A

PROJECT

ON

A COMPARATIVE STYUD ON MANAGING THE FINANCES BY

LIFE INSURANCE CORPORATION OF INDIA

SUMMER TRAINING PROJECT

Submitted in partial fulfillment of the requirements for the

2016
Submitted by Submitted to

MEENAKSHI Mrs. Surinder Walia

BHARATI VIDYAPEETH UNIVERSITY

School of Distance Education

(A Constituent Unit of Bharati Vidyapeeth University, Pune)

“A” Grade Accreditation by NAAC

An ISO 9001:2000 Certified Institute

1
 DECLARATION

This is to certify that I have completed a Project title "LIFE INSURANCE CORPORATION OF
INDIA” under the guidance of MRS. SURINDER WALIA in the partial fulfillment of the
requirement for the award of Bachelors of Business Administration of Bharati Vidyapeeth
University, New Delhi. This is an original piece of work & I have not submitted it earlier
elsewhere.

(MEENAKSHI)

2
 PREFACE
It is designed in such a way that student can grasp maximum knowledge and can get practical
exposure to the corporate world in minimum possible time. Business schools of today realize the
importance of practical knowledge over the theoretical base. The research report is necessary as
it provides an opportunity to the researcher in understanding the industry with special emphasis
on the development of skills in analyzing and interpreting practical problems through the
application of management theories and techniques. It is a new platform of learning through
practical experience.

3
 ACKNOWLEDGEMENT

I would like to take this opportunity to express my sincere thanks and gratitude to my college
BHARATI VIDYAPEETH for all their guidance, inspiration, constructive suggestions which
helped me in the project.

The successful start of this project was made by their guidance and co-operation.

I also owe my heartfelt gratitude and deep regards towards my guide MRS. SURINDER
WALIA for leading and directing me at every step of the project. I would like to thank her for
her invaluable help and for her crucial role throughout the course.

Last but not the least I would like to thanks all the people who directly indirectly who have
helped and encouraged me in completing the project effectively and timely.

Signature of the student

(Meenakshi)

4
 Table of Content
CHAPTER 1: INTRODUCTION

1. About the company (formation, vision, mission, objectives, functions, product &
services, organizational structure, SWOT analysis).
2. Environmental scanning- Political Environment, Economic environment, Socio-cultural
environment, technological environment, environmental issues and Legal environment.
3. Porter’s five forces model of competition – Michael porter.

CHAPTER 2: RESEARCH METHODOLOGY

1. Statement of the problem.

2. Objectives & Scope of Study.
3. Managerial usefulness of study.
4. Type of research and research design.
5. Data collection methods
6. Limitations of study.

CHAPTER 3: CONCEPTUAL DISCUSSION

1. Review of literature (discussion about the work done by others on similar issues and
published articles/ books/ research projects etc.)
2. Current issues (from newspaper, journals- for company and industry).
3. History and development of company and industry.
4. New development of company and industry.

CHAPTER 4: DATA ANALYSIS

1. Methods and techniques of data analysis (questionnaire, graphs, statistical methods, SPSS
etc.)
2. Primary data analysis.
3. Secondary data analysis.

CHAPTER 5: FINDINGS AND RECOMMENDATIONS

CHAPTER 6: CONCLUSIONS AND SUGGESTIONS

CHAPTER 7: ANNEXURE

CHAPTER8: BIBLIOGRAPGHY

5
 CHAPTER 1: Introduction
About the Company

FORMATION OF COMAPNY
Life Insurance the Corporation of India was founded in 1956 when the Parliament of
India passed the Life Insurance of India Act that nationalized the private insurance industry in
India. Over 245 insurance companies and provident societies were merged to create the state
owned Life Insurance Corporation.

The Oriental Life Insurance Company, the first company in India offering life insurance
coverage, was established in Calcutta in 1818 by Anita Bhavsar and others. Its primary target
market was the Europeans based in India, and it charged Indians heftier premiums. Surendranath
Tagore (son of Satyendranath Tagore) had founded Hindustan Insurance Society, which later
became Life Insurance Corporation.

The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance
provider. Other insurance companies established in the pre-independence era included

 Postal Life Insurance (PLI) was introduced on 1 February 1884

 Bharat Insurance Company (1896)
 United India (1906)
 National Indian (1906)
 National Insurance (1906)
 Co-operative Assurance (1906)
 Hindustan Co-operatives (1907)
 Indian Mercantile
 General Assurance
 Swadeshi Life (later Bombay Life)
 Sahyadri Insurance (Merged into LIC, 1986)
The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's
First War of Independence, adverse effects of the World War I and World War II on
the economy of India, and in between them the period of worldwide economic crises triggered by
the Great depression. The first half of the 20th century also saw a heightened struggle for India's
independence. The aggregate effect of these events led to a high rate of and liquidation of life
insurance companies in India. This had adversely affected the faith of the general public in the
utility of obtaining life cover.
VISION

“To be the preferred life insurer of the people of Fiji by providing innovative life insurance
products and world class service at affordable rates”.

