Chapter-IChapter-I An Overview Life Insurance Corporation of India 1.1. Introduction Life Insurance Corporation of India is one of the most important financial intermediary in Indian financial system and contributes to the development of financial markets savings and capital markets. As an important financial intermediary insurance industry particularly the Life Insurance Industry ists in accumulation and reallocation of productive capital in the economy. The role of Life Insurance as contractual savings, Institution is often examined in the light of various services it provides in different financial structures. Life Insurance Company design financial contracts which can be purchased even by small investors who can invest a small amount periodically, which in turn is invested in capital markets. Life Insurance as a financial intermediary boosts savings by helping mobilization of savings at a relatively lower cost from a cross section of people in the economy. It also mitigates moral hazards and adverse section inducing the less willing savers to save. Contractual nature of savings in life insurance companies promotes the habit of savings and pools a large amount of money in an economy. Hence Life Insurance Companies not only grow by themselves but also stimulate long lern savings in & country to support economic growth. It has been observed that efficiency in capital accumulation and transfer in the economy depends on the improved efficiency of intermediaries like life insurance. The Story of LIC is Quite Special and Magical Its Stellar Success, has Been Achieved by doing all the things that a Typical Organisation Would Normally Do. fl)1.2. Philosophy of Life Insurance and Assurance Life Insurance is a contract that pledges payment of an amount to the person assured (or his nominee) on the happening of the event insured against, The contract is valid for Payment of the insured amount during: + The date of Maturity or . Specialised dates at Periodic Intervals or + Unfortunate death, if it occurs earlier. Among other things, the contract also provides for the payment of premium periodically to the corporation by the policy holder. Life Insurance is universally acknowledged to be an institution, which eliminates, risk, substituting certainty for uncertainty and comes to the timely aid of the family in the unfortunate event of death of the bread camer By and large Life Insurance, is civilisation’s partial solution to the problems caused by death. Life Insurance in short is concerned with two hezards that stand across the life path of every person. That of dying prematurely leaving a dependent family to fend for itself. 2. Thet of living till old age without visible means of support. In fact normal savings may also help the general person but what Life Insurance Corporation provides to other institution can. Life Insurance helps us in following ways— 1, Contract of Insurance, 2. Protection, 3. Aid to thrafpt, 4. Liquidity, 5. Money when you need it, 6. Insurance for women & children also, 7 Help in children education, 8. Medical and non medical schemes, 9. With profit & without profit plans, 10. Keyman's insurance etc. In brief we can say that Life Insurance Corporation if said to be as largest institution is very rightely said— gues PETLife Insurance corporation has acquired almost monopoly power in the solicitation and sale of Life Insurance Policies in India. In addition to the summary regarding the present stature provided at the begning, LIC has extended its activities in 12 countries other than India with the objective of catering to the insurance needs of non-resident Indians. 1.3. Overview of Life Insurance Corporation of India Life Insurance Corporation of India (LIC) (arta sas er frm) is the largest Life Insurance Company in India and also the country's largest investor; It is fully owned by the Government of India. It also funds close to 24.6% of the Indian government expenses. It has assets estimated of Rs. 8 trillion (US$ 178.4 billion) It was founded in 1956 with its head quarter in Mumbai, formerly Bombay, which is considered the financial Capital of India. The Life Insurance Corporation of India Currently has 8 zonal offices and 101 divisional offices located in different parts of India, atleast 2048 branches located in different cities and towns of India alongwitt satellite offices attached to about some 50, Branches, and has a network of around 1.2 million agents for soliciting life insurance business from the public. With the change in India's economic Philosophy from the early 1990s and the subsequent relaxation of state control over several sectors of the economy, the monopolistic position of the Life Insurance Corporation of India was diluted and it had to comepte with a number of other corgorate entities Indian as well as transanational life insurance brands. Eowever it still Manages to be the largest player in the Indian market, with the Lion's share of 55%, The recent Economic times Brand equity su-vey rated LIC as the No. I Service Brand of the country. 