LIC losing ground in overseas market

NEW DELHI: Country's largest life insurer LIC is losing business in the overseas market year after year as it has failed to attract new customers amid stiff competition.

The first premium collection from foreign operations which stood at Rs 123.41 crore in 2004-05 declined to Rs 120.8 crore in the following year and further to Rs 108.67 crore for the year ended March 2007, official sources told media.

Thus, the new business in the overseas market declined by nearly 12 per cent in a span of three years, they said.
The decline in the first premium income in successive years is mainly because of failure of marketing strategies to attract new customers amid stiff competition, the sources said.

The sources also attributed the decline to reduction in sale of single premium policies by LIC Bahrain for 2004-05.
However, on the back of old policies, renewal premium witnessed a growth. During 2004-05, LIC's operations abroad earned renewal premium of Rs 235 crore, which increased to Rs 292 crore the next year. Renewal premium stood at Rs 341 crore in 2006-07.

Despite falling first premium income, LIC has charted aggressive foreign expansion plan with a view to increase bagging of new policies.

The insurer is currently exploring opportunities for expansion in new territories, including Asian countries such as Singapore, the sources said.

Besides, it has formed a new joint venture company Saudi Indian Co for Cooperative Insurance in Saudi Arabia. The venture has already received certificate of registration.

At present, LIC has operation in countries including UAE, Bahrain, Oman, Nepal and USA. In the domestic market it continues to be a market leader with first year premium collection of Rs 59,182 crore in 2007-08.

However, in terms of year-on-year growth, new business grew by just 5.8 per cent in 2007-08, compared to a massive 118 per cent increase in 2006-07. During 2006-07, LIC earned first premium income of Rs 55,934 crore, against Rs 25,645.19 crore in the previous year.