MINOR PROJECT REPORT

ON

“MARKETING OF LIC INSURANCE”

Submitted in partial fulfillment of the

requirement of.

Bachelor Of Business Administration (BBA)

Guru Gobind Singh Indraprastha University Delhi

Submitted to : Dr Hakimuddin khan Submitted

by; Aman Sharma

Enrollm

ent No.; 16421401710

BBA-

III – B (EVE)
 JAGANATH INTERNATIONAL MANAGEMENT SCHOOL

VASANT KUNJ , NEW DELHI 110070

CERTIFICATE

This is to certify that Aman Sharma is a bonafide student of this institute pursuing BBA full time
programme of three years duration which is in affiliation with Guru Gobind Singh Indraprastha
University.

And has undertaken a minor project report on “MARKETING OF LIC INSURANCE” in partial
fulfillment of BBA degree as required under the rules of the university. The work done by him is
original and have not been submitted(in full or part) for any degree or diploma any where

Signature of Guide

Date :
 ACKNOWLEDGEMENT

The present work is an effort to throw some light on “MARKETING OF LIC

INSURANCE”. The work would not have been possible to come to the present shape
without the able guidance, supervision and help to me by number of people. With
deep sense of gratitude I acknowledge the encouragement and guidance received by
our faculty guide, Dr Hakimuddin Khan.

I convey my heartfelt affection to all those people who helped and supported me
during the course of completion of my Project Report.

AMAN SHARMA

16421401710
 CONTENTS

CHAPTER-I

i) Introduction

ii) Objectives of the study

iii) Purpose of the study

CHAPTER-II

Company’s Profile

CHAPTER-III

Research methodology

CHAPTER –IV

Data analysis and interpretations

CHAPTER-V

Findings

Recommendations

Conclusion

Limitations of the study

Bibliography

LIST OF GRAPHS & CHARTS

1. Fig 2.1-map showing areas of Operations of LIC insurance company………16

2. Fig 2.2-organizational structure of LIC Company……………….20

3. Fig 4.1-graph showing the LIC housing finance………………….30

4. Fig 4.2- pie chart showing market position of LIC……………….32

5. Fig 4.3-pie chart showing the Achievements of LIC……………..34

6. Fig 4.3-graph showing the revenues of LIC………………………37

CHAPTER - 1
INTRODUCTION
Marketing in Insurance

Insurance a financial service for collecting the savings of the public and providing them with risk
coverage caused due to uncertain events like death, pension, retirement or theft, fire, accident, etc.
which results in financial losses. The main function of Insurance is to provide protection against the
possible chances of generating losses. It eliminates worries and miseries of losses by destruction of
property and death.

The term Insurance Marketing refers to the marketing of Insurance services with the aim to create
customer and generate profit through customer satisfaction. The Insurance Marketing focuses on the
formulation of an ideal mix for Insurance business so that the Insurance organization survives and
thrives in the right perspectives.

Marketing in the Insurance Industry

Over the last ten years, advertizing spending rose significantly but the spend slowly shifted from the
traditional print and broadcast media, to niche marketing and the internet. This general growth was
fueled by competition for market share and, because the insurance industry was highly profitable,
more money could be diverted to the marketing budget. Today, the level of spending cannot be
maintained. In fact, it has slowed quite significantly over the last eighteen months. There are two
reasons for this. The market for insurance has peaked and is starting to contract in all segments as a
looming recession forces policy holders to trim their budgets. Secondly, the price competition
between the major insurers has reduced the level of profitability at a time of slowing revenue
growth.

Despite this, the four leading insurers – Allstate, GEICO, Progressive and State Farm – have
maintained brand awareness and their marketing activities pressure their smaller rivals to maintain
their marketing momentum to avoid losing market share. However, there is a potential problem.
The growth of the internet has turned the standard policies of auto, health and homeowners into
commodities. It has become easy for policy holders to obtain comparative quotes through sites like
this. Policies can be written over the internet without the parties ever having to meet (whether
directly or through an agent). So the advertising has to shift to differentiate the insurers and their
policies. Price on its own is not a key feature given the ease with which prices can be compared.
That means a focus on other elements such as claims handling and customer service. The internet is
not passive. There are now customer sites which carry stories of poor service. The insurance
industry therefore has to spend less on marketing and more on actually delivering better service.

This has serious implications for media that have traditionally relied on advertising revenue from
the advertising industry. Newspapers in particular have seen a dramatic drop in their insurance ad
revenue. The new campaigns focus on market segments where growth is predicted. More specialty
products are being offered and Spanish language advertising to the Latino market has been
growing. We can therefore expect to see a further reduction in marketing spend as the reality of a
recession bites into consumer confidence.

