AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

A Peer Reviewed International Journal of Asian

Academic Research Associates

AARJSH
ASIAN ACADEMIC RESEARCH
JOURNALOFSOCIAL
SCIENCE&HUMANITIES
MARKETING STRATEGY OF LIC OF INDIA IN THE GLOBAL SCENARIO
DR. G. KARUNANITHI*; DR. S.BANUMATHY**
*Assistant Professor of Commerce,
DDE, Annamalai University,
Annamalai Nagar.
**Associate Professor and Head,
Dept. of Commerce,
V. V. Vanniaperumal College for Women, Virudhunagar
.
ABSTRACT
LIC today services its customers through 8 Zonal offices, 113 Divisional Offices, 2048 Branches,
1202 Satellite Offices, more than 1.19 lakh employees and 12.78 lakh agents. Besides life
insurance, through its various subsidiaries, it is involved in providing various financial services.
Today, a public giant LIC is facing direct competition with the rest 23 private life insurers. As a
result of product innovation by private players, LICs market share has gradually reduced in the
post-liberalization period. Despite that, the Life Insurance Corporation of India continues to
remain the largest player in the Indian Life Insurance market with a market share of 71.30% in
FY 2011-12. Life Insurance Corporation of India operates in 13 countries abroad through its
various branches and Joint Venture Companies/ Wholly Owned Subsidiaries. Branch Offices in
the U.K., Mauritius & Fiji and operate through Joint Venture Companies in Bahrain, Qatar,
Kuwait, U.A.E., Oman, Kenya, Saudi Arabia, and Nepal & Sri Lanka. A wholly owned
subsidiary Life Insurance Corporation (Singapore) Pte. Ltd. has been incorporated in Singapore.
Key Words: Liberalization, Globalization and Privatization (LPG), Market share, First Year
Premium, Regular Premium, Renewal Premium, Chief Life Insurance Advisor, Micro Insurance,
Health Insurance, Supervised Agents.

Asian Academic Research Journal of Social Sciences & Humanities

www.asianacademicresearch.org
135

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

INTRODUCTION
Insurance is an integral part of national economy and a strong pillar of financial
market. Therefore, waves of globalization have also deeply influenced the insurance
market Worldwide. Financial Market Globalization has also been strongly supported by
Globalization of Insurance. With the increase in Trade, Direct Investment and Portfolio
Investment, there has been an ever growing demand for Insurance services particularly in
the emerging markets. Globalization of Insurance market, as a part of the overall process
of liberalization in emerging and other countries enabled the foreign insurance companies
to enter in those countries and benefited both.
Liberalization is the gateway of globalization and regulates the financial market
by reduction of tariff and non-tariff barriers, abolishment of industrial Licensing and by
exercising control over foreign direct investment. The major purpose of liberalization was
to free the large private corporate sector from bureaucratic controls. Liberalization of
insurance industry has witnessed major structural transformations and growth in life
insurance business. To end the monopoly of the life insurance corporation of India and to
induce a spirit of competition amongst the various insurers and to provide a choice to the
consumers were some of the main motives behind liberalization. In the first year of
insurance market liberalization (2001), ten private companies have registered under the
life insurance category and this number has been increased to 22 in 2010. Today, a public
giant LIC is facing direct competition with the rest 23 private life insurers.
LIFE INSURANCE CORPORATION OF INDIA
On 1st of September 1956, The Life Insurance Corporation of India (LIC)
embarked upon its momentous journey in true spirit of serving the people and nation as a
whole. Since then it has spearheaded the financial and infrastructure development of the
nation. The performance of LIC has been exemplary and it has been growing from
strength to strength be it customer base, agency network, branch office network, and the
like. LIC has played a significant role in spreading life insurance among the masses and
mobilization of peoples money for peoples welfare. Even after the entry of private
insurers for almost a decade now, LIC continues to be the frontrunner in the industry in
terms of market share.
Asian Academic Research Journal of Social Sciences & Humanities
www.asianacademicresearch.org
136

