A CASE STUDY ON LIFE INSURANCE CORPORATION OF INDIA

One of the Worlds Largest Life Insurance Company

By: Ashish Singh Pathania ,Prashant Kaushal, Richa Parmar , Sudhir Thakur & Uday Kaundal

INTRODUCTION
Life Insurance Corporation was formed as a government regulated monopoly in September 1956 by an act of Parliamentary, (LIC Act 1956) with a capital contribution of Rs 50 million. Over the years, LIC built a strong distribution and agent network. By now, LIC had 2048 branches and 6,28,301 agents across the country. LIC was a financial powerhouse, with a presence in mutual funds and housing loans besides life insurance. The company had insured more than 23 crore people in the country through its individual and group schemes. Of the 60-80 million life insurance policies outstanding, 48% were from the rural and semi urban areas. This is very impressive since no company in any other industry had been able to tap the rural market to this extent. Other branches out of India- UK, Fiji, Mauritius, Nepal, Sri Lanka, Kenya, Bahrain, Oman, Qatar, Kuwait, UAE, Saudi Arabia. It has assets estimated of 5 Trillion Rupees. Headquartered in Mumbai , which is considered the financial capital of India. Today LIC can boast of great achievements in IT and investment under able Chairmanship of T S Vijayan.

HISTORICAL PERSPECTIVE
The British opened general insurance in India around the year 1700. Bombay Insurance Company Ltd was established in 1793. In 1818 it was conceived as a means to provide for English Widows. The Bombay Mutual Life Insurance Society started its business in 1870.

The Oriental Assurance Company was established in 1880.

The insurance business grew at a faster pace after independence.

Nationalization was justified on the grounds that it would create much needed funds for rapid Industrialization.

MISSION AND VISION OF LIC

Vision
A trans-nationally competitive financial conglomerate of significance to societies & PRIDE OF INDIA

FINANCIAL HIGHLIGHTS

Total Premium Income : Total Income : Payments to Policyholders :

Rs. 1,57,186.55 crore Rs. 2,00,280.68 crore Rs. 53,250.37 crore

As on 31.3.2000 31.3.2001 31.3.2002 31.3.2003 31.3.2004 31.3.2006 31.3.2007 31.3.2008 31.3.2009

Rs. (in crores) 1,61,002.02 1,92,514.65 2,45,331.46 2,89,895.52 3,67,359.84 5,52,447.33 6,74,514.78 8,03,820.00 8,73,551.35

As on 31.3.2000 31.3.2001 31.3.2002 31.3.2003 31.3.2004 31.3.2006 31.3.2007 31.3.2008 31.3.2009

Rs. (in crores) 1,54,043.73 1,86,024.75 2,27,008.98 2,73,004.96 3,21,753.53 4,63,147.62 5,72,602.80 6,86,616.00 8,07,317.45

Market shares of different insurance companies

4.12 1.8 4.8 1.97 1.14 3.81

Max New York Life Insurance Co. Ltd. ICICI Prudential Life Insurance Company Ltd.
6.86

Birla Sun Life Insurance Company Ltd. Tata AIG Life Insurance Company Ltd. SBI Life Insurance Company Limited . Bajaj Allianz Life Insurance Company Limited Reliance Life LIC of India

2.22

70.52

Others

SWOT ANALYSIS

It is the oldest and most well experienced player having a Pan India presence. LIC has a strong and very well developed distribution network.

Its employees and other staff are lethargic and least motivated to render prompt and sincere customer service. After sales customer grievance redressal mechanism is inefficient. The top management or bosses are mediocre and there is large scale corruption in main office.

It has the advantage of government guarantee is accompanied with it. It is having a huge consumer base and is evolved as one of the most powerful brands of the country.

The top management or bosses are mediocre and there is large scale corruption in main office. Agents not taking into account the needs of people and promote policies having high Commissions only.

SWOT ANALYSIS

People becoming more aware and demanding so there is scope for a whole lot of innovative products.

Pension markets, health insurance and large real estate portfolio.

Red-tapism is very much persistent.

Objective of LIC

To conduct business with utmost economy and keeping in mind that the money belongs to the policyholders.

To maximize mobilization of peoples savings by making insurance linked savings adequately attractive.

It acts as a trustee of the insured public in its individual and collective capacities.

To meet the various life insurance need of the community that would arise in the changing social and economic environment.

CONTRIBUTION TO INDIAN ECONOMY:

Life Insurance is the only sector which garners long term savings.

Strong positive correlation between development of capital markets and insurance/pension structure.

VALUES OF LIC

CULTURE

INVESTMENT PORTFOLIO OF LIC OF INDIA

About 15% is invested in infrastructural and social sector investments.

About 35% in other investments, to be governed by exposure prudential norms

COMPETITIVE STRENGTH
Large market share.

Low cost operations.

Its marketing. Developing special capabilities & competencies. Product innovation.

LIC MARKETING STRATEGY

The Visakhapatnam division of the LIC has signed MoUs with two private broking firms for marketing its products, as provided for in the Insurance Regulatory and Development Authority (IRDA) Act. Setting a new trend, the divisional office signed memoranda of understanding with Insol Insurance Solutions Pvt Ltd, a broking firm, and Vijay Sai Associates, corporate agents, for the purpose. Mr Surendra Behera, the divisional manager, said that LIC was aggressively marketing its products through private channels as well.

INTERACTIVE VOICE RESPONSE SYSTEMS

IVRS has been made functional in more than 50 centers all over the country. This would enable customers to ring up LIC and receive information about their policies on telephone. This information could also be faxed on demand to the customer.

AWARDS WON BY LIC

Readers Digest Trusted Brand Award (Platinum) 2009.

CNBC Awaaz Consumer Award, 2008. NDTV Profit Business Leadership Award, 2008.

IT USER 2008 NASSCOM Award.

RECOMMENDATIONS:
To increase the level of insurance penetration LIC may focus on bringing products that suit to the rural customers.
LIC should also tie up with several other banks apart from the existing ones to sell its products i.e. through banc assurance . The Company has the option of tying up with local NGOs for selling its rural insurance products. Customer friendly documentation i.e. it should be made easier and faster. LIC should keep a check that its agents equally promote all its products. LIC may provide additional funds to its development officers and agents. Some special focus should be laid on individual risk coverage while designing the products.

CONCLUSION
Growth of Indian Economy is not a consumption driven but it is an investment driven growth, and opens a wide variety of Investment Avenue. Competition means to compete, fight with other business in the insurance industry to get maximum market share or profits, income, sales etc. The entry of private sector insurance companies into the Indian insurance sector triggered off a series of changes in the industry. Even with the stiff competition in the market place, it is evident from the study that the public sector giant LIC dominates the Indian insurance industry.LIC is competing with 16 other companies in the insurance sector and has successfully managed not only to beat the competition but also has taken advantage of the competition to increase its market share and premium income. Thus, LIC has taken the competition positively as a means to innovate, develop and re-engineer itself to the market. In this project, an attempt is made to determine the present competition in the Insurance and effective strategies to overcome the competition.

BE INSURED & BE SAFE

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