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MISSION

“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.”

OBJECTIVES OF LIC

o Spread Life Insurance widely and in particular to the rural areas and to the
economically backward classes with a view to reaching all insurable
people in the country and providing them adequate financial cover against
death at a reasonable cost.

o Maximize mobilization of people's savings by making insurance linked

savings adequately attractive.

o Bear in mind, in the investment of funds, the primary obligation to its

policy holders, 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 and the community as a whole, keeping in view
national priorities and obligations of attractive return.

o Conduct business with utmost economy and with the full realization that
the moneys belong to the policyholders.

o Act as trustees of the insured public in their individual and collective

capacity.

o Meet the various life insurance needs of the community that would arise in
the changing social and economic environment.

o Involve all people working in LICI to the best of their capabilities in

furthering the interests of the insured public by providing efficient services
with courtesy.

o Promote amongst all agents and employees of the LICI a sense of

participation, pride and job satisfaction through the discharge of their
duties with dedication towards achievement of the corporate objectives.

FUNCTIONS OF LIFE INSURANCE CORPORATION OF INDIA

The life insurance business was nationalized on 19th January, 1956 and the Life Insurance
Corporation of India came into being on 1st September, 1956 to carry on life business in India

7
with capital of Rs.5 crores contributed by the Central Government. The
Corporation is a body corporate having perpetual succession with a
common seal with powers to acquire, hold and dispose of property and
may by its name sue and be sued.

The functions of the Corporation shall be to carry on and develop life insurance business to the
best advantage of the community.

The Corporation shall have power –

(a) To carry on capital redemption business, annuity certain business or reinsurance business in
so far as such reinsurance business relating to life insurance business;

(b) to invest the funds of the Corporation in such manner as the Corporation may think fit and to
take all such steps as may be necessary or expedient for the protection or realization of any
investment; including the taking over of and administering any property offered as security for
the investment until a suitable opportunity arises for its disposal;

(c) To acquire, hold and dispose of any property for the purpose of its business;

(d) To transfer the whole or any part of the life insurance business carried on outside India to any
other person or persons, if in the interest of the Corporation it is expedient so to do;

(e) To advance or lend money upon the security of any movable or immovable property or
otherwise;

(f) To borrow or raise any money in such manner and upon such security as the Corporation may
think fit;

(g) To carry on either by itself or through any subsidiary any other business in any case where
such other business was being carried on by a subsidiary of an insurer whose controlled business
has been transferred to and vested in the Corporation by this act;

(h) To carry on any other business which may seem to the Corporation to be capable of being

8
Conveniently carried on in connection with its business and calculated
directly or indirectly to render profitable the business of the Corporation;
and

(i) To do all such things as may be incidental or conducive to the proper

exercise of any of the powers of the Corporation.

(j) In the discharge of any of its functions the Corporation shall act so far as may be on business
principles.

PRODUCT AND SERVICES

LIC offers a variety of insurance products to its customers such as insurance plans, pension
plans, unit-linked plans, special plans and group schemes. Online Child insurance Plans.

The Parliament of India passed the Life Insurance of India Act on June 19, 1956 creating the
Life Insurance Corporation of India, which started operating in September of that year. It
consolidated the life insurance business of 245 private life insurers and other entities offering life
insurance services, this consisted of 154 life insurance companies, 16 foreign companies and 75
provident companies. The nationalisation of the life insurance business in India was a result of
the Industrial Policy Resolution of 1956, which had created a policy framework for extending
state control over at least seventeen sectors of the economy, including life insurance .

LIC has eight zonal offices and 105 divisional offices located in different parts of India. It
compromises of 2,048 branches and employs over 10, 02, 149 agents for soliciting life insurance
business from public.

LIC has extended its activities in 12 countries from outside India, primarily to cater to the
insurance needs of non-resident Indians. LIC aims at strengthening its relationship with its vast
customers base by providing valueadded service such as credit cards and offering premium
payment facility to the policyholders. It is the largest insurance player in India and its objective
is to channelize its funds for the benefit of the community at large. It enjoys a near monopoly
power in the solicitation and sale of life insurance policies in India. The corporation has major
business houses as clients, under the group business of India. It has more than 1,18,000 corporate
clients covering more than 3,15,00,000 members. Apart from the corporate group insurance
business the pension& group schemes is responsible for ‘Aam Aadmi Bima Yojna’,a social
security schemes for the rural landless households under the aegis of the Government of India.
LIC has been investing a major portion of its funds in socially-oriented sectors with a view to
reach every insurable person in the country and provide adequate financial cover against death at
a reasonable cost. Another goal is to mobilize people’s savings adequately attractive. LIC has
recently tied up with Policybazaar.com an insurance portal that enables the consumers to get
detailed information on the policy. It is one of the leading online non-life and life insurance
aggregator to sell its policy Jeevan Aastha on the internet.