Marketing is a managerial process by which individuals and groups obtain what it needs. Marketing
is a social and a managerial process offering and exchanging products of value with others.
Marketing relies on needs and wants, products, demand, value, cost and satisfaction.

Marketing process:

1. Analysis ~ where we are

2. Objectives ~ where we want to see us after some time
3. Strategies ~ how to achieve
4. Tactics ~ techniques application
5. Implementation ~ how to apply
6. Controls ~ control our market.

What is marketing mix? What are the elements of marketing mix?

The marketing mix is the combination of marketing activities that an organization engages in so as
to best meet the needs of its targeted market. Marketing mix is composed of large battery of devices
which might be employed to induce customers to buy a particular product. In other words,
marketing mix is the blend of all the marketing efforts around the 4 ingredients: product, price,
promotion, place, and these variables are inter-related and all revolve around potential customer’s
satisfaction as a focal point.
The marketing mix includes sub-mixes of the 7 P's of marketing i.e. the product, its price, place,
promotion, people, process & physical attraction.

1. PRODUCT

A product means what we produce. If we produce goods, it means tangible product and when we
produce or generate services, it means intangible service product. A product is both what a seller
has to sell and a buyer has to buy. Thus, an Insurance company sells services and therefore
services are their product.

The product is the focus of making and marketing efforts. Product is the sum total of physical and
psychological satisfaction it provides to the buyer. For instance, a car in a physical sense, a
fabricated conveyance powered by gasoline engine which carries people from one place to another.
The product mix has the following important variables:

{a} product line and product range

{b} product design
{c} product package
{d} product quality
{e} product labeling
{f} product branding
{g} after sales services and guarantees

2. PRICE

Price is a major marketing tool and helps in directing the product to a specific consumer segment.
Price is the value of a product expressed in terms of money. Price is a powerful instrument in which
both buyers and sellers are keenly interested. The price has the important following variables:

{a} pricing policies and strategies

{b} terms of credit
{c} terms of delivery
{d} margin
{e} resale price maintenance

In the insurance business the pricing decisions are concerned with:

i) The premium charged against the policies,
ii) Interest charged for defaulting the payment of premium and credit facility, and
iii) Commission charged for underwriting and consultancy activities.

3. PLACE

Place or distribution mix stands for the marketing arrangement for the smooth flow of the goods
and services from the producers to consumers; it is concerned with the place, time and possession
utilities. In other words, it signifies two things namely; physical distribution and channels of
distribution.

The place mix has the following important variables-

a} Transportation
b} warehousing
c} inventory levels
d} the channels of distribution

Another important dimension to the Place Mix is related to the location of the insurance branches.
While locating branches, the branch manager needs to consider a number of factors, such as smooth
accessibility, availability of infrastructural facilities and the management of branch offices and
premises.

4. PROMOTION

Promotion mix is the communication mix which deals with the personal and impersonal
persuasive communication about the products or service of the manufacturer. The promotion
mix has the following important variables;

a) Personal selling
 b) Advertising
c) Sales promotion
d) Trade fairs and exhibition
e) Public relations

The insurance services depend on effective promotional measures. It is essential to have

both personal and impersonal promotion strategies. In promoting insurance business, the
agents and the rural career agents play an important role. Due attention should be given in
selecting the promotional tools for agents and rural career agents and even for the branch
managers and front line staff.

5. PEOPLE
Understanding the customer better allows designing appropriate products. Being a service
industry which involves a high level of people interaction, it is very important to use this
resource efficiently in order to satisfy customers. Training, development and strong
relationships with intermediaries are the key areas to be kept under consideration. Training the
employees, use of IT for efficiency, both at the staff and agent level, is one of the important
areas to look into.

6. PROCESS
The process should be customer friendly in insurance industry. The speed and accuracy of
payment is of great importance. The processing method should be easy and convenient to the
customers. Installment schemes should be streamlined to cater to the ever growing demands of
the customers. Technology (IT and Data houses) can either complement or supplement the
channels of distribution cost effectively. It can also help to improve customer service levels.
The use of data warehousing management and mining will help to find out the profitability and
potential of various customers product segments.
7. PHYSICAL DISTRIBUTION:
Distribution is a key determinant of success for all insurance companies. Buyers prefer a face-
to-face interaction and they place a high premium on brand names and reliability. Finance
companies and banks can emerge as an attractive distribution channel for insurance in India.
Banks hope to maximize expensive existing networks by selling a range of products.

