PROJECT REPORT

ON

Marketing in Life Insurance Corporation of India

SUBMITTED BY: ATISH PANDA MBA SEMESTER III ENROLLMENT NO. - A0633512014 AMITY INSTITUTE OF COMPETITIVE INTELLIGENCE AND S TRATEGIC MANAGEMENT AUUP

Faculty Guide:
Dr. Renita Dubey Assistant Professor Amity Institute of Competitive Intelligence and Strategic Management Noida

Industry Supervisor:
Mr Durga Prasad Panda Divisional Officer Life Insurance Corporation of India Odisha

ACKNOWLEDGEMENT
A summer internship is a golden opportunity for learning and self-development. I am truly honoured and lucky to have so many wonderful people lead me through in completion of this project. I wish to express my gratitude and special thanks to my industry mentor Mr Durga Prasad Panda (Development Officer), Life Insurance Corporation of India who in spite of being extraordinarily busy with his duties took time out to hear, guide and keep me on the correct path and allowing me to carry out my internship project work at their esteemed organization and extending during the training. I am also thankful my faculty mentor Dr. Renita Dubey, Assistant Professor & Programme Leader, Amity Institute of Competitive Intelligence and Strategic Management for her constant guidance during my summer internship. Without her valuable inputs, this project would not be imaginable. My sincere thanks to the entire staff of LIC of India Gunupur branch for providing all the help and support all the time and without them this project would not be possible. Last but not the least I would like to thank my family members and colleagues who have constantly supported me.

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DECLARATION
I hereby declare that the project report prepared on Marketing in Life Insurance Corporation of India is a genuine project undertaken by me under the guidance and supervision of Mr. Durga Prasad Panda (Divisional Officer) and Dr. Renita Dubey. All the findings and analysis in this project report are true, authentic and impartial. I promise that the data gathered for the purpose of this report will not be made public and will be kept confidential, except for academic purpose.

_______________________ Faculty Guide Signature

_______________________ Student Signature

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CERTIFICATE FROM THE INDUSTRY MENTOR

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PROJECT SYNOPSIS
The report provides a detailed insight into the different marketing strategies adopted by Indian insurance major Life Insurance Corporation (LIC) of India in various areas. This report also provides information about the company's history, its evolution, its current profile, subsidiaries and the products offered, and examines different kinds of marketing techniques adapted by the company to attract the market share hence by increasing the sale. Details about various kinds of initiatives that are being taken up by the company in its technology drive are also covered. It highlights the life insurance industry's structure in India and the changes that took place after the entry of private players into the market. It also suggest the different types of opportunities prevailing for the company along with threats. The case examines how LIC is gearing up to combat the competition from private players and provides a detailed note on the Indian insurance market. Objective of the study:1. To know various marketing techniques adopted by LIC. 2. To identify unique strategies adopted by LIC to differentiate itself from competitors in the insurance industry.

3.

To study market penetration of LIC in the Indian insurance industry.

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INDEX

Sl. No.

Particulars

Page No.

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Title page Acknowledgement Declaration Certificate from Industry Mentor Project Synopsis 1 2 3 4 5 6 Review of Literature Research Methodology Introduction Data Analysis and Interpretation Key Finding and Recommendation Conclusion References Annexure 1 2 3 4 6 11 16 30 42 53 56 59

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CHAPTER 1 REVIEW OF LITERATURE

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REVIEW OF LITERATURE
As per the study conducted by Rao in the year 1996 is aimed at understanding how the life insurance business in India has evolved and developed over a period around three decades. The study primarily focuses on the growth of business by Life Insurance Corporation of India, which is the monopoly public sector life insurance company. Results that came out shows that key macroeconomic parameters like population coverage and per capita premium are still very low in India as compared to other developed countries. It has been observed that in spite of the commendable growth and performance of life insurance sector, a vast potential still exists in this domain.

Gidhagen in 1998 has made an attempt to develop a conceptual framework from a relationship perspective for the study of insurance services marketing. Deregulation and internationalisation have created a new, healthy and increasingly competitive business environment. The focus of this research work is to state the relationships between insurance companies and their corporate customers. Interesting analysis include how highly the customers value the relationship in comparison with the price level of the perceived quality of the exchange relationship, services offered, the level of commitment, mutual trust and interdependency.

The work of Purcal in 1999 have examined the question about lifetime personal financial planning and how individual investors should needs to determine their optimal consumption, savings and life insurance needs. Human Life Value (HLV) model as a preliminary step to developing a relevant model for financial planning has been analysed. The life insurance purchasing behaviour implied by the model was also examined, showing that, optimal life insurance purchase is related to consumption levels. This finding calls into question the usefulness of the HLV concept of financial planning, which focuses on future income. In addition, the model
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provides details about optimal annuity purchase around retirement, suggesting a shaped pattern of annuity receipts.

According to study done by Clemons and Croson in 2000, there are three principal issues i.e. differential pricing, disintermediation and transparency that will determine the transformation of life insurance companies. Each of these will affect the roles to be played by financial service providers, the sources of profits available to them, and the strategies they may pursue in order to earn those profits. The authors have postulated that these are the three trends through which the financial services industries are going to be transformed.

