The Life Insurance Corporation (LIC) commands over 64 per cent of the life insurance market in the country. However, with a host of private players entering the market in the last 8 years, LIC's market share is slipping fast. In an interview with Manju AB, managing director DK Mehrotra discusses how the government-owned life insurer plans to present itself as a vibrant organisation and maintain its status as
the most-favoured insurer in the country. Excerpts:

The market share of LIC has been declining steadily, hitting about 64 per cent in 2007-08. What are you doing to prevent the slide?

We have certainly moved from being a monopoly to a competitive player. That is bound to happen when new players come into being. But if we look at the individual shares of competitors, they are still minuscule compared to LIC.

Are you taking any steps to improve the LIC brand?

We are re-branding the company as a young and vibrant organisation, rather than projecting it as a 50-year-old ageing corporation. We are building on the years of experience and at the same time trying to be relevant to the younger generation, who have an investible surplus. We now have a new corporate flag, which is half blue and half white signifying universality, financial credibility, vibrance and enthusiasm. We have launched television commercials like Boat – A journey of life' and Na Chinta Na Fikar, which increases our visibility as a vibrant organisation. We are also about to launch a number of customer-friendly products, which are awaiting approval from the IRDA.

Why is LIC going slow on Ulips (Unit-linked insurance plans) despite the fact that it contributed about 85 per cent of the total first premium income in 2008-09?

We feel 70:30 is a good product mix with 70 per cent of business coming from Ulips and 30 per cent from traditional insurance plans. We don't want to be a market driver (for Ulips). For us, the priority is to provide a lifeline with a continuous flow of income for the investors.

But Ulips are contributing to nearly 85 per cent of the first premium income?

In 2005-06, Ulips formed just 7.10 per cent of the new policies we sold contributing to 42 per cent of the first premium income (FPI). In 2007-08, it contributed nearly 86 per cent of the first premium income. When markets were doing well, investors took to it (Ulips) eagerly. It is the investors' decision finally. From the marketing point of view, it is more difficult for us to sell Ulips as it requires a certain amount of alertness at the point of sale. The insurer needs to spend a lot more of time in making the investor understand Ulips.

What are the targets for this year?

Our projection for the year is 30.10 per cent growth in first premium income to Rs 57,000 crore and 15.72 per cent growth in the number of policies.

What sort of revenues were generated in 2007-08?

The total income rose 18 per cent to Rs 2,06,363 crore in 2007-08 from Rs 1,74,424 a year ago. Of this, the premium income generated was Rs 1,49,705 crore and investments and other income was about Rs 56,658 crore.