Term Paper

CRM Programs at Life Insurance Corporation of India
(With special reference to Special Plans- Health Plans)

Course: Customer Relationship Management Course Code: MGT 631

Submitted By: Varun Puri 10800464 RR 1805 A 19

Submitted To: Rajan Giridhar

Department of Management Lovely Professional University
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Acknowledgement
Words are the dress of thoughts, appreciating and acknowledging those, who are responsible for the successful completion of the project. My sincere gratitude goes to Mr. Rajan Giridhar who assigned me responsibility to work on this project and provided me all the help, guidance and encouragement to complete this project. The encouragement and guidance given by him have made this a personally rewarding experience. I thank him for her support and inspiration, without which, understanding the details of the project would have been exponentially difficult With Sincere Thanks, (Varun Puri)

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DECLARATION

I, "Varun Puri”, hereby declare that the work presented herein is genuine work done originally by me and has not been published or submitted elsewhere for the requirement of a degree programme. Any literature, data or works done by others and cited within this dissertation has been given due acknowledgement and listed in the reference section.

(Varun Puri) Registration No.:- 10800464 Date: 09-05-2010

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Conents
1 Introduction to Subject..................................................................................................................1 1.1 CRM: Meaning......................................................................................................................1 1.2 Company Profile....................................................................................................................1 1.3 Special Plans: - Health Protection Plans................................................................................3 2 Review of Literature.....................................................................................................................6 3 CRM Initiatives being taken by the given organization...............................................................8 3.1 Policy Locator........................................................................................................................8 3.1.1 Features:..........................................................................................................................8 3.2 Insurance Selector..................................................................................................................9 3.3 Phone Helpline.....................................................................................................................11 3.4 Grievance Redressal System................................................................................................12 4 Sales Force Account Leads.........................................................................................................13 5 New Initiatives by LIC in CRM .................................................................................................15 5.1 Beware! - Life Insurance Corporation of India gets serious about customer service..........15 5.2 LIC ropes in Wipro, IBM for CRM project.........................................................................15 5.3 Insurance: Waking Up to a New Life..................................................................................16 5.4 LIC’S Wan/Man Network Serving Insurance Policies on the Net .....................................16 6 Suggestions:................................................................................................................................17 6.1 M-CRM: ..............................................................................................................................17 6.2 Cross-Selling: ......................................................................................................................17 6.3 De-Materialized Policies: ....................................................................................................17 6.4 One counter Payment of Claims..........................................................................................17 7 Reference....................................................................................................................................18

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1 Introduction to Subject
1.1 CRM: Meaning
CRM is an acronym for ‘Customer Relationship Management’. It’s a set of strategies, processes, metrics, organizational culture and technology solutions that enhance an organization's ability to see the differences in its present & prospective customers, track new opportunities to better serve customers and act, instantly and profitably, on those differences and opportunities. Recently CRM has taken a center stage in the business world with businesses concentrating on saving money and increasing profits by redefining internal processes and procedures. It costs a company dramatically less to retain and grow an existing client, than it does to court new ones. The aim of CRM is to optimize the use of technology and human resources. CRM services consist of the following major segments: • • • • Consulting services Implementation services CRM Outsourcing services Training services

1.2 Company Profile
The Life Insurance Corporation of India (LIC) is the largest life insurance company in India, and also the country's largest investor; it is fully owned by the Government of India. It also funds close to 24.6% of the Indian Government's expenses. It has assets estimated of Rs. 8 trillion (US$ 178.4 billion). It was founded in 1956. Current status

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Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7 % of India's GDP in 2006. The Corporation, which started its business with around 300 offices, 5.6 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a US $, has grown to 25000 servicing around 180 million policies and a corpus of over Rs. 8 trillion. The organization now comprises 2048 branches, 109 divisional offices and 8 zonal offices, and employs over 1,002,149 agents.The corporate Office of LIC is in Mumbai. It also operates in 12 other countries, primarily to cater to the needs of Non Resident Indians. With the change in the India's economic philosophy from the early 1990s, and the subsequent relaxation of state control over several sectors of the economy, the monopolistic position of the Life Insurance Corporation of India was diluted, and it has had to compete with a number of other corporate entities, Indian as well as transnational Life Insurance brands. However, it still manages to be the largest player in the Indian market, with the lion's share of 55%. The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of the Country. In the financial year 2006-07 Life Insurance Corporation of India's number of policy holders are said to have crossed a whopping 200 million (fourth in terms of population of the countries of the world). (http://data.un.org/Data.aspx?d=CDB&f=srID:6080). People LIC is one of the largest employers in India. The organization is headed by 4 officers, namely the Chairman and three Managing Directors. The top brass is appointed by the Government of India after an intensive selection procedure. Though the company was accused to go by mere seniority in number of years for the selection of the senior management, this has changed as seen in the case of Thomas Matthew and A. Dasgupta (Managing Directors).