A study was conducted by Srinivasan, Prakash and Sitharamu in the year 2001, to explore the changes in management of agents (distributors or seller of life insurance products) in the liberalized economic scenario. The focus of the study was to identify the proficiency necessary for a successful agent and to provide objective i.e. the guidelines or methodology for selecting the effective agents. The Semi-Structured Interview technique was used to assess the competency level of the agents. The findings of the study indicate the professional competencies that are necessary for being successful Insurance agents. The research also highlighted the skills that are required in selection and staffing of effective agents, managing them and developing their competencies.

There was research done by Organisation for Economic Co-operation and Development (OECD) in the year 2001 in detail on the benefits of life insurance for an individual and for the economy as a whole. The authors also list down the forces, which are responsible for driving the development of life insurance industry in the OECD countries. The authors have analysed the impact of key macro indicators like economic growth and regulatory environment in the growth of life insurance industry
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in an economy. The difficulties that can be faced by the life insurance industry according to them are underdeveloped financial markets, inflation, lack of actuarial data and lack of customer awareness.

In 2002, Kundu assessed different aspects of life insurance business like investments, product innovation, regulatory reforms and distribution channel. With the entry of new players in India's insurance sector, new distribution channels like Bancassurance and direct marketing will see increasing contribution to the industry. Rural sector can be seen as a perfect case for mass marketing and the new private life insurance companies cannot afford to ignore this market segment because it has a wide scope and huge potential which is yet to be explored by the insurance sector. Competition will surely cause the insurance market to grow beyond current level and will offer varied choices to customers through the introduction of new products, better services and through flexible and affordable pricing options.

According to Agarwal (2002), deregulation in India has resulted in increased number of players (which includes private players) in the life insurance market. The competition in the industry has brought various changes in business, like exploring newer distribution channels and adoption of technology in distribution process. It is important that insurers need to build and develop appropriate infrastructure for the distribution of products, especially in the rural areas. Infrastructure should also be built in such a way that it is accessible to the customers and use of CRM (Customer Relation Management) to gain technological advancement.

Lakshmikutty and Baskar in the year 2003 analysed the distribution channels in life insurance industry from the perspective of socio-cultural ethos. Various challenges posed in managing different channels by life insurance companies have also been assessed. In defining a distribution model, its capability to reach a large section of
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population and its cost effectiveness are some of the critical aspects that needs to be addressed by the life insurance companies to be successful in life insurance business.

In the opinion of Machiraju and Sandhya as per their study in 2004, the insurance scenario in India especially in terms of coverage of the rural population is not very satisfactory. A surveys report that insurable population of India is about 250 million. Authors recommend the use of the wide postal network for marketing and servicing of life and health insurance products and channelize the raised demands in rural areas for insurance cover to truly facilitate peoples empowerment.

Sinha (2005) has observed that India, with a relatively youthful population from the total population of over a billion people, is projected to become an attractive insurance market, globally, in the next decades. The report highlights the importance of the rural sector and analyses the impact of recent privatisation of the insurance industry. The Indian life insurance market is expected to be at US $ 140 billion in India in the year 2020 based on the GDP growth rate.

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CHAPTER 2 RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY
Research is defined as human activity based on intellectual application in the investigation of a matter. The primary purpose for applied research is discovering, interpreting, and the developing the methods and systems for the advancement of human knowledge on a wide variety of scientific matters of our world and the universe. The term research is also used to describe an entire collection of information about a particular subject. Methodology is the method followed while conducting the study on a particular project. Through this methodology a systematic study is conducted on the basis of which the basis of a report is produced. It is a written game plan for conducting the Research. Research methodology has many dimensions. It not only includes the research methods but also considers the logic behind the methods used in the context of the study and explains why only a particular method or technique has been used. It also helps to understand the assumptions underlying various techniques and by which they can decide that certain techniques will be applicable to certain problems and other will not. Therefore in order to solve a research problem, it is necessary to design a research methodology for the problem as the some may differ from problem to problem.

Nature
The methodology adopted to achieve the project objective involved descriptive research method. The information required for fulfilling the objective of study was collected from various primary and secondary sources.

Research Design
Research design constitutes the blue print for the collection, measurement and analysis of data. The present study seeks to identify the types of marketing techniques practiced by Life Insurance Corporation of India and preferences of life insurance service among the users. The research design is descriptive in nature. The research has been conducted on the different people from urban, semi-urban & rural areas to know their opinion about the products and services offered by Life Insurance Corporation of India and also to check the
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awareness among the people about the life insurance products. For the selection of the sample, convenient sampling method was adopted and an attempt has been made to include all the age groups and gender.

Sources of data:
Following are the sources of data:

Primary data:
Questionnaire was used to collect primary data from respondents. The questionnaire was objective type and contained basic questions relating to life insurance sector developed preferences among customers such as level of awareness of consumers, benefits of insurance, problems encountered. The questions that were included in the questionnaire were dichotomous, open-ended and offering multiple choices.

Secondary data:
Articles related to life insurance policies, taken from journals, magazines published from time to time. Through internet.

Method of data collection:

The survey method is used to collect the data. Various places nearby are visited for the purpose of collection of data. Data also collected from previous reports, published journals and also through referring various internet sites.

