For over a decade after the Indian insurance industry was thrown open to the private sector. Even now, the Life Insurance Corporation of India (LIC) remains a leading player in the insurance industry with over three fourths of the market share in the industry.
There are several aspects that have attributed to the success of LIC. There are over 9 lakh insurance agents and a wide spread distribution channel for the insurers to access easily. Apart from these aspects, the rate of claim settlement rendered by LIC is 99.87 percent that is far above the other service providers that exist in the country rendering only 84 percent. In addition to these aspects, the level of customer service of LIC has also helped its flags fly high.
This dominance is not given to LIC has there are private peers that are equipped with higher foreign capital. The past performance is a great aspect that will contribute to bringing more customers. Though LIC has this aspect, it needs improvement in the fund management system that has made it lag behind its private peers in the last year.
One of the accredited reasons for the sagging performance of LIC is that it inclined towards the public sector stock ownership to a great extent. While the new administration’s hands-off approach might improve the performance of the same, it will ensure that the company does not lag behind the private challengers. However, LIC remains stuck to its investment philosophy claiming that its strategy, be it directed or intentional, has helped the firm make profit.
Regarding the same, LIC’s Chairman, SK Roy stated that they much understand that the PSU systems are quite strong and robust. They have invested in the offer for the sale of Coal India for a price of Rs 358 and it is trading for over Rs 400 right now. The capacity of LIC is to invest in small scrips is quite restricted, claimed the executive. He revealed that as the institution is large, its appetite is also large.