Life Insurance Corporation (LIC) has appointed KPMG, market consultants, to study on whether it could enter credit card business and what sort of business model should be adopted if the report was positive.

KPMG was expected to give a report within five weeks. After which, LIC would decide whether it could be a stand alone business or with a technical partner, if the study okayed the proposal, said A K Shukla, Chairman, LIC. He said the corporation would enhance its brand reputation if it forayed into credit cards as with a 'huge data bank of policy holders and good distribution network, we could analyse the credit worthiness of customers before issuing cards at affordable cost.'

In the current fiscal, the number of policies sold as on 15 February, 2006 rose by 25 per cent with a first premium growth of 70 per cent and the total assets of LIC was poised to touch Rs 5 lakh crore by March 2006 as against Rs 4.69 lakh crore when the last figures were compiled. Bima Gold policy launched by the Prime Minister at Lucknow in September 2005 had received good response, netting 17 per cent of total policies sold and would be closed on 31 March, 2006.

'Though there is no bar for us into entering health insurance, LIC don't have the expertise in managing, pricing and administering the insurance business in the health market. Also, there is no regulator in this market, besides lack of adequate data on different aspects of diseases for us to price the insurance products,' said Shukla.

He said a committee was looking into the entire gamut of issues and IRDA (Insurance Regulatory Development Authority of India) has also been approached for clarifications on whether LIC could enter into health insurance with a partner.

LIC was also toying with idea of entering into a joint venture with New India Assurance for distributing micro-insurance products. 'But as of now only one partner is allowed in this venture, but the market regulator has been approached for tying up with multiple partners. We would like to be in this market as soon as possible,' he said.

Over the years, the corporation has been giving higher returns to both the policy holders and the government. 'While 95 per cent of our surplus are issued to the policy-holders, the balance five per cent goes to the goverment as their share. This year the share of the government will be over Rs 650 crore as compared to Rs 580 crore given by the LIC last year,' Shukla informed.

There was no question of invoking sovereign guarantee as LIC's brand reputation was at all time high, he said. Last year alone, one crore policy claims were settled worth Rs 22,000 crore and 90 per cent of them were through post-dated cheques. As the only insurer selling pension funds, 'we have the right expertise to take the lead in the market and do much better business in this segment.'

As there was much scope for business in the Gulf region, LIC has received licence to open a branch office in Dubai, to be inagurated shortly. Another office in Saudi Arabia has also been planned. At present, LIC has offices in Bahrain, Mauritius, Fiji, UK, Nepal and Sri Lanka. A company delegation would visit New Zealand in the third week of March to explore the possibility of a joint venture.

(http://newstodaynet.com)