Research instrument:
The instrument used for gathering data was questionnaire. To supplement the primary data and to facilitate the process of drawing inference, secondary data was collected from published sources like magazines, journals, newspapers, content from various websites etc.

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Tools and techniques of analysis:

The data collected will be analyzed through the application of statistical techniques, such as bar graphs and pie charts. Tools used in the following research process are MS-Word and MS-Excel.

Research Process:
Research process is the way or steps in which the research work is being carried out for a particular project. The research process is carried out in the following manner.

Collection of Data

Analysis of Data

Interpretation of Data

Collection of Data This is the first stage involved in conducting the study. At the initial data are collected through various sources like primary sources i.e. through field research, survey research, content analysis and experiments and from secondary sources i.e. through published articles, content from the internet etc.

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Analysis of Data This process involves processing the information collected in the above process. It can be done manually or can be processed through any software. The data are quite important factors in processing the information, relevant data and inputs are required to generate the desired information. Interpretation of Data It is the last stage of conducting a study here we get the desired output by the analysis from the earlier stage. After output is being generated or processed, basing upon the result derived we have to interpret it and find conclusion which fit for our cause of research.

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CHAPTER 3 INTRODUCTION

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INTRODUCTION
Insurance is related to the protection of the economic value of assets, which are of utmost important to the owner as he/she has created the asset by putting a large amount of effort. The assets is valuable to the owner, because it provides him benefit either monetarily or in some other form. However, there is no guarantee than an asset can last for ever. So the benefits received by them will also be stopped after them. There is an adverse situation. Insurance is a mechanism that helps to reduce the effects of such adverse situations. It promises to pay the owner or beneficiary of the asset, a certain sum if loss occurs. Life insurance is a contract that pledges for payment of certain amount to the person assured (or his/her nominee) on the happening of the event insured against. The contract is valid for payment of the insured amount during: Specified dates at periodic intervals The date of maturity Unfortunate death. Need of life insurance: Life insurance is a contract by which you can protect yourself against specific uncertainties by paying a premium over a period. During the course of our lives we face with numerous health issues, fatalities, financial losses and fatalities. Life insurance is universally acknowledged to be an institution, which eliminates 'risk', substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the breadwinner. The need of life insurance is to serve for the following purpose: Protection

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You need life insurance to be there and protect the people for whom you care about, making sure that your family has a means to look after itself after you are gone. It is a type of business concept which is designed to protect the economic value of a human life for the benefit of those financially dependent on him. Retirement Life insurance make sure that you have regular income after you retire and helps you maintain your standard of living. It ensures that your post-retirement years are spent in peace and comfort. Savings and Investments Insurance is a means to save and invest. Your periodic premiums are like savings and you are assured of a lump sum amount on maturity. A policy can be very useful at the time of your future investment like childs education or marriage. Besides, it can be used as supplemental retirement income. Tax Benefits Life insurance is considered one of the best tax saving options today. Your tax can be saved on a life insurance policy once when you pay premiums and when you receive maturity.

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HISTORY
The story of insurance is as old as the story of mankind. The same instinct that prompts modern businessmen today to secure themselves against loss and disaster existed in primitive men also. They too sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era past few centuries yet its beginnings date back almost 6000 years. Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being charged on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Cooperative Assurance at Lahore were established in 1906. In 1907, Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912 India had no legislation to regulate insurance business. In the year
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1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the Act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also nonlife insurance to provide strict state control over insurance business. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization. Nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re-organization of LIC took place and large numbers of new branch offices were opened. As a result of reorganisation servicing functions were transferred to the branches, and branches were made
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accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of new Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organisation happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8 zonal offices, 992 satellite offices and the corporate office. LICs Wide Area Network covers 109 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-line premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

Some of the important milestones in the life insurance business in India are:

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 1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning. 1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business. 1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.
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Objectives of LIC
Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost. Maximize mobilization of people's savings by making insurance-linked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people working in the corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of corporate objective.

Mission

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"Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development."

Vision
"A trans-nationally competitive financial conglomerate of significance to societies and Pride of India."

Operations of LIC:
LIC operates all over India. It has its headquarters/Corporate office situated in Mumbai. It is divided into 8 Zonal offices throughout India basing upon different zones which is further structured into various Divisional offices that consists of many Branch offices and Satellite offices under them.

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HIERARCHY OF LIC

Corporate Office/ Head Office (1)

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Zonal Offices (8)

Divisional Offices (104)

Branch Offices (2048)

Satellite Offices (992)

The hierarchy of LIC depicted in the figure above states that all the important decision regarding LICs operations were taken by the executives in the corporate office, hence there by passing it to the zonal offices from where the divisional offices are get controlled by. Finally the execution of decisions that are formulated at the corporate and zonal office are performed by branch offices and satellite offices.

Members on the Board of the Corporation

Shri S. K. Roy (Chairman) Shri Sushobhan Sarker (MD, LIC)

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Shri S.B. Mainak (MD, LIC) Shri Arvind Mayaram (Secretary, Department of Economic Affairs, Ministry of Finance, Government of India.) Shri Rajiv Takru (Secretary, Department of Financial Services, Ministry of Finance, Government of India.) Shri A.K. Roy (Chairman cum MD, GIC.) Shri M.V. Tanksale (Chairman & MD, Central Bank of India) Shri Anup Prakash Garg Shri Sanjay Jain Shri Ashok Singh Shri K.S. Sampath Shri Amardeep Singh Cheema Smt Manjari Kackar

BRANCH STAFFING
Branch Manager

Assistant Branch Manager

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Administrative Officer

Handle both Administration

and Marketing dept.

