LIC’s goal is ‘Insurance for All’ by 2047, policy numbers should grow from Q2: R Doraiswamy, MD & CEO

Life Insurance Corporation of India’s new chief executive R Doraiswamy is betting on a diversified product mix and higher sales through bancassurance channels to keep the state behemoth ahead of private rivals. In his first interview since taking over, Doraiswamy discusses with ET his plans on increasing the share of non-participating products to 40% of annual premium equivalent-a switch that is key to boosting profitability. Edited excerpts:

Your market share in individual policies is 39% by count and 63% by premium. How do you see policy volumes growing?

The broader goal is “Insurance for All” by 2047. The industry saw a drop in volumes after last year’s product rule changes, but our sales have stabilised. We expect growth in policy numbers to turn positive from the second quarter onwards, with stronger momentum in the third and fourth quarter. Market share being a by-product of growth, when LIC grows at a rate higher than the rest of the industry, my market share is going to go up.LIC’s margins improved 150 bps in the first quarter to 15.4%. Is it sustainable and when can you match private sector levels of around 25%?
Three factors drove our margin expansion-higher non-PAR contribution, expense optimisation, and revised commission structures following the October 1, 2024 norms on products. There were some changes in some products, we had to be compliant with the surrender value norms, tweak the agency commission from being totally front-ended to introducing some deferred payments of commission.

Our margins also follow a seasonal pattern, rising from the first quarter to the fourth because PAR profits are booked in the last quarter. We have consciously shifted from a 7% share in non-participating (non-PAR) annual premium equivalent (APE) at the time of listing to around 30% now. This could rise further to 35-40% in the near term, before we balance the mix back towards participating (PAR) products.

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Which products will drive growth this year?
Customer preferences vary. Younger buyers lean towards guaranteed non-par protection products, while others prefer savings-oriented participating or non-participating plans. ULIPs see strong demand in rising markets and a slowdown when markets dip. This year, we expect ULIPs to grow alongside non-PAR savings and protection products.

We try to fill product gaps and cater to all segments from micro-insurance to high-ticket savings. Our recent launch, Jeevan Utsav, has already set a trend in the market. Over the next few months, we will bring out three to four innovative products across categories.

What is your vision for LIC?
LIC is a major financial institution player in the country, and they are playing a major role in developing India’s economy for the last 69 years. If you look at what we have to do, our objectives are very clear, extend insurance coverage across the country at affordable prices, and mobilise savings for the welfare of policyholders while delivering decent returns. Globally, we are already the fourth-largest life insurer, and see whether we can still grow more.

LIC’s share of bancassurance is less than 7% despite several bank tie-ups. Given open architecture in agencies, how do you plan to improve channel mix?
Our individual agency network is the backbone of LIC. It is a distribution strength we will continue to nurture. That said, we are changing in other channels, bancassurance and corporate. Our bank assurance premium share has risen from less than 3% two years ago to 6.77% today. We expect it to cross 10% in the near future.

LIC has recently invested large sums in Adani bonds and SBI QIP. How much investment is likely to come into equity markets from LIC this year?
When you have such large investable funds to be invested, you are looking at various options which are giving you a decent return. We need to look at both debt as well as equity in the proportion that we are supposed to invest. But at many times you find that you will do more on one side or the other based on availability. We have to have a clear rating of those instruments, paying certain dividends and stuff like that.

The regulator has allowed insurers to hedge through derivatives. What are your plans?
LIC has already started doing FRA (forward rate agreements), and now we are actively looking at bond forwards. Once we have enough tie-ups on that, we will be moving to bond forwards to hedge our interest rate risk only in perspective of our guaranteed protection. On the equity front, we are still weighing the options.

The Centre is talking about reducing stake to 90% in LIC by FY27 by selling 6.5%. How much of that will happen this year?
This decision will be taken by the government.

LIC owns a strategic stake in IDBI Bank. Will you continue to own a strategic share in the bank or exit completely eventually ?
The vision of LIC is to be a transnationally competitive financial conglomerate. That is a vision, if you look at this. So, when you are looking at a financial conglomerate, you would like to have a bank as a major partner, a housing finance company, or a mutual fund. But the Act and regulations do not permit LIC to have a bank of its own. Whereas a bank can have an insurance company, an insurance company can’t promote a bank. That is what the problem is. RBI has already made their position clear.

What is the status of the health insurance venture?
We have the options in front of us. We are doing due diligence into existing SAHI (standalone health insurance) companies, which we can have a stake at. Only thing is, we are not fixing a particular time limit. We are examining those options.

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