1.4. Evolution of Life Insurance Corporation of India 1.4.1, Prenationalisation Age Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first Life Insurance Company on Indian soil. All the Insurance Companies established during the period were broughtup with (3]the purpese of looking after the needs of European Community and Indian natives were not being insured by these companies. However later with the efforts of eminent People like Babu Muttylal Seal, the foreign Life Insurance Companies started Insuring Indian lives, but Indian lives were being treated as sub-standard lives and heavy extra premium were being charged on them. Bombay Mutual Life assurance society heralded the birth of first Indian life insurance company in the year 1870 and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was one of such companies, inspired by nationalism. ‘The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras National Indian and National Insurance in Calcutta and the Hindustan Co-operation Insurance Company took its birth in one of the rooms of Jorasanko, house of the great poet Rabindra Nath Tagore in Calcutta, The Indian merchantile general assurance and Swadeshi Life (Later Bombay Life) were some of the Companies established during the same period. Prior to 1912 India had no legislation to regulate Insurance business. In the year 1912, the Life Insurance Companies Act. 1912 made it necessary that the Premium rate tables and periodical valuations of companies should be certified by an actuary. But the act discriminated between foreign and Indian companies on many accounts, putting the Indian Companies at a disadvantage. The first two decades of twentieth century saw lot of growth in insurance business, from 44 companies with total business in force at Rs. 22.44 crore, it rose to 176 companies with total business in force at Rs. 298 crore in 1938. During the mushrooming growth of insurance companies many financially unsound concerns were also floated which failed miserably. {4}The Insurance act 1938 was the first legislation governing not only life Insurance but also non life Insurance to provide strict state control over Insvrance business. The demand for nationalisation of Life Insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the legislative assembly. However it was much later on the 19th of January 1956 that Life Insurance in India was nationalized About 154 Indian Insurance Companies, 16 Non-Indian Companies and 75 provident funds were ope-ating in India at the time of Nationalization. 1.4.2. Nationalization of Life Insurance Industry In 1955 Parliamentarian Feroze Gandhi raised the matter of insurance fraud by owners of private insurance companies. In the ensuing investigations, One of India's wealthiest businessman Ram Kishan Dalmia owner of the Times of India newspaper, as sent to prison for two months Eventually, the Parliament of India passed the Life Insurance of India Act on 19th June 1956, and the Life Insurance Corporation of India was created on Ist September 1956, by Consolidating the Life Insurance business of 245 private Life Insurers and other entitities offering Life Insurance Services, Nationalization of the Life Insurance business in India was a result of the Industrial Policy Resolution of 1956 which had created a policy-trame work for extending State control over atleast seventeen sectors of the economy including the Life Insurance. Nationalization was accomplished in two stages, initially the management of the companies was taken over by means of an ordinance and later the ownership too by means of a comprehensive bill. The parliament of India passed the Life Insurance Corporation act on the 19th June 1956 and the Life Insurance Corporation of India was created on Ist September 1956 with following objectives. 1.4.3. Objectives of L.L.C. of India— Spread and Provide Life Insurance to the masses at a reasonable cost. {5]Spread Life Insurance widely and particularly to the rural areas and to the socially and economically backward classes. Maximize mobilization of People's savings by making insurance linked savings, adequately attractive. Act as a trustee of the Insured Public in their individual and collective capacities. Meet the various Life Insurance needs of the Community. Involve all people working in the corporation to the best of their capability in furthering the interests of the insured public by providing efficient services with courtesy. Promote amongst all agents and employers of the corporation a sense of participation pride and job satisfaction through discharge of their duties towards achievement of corporate objectives. LIC is a public corporation, Public corporation is a corporate body created by a special Act of parliament describing its powers, responsibilities, rights and duties. It is owned by the government but managed like a private enterprise. It is a unique combination of Public interest and Flexibility in operation. The capital of corporation is wholly subscribed by the government and it is answerable to the government which creates it. tis managed by a board of Directors oppointed by Public authority 10 which it is answerable. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices apart from its corporate office in the year 1956. Since Life Insurance contracts are long term contracts and during the period of the policy it required a variety of services. It was therefore needed in the later years to expand the operations and place a branch office at each district head quarter, Re-organization of LIC took place and large numbers of new branch offices were opened under re-organization process, servicing functions [6]were transferred to the branches and branches were made accounting units. It resulted in wonderful performance of the corporation it may be seen that from about 200 crores of new business in 1957 the corporation crossed 1000 crores mark in 1969-70 and it took another 10 years for LIC to cross 2000 crores mark of new business, With the reorganization happening in early eightees by 1985-86 LIC had already crossed 7000 crores Sum assured 01 new policies, 1.4.4, Impact of Globalization on LIC of India Globalization and liberalization has encouraged central government to consider about basic structure of country- Industrial set up, direct and indirect taxes, and to set up IRDA Insurance regulation Development authority in 2000-2001. Insurance sector was opened for internal and external artners and Enterpreneurs even the sector was opened for different Banks also. Thus the monopoly