Development Officer (DO 1)

Mktg.

Every branch operations are directed by the Branch Manager, who manages both administrative and management department. He is also coordinated by Assistant Branch Manager. The marketing and sales are handled by Development Officers who have certain target to fulfil in a specific time period. They have various agents under them who are hired to assist them in the best possible way to achieve their target.
Branch Management There are various operation that are being performed in a branch. LIC manages each of branch operation through mutual coordination of different departments. The various department present inside a branch can be listed as: New Business(responsible for looking potential clients and targets) Policy Serving(deals with existing clients) Accounts dept.(manages accounts) Sales dept.(product promotion, advertising) Office service dept.(concern about employees welfare and office service) IT dept.(manages any kind of technical issue) Marketing Dept. All the decision about marketing are proposed by Marketing E.D and secretariat. E-marketing of LIC has been introduced since 2009-10 onwards.
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The marketing can be done in different ways: Online Through agent Bank insurance Corporate agency Micro insurance small organization Marketing Process Online Marketing: - This process will relatively cost cheaper to customer, but due to lack of customer awareness and inadequate infrastructure advancement & due to illiteracy among mass, it has not been up to that mark. Marketing through Agents: - The usual approach of marketing is done through the agents. There are about 11.73 lakh agents in year 2012-13 which can be termed as the backbone of LICs insurance marketing policy. Target Market Preference to person who are economically sound and insurable population (health, age, education). Products are launched in pan India scale, no specific product are prepared for specific region. Urban area Higher income group Businessman Celebrities

Rural areas As per the want of people Age(minimum standard age)

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 Qualification It is difficult to sell high policies in rural area. So for the rural population there are micro policy available like Jeevan Madhu, Jeevan Deep etc.

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CHAPTER 4 DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS AND FINDINGS

A questionnaire consisting about general questions was prepared and distributed among small sample i.e. around 30 respondents and data collected were represented in tables & diagrams. The objective behind conducting this survey is to know about market penetration in consumers perspective and also to get a feedback on the marketing technique adopted by LIC to check whether it is efficient enough to handle todays challenges and threat. Q1. What type of occupation are you involved in? Table no. 1 Type Service Business Retired Other Total Pie Chart 1 No of respondent 17 10 3 0 30 Percentage 56.67% 33.33% 10.00% 0.00% 100.00%

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Type of occupation
Service Business
Retired 10% Other 0%

Retired

Other

Business 33%

Service 57%

Q2. Your monthly income/earnings? Table no. 2 Income Range

Less than 15,000 15,000 - 25,000 25,000 - 35,000

No of respondent 4 12 4 10 30

Percentage 13.33% 40.00% 13.34% 33.33% 100.00%

Above 35,000 Total

Pie Chart 2

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Income Range
Less than 15,000 15,000 - 25,000 25,000 - 35,000 Above 35,000

Above 35,000 40%

Less than 15,000 20%

15,000 - 25,000 27% 25,000 - 35,000 13%

Q3. Do you avail any life insurance policy? Table no. 3 No of respondent Yes No Total 30 0 30 Percentage 100.00% 0.00% 100.00%

Pie Chart 3

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People having life insurance

People having life insurance policy People who don't have life insurance

People who don't have life insurance 0%

People having life insurance policy 100%

Q4. Age group of people availing life insurance policy? Table no. 4 Range(in years) 21-31 31-41 41-51 Above 51 Total No of respondent 7 11 9 3 30 Percentage 23.33% 36.67% 30.00% 10.00% 100.00%

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Pie Chart 4

Age group of people availing insurance policy

21-31 31-41 41-51 Above 51

Above 51 10%

21-31 23%

41-51 30%

31-41 37%

Q5. From which company you would prefer to have your life insurance? Table no. 5 Company Name LIC Bajaj Allianz ICICI Prudential Others Total Number of respondent 19 2 4 5 30 Percentage 63.33% 6.67% 13.33% 16.67% 100.00%

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Pie Chart 5

People Choice in life insurance

LIC Bajaj Allianz ICICI Prudential Others

Others 17% ICICI Prudential 13%

LIC 63%

Bajaj Allianz 7%

Q6. How do you came to know about your life insurer company? Table no. 6 Medium Electronic media (TV, radio) Print media (newspapers, magazines) Social media (social networking sites like YouTube, Facebook) Other medium 0 0.00% No of respondent 24 4 2 Percentage 80.00% 13.33% 6.67%

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Total

30

100.00%

Pie chart 6

Mode of communication
Electronic media
Social media 7%

Print media

Social media

Other medium

Other medium 0%

Print media 13%

Electronic media 80%

Q7. Were the agents and marketing people from the insurance company able to explain you about all the products and services that are being offered by the company? Table no. 7 Product description by the marketing peoples and agents Very good Good Average Poor 2 12 10 6 6.67% 40.00% 33.33% 20.00%
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No of respondent

