LIC plans to sell over 4 mln policies in rural India in FY09

[K.Karthik Raja]

LIC plans to sell over 4 mln policies in rural India in FY09
Tuesday, Jun 10

MUMBAI - Life Insurance Corporation of India is targeting to sell
over 4 mln policies in rural areas during the current financial year
ending March, T.S. Vijayan, chairman, said today.
"We are confident of moving out in a big way, having realised that
the key to greater spread will come from creating new distribution
avenues and set a target of selling more than 4 mln policies (in rural
areas) in current year," he said.
Rural area, as defined by the insurance regulator, Insurance
Regulatory and Development Authority, has a population of 5,000.
Overall, LIC sells about 30 mln policies every year.
Speaking in the Skoch summit 2008, Vijayan said the corporation
has devised new products, both in terms of payment schedule and
delivery, for the rural areas keeping the affordability of the rural
people in mind.
Commenting on the expensive distribution cost in rural areas, he
said as rural and informal sectors are not a homogeneous category and
are geographically dispersed, it has been estimated that if the cost
of policy is 300-400 rupees, the cost of distribution would be double
of that.
Total around 50 mln policies were sold last financial year in the
entire sector, out of which 11 mln were in rural areas.
However, in terms of penetration, urban India is still ahead, he
said.
"Penetration in urban India is 47%, while it is 27% in rural
areas.
Clearly, there are many, many, who are out of the net," Vijayan said.