Objective of study

1. To understand the relationship between customers (who demand the product) and the
suppliers or manufacturers (who produce the product).
2. For studying the various marketing strategies for different fields like advertising, promoting,
sales and so on.
3. For understanding the company’s structure and functioning among various departments like
finance, accounts, HR, etc better.
4. To study needs wants and expectorations of both customers as well as the sellers.
5. To study the marketing competition, channels of distribution and various strategies opted by
the marketing companies regarding products and prices.
PURPOSE OF THE STUDY

The title of my Project is “MARKETING OF LIC INSURANCE”. The purpose of the study which
I have done is to carry out an in-depth analysis of the MARKETING which is being practiced in
most of the corporate, viz. LIC. The basic purpose is carried on with an intention to reduce the
study in the form of a report which is submitted in the partial fulfillment for the Award of Degree of
BBA (Banking & Insurance).
CHAPTER- 2
COMPANY’S PROFILE
 MINOR PROJECT REPORT ON LIC

NAME - LIC (Life Insurance Corporation of India)

ADDRESS -LIC Customer Zone Mumbai

M/s Mayfair Housing Pvt.Ltd.
9, Mayfair Meridian, Near St.Blaise Church,
Caesar Road, Andheri (W),
Mumbai-400058

ADDRESS OF REGISTERED OFFICE- 1rst floor Yogakeshema Centre Office, Jeevan Bima
Marg, P B no. 19053, Nariman Point, Mumbai-400021, Maharashtra, India.

PHONE NO. 022-26766221

Email ID - customerzone_mumbai@licindia.com
GEOGRAPHICAL areas of Operations:

Fig 2.1-map showing areas of Operations of LIC insurance company.

HISTORY OF LIC

• 1993 – LIC was established;

• 1994 – The company started selling Australian productions to Chinese boasters and found a
number of agents in China. Such organizations as CCTV, and Jenny Cornish Media became
partners of LIC;
• 1995 – LIC becomes the exclusive representative of the Australian Broadcasting
Corporation in China and starts to establish its local network;
• 1996 – LIC becomes the exclusive representative of Film Australia, SBS and other media
companies in China;
• 1997 – First daily timeslot for broadcasting all over China is produced. The development of
radio, advertisement and print media was initiated;
• 1998 – Daily timeslot The Tales of Fabulous Nature began broadcasting on 121 TV stations
around China. LIC Production wing grew significantly;
• 1999 – LIC became the production partner of the Discovery Channel;
• 2000 – A new daily timeslot The World Odysseys was created. A contract was signed with
the Chinese Television Artists' Association. The Hong Kong office was established;
• 2001 – A syndicated daily timeslot SAGA started, covering more than 90% of China’s
population. In this year LIC presented nearly 22000 hours of programs sourced from 14
different countries around the world. LIC Advertising wing showed extensive growth. The
Shanghai office was established;
• 2002 – Commercial success of SAGA. LIC’s Publishing Department starts growing;
• 2003 – LIC China’s team exceeded 140 people in its four offices in Beijing, Shanghai, Hong
Kong and Sydney;
 • 2004 – Company’s first production, a six part series titled “China From Within” launched
on the international market. LIC opened its Travel Department;
• 2005 – LIC started investing the revenues from distribution of foreign documentaries in to
producing Chinese documentaries. LIC’s Cultural wing gets rapid development;
• 2006 – SAGA becomes a country-wide recognized brand. The International Education
company is established within LIC. Opening of Shenzhen office marked further expansion
of company’s business;
• 2007 –LIC became the official agent of Animal Planet Channel responsible for every aspect
of the channel’s broadcast in China, including program scheduling, distribution and
advertising. The Vanguard timeslot broadcasts started. LIC International Business Center
was created;
• 2008 – SAGA of World Magazine began its commercial distribution. Two new LIC’s
timeslots appeared on Chinese TV – Enjoyable Creation and Chinese Legend. An award
winning documentary PUYI – the Last Emperor of China was produced in cooperation with
Liaoning TV;
• 2009 – A co-operation was established with RAI TV (Italy) and became its agent in China.
In the course of the last 5 years LIC China C grew quickly and produced 5 high quality
documentary films following its first production in 2004.

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."

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

Ambition

To be on the top 3 private life insurers in gross profit premium.

To be 1 of the top two companies in terms of profitability.
To be more customer focused and reduce complexity

Market Share

Insurance giant LIC had a healthy market share of 74.18 per cent in the last financial year with a
premium collection of Rs 55,934.6 crore while nearly a dozen private insurers accounted for the rest
25.82 per cent.

