Life Insurance Corporation of India

Life Insurance Corporation of India

Type

Government-owned corporation

Industry

Insurance

Founded
1 September 1956
Headquarters Mumbai, India
T. S. Vijayan (Chairman)
Key people

D. K. Mehrotra, Thomas Mathew and A.

Dasgupta (MD)
Life insurance

Products

Pensions

Total assets
Owner(s)
Employees

Mutual funds
9.31 trillion (US$ 211.34 billion)
Government of India
112,184 (2008)
LIC Housing Finance Limited

Subsidiaries

Website

LIC(Nepal)Ltd
LIC(Lanka)Ltd
LIC(International)BSC(C)
www.licindia.in

The Life Insurance Corporation of India (LIC) (Hindi: ) is the largest

state-owned 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's
expenses. It has assets estimated of 9.31 trillion (US$ 211.34 billion).[1] It was founded in 1956
with the merger of more than 200 insurance companies and provident societies. [2]

Headquartered in Mumbai, financial and commercial capital of India,[3] the Life Insurance
Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different
parts of India, at least 2048 branches located in different cities and towns of India along with
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.

History
The Oriental Life Insurance Company, the first corporate entity in India offering life insurance
coverage, was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Europeans
in India were its primary target market, and it charged Indians heftier premiums. The Bombay
Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other
insurance companies established in the pre-independence era included

Bharat Insurance Company (1896)

United India (1906)

National Indian (1906)

National Insurance (1906)

Co-operative Assurance (1906)

Hindustan Co-operatives (1907)

Indian Mercantile

General Assurance

Swadeshi Life (later Bombay Life)

The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's
First War of Independence, adverse effects of the World War I and World War II on the economy
of India, and in between them the period of world wide economic crises triggered by the Great
depression. The first half of the 20th century also saw a heightened struggle for India's
independence. The aggregate effect of these events led to a high rate of bankruptcies and
liquidation of life insurance companies in India. This had adversely affected the faith of the
general public in the utility of obtaining life cover.
The Life Insurance Act and the Provident Fund Act were passed in 1912, providing the first
regulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of
1928 authorized the government to obtain statistical information from companies operating in
both life and non-life insurance areas. The subsequent Insurance Act of 1938 brought stricter
state control over an industry that had seen several financially unsound ventures fail. A bill was
also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry.

Nationalization
In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of private
insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram
Kishan Dalmia, owner of the Times of India newspaper, was sent to prison for two years.
Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and
the Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life
insurance business of 245 private life insurers and other entities 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 framework for extending state control over at
least seventeen sectors of the economy, including the life insurance.

Current status

LIC building, at Connaught Place, New Delhi, designed by Charles Correa, 1986.
Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a
monopoly of soliciting and selling life insurance in India, created huge surpluses, and
contributed around 7 % of India's GDP in 2006.
The Corporation, which started its business with around 300 offices, 5.6 million policies and a
corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a
US $ [4], has grown to 25000 servicing around 180 million policies and a corpus of over 8
trillion (US$ 181.6 billion).
The recent[when?] Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of
the Country.

Insurance in India
From Wikipedia, the free encyclopedia
Jump to: navigation, search

Insurance is a federal subject in India. The insurance sector has gone through a number of
phases and changes. Since 1999, when the government opened up the insurance sector by
allowing private companies to solicit insurance and also allowing foreign direct investment of up
to 26%, the insurance sector has been a booming market. However, the largest life-insurance
company in India is still owned by the government.
History

In India, insurance has a deep-rooted history. Insurance in various forms has been mentioned in
the writings of Manu (Manusmrithi), Yagnavalkya (Dharmashastra) and Kautilya (Arthashastra).
The fundamental basis of the historical reference to insurance in these ancient Indian texts is the
same i.e. pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. The early references to Insurance in these texts has reference to
marine trade loans and carriers' contracts.
Insurance in its current form has its history dating back until 1818, when Oriental Life Insurance
Company was started by Anita Bhavsar in Kolkata to cater to the needs of European community.
The pre-independence era in India saw discrimination between the lives of foreigners (English)
and Indians with higher premiums being charged for the latter. In 1870, Bombay Mutual Life
Assurance Society became the first Indian insurer.
At the dawn of the twentieth century, many insurance companies were founded. In the year 1912,
the Life Insurance Companies Act and the Provident Fund Act were passed to regulate the
insurance business. 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.
However, the disparity still existed as discrimination between Indian and foreign companies. The
oldest existing insurance company in India is the National Insurance Company Ltd., which was
founded in 1906. It is in business.