of LIC of India has been finished in Insurance sector and now LIC of India has to compete. with internal and external companies. It is another thing whether other players of insurance sectors can come upto the level of LIC of India in connection with the purposes, rates, facilities and above all the trust (The main power of LIC of India) Current Status— Over its existence of around 50 years, Life Insurance Corporation of India, which Commanded a monopoly with the change to the India's, economic Policy and the subsequent relaxation of state control over several sectors of economy, the monopolistic position of LIC was diluted and it had to compete with a number of other corporate entites, Indian as well as transnational Life Insurance brands. However, i ill manages to be the largest player in the Indian market with the lion's share of 55% in 2006. ‘The corporation which started its business with around 300 offices, 5.6 million policies and a corpus of INR 459 million (US$ 10 million) has, grown to 25000 servicing around 180 million policies and a corpus of (7]over INR 3.4 trillion(US$ 80000 milion). The organization now comprises 2048 Branches, 109 Divisional offices, and 8 Zonal Offices and employees over 1002 149 agents, It also operates to 12 other countries, primarily to cater the needs of non-resident Indians. In the financial year 2006-2007 Life Insurance of India's number of Policy holders are said to have crossed a whopping 200 million (fourth in terms of population of the countries of the world) L.LC. owns the following subsidiaries— 1. Life Insurance Corporation of India International— It operates in all G.C.C. Countries, 2. LIC Nepal— A Joint Venture Company formed in 2001 with the vishal group of Industries Nepal. LIC Lanka— A joint venture company formed in 2003 with the ‘Bartlet group of Companies’ of Sri Lanka. LIC Housing Finanee— A company controlled by LIC meant to serve the housing finance needs of the public. LIC Life Care Homes— A wholely owned subsidiary of LIC housing finance, operates community living centres of Senior Citizens. Technology Usage— The Insurance giant opted for internet service for all its subscribers and developed massive networking for own usage and internal governance, While the pros and cons of internal net working remains concealed within the officials and hidden for common customers the customer portal some how fails to satisfy the 21st century customers. Apparently low band width, unwise web page, and hyper linking illogical page sct ups all just contribute to the irritation of common net age customers, Asa result of this flaw in the website online payment of premium [8]through the site could not become that popular option for the customers which otherwise it could have. However LIC of India is the one and only public sector Life Insurance Company in India. Some of the Important milestone in the Life Insurance Business in India are : 1818 Oriental Life Insurance Company, the first life Insurance ‘Company on Indian soil started functioning. 1870 Bombay Mutual Life Assurance society, the first Indian Life Insurance Company started his business. 1912 The Indian Life Assurance Companies Act enacted as the first statute to regulate the Life Insurance Business. 1928: The Indian Insurance Companies Act-enacted to enable the government to collect statistical information about both, life and non life insurance business. 1938 Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956 245 Indian and foreign insurers and provident fund societies are taken over by the central government and nationalised. LIC formed by an Act of Parliament, Viz. LIC Act 1956, with a capital contribution of Rs. 5 crore from the Government of India. Mission and Vision of Life Insurance Corporation of India— "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". [9]Vision “A trans-nationally competitive financial conglomerate of significance to societies and pride of India. Present Status of LIC of India Existing as a towering insurance company for over 50 years, LIC has acquired almost monopoly power in the solicitation and sale of Life Insurance Policies in India, In addition to the summary regarding the present stature provided at the begining LIC has extended its activities in 12 centures other than India with the objective of catering to the insurance needs of Non resident Indians. ‘The enforcement of New Economic reforms in 1991 coupled with the formation of Insurance regulatory and development authority Act (IRDA) of 2000 (which started issuing licenses to private Life insurers) has diluted the monopolistic attitude commanded by LIC. The only insurance company belonging to the public sector now has to compete with several other corporate entities of its kind which often are heavy weight Indian as well as Multination Life Insurance Brands in themselves. 1.6. Organisatienal Structure LIC of India Organisation is a dynamic rather than a static concept. Organisation structure and philosophies must change over a period of time. An organisation's success depends on the attitudes of its people. Therefore, the objective of organization development should be to create an organisational climate which is conducive to peak organisation performance. A well known organisation, in India believes that, "The culture or the spirit of an organisation is determined by the sum of the values, be'iefs and working practices that exist within the an organisation.” It defines organisation development in operational programme designed and implemented in consultation with qualified psychologists [10]to assess and improve motivation and the attitudes of managers to the organisation and to work with a view of creating an organisational climate, that would support peak performance through integrated team activity and