However, in terms of number of new policies, the state- owned company enjoyed a much better
market share of 82.83 per cent with 3.82 crore new policies, LIC Chairman T S Vijayan said in his
presentation of the financial performance in 2006-07.

"In total LIC planned to invest around Rs 117 lakh crore this financial year of which Rs 52,000
crore had been already invested," he said.

LIC's investment in the capital market as on March 31, 2007 stood at Rs 1,24,643 crore and it
intended to invest between Rs 10,000 to 12,000 crore in equities and preference shares in the
current fiscal.

Till March 31, 2007 LIC's total investment was of Rs 6,13,266.58 crore of which 2,72,497.82 crore
was invested in Central Government securities, Rs 64,284.80 crore in State Government and other
approved securities, Rs 73,746 crore in infrastructure and social investments and Rs 44,217 crore in
bond and debentures.

The popular unit-linked insurance plans (ULIP) contributed 80 per cent in LIC's new business
premium of Rs 39,541 crore as compared to the traditional business products....
Fig 2.2-organizational structure of LIC Company

COMPANY’S TURNOVER

In a bid to maintain its high growth momentum, the state-owned Life Insurance Corporation (LIC)
has set a target of mobilizing over Rs 20,000 crore of new premiums in 2002-03.

The target for its sum assured is pegged 25 per cent higher than the last fiscal’s mobilization of Rs
1, 87,000 crore. The institution has ended the last fiscal with a total first premium income of over
Rs 15,000 crore.

Acting LIC chairman A Ramamurthy said the institution wants to sell around 2.65 crore policies
this financial year.
The institution is also planning to launch some ban assurance products after regulations on allowing
banks to sell insurance products are announced. LIC has already tied up with Oriental Bank of
Commerce, Central Bank, Nedungadi Bank and Bank of Punjab.

LIC has recently opened its first call centre in Mumbai. In the next few days, it also plans to open
seven more in major cities like Ahmadabad, Delhi, Bangalore, Hyderabad, Pune and Chennai.

Initially, some three crore out of the LIC’s existing 13 crore policyholders can make enquiries
through the call centre. It is also setting up videoconferencing facilities at its zonal offices. LIC also
plans to open a research cell to undertake comparative studies of its products and the private sector
ones.
CHAPTER 3
RESEARCH METHODLOGY
RESEARCH DESIGN
A research design is a structure of any scientific work. It gives direction and systematizes the
research. The method you choose will affect results and findings and can help in understanding a
phenomenon. There are basically 2 approaches, quantitative and qualitative. There are various
research designs like descriptive, observational, experimental, and so on.
A research design is the arrangement of conditions for collection and analysis of
Data in a manner that aims to combine relevance to the research purpose with economy in
procedure.”
In fact, the research design is the conceptual structure within which research is conducted; it
constitutes the blueprint for the collection, measurement and analysis of data.

Which method to choose?

What design you choose depends upon the different factors:

(a) What information you want? The aims of the study.

 (b) The nature of the phenomenon- is it feasible to collect the data and if so, would it be.

(c) How reliable should the information be?

The research design is comprised of the descriptive research studies. Descriptive research studies
are those studies which are concerned with describing the characteristics of a particular individual,
or of a group. Most of the social research comes under this category. In descriptive studies, the
researcher must be able to define clearly, what he wants to measure and must find adequate
methods for measuring it along with a clear cut definition of ‘the related topic. Since the aim is to
obtain complete and accurate information in the said studies, the procedure to be used must be
carefully planned.
The research design has focused attention on the following:
1. Firstly, formulated the objective of the study.
2. Designed the methods of data collection.
3. Selected the sample.
4. Collection of the data.

In a descriptive/diagnostic study the first step is to specify the objectives with sufficient precision
to ensure that the data collected are relevant. If this is not done carefully, the study may not provide
the desired information. Then comes the question of selecting the methods by which the data are to
be obtained. In other words, techniques for collecting the information must be devised. Several
methods (viz., observation, questionnaires, interviewing, examination of records, etc.), with their
merits and limitations, are available for the purpose and the researcher may user one or more of
these methods. The data collected must be processed and analyzed.
A descriptive methodology of research design involves the following suggested steps:
1. Choosing the approach.
2. DE terminating the types of data needed.
3. Locating the source of data, either internal or external
4. Choosing a method of collecting data, either primary or secondary data.
DATA COLLECTION
Data collection is an important aspect of any type of research study. Inaccurate data collection can
impact the results of the research study. Data collection is the key activity in the implementation of
a marketing strategy and it must be carefully planned to provide information. There are various
methods of data collection. The data collection process can be relatively simple depending on the
type of data collection tools required and used during the research.
As such the researcher must judiciously select the method/methods either primary or the
secondary data collection, for his own study, keeping in view the following factors: Nature, scope
and object of enquiry, Time factor, Precision required. Primary data is that data that is not already
available. The researcher collects it first-hand. Methods used are questionnaires, interviews, focus
groups, observation and others.

