CHAPTER -1

: INTRODUCTION

1.1 OVERVIEW OF INDIAN ECONOMY AND SERVICE SECTOR 1. INTRODUCTION OF INDIAN ECONOMY

ECONOMY An economy consists of the economic system of a country or other area; the labor, capital and land resources; and the manufacturing, trade, distribution, and consumption of goods and services of that area. An economy may also be described as a spatially limited and social network where goods and services are exchanged according to demand and supply between participants by barter or a medium of exchange with a credit or debit value accepted within the network. A given economy is the end result of a process that involves its technological evolution, history and social organization, as well as its geography, natural resource endowment, and ecology, as main factors. These factors give context, content, and set the conditions and parameters in which an economy functions. INDIAN ECONOMY The Economy of India is the ninth largest in the world by nominal GDP and the third largest by purchasing power parity (PPP). The country is one of the G-20 major economies and a member of BRICS. The country's per capita GDP (PPP) was $3,703 (IMF, 129th in the world) in 2011, making it a lower-middle income economy. The independence-era Indian economy (before and a little after 1947) was inspired by the economy of the Soviet Union with socialist practices, large public sectors, high import duties and lesser private participation characterizing it, leading to massive inefficiencies and widespread corruption. However, later on India

adopted free market principles and liberalized its economy to international trade under the guidance of Manmohan Singh, who then was the Finance Minister of India under the leadership of P.V. Narasimha Rao the then Prime Minister. Following these strong economic reforms, the country's economic growth progressed at a rapid pace with very high rates of growth and large increases in the incomes of people. India recorded the highest growth rates in the mid-2000s, and is one of the fastest-growing economies in the world. The growth was led primarily due to a huge increase in the size of the middle class consumer, a large labor force and considerable foreign investments. India is the seventeenth largest exporter and eleventh largest importer in the world. Economic growth rates are projected at around 7.0%-7.5% for the financial year 2011-2012.

2.

HISTORY OF INDIAN ECONOMY

The known Economic history of India begins with the Indus Valley civilization. The Indus civilization's economy appears to have depended significantly on trade, which was facilitated by advances in transport. Around 600 BC, the Mahajanapadas minted punchmarked silver coins. The period was marked by intensive trade activity and urban development. By 300 B.C., the Maurya Empire united most of the Indian subcontinent. The political unity and military security allowed for a common economic system and enhanced trade and commerce, with increased agricultural productivity. For the next 1500 years, India produced its classical civilizations such as the Rashtrakutas, Hoysalas and Western Gangas. During this period India is estimated to have had the largest economy of the ancient and medieval world between the 1st and 17th centuries AD, controlling between one third and one

fourth of the world's wealth up to the time of the Marathas, from whence it rapidly declined during European rule. India has followed central planning for most of its independent history, which have included extensive public ownership, regulation, red tape, and trade barriers. After the 1991 economic crisis, the central government launched economic liberalization. India has turned towards a more capitalist system and has emerged as one of the fastest growing large economies of the world.

3.

SALIENT

FEATURES

OF

INDIAN

ECONOMY

Indian economy is basically an agricultural economy. More than 60% of the population is engaged in agriculture and allied activities. Low per capita income is the second feature of Indian economy. It is one of the lowest in the world. The occupational structure has not been changed during the last 100 years. In 1950-51 about 73% of the workers were engaged in primary activities, 11% in secondary and 16% in tertiary activities. In 1999-2000 the share of different sectors in employment amounted to 60%, 17% and 23% respectively. Inequality of income and wealth is other important feature of Indian economy. In India the main resources are concentrated in the hands of the few people. 40% of the total assets is concentrated in the hands of top 20 percent people. There has been remarkable improvement in social sectors such as education, health, housing, water supply, civic amenities etc.

 Planning process is also an important feature. As the

government has adopted planned developmental economy. Five years plans are framed for economic development.

4.

DIFFERENT SECTORS OF INDIAN ECONOMY

4.1 Primary Sector The primary sector of the economy extracts or harvests products from the earth. The primary sector includes the production of raw material and basic foods. Activities associated with the primary sector include agriculture (both subsistence and commercial), mining, forestry, farming, grazing, hunting and gathering, fishing, and quarrying. The packaging and processing of the raw material associated with this sector is also considered to be part of this sector. In developed and developing countries, a decreasing proportion of workers are involved in the primary sector. About 3% of the U.S. labor force is engaged in primary sector activity today, while more than two-thirds of the labor force were primary sector workers in the mid-nineteenth century 4.2 Secondary Sector The secondary sector of the economy manufactures finished goods. All of manufacturing, processing, and construction lies within the secondary sector. Activities associated with the secondary sector include metal working and smelting, automobile production, textile production, chemical and engineering industries, aerospace manufacturing, energy utilities, engineering, breweries and bottlers, construction, and shipbuilding.

4.3 Tertiary Sector The tertiary sector of the economy is the service industry. This sector provides services to the general population and to businesses. Activities associated with this sector include retail and wholesale sales, transportation and distribution, entertainment (movies, television, radio, music, theater, etc.), restaurants, clerical services, media, tourism, insurance, banking, healthcare, and law. In most developed and developing countries, a growing proportion of workers are devoted to the tertiary sector. In the U.S., more than 80% of the labor force are tertiary workers. 4.4 Quaternary Sector The quaternary sector of the economy consists of intellectual activities. Activities associated with this sector include government, culture, libraries, scientific research, education, and information technology. 4.5 Quinary Sector Some consider there to be a branch of the quaternary sector called the quinary sector, which includes the highest levels of decision making in a society or economy. This sector would include the top executives or officials in such fields as government, science, universities, nonprofit, healthcare, culture, and the media. An Australian source relates that the quinary sector in Australia refers to domestic activities such as those performed by stay-athome parents or homemakers. These activities are typically not measured by monetary amounts but it is important to recognize these activities in contribution to the economy.

5.