Percentage

Total

30

100.00%

Pie chart 7

Product description by marketing people and agents

Very good Good Average
Very good 7% Poor 20%

Poor

Good 40%

Average 33%

Q8. Are you satisfied with type of products and services offered to you? Table no. 8 No of respondent Very good Good Average Poor Total 4 11 13 2 30 Percentage 13.33% 36.67% 43.33% 6.67% 100.00%

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Pie chart 8

Satisfactory level of customer on products offered

Very good Good Average Poor

Poor 7%

Very good 13%

Average 43%

Good 37%

Q9. Are the pricing of products and services are good and reasonable? Table no. 9 No of respondent Yes No Total 26 4 30 Percentage 86.67% 13.33% 100.00%

Pie Chart 9
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People who find products and services worth of price

Yes No

No 13%

Yes 87%

From the above conducted surveys we can interpret that most people in nowadays are aware about Life insurance policies, its benefits also the fact that it cannot only be seen merely as a life insurance also it gives other benefits like tax saving option and also as a pension plan for the people who are retired in the future. Also we came to know that marketing techniques is a bit old and traditional in nature LIC have not invested much into technology in overall aspect like training the agents and marketing people through online courses. Equipping all the staff with minimum technological functional devices that can be accessed in the field work to ease of their work like marketing a product, giving information about the product. Life Insurance Industry Scenario and LICs Market share

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The difficult phase of de-growth continued in 2012-13 for Indian life insurance industry. Industry suffered de-growth of 6.32% in First Year Premium and LIC too decelerated almost at the same rate. In number of new policies, LIC achieved 2.88% growth, thereby saving the industry from a sharp de-growth due to decline otherwise suffered by the private sector. Market share in Number of Policies increased from 73.02 % in March 2010 to 0.90 % in March 2012 and further improved to 83.24% March 2013.

Growth of LICs market share in terms of no of policies

86.00% 84.00% 82.00% 80.00% 78.00% 76.00% 74.00% 72.00% 70.00% 68.00% 66.00% Jan-10 Jan-11 Jan-12 Jan-13 73.02% 77.28% 80.90% 83.24%

Time Period

Market Share

Similarly, First Year Premium market share was 64.86 % in March 2010, increased to 68.7 % in March 2011 and further Increased to 71.36 % in March 2012 and market Share for FY 2012-13 is above 71%. Share of first premium of SBI Life, the nearest competitor in new premium share, is 4.84%, ICICI Prudential 4.50% and HDFC Life 4.14%.

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Market shares in 2012-13

LIC SBI Life Insurance ICICI Prudential HDFC Life Others

HDFC Life 4% ICICI Prudential 5% SBI Life Insurance 5%

Others 15%

LIC 71%

The above data shows us that LIC being the oldest and most trusted life insurance firm has marked a heavy presence in the Indian insurance industry. It has maintained its dominance in the market but now the new entrant are offering more flexible option so customer are slowly switching their preference to other companies.

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CHAPTER 5 KEY FINDINGS AND RECOMMENDATION

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KEY FINDINGS
SWOT ANALYSIS OF LIC
The SWOT analysis involves an in depth study of the strength and weakness of the provided organization and it also provides information to the promoter, consultant, other agencies and helps in long term viability of the project. Strength: It is the most well experienced and the oldest player having a Pan India presence. LIC has a very well developed and strong distribution network. It is having a large consumer base and has evolved as one of the most powerful brands of the country. Claim settlement is easier to get and it also has a large product portfolio. It has the advantage of government guarantee associated with it. Largest insurance Company in the world in Customer Base (23 crore customers) No.1 insurance company in the world in terms of agency (about 1.1 Million agents) It is the 2nd Biggest Real Estate Owner next to Indian Railways. It has highest insurance Professionals (Club Member agents) No.1 insurance Company in the world in terms of claims paid. Prompt settlement of claims (96% maturity claim settled on or before due date) Technological advancement-For better Customer Service All 2048 branches and 159 satellite offices are computerized and networked throughout the country. Use of High Tech-WAN, LAN, IVRS & EDMS LIC uses high end infrastructure and is the second largest PC user in the country. Electronic Data Management System are established make LIC a paperless officeEnabling Policy servicing & payments through all branches in the country.

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 Premium Payment Facility are extended through networked 2048 branches, ECS, ATM's through internet, online portals, collecting bank (Axis Bank), AP online, through SMS, through selected agents, Now LIC Premium can also be paid through. "Suvidha info Serve KIOSKS" was established to assist people all over India. Policy holder's portal allow online access to view policy status and other details. Info centre set up in 12 cities for customers to interact easily. Dial-1251 for details. 45 interactive Voice Response System (IVRS) centers all over the country to provide information on policy servicing facility which is available 24x7.