The second stage of data collection of the project reports is based on the secondary data.

Secondary data are data collected for some purpose rather than the problem at hand. Secondary
data means data that are already available i.e., they refer to the data which have already
been collected and analyzed by someone else. When the researcher utilizes secondary data, then he
has to look into various sources from where he can obtain them. In this case he is certainly not
confronted with the problems that are usually associated with the collection of original data.
Secondary
Data may either be published data or unpublished data.
They data used in this project report study is the published data. Detailed study is made in
insurance sector on the basis of the data available in:
Company records and statistics,
Records and publications of various associations connected with the business and industry,
Technical and trade journals,
Reports prepared by research scholars,
Books, magazines and newspapers, and other sores of published information.
Researcher must be very careful in using secondary data. He must make a minute scrutiny
because it is just possible that the secondary data may be unsuitable or may be inadequate in the
context of the problem which the researcher wants to study.

PRECAUTIONS IN USING SECONDARY DATA

1. The scope and object of the enquiry conducted by the original person/ research organization.
2. The sources from which the information was obtained.
3. The method of collection adopted.
4. The degree of accuracy desired.
5. The suitability of their application to the given problem.

USES OF SECONDARY DATA

1. It is cheap and inexpensive.
2. It is easily accessible.
3. It is already available.
4. It saves time and efforts.
5. It is unobtrusive.
6. It avoids data collection problems and provides a basis of comparison.
7. It may allow the researcher to cover a wider geographical or temporal range.
8. It can allow for larger scale studies on a small budget.

METHODS OF SECONDARY DATA COLLECTION

1. locating the data:
Secondary data can be located by using printed indices, such as American statistics index or the
statistical reference index available at most libraries. There are also online databases of secondary
dat. For example: U.S census.
2. evaluate the data:
Evaluating data is similar to doing a criterion of a published research report. Everything about the
original project that produced the data should be scrutinized to ensure that the project had high
validity and reliability such as: theoretical and conceptual model used variables and hypothesis
posited operational definitions of variables and measures employed sample frame, sampling design
and the data collection strategy and response rate obtained quality control measures which affect the
study.
3. verify the data:
If the data seem valid and reliable, you need to make sure that we have accurate copy of the data,
especially if obtained if obtained through an electronic medium. It includes verifying that the
collected data have proper documentation, have correct number of observations of cases, have
correct number of variables, have correct coding scheme.

INSTRUMENTS OF DATA COLLECTION

1. Internet search, using online resources to gather data for research purposes. This method is
not usually very reliable and requires appropriate citation and critical analysis for findings.
2. Library search and indexing, this technique requires to go through written texts that have
already done similar work and utilizing their researches for our own dissertations.
3. Data collecting organizations, for example Gallup and AC nelson conduct researches on a
recurrent basis ranging in a wide array of topics.
4. Newspapers and magazines, journals and other similar periodicals.

Limitations in use of secondary data

In collection of secondary data there are a lot of problem which are related to assembling of the data
for the users. These problems are as follows:-
1. Low/less accuracy in which is collected.
2. The data which is collected is not reliable all the times.
3. Availability: it has to be seen that the kind of data you want is available or not. If it is not
available then we have to go for the primary data.
4. The data is sometimes not relevant.
5. Less Sufficiency in the data.
CHAPTER 4
DATA ANALYSE AND
INTERPRETATION
LIC market shares in 2010-2011

The market share of the government-run Life Insurance Corporation of India (LIC), in terms of
number of policies in the country, rose to 76.92 percent in 2010-11 from 73.02 percent in the
previous year.

When taking into consideration just the first year premium, LIC's market share rose to 68.70
percent in 2010-11 from 64.86 percent in 2009-10, Minister of State for Finance Namo Narran
Meena said Friday.

