LIC sits on Rs 20,000 cr lapsed policies

A survey conducted by 42 consumer groups under Consumer Coordination Council has revealed that awareness regarding the policies is badly needed among LIC staff as well as policy holders. Policy holders have identified delays in payment assured and claim settlement, non-receipt of premium notice, late receipt of policy document and procedural bottlenecks as some of the major problemsfaced by them, the survey said.

With the imminent opening up of the insurance sector — besides competition from the private sector — LIC is facing a major threat in form of erosion in consumers’ confidence. Though in a belated move the Corporation has decided to hire international management consultants to restructure its mammoth organisation, customers and agents say that they are waiting for private operators to enter the insurance sector.

For LIC, the opening up of insurance sector — bitterly opposed by unions and tacit supported by the management — means loss of business and financial muscle. “LIC’s customer service has degraded in the last few years even though the organisation is over-staffed and has an extensive branch network. With the private sector companies like Tatas, Birlas and Reliance coming… it would be anyone’s guess what will happen to LIC,” says a Mumbai-based LIC agent.

Customers complain of lapsed policies, delays in remittances, cheques sent in wrong account numbers. SaysSudha Pai, a Mumbai-based LIC customer: "You can imagine my plight when I stood in a queue for an hour and later told that my policy has lapsed… this kind of inefficiency and lack of accountability is unpardonable. What’s more, once you have signed up for the policy, there is no exit route.”

The CCC survey confirms the consumers’ complaints and lack of any effective complaint redressing mechanism. “You walk into any LIC office and you can be sure to know why we need competition,” says N Shubha Laxmi, a LIC customer.

The corrosion in goodwill for LIC is its own making. Even though the branches are now computerised and networked, customers have to travel to that branch where the policy has been issued. “To pay Rs 70 change as deposit, I had to travel from Kalyan to Santacruz which is a two hour train ride,” says an irate customer Arun Shetty. “When I reached there computers were down and I was asked to come again next week,” he said.

The survey has suggested that LIC should spend its hugeunclaimed amount due to policy lapses for creation of consumer awareness and upgradation of services.

When contacted, top LIC officials admit that they are lacking in customer services and efforts are on to serve then better. “LIC should take lessons from the fate of Indian Airlines and Air India which are making huge losses as competition was allowed,” Shetty said.

“Even in the banking industry, one can witness change. Private banks like ICICI Bank are aggressive in deposit mobilisation by giving consumers extra services like internet banking, free ATM etc. LIC is like a dinosaur and continues to give shoddy services to its vast customer base spread all over the country,” analysts said. With private operators now set to offer services by 1999-end, it is finally perform or perish for LIC, they add.