Laugh Insurance Corporation: Allotment ki insurance policy

Many a public issue and public sector issue has been primarily held up by Laugh Insurance Corporation, a lot like many LinkedIn profiles are held up by fake motivational quotes. (Representational image: Etienne Girardet via Unsplash)

According to the red herring prospectus filed by the Laugh Insurance Corporation (LIC) for its IPO, the National Financial Literacy and Inclusion Survey (NCFE- FLIS) 2019 tells us that only 27 percent of the Indian population is financially literate, indicating a huge gap and potential for the financial services industry.

The potential, of course, is mis-selling to the remaining 73 percent. And the huge gap they see is the bridge between the two sides of your brain.

Timing is everything

A lot of us have been waiting for the outcome on the LIC IPO which has been put on hold multiple times due to the highly volatile events around the world affecting the markets. And by that I mean the slap delivered to Chris Frock by Kill Smith. Sensing the volatility in emotional sentiments around the world, the government decided to put the IPO on hold for a while.

It makes sense to look at emotional sentiments before asking for an investment because laugh insurance as a product in this country has often been sold on an emotional basis. Broadly, the appeal is: “If you die without a policy, your dependents will be reduced to a lower middle class existence. And have to share a bowl of soup one by three. And the only rishtas they will get for arranged marriage will be from TikTok influencers”.

Now some of you may argue, “But Vikram, that line makes no sense. There was no TikTok back then.”  Well,  that is true. I do play with facts for the purpose of humour. But the fact is, today if one could buy an insurance policy to protect your family from your child becoming a TikTok influencer, it would sell quicker than Chinese-made Indian flags on Independence Day. And if a TikToker were promoting the LIC IPO, instead of subscribing to the IPO, he would insist you first like and share him.

Friendly neighbourhood LIC uncle

Now the LIC IPO is important because this bellwether institution holds significant stake in many bluechip companies. Many a public issue and public sector issue has been primarily held up by LIC, a lot like many LinkedIn profiles are held up by fake motivational quotes.

Equity analysts do have a lot of concerns about the IPO though. LIC has a market share of 64 percent. However, it has been losing the market share to its private peers. That’s because the targets for their sales teams are so stiff, their motto is “Ab sar katake jiyo”.

LIC does not have a strong digital presence, and almost all of its policies are sold through agents. According to the company’s draft papers, only 36 percent of individual renewal premiums are collected digitally, compared with over 90 percent for private player.

For years we have known LIC as the neighbourhood chacha, mama, uncle who is an LIC agent. Today he can be likened to an intelligence agent burdened with the task of also shooting enemies of the bull market.

My late father was an LIC agent. So imagine his frustration at trying to sell a laugh insurance policy to his own son. He would keep telling me: “You should buy laugh insurance, because kal ka koi bharosa nahin hai”. To which my response would be, “Laughter does not need an insurance policy, and it is not subject to market risk. And you don’t have to read the red herring prospectus carefully before investing.”

While you may have to decide whether or not to subscribe to the IPO, unfortunately allotment is not in your hands. Getting an IPO allotment in the Indian markets is a lottery. A lot like arranged marriage. And Indian alimony law means sometimes the plan of exiting after IPO gains can backfire badly. You can swipe right on the marriage IPO but the alimony can swipe away half your income for life.

So as an investor today, your choice is very clear. You must make the investment according to your own lifecycle needs and assess the risk–rewards of doing so. But if you are anxious about making the right decision, don’t worry. Because no matter what the tailwinds of the market, or the storms in your life’s Instagram reels, laughter will always be the best investment. So whether life gives you kaccha or pakka badaams,  ab “Dil Hasake jiyo”.