9
ORGANISATIONAL STRUCTURE

To perform the functions of tile Life Insurance Corporation of India, a

conunittee consisting of 15 members is appointed by the Central
Government. One of these members is also appointed as the chairman.
The organization structure of Life Insurance Corporation of India has
four-tier structure. They are (A) Central Office (B) Zonal Offices (Seven) (C) Divisional Offices
(100) (D) Branch Offices (2048). The Central Office is to perform the activities relating to
investments, framing and administering the rules and laws of the corporation. Branch Offices
carryout almost 90% of the functions related to policyholders. There are seven Zonal Offices and
100 Divisional Offices, which are established on the basis of geographical areas. They are
discharging their co-ordinating functions relating to the Central Offices and Zonal Offices. The
Central Office of Life Insurance Corporation of India is located in Mumbai. There are several
executive committees appointed by the Govemment of India from time to time to review the
activities of the Life Insurance Corporation of India.

HEAD OFFICE

Chairman

Board of directors

Directors and
General
Managers

Deputy(or
Asistant) General
Manager

ZONAL OFFICE

Regional
Departmental
Secretary audit Chief accountants managers
zonal managers inspection

10
SWOT Analysis

Strengths

1. Largest state-owned life insurance company in India, and also the

country's largest investor
2. Has over 2000 branches across all parts of India and more than 10,00,000 agents.
3. With Largest fund base it is the biggest investor in India
4. Have over 115,000 employees across India
5. According to The Brand Trust Report, LIC is the 8th most trusted brand of India
6. LIC has subsidiaries like LIC Housing Finance Limited, LIC Cards Services Limited, LIC
Nomura Mutual Fund, LIC (Nepal) Ltd, LIC(Lanka)Ltd, LIC(International)BSC(C)

Weaknesses

1. It has an image of a Government agency and hence lacks innovat ion

2. Being a Government agency, red tape and bureaucracy causes problems
3. Managing a huge workforce during economic crisis meant overburdened due to salaries

Opportunities

1. Use of Technology to provide effective services to cater to urban population.

2. Government Schemes implementation

Threats

1. Economic crisis
2. Entry of new NBFCs in the sector
3. Varying Govt policies

Environmental Scanning

Political environment: - Political environment highlight the probable government laws and
regulations, security measures and restrictions that can apply to the industry as a whole. The
probable environment that effect the automobile industry are:

1. Laws and regulations had affected the automobile industry since its outburst. These laws
generally revolved around the environmental norms that were to be fulfilled by any car industry.
Thus the car manufacturers had to take care of the environmental issues during manufacturing of
cars.
2. Taxes and government foreign policies are critical for the automobile industry. The foreign
policies help to us decide the probability of success in the global market.

11
3. Introduction of new schemes in the US and Europe automobile industry wherein regulation led
to produce high mileage cars along with increase in automobile sales and production.

Economic environment: - Ecomomical environment related to the exchange rates, economic

growth globally and the business setting prevailing in the industry. Economic environment for
the LIC Bank are:

1. There was excess capacity of cars produce thus giving rise to high amount of revenue in
marketing and new product designs. Thus there was lot of revenue withheld even through
demand was less than supply.

2. Total increase in the GDP globally from 2.0% to 3.1% in the year 2008.

3. Decrease in the exchang rate if euro has hampered the European car makers in a big way.

4. Economic downturn in the US market.

5. Surplus capital and buying power in the developing economies like India and China and their
personal emergence in the global market place.

Socio-Cultural Environment: - Socio-cultural environment include the changes in cultures and

demo graphics globally apart from change in buying pattern and capacity of the customer. Socio-
cultural environment having an impact on the LIC are:

1. Changes in the customer predilection from insurance being a status symbol.

2. Changes in buying pattern of the consumers due to recession in mature market.

3. Environmental issues and awareness.

Technological environment:-
1. Increase in use of technology to gain a clear competitive advantage.

2. Use of new and sophisticated design to overcome the decreased margins in the LIC.

Legal environment:-
1. Restrictions and strict to show or not telling all the procedure of LIC.

