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LIC seeks tie-ups with tech savvy private banks

Freny Patel

The state-owned Life Insurance Corporation of India in a bid to improve its corporate image among the affluent class wants to join hands with tech savvy private sector banks in the metros.

"We want to get out of our present image of being strong in the rural and middle income groups. Though 60 to 70 per cent of the population lives in the rural areas, the big money is in the urban areas, especially the metros, where we feel we are relatively weak," said a senior LIC official.

The move is part of LIC's plans to sell its products through the corporate agency route. Pointing out that the high-end customer base is strong among new private sector banks, the official said that LIC would look more keenly at alliances with private sector banks to act as its corporate agents.

LIC has, however, ruled out possible alliances with ICICI Bank, HDFC Bank and IDBI Bank where the group is engaged in the life insurance ventures.

ICICI Prudential Life, HDFC-Standard Life and IDBI Principal's proposed pension venture will directly compete with LIC.

Most new insurance players have already signed a memorandum of understanding with various banks for the sale of their risk products.

LIC is going all out to fight competition on their turf. "We realise that our competitors are finding it difficult to beat us through the individual agents route and that they would tap the corporate agency route once the regulations are modified to facilitate this distribution channel," the official said.

The state-owned life insurer is looked upon favourably by many foreign banks which are keen on acting as LIC's corporate agents. However, these banks are handicapped by their international tie-ups with global insurance players.

Identifying that the real battle between the new players and LIC would be fought in Bombay, LIC is planning to aggressively increase its visibility here.

"As Bombay accounts for more than 40 per cent of the country's total tax revenue, our people need to concentrate more in this market," said the official.

LIC is on the verge of formalising its alliance with the Mangalore-based Corporation Bank to act as its corporate agent.

"Corporation Bank is the best among the public sector banks with customer friendly service and computerised set up," said a senior official at LIC.

Last month, LIC hiked its shareholding in Corporation Bank to 12.81 per cent and would look at increasing its stake further as "taking a stake in the bank would help build a strong relationship with the corporate agency," the official explained.

Corporation Bank will equally benefit in terms of cross-selling its savings products with life covers, he added.

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