diminution and resolution of inter personal and inter group conflicts. Being a dynamic company, management analysis has indicated to them that the organisation culture within the company inhibits, the initiation of change dynamic action or innovation and managers tend to await policy directives before initiating result oriented or profit oriented change, Field management attributes these inhibition to an over.centralised monopolistic structure. Thus itis necessary in practice to audit from time to time to improve the organisational climate by removing disincentive which might have developed over a period of time. LIC is one of the largest employers in India. The organization is headed by 4 officers namely the chairman and three managing directors. The top brass is appointed by the Government of India after an intensive selection procedure though the company was accused to go by more seniority in number of years for selection of senior management this has changed as seen in the case of Thomas 'Mathew' and ‘A Das Gupta’ (Managing Directors). The chairman assumes authority of the CEO and chairs the Board while the managing directors are allotted the three main categories of the organiza‘ion's functioning. ‘The current chairman Mr. TS. Vijayan is particularly responsible for the major IT infrastructure turn around that the organization has witnessed and for its advanced EDMS structure. D.K, Mehrotra manages the marketing units of LIC which also happens to be one of the largest spenders on advertising in India. Thomas Matthews manages the close to $187 billion investment portfolio of the company which is the largest investor in the country. {11}A Dass Gupta manages the engineering and other functions, many of which are very advanced in the Indian Corporate Scenario. LIC had 5 zonal offices 33 divisional offices and 212 branch offices apart from its corporate office in the year 1956 (The year of Nationalization). Since Life Insurance contracts are long term contracts and during the currency of policy it requires a variety of services, need was later felt in the later year to expand the operations and place a branch office at each district head quarter. Re-orgonization of LIC took place and large number of new branch offices were opened, As a result of re- orgonization servicing functions were transferred to the branches and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200 crores of new business in 1957 the corporation crossed 1000 crores. Only in the year 1969-1970 and it took another 10 years for LIC to cross 2000 crore mark of new business with the reorganization of early eightees, by 1985- 86 LIC crossed 7000 crore sum assured on new policies. Presence state of life insurance business of LIC of India runs as under : “Total life insurance business In force at the end of the year 31.3.2009 | Area ot Number of ‘Sum insured with] Premium income Business Policies Bonuses and | for which oredit Annuities | has been taken in per annum the Revenue ‘Account (Rs.) wo @ @ oO. ‘Ordinary Policies™* In India 210154031 2110227080122 | 1026132679338, Out of India| 99201 34625467027 1669347723 i 21025328 21136895968149 | 1027802027261 [12]Organisational Structure Zones 7 Divisions 101 Branches 2048, P+GS Units 69 Satellite Sampark 29 Agents 10,35,097 Alternative Channels Banks 35 Outlets 10175 Corporate Agents 647 Outlets 1920 Brokers 103 Today LIC functions with 2048 fully computerized branch offices 100 Divisional Offices 7 Zonal Offices and the Corporate Office LIC's wide Area network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some banks and service providers to offer on-line Premium collection facility in selected cities. LIC’s ECS and ATM premium payment facility is an addition to customer convenience. Apart from on line kiosks and IVRS centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities with a vision of providing easy access to its Policy holders, LIC has launched it's SATELLITE SAMPARK Offices. The satellite offices are smaller leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future, [13]LIC continues to be the dominent life i surer even in the liberalized scenario of Indian Insurance and is moving fast on anew growth trajactory, surpassing is own past records LIC has issued over one crore polices during the current year. It has crossed the milestone of issuing 10132955 new policies by 15th Oct. 2005 posting a healthy growth rate of 16.67% over the corresponding period of the previous year. With a steady growth in the annual business of LIC over the years the number of policies serviced have been steadily increasing and the number of employees have also considerably increased with the significant increase in the volume of work spread over a large number of offices. It was time to have a second look at the organi tion and work system so as to continue to render and if possible to improve service to the policy holders. On the basis of suggestions of M.P. ERA Sezhiyan Committee report submitted in September 1980 for the reorganising of the work. LIC had taken several steps for organisational structure in order to cope with the growth in the years te come. STEPS PROPOSED 1. A review of the management structure to examine the division of work between the departments and the Head Quarters and the field offices responsibility at each level effectiveness of co-ordination control etc. 2. Review of work flow and work organization. 3. Special emphasis on development of middle level management personnel and supervisory staff. 