Fighting the mighty

Uday Chatterjee
08 March 2003

Mumbai: The life insurance sector was opened to private players who kicked off operations about two years back. A lot was expected from these private players who were to give Life Insurance Corporation (LIC) of India, till then a monopoly, a run for its money.

Although two years is a bit too early to conclude whether there has been any perceptible change in the way life insurance business is carried out it, it is worth looking at the changes that are slowly, but surely, going to take place.

In the first place one has to admit that LIC has changed, and how. LIC, under the stewardship of then chairman G N Bajpai decided to get their act together and presented a strong riposte to the new players. Almost overnight, this public sector behemoth became the epitome of efficiency.

Changing stripes
The branches no longer functioned like any another government office, red-tapism was cut and the company became customer-centric. The result was that in the first year of the opening up of the industry, private players could not garner even 5 per cent of the business. LIC’s performance in the second year, too, was strong and it suffered just a small dent in the market share.

A point to be noted is that in these two years, life insurance business registered record levels of growth — a clear indication that India is an underinsured country and there is tremendous scope for growth.

This is not to say that the private players got their calculations wrong and that LIC’s dream run will continue forever. Insurance business is after all a marathoner’s run and there is a long way to go before the new players reach critical mass. Of course, none of the new players have the infrastructure that LIC has, mainly a wide distribution network and an 8-lakh agent strength.