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India’s largest insurer Life Insurance Corporation of India (LIC), has kicked-off a massive customer campaign informing customers to buy their popular products before January 1, 2014. The campaign which read, ‘Your favourite products now available till December 31, 2013 only’, mentions the popular products Jeevan Tarang, Jeevan Anand, Bima Bachat and Jeevan Saral, which would be phased out from January 1 onwards.
LIC, which has already withdrawn 19 of its products, is expected to halt sales of several more products in December. From January 1 onwards, the insurer will begin with a portfolio of 15 products, some of which would be modifications of existing products.
The new product regime that has made changes in the surrender charges and product structure of traditional policies will be enforced from January 1, 2014. These guidelines, which were earlier to be implemented from October 1, 2013 had led to a customer frenzy due to fear of non-availability of the products from October 2013 onwards.
Industry experts said that this was the primary reason why LIC had seen a sharp rise in new premium business in September. A similar jump is expected in their first premium for the month of December too.
Usha Sangwan, Managing Director of LIC had earlier told Business Standard that in September, the state-owned life insurer had a 91 per cent market share in terms of number of policies.
Sangwan explained that their performance in September was excellent. “Earlier rules had said the new product regime would be implemented from October onwards, and September was supposed to be the last month in the old regime. In September, we had 100 per cent increase in business, despite volatility in the market,” she said.
LIC had collected Rs 6,000 crore of new business premium for September. With old products being phased out, Sangwan said that they are expecting a huge rush in December too.
“For the quarter ending December 31, we are looking at a 91 per cent market share in new business premium too,” she had added.
Life insurance companies are apprehensive of the customer demand for products from next year onwards. While the new traditional product regime has made the system more transparent, insurers are sceptical about prospective policyholders’ adaptability to the new norms.
Hence, the largest insurer, LIC, is also ensuring that its business performance does not have any impact in the last quarter, which is usually the most productive quarter in terms of new premiums.
“Almost 60 per cent of LIC's total business comes from the fourth quarter. However, the same ratio may not be seen due to the regulatory changes. But, since traditionally, customers are in a savings mode in the fourth quarter (Q4), we expect business to be robust. Q4 is demand-driven. We are looking at launching our high-selling products with very little variations,” Sangwan had stated.
According to LIC's website, it has already withdrawn 19 products that include Jeevan Nischay, Market Plus I, Wealth Plus, Jeevan Nidhi, Jeevan Vaibhav (Single Premium Endowment Assurance Plan), Child Fortune Plus and Jeevan Sugam, among others.
India’s largest insurance company collected new premiums of Rs 37,906 crore for the April-September 2013 period, compared to Rs 35,341.53 crore in the year-ago period — a growth of 7.25 per cent. The insurance sector collected Rs 50,056.56 crore of new premiums during this period, with a rise of 6.5 per cent over the last year.
