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D K Mehrotra used to play the keyboard in his younger days, but now, the responsibility of heading the behemoth, Life Insurance Corporation of India (LIC) as its chairman, keeps him busy from pursuing his passion. But he finds time to read, not only books but also people’s minds, and that has helped him guide his company to dominate the market with a 72 per cent market share. He spoke to R Sridhar on the changing trends in the insurance sector LIC is synonymous with life insurance.

How will you analyse its growth over the years?

LIC has been in existence for the past 56 years and the journey though not easy, has definitely been interesting. Over the years, our premise has been to stay connected with the grassroots, to be close to the customer and give him a product and service mix from within the resources we have. Towards this purpose we have come out with various interventions in terms of IT, products and services and I feel proud to say that LIC is the leader in the initiatives it has introduced in terms of product innovation or customer servicing. We have settled nearly 1.8 crore claims amounting to Rs 66,022 crore! Our outstandings are at the lowest today considering the volumes at which we work.

Moreover, our IT capabilities have been developed completely in-house and today all our outlets are interconnected. So, our journey has been very fruitful and the customers who have been with us over the years will have something similar to say. This is evident from the fact that over the last few years, LIC has gained on its market share – it is a rarity to see a PSU gain back its market share from the private players after the markets opened up. This shows the trust the customer has on us.

Is it true that your focus now is on attracting the youth towards your insurance products?

We would like to target all segments of our audience and not deprive anyone of our products. But we definitely are targeting the younger generation because today maximum wealth generation happens there. Given the fast pace of life they live today, insurance is very important for them, not necessarily in terms of risk cover but in terms of savings. And we offer both savings and risk coverage products. We know that today a young customer will not like to come to our office and buy a product. We need to give him something at his convenience. So, we are having more products online and may have more such interventions in the future, so that we stay connected with them.

How is the ubiquitous LIC agent dealing with this new development?

We have been continuously working on upgrading their skills. It is an issue but we have been working to resolve it. We have 600-odd training centres where we equip our agents to be updated on the latest trends. I’m sure that is working because it is being reflected in the income levels of the agents. However, since the number is huge and the market is changing so fast, we need to do this in an aggressive manner.

How challenging is online insurance for LIC given that private players are touting that as the best way to buy insurance?

We are working on it. There is a huge scope for insurance in this country. Today, people have investible surplus, and my priority is to bring insurance as one of the top five priorities of the customer. Currently, it isn’t. Market penetration of the industry is still very low, you know – insurance premium contributes only 4.5 per cent of the GDP. That’s because the market has not matured yet. Insurance is still seen as an expense in many markets. But in India, it is seen as savings and contributes to a customer’s life cycle. But there is a strong move to push term insurance… Yes, I’m aware there are opinions saying that people should be given minimum insurance so that the money saved on premium can be invested in other instruments. What they don’t factor in is the cost of insurance. Any other form of return will depend on various factors like market movements, interest rates, etc. But if you put your money in an insurance product, it is insulated against any other kind of market movement. That’s because I’m factoring in the cost of insurance, the risk that I am taking for them. That is what people should realize. Nevertheless, it is good that awareness has increased in the market today.

What would you name as the product of the future?

Pension products definitely. Given the high cost of living, medical treatment, the movement towards nuclear families - all this means that people need retirement planning. We are even planning to position a pension product for the younger generation.

What do you expect from the budget?

We are definitely expecting some more support in terms of tax rebate. Today, we see a lot of thrust on infrastructure development and there are two areas that lend it support – insurance and provident fund. If you see the tax rebate structure in Section 80CCC, there are so many insurance products huddled in there in the Rs 1 lakh tax rebate bucket as compared to earlier when there were only a few insurance items. We have suggested that insurance and pension products be treated separately. LIC has often bailed out the government especially on disinvestments issues… (Laughs) We have not bailed out anybody. Whenever we have invested, it has been based on our own intelligent reports and due diligence. Somebody will definitely benefit from our investment, but we are not doing it with the intention of bailing out anybody.

LIC has made huge strides in the rural sector. Could you elaborate?

The contribution of our rural business is 30 per cent which is a very unique for an organisation of our size. LIC has plans to shake hands with the Postal Department of India which is planning to create its own space in nanking and insurance. With this move, we are a step ahead in our Vision 2020 whereby we wish to see each Indian having at least one LIC Policy.

What does this vision entail?

Vision ‘An LIC Policy in Every Pocket by 2020’ is aimed at reaching out to every Indian with three protections – health, insurance and annuity — while setting a time frame for achieving it. The journey towards Vision 2020 is a relay race - the baton would get passed on as years change but the run must continue till the goal of ‘a policy in every pocket’ is achieved.