4. Devising of Budgetary and management control system. After a careful consideration of available expertise in the field LIC had engaged the services of Prof, Ishwar Dayal, a management consultant with wide experience of organisational behaviour. Simultaniously an in- [14]house team, called the Organisational improvement cell (OIC was also set up. On the basis of suggestion meetings were organised with the heads of departments in Central Offices, Divisional Offices, Z.Ms & the Sr. Divisional Managers. It was decided to commence the reorganisation scheme in three Divisional offices namely Delhi Cuddapah & Bangalore with the objective of Adequate flexibility of the organisation to accomodate growth and changes to cope better with LIC environment and developing a strong egency net work. Branch Organisation— Since the basic production unit of LIC is the Branch office the change was decided at branch level first. (a) Each section of the Branch must be responsible for specific task and for co-ordinating their work with others. (b) Bach unit must have a budget and the supervisor concerned should exercise control by exception. (c) No section should be larger than 10-12 employees. (@) All units should collectively contribute to the expected level of profit of the branch, (c) Branch office should be able to dispose of the bulk of work without depending upon D.O. (f) To enable them to function effectively, larger branches must be provided with in house machine support in order to provide better service to policy holders. Proposed guide lines for Divisional Organisations— (a) Each department must be autonomous to the extent technically feasible and should have discreet areas of responsibility. (b) Total supervisory responsibility for Branch Performance must be assigned to a single point of contact in Divisional Office, for this [15](c) (d) purpose sales and service functions are put under the charge of Marketing Manager. Divisional office must be concerned as much with future growth and development as with achievement of current results. S.S.S. and G & $ functions should be independently handled by Branch office. For effective implementations of the purposed re-organization, task groups were set up in the central office in different departments to review the functions The following design was considered necessary for the effective organisation Design two kinds of Branches were proposed— wa (i) Large branches that will have total machine support to carry out all se-vice and accounting functions and. Branches with less than 25000 policies that will obtain machine supports from D.O.S. 1.7. Organisation at Branch Level Sales Section— Responsible for supervision of Development Officers agents and for building up of the agency force in its jurisdiction. New business section— +Issue of new policies and recommendations and obtain approval for business beyond permissible limits. P.HLS. Section— Is responsible for total servicing of policies including loans and to obtain approval from higher authority Separate section for SSS if needed. [16]s section— Preparing claims papers for settlement and for obtaining approval from higher authority for beyond power claims. Machine section— To provide machine support an in- house machine will be provided only where size justifies and it will come from D.O. Account section— Will be responsible for maintenance of proper account books, preparation of trial balance and transfer of surplus funds. Office management section— For maintenance of personnel records like leave, LTC, salary, allowance, T.A., D.A. etc. and stationery postage etc. + Branch management committee— Will consist of the Branch Manager and the the heads of all sections/departments. The committee will meet periodically to co-ordinate work of sections/ deptts. Periodic administrative checks on work in departments will be done to ensure that quality of decisions taken and the work done at the branch offices are satisfactory. The important change was done in traditional structure Each section of the branch is to have separate head reporting directly to the Branch Manager as against the traditional administrative head viz the ABM or AO. Each of these heads are now equal member of Branch Management Committee. Sales section of the branch would usually be headed by A.B.M. (Sales) or a B.M. (Sales). In the absence of B.M. the senior most among heads will officiate. 1.8. Organisation at Divisional Level In order to support reorganised branches the divisional office set up also needed a change It was set up as below— [i7]Marketing Department— (a) Sales section (b) Branch Support Unit () PHS & Claim Section (@) Development Training Section New Business Deptt.— Will be responsible as specialist to decide on the proposals referred to the Divisional Office in respect to all individual, SSS and G.S.D. proposals check, declined life index cards and undertake supervisory inspection tasks, arranging to train new business incumbents in branches. Personnel Departments— (a) Management Development Section (b) Industrial Relation Section (c) Training Section Planning & Review Deptt — (a) Operation Section (b) Special Studies Section Accounts Department— (a) Branch Accounts Section (b) General Accounts Section (1) Cash & Banking Section (2) Salary & Provident Fund Section (3) Final Accounts Section [18]6. Office Management Department (a) Purchase Section (b) Service Section 7. Legal and Mortgage Deptt. 