LIC IPO: Agents wait with bated breath, recall challenges and adventures had so far

The country’s biggest insurance company, with around 65% market share both in premium and new business premiums, is currently headed for another rescue–of the government's disinvestment programme. 

The insurer owes its success to its massive distribution network, particularly its ubiquitous agents, who number close to 1.34 million. As LIC is set to cross a milestone, Moneycontrol talked to these men and women on what keeps them going, considering that selling anything – particularly insurance–is not a job for ordinary mortals.

Read also: 5-10% discount will make it attractive for policyholders: ithought Financial's Shyam Sekhar

`When I joined LIC, it was the only company of its kind in India’: Veteran LIC agent S Kanan

S Kanan has been a LIC agent for the last 40 years, first in Delhi and now based in Bengaluru. So why did he join the LIC? ``Then there was no other company other than LIC. It was investor oriented. The other was UTI or the Unit Trust of India, which was bifurcated and is now a private entity,” he told Moneycontrol.

The thing about LIC is that – the company apart – just its real estate value is phenomenal. ``Look at the central office in Connaught Place or the building at Asaf Ali Road just in the capital. There are LIC offices at district and taluka levels all throughout the country. Just about beginning to evaluate them would be mind boggling,” said Kanan.

Once can but hope that LIC’s real-estate evaluation is in order, given that as one of India’s largest realtors, any valuation at that scale is fraught with risk. In late 2020, the government entrusted the task of computing LIC’s embedded value (EV) to Milliman Advisors India, the Indian arm of the US-based actuarial consultancy, Milliman. 

What was the biggest challenge that Kanan faced during his four decades at the LIC? ``With the arrival of multinational companies, technology changed and there was a big upgrade. It was a huge challenge to keep up with the big players, but the LIC began to invest in technology, and it paid rich dividends,’’ he said.

Today’s youngsters, said Kanan, don’t go for conventional insurance policies and prefer mutual funds and term insurance policies. ``For the common man, though, LIC is still the best,” he addded.

What is his most unforgettable moment at the LIC? ``The day I got my LIC Chairman Club membership, a very exclusive recognition, which is signed by the LIC chairperson,” said Kanan, of an official ratification of lifetime service to the organisation.

But with the IPO and new alliances such as Policybazaar.com, is it a threat to LIC agents in the future? Hardly, said Kanan.  

`My most extraordinary experience was to settle death claims after coronavirus broke out’: Rajiv Seth, former development officer, LIC

Rajiv Seth can justifiably claim to know LIC better than most. He is not an agent, but a development officer, who presides over the company’s agents. He was the first batch of direct recruits into LIC in 1985. Until then, the insurance company hired agents.

After serving in the LIC for well over three decades, he now spends time watching business news and keeping an eye on the market, something that he learnt intimately at the insurance house.

What was his biggest challenge? ``Undoubtedly to learn the tricks of marketing, which was formally not taught to us by our office. There was little support from the office, but one had to pick up the art of marketing on one’s own. It was a great learning curve,” said Seth.

`We went door to door and that was the biggest challenge,” he pointed out.

Seth's most unforgettable – and altogether novel–experience was the pandemic. ``There were many people wanting to make claims for the dead, and it was my moral duty to help, even though I had nothing by way of written orders. I had to tell my staff that someone had to handle the claims and it had to be my team,’’ he recalled. 

``There were instances where second nominees too had expired. Yet we took care of the people who needed help at that critical time,” explained Seth.

Does this privatisation of the LIC bother him?  ``Not a bit. It is still a government company and barely 5 percent is being offloaded,” he said.

Read also: How reliable is LIC's claim of least amount of mis-selling complaints?

`The proposed IPO is the best thing that has happened to the LIC’: Agent Azad Narian

The IPO is the best thing to happen to the LIC, said Azad Narian, a successful Delhi-based LIC agent. One can be sure that the value of the company, already very high, is going to go up further, he added.

The LIC, as you know, is a unique company, without a parallel in India, maybe even the world. It has bailed out public sector companies when they have been in trouble. Indeed, it is a favourite trouble shooter of the government, said Narian.

But does the tie up with Policybaazar.com cut into the agents’ sale? Narian does not look at it like that. ``In fact, if anything, such tie-ups add brand value to the company. And if an agent is hard working and driven enough, it adds to the company’s value,” said the man, who has spent more than 20 years hawking LIC wares with a fair degree of success.

The LIC is a cash-rich company, he said. ``You can close your eyes and invest in LIC shares and be rest assured of excellent returns,” Narian predicted, confidently. 

‘This 5% divestment of the LIC is just the beginning. Like the banks and insurance companies, it is not going to stop at that’: Shreekant Mishra, general secretary, All India Insurance Employees Association    

There are those who see the disinvestment with deep suspicion, like Shreekant Mishra, general secretary of All India Insurance Employees Association.  

He believes that the insurer’s tie up with Policybazaar will take a share of the agents’ business. 

“But there is more than that,” he said. “It is difficult to trust this government because I don’t think they are going to stop at 5 percent off loading in the LIC. It is just the opening gambit. Look at their track record. They began by saying that banks would be allowed 51 percent ownership; now banks are wholly privatised.” 

According to Mishra, the inflationary trend and the recession has hit the insurance sector hard – with reduced incomes, a life insurance policy becomes a low priority for families.

What are the biggest challenges faced by him at the present time? ``Young people are opting for mutual funds and SIPs, particularly the upwardly mobile middle classes,” said Mishra.

‘Update pan details and hope to make money in the IPO’: Suman Mitra, LIC agent

Some things are changing forever with the proposed IPO for India’s greatest insurer, said senior agent Suman Mitra. LIC has said that every policyholder shall have to ensure that their PAN details are updated in the policy records of the Corporation on or before February 28, 2022, to be considered an eligible policyholder for application in the forthcoming public issue.

``I have spent close to three decades in the LIC and the changes I see are exciting,’’ said Mitra, who began life as just another agent, but is quite willing to change with the times. And obviously, there is no bigger shift than the LIC IPO.

All LIC policyholders are getting calls from brokers and agents such as Mitra, who are also involved in the work of share broking. Mitra claimed that, if a person has an LIC policy, then his or her chances of getting shares in the IPO will go up.  

She said that selling tactics have evolved over the years. Now, the IPO has armed her with a new sales hook. Instead of pressuring customers to buy a policy, she makes another offer – to purchase the policyholder a Demat account, free of cost. It invariably brings a smile on the face of the policyholder. 

Read also: Government to gain profit share at the expense of participating policyholders

‘My biggest worry is about the money, which belongs to the people and LIC real estates, which is certain to be undervalued’: S Rajkumar, general secretary, Federation of LIC Class I Officers’ Associations

S Rajkumar, general secretary of the employee association, believes that private investment will dilute LIC’s social-welfare mission. 

“The concept of `peoples’ money for peoples’ welfare will give way to maximisation of profits for shareholders. This is not in the interest of LIC’s 40 crore policyholders or the national economy,” he said.

It will hit vulnerable sections of the Indian population the hardest, he believes. “The social objective of providing insurance cover to the weaker sections will receive a setback. The aim to expand insurance in unprofitable rural areas too will suffer,” he said.

The biggest challenge he has faced in the 31 years with LIC was when multinational insurance companies came in. “These companies thought LIC would be a pushover… but, we still hold nearly 70% of the market share,” he said.

Rajkumar is also worried that private investors will be more interested in getting their hands on LIC’s real-estate assets, which are spread across the country. “I suspect shareholders will have their eyes on those buildings rather than LIC’s core business,” he said.