The Chairman assumes authority of the CEO and chairs the board while the Managing Directors are allotted the three main categories of the organization's functioning. The current Chairman, Mr. T.S. Vijayan, is particularly responsible for the major IT infrastructure turnaround that the organization has witnessed and for its advanced EDMS structure. D.K. Mehrotra manages the Marketing Units of LIC, which also happens to be one of the largest spenders on advertising in India. 2

Thomas Mathew manages the close to $187 billion investment portfolio of the company, which is the largest investor in the country. A. Dasgupta manages the engineering and other functions, many of which are very advanced in the Indian corporate scenario.

1.3 Special Plans: - Health Protection Plans1
LIC’s Special Plans are not plans but opportunities that knock on your door once in a lifetime. These plans are a perfect blend of insurance, investment and a lifetime of happiness. Features: Health is a major concern on everybody’s mind these days. With sky rocketing medical expenses, the possibility of any illness leading to hospitalization or surgery is a constant source of anxiety unless the family has actively provided for funds to meet such an eventuality. Most families rarely provide for healthcare, and even if they do, it is grossly inadequate. Given this scenario, LIC has launched LIC’s Health Protection Plus plan, a unique long term health insurance plan that can combine health insurance covers for the entire family (husband, wife and the children) Hospital Cash Benefit (HCB) and Major Surgical Benefit (MSB) along with a ULIP component (investment in the form of Units) that is specifically designed to meet Domiciliary Treatment Benefit (DTB) / Out Patient Department (OPD) expenses for the insured members.

Vital Information Accumulation period Age Principal Insured Spouse Insured 18 18 18 55 Child Insured 3months 3months 18 17

Min Policy Entry Age- Age Last 18 Birthday Min Age- HCB Cover, Age Last 18 Birthday Min Age- MSB Cover- Age Last 18 Birthday Maximum Entry Age Age Nearest 55 Birthday

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http://www.licindia.in/Health_Protection_Plus_features.htm 3

remium Payment. Mode of Payment: Yearly, Half-Yearly & Monthly (ECS Mode only) Minimum Annual Premium Conditions Number of Lives Higher of the two conditions in each category listed below: covered Single Life Two Lives More Lives than 6 times the HCB of the Principal Insured OR Rs.5000 p.a. The arithmetic sum of 6 times the HCB of PI and 3 times the HCB of the second insured. OR Rs.7500 p.a. two The arithmetic sum of 6 times the HCB of PI and 3 times the HCB of each of the others insured OR Rs.10,000 p.a.

Annualized Premiums are payable in multiples of Rs.500.

Sum Assured. The Principal Insured must first choose the respective levels of HCB for each member to be covered under the policy. The sum assured for major surgical benefits will be 200 times of the HCB you choose. Principal Insured Spouse Insured Child Insured Major Surgical 200 times the HCB applicable to each insured life Sum Assured under the policy.

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Investment of Funds The premiums allocated to purchase units will be strictly invested in a Health Protection Plus Fund (Income and Growth – Low Risk) as follows: A. Government/ Government Guaranteed/ Corporate Securities/ Debt B. Short term investments: Money Market instruments including A above C. Investment in listed equity shares Not less than 50% Not more than 90% Not less than 10% & Not more than 50%

Benefits Hospital Cash Benefit (HCB). A daily benefit is payable in case the insured is hospitalized due to either accidental body injury or sickness. The quantum of benefit depends upon the level of cover opted. Insured Principal Insured Spouse/Child Initial Daily Benefit (IDB)*# Minimum Rs.250 Rs.250 Maximum Rs.2500 Rs.1500

Major Surgical Benefit (MSB). In the event of the insured undergoing one of the major surgeries defined in the Annexure I, a lump sum benefit (regardless of the actual costs incurred) equivalent to the percentage of the sum assured mentioned against that surgery will be payable on providing proper proof of surgery to the satisfaction of the corporation. Domiciliary Treatment Benefit (DTB). The Principal Insured can claim an amount equivalent to the actual expense he or she has incurred in respect of any domiciliary treatment or to meet the medical expenses incurred over and above the hospital cash/major surgical benefits in respect of either oneself or the others insured under the policy. 5

BEFORE CESSATION OF HCB AND MSB COVERS ON ALL MEMBERS COVERED Minimum domiciliary claimable Maximum amount that can be claimed/ payable* Rs.2500 Up to 50% of the policy fund at the date of payment

* Subject to a minimum balance of one annualized premium being left in the policy fund after making the payment. AFTER CESSATION OF HCB AND MSB COVERS ON ALL MEMBERS COVERED Minimum domiciliary claimable Rs.2500*

No limit on maximum amount that can be claimed/ payable * If the balance in the Policy Fund is less than Rs. 2,500/-, then the payment of entire amount shall be made in one lump sum only.

