Radhika Menon

Plans to launch unit-linked gratuity, superannuation schemes

Mumbai , June 19

Though maintaining market share is a stiff challenge for the Life Insurance Corporation of India in the individual life insurance business, the corporation is seeing a jump in its market share in terms of group insurance business.

LIC's market share for April has increased to 81.97 per cent, compared to 78.8 per cent at the end of March, 2006.

Mr R. Venugopal, Executive Director, Pension and Group schemes, LIC, said that rationalisation of the fringe benefit tax on group superannuation schemes had helped the company in expanding its group business.

For the months of April and May, the corporation has raked in new business premium of Rs 647 crore, a 67-per cent growth from the previous year. Of this, group superannuation gratuity and annuity schemes contributed Rs 111 crore, Rs 106 crore and Rs 118 crore respectively.

In the last financial year, the imposition of fringe benefit tax had dented the growth prospects of group business. As per the recent Union Budget however, FBT will only apply to contributions above Rs 1 lakh. Given that 90 per cent of the contributions to superannuation schemes fall within the Rs 1 lakh bracket, the measure came has a huge relief to insurance companies.

"Corporates today want to provide better benefits to their employees so that they can retain talent. While group gratuity schemes fall under statutory liabilities, pension as well as leave encashment schemes are offered as perks," said Mr Venugopal.

Mr Venugopal believes the business potential this year is very high, as the corporation soon plans to launch a unit-linked gratuity and superannuation scheme.

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