LIC rides high on group insurance biz

Despite tight liquidity in the economy, fresh premium income from group insurance business of Life Insurance Corporation has grown by over 50 per cent as on January 15, 2008-09.

On the contrary, individual retail insurance premium income has suffered a decline to the tune of 2 per cent during the period as compared with last year, according to LIC sources. Group insurance business contributes nearly one-third of LIC’s total premium income.

The corporation has earned Rs 9,925.95 crore of first premium income (FPI) from pension and group schemes (PNGS) as on January 15, growing at over 50 per cent over the same period last year. It sold 10,672 policies and covered 1,48,42, 467 lives under the segment.

“The group insurance business has grown mainly by virtue of new recruitments and salary hikes, particularly by PSU companies and banks, new clientele and compensation for shortfalls by existing clients,” a senior LIC official told Business Line. The segment had grown by 40 per cent in 2007-08. Nearly 80 per cent of LIC’s PNGS business comes from pooled funds policies like gratuity, pension, and leave encashment plans, he said.

Among the biggest contributors in group insurance for LIC in 2008-09 were companies such as Coal India, Damodar Valley Corporation, ITC, the Birla group, the Kolkata and Vizag ports, United Bank of India and the UCO Bank, and also IT companies such as Wipro, TCS and Infosys, the sources said. Coal India’s group insurance contribution with LIC for example increased considerably as it covered new employees in the Western coalfields and a couple of other new coal mines, they said.

Among 69 divisions in the country, the Kolkata Metropolitan Division was the topper in terms of FPI earned as on January 15, followed by Mumbai and Delhi. The division collected a total of Rs 910 crore during the period.

LIC is also hopeful of raising the target of FPI from group insurance by 40 per cent in 2009-10 as the PSUs are expected to raise their gratuity liability cover an employee from Rs 3.5 lakh to Rs 10 lakh according to recent pay commission recommendations, the officer said. The target of FPI from PNGS in 2008-09 is Rs 11,000 crore.

Ref: http://www.blonnet.com