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

LIC today services its customers through 8 Zonal offices, 113 Divisional Offices,
2048 Branches, 1202 Satellite Offices, more than 1.19 lakh employees and 12.78 lakh
agents. Besides life insurance, through its various subsidiaries, it is involved in providing
various financial services viz. Pension (LIC Pension Fund Ltd.), Housing Finance (LIC
HFL Ltd), Mutual Fund (LIC Nomura MF), Credit cards (LIC Card Services Ltd),
Financial Products distribution (LIC HFL Financial Services Ltd) and LIC HFL Care
Homes Ltd. It also provides insurance services in several countries abroad through
branch offices, Joint Ventures (JVs) and a wholly owned subsidiary.
As a result of product innovation by private players, LICs market share has
gradually reduced in the post-liberalisation period. Despite that, the Life Insurance
Corporation of India continues to remain the largest player in the Indian Life Insurance
market with a market share of 71.30% in FY 2011-12. The Life Insurance Corporation of
India also transacts business abroad and has offices in Fiji, Mauritius and United
Kingdom. With its multinational presence, it is associated with joint venture abroad in
field of insurance namely, Ken India Assurance Company Limited, Nairobi, United
Oriental Assurance Company Limited, Kualalumpur and LIC (international) E.C.Bahrain.
REGISTERED INSURERS IN INDIA
After privatization, insurance industry has seen significant growth. Due to low
penetration and huge potential, many foreign and domestic players have entered the
sector. Moreover, several reforms and policy measures have provided a favorable
environment for insurance companies to flourish in the country. The insurance sector in
India is primarily divided into life and non-life, apart from a very small segment
comprising re-insurance. Both the life and non-life insurance segments, which were
nationalized in the 1950s and 1960s, respectively, witnessed an across-the-board
liberalization process in 2000. After the reforms, the number of players has increased
from one in life insurance and four in non-life insurance at end-September 2012, there are
forty-nine insurance companies operating in India; of which twenty four are in the life
insurance business and another twenty four are in general insurance business. In addition,
GIC is the sole national re-insurer.

Asian Academic Research Journal of Social Sciences & Humanities

www.asianacademicresearch.org
137

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

Table 1
Registered Insurer in India
(As on 30th September, 2012)
Type of Insurer

Public Sector

Private Sector

Total

Life Insurance

23

24

General Insurance

6*

18

24

Reinsurance

Total

41

49

*includes specialized insurance companies-ECGC and AIC

OBJECTIVES OF THE STUDY
1. To know market share of LIC of India in Life insurance business.
2. To know new market strategy adopted by LIC of India to increase the volume of
Business.
RESEARCH METHODOLOGY
The present study is based on secondary data. Data and information have been
extracted from Annual Reports of IRDA and LIC of India. The information so collected
has been classified, tabulated and analysed as per the objectives of the study.
CURRENT SCENARIO IN LIFE INSURANCE MARKET
Many players have joined insurance industry posing a tough competition to LIC.
LIC has been reorganizing itself in order to perform better than the new players. On the
basis of total premium income, the market share of LIC declined marginally from 70.10
per cent in 2009-10 to 69.78 per cent in 2010-11. Accordingly, the market share of
private insurers has gone up marginally from 29.90 per cent in 2009-10 to 30.22 per cent
in 2010-11.
The market share of private insurers in first year premium was 31.15 per cent in
2010-11 (34.92 per cent in 2009-10). The same for LIC was 68.85 per cent (65.08 per
cent in 2009-10). However, in renewal premium, LIC had a higher share of 70.49 per
cent (73.64 per cent in 2009-10) when compared to 29.51 per cent (26.36 per cent in
2009-10) share of private insurers. The performance if LIC and Private Players have been
shown for the year 2010-11 in table 2.

Asian Academic Research Journal of Social Sciences & Humanities

www.asianacademicresearch.org
138

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

Table 2
MARKET SHARE OF LIFE INSURERS (IN PER CENT)
Insurer

2009-10

2010-11

LIC

43.13

56.73

Private Sector

56.87

43.27

Total

100.00

100.00

LIC

92.19

81.26

Private Sector

07.81

18.74

Total

100.00

100.00

LIC

65.08

68.85

Private Sector

34.92

31.15

Total

100.00

100.00

LIC

73.64

70.49

Private Sector

26.36

29.51

Total

100.00

100.00

LIC

70.10

69.78

Private Sector

29.90

30.22

Total

100.00

100.00

Regular Premium

Single Premium

First Year Premium

Renewal Premium

Total Premium

Source: IRDA Annual Report

Asian Academic Research Journal of Social Sciences & Humanities

www.asianacademicresearch.org
139

ISSN : 2278 859X

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

Figure - I
Life Insurance Market Share 2009-10 and 2010-11

Note: RP Regular Premium, SP Single Premium FYP- First Year Premium.

