LIC, New India Assurance explore synergy

17 September 2001

Chennai: Indias two largest insurers - Life Insurance Corporation of India (LIC) and New India Assurance Company Ltd - are in talks to explore joint business prospects.

Officials of both the companies are holding parleys to leverage and synergise their respective strengths within and outside India. Of all the domestic insurers, New India and LIC have good overseas presence. They are now planning to further expand their global reach.

New India chairman and managing director K N Bhandari, however, refused to share details about the talks he has been having with LIC. We will announce the details soon.

Earlier, LIC managing director A Ramamurthi had obliquely referred to the corporations' plans to tie up with a general insurance company. Before the insurance industry was nationalised, companies were allowed to carry out both general and life insurance business and thus were able to derive synergy in operation. But the present regulations do not allow this.

It is a win-win tie up for both the companies. LIC can now offer personal accident risk cover to its policyholders by charging them an additional premium. New India can then handle the personal accident risk cover component.

LIC could reinsure this particular risk with New India and can save in its claims outgo. LIC can extend this arrangement to provide add-on covers that offer medical benefits. The tie-up with a general insurance company will also enable the LIC gain a foothold in the corporate sector that interacts with general insurers regularly. LIC can leverage New India's access to corporates to sell its group, pension, and salary-saving scheme policies.