Service sector

The tertiary sector of the economy (also known as the service sector or the service industry) is one of the three economic sectors, the others being the secondary sector (approximately the same as manufacturing) and the primary sector (agriculture, fishing, and extraction such as mining). The service sector consists of the "soft" parts of the economy, i.e. activities where people offer their knowledge and time to improve productivity, performance, potential, and sustainability. The basic characteristic of this sector is the production of services instead of end products. Services (also known as "intangible goods") include attention, advice, experience, and discussion. The production of information is generally also regarded as a service, but some economists now attribute it to a fourth sector, the quaternary sector. The tertiary sector of industry involves the provision of services to other businesses as well as final consumers. Services may involve the transport, distribution and sale of goods from producer to a consumer, as may happen in wholesaling and retailing, or may involve the provision of a service, such as in pest control or entertainment. The goods may be transformed in the

process of providing the service, as happens in the restaurant industry. However, the focus is on people interacting with people and serving the customer rather than transforming physical goods. For the last 30 years, there has been a substantial shift from the primary and secondary sectors to the tertiary sector in industrialised countries. This shift is called tertiarisation. The tertiary sector is now the largest sector of the economy in the Western world, and is also the fastest-growing sector.

6.

Contribution of Service Sector in Indian Economy

The advance estimates (AE) of the Economic Survey 2010-11 put the growth rate of the services sector at 9.6%. This is despite global deceleration in the sector. The sector had registered 10.1% growth in 2009-10. The Survey presented by the Union Finance Minister, Pranab Mukherjee in the Parliament today states that the Indian economy remains the second fastest growing in the services growth with 8.9% rate, behind China (10.5%). An international comparison of the services sector shows that India compares well even with the developed countries in the top 12 countries with highest overall GDP. The two broad services categories, namely trade, hotels, transport, and communication; and financing, insurance, real estate, and business services have performed well with growth of 11% and 10.6% respectively in 2010-11 (AE). Only community, social and personal services have registered a low growth of 5.7% due to base effect of fiscal stimulus in the previous two years, thus contributing to the slight deceleration in growth of the sector. The construction sector, a borderline service inclusion, grew at a moderate 8%. Among the four broad categories of services, in terms of shares, financing, insurance, real estate, and

business services; and trade, hotels, and restaurants are the largest groups accounting for 16.7% and 16.3% respectively of the national GDP in 2009-10. The Survey says that in terms of exports, India is also moving towards a services led export growth. In the first half of 2010-1, services exports growth was 27.4% despite a dip due to the global crisis which was more due to fall in the share of merchandise trade to GDP. The growth rate in 2010-11 is expected to be 19.5 per cent for IT - BPO services, 18.5 % for exports and 22.8% for domestic IT related services. The contribution of the services sector to the Indian economy has been 55.2% in GDP and has been growing by 10% annually. In terms of employment, although the primary sector is the dominant employer followed by the services sector, the share of the services sector has been increasing over the years. The global economic and financial crisis had a dampening effect on the cross border FDI floors. The Survey says that in order to maintain the level of FDI into the sector, the major challenge is to retain India's competitiveness in this sector. Making in roads into some traditional areas such as tourism and shipping and making forays into globally traded services such as financial services, health care, education and accountancy etc. are the other challenges that needs to be overcome.

1.2

OVERVIEW OF INDUSTRY

1. Insurance Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice. The transaction involves the insured assuming a guaranteed and known relatively small loss in the form of payment to the insurer in exchange for the insurer's promise to compensate (indemnify) the insured in the case of a financial (personal) loss. The insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insured will be financially compensated. 2. Insurance sector

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population and the untapped market area of this population Insurance happens to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with banking services, it adds about 7 per cent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian populations are without Life insurance cover and the Health insurance. This is an indicator that growth potential for the insurance sector is immense in India. It was due to this immense growth that the regulations were introduced in the insurance sector

and in continuation Malhotra Committee was constituted by the government in 1993 to examine the various aspects of the industry. The key element of the reform process was Participation of overseas insurance companies with 26% capital. Creating a more efficient and competitive financial system suitable for the requirements of the economy was the main idea behind this reform.

3.

Brief

History

Of

Insurance

PHASE-I : LIFE INSURANCE(1818-1956) About 138 years: Many (245) private sector companies only, competitive market. GENERAL INSURANCE (1850-1972) About 122 years: Many (107) private sectors companies only, competitive market. PHASE-II : LIFE INSURANCE(1956-2000) About 44 years: Nationalization, public sector or state monopoly , only one company.

GENERAL INSURANCE (1972-2000) About 28 years: Nationalisation, public sector monopoly, only one company with its four subsidiaries. PHASE-III : AFTER 2000 Opened to the entry of private domestic, and foreign companies, mixed sector of public and private sector unit, oligopoly of public sector companies (14 life insurance and 12 general insurance companies

Some of the important milestones 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 its 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 businesses. 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 societies are taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company. 4. GROWTH OF INSURANCE :

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 insurancelinked 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.

5.

KEY PLAYERS:

ICICI Prudential Life Insurance Company :

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, one of the foremost financial services companies of India and Prudential plc, one of the leading international financial services group headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector life insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential Life's capital stands at Rs. 4,780 crores (as of September 30, 2010) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the period April 1, 2010 to September 30, 2010, the company garnered Rs 7,267 crores of total premiums and has underwritten over 10 million policies since

inception. The company has a network of over 1,500 offices and over 1,60,000 advisors, as on September 30, 2010. The company has assets held over Rs. 65,000 crores as on September 30, 2010. Since the liberalization of Indian Insurance sector, ICICI Prudential Life Insurance has been one of the earliest private players. Since the time, ICICI Pru Life has been the leader in terms of market share as indicated by the IRDA (Insurance Regulatory and Development Authority, the regulator for Indian Insurance Industry) at its website. In June, 2009 ICICI Prudential Life Insurance has decided to snap its tie up with TTK Healthcare to settle insurance claims of its users. ICICI Prudential's life insurance products may be loosely categorized under four forms- Life Plans (further categorised into Term Plans and Wealth Plans), Child Plans, Retirement Plans and Health Plans. Under Life Insurance Plan category it offers term plans like i-Protect online term plan, ICICI Pru Pure-Protect and ICICI Pru LifeGuard, and ULIP wealth plans like ICICI Pru LifeStage Wealth II, ICICI Pru LifeLink Wealth SP, ICICI Pru Pinnacle Super etc. Under the Child / Education Plan category it offers products like ICICI Pru SmartKid regular premium and ICICI Pru SmartKid Premier Under the Retirement Insurance Plan category it offers products like ICICI Pru Forever Life & ICICI Pru LifeLink Pension SP. Under the Health Insurance Plan category it offers products like ICICI Pru Health.