NEW MARKETING STRATEGY
LIC have been taken following steps to increase its market competitiveness and
retains its dominant position in the insurance market.
1. PRODUCT DEVELOPMENT
In a competitive market, there is a greater need to provide insurance products that
meet the needs of our customers. LIC therefore offers a wide variety of products, which
fulfills the needs of different segments of the society. As at the end of the financial year
2010-11, the Corporation had 52 products available for sale. During the Year Corporation
introduced 5 new plans viz. LICs Pension Plus, LICs Endowment Plus, LICs Bima
Account I, LICs Bima Account II and LICs Samridhi Plus. As a result of product
innovation by private players, LICs market share has gradually reduced in the postliberalisation period. Despite that, the Life Insurance Corporation of India continues to
remain the largest player in the Indian Life Insurance market with a market share of
71.30% in FY 2011-12.

Asian Academic Research Journal of Social Sciences & Humanities

www.asianacademicresearch.org
140

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

2. COMPETITION
Private and foreign entrants in the insurance industry have made others difficult to
retain their market. Higher customer aspirations lead to new expectations and forced him
or her to move towards the insurer who provides him the best service in time. It becomes
less viable for them even to maintain the functional networks or competitive standards
and services. To survive in the industry they analyse the emerging requirements of the
policyholders /insurers and they are in the forefront in providing essential services and
introducing novel products. Thereby they become niche specialists, who provide the right
service to the right person in the right time. Today, a public giant LIC is facing direct
competition with the rest 23 private life insurers.
3. INFORMATION TECHNOLOGY
LIC has been a pioneer in using information technology for enhancing the quality
of its service to customers. Being the largest insurer in India, LIC has always explored all
the avenues that technology offers to provide the best of services to its valued customers
and other stakeholders.
Today, LIC customers can pay their premium not only in any one of its offices,
but also through LICs Premium Payment Gateway on our website through partner Banks
like Corporation Bank, Axis Bank or through associate agencies like APOnline,
MPOnline, etc. Customers can also use their Net Banking accounts, Debit Cards and
Credit Cards to pay premiums online.
LIC reaches out to its customers through IVRS, Call Centres, Customer Zones,
SMS, e-mail, website and now even the Social Networking sites. LIC has also undertaken
many other customer-centric initiatives like Enterprise Document Management System,
Portal for Customers, Agents, Development officers and Employees, etc. All LIC offices
and Training Centres have been connected to a Wide Area Network for more than 10
years now. Last year Central Office, Zonal Offices, Zonal Training Centres and the 113
Divisional Offices are connected through high definition Video-Conferencing. In order to
safeguard its IT infrastructure from external threats, LIC has also installed the latest IT
Security products in its setup. To keep pace with changes in the business environment
and the technology platforms, LIC migrated our Core Insurance Application to web based
architecture. The project called e-FEAP helps LIC to deliver quality service to its
Asian Academic Research Journal of Social Sciences & Humanities
www.asianacademicresearch.org
141

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

Policyholders and marketing force. In 2011-12, LIC also set up the infrastructure
necessary for the on-line sale of policies.
4. CHIEF LIFE INSURANCE ADVISORS (CLIAs)
LIC introduced the above Scheme on 12.04.2008 with an objective of increasing
its market presence through more agents by utilizing capabilities of existing high
performing agents for organizational growth.
In order to increase market presence, more number of agents should be in the
field. Understanding this well, the Corporation decided to utilize the capabilities of
existing senior agents for organizational growth by incentivizing them for identifying,
training and mentoring new agents. Retired employees and Financial Service Executives
(FSE) are also allowed to become Chief Life Insurance Advisors under certain
conditions. More than 1,47,200 agents were being supervised by the CLIAs as on
31.03.2012. The table 3 shows that new business procured by the chief life insurance
advisor channel.
Table 3
Chief Life Insurance Advisor New Business
Year

No. of Policies (in lacs)

FP income (in Crore)

