LIC is gearing up for its IPO launch, which will be the largest public issue the country has ever seen.- Individual agents bring 96% of new business premiums to the life insurer and here is why a lot of them have been leaving the company.
- LIC has the largest individual agent network of 8.96 lakh, which dropped from 10.86 lakh as of March 31, 2021.
LIC is gearing up for its initial public offering (IPO), which will be the largest IPO the country has ever seen.
However, things have changed in the last few years because of the pandemic. While individual agents bring 96% of new business premiums to the life insurer, many of them are no longer working for the company.
The number of active individual agents at LIC dropped by 17.48% to 8.96 lakh as of September 30, 2021 from 10.86 lakh as of March 31, 2021.
The COVID-19 pandemic that led to nationwide lockdowns and restrictions have had adverse effects on LIC’s “business, financial condition, results of operations and cash flows,” said the life insurer in its draft red herring prospectus (DRHP). The impact on its business may continue for some more time in line with the ongoing pandemic.
Agents' ability to distribute products was affected due to social distancing and limiting in-person interactions. Along with it, the pandemic also postponed Insurance Regulatory and Development Authority of India’s (IRDAI) exams to become individual agents and corporate agents, which eventually led to lower new hiring of agents.
LIC, which has dependence on individual agents, has steadily lost its market share in the last 5-10 years to private players who are capitalising via online platforms. In fact, LIC had tied up with online aggregator Policybazaar for distribution of its policies this February.
The last few years have changed consumer perception about buying policies from an agent to browsing the best policies online. This automatically narrows scope for insurance agents who used to visit door-to-door, explaining the details and complications of insurance policies, which now can be understood at the click of a button.
“There is a growing trend for individual products to be distributed online. Digital technology is a new force that is driving massive changes in the insurance sector. According to CRISIL Research, insurers are moving towards adopting a digital services model, enabling customers to complete the entire insurance processes online (from discovery of information to advice and purchase) either on their own or with the help of a service provider/agent. Insurers are now harnessing digital technology to scale their business model and provide a hassle-free experience to their customers,” said LIC in its DRHP.
SEE ALSO: