With booming NBPs, LIC tie up with Policybazaar puzzles some agents

Ahead of LIC IPO, the insurer has tied up with Policybazaar, a move that has been received with mixed emotions by LIC agents. (Photo by Kindel Media from Pexels)

It is difficult for Life Insurance Corporation’s (LIC) agents to be cheering their employer’s tie up with Policybazaar.com.

Afterall, they sourced almost 97 per cent of their new business premium (NBP) in the first six months of FY22 from LIC products alone.

Ahead of its long-awaited initial public offering (IPO), the state-owned insurance behemoth has joined hands with insurance aggregator Policybazaar.com for distribution of LIC’s products. It was done ahead of the insurer's much-awaited IPO, for a wider reach.

From its founding in 1956 until now, LIC has relied solely on its large army of field agents totalling 1.33 million for distributing its products. Not anymore.

Anand Kanan, a big New Delhi-based LIC agent, believes that while the LIC IPO will not impact their lives as the insurer basically remains in government’s hands, the decision to tie up with Policybazaar.com could be another matter.

It will impact customers too, he said. “Since the sale will be completed online, a potential customer may be dealing with voices on a mobile phone or facing their laptops instead of a human face.”

``As an agent, I have personal ties with families and generations going back to ages. An online aggregator’s agents are unlikely to have that personal touch,” he added.

Some other LIC insiders aren’t worried, believing the online insurance sales will remain marginal. ``Today, there are not more than two percent of people using online insurance... So, there is no fear on that count,” said Rajiv Seth, an LIC executive, who recently superannuated from service after working there for over three decades and is very well versed with how the system works.

Perhaps his confidence comes from LIC’s robust field network. In addition to its distribution network of agents, the state-owned insurance company also has 72 bancassurance partners; these include eight public sector banks, 42 co-operative banks, six private banks, 13 regional rural banks, and one foreign bank.

LIC also has 175 alternative channel partners, of which there are 44 insurance marketing firms, 59 brokers, and 72 corporate agents.

If that was not enough, the insurance behemoth also boasts of 3,463 micro insurance agents!

Then there are millions of agents such as Kumar Satyanarain, who have full faith in the government.  “It is at the level of the government, and they know what they are doing. Plus, it is an internal issue of the government. I can’t see how I am going to be affected in any way,” he said.

The disinvestment of the insurance leader is expected to be completed in March 2022.

Read also: Remembering 30 years of disinvestment in India

Navendu Chakravarty, president of the Central Zone Insurance Employees’ Association, is of the opinion that the disinvestment itself will act as a threat to agents’ livelihood. He said, “The government is now selling only 5% of its stake in LIC, but they could raise that to 10% later on. With increased participation of private shareholders, the agents could be pushed out even further.”

Privatisation has always met with resistance in India and LIC’s will be no different, observed industry experts.

Read also: LIC will be valued at a discount to private-sector insurers. Here's why

On February 14, Finance Minister Nirmala Sitharaman has said there is a "positive buzz in the air" following the filing of the LIC draft red herring prospectus (DRHP).

"A big decision like this is never a knee-jerk reaction. It is done with consciousness... And I can see after the announcement, the reception, there is a buzz in the air," Sitharaman told reporters, after her post-Budget meeting with the Reserve Bank of India's (RBI) board.