2008-2009

10.99

1100.71

2009-2010

20.91

2563.88

2010-2011

23.31

2789.00

2011-2012

27.06

2136.67

Source: Annual Report of LIC 2008-09 to 2011-12

5. MICRO INSURANCE (MI)

The huge untapped market for insurance is the rural and social sector. Microinsurance is defined as the protection of low income households against specific perils in
exchange for premium payments proportionate to the likelihood and cost of the risk
involved. It provides an opportunity to the insurance companies to meet their social
responsibility as well as secure a strong footing in the rural market. The active
distribution channels for micro insurance in India are NGOs, MFIs, and SHGs (self-help
groups), Micro agents, Cooperative Banks and RRBs (regional rural banks), and Post
Asian Academic Research Journal of Social Sciences & Humanities
www.asianacademicresearch.org
142

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

Offices. The MFIs/NGOs have been identified as main delivery channels by most of the
insurance companies. These have a large network, catering to huge number of clients.
The year 2011-12 has been another successful year for the Micro Insurance
vertical of LIC. The vertical exceeded the budget of 32 lacs Policies by a hefty margin of
more than 6 lacs policies with 119.59 % A2B.The total number of Policies stood at 38.27
lacs with a growth rate of 29.67%. As many as 7 Zones crossed their budget with good
margin. Similarly 80 MI Units have achieved their budget. 7 MI Units have procured
more than 1 lac policies during the year. During this financial year MI vertical crossed
magical figure of 1crore policies and completed 1.12 crore policies as on 31.03.2012
since inception. The table 4 shows the new business of Micro Insurance.
Table 4
Micro Insurance New Business
Year

No. of Policies ( In lac)

FP income (in lacs)

2006-2007

8.06

138

2007-2008

8.54

1622

2008-2009

15.41

3120

2009-2010

19.85

3615

2010-2011

23.31

2789

2011-2012

38.27

4642

Source: Annual Report of LIC 2006-07 to 2011-12

6. DIRECT MARKETING
In its 3 years of operations, Direct Marketing has successfully established itself as
a Value Pioneer. Through the years, it had striven to take a fresh view of the
environment, capture changes, identify new business opportunities and orchestrate
appropriate response. Direct Marketing has achieved reasonable success in creating a
professional and disciplined work force comfortable with approaching and tapping
emerging segments in the market. The channel, through the effective use of LMS has
been able to ensure fast response to queries to successfully position the Corporation as a
responsive organization sensitive to changing customers expectations. The table 6 shows
the direct marketing channel wise new business of LIC.

Asian Academic Research Journal of Social Sciences & Humanities

www.asianacademicresearch.org
143

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

Table 6
Direct Marketing Channel wise New Business
Year

No. of Policies

FP income (in lacs)

2010-2011

50962

144.04

2011-2012

87578

264.14

Source: Annual Report of LIC 2009-10 to 2011-12

7. BANCASSURANCE AND ALTERNATIVE CHANNELS (B&AC)
Under Bancassurance, at present LIC have tie-ups with 8 PSU Banks, 4 Private
Banks and 33 UCBs / RRBs / CO-OP Banks under Corporate Agency agreement. These
Banks procure New Business for LIC through their Branch Outlets. At present,
approximately 19,000 Outlets under these Banks. The share of Banks in the total business
of B&AC in the year 2011-12 was 91% in FPI and 77% in Policies while Corporate
Agents contributed 8% & 22% respectively. In the current year, there is substantial
growth in Bancassurance Premium. The table 5 shows the banking and alternative
channel wise new business.
Table 5
Banking and Alternative Channel wise New Business
Year

No. of Policies (in lacs)

FP income (in Crore)

2008-2009

8.62

1076.00

2009-2010

7.54

1132. 92

2010-2011

6.95

1281.30

2011-2012

5.93

1207.50

Source: Annual Report of LIC 2008-09 to 2011-12

8. HEALTH INSURANCE
During 2010-11, 67,668 Health Insurance Policies were sold for a Premium
Income of Rs.58.02 crore. LIC settled an amount of Rs. 8.38 crore towards health
insurance claims under 5,096 lives. Incidence of claims under Health Policies is 1.39%,
of which 51% are settled. As at 31.03.2011 LIC covering 7,23,752 lives under Health
Insurance Policies. LIC started Health Insurance Division in 2007-08, to tap the vast
potential for Health Insurance Business and to devise Health Products and Services. The
first product Health Plus was launched in February, 2008 and the second product
Asian Academic Research Journal of Social Sciences & Humanities
www.asianacademicresearch.org
144

