Page 20 - The Insurance Times November 2024

lower the IRRs and adjust to the
current interest rate environment, LIC Allocates Rs. 600 Crore for Digital Transformation
insurers say. Initiatives
State-run Life Insurance Corporation of India (LIC) has committed Rs 600
LIC Retains Lead in New crore for its digital transformation journey, Sunder Krishnan, chief risk officer

Business Premium Market said.
Despite Rising Competition The insurance giant is also aiming to become completely "paperless" in two
years.
Insurance behemoth Life Insurance
Corporation of India (LIC) has "We have hired a large system integrator for more than Rs 400 crore, a
maintained its lead in the life insurance consultant for digital transformation for Rs 100 crore, and Rs 100 crore for
agency transformation. In total, Rs 600 crore is being spent on digital
sector as of September 30,
transformation," Krishnan said at an event organised by the Bengal Chamber
significantly outpacing private sector
competitors in the first year new of Commerce and Industry in Mumbai.
business premium collection for April- Earlier this week, the life insurer said it has roped in tech giant Infosys to
September 2024. develop its next-generation digital platform, which will lay the foundation
for building high-value business applications, including customer and sales
In the April-September quarter, LIC's
first year premium surged 24.73 per super apps, portals, and digital branches for the corporation.
cent to Rs. 1,15,549 crore (Rs. 92,642 This is part of the life insurer's digital transformation programme - Digital
crore), data from Life Insurance Council Innovation and Value Enhancement (DIVE).
showed. On the other hand, the 24 The programme is aimed at strengthening the insurance company's digital
private insurers in an aggregate platform in order to provide superior experience to customers, field forces,
collected premium of Rs. 73,644 crore, partners and employees.
up 12.03 per cent over Rs. 65,734
crore in same period last fiscal.
This disparity highlights LIC's Corporation (LIC) of India has reduced full-year premium. Previously,
formidable market presence, even as the first-year agent commission from companies did not offer such payouts
private sector players expand their 35 per cent to 28 per cent following to customers surrendering their
footprints. A large part of the revision of surrender value norms, policies within the first year.
sources familiar with the development
LIC's strong show can be attributed to told Business Standard. However, it has Additionally, the norms state that the
robust growth in Group Single increased the commission for renewal discount rate for calculating the paid-
premium segment. premiums by 7.5 per cent, from 5 per up value to determine the SSV will be

In April-September 2024, LIC's cent currently. The minimum sum allowed to be up to 50 basis points
higher than the 10-year government
Individual Premium segment collection assured on the revised policies has also security yield.
stood at Rs. 29,492 crore, a 17.33 per been raised to Rs 2 lakh from Rs 1 lakh,
cent increase from Rs. 25,136 crore effective from October 1. "LIC has reduced first-year
during H1FY24. The segment saw a In June this year, the insurance commissions to 28 per cent from 35 per
growth of 27.57 per cent to Rs. 84,679 regulator - Insurance Regulatory and cent, including a bonus. Without the
crore from Rs. 66,378 crore the Development Authority of India - issued bonus, the commission has decreased
previous year. Group Yearly Premiums a master circular on life insurance from 25 per cent to 20 per cent.
also grew by 22.14 per cent to Rs. products, introducing norms to ensure Commission on renewal premiums have
1,379 crore, compared to Rs. 1,129 better payouts for customers who exit been increased to 7.5 per cent," said
crore in H1FY24. their policies prematurely. These a source familiar with the matter.
norms became effective on October 1. Earlier, life insurance industry experts
LIC Lowers First-Year Agent According to the revised norms, life had expected insurance companies to
Commission to 28% from insurers must pay an enhanced special revise their distributor payout
surrender value (SSV) after the structures or internal rates of return to
35% completion of the first policy year, mitigate the impact on their margins
The state-owned Life Insurance provided the customer has paid one due to the new norms.

18 November 2024 The Insurance Times