Life Insurance Corporation (LIC), which has a nearly two-thirds market share, fares well in agent productivity and in cost-to-premium ratio.
According to the draft prospectus filed by the insurer , LIC has the highest commission-to-premium ratio of 5.5% against the median of 4.4% for the top five private players. The lowest commission ratio is for SBI Life (3.5%). The higher commission is because LIC primarily relies on its agency force to distribute policies, whereas many private companies have a large part of their distribution through banks.
In bancassurance, or bank-led distribution, a big chunk of the distribution costs is bunched with operating expenses. LIC fares relatively better here with an operating expense-to-premium ratio of 8.7% as compared to a median of 11.9%.