LIC To Meet Competition Head-On: CEO R Doraiswamy On 100% FDI Boost
The Union Cabinet’s approval of the Insurance Amendment Bill, increasing the cap of foreign direct investment into the sector to 100%, has been welcomed by several large insurers in India, including the Life Insurance Corporation of India (LIC). In an exclusive interaction with NDTV Profit, R. Doraiswamy, CEO and MD of LIC, stated that the organization is ready to meet the increased competition head-on after the 100% FDI approval in the insurance sector.
According to R. Doraiswamy, the new Insurance Amendment Bill is a fantastic move by the government, which was expected for quite some time. Insurance Amendment Bill will amend provisions of the Insurance Act, LIC Act, and the IRDAI Act, contributing to India’s goal of ‘insurance-for-all’ by 2047. The bill is expected to lead to better tech adoption and improved transparency among insurance companies in India.
Key Provisions Of The Insurance Amendment Bill
The bill strengthens IRDAI’s oversight over insurers and intermediaries, opening insurance to more foreign capital in life, general, and health sectors. It focuses on capital infusion and sector stability, with higher penalties for violations by insurers and related intermediaries. The removal of the FDI cap is seen as a major growth catalyst, with IRDAI overseeing commission caps and profit clawback.
Commenting on commissions, LIC CEO highlighted that India has had experience with regulations on insurance commissions in the past. IRDAI regulations previously included a cap on insurance commissions, which was later removed. However, LIC has always stuck to basic levels of commission, even before regulations were implemented in India.
Impact On The Insurance Sector
The higher competition and increased penetration are expected to help the insurance sector, according to R. Doraiswamy. The insurance sector will open up with the bill, improving technology and product quality. The FDI cap removal is expected to attract new players to the market, intensifying competition.
LIC expects the regulator to come back with some kind of cap on commissions, ensuring that customers receive fair treatment. As a customer-centric product in India, insurance has always been thought of as a diversification of portfolio and investment. With the 100% FDI boost, LIC expects that term insurance as part of its portfolio will increase in the near-to-medium term.
LIC’s Strategy To Meet Competition
R. Doraiswamy stated that some organizations abroad were waiting for the 100% FDI approval to operate in the country exclusively without the support of an Indian partner. These organizations may use the opportunity to enter India and set up their offices to capture some part of the market. However, he also believes that the 100% FDI boost will lead to the ease of doing business, better customer service, and better customer perception.
The claim settlement ratio is also expected to improve with 100% FDI as a trigger. According to Doraiswamy, LIC has always faced competition and is confident that it will maintain its leadership even after the 100% FDI boost. The company will bring in some changes and work hard on its path to transformation to meet the competition head-on.
Shares of LIC last traded 0.78% lower to Rs 847.20 apiece on the NSE, with a market cap of Rs 5,35,980.31 crore. For more information on stock market news and updates, visit our website.