Death Benefit. No death insurance cover is available under the plan. Following benefits/charges will take place on the happening of unfortunate death of principal insured (PI) and/or other insured member. a) On death of the PI (if policy is issued on single life) or on death of all Insured members The Policy Fund Value will be payable to the (if more than one life is covered under the nominee/ legal heir. policy). The payment of premiums will cease and the cover will continue for the other Insured lives till b) On death of PI (if other Insured members the fund is sufficient to recover all the charges or are there). till the maximum benefit ceasing age for each of the Insured lives, whichever is earlier. c) On death of insured member(s), other than The payment of premiums and the cover for PI PI and other Insured members, if any, will continue.

2 Review of Literature
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Goswami. P.(2006),2 This paper attempts to understand the dimensions of service quality, which helps ensuring maximum customer satisfaction, and hence , helps life insurers to acquire a larger share of the market. Findings reveal that to maximize customer satisfaction, different players in the competitive life insurance industry in India needs to concentrate on the responsiveness dimension of the service quality. The examination of the items of the responsiveness dimension indicates that promptness and timeliness in service as well as willingness to help the customers, satisfies the customer the most. This would not only involve implementation of CRM solutions, but also internal marketing of the CRM concept. This would naturally require giving more emphasis on giving training to the insurance agents. Proper CRM implementation would not only ensure increased customer satisfaction but also help in acquiring new customers, at the same time retaining the old customers. Improved customer satisfaction would also result in positive word-of-mouth and consequently better customer acquisition and retention. Kekre P. (2010), Says The insurance sector in India has been a slow adopter of IT so far, but it seems to be catching up fast. She also highlights that LIC have been an exception in adopting IT applications frequently. ICICI Prudential is also among the most mature IT adopters. While it has a robust CRM in place for a few years, it has also recently implemented lots of BI tools, and has invested in a HRMS which has automated almost 99% of its people systems and processes. Pasha, A (2008), After telecom and banking, it’s the turn of insurance companies to deploy customer relationship management (CRM) solutions. As competition intensifies, insurers are trying every trick in the book to retain existing customers, with a wide range of services driving the market for CRM applications in the process. Insurance firms spend close to 12 percent of their IT budgets on CRM software and services. The cost includes operational CRM and spending on BI tools. If A spokesperson of an upcoming insurance firm adds, “Of our total IT budget, we are spending 14 percent on CRM applications.” Industry pundits believe that insurance firms are looking for CRM initiatives with budgets ranging from Rs 50 lakh going right up to Rs 3 crore.

Gosawami, P. (2008), :” Customer Satisfaction with Service Quality in the Life Insurance Industry in India” Accessed from: http://s3.amazonaws.com/ppt-download/lic-090608051318phpapp01.pdf?Signature=fQuLJ5MZdWdggLoqXigFVEXOjKk %3D&Expires=1273381236&AWSAccessKeyId=AKIAJLJT267DEGKZDHEQ
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3 CRM Initiatives being taken by the given organization
3.1 Policy Locator
LIC of India have special feature on its official website “POLICY LOCATOR”. This site has been designed for giving a variety of general and policy information to our policyholders. For viewing the policy related information, new customers are required to go through a Registration procedure, the details of which are stated in the ensuing paragraph. 3.1.1 Features: Login Policy holder’s login facility is provided on the Home Page for the use of registered users. Registration All new users are required to complete the Registration Form online selecting username and password of their choice.
• • • • • • •

The username can be alpha, numeric, with characters dot and underscore. The password must be in between 8 to 30 characters. The information marked with (*) are mandatory fields and cannot be left blank. The pin-code cannot be more than 6-digits. The e-mail id entered should be a valid one for further correspondence. The user-id chosen should be unique. Password should be unique and be kept confidential.

An auto-responder mail would be sent to the policy holder as confirmation of successful registration. Status On successful registration, the customer will have access to information regarding status of policy/s, loan, revival, premium due/ policy calendar, maturity calendar etc.