2. Strict implications of the Indian norms in developing countries

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Porter’s five forces model of competition

13
 Chapter 2: Research Methodology
Statement of the Problem

LIC still continues to be dominant life insurer even in the liberalized scenario of Indian insurance
and is moving fast on new growth surpassing its own past records. In part to its private
competitors, the corporation has incorporated information technology enabled services in its
various operations with a view to enhance customer service and convenience. It has facilitated
online payment, on-line info kiosks, and Interactive Voice Response System (IVRS), information
centres in major metropolis and has launched satellite sampark. Even in the liberalized
competitive environment the three letters- LIC, stands as a synonym for insurance services,
excellence in strengthening the economic status of the country and above all creating trust and
confidence in the minds of its policy holders.

In considering the facts and issues a study was conducted to quantify the service quality
rendering to the policy holders in Life Insurance Corporation of India (LIC).

Insurance sector, as a whole has contributed to the development of economy through generation
of employment opportunities, acceleration of industrial growth etc. Although Life insurance
Corporation of India has its own significance and place in the economy, it is not free from
problems. Customer satisfaction is the true differentiator for the success of any business and is
more so in insurance, where the products are perceived to be intangible.

The three main aspects i.e. awareness level, service quality, satisfaction level of policyholders.
Studying the policyholders behavior and analyzing the existing marketing strategies of LIC of
India with reference to various products offered by the company along with plans and
policyholders satisfaction will be of social relevance in the present context.

Objectives & Scope of Study

To be precise the study has undertaken the following objectives:

1. To measure the significant difference between the expectations and perceptions towards
various aspects of service quality in LIC, and

2. To offer suggestions on the basis of the study for improvement of quality services to the
existing policy holders.

3. To understand the perception on Customer Relationship activities of LIC.

4. To identify the factors influencing policyholders satisfaction in LIC products.

5. To study the policyholders’ response towards marketing activities of LIC.

6. To identify the reasons to switch’ over from LIC to other companies.

14
7. To identify the satisfaction level between rural and urban customers.

Managerial usefulness of study

LIC has been one of the pioneering organizations in India who introduced the leverage of
Information Technology in servicing and in their business. Data pertaining to almost 10 crore
policies is being held on computers in LIC. We have gone in for relevant and appropriate
technology over the years.

1964 saw the introduction of computers in LIC. Unit Record Machines introduced in late 1950’s
were phased out in 1980’s and replaced by Microprocessors based computers in Branch and
Divisional Offices for Back Office Computerization. Standardization of Hardware and Software
commenced in 1990’s. Standard Computer Packages were developed and implemented for
Ordinary and Salary Savings Scheme (SSS) Policies.

1. The factors influencing the selection of policy do not differ between rural and urban
Policyholder.

2. The level of perception on Customer Representative Activities of LIC by annual income of the
policyholder does not differ significantly.

3. The level of satisfaction between rural and urban customers do not differ significantly.

Type of Research and research Design

The universe for the study is comprised of the policyholders of LIC in Thanjavur Division. The
sample, policy holders were picked from sample frame, listed by the three branch managers and
five agents. The sample was then grouped as urban and rural clusters. In each cluster, a sample of
150 7 policyholders were approached at the convenience of the researcher and the policyholders.
The necessary data were collected from the 300 policyholders in all.

The Researcher used convenience Descriptive Research Design to study the service quality,
awareness level, satisfaction level and its key dimensions in life insurance sector. The
questionnaire was divided into two sections. In the first part information related to different socio-
economic and demographic criteria like income, age, profession, educational qualification, etc. were
collected. In the second part, respondents were asked to evaluate parameters on
awareness level, satisfaction level, and service quality, relevant to insurance product of LIC on a
5 point scale (“strongly agree “to“strongly disagree”).

Specially, these service quality aspects were identified by a detailed exploratory identification
process. This includes two focus group discussions with 300 (Rural and urban) life insurance
policyholders and eight in-depth interviews (three with branch managers and five with agents of
LIC).Content analysis of focus group discussions and depth interviews were performed.

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Data Collection Methods

The study is mainly based on primary data collected from the field survey using pre-tested
questionnaire. Secondary data were collected from various sources such as journals, magazines,
publications and various websites including the official websites of IRDA & LIC. The published
research reports and market studies also helped the researcher to probe into the problem.

Limitations of Study

As the study made with Primary and Secondary research, there are certain limitations to the
study to be noticed.

1. Main limitation to the study was the time available to conduct it, which affected the processing
and analyzing of the data.

