LIC ties up with Andhra Bank

Life Insurance Corporation of India (LIC) is expecting alternate channels to contribute to five per cent of its premium income this financial year.

This means a substantial increase as compared to the last financial year when alternate channels contributed to around 1.23 per cent of the premium income of LIC.

Addressing a press conference held to announce LIC's tie-up with Andhra Bank for bancassurance, R N Bhardwaj, chairman, LIC, said, "We have already tied up with 30-odd banks for bancassurance and we expect around five per cent of premium income from alternate channels this year."

Last year, the first premium income for LIC from alternate channels was Rs 194.4 crore with bancassurance contributing Rs 140 crore.

"While the average size of policy for LIC is Rs 76,000 per policyholder, through bancassurance it is Rs 1,41,000. Besides, while the average first premium income of LIC has been Rs 5,000 from every policy, it has been Rs 26,000 through bancassurance. We can, therefore, approach the high-end customers also via this channel," Bhardwaj added.

Alternate channels include bancassurance, corporate agents, brokers, cooperatives and worksite marketing, among others. This year, Andhra Bank, itself is targeting to garner a premium income of Rs 100 crore for LIC.

"The focus of banks is now on earning more fee-based income rather than fund-based income. Bancassurance, therefore, is a logical extension to the existing services of the bank," T S Narayanasami, chairman and managing director, Andhra Bank said.

"Today, the insured population stands at only nine per cent of the total population. This leaves a great scope for selling insurance products," he added.

The bank will take up bancassurance initially at 200 branches, mainly rural and semi-urban and extend it later to all branches. "We aim to earn an income of Rs 17 crore during the first year of our operation through this bancassurance tie-up," Narayanasami said.

Andhra Bank has been associated with LIC through products like AB Jeevan Abhaya, AB Jeevan Prakash and liability insurance on retail loan products.

"We aim to cross nine lakh accounts under AB Jeevan Abhaya as compared to 4.11 lakh accounts opened so far," Narayanasami said.

"Besides, we also aim to cover all our retail loan accounts,(around 87,000) by the end of the current financial year," he added. The bank has covered 14,163 retail loan accounts as yet.

Vepa Kamesam, managing director, Institute of Insurance and Risk Management (IIRM) said that they are keen on tying up with the banking fraternity to give training for bancassurance purposes.