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.

[edit] 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. The company began operations with 5 zonal
offices, 33 divisional offices and 212 branch offices. LIC received another set back with
Mundra fraud but it escaped with least damage from Harshad Mehta scam. There are
intermittent rumours in media but LIC has largely escaped large scale scandals of the
type encountered by erstwhile UTI largely because of its immunity from being
transparent in the name of confidentiality in the era of RTI. Often there is consumer
demand to open the investment portfolio of LIC but no body knows if it will be good for
the corporation. But there is a great and undue reliance on the management environment
of this great corporation. People are scared after what has happened to Goldman Sachs or
Lehman Brothers in USA and elsewhere, which were equally or more big and great.

[edit] Current status

(needs editing and updating)

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 $ [3], has grown to 25000 servicing around 180 million policies
and a corpus of over 8 trillion (US$ 173.6 billion).

The organization now comprises 2048 branches, 109 divisional offices and 8 zonal
offices, and employs over 1,002,149 agents.The corporate Office of LIC is in Mumbai. It
also operates in 12 other countries, primarily to cater to the needs of Non Resident
Indians.

With the change in the 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 has
had to compete with a number of other corporate entities, Indian as well as transnational
Life Insurance brands. However, 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 Survey rated LIC as the No. 1 Service Brand
of the Country.

In the financial year 2006-07 Life Insurance Corporation 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)

[edit] Subsidiaries
LIC owns the following subsidiaries:

• Life Insurance Corporation of India International: This is a joint venture

offshore company promoted by LIC which commenced operations in July, 1989
with the objectives of offering US$ denominated policies to cater to the insurance
needs of NRIs and providing insurance services to holders of LIC policies
currently residing in the Gulf. LIC International operates in all GCC countries.

• 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 Bartleet Group of
Companies, Sri Lanka.

• LIC Housing Finance: Incorporated in 19 June 1989, its main objective is to

provide long term finance for construction or purchase of houses or apartments. It
has a Dubai office.
o LICHFL Care Homes: A wholly owned subsidiary of LIC Housing
Finance, it builds and operates "Assisted Community Living Centres" for
senior citizens.

[edit] People Goa

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 mere seniority in number of years for the selection of the senior
management, this has changed as seen in the case of Thomas Matthew and A. Dasgupta
(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 organization's
functioning.
• The current Chairman, Mr. T.S. Vijayan, is particularly responsible for the major
IT infrastructure turnaround 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 Mathew manages the close to $187 billion investment portfolio of the
company, which is the largest investor in the country.
• A. Dasgupta manages the engineering and other functions, many of which are
very advanced in the Indian corporate scenario.

[edit] Objectives of LIC of India

• Spread and provide life insurance to the masses at a reasonable cost.
• Spread Life Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all insurable
persons in the country and providing them adequate financial cover against death
at a reasonable cost.
• Maximize mobilization of people's savings by making insurance-linked savings
adequately attractive.
• Bear in mind, in the investment of funds, the primary obligation to its
policyholders, whose money it holds in trust, without losing sight of the interest
of the community as a whole; the funds to be deployed to the best advantage of
the investors as well as the community as a whole, keeping in view national
priorities and obligations of attractive return.
• Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders.
• Act as trustees of the insured public in their individual and collective capacities.
• Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
• Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
• Promote amongst all agents and employees of the Corporation a sense of
participation, pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective.

[edit] References
1. ^ "The Telegraph - Calcutta (Kolkata) | Business | LIC seeks to pack greater funds
punch". Telegraphindia.com. 2010-03-08.
http://www.telegraphindia.com/1100308/jsp/business/story_12190577.jsp.
Retrieved 2010-08-30.
2. ^ "Life Insurance Corporation of India - LIC - LIC India". Iloveindia.com.
http://www.iloveindia.com/finance/insurance/companies/lic.html. Retrieved 2010-
08-30.
3. ^ "UNdata | record view | Exchange rate, US$ per national currency, period
average (IMF)". Data.un.org. 2008-05-22. http://data.un.org/Data.aspx?
d=CDB&f=srID:6080. Retrieved 2010-08-30.
[edit] External links
• Life Insurance Corporation of India - Official LIC Website

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