Why are all the pvt Insurance companies finding it hard to come out of the red? (please dont show me the botched figures)

What maked people think pvt insurance co are doomed there is a gestation preiod of 8-10 years and pleas enote the cap on charges haev added to woes of pvt sector

LIC has govt to fall back on so that are still havinga  backing after 50 years

If the same is given to pvt sector let me tell you we will be abel to baet them also

Also wish to add there are quite a few companies which are entering life insurance business , if the marlet was doomed they would not come in market at all

example  Sahara India,  India First

HI ,

AS WE ALL KNOW THAT THE INSURANCE INDUSTRY HAS BEEN OPENED FOR PRIVATE PLAYERS ALSO SINCE THE YEAR 2000 AND TILL DATE IT IS NOW 10 YEARS THE PRIVATE INSURANCE COMPANY ARE IN MARKET . AS PER THE COSTING INVOLVED IN THE OPERATIONS NO DOUBT LIC IS HAVING THE BIGGEST CASH RESERVE IN INDIA EVEN HIGHER THAN STATE BANK OF INDIA . BUT IT DOES NOT INDICATE THAT ONLY LIC IS IN PROFIT . IF WE SAY THAT LIC IS THE ONLY COMPNAY WHO IS ABLE TO MAKE PROFITS THEN ON THE OTHER HND WE SHOULD NOT FORGET THAT LIC IS IN INSURANCE BUSINESS SINCE LAST 60 YEARS AND ALL THE PRIVATE PLAYERS ARE ONLY FOR LAST 10 YEARS . LET THEM ALSO HAVE A TOTAL TENURE OF THE SIMILAR TIME FRAME OF ANOTHER 50 YEARS THEN WE CAN THINK OF COMPARISSION FOR PROFIT MAKING OR LOSS MAKING . ONE CAN COMPARE TWO ENTITIES ONLY AND ONLY WHEN BOTH THE ENTITY HAVE SAME TIME FRAME AMD CAPITAL INVESTMENT AT PAR. ELSE ANY COMPARRISSON BETWEEN THE TWO WILL BE BIASED AND OF NO RESULTS ....

Hi Trivendar, I agree with you. The private companies are really doing good, than the public sector. They are even coming up with good plans which are more attractive and beneficial.  That was a good example. Thanks for sharing...  

Dear Amit,

You appear honest while accepting (1) Pvt. insurers are not dooming & (2) entry of Pvt. players has made LICI more competitive. But here you forget that earlier there was no competition, therefore LICI was not competitive. Now there is competition and LIC men are afraid of it. Therefore, they are adopting cheap measures of adverse publicity against Pvt. players. Have you got any knowledge about the capital base of LIC? I think, NO. The huge reserves on which LICI is roaring, are the surpluses generated out of the innocent policyholders of this country which should have been paid to the policyholders as BONUS and should have not been kept for enjoyment and roaring of LICI men. Do you not know that LICI employees are better paid than Bankers and employees of many other organisations. Wherefrom they are being paid? YES, out of the premia of policyholders. Otherwise, perfrmance of LICI,in each category of investment is nowhere in competition with private players.

Why you people(LICians) are so allergic with private insurers? Govt. has allowed them to transact the business and they will do it. How you people are going to be affected? How many articles, you purchase from the market, which are produced by Govt. companies? Are most of such items not produced by private companies owned by TATAs, BIRLAs and so on and you proudly use them without any complaint? Are they not performing better than so many Govt. companies? Then why are you allergic in case of Life Insurance only? Clearly out of fear and frustration owing to the loss of monopoistic status and advantage of LICI. Further, you must be knowing that all the private companies have been promoted by well positioned busness houses of India and have a GLOBAL partner, LICI stands nowhere before them GLOBLLY. LICI has been operating domitically and that too in monopolistic and govt.-shelterred situations.

PLEASE HELP CREATE A HEALTHY COMPETITIVE ENVIRONMENT FOR THE PEOPLE OF THE COUNTRY AND DO NOT MIS-LEAD THEM.

Mr. Jeevan,

Being affiliated to LICI, how can you claim to express fair & honest opinion? And you have proved that your opinion is not fair and honest but inclined in favour of your own organisation.