Birla Sun Life Insurance Company :

Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group, a well known and trusted name globally amongst Indian conglomerates and

Sun Life Financial Inc, leading international financial services organization from Canada. The local knowledge of the Aditya Birla Group combined with the domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers' future. With an experience of over 10 years, BSLI has contributed significantly to the growth and development of the life insurance industry in India and currently ranks amongst the top 6 private life insurance companies in the country. Known for its innovation and creating industry benchmarks, BSLI has several firsts to its credit. It was the first Indian Insurance Company to introduce "Free Look Period" and the same was made mandatory by IRDA for all other life insurance companies. Additionally, BSLI pioneered the launch of Unit Linked Life Insurance plans amongst the private players in India. To establish credibility and further transparency, BSLI also enjoys the prestige to be the originator of practice to disclose portfolio on monthly basis. These category development initiatives have helped BSLI be closer to its policy holders' expectations, which gets further accentuated by the complete bouquet of insurance products (viz. pure term plan, life stage products, health plan and retirement plan) that the company offers. Add to this, the extensive reach through its network of 600 branches and 1, 47,900 empanelled advisors. This impressive combination of domain expertise, product range, reach and ears on ground, helped BSLI cover more than 2.4 million lives since it commenced operations and establish a customer base spread across more than 1500 towns and cities in India. To ensure that our customers have an impeccable experience, BSLI has ensured that it has lowest outstanding claims ratio of 0.00% for FY 2010-11. Additionally, BSLI has the best Turn Around Time according to LOMA on all claims Parameters. Such services are well supported by sound financials that the Company

has. The AUM of BSLI stood at 19725 crs as on April 30, 2011, while the company has a robust capital base of Rs. 2450 crs. HDFC Standard Life Insurance Company: HDFC Life, one of India's leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom. HDFC Ltd. holds 72.37% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of equity in the joint venture, while the rest is held by others. HDFC Life's product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health. Customers have the added advantage of customizing the plans, by adding optional benefits called riders, at a nominal price. The company currently has 28 retail and 9 group products in its portfolio, along with ten optional rider benefits catering to the savings, investment, protection and retirement needs of customers. HDFC Life continues to have one of the widest reaches among new insurance companies with more than 500branches servicing customer needs in over 700 cities and towns. The company has a strong base of Financial Consultants.

Reliance Life Insurance company:

Reliance Life Insurance offers you products that fulfill your savings and protection needs. Our aim is to emerge as a transnational Life Insurer of global scale and standard.

Reliance Life Insurance is a Reliance Capital Company and is part of Reliance Group. Reliance Capital is one of Indias leading private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, life and general insurance, proprietary investments, private equity and other activities in financial services. Reliance Group also has presence in Communications, Energy, Natural Resources, Media, Entertainment, Healthcare and Infrastructure. Nippon Life Insurance Company acquired 26% interest in equity share capital of the Company effective October 7, 2011 subsequent to receipt of all regulatory approval. Nippon Life Insurance, also called Nissay, is Japan's largest private life insurer with revenues of Rs 346,834 crore (US$ 80 Billion) and profits of over Rs 12,199 crore (US$ 3 billion). The Company has over 14 million policies in Japan, offers a wide range of products, including individual and group life and annuity policies through various distribution channels and mainly uses face-to-face sales channel for its traditional insurance products. The company primarily operated in Japan , North America, Europe and Asia and is headquartered in Osaka, Japan. It is ranked 81st in Global Fortune 500 firms in 2011.

6. Contribution of insurance sector in the service sector

Insurance sector in India is one of the booming sectors of the economy and is growing at the rate of 15-20 per cent annum. Together with banking services, it contributes to about 7 per cent to the country's GDP. Insurance is a federal subject in India and Insurance industry in India is governed by Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and General Insurance

Business (Nationalisation) Act, 1972, Insurance Regulatory and Development Authority (IRDA) Act, 1999 and other related Acts. The origin of life insurance in India can be traced back to 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. It was conceived as a means to provide for English Widows. In those days a higher premium was charged for Indian lives than the non-Indian lives as Indian lives were considered riskier for coverage. The Bombay Mutual Life Insurance Society that started its business in 1870 was the first company to charge same premium for both Indian and non-Indian lives. In 1912, insurance regulation formally began with the passing of Life Insurance Companies Act and the Provident Fund Act. By 1938, there were 176 insurance companies in India. But a number of frauds during 1920s and 1930s tainted the image of insurance industry in India. In 1938, the first comprehensive legislation regarding insurance was introduced with the passing of Insurance Act of 1938 that provided strict State Control over insurance business. Insurance sector in India grew at a faster pace after independence. In 1956, Government of India brought together 245 Indian and foreign insurers and provident societies under one nationalised monopoly corporation and formed Life Insurance Corporation (LIC) by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs.5 crore. The (non-life) insurance business/general insurance remained with the private sector till 1972. There were 107 private companies involved in the business of general operations and their operations were restricted to organised trade and industry in large cities. The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect

from January 1, 1973. The 107 private insurance companies were amalgamated and grouped into four companies: National Insurance Company, New India Assurance Company, Oriental Insurance Company and United India Insurance Company. These were subsidiaries of the General Insurance Company (GIC). In 1993, the first step towards insurance sector reforms was initiated with the formation of Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra. The committee was formed to evaluate the Indian insurance industry and recommend its future direction.

CHAPTER-2
LIC

ABOUT THE COMPANY

2.1

COMPANY PROFILE: Life Insurance Corporation of India 1956 $166 million Rs 2 lakh crore: LICs exposure in indian market accounting for about 4% of total market capitalization. 1st Floor,West Wing, Mumbai Do-Iv, Yogakshema, Jeevan Bima Marg, Mumbai - 400 021, India

Date of Establishment Revenue Market Cap

Address

Branches Management Team

8 Zonal Offices and 101 Divisional Offices T.S.Vijayan:Chairman D.K.Mehrotra:MD,LIC ThomasMathew:MD,LIC AKDasgupta:MD,LIC Arun Ramanathan : Secretary, Financial Services, Dept. of Financial Services, Ministry of Finance, Govt of India

T.S VIJAYAN,CHAIRMAN

Sindhushree Khullar : Addl. Secretary, Dept of Economic Affairs, Ministry of Finance Yogesh Lohiya : Chairman cum MD, GIC of India . T.C. Venkat Subramanian : Chairman & MD, Export Import Bank of India.

