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LIC’s market share drops in 2014-15

LIC’s market share drops in 2014-15

 

S.K. Roy, chariman, LIC, explained at CII summit where the report was released: “In 2002, the number of individual agents associated with life insurance was 8.26 lakh which reached a peak of 2.9 million in 2010 and is now 2.19 million. This is not the cause, but effect of low growth.” He added that one has to plan for growth and value creation together at the same time.” Maybe in the past we did not see both together. We grew but maybe some stake holders felt that they did not experience value proposition that they were looking forward to. Perhaps this is one of the reasons that we experienced a slump,” he added.
Global insurers target EMs

Despite With the focus returning to growth and combating low interest rates in matured economies, insurers are seeking to expand their presence in emerging markets, in order to capitalize on better growth dynamics. Many global insurers are targeting acquisition opportunities in the emerging markets (EMs) of Asia, Latin America, and Central and Eastern European region.Despite the modest growth in bond yields, the overall low interest rate environment remains a key concern for the insurance sector, mainly for the life insurance sector due to their guaranteed savings product offerings. To ease the pressure, life insurers continue to de-risk and realign their operations, says the CII- Ernst & Young report. As part of their strategy to come out of this phase, life insurers are adopting several strategies, such as realigning the product mix, minimizing guarantees, selling non-core businesses and focusing on emerging markets. Most life insurers are shifting their product mix away

from spread based products to fee-based products. Several insurers have reduced the emphasis on the spread business, while raising the share of fee-based retirement, pensions and protection business. These product mix shifts are aimed at reducing the exposure to low interest rate risk. In addition, insurers are aggressively revamping their product design, including increasing fees, limiting features, reducing guarantees and rationalizing bonus rates. Several life insurers are restructuring their operations and shedding non-core businesses to reduce their exposure to interest rate sensitive businesses such as
banking and asset management. Insurers are also streamlining their operations to improve efficiency and risk management to drive long-term profitable growth.

 

mehul@bankingfrontiers.com

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