Home / Market / Mark-to-market /  IDBI Bank is not the main headache for LIC

Life Insurance Corp. of India (LIC), the insurer to everyone, is readying to own a public sector bank that has the weakest balance sheet and would require regular and large capital infusions to just keep afloat for the next two-three years. It pays to look at what the insurance behemoth has faced in its own market even as it is poised to fulfil its long-cherished dream of entering the banking sector.

LIC has been losing market share to private sector insurers steadily over the last five years. The adjoining chart shows that in terms of first-year premiums, a good measure of how much new business an insurer gets, LIC’s share has fallen to 67.32% as of March this year from 75.44% in March 2014. This means that during these five years, more and more individuals preferred private sector insurers over LIC.

A steeper fall in market share is observed in the number of policies written. The insurance behemoth’s share in the number of policies (both group and individual) has fallen to 74% as of March this year from 84% five years ago. What this means is that LIC is losing customers hand over fist to private sector insurers.

It is still the single dominant insurer but it would be sooner than later when LIC would have lost this crown too. Unless of course, the insurer ups its game to retain or even salvage its lost share in the market. And that would require more capital. So, IDBI Bank is not the main headache for LIC, it has to figure out how to stem the loss in business to competition first.

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