Overview

The largest life insurance company in India, Life Insurance Corporation is fully owned by the government. It provides individual life insurance, group insurance and pension plans. Its subsidiaries include Life Insurance Corporation of India International, LIC Nepal, LIC Lanka, LIC Housing Finance and LICHFL Care Homes. It has over 12

million policy holders and over 9 lakh agents. It has underwritten more than 120 million policies. LIC saw computers in 1964. Today the company is on the Internet and is utilizing Information Technology in servicing its clients. It has bagged various award including Loyalty Awards 2008 in Insurance Sector, NDTV Profit Business Leadership Award 2007, CNBC Awaaz Consumer Awards 2007 and Outlook Money NDTV Profit Awards 2007. LIC provides a rewarding career as sales agents. It offers world class training, freedom to work and unmatched financial strength.

Life Insurance Corporation of India (LIC)

Life Insurance Corporation (LIC) is the largest life insurance company in India fully owned by the government. Established in 1956 by the Life Insurance of India Act, LIC is headquartered in Mumbai and is the countrys largest investor. Its subsidiaries include Life Insurance Corporation of India International, LIC Nepal, LIC Lanka, LIC Housing Finance and LICHFL Care Homes.

2.2

HISTORY OF

LIC

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.

Some of the important milestones 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 its 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 businesses. 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 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. The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company. 2.3 OBJECTIVES OF LIC :

Spread life insurance widely and particularly to the rural areas and to the socially and economically backward classes with a view to reaching all insurable person in the country and providing them adequate financial cover against death at a reasonable cost . Maximise mobilization of peoples savings by making insurance- linked savings adequately attractive. Bear in mind, in the investments 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 ;keeping in view national priorties and obligations of attractive return.

 Conduct business with utmost economy and with full realization that the moneys belong to the policy holders. Act as trustees of the insured public in their individual and collective capacities. Meet the 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 interest of the insured public by providing efficient service with courtesy. Promote among all agents and the employees of the corporation, a sense of participation ,pride and job satisfaction through discharge of their duties with dedication towards achievement of corporate objective.

2.4

MISSION AND VISION OF LIC

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 significance to societies and Pride of India. Values : Caring and courtesy , initiatives and innovation , integrity and transparency , qualify and returns , participation and relationship ,trustworthiness and reliability. conglomerate of

Culture : Agility (quickness) , Adaptability ,Colloboration , Commitment ,Discipline , Empowerment , Sensitivity and Excellence.

2.6

SWOT ANALYSIS:
Strengths: 1. Largest state-owned life insurance company in India, and also the country's largest investor. 2. Has over 2000 branches across all parts of India and more than 10,00,000 agents. 3. With Largest fund base it India . is the biggest investor in

4. Has over 115,000 employees across India. 5. According to The Brand Trust Report, LIC is the 8th most trusted brand of India. 6. LIC has subsidiaries like LIC Housing Finance Limited, LIC Cards Services Limited, LIC Nomura Mutual Fund, LIC(Nepal)Ltd, LIC(Lanka)Ltd, LIC(International)BSC(C). Weakness: 1. It has an image of a Government agency and hence lacks innovation. 2. Being a Government agency, red tape and bureaucracy causes problems.
3. Managing a huge workforce during economic crisis meant

overburdened due to

salaries.

Opportunities: 1. Use of Technology to provide effective services to cater to urban population. 2. Government Threats: 1. Economic crisis. 2. Entry of new NBFCs in the sector. Schemes implementation.

3. Varying Govt policies.

2.7

Contribution in economy

What is the role of "LIC" in the devolepment of indian economy? LIC has contributes 1.84% of GDP
Currently LIC has no other great role than making life insurance business successful in India. This is the only role an Insurance company needs to and can play in a civilized open economy. Once the insurance business is undertaken, investments have to take place automatically. This will help economic growth. But this is no important role. All what economic textbooks in India say about LIC or any other organisation promoted by Govt. longtime back is absolutely trash, wrong, misleading and propoganda.

Life insurance is considered by many financial experts to be the foundation of a total financial plan. Thats because its uniquely designed to perform three vital roles in the life of an individual, family or business, namely asset accumulation, estate planning, and estate distribution.
Asset Accumulation

During our productive earning years, the ability to generate an income is typically our greatest asset. When income is saved and invested rather than consumed, the potential result is asset accumulation, which takes a lead role in helping to assure that current and future economic needs will be met. Its also a time when premature death may not only undo asset accumulation but also create a critical need for funds, now and in the future. Lets look at the needs created when an income earner dies.

Final expenses : The need for immediate cash at death is universal. Final expenses typically include the cost of a last illnesswhich could span days, weeks or longeralong with funeral and burial expenses. Death can also create a tax liability requiring immediate funds to take care of it.
Outstanding debt: Debt includes charge card balances, auto and school loans, home equity loans and other installment accounts that had formerly been met by an ongoing income that is now lost. Housing expenses: Survivors need money for mortgage or rent payments. Ideally, funds should be earmarked to

pay off a mortgage or make rental payments for a number of years. Family income. The need to find replacement income usually is by far the largest and most important consideration. Even when there is more than one breadwinner, the loss of just one income can be devastating.

Education fund. For a young family, an especially

critical need is money to pay for a dependent childs educationsomething a parents continuing income probably had been counted upon to provide. Social Security blackout period. Generally, a surviving spouse with young children receives Social Security benefits until the youngest child reaches age 16. Then the spouses benefit stops until age 60 when widows or widowers benefits become payable. Funds may be needed to fill in this drop in income for a surviving spouse. Special needs. Providing for children with special needs presents its own challenges. While life insurance may be a cost-effective way to help provide money for supplemental needs, careful planning is required. It is best to work closely with a qualified attorney to make sure good intentions do not have unintended consequences.

Estate Planning
When we reach the end of our working years and are in or near retirement, theres still a need to help protect the assets we have built up over the years and to prevent needless estate shrinkage.

