The Life Insurance Corporation (LIC) of India, which has the largest force of agents in the country—to reach out extensively to the urban and rural populace—is now stepping into the digital distribution market.
Despite its extensive reach across the country, the digital medium is denting the LIC's market share, due to which it is now set to expand its market. Until recently, it did not have any association with aggregators to sell its policies.
However, agents are relishing the new initiatives of the company and gearing up to tackle the digital game. “There is no threat from web aggregators. We recommend policies after understanding their goals and other requirements. For instance, I will not ask a 60-year-old to buy an endowment plan but will recommend a pension policy instead. Ultimately, they want someone to hear them out, a service that only an individual agent can offer,” Mumbai-based LIC agent Mohan Ganachar was quoted as saying.
Agents are also clear on creating awareness about the upcoming initial public offering (IPO) so as to help policyholders take part in the offering. “We have been receiving a lot of enquiries regarding updating PAN and Demat details in LIC’s portal. So much so, that we have decided to create a template email to be sent to our clients explaining the process of PAN updation. This is a strong indicator of the huge level of interest in LIC’s forthcoming public issue,” Ravi Jethani, who runs a LIC agency business and is the founder of Beyond Life, was quoted as saying.
The agent force is around 1.35 million crore strong, accounting for over 55 per cent of the total agent network in the country, according to a report by Moneycontrol. Over the past six months, until September 2021, business sourced through agents accounted for 96.42 per cent of LIC's individual new premiums, the report stated.
"Our individual products are primarily distributed by individual agents. There is a growing trend for individual products to be distributed online. Digital technology is a new force that is driving massive changes in the insurance sector…insurers are moving towards adopting a digital services model, enabling customers to complete the entire insurance processes online (from the discovery of information to advice and purchase) either on their own or with the help of a service provider/agent,” LIC noted in its DRHP’s risk factors.
But, this could be a challenge for the 65-year-old insurance colossus, unless it carries out wholesale changes in its distribution mix. “Our corporation’s products are available for purchase online on our corporation’s website. However, none of our products is available for purchase on third-party websites...If our products remain unavailable for purchase on third-party websites, we may lose market share,” it states.
According to the report, LIC's partnership with web aggregator Policybazaar is a step towards diversifying its distribution mix and reaching out to a younger base of customers, as per analysts views.
This, however, does not change the fact that LIC's agents remain its main task force, accounting for its market share of 60 per cent in new business premiums.
Agents said they are looking forward to the new challenges. “LIC-Policybazaar tie-up will not affect agents’ business. Insurance is a highly technical subject. If you were to buy a commodity, online is a good option. But recommending life insurance products entails complex calculations such as human life value, need-based analysis and so on. Aggregators cannot match up to the kind of services that we can provide,” LIC agent Malay Chitalia was quoted as saying.
Agents also said that many customers find it more comfortable to have face-to-face discussions.
“Now, publicity around such tie-ups can create awareness, but people still prefer buying through agents due to the personal touch and tangible offerings. When it comes to selling life insurance policies, a lot of persuasions, risk assessment and need-based analysis is needed – services that individual agents can provide using their skills and experience,” Mumbai-based LIC agent Bharat Parekh was quoted as saying.
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