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

Health Protection Plus in April, 2009. Both are Unit Linked Health Insurance policies
providing for hospitalization and major surgery cover for 49 specified surgeries. The
plans also have a facility of withdrawal, linked to domiciliary treatment. Following IRDA
regulations on cap of charges, Health plus Plan was withdrawn from 01.01.2010. After
LIC of India introduced to Health product of Jeevan Arockya plan.
9. INDEPENDENT FINANCIAL ADVISORS (IFAs)
IFAs are authorised agents of insurance companies having tie-ups with more than
one insurance company. They are qualified persons or institution who can provide advice
on financial products. Independent financial advisors are commissioned agents whose
primary business is the sale of property and casualty insurance for several insurers. IFA
assembles different financial products in accordance to customer needs and provide value
added product by creating customized financial product. Today, IFA show their
significant presence as distribution channel in both life and non-life insurance business.
10) INTERNATIONAL OPERATIONS
Life Insurance Corporation of India operates in 13 countries abroad through its
various branches and Joint Venture Companies/ Wholly Owned Subsidiaries. Branch
Offices in the U.K., Mauritius & Fiji and operate through Joint Venture Companies in
Bahrain, Qatar, Kuwait, U.A.E., Oman, Kenya, Saudi Arabia, Nepal & Sri Lanka. A
wholly owned subsidiary Life Insurance Corporation (Singapore) Pte. Ltd. has been
incorporated in Singapore and we are in the process of applying for an operating license.
1. Our Foreign Units collectively procured a First Premium Income (FPI) of around
Rs. 349 Crores in the 12 months period of each unit ended during 2011-12,
thereby registering a growth of 15.69%.
2. The Total Net Premium Income (TPI) of our units was around Rs. 1,247 Crores
during the same period in 2011-12 registering a growth of 28.2%.
LIC (International) B.S.C. (c), Bahrain and LIC Fiji are market leaders in their
respective geographies.
CONCLUSION
After privatization, insurance industry has seen significant growth. Due to low
penetration and huge potential, many foreign and domestic players have entered the
sector. Many players have joined insurance industry posing a tough competition to LIC.
Asian Academic Research Journal of Social Sciences & Humanities
www.asianacademicresearch.org
145

AARJSH

VOLUME 1

ISSUE 5

(NOVEMBER 2012)

ISSN : 2278 859X

LIC has been reorganizing itself in order to perform better than the new players. LIC
offers a wide variety of products, which fulfills the needs of different segments of the
society. As at the end of the financial year 2010-11, the Corporation had 52 products
available for sale. The performance of LIC has been exemplary and it has been growing
from strength to strength be it customer base, agency network and branch office network.
LIC continues to remain the largest player in the Indian Life Insurance market with a
market share of 71.30% in FY 2011-12.

REFERENCES:
1.

C. Barathi, D. Balaji And Ch. Ibohal Meitei (2011), Innovative Strategies To

Catalyse Growth Of Indian Life Insurance Sector-An Analytical Review, Indian
Journal Of Commerce And Management Studies, Vol. Ii, Issue IV, May 2011.

2. Chatterjee. P (2009) In Her Article Titled Private Insurers Command Majority

Share Of Life Insurance Market.
3. Krishnamurthy. S, Jhaveri. Nani, Bakshi. S (July-Sept 2005), Insurance Industry
in India: Structure, Performance and Future Challenges, Vikalpa, Iima Volume
30, No. 3, Pg No. 93-95.
4. Kulkarni.S.J. and Sagar. P.N. (2011) Recent Trends in Marketing Strategy of
LIC of India Vol.1. Issue No: 1. Feb. 2011 to July 2011.
5. Arnika Srinivasan, Sarika Tripathi, and Amith Kumar (2012) Indian Life
Insurance Industry- The Changing Trends international Journal of Research
World, Vol-III, Issue 2(3), April 2012,pp.93-98.
6. Sonika Chaudhry and Priti Kiran(2011) Life Insurance Industry in IndiaCurrent Scenario International Journal of Management and Business Studies,
Vol.1,Issue 3, September 2011, pp. 146-150.
7. www.licindia.com
8. www.irdaindia.org
9. www.bimadeals.com/life-insurance-india
10. www.insuringindia.com
11. www.economictimes

Asian Academic Research Journal of Social Sciences & Humanities

www.asianacademicresearch.org
146