Social Strength: LIC - an institution builder promoting many financial and insurance institutes like NSE, NCDEX, LIC Mutual Fund, Stock Holding Corporation of India, National insurance Academy, insurance institute of India etc. LIC has foreign operations in Fiji, Mauritius and London and has joint Venture operating in Sri Lanka, Nepal, Bahrain and Saudi Arabia. New offices will be shortly opened in USA, Australia and Canada. LIC is known as "Pension Provider" of the country. It is the 1st Pension company in India is floated by LIC as "LIC Pension Fund Ltd" on 21st Nov 2007. First to create waves in micro insurance sector by insuring people below the poverty line. In year 2007-2008 which is known as "Jeevan Madhur"Plan. Widest range of plans (about 48) for every need of the customer of 0 to 79 years of age. It has the biggest portfolio of group insurance schemes available. "Jeevan Saral" one of the product of LIC got "Best innovation product award from IRDA. LIC has covered lick Risk of 1.13 crore citizens through "AAM ADMI BIMA YOJANA" & JANASHREE BIMA YOJANA".
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 Very Unique Salary saving Portfolio. Highest Number of Corporate Clients in Group insurance Scheme. It is currently expanding its distribution channel through Bancassurances, Corporate Agencies, Broker ship & Chief Life insurarance Advisor (CLIA). "Golden Jubilee Foundations" was established for undertaking charitable activities like education, health, relief of poverty etc. People's Money for People's Welfare In socially oriented sector like drainage,water, & housing etc, LIC has invested a large sum of money for social benefits of people. Different incentive schemes for schools, villages and banks under Bima Gram, Bima School and Bima Banks.

Weakness: Its employees and other staff are least motivated and lethargic render prompt and sincere customer service. After sales customer grievance redressal mechanism is inefficient. Agents not highly considering or giving priority the needs of people and promote policies having high commissions only. The decision making process is very slow and also internal problems exists between top management and lower cadre staff. The bosses or top management are mediocre and there is large scale corruption in main office. The agents and development officers who are the foundation pillars of LIC are not provided with extra funds and powers to promote its products aggressively.

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Opportunity: There is an emergence or rise of a huge middle income consumer market in the country. People becoming demanding and more aware so there is scope for a whole lot of innovative products. Health insurance, Pension markets and large real estate portfolio. Todays human life becomes is fully uncertain, so they prefer protection against the risk. Therefore they prefer life insurance. There lies a huge opportunity for the life insurance sector. Easy accesses to development in the more advance market provide further opportunity to upgrade their working. Financial, technological or specific area based avenues of absorbing improved system are also now more easily available. So, that the insurance companies working efficiently and fast service. Increased economic activities: increase in the economic activity has become the opportunity for the life insurance industry. The activity such as development in the automotive industry and development in the shipping industry. The growth in the GDP level shows the opportunity for this industry. Uncovered market: The Indian insurance market is the one of the least markets in the world. India has a population 1241.15 million out of which only 81.6 million have a life insurance policy. Almost 450 million people in the country can afford to buy life insurance but of this only 20 % have an insurance cover. Hence there lies a big opportunity for the life insurance industry. No doubt lots of marketing and promotional efforts have to be done for trapping the uncovered portion of the huge market. Indias insurance has very long way to catch up with the rest of the world. According to the Institute of Charted Financial Analyst of India. India is the 18th largest insurance market in the world. India accounts for just 0.4% of the global insurance market
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which is very low. The ratios of premium to GDP for India stands at only 3% against 5.2% in US, 6.5%in UK. Yet to penetrate into rural market where customer awareness about insurance is low by effective and efficient marketing strategies. There lies an opportunity to sell insurance products through electronic medias. Natural calamities: natural calamities taking place now days have created a concern for life insurance among the public. Because of natural calamities like flood, earthquake and cyclone people have become conscious about benefits and need of insurance. Thus through natural calamity it has become a considerably big opportunity for the industry. Growing population: the growth in the population (approximately 1.7%) is very high. It is said that one Australia is added in our country every year. Thus the potential customers for the life insurance industry. The lack of comprehensive social security system combined with a willingness to save means that Indian people demand for pension products will be large in number. Thus, it has become an opportunity for the life insurance industry. India has traditionally been a highly savings oriented country. If the insurance market is properly targeted and tapped, it is possible to raise life insurance premium as a percentage of GDP from its existing level. Thus, it can become an opportunity for the life insurance industry. To use Internet and e-commerce technologies to dramatically cut the costs and/or to pursue new sales-growth opportunities. With the advancement in technology it has become easy for the companies to reach the customer easily, quickly, efficiently and in a better way. The companies can also cut down the cost of operation up to considerable level. Thus technology has shown lots of opportunity for the company. Liberalized government policy toward insurance sector: The government has liberalized the government policy in the life insurance industry. Nowadays role of government has changed drastically. Due to liberalized policy of government the country is benefited in earning
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foreign inflows: the domestic company can also collaborate with foreign country and can create synergy. Thus there lies is great opportunity for those who can trap it. Exist the option of joint venture and alliance etc. for companies to create value and synergy as well as competitive capabilities for the firms.

