Associate Professor Kohima & Head, Department of Commerce, Nagaland University,

Lecturer in Commerce, S.D.Jain Girls’ College, Dimapur (Nagaland)

Abstract Globalisation has initiated far-reaching changes in economies across the world. India is no exception. There was a time when Indian corporate giant the Life Insurance Corporation of India (LICI) had a virtual monopoly in insurance and there was no need for them to be customer friendly. Once the Indian markets were opened up, private players from India and abroad entered the Indian life insurance market and the whole complexion of the game has changed. Liberalization and globalisation on the financial and insurance sector has allowed the participation of foreign and private player to enter the life insurance markets with their Indian partners. Most of the foreign insurers have joined within the local market. India offers immense possibilities to foreign insurers since it is the world’s most populous country over a billion people. The customers have now more option to choose from different insurance products & services. So, in order to capture the life insurance market the insurance companies have to focus on modern marketing approach to retain their existing and attract new customers. At this critical juncture innovative promotional measure of LICI is the need of hour while marketing the services. A new and innovative strategy will be best fit to improve the level of existing performance of LICI in the competitive market. It is with this background that the present research

With the whole hearted support to economic reforms.823 hundred thousand by the end of year 2008-09. ordinary branch of the insurance companies is involved in carrying out the marketing activities. there has been a noticeable extension of the medium to encompass alternative marketing Organisation thus pushing further the movement of insurance companies towards the formation of financial supermarkets. *********************************************************************** * INNOVATIVE MARKETING OF LIFE INSURANCE CORPORATION OF INDIA IN THE GLOBAL MARKET INTRODUCTION: YOGAKSHEMA VAHAMYAHAM. Your welfare is our responsibility is what LICI proclaims through its motto. Although selling medium of insurance companies’ has been predominantly that of corporate agents and brokers. the LICI has come a long way. Ever since the life insurance industry was nationalized in 1956 and the life insurance corporation (LICI) born on September 1. the marketing scenario of insurance sector has become of Government Company in competition with private sector and partnership by government. The existing life insurance marketing scenario has changed with emergence of globalisation. To borrow the motto from their competitor AVIVA they need to think about exercising ‘Kal Par Control’ as they are slowly losing market share to other entrants. while demands specialization. and sophistication in marketing efforts. The insurance giant is now a player rather than the player in the life segment as was the case prior to nationlisation in 1956.paper has been conceived and it takes into account the ground realities that exist today for LICI and what marketing strategies it is adopting to cope up with competition at national and international levels. The monopoly status of LICI is being threatened. life insurance business is operating within a complex competitive environment. LICI now has to worry about its won ‘yogakshema’. the monopoly grew in size and stature with every passing decade.57. From 57 hundred thousand policies in operation in 1957 to 2. the famous words form lord Krishna’s discourses at Kurukshshetra. Today. 1956. is the motto LICI has convincingly used all these years in its monopoly avatar as the sole life insurer. 2 . Towards this end. of late.

To examine the short coming in the marketing strategies of LICI. to retain its market leader status the LICI needs to acquire competitiveness. market. In view of the above. CHANGING SCENARIO OF LIFE INSURANCE MARKET: As things stand today LICI is still on strong footing vis-à-vis its competitors. However. The information and processing of all other system ultimately contribute to the accomplishment of the goals of the marketing system carried out to achieve its goals maximum profit by increasing consumer’s satisfaction and choice with quality products and services at a reasonable price. The specific objectives of the study are: • • • • To review the changing scenario of life insurance market in the competitive To highlight the challenges of LICI in the competitive market. In order to achieve the objectives. LICI have to re look into its marketing strategies. With new 3 .In this critical juncture with the maturing of world trade Organisation and carrying forward the second generation reforms as it is named in India. To advocate the suggestion to improve the performance of LICI in the global globalisation challenges. an attempt has been made to study the innovative marketing of LICI in the global competition. The publication of insurance times and other life insurance journal are considered. Data so collected are analyzed and interpreted theoretically to draw the inferences. METHODOLOGY: The study is completely based on empirical approach. data base is both secondary as well as primary. The proposed topic is targeted to examine the innovative promotional measures of marketing of LICI with a view to advocate the suggestions to meet the globalization challenges. OBJECTIVES OF THE STUDY: Marketing system is the system that integrated all other system in an organization. The primary data are collected by personnel interviewing of various corporate agents and officials of LICI locally accessible. The secondary data are collected from various periodicals and official gazette published by LICI.

