LIC's Roadmap to Enhance Value: 5 Key Performance Indicators
Life Insurance Corporation of India (LIC) has identified five key performance indicators to focus on for value enhancement, including digital innovation, divestment of real estate assets, agency transformation, focus on product mix, and growth in market s
LicLife Insurance Corporation Of IndiaDipamDepartment Of Investment And Public Asset ManagementDigital Innovation And Value EnhancementDivestment Of Real Estate AssetsAgency Transformation ProjectFocus On Product MixGrowth In Market ShareReal EstateAug 05, 2024
The movement in LIC's stock price over the past year has caught the attention of both individual investors and major institutions. LIC's stock, which was priced at ₹828 a year ago, was trading close to ₹1,200 level (until last week), marking a nearly 50% increase. This impressive performance has also been reflected in multiple positive brokerage reports.
The move in LIC's stock price has been a derivation of not just positive regulatory developments but also the changes that the life insurer has been making to its business with a focus on product portfolio, margins, and market share.
The five performance indicators include Digital Innovation And Value Enhancement (DIVE), Divestment Of Real Estate Assets & Other Non-Core Assets, Agency Transformation Project, Focus On Product Mix, Growth In Market Share.
1) Digital innovation and value enhancement (DIVE)
As per sources, LIC has lined up aggressive investments towards its DIVE or Digital Innovation And Value Enhancement programme. DIVE is expected to lead to a complete digitisation at LIC which will bring digital onboarding of policyholders, digital servicing of policies and digital claims management. The programme will also help LIC increase its digital sales substantially. In FY24, the distribution mix for LIC through digital marketing stood at just 0.15% of Individual New Business Premium (NBP). Also, only 1% of its New Business Premium came from digital sales.
2) Divestment of real estate assets and other non-core assets
LIC is also likely to look at divestment of certain large real estate owned by it. LIC is the third-largest real estate owner in the country and the value of its real estate owned by it could be much higher than ₹50,000-₹60,000 crore. Many of LIC's real estate hasn't even been valued yet.
3) Agency transformation project
LIC recently appointed AT Kearney to undertake its agency transformation project. LIC's Agency Transformation Project is expected to include training of LIC's agency force for digital adoption. LIC, with over 14 lakh agents, has nearly half of the life insurance industry's agent strength. Agency force is LIC's biggest distribution channel with 96% of the life insurer's New Business Premium coming from agency distribution. Agency Transformation Project will also include increasing productivity per agent.
4) Focus on product mix
LIC to focus on the growth of increasing share of non-PAR products and hence margins. At the end of the fourth quarter of Fiscal 24, Non-PAR share for LIC stood at 18.32% of Annualised Premium Equivalent (APE). In an interview given to CNBC-TV18, LIC Chairperson Siddhartha Mohanty said that LIC aims to take Non-PAR share of APE higher than 20% for FY25.
5) Growth in market share
LIC will also be focusing on growing its market share. As per numbers collated by CNBC-TV18, LIC gained 260 basis points in market share of total business in Q1FY25 (YoY). LIC's market share gain was largely driven by group businesses, and now LIC's focus will be on growing market share in individual businesses as well.
Frequently Asked Questions
What are the five key performance indicators identified by LIC for value enhancement?
Digital Innovation And Value Enhancement (DIVE), Divestment Of Real Estate Assets & Other Non-Core Assets, Agency Transformation Project, Focus On Product Mix, Growth In Market Share.
What is the expected outcome of LIC's Digital Innovation And Value Enhancement (DIVE) program?
The program is expected to lead to a complete digitisation at LIC, bringing digital onboarding of policyholders, digital servicing of policies, and digital claims management.
What is the current market share of LIC in the life insurance industry?
LIC gained 260 basis points in market share of total business in Q1FY25 (YoY).
What is the target for LIC's Non-PAR share of Annualised Premium Equivalent (APE) for FY25?
LIC aims to take Non-PAR share of APE higher than 20% for FY25.
Who has been appointed to undertake LIC's agency transformation project?
AT Kearney has been appointed to undertake LIC's agency transformation project.
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