The public sector behemoth, which has government backing for all its policies, has registered
growth in its market share for the second consecutive year despite increasing number of private
players entering into the business.
Fig 4.1-graph showing the LIC housing finance
SHARE PRICES OF LIC

BSE

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FINANCIAL POSITION OF LIC

Key Financials Latest Qrtr. Trailing Yr. Full Yr.
• Year End Jun, 2011 Jun, 2011 Mar, 2011
• Sales (Rs.cr) 1362.71 5257.63 4868.95
• Net Profit (Rs.cr) 256.50 1018.98 974.50
• Net Profit Var (%) 21.00 36.00 47.00
• EPS (Rs) - 21.47 20.00
• P/E Ratio - 10.62 11.40
• Operating Profit Margin - 90.81 -
• CPS (Rs.) - - 20.10
• P/C Ratio - - 11.40
• Div% - - 175.00

MARKET POSITION OF LIC

Fig 4.2- pie chart showing market position of LIC

Market Share

Insurance giant LIC had a healthy market share of 74.18 per cent in the last financial year with a
premium collection of Rs 55,934.6 crore while nearly a dozen private insurers accounted for the rest
25.82 per cent.
However, in terms of number of new policies, the state- owned company enjoyed a much better
market share of 82.83 per cent with 3.82 crore new policies, LIC Chairman T S Vijayan said in his
presentation of the financial performance in 2006-07.

"In total LIC planned to invest around Rs 117 lakh crore this financial year of which Rs 52,000
crore had been already invested," he said.

LIC's investment in the capital market as on March 31, 2007 stood at Rs 1,24,643 crore and it
intended to invest between Rs 10,000 to 12,000 crore in equities and preference shares in the
current fiscal.

Till March 31, 2007 LIC's total investment was of Rs 6,13,266.58 crore of which 2,72,497.82 crore
was invested in Central Government securities, Rs 64,284.80 crore in State Government and other
approved securities, Rs 73,746 crore in infrastructure and social investments and Rs 44,217 crore in
bond and debentures.

The popular unit-linked insurance plans (ULIP) contributed 80 per cent in LIC's new business
premium of Rs 39,541 crore as compared to the traditional business products....

LIC’S ACHIEVEMENTS
Fig 4.3-pie chart showing the Achievements of LIC

Achievements

During the 2008/09 financial year, LIC sold more than 35.9 million policies generating a first year
premium income of Rs. 52,953.92 crore (US$ 11 billion) despite the global slowdown (Source:
IRDA). During this period, the corporation settled 577,000 death claims and 1.44 million maturity
claims. To its resounding credit, the Corporation was able to settle 97% of all maturity claims on or
before the due date signing out Rs. 29,105.85 crore (US$ 6.10 billion) in settlement. Additionally,
the corporation paid Rs. 5606.90 crore (US$ 1.20 billion) in death claims. Current figures show the
outstanding claims ratio under the death category at no more than 2.20% and in the maturity
segment at an exemplary low of 0.26%. LIC has a proud record of innovative products that find
instant acceptance and success. For example, the Corporation’s Jeevan Aastha scheme, a close-
ended, single-premium plan sold about 1.84 million policies collecting Rs.10, 664 crore (US$ 2.20
billion) in premiums in 45 days of launch in the year 2009. It is a remarkable achievement that not
only has LIC continued to maintain the trust of consumers during the economic downturn but has
also been felicitated with several awards. It was bestowed the Readers’ Digest Trusted Brand
Platinum Award, in both 2008 and 2009, the CNBC Awaaz Consumer Award in 2009 and the
Customer and Brand Loyalty Award in 2009. In the same year, LIC emerged as the Top Brand in
the Insurance Category in the survey conducted by ACNielsen for Brand Equity. In fact, Brand
Equity rated LIC as the Most Trusted Service Brand, five years in a row. In the recent past, too, its
brand leadership has been on evidence. In 2008, for instance amongst several awards, LIC was
felicitated with the NDTV-Profit Business Leadership award as also the Asia Brand Congress-
Brand Leadership Award. Even in the field of technology, LIC’s innovations and practices were
recognized when it won the NASSCOM Award for the Best IT User.

REVENUE OF LIC

Farmer resilience after hard times is reflected in the record performance of dairy farmer
cooperative, LIC, for the 2010/2011year.

LIC revenue was $166 million, 21.4% ahead of the $136 million achieved during the downturn
year of 2009/2010, and 10.2% better than the $151 million recorded in 2008/2009.

LIC underlying net earnings increased from $9.1 million to $17.1 million and this will flow
through to a record net dividend to farmer shareholders of $13.6 million.

Improved sales volumes resulted in an increase in earnings before interest, taxation and fair value
adjustments on biological assets, of $7.5 million (or 45%) to $24.3 million.

LIC continues to report a strong balance sheet with total assets including cash, software, land and
buildings and bull teams of $236.8 million, an increase of $13.2 million over the previous year with

the equity ratio of the 78% remaining stable.

Cash flows from operations were strong for the 2010/11 year generating $21.3 million.
the investment during the year were $22.1 million.