opening up insurance sector to private players was a necessity in the context of globalization of financial sector. airlines. have significant private sector presence. Though LICI still holds 70. Further more.92% (up to 31st march 2009 by IRDA websites) of the insurance sectors the upcoming nature of these private players are enough to give more competition to LICI in 4 . In fact. This complacency now has to go and LICI must opt for marketing insurance as insurance. Some more companies have announced their intentions to join the party and this will increase the existing number of 22 players. the globalization of insurance has been done. The new players have improved the service quality of the insurance.contenders entering the fray there is need to act more market savvy. As a result LICI down the years have seen the declining in its career. Insurance consciousness as such was largely missing from the market. Its impact has to be seen in the form of creating various opportunities and challenges. The new entrants with their aggressive penetration strategies are at least contributing to the cause of LICI by creating insurance consciousness in the minds of a wide cross section of consumer.. Since the advent of the private players in the market the industry has seen new and innovative steps taken by the players in the sector. continuing a state of monopoly in provision of insurance was indefensible and therefore. The monopolistic character of the sector with the LICI as the sole player has changed into a vibrant multiplayer competitive industry. The market share was distributed among the private players. While nationalized insurance companies have done a commendable job in extending the volume of the business. power etc. insurance agents were promoting policies on life as instruments of returns and tax saving. If traditional infrastructural and semipublic goods industries such as banking. not only in comparison to other countries but also in relation to its own needs. Privileged by its monopoly status LICI did not bother much about creating an insurance consciousness. Moreover. Rather than getting bogged down by competition the LICI needs to see the challenge as an opportunity. Insurance in India was largely misconstrued as an investment or a tax saving device rather than a security hedge. the scenario is that only around 20 per cent of the population has any insurance cover worth its name. as its objective was to insure any how that was happening. such a cover meets only 25 percent of their needed and affordable insurance cover. telecom. India is utterly underinsured.

61 29.08 Source: .92.90 74.25 18.75 81.33 14.46 97. The following table-1 holds the market share of the life insurance industry.98 99.the near future.39 70. % (2008-09).29 90.92 Private Sector 0 0.67 85. TABLE – 1 Market share of Life Insurers (%) Year 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 LICI 100 99.02 0.99 95.01 4.54 2.71 9.IRDA various issues CHART –A MARKET SHARE OF LIFE INSURER 5 .10 25. LICI market share has decreased from 100 %( 1999-2000) to 70.

namely ECGC and AIC. there were forty-four insurance companies operating in India.ECGC and AIC ** Includes two Standalone Health Insurance Companies – Star Health & Allied Insurance Co. 8 are in the public sector (two specialised insurers. Of these forty-four companies. four in general insurance and one re-insurer). source: IRDA 6 . and Apollo DKV Health Insurance Co. TABLE – 2 NUMBER OF REGISTERED INSURERS IN INDIA Type of business Life Insurance General Insurance Re-insurance Total Public Sector 1 6* 1 8 Private Sector 21 15** 0 36 Total 22 21 01 44 * Includes specialized insurance companies .120 100 80 Percentage 60 40 20 LICI 0 1999-00 2001-02 2003-04 2005-06 2007-08 2008-09 2000-01 2002-03 2004-05 2006-07 PVT YEAR By end March 2009. of which twenty-two were in the life insurance business and the remaining twenty-one were in general insurance business and one national re-insurer. one in life insurance. The remaining thirty-six are private sector companies.

