around 11 per cent of India's working population has any form of social security for old age.
Added to this is the fact that life expectancy is expected to increase from 77 to 85 years in the next decade. Yet most professionals and self-employed have no form of guaranteed post-retirement income.
Selling pension products has been a difficult proposition, given the low remuneration agents are paid in terms of commission. This amounts to just 2 per cent of the value, as opposed to commission rates of 5 per cent and more on other risk products.
With an enhanced army of feet on the street, LIC is educating its agents to push pension sales. The state insurer has little choice given the way new players have cornered significant share of the pension pie, limited though it may be given the population of the country.
New insurance players have cornered a significant share of the Rs 35 crore (Rs 350 million) plus pension market. ICICI Prudential Life Insurance Company garnered more than 25 per cent of the market in the first quarter of fiscal 2003.
Currently, there are three main players -- LIC, ICICI Prudential and HDFC Standard Life.