LIC will pay a record dividend of $13.6 million, representing 80% of underlying earnings, to its
Cooperative and Investment Shareholders. This contrasts with the dividend paid in 2010 of $7.3
million, and $12.8 million in 2009.

The 2010/2011 net dividend translates to 8.4 cents per Cooperative Control Share and 44.9 cents
per Investment Share and represents a gross yield of 17.6% on Investment Shares compared to
11.2% last year.
Fig 4.3-graph showing the revenues of LIC
LIC Housing Finance fixed rate home loan product “New Advantage 5”

Mumbai, September 9, 2011: LIC Housing Finance today announced the launch of a new home
loan product “New Advantage 5”. This product is offered at fixed rates of interest for the first five
years and floating rates thereafter. The floating rates will be linked to the LHPLR prevailing at the
time of the switch. The fixed rate of interest for the first five years is as follows:-

For loans up to Rs 30 lacs: 11.15%

Loans above Rs 30 lacks & less than Rs 75 lacks: 11.40%

Loans of Rs 75 lacks up to Rs 150 lacks: 11.65%

The scheme is available till 31.12.2011 with a condition that the first disbursement should be
availed by the customer on or before 15.1.2012.
 Chapter-5

Conclusion, Findings, Suggestions, Limitations

About the Company:

LIC Housing Finance Ltd is one of the largest housing finance companies in India having one of the
widest networks of 205 offices across the country and representative offices at Dubai & Kuwait. In
addition, the Company also distributes its products through branches of its subsidiary LICHFL
Financial Services Ltd. LIC Housing Finance Ltd was promoted by Life Insurance Corporation in
1989 and a public issue was made in 1994. It launched its maiden GDR offering in 2004. The
company enjoys the highest rating from CRISIL & CARE indicating highest safety with regard to
the ability to service interest and repay principal.

Promoters of LIC

The Unit Trust of India (UTI) and IFCI Ltd have been removed from the list of promoters of LIC
Housing Finance Ltd (LICHF) and reclassified as financial institutional investors in the company.
As a result, the housing company now has only one promoter, the insurance behemoth Life
Insurance Corporation.

The stake held by parent Life Insurance Corporation in the company as on September stands at 38.5
per cent, down from 64.55 per cent in June this year.
UTI and IFCI held 12.03 per cent and 11.59 per cent, respectively. With both UTI and IFCI facing
financial problems, market sources said the reclassification will enable them to offload their stake in
LICHF.

Phone calls to both institutions were not returned. The company secretary of LICHF refused to
comment on the reclassification.

UTI has in fact already reduced its stake in LICHF. It held 12.03 per cent in June and has reduced
its holding in LHF to 11.9 in September. The LICHF share in the market was ruling at Rs 72.

The company is also reconciling its accounts as per the US GMP. This credibility-strengthening
initiative is expected to translate into lower cost international funds. Besides, the company expects
to raise debt through the low cost market route over the foreseeable future.

On the business front, LICHF has targeted disbursals of Rs 2,500 crore by the end of the fiscal,
while its outstanding mortgage portfolio is likely to cross Rs. 8,000 crore. It has initiated efforts to
reduce interest costs on existing liabilities and expects its spreads to remain in the range of 1.8 per
cent to 1.9 per cent.

Conclusion

As the cost of expansion by writing new policies erodes profitability, private life insurance
companies are tweaking their business model to focus on renewal premiums rather than market
share.

There was a tremendous focus on top line (sales) growth earlier, said S.B. Mathur, secretary general
of Life Insurance Council, an industry body of life insurers. They have now realized that focusing
on the renewal premium is essential for break-even.
Selling a new policy to expand revenue involves large initial costs, known in the industry as new
business strain, and insurers typically make profits off renewal premiums, paid when the policy is
due for renewal.
India has 22 life insurance companies, including state-run Life Insurance Corp. of India Ltd (LIC),
the country’s biggest.
In the June quarter, total renewal premiums for the industry grew 17.5 percent to Rs 32,750 crore
from Rs 27,870 crore a year earlier, according to data provided by Life Insurance Council.

Single-premium business grew 13 percent to Rs 5,580 crore and that from regular premiums
declined by 8.4 percent to Rs 8,838 crore in the same quarter. Regular premium is the money paid
as premium over the life of an insurance policy.

Focus on profitability, persistency and renewal premium is important to attain break-even. Selling
long-term policies will help achieve this, said Puneet Nanda, executive vice-president, ICICI
Prudential Life Insurance Co. Ltd, the country's largest private sector life insurer.