002 0.87 206.04 601.22 2343. Private life insurance companies have grown by 25.55 253.47 LICI ING VYSYA HDFC STD LIFE BSLI ICICI PRU KOTAK LIFE TATA AIG* SBI LIFE BAJAJ ALLIANZ MNYL MET LIFE RELIANCE LIFE AVIVA SAHARA — 0.06 1691. 2009.47 2363.59 15356.49 4302.85) 425.66 1147.01) 1442.21 72.99 224.71 7912. 51561.31 2714.52 3857.22 crore up to March 31.35 5622.04 crore as against a total premium of Rs.22 (20.85 880.32 3133.19 2747.20 2855.62 40.87 1776.25) 338. 201351.53 106.26 crore during 2008-09 as against a total premium of Rs.01% for 2008-09 with a premium of Rs.66 2006-07 127822.43 81.18 2928.32 81.99 971.04 (5.54 1992.26 1996. by registering a total premium of Rs.21 600.68 413.71 1004.58 788.38 1569.74 2005-06 90792.27 27.19 1075.14 9725.87 4858.47 13.19) 1158.88 143.65) 21.83 143.9 9 (17. LICI registered a growth of 5.49 2008-09 157288. including group business.8 4 (40.The total industry had a total premium including group business (addition of regular premium.14 2046.28 5564.63 915.29 (18.16 148.54 3225.10 % in total premium income. as against a total premium of Rs.82 466.79) 707. 64503.91 1259.51 1367. Crore) 2000-01 34892. (See Table-3) TABLE – 3 TOTAL LIFE INSURANCE PREMIUM INSURER (Rs.19 13561. 157288.23 51.44 1891.17 96.28 492. 149789.4 crore in the previous financial year 2007-08.50 7212.05 621.42 crore in 2007-08.13 205.42 1.74 1500.59 7.18 1001.32 5.47 — 2004-05 75127.99 crore for 2007-08. single premium and renewal premium) of Rs.39 69.02 — 2002-03 54628.92 417. 22179.86 686.69 4577.00 2007-08 149789.16 — — — — 7 .10 10624.56 3272.49 (9.64 4932.97 — — — — 0.60 1159.91 6.68 4261.16 497.

2007-08.17 7.33 — — — — — — 181.01) 64503.49 11. individual premium accounted for Rs.15) Source: . While the premium underwritten by LIC increased by 19.3065.9049 — — — 436.22 (25.59 per cent. 4) 1 Crore = 10 Million During the first quarter of the current financial year of 2009-10 life insurers underwrote a premium of Rs.10) 221791.4147.13 per cent over the corresponding period of the previous year.14456.45 34898.65) 82854. Of the total premium underwritten.10308.08) 156075.68 crore and the private insurers accounted for Rs.93 crore came from the group business.4344. 2) Figures in the bracket represent the growth over the previous year in percent. (IRDA) Note: 1) *Figures revised for the year 2002-03 and include the Group business.97 296.05 118.Annual report 2005-06. individual business was Rs.57 per cent in the case of private insurers.8 — 15083.40 crore and the remaining Rs.42 (82. 2008-09. In respect of LIC.14320. 3) — represents business not started.5963.31) (27.5427.00 (87.28) (24. marginally higher than Rs.19) 105875.78 — — — — — 358.04 crore.78) (10.06 (310. The corresponding figures for private insurers were Rs.76 — 28253.50) 201351. The number of policies written by life insurers grew by 12. premium of the private insurers declined by 20.55 — 7727.17 360.41 3.59) 55747.90 crore 8 .06 per cent.47 — 1119.19 BHARTI AXA FUTURE GENERALI IDBI FORTIS CANARA HSBC DLF PRAMERICA AEGON RELIGARE STAR UNION DAIICHI PRIVATE SECTOR — 6.8 4 (47. LIC accounted forRs.38) — 51561.66 crore.1082.41 2.51 (147.20 crore in the comparable period of last year.64 crore and group business was Rs.99 per cent.21 50.26 Total (11.41 152.60 318.75 crore and Rs.4 1 (29. there has been a decline of 6.SHRIRAM LIFE — — — — — — — — — — — — — — — — — — — — — 10. While the number of policies written by LIC increased by 22.54 (95.9028.34 crore.37 31.

