What insurers can discover from LIC

In a year when the largest life insurance player LIC gained market share at the cost of private players, most of whom were grappling with the new Irda regulations on Ulips, there have been a lot of valuable lessons learnt for the private life insurers.

It is not only the right product mix that helps gain market share but the age old tradition of advice-based insurance selling that really works, according to private players in the industry.

"LIC has a huge product range and they have always been strong in traditional policies, while most private players didn't have a full range of products. When the Irda regulations made Ulips less attractive for agents to sell, their lack of experience in selling traditional policies came to the fore," GV Nageswara Rao, MD and CEO, IDBI Federal Life, told Financial Chronicle.

For the year 2010-11, LIC increased its market share to 63 per cent in the first year premium income received, against 61 per cent in the previous financial year, while the private players saw their market share drop to 36 per cent, from 38 per cent held in 2009-10.

Among the top few players, only ICICI Prudential, SBI Life and HDFC Life gained market share, while those like Reliance Life and Bajaj Allianz lost market share and were relegated to the fourth and fifth positions among the private players.

For most private insurance players Ulips constituted over 90 per cent of the total sales and when Irda guidelines made Ulips less attractive for agents to sell, not many private players had an extensive traditional policy range, resulting in them losing market share.

Admitting that the product range of private players was not very large when it came to traditional policies, V Viswanand, director and head, products, Man New York Life, also blamed it on the boom in the stock markets.

"Post the introduction of Ulips, the stock markets were also growing exponentially and most private players may not have invested enough in creating a balanced product portfolio and training their distribution intermediaries to sell based on needs of the consumer," he observes.

Now most private players are reporting a 50:50 balance between traditional and Ulip policy sales and many are also gearing up to launch new traditional products for savings, retirement and health needs to have products across the entire spectrum of life insurance, which is a very good sign according to experts.

Source: [mydigitalfc]