LIC decides to bring down Transaction costs.

Public Sector Giant, LIC has decided to bring down transaction rates to around 50 paise for collection of small premium and Re 1 for payments. The company is looking forward to making insurance more inclusive by trying to profitably deliver products to smallest buyers.

LIC mobilized premium income of nearly $55 billion last year. This involved 4,050 crore transactions. These transactions don’t count much as compared to the challenge of making monthly payouts for annuitants when their pension policies maturity show maturity in the coming years.

LIC is looking forward for partnership with a public sector bank that allows linkage with payment systems to bring about low cost transactions. Mr. Vijayan, the chairman of LIC reported that the challenge on micro insurance products will be greater where the sum insured is small and premium minuscule.

The company is also taking certain IT initiatives to bring down costs. For example, LIC’s corporate active data warehouse product will allow consolidating policyholder accounts.