This is not the reason, and I have never expressed, that LIC agents are maligning the private insurers and therefore private insurers are dooming. I have expressed that they are not dooming at all. The LIC agents are publicising as if the private companies shall fail and will run away with policyholders' money. Is it fair?

You have misconceptualised and mystified the payment of bonus. First of all, LICI pays the bonus whenever the policy matures or a claim is paid. It is clear that the bonus declared is not transferred immediately in the hands of the policyholders but is held by LICI with it and is used by itself, for a long period, i.e. till end of the policy. Further, the rates of bonus are not uniform for all the plans and are declared according to the surplus available with the company for that particular plan. How far, then, the bonus declaration is concerned with the profits/ losses of a company?  How the companies, running in losses, are declaring bonus? Have you got any record of the bonuses declared by LICI (and of private companies) for last0 years? If yes, please provide me for my knowledge sake. If the figures are not available with you (as D.O.), then you are talking of hypotheically. You will see by comparison that some of the private companies have declared better than LICI. Pleae donot forget to provide me the information on this forum for the benefit of the members.

Payment of death claims is the liabiity of the company and it is no obligation on the nominees of the policyholders. Companies are bound to pay the valid claims. Do you expect the appreciation for not disallowing valid claims. Can you afford not to pay a valid claim? Then why are you linking the point with doom of the companies?

Still further, you appear having seen the figures in the Annual Reports and P/L statements simply for your amusement and having never analysed these statements. Please analyse them critically and then form any opinion about private players. You would find they are utilising their resources more efficiently than LICI.

You have somewhere else accepted that the agents of LICI are required to be trained, now, keeping in view the competetion. This is fair acceptance on your part and it denotes that LICI agents, so far, are not trained upto required level and are enjoying the fruites of monopolisic size/image/strength of the organisatin.

Please be really fair and honest for healthy debates and for knowledge sake of the readers/ viewers. 

I believe that the private insurance companies are doing well.

Let me put accross to you on question, did LIC grow 3 folds in its first 3-4 years of operation? The private companies have.. The reasons for their growth have been the unique products and services offered.

I am not against LIC but for a healthy market the private companies have done a great job. Today all the insurance companies are using all the tactics to push their products and end of the day its the consumers who will benifit.

I believe that the Private Insurance companies are doing well and will continue to do well in future..

Private companies give full knowledge to their agents so agent also give full knowledge of plan to customer,On other hand LIC not support their agents anytime or DOs not support and they give false knowledge.For example Money Plus plan

Mr. Nevin,

So far I was holding many policies purchased from LICI and my experience, like many others says something else.

You must be aware of the fact that LICI are leader in mis-selling and rebating. There are several evidences to prove the fact. Are you not aware of the situation? I am sure you are aware but you are covering up under the influence of misleading notions. Further, the fact remains that after enjoying almost 50 years of unchallenged monopoly the LIC people are now realising what actually the insurance is. So far they have looted the innocent people of India and procured huge reserves on the strength of which you people are roaring. You are afraid of the challenge given by private plyares and you are misleading the people by saying that you are the only govt. company and only you have the right to survive. Are you sure that LICI shall never be disinvested and privatised by Govt.? How shall, then, you convince the people? LIC have been paying almost lowest bonus(upto 2, 3, or 4%) or even no bonus on various policies while their premia are not lowest ones. On ULIP front also perfomance of LICI (particularly in EQ) is far behind of private companies. You must also know that profit or loss is not going to affect the interest of policyholders. Govt. has adequate regulatory provisons for protection of policyholders' interest. Why are LIC people beating the drum as if they are the only well wishers of the people? The insurance sector is providing better safeguards to the policyholders' interests than Banking (which is almost privatised) and still the people of the country have immense trust in Banks.

You should know that every business entity incures initial losses during its expansion period and till it reaches its Break-even-point. So there is nothing unusual in the initial losses of private companies.

PLEASE STOP ALL SUCH MISLEADING EXPRESSION WHICH ARE GIVING NOTHING POSITIVE AND CREATING ONLY CONFUSION AMONG THE PEOPLE. HAVE A FAITH IN CO-EXISTENCE OF THE COMPETITORS FOR THE BENEFIT OF THE PEOPLE.    

