LIC looks at stronger digital presence in bid to grow market share

LIC, gearing up for its IPO, will look at strengthening digital presence in its efforts to halt sliding market share

IPO-bound Life Insurance Corporation of India (LIC) has been battling a peculiar problem for the past so many years. The problem may be attributed to its failure in halting the reduction in its market share even as new generation life insurers have been galloping ahead on that front. LIC’s over dependence on physical agents has been seen as contributing to this problem.

In a bid to reduce its dependence on agents in the field, LIC is now looking towards a new digital avatar and has lined up measures to strengthen its digital presence.

Shifting its stance and banking on more digitalisation aspects, the life insurer would soon line up an entirely new vertical that would stand cemented on a digital platform. This is expected to help in its digital growth and also lure more investors after it goes public on the bourses.

Dip in market share prompts LIC digital plan

The company will look towards revamping its existing online space so that a new and strong digital presence is ensured.  It may be noted that the market share of LIC had seen a sharp decline between December 2020 and January 2022, as it dipped from 68.05 percent to 61.4 percent during the period. That meant a loss in market share to private insurance companies by around 13 percentage points. In comparison, the June 2020 figure had stood at 74.04 percent market share.

Over dependence on agents who were not in a position to knock at the doors of prospective customers in the midst of the Covid-19 lockdowns and related restrictions is seen as a reason for this sharp fall in market share.  The lack of strength in its online capabilities had pulled the insurer down during the period. 

LIC more dependent on agents until now

A look at the private insurer incomes that were driven mostly by digital tools would come in handy here. Statistics revealed by the insurance regulator has clearly stated that private insurers grew their new business income by 29.8% to Rs 79,216.84 crore during the April-December period, while for LIC the numbers nosedived by 3.07 percent to Rs 1.26 trillion compared to the year-ago period. It also needs to be noted that as many as 1.36 million agents help LIC generate more than 90 percent of premium income, while bancassurance and other channels contribute the remaining chunk.

In an era where customers see online support for every financial need, LIC has lacked much on that front. The new decision by the life insurer to hop on to the digital bandwagon in a major way would most probably do wonders for the company.

It is expected that the new digital vertical will take shape very soon, and might need a bit of capital to drive the plan. LIC might knock at the government door for support on that front.

https://www.digpu.com/business-and-finance/lic-mulls-stronger-digital-presence