Surya Kumar Roy started his career in 1981 in LIC as a direct recruit officer, and has climbed the ladder to become its chairman in June last year. In a wide-ranging interview with ET, Roy touches upon a variety of issues ranging from LIC’s concern on repository, competition from private insurers, to its vision to cover every Indian by March 2020. He even dwells on prickly subjects like whether the State Bank of India should be allowed to do life insurance business, and much more. Edited excerpts:

How does the insurance industry look like?

The micro and macro pictures may give very different perspectives. The macro picture looks good. The life insurance industry is growing. Also, claim settlements have improved, showing 10% rise against 5-6% earlier. So, if you take these two as parameters, both on new sales and servicing, there have been major achievements — that’s the macro picture. But the micro picture is that a large number of companies are still not in a position to make profits. The break-even, which was supposed to take 7 to 10 years, has already doubled. But that’s something for them to explain.

If there’s a rebound in the economy in the coming years, what will drive growth over the next few years?

The market is not a driver of growth because it is hugely un-penetrated. We can’t say that the market has expanded. One constraint of the recent past is likely to change now — disposable income may be increasing. If that happens, then everybody in the financial sector will have to be more active to get their share of the pie. That disposable income is likely to see an upward movement. The second thing which will drive growth is the type of products that are available on sale. A big challenge for life insurance companies is how do they come up with products that are compliant and yet attractive.

Would that mean that people are looking for assured return products or pure term life products?
The pure term product is a guaranteed product because in case of an unfortunate death, we know that this is the amount that’s going to be paid. The only uncertain element is ULIP where we are not present at this moment. We are very clear that we want to be in the ULIP market, but we aren’t sure what’s the right time to enter. The product will have new feature.

LIC is slow in joining the repository. What are your concerns?

I would like to correct the notion that we are slow. Actually, we are far ahead of others in the industry because, in a manner of speaking, we are already running a surrogate repository. So, all 30 crore records of LIC customers are already hosted in electronic form. Since we are ahead of the system, we have to come back. And coming back in reverse gear to align ourselves with five repositories is a time-consuming process because I have legacy issues.We started this project in 2006 and it is implemented. So, I have gone far ahead and have to come back and join others in this exercise - that’s the problem. We are a very compliant institution and would like to implement anything that the IRDA wants. But this is an operational nightmare for us. The industry raised two sets of concerns on repository: technology and safety issues, and IRDA set up two sub-committees which submitted their recommendations by May. I am sure IRDA has considered them. The ball is now in IRDA’s court. This is the age of convergence and the finance minister’s vision is absolutely right that we should not be hosting the same data at multiple locations. It should be in one place.

What’s your vision for the next 5 years. Where do you see LIC?

Our vision is that by March 2020, we should get this country insured with our products. Some 70 crore people have to be covered. Today, we sell 4 crore policies, but to achieve this target, we have to sell 7 crore. This will be driven by technology, managed by BPR, led by vanilla products which are very popular in public imagination. We can’t do this with insurance as a push product, it will have to be a pull product. So, the product is going to be a major part for Vision 2020— we want to achieve it because it’s our corporate aspiration. But there may be tremendous competition from private players who are also eyeing that pie, particularly if FDI is allowed in insurance up to 49%?

Are you sure that there will be tremendous competition?

Tell me what is it that they will achieve with 49% that they haven’t with 26%? They went and came back. If you see the annual report of IRDA from 2007-08 to 2012-13, you will find that the offices of private sector have come down by 25%. And it must have come down in Tier 2 and 3 and 4 cities, not in the metros. LIC has a 70% market share — one could say a lot would depend on the credibility factor I think credibility is a virtue which has been flogged a little more than necessary. Do you think the credibility of SBI is ever doubted? We have 2,048 branches and SBI has 15,000. Is it a fair competition? Should SBI be allowed to do life insurance business? I have 2,048 branches, and I have been asked to compete with a bank which has 15,000 branches. My staff strength is 1.50 lakh, while they have 3 lakh employees. Is it a fair competition? Is it a question of credibility? Is SBI less credible than LIC?

Is it that in India when people want to buy, they prefer state insurers?

I am challenging that assumption. SBI is also state-run. No one who is buying a policy from SBI knows that Cardiff is their partner. Everyone knows that they are buying life insurance from SBI RBI is looking at on-tap bank licence. Would LIC Housing Finance look at it? That’s a call for the board of LIC Housing Finance to take. It’s not eligible to be a payment bank and a payment bank can’t lend and lending is their activity. I don’t think it is qualified to be a small bank either. So, the options are very limited.

Now that the Companies Act is amended, giving minority shareholders more powers, will LIC be more proactive as a shareholder?

We have never shirked our responsibility of protecting minority shareholders’ interest. If at all, there have been a problem in the public mind, it’s about perception on how active or passive we are. Now, there are more specific provisions which are enabling: we can always take advantage of them.

What are your equity investment plans? Would you keep aside money for disinvestment?

Nearly half the year is over, and we feel that we should cross our proposed investment of .Rs 55,000 crore in equity this year. So far, we have invested just a little over half of what’s projected. If you see our past record, our investment in disinvestment has given us fantastic returns.