LIC to take fight to niftier rivals

How will you improve LIC's market share? How will you change the brand image of the organisation, which is looked at as a ponderous monolith?

These were the key questions posed to the three managing directors in the race for the post of chairman of the Life Insurance Corporation of India (LIC).

The three LIC managing directors "" K Sridhar, A K Shukla and T S Vijayan "" were interviewed last month by the government as R N Bhardwaj, the current chairman, retires at the end of May.

The questions were crucial, as surely were the answers: the government has expressed concern over LIC's declining market share and brand equity and the concurrent rise of private insurers who have already garnered about 20 per cent of the insurance pie after they were allowed entry in December 2000.

"Our aim is to get 90 per cent of the market and we have aggressive plans to retain our shares," LIC managing director Sridhar told Business Standard.

The public perception is that LIC is an ageing organisation and it needs to counter this by appealing to the younger generation, he said.

To prepare for the war ahead, LIC plans to arm itself with a battery of MBAs, chartered accountants, and company secretaries to counter the competition, and regain past glory.

It has identified a three-prong strategy to regain 'lost' market share. Hiring the top-notch professional, increase the feet on the street and restructure branches to ensure the customer is reached.

Since the insurance sector was privatised in December 2000, the sector has grown manifold and private life insurance players have increasingly mopped up market share.

After more than three years of not hiring, LIC has come to the employment market with a vengeance as it seeks professionals to fill the vacancies in the marketing, actuarial science, pension and group business.

Further, it proposes to top up its team of agents by over 10 per cent despite its 11-lakh plus field force.

"Retaining talent has today become difficult as it is a question of tough selling," said senior LIC management. The corporation has recruited 20,000 new agents in January alone. Of every 10 new agents recruited, only 7 remain after the first year, and this gets further reduced over the years.

LIC targeted new premium income of Rs 18,000 crore in the current year, as it aims for 90 per cent of new business income and 95 per cent of new policies. This is expected to include about Rs 6,000 crore through sale of unit-linked insurance policies (ULIPs).

"We are pushing for a growth of 40-50 per cent in new business in the current financial year, largely on the back of sale of ULIPs," said Sridhar. Plans are afoot to restructure its 2,048-strong branch network in a manner in which LIC is present near customers' residence.

"Not many people use the internet, except for sophisticated individuals. Moreover, our branches today are clustered in one area, and there is a need to increase our presence through the hub and spook concept," said a senior LIC executive.