 A need for cash. Once an estate has reached a respectable sizethanks to increasing income, savings, successful investing and similar wealth-building activitiesthere can still be a need for cash at the estate owners death. This is especially true when the property consists of non-liquid assets such as real estate, a business, or other property that cant quickly be converted to cash. Estate taxes cant be ignored. Depending on the size of the estate, federal estate and income taxes, state taxes and other levies can dramatically shrink assets, particularly money in a qualified retirement plan. And theyre typically payable at the time of death or shortly thereafterin cash. A need for income. Immediate cash needs aside, a surviving spouse may need additional income if Social Security or pension benefits are lost or reduced at a spouses death. For example, And depending on what kind of retirement planning job was done, there may be a need to supplement retirement earnings whether or not the estate owner dies.

Estate Distribution
When estate assets are no longer needed to provide for the individuals who accumulated them, they take on a new role. This is the point where decisions must be made about the orderly distribution of the assets to the people and institutions on the receiving end.

Family members. An important consideration is how to

give family members equitable and fair treatment in the distribution of estate assets. Proper planning can go a long way in avoiding conflicts and assuring family harmony. An example is the case where a son or daughter may be in line to take over ownership and control of a family business. If the

business assets are given to that person, other family members may be shortchanged unless there are other assets available to provide equitable estate distribution. Charitable giving. An estate owner who has been providing funds and other support to one or more favorite charities may want to assure continued support well into the future. Earmarking estate assets for charitable giving is one way of accomplishing this, provided plans are made well in advance, and there are adequate estate assets to do the job after other obligations have been met.

2.8 Life insurance as "Investment" Insurance is an attractive option for investment. While most people recognize the risk hedging and tax saving potential of insurance, many are not aware of its advantages as an investment option as well. Insurance products yield more compared to regular investment options, and this is besides the added incentives (read bonuses) offered by insurers. You cannot compare an insurance product with other investment schemes for the simple reason that it offers financial protection from risks, something that is missing in non-insurance products. In fact, the premium you pay for an insurance policy is an investment against risk. Thus, before comparing with other schemes, you must accept that a part of the total amount invested in life insurance goes towards providing for the risk cover, while the rest is used for savings.

In life insurance, unlike non-life products, you get maturity benefits on survival at the end of the term. In other words, if you take a life insurance policy for 20 years and survive the term, the amount invested as premium in the policy will come back to you with added returns. In the unfortunate event of death within the tenure of the policy, the family of the deceased will receive the sum assured.

2.9 PESTEL

ANALYSIS:

A. POLITICAL FACTORS: 1. INCREASED SERVICE TAX ON PREMIUM :

The imposition of service tax on the services provided by the insurers has been increased significantly over past few years by the government.
2. ENDING OF GOVERNMENT MONOPOLY :

A g r e a t r e v o l u t i o n i n t h e insurance sector came in the year 1999 when IRDA passed the bill, lift in gall entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership.

3 . I N C R EA SE I N F D I L I M I T :

The hike in the insurance foreign direct investment (FDI) limit to 49 per cent from 26 per cent has proved to be very be ne ficial f or t he insur ance industr y in I ndia. I t has e ncour age d f ore igninvestors to invest in Indian insurance industry. 4. FAVOURABLE REGULATIONS FOR RURAL INSURANCE: To encourage insurance sector to increase its spread in rural India, government has made regulations more favorable for rural people by decreasing the amount

of premiums, introducing new group insurance plans and various other special plans for farmer. B.ECONOMIC FACTORS:
1. INCREASE IN GROSS DOMESTIC SAVINGS:

The gross domestic savings of people in India have increased significantly, due to which they are moving towards new ways of investing money for the future benefits including various insurance plans. As compared to previous year i.e.2007,the insurance industry thus expected to grow by about 40% during this fiscal year, i.e.2008.
2 .C O N T R I BU T I O N T O C O U N TR Y S G. D. P : Accor ding t o

gove rnme nt sources, the insurance and banking services contribution to the countrys gross domestic product is 7% out of which the gross premium collection by various insurance companies forms a significant part.
3 . RO L E I N GO V T . SEC U RI T I E S M ARK ET : I nsurance

companie s are fest emerging as one of the most prominent players in the govt. securities market. The share of insurance companies in overall investment in the G-se c mar ke t has more t han double d t o 23% dur ing 2007-08 fr om 9% during the previous fiscal year.
4. BIGGEST DOMESTIC PLAYER IN EQUITY MARKETS :

According to RBIs annual report for 2007-08, the insurance companies invested Rs.35880 crore in the Gsec market, which is over 173.06% higher than the

Rs.13880 crore they invested in 2006-07. Thus insurers have emerged as the biggest domestic institutional players in the equity market.

C. S O C I A L F A C T O R S : I ndia insur ance is conside re d as which is pushed upon the customers to buy. People are unwilling to buy insurance due to lack of awareness.
1. LOW I N SU RAN C E 2. INCREASE IN LIFE SPAN AND RISE IN ELDERLY POPULATION : In India lifespan has increased over past few years due to which the elderly population in India is rising day by day by day. To live a happy and independent life , more no. of educated people is moving towards investing in insurance to ensure a respectful and independent life even in old age. 3. UNCERTAINITY ABOUT LIFE : Due to increasing no. of events of terrorist attacks in various parts of the country, people have started viewing life as more uncertain. It has developed a kind of fear factor in the minds of people leaving them more worried a b o u t t he i r fa m i l y a nd k i d s . D u e to t hi s re a s o n t he y a re m o v i n g m o re a nd m o re towards buying insurance policies in order to secure their familys future. 4. CHANGING INDIAN PERCEPTION : In India e a r l i e r p e o p l e u s e d t o v i e w insurance as a tax saving device or as a method of investment. But, nowadays a great change in the perception has come. People have started realizing the C O VE RA GE : I n

importance of getting insured. Now more no. of people is viewing it as a transfer of risk for a good future. 5 . C H AN G E I N F AM I L Y SY ST EM : S i n c e p a s t , j o i nt f a m i l y s ys te m w a s t he m o s t prevalent in all the stratus of Indian society. At that time, in case of a mans death, there were other people in the family to take care of his wife and kids. But, with the passage of time, a big change in our culture has come. More no. of people is moving towards nuclear family system. In todays scenario there is no one to help a widow and her kids because everyone is busy with his/her family. In such a situation more no. of people are opting for insurance to secure their spouse and childrens future. 6. INCREASE IN LIFE STYLE DISEASES : Due to m o d e r n i z a t i o n , t h e l i f e h a s become very fast. Many changes have taken place in the life style of people, due to which a large no. of new life style diseases have made their place in our country. Thus, more no. of people is opting for health insurance etc to lead a better and more secured life.

