LIC: Communications and change

“After 50 years of hand-holding, the government may consider withdrawing its guarantee on more than 16 crore policies sold by the Life Insurance Corporation,” says a report in The Economic Times on February 13, 2006. “The move may finally open up a level-playing field for the private players, without the prop of government support for the public sector giant.”

“The move follows the diktat of the Fiscal Responsibility and Budget Management Act, which mandates reduction in the level of public debt to 0.5% of the GDP,” the report said. “This means the government guarantees on LIC policies may have to be terminated in the Budget.”

If this is true, would there be grave repercussions? Would it spark major changes in the insurance industry? How would it affect the average insurance policy-holder? In the absence of a government guarantee, what would be the impact on LIC’s business? The trickle of questions continues….

Considering the pace of India’s economic reforms, radical changes seem inevitable. As for the reported move to terminate government guarantee to LIC policy-holders, it was recommended by Deloitte & Touche Tohmatsu, which had been roped in to look at the restructuring of LIC, two years ago.

If change is on the anvil, are the stake-holders being prepared for it? That is the all-important question.

Watch this space for ‘Message mapping’