Threats: Private entrants are naturally targeting the profitable and more lucrative segments, by providing new products, flexible option, and better service. They are targeting the bigger corporate the other clients in the well established metropolitan centre. These new entrants succeeded in eating share of the existing entities like LIC. This creates threat among rival firms itself. Decreased in bank rate: the decreased bank rate is the biggest threat for the life insurance industry. Fluctuation in the bank rate makes a big difference for the life insurance industry. It has become a threat for the life insurance sector. Interest rate of Provident Fund and bank saving create threat to insurance industry. All other saving policies are also a threat for life insurance sector. Increasing intensity of competition among industry rivals-may cause squeeze (fall) on profit margins. Due to consumers education, consumers are more and more confused because the market players are offering large number of product range. At present the awareness level among is not much, it is only because the education level is only 68 %( in which only 16% are well educated). Fraud in insurance sector is one of the major problem, which affects the life insurance sector. The flight of talent to new entrants is already in evidence, and could be on the rise for time to come. Retaining competent and qualified executives will be considerable challenges for existing companies. The new units, equipped with state of arts equipment and innovative procedure would have an in-built edge over the erstwhile traditional framework, which until recently

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had no such opportunity. Due to possible negative impact on employment, there were no serious efforts made in updating technology and equipment. The inadequate investment in infrastructure could lead to their lagging behind in the race. Backbone of industry are the agents and the marketing people because these people are brand ambassador of LIC and household name of LIC. After the introduction of IRDA (Insurance Regulatory and Development Authority) online exam, it is very difficult to recruit more agents simultaneously the benefits to the agents and simultaneously the benefits to the agents and marketing people has been changed. So retention of agents and marketing peoples is a big threat to the Indian industry. To overcome this industry has to take drastic step. Before LPG (Liberalisation, Privatisation, Globalisation), the monopolistic behaviour of the industry was difficult to change. After LPG, it has to compete with other company in the same sector. Other companies have targeted the weakness in approach of LIC like service, technology, traditional approach etc. They (other companies) entered into the market with a new look and tried to snatch the knowledgeable officer and other staffs from LIC which was a big blow. Issues faced during executing marketing strategies Most of the LIC agents are not well informed about all the plans. While selling product certain factors like education, income and age play a major role in shaping the requirement of market which is diverse in nature. LIC allocate fixing target to each marketing people. So it is difficult to sale the right product to right people. Agents recruitment condition and the recruited agents are generally not highly educated i.e. they are just matriculation passed or below so their product knowledge is very poor. Poor advertisement of product and simultaneously illiteracy is an important factor to execute new product in market.

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 Due to insufficient infrastructure like inadequate computer, mobile, internet. It is very difficult for the field force and agent to execute the right product at right place and in right time. It is also seen that whatever infrastructure corporate provide is insufficient. That is why difficult to execute the right product in right time. India is a land of agriculture, where LIC introduced it product not all policies are related to Indian agricultural earning system. So it is difficult to execute a new product. Unique marketing strategies of LIC Ploughing back strategy: - Money can be reinvested back after maturity. Marketing people competition: - It helps to increase its sale of by motivating marketing people by providing high offer for achieving target. Insurance through banks: - It also provides insurance services by tying up with banking organisation which is a unique of its own kind. Innovative marketing skill The psychology of Indians are always in a need of new products. Observing this psychology of common Indians sometime LIC introduces Close end policy which snatch a large share from the Indian insurance market.

Role of technology in improving the marketing Internet: - Through the help of internet it is easy transfer funds at a quick pace from any part of the world. It also helps to gather a lot of information about the products. Marketing is also done through social media like Facebook, Twitter, YouTube & LinkedIn which keep the customer updated giving real time updates. Computers: - By the use of computers a company can create a digital content related to his product and make it available and accessible to each and every corner. Different application has come out to make user easy to access services
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 Mobile: - Mobile can be used to broadcast messages related to various products, their information and various services. Mobile penetration in the Indian market is large so it can be used to alert people about any kind of innovation, new products and services when they get launched so the information can be quickly transferred. Nowadays there are mobile application in the smartphone to make the user accessible of services 24x7 anywhere in any part of the world. TV: -This is the most successful and most sought after marketing channel used by LIC as the ad display an emotional appeal to convince people to get themselves enrolled in a health insurance plan so that their loved ones dont suffer after they have passed away. Advertisement through television has penetrated the most in the Indian market and have contributed to a large extent in increasing LICs market share in the insurance market. Traditional marketing ways Marketing was done manually no proper infrastructure was present to facilitate the marketing. Agents are the only means of in traditional marketing. Advertisement can only be done through posters, hoardings. In old days training to marketing people was indoor facilitated and taught through usual approach of teaching. Traditionally, agency in LIC was considered as a social work. Marketing was difficult in past because of no online fund transfer. Modern marketing ways Marketing is done through infrastructure support like computer, mobile, internet, with the help of banking organisations etc. There are many channels like banks, online, corporate agents. In modern way the trainings are given through online through different professional peoples.

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 Nowadays, agency is a profession where marketing is a new course to learn like other subjects. Marketing in current time is possible due to online banking.

RECOMMENDATION
At present, there is untapped market of health and pension plan. LIC has to change its way of approach in order to tap this market otherwise it can be a big opportunistic loss to LIC. LIC need to specially focussed on these markets because these can be a huge boost to its market share. The lifespan of an average Indian has changed drastically over the past few years. So the old tabular premium is old, outdated and still followed in LIC which can be a big threat in LIC cost management. LIC 3-tier system is an outdated management and not that cost effective. It has to be renewed and introduced with a new form else it can possess a big threat to LIC. It need to have a high end IT products and services to make user comfortable to access their service anytime and anywhere. Need to focus on customer care services as it limited to time period which can be extended to 24x7 for enhancement of service. It has to develop its outdated traditional training system and employees unrest because of the promotion, benefits, salary comparing to the same financial organisation in India. It can possess a potential threat in terms of qualitative outcome and the competitive spirit of the growth of industry. It need to develop high end infrastructure by installing updated equipment and to make it one of the finest organisation. Penetration in the social marketing need to be addressed to cater to the people relating to that segment.

