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LIC flags ULIP volatility, small-ticket policies for persistency dip; says some plans may face commission impact under IRDAI proposal

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LIC flags ULIP volatility, small-ticket policies for persistency dip; says some plans may face commission impact under IRDAI proposal

LIC flags ULIP volatility, small-ticket policies for persistency dip; says some plans may face commission impact under IRDAI proposal

Life Insurance Corporation of India (LIC) is shifting its sales focus towards higher-ticket policies to address the deterioration in long-term persistency, with market volatility affecting demand for unit-linked insurance plans (ULIPs) and smaller-ticket policies emerging as a key area of concern.

R Doraiswamy, Managing Director and CEO, LIC, answering a question by ETBFSI, said the insurer has been consciously recalibrating its product and sales strategy, particularly in response to challenging market conditions that have affected both ULIP sales and customer confidence in market-linked products. "When the markets go through a difficult time, ULIPs tend to get affected. Both the sale of ULIPs as well as the customer's confidence in ULIPs when the markets are going tough, that happens," Doraiswamy said, during its results presser on Thursday. LIC's 61st-month persistency on a premium basis declined to 61.03% in the first half of FY27, compared with 63.81% in the corresponding period last year. On a policy-count basis, the ratio fell more sharply to 48.33% from 51.50%, indicating continued challenges in retaining policyholders over the longer term. Advt

Responding to ETBFSI's question on the factors driving the decline and the corrective measures being undertaken, Doraiswamy said persistency concerns are more pronounced among policies with smaller premium tickets, while policies above a certain premium threshold have demonstrated more stable retention. "The persistency issues come only in terms of small ticket size policies. So, we are slowly nudging the sales towards policies with above the threshold level," he said.


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