`Further, today 75% premium comes from ULIPs, which are not participating plans, i.e., Company's profits or losses don't affect the investors. Their returns are separate from that of promoters`.Right MrGoyal,but ULIP commissions have come down drastically and most pvt co agents I know are trying to sell more traditional plans.And, as you have rightly stated,traditional plans(Participating Plans) depend upon companies profit or loss ie- NO PROFITS BY COMPANY=NO BONUS FOR POLICYHOLDERS(IRDA has allowed 2 more years for private players to pay bonus to policyholders out of the money brought in by the promoters).So now MrGoyal,after these 2 years are over how do you intend to face your policyholders whom you have promised high returns?Especially since you have yourself said you are `intentionally increasing your PLANNED LOSSES`????

`So, the present losses are planned losses, being intentionally increased by way of money spent in expansion`-MrGoyal,BSLI.So you must be very happy,you people have been making losses for 7- 8 years now.                                            Well,good luck to you sir,may you make bigger losses this year too.LOL!

Pvt. Sector is really doing well, taking away almost 50% of market share from mammoth LIC, which is a good orgn by the way. Profits of any company, including a life insurance company, comes only after a particular scale of business volume is reached. So, the present losses are planned losses, being intentionally increased by way of money spent in expansion.

Further, today 75% premium comes from ULIPs, which are not participating plans, i.e., Company's profits or losses don't affect the investors. Their returns are separate from that of promoters.

Ashok Goyal, Birla Sun Life

All are not covered by insurance for risks they face.

Mobile Insurance at the doorsteps of each road/village

is a necessity to educate and create opportunities

for more insurance by more people

Mr. Imran is right in his argument. Further, it is expected of the person, hosting the debate, that he must be impartial in initiating the ebate. His language as well as the wording of the topic should be balanced and should not appear having been patronised by someone in his favour otherwiseit will ruine the spirit of the debate. Mr. Shrath, please be honest in this regard, in future. 

To

Mr sharath.

You are debating with too many people.One question i want to ask i am not saying you are right others are wrong . but one thing tell me If LICI are capable then why government allow private players to do business in insurance?

Mr. Kotiah,

You are a LIC man. Therefore, you would not like to listen a argument against LIC. Your denial of accepting any word against LIC or that favouring Private players is self convincing oweing to your blind loyalty to LIC. It is unfaire to sponsor the debate where you are full of prejudices and one sided notions and there is no room for the arguments against your misleading notions. It realyy brings down the level of debate as also the standard of the forum

Mr. Kotiah, I donot know in which paradize you are living but please come down to the earth and see the ground realities about LIC. All the demerits, you have enumerated against private players, have been initiated by LIC and they are flourishing well, therein, multifold. You are denying the demerits of LIC instead of being ashamed therefor. There is a long list of miscreations adopted by LIC persons, a few of which may be enumerated as under:

1.  There is well publicised practice of huge rebating in LICI (offering upto 6 years' commission), against the IRDA norms. It is widepread like curruption (84% according to Planning Commission) all over the country. Everybody is acqainted with the situation but helpless to abolih it. In the same way you are denying the rebating in LIC, shamelessly.

2.  There are a good number of Agents (particularly ladies) who are dormant and their husband/ sons/ father (mostly Govt. employees) are selling the policies of LICI pressurising the persons/ employees working under them or who are compelled to oblige them.

3.  A LICI agent seldom regard the actual financial needs of the policyholders, at last I could not find a single one. In other word the LICI agents have no regard to the financial planning. They simply sell the policies by offering rebates thus prompting the clients to purchase their policies blindly having no regard to their actual financial needs. 45 years of uninterrupted monopoly of LICI has created an environment where Insurance has been recognised a investment, savings and tax saving device rather than INSURANCE. It has harmed insurance industry in a big way.

