India’s largest government owned life insurance company, Life Insurance Corporation of India (LIC), set a new target of selling 4 million micro insurance policies this year. In a speech given at the SKOCH Banking, Financial Services and Insurance Summit, LIC Chairman TS Vijayan said that two years ago, the corporation had sold 0.8 million micro insurance policies and this year, planned to increase its sales five fold.
LIC’s micro insurance product, ‘Jeevan Madhur’, is a life insurance plan, first launched in 2006. Under the plan a minimum coverage of Rs5,000 (USD 110) and a maximum of Rs30,000 (USD 650) can be obtained. Minimum premium payments range from Rs25 (USD 0.55) per week to Rs250 (USD 5.5) yearly.
According to India Invest Incomes and Savings Survey 2007 by IIMS Dataworks, a Noida-based retail finance research firm, insurance penetration in urban India is 47%, while it is only 27% in rural areas. In 2006, LIC entered into a memorandum of understanding (MoU) with the Confederation of NGOs of Rural India (CNRI), an apex body of Non-Governmental Organisations of rural India that has over 4,000 NGOs across the country. The MoU authorized the NGOs that are members of the CNRI to distribute micro insurance to rural areas.
In his speech at the Summit, Vijayan underlined the high-cost of distribution in rural areas, giving the estimated cost of distribution as double the cost of a policy. Along with suggesting alternative distribution mechanisms such as privately owned rural kiosks that serve as information centers, Vijayan also called for a technology fund to be made available for micro insurance as there is one for microcredit.
LIC was founded in 1956 and as of 2007, has total assets of USD 165 billion. Headquartered in Mumbai, the corporation has 8 zonal offices and 101 divisional offices located in different parts of India.
The summit was organized by SKOCH, a commercial strategy and management consultancy company spread in eleven countries. SKOCH was founded in 1997 and in India extensively works towards ICT (information and communication technology) led development.
By Ipek Kuran, Research Assistant
Additional Resources:
Life Insurance Corporation of India
MicroCapital.org article, October 6, 2006
Confedaration of NGOs of Rural India
Hindu Business Line article, June 10, 2008
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