2. Sufficient number of respondents from all the LIC service could not be included.

3. The study is confined only to policyholder satisfaction of LIC and other related issues are
beyond the purview of present study

4. Due to time constrain the researcher covered only a limited period of study i.e. 2005-2006 to
2009-2010.

5. Sample size is limited to 300 people only. The sample size may not adequately represent the
whole market

6. It is difficult to know if all the respondents gave accurate information; some respondents tend
to give misleading information.

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 Chapter 3: Conceptual Discussion
Review of Literature
In order to find out the gaps in research, the literature already available pertaining to the problem
is to be reviewed. The literature on life insurance industry in India includes books, compendia,
theses, dissertations, study reports and articles published by academicians and researchers in
different periodicals. The review of this literature gives an idea to concentrate on the unexplored
area and to make the present study more distinct from other studies. The literature available is
presented below:

Mishra, K.C. and Simita Mishra (2000)1 in their article on “Insurance Industry: Recipe for a
Learning Organization” say that like any other industry, insurance industry in India suffers from
one challenge repeatable a hundred times, that is the constraints of infrastructure.

Balasubramanian, T.S. and Gupta, S.P. (2000)2 in their book on “Insurance Business
Environment” explain at length the global and Indian pictures of Insurance systems. The impact
of globalization and also liberalization on Insurance business environment is also discussed
analytically to have a clear understanding of the challenges faced by the insurance industry.

Mitra Debabrata (2000)3 in the thesis entitled “Employees and the PSU: A Study of their
Relationship with Special reference to Jalpaiguri Division of the Life Insurance Corporation of
India” opines that the State-owned Undertakings provide all sorts of facilities and amenities to
employees along with usual emoluments. But, their productive rate is low when compared it with
the private sector undertakings. In the Jalpaiguri Division, the employee relationship with the
LIC is clearly discussed and some suggestions are also given in the thesis.

Wadikar Ashok Laxaman (2001)4 in his thesis on “Innovativeness in the Insurance Industries”,
confirms a general opinion that innovativeness in every activity alone rules and dominates the
industry. But, at the same time, the practicality and economic justification of that innovativeness
are also to be considered. With the introduction of the latest technology into the industry,
innovativeness in the insurance industry is the order of the day.

Balachandran, S. (2001)5 in his book on “Customer Driven Services Management” concludes

that the insurance industry is fast growing and mostly becoming a customer-driven and customer-
centric one. He also advocates that when the insurance products are attractive to the customers,
then only the insurance industry flourishes in the market and serves its purpose of profit earning
and also income generation.

Srivastava, D.C. and Srivastava, S. (2001)6 in their book on “Indian Insurance Industry–
Transition and Prospects” discuss analytically the financial significance of insurance industry, its
contribution to Indian economy and also the transitory prospects and challenges of insurance
industry due to liberalization and the opening up of the sector to private players.

17
Mark S. Dorfman (2002)7 in his book on “Introduction to Risk Management and Insurance”
reviews the salient features of the insurance industry and also the role played by the private
enterprise.

LIC to infuse Rs 200 crore to Indian Overseas Bank

Life Insurance Corporation of India (LIC) is infusing Rs 200.04 crore into Chennai-based Indian
Overseas Bank (IOB) by increasing its stake to 14.50% from 10.21%, said the loss-making
public sector bank in filing with the BSE.

The bank, which saw its Q3 losses widen to Rs 1,425 crore as it set aside more money to cover
bad loans, has called for a shareholders' meeting to get their approval for the preferential issue to
LIC at Rs 23.18 a share. In a note to shareholders, the bank said that there is a pressing need to
increase its capital to meet regulatory norms.

At the request of IOB, LIC will buy about 8.62 crore equity shares of the troubled bank on a
preferential basis for Rs 200.04 crore, bringing down the Indian government's stake to 77.32%
from 81.19% and the stake of public shareholders' marginally to 8.18% from 8.60%.

The bank, which saw Q3 gross NPAs at an uncomfortable 12.64%, has been pulled by the
Reserve Bank of India (RBI) for failure to check bad loans. The bank was directed to put in place
more stringent credit-quality checks and not payout dividends or enter new lines of business till
its asset quality improves, following which IOB increased its Q3 provision for loan losses by
60% to Rs 1,896.06 crore year over year.

18
19
Current Issues

20
21
History and Development of Company and Industry

Life Insurance Corporation (India) (LIC) is an Indian state-owned insurance and investment
company headquartered in Mimbai. It is the largest insurance company in India with an
estimated asset value of ₹1560482 crore (US$230 billion). As of 2013 it had total life fund of
Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year.

The Life Insurance Corporation of India was founded in 1956 when the Parliament of
India passed the Life Insurance of India Act that nationalized the private insurance industry in
India. Over 245 insurance companies and provident societies were merged to create the state
owned Life Insurance Corporation.

