India’s largest insurer cuts down its paperwork and that’s helped cut its costs by 40%
LIChas cut down its cost massively by outsourcing some of its work to the Indian postal department.
- This is positive for the insurance giant as it has been losing market share over the last few years to private insurers, who are more tech savvy.
- While LIC has taken several steps to digitize its services in recent times, it claims to have gained more than 3% market share between December and May.
AdvertisementThe country’s largest insurer –
And, it also has found an innovative way to cut costs. Instead of printing all the
“Three months ago, we started a post-to-print solution with the postal department. We give them an encrypted soft copy that is printed and dispatched. Otherwise, we used to print and send from our branches,” said Chairman MR Kumar in an interview to the Economic Times.
Eliminating paperwork has helped it cut costs by a massive 40%.
Since their customers are spread all over the country, allowing the postal department to dispatch them saves delivery costs and other overheads associated with paperwork.
In a move to send documents to policyholders much faster in 2021, LIC had signed an agreement with the Department of Posts for 'Print to Post' services, wherein they print and dispatch the policy booklet issued under a life insurance policy.
The tech savvy rivals
The insurance giant has been losing market share to 24 private insurers over the last few years, who are more tech savvy, while it itself was mired in paperwork.
It is finally ramping up its digital initiatives like its rivals. In fact, insurtechs who offer these services via platforms and also directly have been thronging the market and LIC too is upping its game in a rapidly changing market.
LIC has about 65% market share in the life insurance business and claims to have gained more than 3% market share between December and May, according to the ET report.
“We are going big on digital and will soon recruit a digital officer as a lateral entry. Our online marketing is going to be refurbished totally and more products are now available online. More than 50% of our transactions on the servicing side are coming from digital channels in terms of premium payments,” said Kumar.
AdvertisementThe insurer, like its peers, is also targeting a large untapped market – and expanding its presence in Tier 2 and Tier 3 towns.
Kumar also addresses the fact that LIC’s stock has lost a quarter of its value since listing on May 17, which has disappointed about 7 crore investors who were allotted the shares.
He asks investors to be patient and wait for the market to rebound. Due to its heavy investments, LIC’s stock performance mimics the entire market.
“People should not be worried about immediate performance. The market is down for many other factors -- the war, global risk-off in financial assets, monetary tightening. As the market improves, our share prices will also improve. Investors should be patient,” said Kumar in an interview to ET.
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