Calcutta, June 29: ITC has entered into an alliance with Life Insurance Corporation of India (LIC) to sell the latter’s policies through its subsidiary, Megatop Insurance.
The tobacco major plans to use its e-choupal network to distribute insurance policies in rural markets. E-choupal network at present straddles 10,000 villages in Karnataka, Andhra Pradesh, Uttar Pradesh and Madhya Pradesh.
The network is a click-and-mortar supply chain that ITC has set up to source agricultural commodities.
In the last financial year, the company has earned more than Rs 100 crore from export of commodities procured through e-choupals.
It now intends to use the network as a channel for distribution of a range of fast moving consumer goods, financial products and services. Insurance is the first financial product that the company plans to sell through the channel.
ITC says it has conducted pilot projects for distribution of agricultural inputs and insurance policies.
“The company is completing the legal formalities at present,” said senior officials connected with the venture.
ITC has, in the past, considered foraying into the insurance segment in partnership with Eagle Star — an insurance company previously owned by British American Tobacco (BAT) Plc. It had engaged Watson Wyatt, an actuary, to examine the potentials of the business. However, BAT sold Eagle Star before the plan materialised forcing ITC to abandon the project.
The plan resurfaced again after LIC examined ITC’s e-choupal network, and was impressed with the company’s reach in rural markets. LIC was reported to have remarked “ITC owns the farmers”.
In the current year, ITC also plans to set up an electronic market for spot trading in coffee. The company says it will lead to better price discovery, besides making the market deeper.