4.  I remember and it i recorded fact that for years togather LICI has allowed the bonus @3-4 percent or even lower on the traditional policies. It never encouraged  selling of term insurance, the real and cheapest insurance necessary for every pivot person for the welfare of his family. LICI has thus created huge resources by exploiting ignorance of the people of the country. Otherwise, wherefrom this huge capital/ reserves/ assets have been created? Has LICI got money producing machine with it? It was only with the entry of private players in Life Insurance indutry in the counrty, that LICI was compelled to pay bonus to the extent of 6-7 percent or so. Now afraid of the performance of the private players and looing the market share to the private players LICI persons are using rumours in variou ways.

5.  LICI has enjoyed 45 years of uninterrupted monopoly and has faced no competition to reach preent level. Why are you, the LICI men impatient over the performance of private players. Certainly they should be allowed to take longer period to overtake position of LICI, as they are bound to face pressures and tress of competition particularly with an unscrupulous giant. Still, they might be lagging behind in terms of capitalbase or their size but are paying better to the policyholders in terms of returns/ bonuses, than LICI. LICI stands nowhere in the market in terms of performance. LICI is roaring on its position due to large customers' base created by it during its 53 years of exitence, including 45 years of monopoly, a also on the plea "we are govt. company, others will run away taking your money". Are you not aware of it? You are but you can not accept being LICI man....... contd.

In most LIC branches one can find leaflets with 25-35% returns on ULIPS distributed which is a clear case of misselling. Also LIC pushes sales with a date as last date after which such a great product will not be available.

Disagree. LIC has large customer base and policies. Service quality should be measured in percentage of total number of policies and not mere numbers. Today the quality and reach of LICs service is the best in the Industry. At LIC a loan on the policy is processed within 1-2 hours and online status of policies and online payment facilities have been improved.

Most of the operations are decentralised in LIC and in private companies it is centralised and the delays are large.

If disbursing of money is the sole criteria for you to think that the companies are doing good or not than the private players have not got the chance to show that to you. Moreover there is another thing called gestation period. Every companies passes through that phase. Even LIC has passed through that phase. If you will ask people who saw LIC opening and starting business you will get to know that at that time people used to ask the same questions as they are asking now. The only difference in the reply was that the LIC officers used to say look it is a Govt. company and your money will not be doomed. In the case of Pvt companies they can not say look we have a godfather in the form of Govt. that is why people suspect and look at them with a lot of suspicion. To believe them we have to see their financial results. But if look at your buying habits of other things than you will see people do not hesitate in buying from private companies. Your child goes to a private school, you buy milk from a local milkman, you buy cloths for your self from a private company, you depend more on a private mobile service provider, in the DTH service providers private player are more trusted and the list is endless. In the case of Banking business the rise of ICICI Bank every body knows is good. Though Govt. banks are also competing now with private players but you will agree that the level of service of private players is lot of notches above the Govt. banks. See you can not just start believing happening of an event. There is lot more that is required. But in the same way you can not just start not believing it. People like Mr. Ajay Ziz think that what they are thinking is right and every other thing is rubbish. They are bound to prove their point right rather than listen & understand to what the other person is saying. In one sentence they have a closed viewpoint. This is harmful for them and also for the society in which they live. I might have trudged a bit out of the point in question. But my only thinking in doing this is to make people understand.

They are doing well,but they are heavyly staffed,some body must give a hard look at their organisation chart and get rid of junk...actuaries,underwriters and buddle of managers,if they cut their wage bill comensirate with their biz.But the axe must fall on actuaries and underwriters,this the mafia stangling the biz devlopment

They have brought in product innovation. Yet big thing in Insurance industry is awaited is statistical data, which will really create a price war among all private players & govt behemoth.

Private Insurance companies are doing well/ are doomed.........etc.etc.......these thoughts are valid,but too premature to get a vardict on this.

But I would like to ask all participants one question........Are we comfortable buying life insurance products in a monopolistic market ????????

Dear Mr. Sharath Kotian,

I am happy to know from u that LIC gives good training. I said about ur ULIP plans because u said that ur agents are selling mostly traditional plans.

I am not expecting you to compare with those who are charging higher than you. There are more companies in the market which charges lesser than LIC . I expect, being a market leader,public sector,profit making company LICs's plans should be with least allocation charges. But it is not.

And you have said LIC is the one which introduced ULIPs last.