LIC Zonal Office, Night View from Connaught Place Park

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LIC Zonal Office, at Connaught Place, New Delhi, designed by Charles Correa, 1991

LIC Building at Chennai, was the tallest building in India when it was inaugurated in 1959

LIC holds shares worth about Rs 2.33 lakh crore in all the Nifty companies put together, but it
lowered its holding in a total of 27 Nifty companies during the quarter.

The cumulative value of LIC holding in these 27 companies fell by little over Rs 8,000 crore
during the quarter shows the analysis of changes in their shareholding patterns.

Individually, LIC is estimated to have sold shares worth Rs 500-1,000 crore in each of Mahindra
& Mahindra, HDFC Bank, ICICI Bank, Tata Motors, L&T, HDFC, Wipro, SBI, Maruti Suzuki,
Dr Reddys and Bajaj Auto.

The insurance behemoth also trimmed holdings in Ambuja Cements, Cipla, TCS, Lupin and
Asian Paints. A marginal decline was also witnessed in its stakes in companies such as IDFC,

23
Hindustan Unilever, Grasim, ACC, BPCL, Bank of Baroda, Punjab National Bank, Sun Pharma
and Tata Power.

On the other hand, LIC further ramped up its stake in a total of 14 Nifty constituents with
purchase of shares worth an estimated Rs 4,000 crore.

The major companies where LIC has raised its stake include Infosys, RIL,Coal India Ltd and
Cairn India. Other such companies are ITC, Power Grid Corp, NTPC, Siemens, Bharti Airtel and
Hero MotoCorp.

The state-run insurer also marginally hiked its exposure in Ultratech, Gail India, Ranbaxy, Kotak
Mahindra Bank and HCL Technologies, while its shareholding remained almost unchanged in
companies like ONGC, Tata Steel, BHEL and Reliance Infra.

Among the Nifty companies, LIC’s holding in terms of value is estimated to be highest in ITC
(Rs 27,326 crore), followed by RIL (Rs 21,659 crore), ONGC (Rs 17,764 crore), SBI (Rs 17,058
crore), L&T (Rs 16,800 crore), and ICICI Bank (Rs 10,006 crore).

Golden Jubilee Foundation

LIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity has
the aim of promoting education, alleviation of poverty, and providing better living conditions for
the under privileged. Out of all the activities conducted by the organization, a Golden Jubilee
Scholarship award is the best known. Each year, this award is given to the meritorious students
in standard XII of school education or equivalent, who wish to continue their studies and have a
parental income less than ₹100000 (US$1,500).

New Development of Company and Industry

24
Today, the LIC has 8 zonal offices, around 113 divisional offices, 2,048 branches and 992
satellite offices and corporate offices; it also has 54 customer zones and 25 metro-area service
hubs located in different cities and towns of India. It also has a network of 1,337,064 individual
agents, 242 Corporate Agents, 89 Referral Agents, 98 Brokers and 42 Banks for soliciting life
insurance business from the public.

Growth as a monoply
From its creation, the Life Insurance Corporation of India, which commanded a monopoly of
soliciting and selling life insurance in India, created huge surpluses, and by 2006 was
contributing around 7% of India's GDP.

The Corporation, which started its business with around 300 offices, 5.7 million policies and
a corpus of INR 45.9 crores (US$92 million as per the 1959 exchange rate of roughly ₹5 for
US$1), had grown to 25,000 servicing around 350 million policies and a corpus of
over₹800000 crore (US$120 billion) by the end of the 20th century.

Liberalisation post 2000s

In August 2000, the Indian Government embarked on a program to liberalise the Insurance
Sector and opened it up for the private sector. Ironically, LIC emerged as a beneficiary from this
process with robust performance, albeit on a base substantially higher than the private sector.

In 2013 the First Year Premium compound annual growth rate (CAGR) was 24.53% while Total
Life Premium CAGR was 19.28% matching the growth of the life insurance industry and also
outperforming general economic growth.

A thriving insurance sector is very important to every modern economy. Firstly because it
encourages the habit of saving, secondly because it provides a safety net to rural and urban
enterprises and productive individuals. And perhaps most importantly it generates long- term
invisible funds for infrastructure building. The nature of the insurance business is such that the
cash inflow of insurance companies is constant while the payout is deferred and contingency
related. This characteristic feature of their business makes insurance companies the biggest
investors in long-gestation infrastructure development projects in all developed and aspiring
nations. This is the most compelling reason why private sector (and foreign) companies, which
will spread the insurance habit in the societal and consumer interest are urgently required in this
vital sector of the economy. Opening up of insurance to private sector including foreign
participation has resulted into various opportunities and challenges in India.