The company's total premiums rose 13 percent to Rs 15,356 crore in the last fiscal, with renewal
premium income increasing 61 percent to Rs 8,872 crore. New business premiums fell 17 percent to
Rs 6,592 crore in the same period.

The company's expense ratio, or the ratio of operating expenses to premiums, dropped to 11.6
percent during the quarter ended June from 14.5 percent a year earlier.

According to a report by Edelweiss Securities Ltd, co-authored by Vishal Goyal and Vivek Verma,
operating expense as a percentage of premiums varies between 10 percent and 40 percent for
insurers, and is the biggest determinant of profit.

Companies with lower operating expense ratios have the ability to offset negative variations of
persistency, a measure of the policies that remain valid.

Insurers have now introduced front-loaded policies, charging a higher amount in the first year, to
reduce new business strain and lower persistency risks.

Private insurers are also steering away from single-premium policies that generate lower value.

Sanket Kawatkar, head (life insurance consulting) at Watson Wyatt Worldwide Inc., a global
consulting firm that specializes in insurance and financial services, said that any company that
achieves significant growth in new business volumes every year will incur losses until profit from
renewal premiums exceeds new business strain.

The problem has been exacerbated by the fact that the business models followed by the private life
insurance sector have stressed top line and market share targets, as opposed to capital management,
bottom line (profit) management, etc.,he said. Even issues like productivity or efficiency of the
distribution channels “established at enormous cost “have been sacrificed to achieve this high
topline growth.
Private life insurers had been expanding their branches and distribution channel aggressively over
the past few years. Most of their premium income was generated by unit-linked insurance products
(Ulips) that offered market-linked returns. Sales of Ulips rose during the equity bull run that
continued until the fourth quarter of 2007-08.
The private sector life insurers have been mostly selling Ulips. Single-premium (business) has
started reducing and renewal premium has started growing. This shows that companies are focusing
on profitability now, and not merely market share, said Mathur of the Life Insurance Council.

In India, most life insurance firms had expected to break even in eight-nine years, but the cost of
new business growth came in the way. India allowed private insurance firms about a decade ago by
dismantling the monopoly of LIC.
COMPANY’S TURNOVER

In a bid to maintain its high growth momentum, the state-owned Life Insurance Corporation (LIC)
has set a target of mobilizing over Rs 20,000 crore of new premiums in 2002-03.

The target for its sum assured is pegged 25 per cent higher than the last fiscal’s mobilization of Rs
1, 87,000 crore. The institution has ended the last fiscal with a total first premium income of over
Rs 15,000 crore.

Acting LIC chairman A Ramamurthy said the institution wants to sell around 2.65 crore policies
this financial year.

The institution is also planning to launch some ban assurance products after regulations on allowing
banks to sell insurance products are announced. LIC has already tied up with Oriental Bank of
Commerce, Central Bank, Nedungadi Bank and Bank of Punjab.

LIC has recently opened its first call centre in Mumbai. In the next few days, it also plans to open
seven more in major cities like Ahmadabad, Delhi, Bangalore, Hyderabad, Pune and Chennai.

Initially, some three crore out of the LIC’s existing 13 crore policyholders can make enquiries
through the call centre. It is also setting up videoconferencing facilities at its zonal offices. LIC also
plans to open a research cell to undertake comparative studies of its products and the private sector
ones.
FINDINGS

Through this research I learned to do analysis of the data which I got from different sources by
different ways

1. Most of the customers opted the insurance schemes of foreign countries for the sake of foreign
exchange.

2. Customers of foreign insurance companies are satisfied by their services.

3. LIC has a very large service centre on web but less than any foreign company.

4. Services provided by LIC are not so much backward as compare to foreign companies.
SUGGESTIONS

After completing the study, I got to know about many schemes, facilities and working of LIC
INSURANCE of India. These are providing satisfactory services:

1. Every company must keep in touch with their policy holders.

2. The branches of LIC must be increased in rural and backward areas.

3. LIC providing very good services to its policy holders but it must enhance the scope of dealing in
foreign exchange for its customers.

4. LIC must provide more web facilities to their customers.

LIMITATIONS

1. Policy sellers do not take interest to give information about the different policies.

2. Documentation is not available due to secrecy point of view.

3. Certain type of respondents such as officials and executives or people in high income group may
not be easily approachable.

4. It is a taken process.

5. From this study we observed that respondents occasionally hesitate from giving relevant
information of their companies or policies.
BIBLOGRAPHY
I have prepared my MINOR PROJECT REPORT on the topic MARKETING of LIC

INSURANCE. The study is SECONDARY STUDY. And the data is collected from the official

website of LIC, which is www.licindia.in .