I Ask you WHY?

Why didnt LIC, being a monopoly in India for almost 50 years, didnt serve the customers with the wonderfull product ULIP untill pvt players introduce it?? what is the reason behind. If u say ULIPs are bad then why are you selling it now?

Dear Niranjan Meena,

I support your views entirely.  The present loss of market share can be compared to a situation where the glass if full of milk and even a further drop of milk cannot be added, but if you still start pouring then obviously there will be spillage.  We should not call it exactly as loss of market share.  Its the spillage which the private companies are presently enjoying and they call it loss of market share for us so that they can degrade us in the market.

Only thing they have with them presently are posh offices and tall claims of success.

God help the poor Indian.

Thanks for your support.

Mr Ravikant,

It seems that you are saying it will take at least 50 years for you to surpass LIC.  Dont you think thats a bit too long a time to get trust in your company or any private company.  And what guarantee can you give the people that after that many years you will still be in profits.

Today the private insurers are selling ULIP plans because they are the easiest source of income for them to survive.  Here they deduct handsome amount towards charges and feed themselves.  Please be fully sure about NAV's before writing about it.

The ULIP plans are sold by their agents by presenting the clients with bloated figures of maturity to the extent of 55% to even 80% in many cases.  These papers are handed over to the unsuspecting clients who are made to believe that 3 years on and/or after maturity they will be earning handsome returns from the company.

One of my client even argued with me saying that a particular company can pay handsome returns because they have been in the market since more than 100 years selling SALT and Steel Cupboards.

Do you think this company will borrow from its Salt business to pay the clients their due/claims of their policies if the company runs into such losses.

As far as fast settlement of claims are concerned,  let us consider the outstanding claims at the end of the year compared to that of LIC with any other private insurer.  Settlements and not 'fast settlements' are the need of the hour if anybody needs a foot hold in this industry today.

Also for your information, the govt share in LIC is 5% and not 3%.  And the share is still intact with the govt.

kindly explain how the policy holders will suffer.

Do u mean LIC agents dont MIS SELL?

Here the loss incured by Pvt Life Insurers draw unnecessary arguements because of failure to understanding the problem.

First the loss incured is BUSINESS LOSS not INVESTMENT LOSS. So the policy holder wont be suffered. The business loss is because all companies are in expansion mode which is unavoidable for customer aquisition.

But this will be met by new capital infusion by the promoters not from the money invested by the poor indian customers, as worried. 

Again investments made by the pvt players are performing far better than their public sector big brother and this can be supported by the bonus declaration and comparison of NAV of ULIPS.

Other allegation is on settlement of claims, on my experience, death claims are settled faster and partial withdrawals and preclosure are entertained without any hesistation. if any one have any bad experience,, kindly come out with details.

But this business loss is communicated to customers as if they have lost their invested money which is untrue.

what sharath has opined is what i wanted from aditya sharma from HDFC

by the way sharath  i have a policy of LIC.

i do agree with the opinions , and would add that only LIC has disbursed money to  the people.

PRIVATE players are in the collection mode yet , their true character will come out only when they will have to disburse.

well if i talk about LIC it has passed more than 56 years in india and have gone beyond the break even point of making profits.

if we talk about PVT. Co's its just started and is growing more than what LIC have never thought before. and to grow an insurance co's only funds which are coming from policyholders investments is used which might be LIC have used before now its not been seen.

if i see a PVT. Co's after 56 years from now onwards its a huge guarantee that LIC will be NO WHERE in the industry.

AS 3% central govt. stake has been withdrawn from LIC is a big drawback for the same...

Insurance requires selling through persuasion. During this slowdown period and unemployment it has adversely affected the growth of insurance business and build-up of funds not only for private companies but also for public enterprises. It has created a crisis of confidence. I will not shy away to say that Public sector has lost its market share at the cost of stupendous growth of private players. It is better to have aggressive and penetrative marketing strategy coupled with wide product bandwidth for masses. And collaborate with micro finance companies and village management authorities for selling insurance which is a good way to go during this times.......

Do share your views Sharath....

I think that the private insurance companies are doomed unless they start thinking the way I do.