D. TECHNOLOGICAL FACTORS:
1 . AU T O M AT I O N O F P RO C ES S ES : Nowadays, with advancement in technology the whole process of insurance has become automated. Earlier it used to take 15days to45days for the issuance of policy documents. But, now a days the whole process gets completed within 5 to 7 days. 2 . I N T E RN ET D RI VEN I N F O RM AT I O N E RA : W i t h a n i nc r e a s e i n i n te r ne t u s a ge a nd i ts i nc re a s i n g s p re a d , i t ha s b e c o me e a s i e r fo r p e o p l e to ge t i n fo rm e d a b o u t

e v e ry th i n g a t t he i r ho m e o nl y . N o w the y d o n t ha v e to w a s te ti m e i n ga t he ri ng information before taking any financial step. Every information is now-a-days is available on the net. 3.BUSINESS PROCESS MONITORING : It has become easier fo0r people to track e v e ry e v e n t i n a b u s i ne s s p ro c e s s . I t h a s re s u l te d i n m o re tr a ns p a re nc y i n e v e r y aspect of business processing. 4.E-BANKING FACILITY : More no. of people in urban sector are moving towards e- banking and credit card facilities etc, which has made payment of premium much easier, convenient and hassle free for customer.

E.LEGAL FACTORS:
1.REGULATORY BODIES: IRDA (Insurance Regulato r y D e v e l o p m e n t A u t ho ri ty ) k e e p s o n c ha ngi n g p o l i c i e s re l a te d to i ns u ra nc e w hi c h m a k e s difficult for the companies to adopt quickly. 2.RENEWAL OFREGISTRATION: An insurer, who has been granted a certificate of registration, should have the registration renewed annually with each year ending on March 31 after the commencement of the IRDA Act. 3. REQUIREMENTS AS TO CAPITAL: The minimum paid up equity capital, excluding required deposits with the RBI and any preliminary expenses in the formation of the country, requirement of an insurer would be Rs 100 crore to

carry on life insurance business and Rs 200 crore t o e x c l u s i v e l y d o reinsurance business as per Section 6

References:
http://en.wikipedia.org/wiki/Economy http://en.wikipedia.org/wiki/Economy_of_India http://en.wikipedia.org/wiki/Economic_history_of_India http://info.shine.com/company/Life-Insurance-Corporation-ofIndia/348.aspx http://knowledge.policybazaar.com/life-insurance/item/51-lifeinsurance-corporation-of-india-lic.html http://www.licindia.in/history.htm http://www.licindia.in/mission_vision.htm http://www.iciciprulife.com/public/About-us/About-Us.htm http://insurance.birlasunlife.com/AboutUs/CompanyProfile/tabid /167/Default.aspx http://www.hdfclife.com/AboutUs/AboutUsIntroduction.aspx http://www.reliancelife.com/rlic/AboutUs/our_founder.aspx http://www.mbaskool.com/brandguide/banking-andfinancial-services/1019-life-insurance-corporation-of-india-lic.html http://www.scribd.com/doc/63014735/Pest-Analysis-of-LIC http://www.indianstockmarkettips.net/2011/03/22/what-isthe-role-of-lic-in-the-devolepment-of-indian-economy/ http://www.moneycontrol.com/news/economy/economy-surveyservice-sector-likely-to-see-96-growth_526098.html http://en.wikipedia.org/wiki/Insurance

CHAPTER 3 MARKETING STRATEGIES OF THE COMPANY

1. INTRODUCTION OF MARKETING STRATEGY Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. 2. MARKETING MIX: The marketing mix is a business tool used in marketing products. The marketing mix is often crucial when determining a product or brand's unique selling point (the unique quality that differentiates a product from its competitors), and is often synonymous with the 'four Ps': 'price', 'product', 'promotion', and 'place'. However, in recent times, the 'four Ps' have been expanded to the 'seven Ps' with the addition of 'process', 'physical evidence' and 'people'. The term "marketing mix" was coined in 1958 by Neil Borden in his American Marketing Association presidential address. However, this was actually a reformulation of an earlier idea by his associate, James Culliton, who in 1948 described the role of the marketing manager as a "mixer of ingredients", who sometimes follows recipes prepared by others, sometimes prepares his own recipe as he goes along, sometimes adapts a recipe from immediately available ingredients, and at other times invents new ingredients no one else has tried. The term became popular in the article written by Neil Borden called The Concept of the Marketing Mix. He started teaching the term after he learned about it with an associate. The prominent marketer, E. Jerome McCarthy, proposed a Four 'P's classification in 1960, which has since been widely used by marketers throughout the world. Since consumerism appeared, Four 'C's theory has been born to Japan and the United States late in the 1970s.

B. Four Ps of marketing : 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. In India, the Life Insurance Corporation of India (LIC) and the General Insurance Corporation (GIC) are the two leading companies offering insurance services to the users. Apart from offering life insurance policies, they also offer underwriting and consulting services. When a person or an organisation buys an Insurance policy from the insurance company, he not only buys a policy, but along with it the assistance and advice of the agent, the prestige of the insurance company and the facilities of claims and compensation. It is natural that the users expect a reasonable return for their investment and the insurance companies want to maximize their profitability. Hence, while deciding the product portfolio or the product-mix, the services or the schemes should be motivational. The Group Insurance scheme is required to be promoted, the Crop Insurance is required to be expanded and the new schemes and policies for the villagers or the rural population are to be included. The Life Insurance Corporation has intensified efforts to promote urban savings, but as far as rural savings are concerned, it is not that impressive. The introduction of Rural Career Agents Scheme has been found instrumental in inducing the rural prospects but the process is at infant stage and requires more professional excellence. The policy makers are required to activate the efforts. It would be prudent that the LIC is allowed to pursue a policy of direct investment for rural development. Investment in Government securities should be stopped and the investment should be