In the rural sector.13 crore.16 per cent over the previous period. • • The approach of marketing in the insurance sector has shifted from production Trust and faith are essential for insurance business. The emerging challenges faced by LICI are: • • • The opening up of the insurance sector for foreign and private participation is LICI is gradually loosing the status of being a monopoly undertaking and thereby. the insurers underwrote 21. • • The changing business environment market by deregulation and decontrol require Consumers have become more aware today because of quick dissemination trained and specialized corporate agents for increasing new business. In a competition market and selling orientation stage to that of marketing and social responsibilities stage. Also the competition from foreign insurance companies will be very tough.72 lakh. (Source: IRDA website. building trust and faith in the minds of potential customers is a real challenge today.71 crore.86 lakh lives in the social sector with a premium of Rs.18 lakh and private insurers 56. This has trusted pressure on the insurance companies to introduce anew schemes with more economic benefit as well as risk cover. The scope of borderless business demands specialized marketing efforts to face resulting contraction of the target market of LICI. Of the total lives covered under the group scheme. Developing insurance consciousness amongst the community is essential in the global market. the developed markets abroad. 9 .90 lakh recording a growth of 60.1455. IRDA Annual Reports) CHALLENGES OF LICI IN THE COMPETITIVE MARKET: The legacy of economic reforms is being carried forward to the new millennium but with human face.89 lakh policies with a premium of Rs. LIC accounted for 33. The life insurers covered 37. The numbers of lives covered by life insurers under the group scheme were 89. information through electronic media including internet.respectively. • The departure from socialist pattern of society toward market economy expects the LICI to adopt itself to changing economic scenario and revise its marketing approaches. profitability will fall subsequently. As a result the challenges before LICI are imperative.34.

the LICI failed to create awareness about the utility of life insurance among common people. • • Generally. IN fact. Still there exists lots of short coming or lapses in marketing activities. will be a suicidal. the following suggestions are note worthy: 10 . it continued. • So far selling of LICI products and services has been automatic to some extent owing to monopoly nature of the business. This is one of the important factors that may be serious problem ahead of LICI. implications for claim settlement in LICI business. which is obsolete today. the coverage of LICI business is not mass based. life insurance policies are long term. mainly because of the growing business performance as it maintained a monopoly status. We cannot be indifferent to these challenges placed before LICI. • The high establishment cost including massive labour force is a barrier for LICI’s today in the competitive market. marked by various challenges and limitations. which discourages many of the Another limitation is the procedural difficulties and formalities with legal prospective customers. Thus. In the backdrop of the liberalization and globalisation. much has not been done to tackle these challenges.SHORTCOMING IN THE MARKETING STRATEGIES OF LICI: The challenges cited above need to be met adequately for the survival of LICI in the years to come. although many reforms and amendment have taken place in life insurance business. Also the LICI is not yet recognized to tap the potential market while rivalry started crippling in. This is mainly due to lack of publicity and advertisement. So far. REMEDIAL MEASURES AND SUGGESTIONS: LICI can no longer continue with its traditional marketing approach. the limitations of LICI were not duly recognized. With the opening up of insurance sector for the private participation such selling will be difficult. the empirical approach by LICI. • In the years went by. The following important short coming or lapses that require to be addressed properly: • The schemes or services of LICI are target specific only certain section of people belonging to higher income groups are the potential customers for LICI. In the preceding eras.

the basic backbone of insurance. with the declaration of the IRDA Act. • Imparting knowledge is indispensable but without training it is not sufficient. credibility and wide reach the LICI enjoys. The vast and under explored rural market is a case in point. Thus. Only LICI can tap the rural market effectively by using its huge sales force. and promotion as a par of their sales and marketing activity. stands revised. This is one area in which LICI can take a big lead over its competitors. • Under the present circumstances inter company a relationship within the industry is of paramount importance. LICI shall have to re-look into these aspects. LICI shall also have to re-think of collaborating with Indian and international players. Further. • The customer of today is having more to choose in terms of policy instruments as new players have come up with innovative product line. These are indispensable pillars of market mix involving products. LICI shall have to come up with new and innovative schemes with more economic benefits to the policyholders. pricing. tapping unexplored markets will not be difficult. Only then common people will be attracted towards life insurance. Naturally.• Today’s insurance market is very competitive under such a market condition quality and a reasonable price of products and services are prerequisite. 1938. Quality of services is the prime consideration of insurance business now. • Publicity and advertisement is the elements of marketing communication process. • In addition to the schemes and policies already in the market. • Given the brand equity. the insurance Act. Presently the employees of LICI have the knowledge about the subject but they are lack in rigorous training which is compared to that of “knows swimming but never swam”. For this purpose merger and amalgamation of companies may be encouraged. according to sections 32B and 32C of the IRDA Act it has been made obligatory for life and nonlife insurers to undertake a certain percentage of business in the rural market. the policies issued by LICI need to be seen in these light and suitable steps taken to customize the 11 . Also short term policies will be very effective to attract more buyers. visibility. The employees and officers of LICI shall have to acquire practical training or on the job study. In order to expand markets or to maintain existing markets it is essential for LICI to make sufficient investments in this head. 1999. Now it is the time for integrating knowledge and training for maintaining or improving upon the existing level of performance.