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Feedback Form Policyholders may use the ‘Feedback’ link to send their queries and valuable suggestions / comments

3.2 Insurance Selector
This is an application on their official web site. This helps one in deciding which plan is suitable according to his/her age, occupation, income and insurance needs. Following are the some questions which are asked by the application • How much insurance do I need? (Human Life Value Calculation) Human Life Value Calculator Main Page Human Life Value is defined as the Present Value of Future Income that you could expect to earn in rest of your Working Span Your Age: Retirement The age up to which you expect to continue to work Current Annual Income(in Rs): Future Rate of The Rate of Interest you expect to earn in future Interest: Age:
þÿ þÿ

þÿ þÿ

Calculate

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Get insurance advisor

Insurance Advisor Main Page Your choice:

þÿ

Age: Gender: IncomeGroup:

þÿ

M

F

þÿ

Occupation:

þÿ

Display Plan List

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3.3 Phone Helpline
LIC have a phone helpline, i.e. toll free no. A customer can have following interactions with the executive or with IVR. Customer Zone • • • • Change of address Issuing premium paid certificate Acceptance of life certificate for pension policies Resolving any policy related complaints

Information on • • • • Premium position, Bonus, Loan , Revival of lapsed policies

Assistance for • • Filling up of forms Registration on LIC’s Customer Portal

To know Policy details through IVRS, simply dial 1251 available 24x7 in the following cities Asansol Allahabad Aurangabad Bareilly Coimbatore Dharwad Gorakhpur Gwalior Hazaribagh Jodhpur Jammu Kozhikode Kota Kolhapur Meerut Mysore Nashik Patna Pondicherry Rajkot Ranchi Salem Surat Shillong Shimla Thanjavur Vadodara Varanasi

For making local call from any MTNL or BSNL number simply dial 1251 and for other than local users IVRS can be accessed by dialing the city STD code of the IVRS center followed by 1251. 11

3.4 Grievance Redressal System
In a vast organization like LIC, catering to the various needs and aspirations of millions of policyholders, grievances of customers do arise occasionally. In order to redress this grievance LIC has established an elaborate Grievance Rederessal Machinery and the details are as under: Grievance Redressal Officers: Grievance Redressal Officers have been designated at all levels of the Organization: At the branch level: The Sr/Branch manager At the divisional level: Manager, CRM At the zonal level: The Regional Manager CRM At the Central level: The Executive Director CRM/Chief(CRM) For P&GS policies: At the Zonal level: The Regional Manager (Pension and Group Schemes) in case of P&GS. At the Central level: Chief (Pension and Group Schemes) in case of P & GS policies. Policyholders can personally contact these designated Officials and seek redressal of their grievances. The respective Grievance Redressal Officers are available at their Offices for personal interviews with the customers on all Mondays between 2.30 p.m. to 4.30 p.m., except on holidays without bprior appointment. The names of the Grievance Redressal Officers are displayed in the respective Offices and are periodically published in the local newspapers.

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4 Sales Force Account Leads
Username: Varun8987@yahoo.com Leads Entered in Sales force Account Password: puri12345

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5 New Initiatives by LIC in CRM
5.1 Beware! - Life Insurance Corporation of India gets serious about customer service.3
Life Insurance Corporation of India (LIC) is all set to launch two portals -- one each for customers and agents -- in the second week of November this year. The customer portal will help one who has at least one policy with LIC to get information relating to the • • • Status of his policy, The amount of loan he can get against the policy and Download forms that he requires to start another policy.

The customer would also use the portal to deposit premium and details about change of address.

5.2 LIC ropes in Wipro, IBM for CRM project4
The Life Insurance Corporation of India (LIC) has roped in Wipro and IBM for its customer relation management (CRM) project. The project will help the corporation chalk out its future plan and marketing strategy. “This CRM project is the largest of its kind in India. It is aimed at studying consumer behaviour and chalking out our future plans and marketing strategy,” said R N Bhardwaj, managing director, LIC. The cost of the project is estimated to be over Rs 50 crore and it is expected to be completed in the next three years. Wipro and IBM will work together to compile the data of over 15 crore policyholders of LIC.
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Karat S., (2005), “Beware! - Life Insurance Corporation of India gets serious about customer service. Accessed from http://customerworld.typepad.com/swami_weblog/2005/10/beware_life_ins.html Pandey P, (2004), “LIC ropes in Wipro, IBM for CRM project”, Business Statndard, May 24, 2004.Accessed from: http://www.business-standard.com/india/news/lic-ropes-in-wipro-ibm-forcrm-project/150982/
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The data would reflect consumer behaviour of the policyholders. It will also find out the number of customers going for loans, paying premium within the due date and defaulting in premium payment. “Based upon the consumer behaviour of over 15 crore policy holders, LIC will formulate its new policy accordingly and will chalk out its market plan. Consumer behaviour analysis will help the corporation play a major role in the competitive and expanding insurance market,” said Bhardwaj.

