Life Insurance Corporation Of India CC-Jun24.pdf · 2024-08-09
Yes. Hi. Good morning. Thanks for the opportunity. Couple of q uestions. The first one is around this new surrender regulation. So virtually, this increases the payout to the lapsing policyholder. Now, if I were to look at LIC's premium persistency drop at 13 months or nearly 20%, 22%. Now in today's context, those lapsing policyholder will be gett ing a zero. Now going forward from October, they will have to be paid depending upon the formula calculated number. Now that -- mean that, okay, you will have to sort of compensat e to those policyholder by sort of a cutting benefits on the persistent policyholder or tweakin g your commission structure or taking a hit to the margins. So can you just elaborate and help , I mean, what would be the strategy? How to compensate for the sort of at least this 13 month extra payout that comes under the new regulation? So how is that going to happen? That is my question number one. Second question is on the margin front. If I look, I can under stand that, okay, the margin on the non-par individual side could be an outcome of increased benefi t payout due to maybe competition, increasing guarantee, increasing annuity rates and also on the group side, it could be a mix of factors, including how the composition is changing between group saving, annuity and maybe term. That is right. But a big puzzle that, okay, how is that margin is such a sharp drop on participating side, particularly because now even in the profit sharing and all are nearly 90/10 and all. So what is driving this kind of a margin drop in the pool, par saving side because your scale is too big. So what is happening here on the individual participating side that is driving your margin so low. Yes, so I believe the two questions the first one was on how are you sort of going to respond to this new surrender regulation when you will have to sort of at least if I look like the 20%-22% of the lapse in premium at the 13th month today you are I mean based on regulation you are not paying anything. Now going forward and of course I mean this surrender of money was anyway going to the largely to the PAR pool. So going forward I mean the impact has to be felt by the possessing policyholder, the distributor in terms of commission tweaking and also some bit in the margin , s o h o w a r e y o u s o r t o f foreseeing this impact of now the new surrender regulation with the lapsing policyholder being paid, is going to play out across these previous stakeholder. S o that was my question number one. And second was that okay, on the margin I understand that on the group side they have so many things that play out even the kind of annuity rates you offer even within group the kind of product changes that happen so that margin change over your other stories on the group non-PAR side I mean because of the change in guarantees and maybe you'll -- ha ving lower margin those parts we understood but at your scale. And this thing I mean what is driving down this PAR margin Y-o-Y I mean that's the material drop. And you have a bigger sc ale and I mean so what is happening on the individual PAR side margin?
So quick follow-up on the first surrender regulation. So, very specific now, will it be possible - - because you have a large agency distribution, there is first year's commission, will it remain viable to not have a clawback or a trail-based commission for the policies that if likely lapse say in 13 months specific. So I mean, under the new surrender regul ation, will it remain viable that you still have the usual payout structure that you are doing to day, if the policy were to lapse, say, in 13 months after paying one year premium?