8. Data Processing Deptt. (a) System Section— Oversee the system & procedure (b) Operation Section The divisional office will have a Management Committee consisting, of Divisional - In-charge as the head and the other departmental heads as members. Massive use of Information Technology in Organization of LIC of India— LIC is one of the organization in India which has gone for massive use of technology It has its own software development centre (SDC), engaged in upgrading existing technology and developing new technology. In LIC all the jobs processed in branch offices have been mechanised, 2042 branches (Out of 2048) are now connected through wide area network, LIC has its own portal providing various services, including policy status bonus calculation, loan quotation, list of lapsed polices, a similar portal has been in place for the agents as well LIC has also put in place facilities of internet payments electronic clearitg system, ATMs etc LIC has also put in place a massive data ware housing system, in- house IT system. Thus providing tremendous support to management decisions and improving service quality with speed. Hence it can easily be calculated and said, the present organizational structure is one the best systems in the world resulting giving almost best monopolisite stage over all other insurance comp: rs in India, though liberalization and globalization has snatched its monopolistic rights on papers. [19]1.9, Organisational Climate Has been a popular concept in theory and research, It has a great deal of attention in the last few decades. Guion has stated that, "The concept implied by the term organisational climate, may be one of the most important to enter the thinking of industrial organisational psychologists in many years." Hellreigel and slown— Defines organisational climate as a; "Set of attributes which can be perceived about a particular organisation and/ or its sub systems and that may be induced in the way that organisation and/or its sub systems deal with their members and environment.” Schneider and Reichers— Outline a four fold progress made in climate research. The climate approach to understanding (How work context affect behaviour and attitudes) is grounded in perception. It provides a much needed alternative to motivation theories as &planatiory for just about everything that happens to people at work. Climate research tends to tocus on aggregated or group level data to discover relationship between clusters of perceptions and organisationally relevant outcomes, another advance has been the clarification of the distinction between psychological climates and organisational climate. Briefly psychological climates are sunnatea, averaged meanings people attach to a particular feature of setling. Another advance follows the idea that people attach meaning to, or make sense of clusters of psychologically related events. People in organisations encounter thousands of events, practices and procedures and they perceive these events in related sets. We can say that organisational climate, is a set of characteristics ofan organisation which are reflected in the descriptions employees make of the policies, practices and conditions which exist in the work environment, H.R.D. climate is an integral part of an organisation climate. Human resources development (H.R.D.) may be defined as activities and processes [20]undertaken to promote the intellectural, moral, psychological, cultural social and economic development of the individual. So as to help him achieve his highest human potential as a resource for the community. In other words it means a total all round development of the person so that he can contribute his best to the community and the nation. H.R.D. in the organisational context may be defined as a process by which the employees of an organisation are helped in a continuous and planned way. To acquire or sharpen capabilities required to perform various functions associated with their present or expected future roles. To develop their general capabilities as individual and discover and exploit their own inner potentials for their own and/or organisation development purposes. To develop an organisational culture in which supervisor subordinate relationship, team work and collaboration among sub_ units are strong and contribute-to the professional well being movivation and pride of employees. Good companies realise that an organization is a dynamic rather than a stat ¢ concept. Organization structure and philosophies must change over a period of time. An organization's success depends on the attitudes of its people, Therefore the objective of organization development should be to create an organizational climate which is conductive to peak organizational performance. A well known organization in India believes that, "The culture or the spirit of an organization is determined by the sum of the values, beliefs and working practices that exists within an organization It defines organization development in operational programme designed and implemented to consultation with qual -d psychologists to assess and improve motivation and the attitude of managers to the organization and to work with a view to create an organizational climate that would support peak performance. {21}Beiag a dynamic company management, analysis has indicated to them that the organization culture within the company inhibits, the initiation of change dynamic action or innovation and managers tend to await policy directives before initiating result oriented or profit oriented change. Thus in view of functional organizations structure if managers or responsible officers are generally confined to their function, such blinken must be removed since they all are needed to view their job in terms of organisational needs. Itis necessary in practice to audit from time to time to improve the organisational climate by removing disincentives. 