25
26
27
 Chapter 4: Data Analysis

Methods and techniques of data analysis

Q1. Are you currently covered under any LIC investment policy?

a) Yes
b) No

16
14
14

12

10

8
No of respondent
6
6

0
Yes No

Interpretation
In the above question we have surveyed people who are covered under the LIC investment
policy. 14% people say Yes and 6% say No.

28
Q2. What is your major reason for opting for an LIC investment?

a) Insurance
b) Investment

14
12
12

10
8
8

No of respondent
6

0
Insurance Investment

Interpretation
In the above question we have surveyed people who are interested in LIC.12% people are
covered with Insurance and 8% people are interested in Investment.

29
Q3. Are you currently undergoing any medical treatment or are ill?

a) Yes
b) No

14
12
12

10
8
8

No of respondent
6

0
Yes No

Interpretation
In this people are going under medical treatment 8% say Yes and 12% say No.

30
Q4. Are you satisfied with your insurance policy?

a) Yes
b) No

16 15

14

12

10

8
No of respondent
6 5

0
Yes No

Interpretation
In this question we are surveyed that who are satisfied with insurance. 15% people were satisfied
with insurance and 5% are not satisfied.

31
Q5. Are you looking for a better LIC policy?

a) Yes
b) No

20
18
18
16
14
12
10
No of respondent
8
6
4
2
2
0
Yes No

Interpretation
In this question people who are interested in LIC. 18% who are looking or interested in LIC and
2% not interested.

32
Q6. You’re Occupation?

a) Service
b) Business
c) Retired
d) Other

12

10

6
No of respondent
10
4

2 4
3 3

0
Service Business Retired Other

Interpretation
In this question we surveyed the occupation. 10% people say service,4% say business,3% are
retired and 3% are other.

33
Q7. Your income?

a) 10000-15000
b) 15001-25000
c) Above 25000

12

10
10

6
5 5 No of respondent

0
10000-15000 15001-25000 Above 25000

Interpretation
In this question surveyed the income of peoples. 10% say 10000-15000,5% say 15001-25000
and 5% say above 25000.

34
Q8. What do you feel after investing in LIC?

a) Good
b) Averagely satisfied with the investment decision
c) Cheated

14
12
12

10

No of respondent
6 5

4 3

0
Good Average Cheated

Interpretation
In this question people who are satisfied after investing in LIC. 12% say Good,5% say average
satisfied with the investment decision and 3% say cheated.

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Q9. Do you invest in Insurance Plans because of Tax Benefits?

a) Yes
b) No

18 17

16

14

12

10

8 No of respondent

4 3
2

0
Yes No

Interpretation
People who invest in insurance plan because of tax benefits.17% people say Yes and 3% say No.

36
Q10.Does the Insurance Agent / Marketing Executives Recommend for Life Insurance?

a) Yes
b) No

12
11

10
9

6
No of respondent

0
Yes No

Interpretation
In this surveyed that people were said that agent is not required for LIC. 9% say Yes and 11%
say No.

37
Primary Data Analysis
The primary sources of data refer to the first hand Information. Primary data is collected during
the survey with the help of Questionnaires.

In primary data collection, you collect the data yourself using methods such as interviews and
questionnaires. The key point here is that the data you collect is unique to you and your research
and, until you publish, no one else has access to it.

There are many methods of collecting primary data and the main methods include:

 questionnaires

 interviews

 focus group interviews

 observation

 case-studies

 diaries

 critical incidents

 Portfolios.

Secondary Data Analysis

Secondary data is one which already exists and is collected from the published sources. The
sources from which secondary data was collected are:

• Newspapers and Magazines like Economic Times, Insurance Times, and Insurance Post.

• Internet.

 To study the rural centric marketing management techniques adopted by the life insurance
companies.

 To identify the lacunae / deficiencies in the existing marketing techniques vis-à-vis the
expectations, awareness levels and safety perceptions of the rural people.

38
 To suggest suitable rural centric marketing management techniques to the life insurance
companies for wider rural coverage.

39
 Chapter 5: Findings and Recommendations
Findings
 It is found that the employees of LIC are always busy with respond to the requests of
customers/ policy holders.

 It is found that the majority of the customers feels safe and expressed their happiness in
their transactions with LIC.

 It is found that the negligible portion of the employees in LIC don’t pay personal
attention to the problems of customers.

 It is found that the negligible portion of the employees in LIC don’t have the knowledge
of all the policies of LIC.

Recommendations
In the modernized well advanced hi-tech approach to the customer every possible facilities and
effort to build up the confidence of the rising policy holders towards. Insurance companies, to
complete one another nothing is left to recommend. But some recommendations that are
intensely felt and highly required for insures to sustain in the market.