information related to them is being communicated completely there by putting the customer in a quandary. when challengers were not there LICI could get a way with whatever products it had to offer. In this regard LICI should think and prove its leader’s position in the market. The ultimate objective of reforms is to 12 . One possible solution to this problem could be having in place a better motivational system that takes care of both material and non material needs of the agents who would propel them to look at the long term perspective rather than the short term interests like an immediate high rate of commission. Whatever be the free part of it. it is a great achievement. When a new policy is being introduced in the market it sounds as if it is a competitive product rather than a genuine useful product of customer. policyholders usually do not read the policy documents for the simple reason that the way the clauses are framed therein they do not make sense to the average reader. In India. The Indian customer thus has a whole new range of insurance products to choose from. The customer had no inkling as to what insurance could offer by way of products. the policyholder is being made to go through the clauses or the policy conditions and to this extent alone. The sudden rise in the number of players has brought about innovation in product development and distribution channels. there is choice for every societal segment. As the new players are coming up with their innovative products the customers’ expectations are rising. The liberalization transformed the industry’s outlook towards the huge Indian market. • In a business like insurance where credibility and trust are essential ingredients for success. CONCLUSION: The insurance industry in India has witnessed a sea change ever since it was opened up to private players in 1999. New players are introducing the free look in period. Hitherto. Entry of new players has changed all this. he was satisfied with whatever he could get.products. The LICI must make sure that its products and their implication are properly understood by the customers. • While some new products have been introduce in the market. Obviously. Even though LICI is the market leader. The Life Insurance Corporation of India needs to welcome competition with open arms and treat it’s as an opportunity rather than a threat. it still needs to change its product mix to suit customer needs. • In an insurance contract the clauses must be simple and easy to understand.

6. Indian Economy. New Delhi. Indian Financial System. Dutta Ruddar & KPM Sundaram. Himalaya Publishing House.Second Edition 2006. Diphu Govt. P. because operational excellence would not only be the lone criterion for successful operator. Insurance Principles & Practice. India 2007 & India 2008 Publications Division Ministry of information & Broadcasting. New Delhi. business is rediscovering growth.Bhole. Rajiv Jain’s. changing the need into their want and turning the want into demand which the6 must be able to satisfy. affordable and understandable products and services. elevating performance standards. both individuals and institutions. College Committees Reports ..S. S Chand.M. 3.K. ************************************************************ References:Books:1. 9. IRDA Journal Various Issues.fourth edition. of India.increase insurance-density and insurance penetration levels by designing more tailor made products for customers. Govt. Ltd. DGCCS’S Journal of Commerce. not living by myths but a fundamental rethink of the total modus operandi and basis of competing in the competitive global market. Recommendations & others:- 13 . New Delhi.N. New Delhi. Thus. 7. Journals & Periodicals:8. Vol –V No. to conclude. LICI now needs to use its reach and visibility to penetrate deeper into the Indian market.N.Sultan Chand & Sons.Vidhi Publication (P) Ltd. ICAI Journal Various Issues. the Indian Financial System. Vasant Desai. 2. L. The challenge for the LICI is three fold creating the need where it is not there. Mittal. developing a different momentum of business through client relationships.Mishra. Financial Institutions and Markets.Varshney & D. LICI needs to rebuild trust with the public and to deliver sustainable. Insurance Law & Practice. The McGraw-Hill Companies. Marketing mix will have to be more competitive establishing creditability sounding earnestness. 10. M. 4. New Delhi.Chand & Co.1 2008.Mumbai. 5.

LICI annual report various ************************************************************ 14 . www. of India. www.indiacore. IRDA annual report various issues Websites:14. www.lici. Report of the committee on reforms in the insurance sector (Malhotra Committee) 12.html 17.11. 18. www. www.

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