Inner-View

Bikash Chandra Bose has recently joined as Managing Director of LIC (Nepal) Ltd, a joint venture of LIC of India and Vishal Group of Nepal.

Before joining in the Joint Venture in Nepal, Bose was Executive Director in the Corporate Office of LIC of India in Mumbai, In-charge of Personnel and Industrial Relations. Excerpts:

What are the factors that prompted LIC of India to get into joint venture in Nepal? Is it because of competitive heat in Indian insurance market?

In responding to this question let me first briefly deal with foreign operation of LIC of India. LIC is having international outfits in U.K., Fiji, Mauritius and Bahrain. In fact, with controlling office at Bahrain, LIC of India’s operation in Middle East covers Dubai, Qatar and Saudi Arabia. The company also operates in Kenya through Kenindia Assurance Co. Ltd. In its Corporate Office, LIC is having a Foreign Operation Department headed by one executive director. Thus, involvement in foreign operation is nothing new for LIC India. It is by way of continuation of the same process that LIC India has become a promoter in joint venture in Nepal. This is to add that the proposal for having such joint venture in Sri Lanka has also made significant headway.

It is true that the insurance sector in India has become competitive as a part of Government of India’s overall policy of opening up the economy. MNCs like Prudential, Allianz, AIG and others had entered in top life insurance market in India as JV partners of very established Indian business groups. But results show that after the sector has been opened up LIC India’s performance registered unprecedented heights. In first half year of the financial year 2000-2001 total collection of LIC has become almost equal to that for the full previous year. Recently, on 12th September 2001, the Honorable Finance Minister of Government of India said in course of his address, "I have always been proud of LIC and am prouder of the achievements of LIC today."

Thus the LIC of India converted competitive heat into inspiration in its performance.

As a JV company, LIC (Nepal) is having two promoters viz., LIC of India and Vishal Group of Nepal. The public issue (yet to be invited) will ensure public participation. Capital of the company to the tune of Rs. 250 million is contributed at 55% and 25% by the LIC of India and Vishal Group respectively, while balance 20% will be raised by public issue.

Vishal Group has made significant progress through diversification covering segments that include, iron and steel, consumer goods, agro industry, international trading, financial services. They are also having strategic stake in industrial and commercial banking.

Thus, LIC (Nepal) as a JV, is a combination of one promoter with proven success in the business of life insurance and the other promoter with depth of knowledge and experience in the economy of Nepal, one complementing the other.

As I have stated earlier, LIC (Nepal) with only two promoters (apart from public participation) presents itself as a cohesive enterprise. The combination of the two promoters radiate synergy. Again, LIC (Nepal) is a techno driven company from the start. The software, successfully applied by LIC of India is loaded in hardware of appropriate configuration procured at Nepal. Further, LIC (Nepal) is having priority on training in administration as well as marketing by utilizing the modules used by LIC of India with proven success. Thus, HRD is positioned as a thrust area for skill formation and updation to strengthen the company on a continuing basis.

Insurance market of an economy has got many determinants. Couple of months is too short a period to pass opinions. However, based on the interaction that I had both on one to one basis as well as on group basis in a class room atmosphere for training, agents in Nepal are quire receptive, understanding, inquisitive and suggestive. Again, doctors play a vital role as medical examiners. They have also been observed as very responsible in playing their role. Prospects are also quire receptive and co-operative to the requirements that they are to comply. These are definitely strong points of salient constituents of the insurance market in Nepal.

With regard to overall dimensions of the market, I would call it a compact market. It is worth noting that even six to seven months back there was no insurance company in Nepal, exclusively dealing in life insurance. As of now also there are just two insurance companies including LIC (Nepal) solely devoted to life insurance business. It has been learnt through experience that competition in life insurance sector itself spreads awareness about life insurance, disclosing potential of the market. I believe that it will be true for Nepal as well.

I should also add that the economic policies of HMG with target of 6% growth in GDP as well as measures being pronounced for 10th plan to be operative from 2002, provide encouraging indicators for development which will have its direct bearing on life insurance potential.

These and other related factors make LIC (Nepal) approach the market with a positive outlook.

LIC (Nepal) has started with two products, deliberately selected, with which market is familiar. These are Endowment Plan and Money Back Plan.

Though these plans are familiar in Nepali market, there are certain fringe benefits provided by us which impart some differentiation. To illustrate, there is Add-On-Value though Accidental Benefit and Permanent Disability Benefit which can be up to Rs. 3,00,00. Another such value addition is contained in Term Rider. It provides death benefit to the extent of double the basis sum assured up to Rs. 2,00,00 on payment of small extra amount. The focus of such value addition is to drive home the basic benefit of life insurance to the family in extending protection.

Have you got any vision for your company as you like it to emerge in future?

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Life insurance business in Nepal holds good potential : Bikash C Bose