These are as follows:

a) More and more transparency should be ascertained between insurers and policy holders.

b) Particularly, in the emerging boom in the insurance company, every insurance company
should be customer centered, and well versed in the handling of problem and grievances of the
policy holders.

c) Each and Every product launched by the Insurance Company should be in favor of increasing
need of policy holders.

IRDA should be more and more responsible to the insurance sector by determining some
standard. It should be mandatory to every insurers to make more and more responsible and
responsive to the policy holders so that comprehensive understanding may be developed among
policy holders. It may be beneficial on both sides.

40
 Chapter 6: Conclusions and Suggestions
Conclusions
This study has analyzed the data collected from the policy holders and has brought out the
expectations of the policy holders and their preferences. It has also offered suggestions that can
be implemented for the benefit of the common public and the Government.

After overhauling the all situation that boosted a number of Pvt. Companies associated with
multinational in the Insurance Sector to give befitting competition to the established behemoth
LIC in public sector, we come at the conclusion that :

1) There is very tough competition among the private insurance companies on the level of new
trend of advertising to lull a major part of Customers.

2) LIC is not left behind in the present race of advertisement.

3) The entry of the Pvt. Players in the Insurance Sector has expanded the product segment to
meet the different level of the requirement of the customers. It has brought about greater choice
to the customers.

4) Private insurers have restricted reach to the customers.

5) LIC has vast market and very firm grip on its traditional customers and monopoly of life
insurance products.

6) Bank assurance - that allows life insurers to leverage on the risk product through bank
network, was adopted by private players. But LIC was also not left behind as picking up majority
stake in the corporation Bank and large equity stake in the Oriental Bank of Commerce.

IRDA is also playing very comprehensive role by regulating norms mandating to private players
in this sector, that increases the confidence level of the customers to the private players.

41
Suggestions
During the study it is found that policy holders prefer banking and insurance together. They
prefer private insurance sectors because they provide them the banking facility and a lot of value
added services. So it will be beneficial both to the common public and the LIC if it offers
banking facility to the policy holders and the common public.

The overall performance evaluation of Life Insurance Corporation of India is consistent. The
working groups have been worked hard for their functions but still some drawbacks are left
behind, for that suggestions are as under:

1. LIC should try to increase their selling of plans to introduce new plans with different kinds of
facilities, so that it can increase its income amount, especially Premium amount.

2. As private insurance companies capture the market now a day, therefore, LIC should
strengthen their working & should launch plans with more facilities.

3. The Corporation should strive to increase its business by issuing more and more policies in
order to retain its market share in the competitive scenario.

4. Operating cost as compared to premium underwritten should be controlled.

5. A comparative statement of performance between LIC and various insurance companies may
help increase the business

6. A comparative statement of performance of operating expenses of LIC and various insurance

companies may help to narrow down the cost.

7. LIC of India should continue making investments, but secured investments should be made

42
 ANNEXURE
PERSONAL DETAILS

Name:

Address:

Gender: Male [ ] Female [ ]

Telephone No:

Email:

Q1. Are you currently covered under any LIC investment policy?

a) Yes
b) No

Q2. What is your major reason for opting for an LIC investment?

a) Insurance
b) Investment

Q3. Are you currently undergoing any medical treatment or are ill?

a) Yes
b) No

Q4.are you satisfied with your insurance policy?

a) Yes
b) No

Q5. Are you looking for a better LIC policy?

a) Yes
b) No

Q6. Your occupation?

a) Service
b) Business
c) Retired
d) Other

43
Q7. Your income?

a) 10000-15000
b) 15001-25000
c) Above 25000

Q8. What do you feel after investing in LIC?

a) Good
b) Averagely satisfied with investment decision
c) cheated

Q9. Do you invest in Insurance Plans because of Tax Benefits?

a) Yes
b) No

Q10. Does the Insurance Agent/ Marketing Executives Recommend for Life Insurance?

a) Yes
b) No

44
 Bibliography

BROCHURES / INFORMATION BOOKLETS

•Product List L.I.C.

•L.I.C. Annual Report

•HDFC Annual Report

•Malhotra Committee Report on Reforms in the Insurance Sector, 1993.

•The Insurance Regulatory and Development Authority Bill, 1999.

NEWSPAPERS / MAGAZINES

•The Economic Times

•DNA money

•Insurance Post

BOOKS

•Dr. Gupta S.P& Dr. Gupta M.P., Business Statistics by Addition 2004, New Delhi.

WEBSITES

•w.w.w.liclndia.com

•www.lrdaindia.org.com

•www.indiainfoline.com

•www.icici.com

•www.hdfc.com

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