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CONCLUSION

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CONCLUSION
LIC is the giant of the insurance sector. Overall size of LIC is much more than that of all private insurance companies. Private insurers currently are in expansion mode and are increasing their size but are still they have behind LIC. Total premium deposits in LIC is much higher than the private insurance companies. Income of LIC is much greater than private insurance companies. If we see the total number of policies issued by LIC and private insurance companies, we can find that there is a huge gap between them. There is no doubt that LIC is a well established player in the field of insurance and many private companies have just started their business. So it is obvious that LIC is having large number of policyholders. Number of branches of private insurance companies is increasing as the new players are entering in this market. The established players are also in expansion phase and hence are expanding their business. There are many private insurance companies and hence there total number of branches has gone past LIC in the last financial year. But the offices of private insurance companies are mostly in urban areas and still it is LIC which covers most of the area. Hence we see that LIC is leading when it comes to size. It is considered as a giant in insurance sector having huge network and customer base. We see that due to excellent service quality and attractive offers private insurance companies have started getting a number of customers. They are growing at a fast pace. Though LIC is

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also increasing its customer base but private insurance companies are also moving at a fast pace. Though the income of private insurance companies is negligible when compared with LIC but then also the pace with which they are increasing their income is tremendous. Private companies are expanding their business and will certainly going to give a tough competition to LIC in the coming days. LIC is certainly having a large customer base. As compared with LIC private insurance companies are not having that much number of customer base but they are increasing it rapidly. LIC, being the oldest player in the existing insurance market, has the biggest market share of 71.42 % which was 78.3% five years before. We see that private insurance companies are penetrating in the customer base of LIC. As seen that private insurance companies are giving a tough competition to the LIC and will certainly create a good business for themselves in the coming days. There are many new entrants in this industry who have experienced a huge loss. This is the main reason why private insurance companies lag behind LIC. There is a huge difference between them. New business is increasingly going towards private insurance companies but still the customer base of LIC is very strong. In the case of issuing new policies per branch also, they are ahead of private insurance companies though not by very large margin. Overall we have seen that still LIC is very famous but private insurance companies are growing at exceptionally fast pace. Private companies show due concern in grievance management and brings innovative schemes to attract the customers. At the moment they are giving good competition to LIC and very soon they will give very tough competition to Life Corporation of India.

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REFERENCES

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REFERENCES
Articles and Books
Agarwal, Abhisek, Distribution of life Insurance products in India. Insurance Chronicle, 2002 Clemons, Hitt and Croson, The Future of Retail Financial Services Transparency, Bypass, and Differential Pricing, The Wharton School, 2000 Gidhagen, Mikael, Insurance marketing -Services and relationships, Uppsala University, Sweden, 1998 Kundu, Sumit, What next in Indias insurance Market, 2002, www.MIB.com Lakshmikutty, Sreedevi and Baskar, Sridharan, Insurance Distribution in India - a perspective, DCG, Infosys Technologies Ltd, 2003 Machiraju, Appa Rao and Sandhya, K Rani, Economic security through life and health insurance Role of rural post office network, 2004 OECD Secretaria, Developing life insurance in the economies in transition, OECD 2001 Purcal, T Sachi, Optimal Consumption, Portfolio Selection and Life Insurance for Financial Planning, School of Actuarial Studies, University of New South Wales, 1999 Rao, D Tripati, A study of the Indian life insurance Industry, Centre for development studies, Thiruvananthapuram, 1996 Sinha, Tapen, An analysis of the evolution of Insurance in India, Centre for Risk and insurance studies, University of Nottingham, 2005 Srinivasan, Vasanthi, Prakah, P, Sitharamu. S, Selection of agents: A challenge for the Indian insurance industry, Centre for Insurance Research and Education, Indian Institute of Management, Bangalore, 2001

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Websites
http://www.irda.gov.in http://www.licindia.in http://www.policybazaar.com

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ANNEXURE
Q1. What type of occupation are you involved in? # Service # Business # Retired # Other Q2. Your monthly income/earnings? # Less than 15,000 # 15,000 - 25,000 # 25,000 - 35,000 # Above 35,000 Q3. Do you avail any life insurance policy? # Yes # No Q4. Age group of people availing life insurance policy? # 21-31 # 31-41 # 41-51 # Above 51 Q5. From which company you would prefer to have your life insurance? # LIC # Bajaj Allianz
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# ICICI Prudential # Others Q6. How do you came to know about your life insurer company? # Electronic media (TV, radio) # Print media (newspapers, magazines) # Social media (social networking sites like YouTube, Facebook) # Other medium Q7. Were the agents and marketing people from the insurance company able to explain you about all the products and services that are being offered by the company? # Very good # Good # Average # Poor Q8. Are you satisfied with type of products and services offered to you? # Very good # Good # Average # Poor Q9. Are the pricing of products and services are good and reasonable? # Yes # No

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