5.3 Insurance: Waking Up to a New Life5
LIC has been one exception, and has played the lead role in adopting technology on a very progressive basis, despite the size of the organization and the number of policy holders it is among the largest in the world. LIC of India is investing nearly Rs 600 crore on electronic document management system (EDMS). The corporation is expected to transform more than 175 million policies into electronic format by 2010.

5.4 LIC’S Wan/Man Network Serving Insurance Policies on the Net6
Life Insurance Corporation of India (LIC) has now made its services more extensive and accessible by extending its WAN to the far corners of the nation. The next step is serving insurance policies on the Web. The LIC WAN/MAN network is a perfect example of technology being used to streamline operations and take customer satisfaction to higher levels. LIC has now extended its WAN, voice-enabled it, and set up a Web server. The nationwide WAN is arranged in a hierarchical fashion. The Central Office (C.O.) at Nariman Point, Mumbai is the network core. Next in the hierarchy are the seven zonal offices located at Mumbai, Delhi, Calcutta, Chennai, Kanpur, Hyderabad, and Bhopal. The district/divisional offices (also known as MAN centers) come next, and these are in turn linked to the branch offices/branches, which are at the lowest tier in the hierarchy. All branch offices have LANs. To date, there are a total of 89 MAN centers.

Karkre. P., (2010), “Insurance : Waking Up to a New Life”, Dataquest, January 07, 2010, Accessed from http://dqindia.ciol.com/content/verticals/2010/110010701.asp 6 Cisco, “Case Study Special: LIC’S WAN/MAN Network Serving Insurance Policies on the Net” http://www.cisco.com/web/IN/about/files/serving_cisco.pdf
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At present, policy holders can pay premiums online through services providers (ICICI bank, HDFC bank, UTI bank, Bank of Punjab, Corporation Bank, Billjunction.com and Timesofmoney.com. “Through the website we will be offering a statement of all the premiums paid during the financial year, for filing of income tax returns. LIC is benefiting too. Payments via the Web are going up every month, and workflow processes have been streamlined. As of February 2002, there were 2,872 collections for premiums made through the Web, amounting to Rs 86,28,410.

6 Suggestions:
6.1 M-CRM:
LIC should move further by using MCRM application to inform its policy holders about the status of their policy & even informing them about the various due dates that may be for payment of premium, date of maturity, any discrepancy in documents attached by just sending them a text message on their mobiles.

6.2 Cross-Selling:
LIC can also go for cross selling; they can offer some other products like Loans & mediclaim policy with some special benefits to the existing policy holders.

6.3 De-Materialized Policies:
LIC can start issuing policies in dematerialized form than in physical form, enabling customer to handle the policy more easily.

6.4 One counter Payment of Claims
Payment system should be made such that on the time of payment of claims or at the time of maturity of policy the customer has to meet only one executive at one counter.

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7 Reference
Books • Kumar, A, , Sinha, C, & Sharma R,. “Customer Relationship Management Concepts & Application” , Bizantra Publication, New Delhi (2009) • Shajahan, “Relationship Management”, Tata McGraw Hill, New Delhi, 2008

Web Sites

Gosawami, P. (2008), : “Customer Satisfaction with Service Quality in the Life

Insurance Industry in India” Accessed from: http://s3.amazonaws.com/ppt-download/lic-090608051318phpapp01.pdf?Signature= fQuLJ5MZdWdggLoqXigFVEXOjKk %3D&Expires=1273381236&AWSAccessKeyId=AKIAJLJT267DEGKZDHEQ

Karat S., (2005), “Beware! - Life Insurance Corporation of India gets serious about

customer service”. Accessed from http://customerworld.typepad.com/swami_weblog/2005/10/beware_life_ins.html

Pandey P, (2004), “LIC ropes in Wipro, IBM for CRM project”, Business Statndard, May

24, 2004.Accessed from: http://www.business-standard.com/india/news/lic-ropes-in-wiproibm-for-crm-project/150982/

Cisco, “Case Study Special: LIC’S WAN/MAN Network Serving Insurance Policies on

the Net” http://www.cisco.com/web/IN/about/files/serving_cisco.pdf

Karkre. P., (2010), “Insurance : Waking Up to a New Life”, Dataquest, January 07, 2010,

Accessed from http://dqindia.ciol.com/content/verticals/2010/110010701.asp

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