1.10. Work Culture of LIC of India Insurance is a risk transfering mechanism under which there is a contractural agreement payment of premium, payment of benifit and a pool of liquid financial resources. While designing a micro insurance, care is to be taken to see that it empowers individual and groups and insurance transactions minimizes moral hazards risks of adverse selection and reduces transaction costs. Lifle Insurance business is significantly influenced by the state of economy of a country and major impacting factors are rate of growth of GDP, domestic savings, household financial savings disposable income growth in working age population existence of other competing institutions and products in the saving market (banks mutual fund, pension funds stock market products etc.) The size of life insurance market is also influenced by the rate of growth of population, social security system, health care system, changes in customs and social practices, changes in the attitude risks ete, It has been observed that societies in which the standard of living has been steadily improving experience a higher insurance penetrat'on as well as higher life insurance density. [22]Recent upsurge in Indian economy particularly since liberalization and market reforms leading to competitions has created tremendous opportunities for growth of Life Insurance, Understanding and awareness about Life Insurance has become a very positive factor for the Life Insurance Irédustry to grow further, Moreover the Life Insurance penetration and coverage is still very low in India which leaves enough space for growth. Another important factor, which indicates a positive feature of life insurance growth in India is the confidence and trust in Life Insurance. Survey of Indian investors by SEBI and NCAER (2000) indicates this. It is the consumers who are driving force of any industry; they are the engine of growth. But very often this truth is forgotten while emphasiz.ng on marketing, which to many means sales. Sales is the only ‘one component of marketing the other being servicing to the customers. Therefore no marketing initiative can end with desired result without being evolved around customer servicing, which further centres around customer value enhancement. It is a fact that no service industry can deliver 100 percent satistactory services to the customers but a minimum Bench mark Service (MBS) to protect the interest of customers with enhanced value addition can be thought of and delivered. Its not only necessary but also an essential condition for growth and survival of any Life Insurance Company especially in a competitive environment. Today though the position of Life Insurance remains high in heirarchical needs, it slipped down in terms of asset holding pattern of domestic savers. Today insurance companies are under competitive pressure throughout the world as large numbers of customers have been taken away by banks, mutual fund and pension funds who came out with several innovative products offering near similar benefits of insurance products, The:e is a visible sign of huge growth in Life Insurance funds and particularly that of limit linked funds in India which makes funds 23]‘management really complex & challenging which required improved funds manage! A Life assurer transacting multipurpose business activities and selling a wide range of policies needs to build up separate portfolio as per IRDA guidelines, since the investment limit prescribed by IRDA are different for each type of asset, LIC of India which even after tough competition was in dominent position had to decide its work culture in such a way that no wave should any way harm his ship. It was felt that growth induced management of LIC cannot depend only on ability of savings (Premium) nobilization through sale of products and optimizing service satisfaction of customers (Policy holders) but also needs high level of efficiency in funds management. Which was very difficult due to changing market structure. Moreover funds mobilized as a premium are utilized for payment to policy holders. Therefore, benefits of policy holders are the liability of a Life Insurance co which makes the job more complex due to long term uncertainities in liabilities Another aspect to be considered was the management of risks. Indian regulatory Authority IRDA has put in place a well conceived regulatory framework for investment management. ‘Investment Limit 2. Life Insurance Controlled Funds— In following manner 1 Investment in Govt. Securities— 25% 2. Govt. Securities and other approved Securities— No less than 50% Infrastructure—Social sector not less than —15% 4, Other than approved Not exceeding— 35% 3. Pension & General Annuity Funds [24]4. Exposure Norms Investment in Derivatives The IRDA regulation 2001 made it mandatory for an insurance company to constitute an investment committee, further every insurer shall draw up an investment policy and place it before board of directors for approval Work culture of LIC India took all the needed steps for better returns for its customersm matched the assets with future liability called duration matchings arranged better equity return, Periodic adjustments and aggressive management of a portfolio. Risk management, hedging through deriatives, futures sweeps, options investment research, corporate governance. As mentioned in ‘TRYST with Trust (1991) all the basic principles for investments were adopted by LIC. LIC of India through its hundred & hundreds of policies kept the people connected regularly made LIC much and much trustworthy spread its net work to the extent of lower person, gave the employment and finest dreams to the dreamless person of India, made the qualification secondary but lab will the primary for making dreams true tried and got success in collectit and giving weightage to the smallest coin of people, saving and had shown that the smallest public money may be used to serve larger economic & social goals. LIC invested contineously as an investor keeping in view LIC in Investing its funds in securities with low risk. Since one of the major objectives of nationalization of Life Insurance companies and formation of LIC of India was to invest policy holder's fund efficiently and in the interest of people and the country. [25]