channelized in private sector for maximizing profits. In short, the formulation of product-mix should be in the face of innovative product strategy. While initiating the innovative process it is necessary to take into consideration the strategies adopted by private and foreign insurance companies. Product Portfolio of LIC : LIC has enormous range of products : 1. Retirement Plan: With rising inflation, its absolutely necessary to make provisions for the future which makes retirement plan an important financial decision. Better known as Pension plan, this plan takes care of financial needs after retirement by investing a part of your savings for limited period. Pension plan provides steady income after retirement and takes care of daily needs. The pension plans offered by LIC are Pension Plus, Jeevan Nidhi, Jeevan Akshay- VI, New Jeevan Dhara- I and New Jeevan Suraksha- I. 2. Child Plan: Parenthood brings responsibilities and no one is better judge of that than you. Child Plan is a plan specifically designed to take care of financial needs of your child. Child plan provides with necessary funds that will take care of childs education, marriage etc. By investing small portion of your savings you secure the financial end of your child. Child plans of LIC are called Jeevan Anurag, CDA Endowment Vesting at 21, CDA Endowment Vesting at 18, Jeevan Kishore, Child Career Plan, Child Fortune Plus, Komal Jeevan, Jeevan Chaya, Child Future Plan and Marriage Endowment Or Educational Annuity Plan. 3. Term Plan: A risk plan which provides comprehensive cover for your family in the unfortunate event of untimely demise. A term life insurance plan provides good cover at relatively nominal cost and has no survival benefits. LIC term plans are Amulya Jeevan- I, Two Year Temporary Assurance Plan, The Convertible Term Assurance

Plan, Anmol

Jeeval-I

and Mortgage Redemption.

4. Investment Plan: Popularly known as ULIP, an investment plan invests part of your savings in equity or debt market as per your preference. The objective of investment plan is to give you returns which easily beat the rising costs since the usual returns in a bank are extremely low. ULIPs offered by LIC are The Money Back Policy20 years, The Money Back Policy- 25 years, Jeevan Surabhi- 15 Years, Jeevan Surabhi-20 Years, Jeevan Surabhi- 25 Year, Bima Bachat, Jeevan Shree- I, Jeevan Pramukh, The Endowment Assurance Policy, The Endowment Assurance Policy- Limited Payment, Jeevan Mitra (Double Cover Endowment Plan), Jeevan Mitra (Triple Cover Endowment Plan), Jeevan Anand, New Janaraksha Plan, Jeevan Amrit, Endowment Plus, The Whole Life Policy, The Whole Life Policy- Limited Payment, The Whole Life Policy- Single Premium, Jeevan Tarang, Jeevan Bharati-I, Jeevan Aadhar, Jeevan Vishwas, New Bima Gold, Bima Nivesh 2005, Jeevan Saral, Jeevan Madhur and Jeevan Mangal.

5. Health Plan: Slightly different from health insurance, health

plan provides cover for surgery costs, critical illness. A lump sum is paid irrespective of actual hospital bill. Health Protection Plus and Jeevan Arogya are LIC health plans. 2. PRICING: 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. With a view of influencing the target market or prospects the formulation of pricing strategy becomes significant. In a developing

country like India where the disposable income in the hands of prospects is low, the pricing decision also governs the transformation of potential policyholders into actual policyholders. The strategies may be high or low pricing keeping in view the level or standard of customers or the policyholders. The pricing in insurance is in the form of premium rates. The three main factors used for determining the premium rates under a life insurance plan are mortality, expense and interest. The premium rates are revised if there are any significant changes in any of these factors. Mortality (deaths in a particular area): When deciding upon the pricing strategy the average rate of mortality is one of the main considerations. In a country like South Africa the threat to life is very important as it is played by host of diseases. Expenses: The cost of processing, commission to agents, reinsurance companies as well as registration are all incorporated into the cost of installments and premium sum and forms the integral part of the pricing strategy. Interest: The rate of interest is one of the major factors which determines peoples willingness to invest in insurance. People would not be willing to put their funds to invest in insurance business if the interest rates provided by the banks or other financial instruments are much greater than the perceived returns from the insurance premiums. 3. PLACE: This component of the marketing mix is related to two important facts i) Managing the insurance personnel, and ii) Locating a branch. The management of agents and insurance personnel is found significant with the viewpoint of maintaining the norms for offering the services. This is also to process the services to the end user in

such a way that a gap between the services- promised and services offered is bridged over. In a majority of the service generating organizations, such a gap is found existent which has been instrumental in making worse the image problem. The transformation of potential policyholders to the actual policyholders is a difficult task that depends upon the professional excellence of the personnel. The agents and the rural career agents acting as a link, lack professionalism. The front-line staff and the branch managers also are found not assigning due weightage to the degeneration process. The insurance personnel if not managed properly would make all efforts insensitive. Even if the policy makers make provision for the quality upgradation, the promised services hardly reach to the end users It is also essential that they have rural orientation and are well aware of the lifestyles of the prospects or users. They are required to be given adequate incentives to show their excellence. While recruiting agents, the branch managers need to prefer local persons and provide them training and conduct seminars. In addition to the agents, the frontline staff also needs an intensive training programme to focus mainly on behavioral management. 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 office sand premises. In addition it is also significant to provide safety measures and also factors like office furnishing, civic amenities and facilities, parking facilities and interior office decoration should be given proper attention. Thus the place management of insurance branch offices needs a new vision, distinct approach and an innovative style. This is essential to make the work place conducive, attractive and proactive for the generation of efficiency among employees. The branch managers need professional excellenceto make place decisions productive.

Some of the Branches of LIC are:

Eastern Division Location Asansol Address Jeevan Prakash West EndG T Road Asansol WEST BENGAL 713304 LIC of India,P&GS Unit Jeevan Prakash,Calcutta Metro DO-I 16 Chittaranjan Avenue Kolkata WEST BENGAL 700072 LIC of India,P&GS Unit 84 Kharvel Nagar,UNIT 3 Bhubaneshwar Bhubaneshwar ORISSA 751001 Jeevan Prakash S S Road Post Box No 6 Guwahati ASSAM 781001 Jeevan Prakash Post Box No 71 P O & Dt. Jalpaiguri Jalpaiguri,shantipara WEST BENGAL 735101 Jeevan Prakash Garali Rajabari P.O Jorhat ASSAM 785014 LIC of India,P&GS Unit Jeevan Prakash 1st floor, Meherpur ilchar,CACHAR ASSAM 788015

Kolkata

Bhubaneshwar Guwahati

Jalpaiguri

Jorhat Silchar Western Division Location Ahmedabad

Address Jeevan Prakash GHB Complex, 2nd Floor, Opp.to Rupal Park, Behind Ankur Bus stop, Naranpura,Ahmedabad. UJARAT 380013. LIC of India, P&GS UnitJeevanPrakash, Near Daffrin Hospital ShriKrishna Peth Amravati. MAHARASHTRA 444601 LIC of India, P&GS Unit Adalat Road Jeevan Prakash, Aurangabad. MAHARASHTRA 431005 Jeevan Prakash, 4th floor, Sector No 11, Behind Telephone Exchange, Gandhinagar, GUJARAT 382017.

