The next time your mobile phone beeps alerting you of an incoming message, it may not be your broker, or your mobile service provider.

It just well may be the Life Insurance Corporation of India alerting you that your insurance premium is due in the next 24 hours.

Yes, the state insurer is becoming technology savvy.

As part of its information technology upgradation drive, LIC proposes to use short messaging service to communicate with its over 12 crore (120 million) policyholders, its 800,000 agency force and for internal office communication.

The state life insurer proposes to alert its policyholders and agents on premiums due, inform them of bonus declaration as well as broadcast its latest offerings through SMS.

At the same time, offering two-way communication, it will also give premium quotations and calculations based on age and size of insurance cover.

LIC chairman S B Mathur pointed out that this has become a cost-effective way of communications at just Rs 1. This as against Rs 3 for a phone call or Rs 2 for a post-card.

Most private sector insurance companies have not as gone to this extent of IT advancement as far as reaching out to policyholders is concerned.

"We do not offer quotes over SMS. That will be a tough task. However, we do offer policy status updates to our financial consultants over SMS," said a senior official with a leading private sector company.

"From our database, we are able to generate the alerts in terms of premium dues and revival of lapse policies," said a senior LIC official who is part of the IT team engaged in this mammoth task.

LIC has called for bids from vendors able to provide software solutions for the two-way communications on both GSM and CDMA networks.

To date, it has received bids from three to four service providers of this software solution package, said senior officials.

The software vendors will also need to have tie-ups with multiple mobile carriers for delivery of messages, thereby offering a one-stop solution, stated the tender.

The state life insurance company will bear the entire cost of the project and provide the service free of cost to its policyholders having mobile phones.

"Today mobile users are less and establishment (fixed) cost are not very high for setting up this means of communications," said Mathur.

According to officials with a leading software vendor, the cost of sending such messages depends on the volumes.

As volumes grow, the average cost will reduce. Considering the fact that there are just about 1.3 crore mobile users, this just about takes care of 10 per cent of LIC's policyholders.

However, with the entry of CDMA service providers offering cheaper service and the prevalent price war, the industry expects this number to grow considerably.

Meanwhile, Aviva Life Insurance has launched the SMS-based customer service for its 10,000 customers, to update them on premium payments and policy status. It has tied up with Cellnext.