India’s largest insurer LIC launches tender from fee aggregators


  • This could possibly be an enormous alternative for companies and fee startups providing entry to LIChas greater than 250 million prospects.
  • Enterprise Insider has discovered that on February 5, 2021, LIC launched the “Request for Proposal (RFP)” for a contract that shall be legitimate for 5 years.
  • See the most recent information and updates on Enterprise Insider.

The Life insurance coverage firm of India (LIC), the nation’s largest insurer for greater than half a century, has a golden egg for fee gateway operators in India.

LIC is at present launching a young from fee aggregator firms to allow digital premium fee for its greater than 250 million prospects – a chance for the likes of Razorpay, Paytm, PayU to get began and win hundreds of thousands of LIC customers in a single day.

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Enterprise Insider has discovered that on February 5, 2021, LIC launched the “Request for Proposal (RFP)” for a contract that shall be legitimate for 5 years. The RFP, seen by Enterprise Insider, states that “LIC desires to profit from an entire and totally automated end-to-end answer for all sorts of LIC collections, not simply bounties, by integrating LIC’s web site with an aggregator built-in Web fee ”.

LIC had already launched an analogous supply in 2017, however the supply had not seen the sunshine of day. However now there are nice issues for the LIC to do. The 65-year-old insurer can also be gearing as much as make its market debut this 12 months, as Finance Minister Nirmala Sitharaman introduced in her 2020 price range speech.

One of many fee gateway operators in India, Razorpay, has confirmed to Enterprise Insider that it has been invited to bid for LIC, and can submit its proposal in March. Nevertheless, the billion-dollar startup didn’t share extra particulars.

For LIC, an appointment with ‘information utilization’


For tech lovers like Rajeev Suri, Managing Director of Orios Enterprise Companions, the largest profit for LIC lies on this partnership. Suri takes a sheet from China’s playbook to quote the instance of Alipay and its success. Jack Ma’s Ant Monetary’s funds app Alipay used information from the funds vertical to
promote extra merchandise to customers, which in the end led Ant Monetary to develop into a huge finance firm with a valuation of over $ 300 billion.

The info obtainable to those fee aggregators would give LIC the chance to direct insurance policies to the proper person, leaving room for deeper penetration of Insurance coverage in India. And it’s this disruption of information that’s on the origin of LIC’s story.

“At this time, insurance coverage is especially used as a tax saving different. However with the info from these startups, it should assist LIC. It was the info magic that occurred in China that constructed probably the most highly effective IPO the world has ever seen. And that might additionally occur with LIC, ”Suri mentioned.

For any fee gateway operator, a novel alternative

In line with a report by Goldman Sachs, the web particular person insurance coverage (life and well being) market could possibly be price $ 1.25 billion by FY25, greater than tripling from $ 365 million in FY20. And no doubt, LIC holds the large market share.

EXCLUSIVE: India's largest insurer LIC launches tender from payment aggregators
BI India

For fee startups in India, will probably be an awesome likelihood to accumulate extra customers and transactions. In 2019-2020 alone, LIC processed bonuses price ₹ 3.79 lakh crore ($ 51.7 billion). And this, whereas India continues to stay an insecure nation with barely 4% market penetration, leaving a big alternative for LIC to develop additional.

In line with a Financial institution of America report from January 2021, India’s digital funds market is anticipated to achieve $ 300 billion by FY25. And on the coronary heart of it are native gamers like Paytm, Razorpay who will trip the wave of digital funds.

Insurance coverage in India remains to be closely regulated and for any startup, working with LIC would imply eradicating many boundaries without delay.

“LIC is the grandmaster of insurance coverage in India. For any start-up in partnership with LIC would imply simpler promoting of insurance coverage to shoppers, the belief deficit related to monetary merchandise would disappear when there may be an affiliation with LIC, ”Suri informed Enterprise Insider.

For startups, that are nonetheless closely concentrated in India’s largest cities, working with LIC will open up direct entry to customers in Tier 2 and three cities. Suri believes startups would turn into a “ reliable enterprise. throughout India, as the popularity worth of LIC is excessive.

So who can bid on the LIC tender?

Partnering with India’s largest life insurer, which can also be heading public markets in what is called the ‘largest IPO of the last decade’, is not going to be a simple activity.

LIC in its request for proposals has already issued an eligibility criterion with a number of components which every signify a set variety of factors. The factors shall be determined based mostly on components reminiscent of the overall worth of digital transactions made by the corporate in 2019-2020, with over ₹ 50 crore taking the best factors, the variety of years of expertise within the trade, amongst others. For an organization to win the supply, it should want a minimal of 75 factors.

However that is not the one hiccup. Bidding for the LIC implies that the corporate ought to first give a critical cash deposit of 10 lakh and the ultimate winner ought to submit a efficiency financial institution assure (PBG) of 10 crore.

And all of that makes issues a bit difficult. “Technically, due to the auctions, these are turning out to be low earnings alternatives,” a supply from one of many main fee aggregators informed Enterprise Insider on situation of anonymity.

Curiously, there are numerous different gamers coming into the funds trade with drive. From Mukesh Ambani’s Reliance to the Amazon led by Jeff Bezos, has partnered with banks and different organizations to use for a brand new Umbrella Entity License (NUE), which could have powers just like these of the Nationwide Funds Company of India (NPCI).

EXPLAINED: The NUE license for funds requested by Tata, Ambani and Bezos
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