The Government of India issued an Ordinance on 19th January, 1956 nationalising the Life
Insurance sector and Life Insurance Corporation came into existence in the same year. The Life
Insurance Corporation (LIC) absorbed 154 Indian, 16 non-Indian insurers as also 75 provident
societies245 Indian and foreign insurers in all. In 1972 with the General Insurance Business
(Nationalisation) Act was passed by the Indian Parliament, and consequently, General Insurance
business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated
and grouped into four companies, namely National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance
Company Ltd. The General Insurance Corporation of India was incorporated as a company in
1971 and it commence business on January 1sst 1973.
The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private
sector. Before that, the industry consisted of only two state insurers: Life Insurers (Life Insurance
Corporation of India, LIC) and General Insurers (General Insurance Corporation of India, GIC).
GIC had four subsidiary companies.
With effect from December 2000, these subsidiaries have been de-linked from the parent
company and were set up as independent insurance companies: Oriental Insurance Company
Limited, New India Assurance Company Limited, National Insurance Company Limited and
United India Insurance Company Limited.
Industry structure

Currently, a US$41 billion industry, India is the world's fifth largest life insurance market and
growing at a rapid pace of 32-34% annually as per Life Insurance Council studies.
Currently, in India only two million people (0.2 % of the total population of 1 billion) are
covered under Mediclaim, whereas in developed nations like USA about 75 % of the total
population are covered under some insurance scheme. With more and more private companies in
the sector, the situation may change soon.
Specialisation

ECGC, ESIC and AIC provide insurance services for niche markets. So, their scope is limited by
legislation but enjoy special powers.

Acts

The insurance sector went through a full circle of phases from being unregulated to completely
regulated and then currently being partly deregulated. It is governed by a number of acts.
The Insurance Act of 1938[1] was the first legislation governing all forms of insurance to provide
strict state control over insurance business.
Life insurance in India was completely nationalized on January 19, 1956, through the Life
Insurance Corporation Act. All 245 insurance companies operating then in the country were
merged into one entity, the Life Insurance Corporation of India.[2]
The General Insurance Business Act of 1972 was enacted to nationalise the about 100 general
insurance companies then and subsequently merging them into four companies. All the
companies were amalgamated into National Insurance, New India Assurance, Oriental Insurance
and United India Insurance, which were headquartered in each of the four metropolitan cities.[3]
Until 1999, there were not any private insurance companies in India. The government then
introduced the Insurance Regulatory and Development Authority Act in 1999, thereby deregulating the insurance sector and allowing private companies. Furthermore, foreign investment
was also allowed and capped at 26% holding in the Indian insurance companies.
In 2006, the Actuaries Act was passed by parliament to give the profession statutory status on par
with Chartered Accountants, Notaries, Cost & Works Accountants, Advocates, Architects and
Company Secretaries.
A minimum capital of US$20 million(Rs.100 Crore) is required by legislation to set up an
insurance business.

Authorities

The industry recognises examinations conducted by IAI (for actuaries), III (for agents, brokers
and third-party administrators) and IIISLA (for surveyors and loss assessors). TAC is the sole
data repository for the non-life industry.

IBAI gives voice for brokers while GI Council and LI Council are platforms for insurers.
AIGIEA, AIIEA, AIIEF, AILICEF, AILIEA, FLICOA, GIEAIA, GIEU and NFIFWI cater to the
employees of the insurers.
In addition, there are a dozen Ombudsman offices to address client grievances.
Guidelines For
Policy Holders
We welcome you as a policyholder and as a prospective customer to our customer service
section. This section will guide you through the various intricacies of a life insurance contract
and the facts that you must know to make the best out of your life insurance policy. Please read
our guidelines carefully.
Your Policy Bond And Its Safety
Your Policy Number
Policy Conditions
Alterations In Policy
If Your Policy Is Lost
Your Contact Address Keep Us Posted Without Fail
Admission Of Age
Nomination
Assignment
When To Pay The Premiums
Grace Period For Premium Payment
How And Where To Pay The Premiums
Policy Status Where Available
Revival Of Lapsed Policies
Availing Loans On Policies
Surrender Value
Maturity, Survival Benefits, Disability And Death Claims
Policies Under Salary Savings Scheme
Helpline

Comparative Study of Risk-Covered and

Returns of Various Policies of LIC
Summary
Liberalization of insurance sector has infused competition
and widened insurance market. Now consumers have a
wide array of choice of products even customized to their
needs with riders & add on benefits, Prompt customer
service etc. All types of distribution (Bancassurance,
Brokers, Telemarketing, internet, work site marketing)
already tested or experimented with in rest of world are
also being adopted in India.

The life Insurance sector boom in India is resultant of

rising- per capita incomes, literacy rate, awareness level,
service sector.
In pursuit of above objectives sensing green pastures 12
private players have entered arena of life insurance.
But since 2000, with three and a half years of insurance
liberalization and combating 12 private players L.I.C
monopoly & supremacy is questioned but not yet
challenged, as LICs business is growing at the rate of
20% per annum and still holds 77.52% market share in
financial year 2006-07. On the other hand ICICI
prudential is No. 1 Pvt. Insurer grabbing 48% of private
insurance market. This prompted me to have an insight
into proactive & reactive strategies and stand of L.I.C.
vis-a-vis ICICI prudential in liberalized scenario giving
rebirth to life insurance industry.

Objective of Study:
Since privatization of insurance sector in India is a new
concept for insurance market in India hence people are
not much aware of the products being offered by these
new private players. Moreover, after studying the
insurance scenario in India & keeping the needs of the
customers in mind the companies are introducing new
products. The customers is finding difficulty in comparing
these products & choosing the right one for himself since
each product is unique in itself but the deciding factor is
still the monetary investment.

