LIC’s bancassurance business could get a ‘substantial boost’; mis-selling crackdown needs wider review: Vipin Anand

Former LIC Managing Director Vipin Anand expects tighter restrictions on distribution incentives to make LIC policies more competitive within bank networks. He also calls for a separate review of mis-selling, an additional allowance for agent incentives and marketing expenses, and a gradual reduction in commission payouts.

The Insurance Regulatory and Development Authority of India’s ( IRDAI ) proposed commission curbs could improve Life Insurance Corporation of India’s ( LIC ) competitive position in bancassurance, with former LIC Managing Director Vipin Anand expecting business to shift towards the state-owned insurer as restrictions on distributor incentives narrow the advantage enjoyed by private insurers. Anand said LIC has partnerships with a wider network of bank branches but has not fully leveraged them for insurance sales, as banks have often directed business towards private insurers offering more attractive incentives. If the proposed framework reduces these differences, LIC could gain business through existing bank partnerships and potentially improve its market share. Advt

“I personally feel that LIC’s bancassurance business could improve substantially because banks have more branches partnered with LIC, but they are doing very little bancassurance business. What was happening was that banks were passing business to private companies that were giving them more incentives,” Anand told ETBFSI in an interview. “If the incentive gets pared, selling LIC policies becomes easier. Some of the business that was going to private companies from the same banks may start coming to LIC because a lot of customers prefer LIC,” he said.

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