Explained: Here’s how LIC agents will sell life insurance policies digitally

For the first time in its 64-year history, Life Insurance Corporation of India (LIC), the country’s largest insurer, has taken the digital route to sell policies. While agents will still continue to be the intermediary, the sales process itself has moved online.

Called ‘ANANDA’, an acronym for Atma Nirbhar Agents New-Business Digital Application, LIC’s new digital application will help agents sell policies through a paperless mode.

“This tool has been brought out at the right time, to enable and empower the marketing force of LIC to face the current challenges and propel insurance selling to a higher level,” said LIC in response to a query by Moneycontrol.

This is a significant move considering that LIC has 70 percent market share (by new premium as of October 2020). In fact, while private insurers had introduced tablet-based sales, this is the first time that the public sector insurer has digitised policy sales in the traditional channel.

No physical interface

LIC said that the entire process from proposal registration to completion of the proposal will be done virtually without any physical interface. This is in stark contrast to the traditional way of selling, where agents carry physical forms and use calculators and mortality tables to explain the premium based on the age and risk profile of the customer.

This comes at a time when life insurers have slowly started to see signs of revival in business amid the Coronavirus outbreak and subsequent lockdowns across States.

Data from the Insurance Regulatory and Development Authority of India (IRDAI) showed that life insurers had 31.9 percent year-on-year (YoY) growth in new premiums at Rs 22,776 crore in October 2020.

Here, LIC beat the industry by posting YoY growth of 36.1 percent at Rs 15,548 crore in October. Private insurers, on the other hand, posted YoY growth of 23.6 percent at Rs 7,228 crore.

 What is ANANDA?

ANANDA is a completely digital application tool that will be used by agents to sell policies to customers across the country. The tool was developed by LIC’s in-house IT team.

This tool has been brought out at the right time, to enable and empower the marketing force of LIC to face the current challenges and propel insurance selling to a higher level

- LIC

As per IRDAI’s Annual Report (2018-19), agents contribute 62.26 percent of individual new business premium of the life insurance industry as a whole and 95.81 percent of LIC’s individual new business premium.

LIC said that under ANANDA, the policy is purchased through the assistance of trained agents with the added advantage of after-sales service.

How will it work?

ANANDA will be used by the agent to show the various products available for sale based on the needs of the customer. Once the customer selects a policy, the form filling will also happen virtually.

Physical KYC documents need not be submitted. This tool is built on a paperless KYC process using Aadhaar based e-authentication of the proposed customer.

Agents are being trained in-house on how to use the application. The agent will be able to facilitate sales virtually once all the details of the policyholder are entered. Premium payment can be done online.

Even if there is a situation where internet connectivity is poor, LIC said that the ANANDA application will be effective. This is because it is a low bandwidth application.

Why was it necessary?

Internet penetration is expected to rise, with the number of users in the country projected to increase from 429 million in 2017 to 829 million by 2021. This digital push is expected to influence the insurance business, especially sales.

“To encourage digital form of transaction amid increasing use of internet, we were planning a digital process of purchasing a life insurance policy through our agents. It can be said that the current pandemic with related social distancing norms has only accelerated the process,” LIC said in response to a Moneycontrol query.

LIC also said that this paperless onboarding process will ensure that the field sales force saves time and will lead to higher productivity. As of October 31, LIC had 1.29 million agents and this agency force is now being migrated to the new system.