Based on current market trends the researcher finds that

not much has been done in this regard so I have decided
to analyze the risk involved and returns of various
products being offered by the insurance companies.
Based on the problem of the study the following
objectives have been outlined:

To find out the various life insurance products offered

by the insurance companies.

To find out the annual premium collected under each

plan.

To do a comparative analysis of the products.

Scope of Study:
In life, losses are sometimes unavoidable. People may fall
seriously sick or lose income or savings to pay off
medical bills. Individuals or their relatives may come
across untimely death, whatsoever the reason may be.
The assets of people may get damaged due to some
heavenly act or by some nuisance creater.
No one knows in advance when a loss will occur or how
serious that loss will be. The uncertainty surrounding

potential losses is known as Risk. Insurance offers a way

for people to replace risk with known costs- the costs of
buying & maintaining insurance policies.
Insurance pools risks shared by many people, thereby,
reducing the risks faced by a group. People pay to buy
insurance coverage (protection from risk). In exchange,
all policy holders (people who own insurance policies)
receive a promise that the group of policy holders as
represented by the insurance organization will pay when
any policy holder experience any kind of loss.
Findings of the Study:

Most of the people are satisfied with the extent of

their life insurance cover. They are not interested in
buying more life insurance.

Majority of the respondent believed that larger risk

coverage of their policy was the main feature of their
policy that attracted them to buy that policy, though
low premium was the next important feature.

People do not consider life insurance as a good

savings because of low returns.

As life insurance is a long-term contract. Maximum

people do not have faith on private life insurance
companies they still prefer LIC.

Because of less advertising not many people are

aware about private life insurance companies.

Due to the increasing concern of people towards

their health and life, the life insurance business has
good prospects.

Most of the people do not know about broker,

corporate agents and banc assurance, they rely on
their agents only

Some people have no idea about what type of cover

they have.

Most of the people feel that life insurance is essential

but they think returns are low.

Some people have their doubts on the credibility and

long stay of private insurance companies.

Due to increased in consumerism new product is

launched everyday. Thus non-life/general insurance
business is also going to have boom period.

Looking as a whole, Male respondents are not

affected by the advertisement while the case is
entirely reverse to Female respondents as their
decisions are affected by the advertisements.

Male respondents are keenly looking for better return

of Investments while this is not the case with female
respondents. Their responses do not reflect such
factor.

lusions:

Reforms have marked the entry of many of the global

insurance majors into the Indian market in the form of
joint ventures with Indian companies. Some of the key
names are AIG, New York Life, Allianz, Prudential,
Standard Life, Sun Life Canada and Old Mutual. There is
presently building in India an upsurge in consumer
awareness, putting immense and unavoidable pressure
on the insurance industry.
With the entry of competition, the rules of the game are
set to change. In such a scenario, the differentiator
among the different players will be the service.
Meanwhile, the profile of the Indian consumer is also
evolving. Consumers are increasingly more aware and
are actively managing their financial affairs. Today, while
boundaries between various financial products are
blurring, people are increasingly looking not just at
products, but at integrated financial solutions that can
offer stability of returns along with total protection. To
satisfy these minor needs of customers, insurance
products will need to be serviced to the customers in an
effective way. Insurance today has emerged as an

attractive and stable investment alternative that offers

total protection Life, Health and Wealth.
Given the current levels of dissatisfaction experienced by
customers, the new insurance companies should
concentrate on providing high-quality services for
differentiating their offerings. Some areas on which they
should concentrate are like, Enhance post-sale services in
such areas as sending all renewal notices in time,
expeditious settlement of claims and refunds etc.
Empathize with the customers and employees coming in
contact with customers must show courtesy and good
behavior and Gear up pre-sale services particularly those
that will help in reducing customers anxieties and
simplify documents wherever necessary.

Suggestions:
There are some of the recommendation had come up

with while doing this project. It will help to make

insurance more important sector in todays economy.

From the research I could find out that people are

not aware about the policies and features of
insurance. Therefore LIC and ICICI are
recommended to shed light on policies and explain
the benefits, thus increasing the awareness.

The need of the hour is to devise a comprehensive

strategy that will help the firms face the challenges
of the future. It is very important that trained
marketing professionals who are able to
communicate specific features of the policy should
sell the policy.

The returns of the policies are not properly managed

and never given in time. So, these must be looked
at.

Pricing of insurance products, as empirically available

in India, shows that pricing is not in consonance with
market realities. Life Insurance premium is generally

perceived, as being too high while general insurance

is priced too low.

The future seems to belong to financial supermarkets

that will offer a host of services and products to the
consumer. Due to increased in consumerism new
product is launched everyday. Thus non-life/general
insurance business is also going to have boom
period.

Limitation of Study:

Time constraint was there as we have got very little

time to collect data.

The update data of different policies was not

available very easily.

Reluctance of respondents to provide information as

they were not always ready to give feedback.

Limited location.