Amravati

Aurangabad

Gandhinagar

Goa

LIC of India,Jeevan Vishwas, Plot No.2, EDC Complex Patto, Panajim GOA 403001 LIC of IndiaP&GS Unit, 14th Floor, YogakshemaJ.B.Marg, Mumbai MAHARASHTRA 400021 National Insurance Building, S V Patel Marg, Post Box No 63 Nagpur, MAHARASHTRA 440001 Jeevan Prakash, R G Gadkari Chowk Golf Club, Ground Old Agra Road, Post Box No 410 Nasik, MAHARASHTRA 422002 Jeevan Prakash University, Road 6/7 Shivaji Nagar, Post Box No 935 Pune, MAHARASHTRA 411005 Jeevan Prakash Tagore, Marg Post Box No 208, Rajkot GUJARAT 360001. LIC of India, P&GS Unit Jeevan-Tara Ganpatdas Devi Path, 513,Sadar Bazar Satara MAHARASHTRA 415001. Jeevan Prakash, Post Box No 239, Ground floor, Muglisara Surat, GUJARAT 395003 JEEVAN CHINTAMANI, 7TH FLOOR, EASTERN EXPRESS HIGHWAY, PO.BOX NO.464, Thane, Maharashtra 400604 Gajanan Complex, 3rd Floor Old Padra Road, Vadodara GUJARAT 390020. LIC of India, 2nd Floor, New India Building, S.V.Road,Santacruz(W), MUMBAI, Maharashtra 400054 LIC of India, P&GS Unit II, Plot No. 112, Sion Koliwada Road, Sion(E) MUMBAI, Maharashtra 400022

MUMBAI-DO1

Nagpur

Nasik

Pune

Rajkot

Satara

Surat

Thane

Vadodara MUMBAI-DOIII (VILE PARLE) MUMBAI-DOII (SION)

Northern Division Location Ajmer Chandigarh Delhi Jaipur Jalandhar Jodhpur Karnal Ludhiana Shimla Jammu . Southern Division Location Coimbatore Ernakulam Kottayam Kozhikode Address India Life Building, 1543/44 Trichy Road, Post Box No. 3810, Coimbatore, TAMIL NADU 641018 Jeevan Prakash, Post Box No 1133 M G Road, Kochi Ernakulam, KERALA 682011. LIC of India, P&GS Unit Jeevan Jyothi, 2nd Floor Star Junction, M.C.Road Kottayam, KERALA 686001. LIC of India, P&GS Unit Post Box No 177, Jeevan Prakash, Kozhikode, KERALA 673001 Address Jeevan Prakash Ranade Marg Alwar gate Ajmer RAJASTHAN 305008 Jeevan Prakash Post Box No 42 Sector 17-B Chandigarh CHANDIGARH 160017 Jeevan Prakash Post Box No 102 25 Kasturba Gandhi Marg New Delhi DELHI 110001 Jeevan Prakash, 2nd floor, Bhawani Singh Marg, Near high Court Circle, JAIPUR 362005 Jeevan Prakash Model Town Road Post Box No 82 JalandharPUNJAB 144001 Jeevan Prakash Ground floor,1, West Patel Nagar Circuit House Road Jodhpur RAJASTHAN 342011 Jeevan Prakash 489 Model Town Post Box No 106 Karnal HARYANA 132001 Amar Singh Palace Sham Nagar Near Bus Stand Ludhiana PUNJAB 141008 LIC of India,P&GS UnitGovil Niwas,Circular Road Opp. Himland HotelShimla HIMACHAL PRADESH 171001 LIC of India,P&GS UnitJeevan Jyothi18A Rail Head ComplexJammu, JAMMU AND KASHMIR 80012

Chennai Madurai Salem Thanjavur Tiruneveli

LIC Building 102 Anna Salai Post Box No 324 Chennai TAMIL NADU 600002 Jeevan Prakash, Bridge Station Road, Post Box No 16, Sellur Madurai, TAMIL NADU 625002. Jeevan Prakash, Johnsonpet, Opp ATC Bus Depot, Post Box No 776 Salem, TAMIL NADU 636007. Jeevan Prakash Gandhiji, Road Post Box No 39, Thanjavur, TAMIL NADU 613001 LIC of India, P&GS Unit Jeevan Prakash, 9A Punithavathiar Street, Palayamkottai Tiruneveli, TAMIL NADU 627002

ThiruJeevan Prakash, Post Box No 1001 Pattom, vananthapuram Thiruvananthapuram, KERALA 695004 LIC of India, P&GS UnitJeevan Jyothi, 1st Floor 30-A, Vellore 1st East Main Gandhinagar, Vellore TAMIL NADU 682006. . Central Division Location Address Bhopal LIC of India,P&GS Unit 60-A, JEEVAN PRAKASH, Grd. Floor,Arera Hills Bhopal MADHYA PRADESH 462011 LIC of India,P&GS Unit 28,Jeevan Prakash P.B.No.43, City Centre,J.B.Marg Gwalior MADHYA PRADESH 474011 LIC of India,P&GS Unit9/1-A South tukoganj New Jaalsabha Grah Indore MADHYA PRADESH 452001 Jeevan Prakash Madan Mahal Nagpur Road Post Box No. 17 Jabalpur MADHYA PRADESH 482001 Jeevan Prakash Post Box No 10 Jeevan Bima Marg Pandri Raipur MADHYA PRADESH 492004

Gwalior

Indore Jabalpur Raipur

North Central Division Location Agra Allahabad Bareilly Dehradun Gorakhpur Kanpur Lucknow Meerut Varanasi Address Jeevan PrakashSanjay Palace Post Box No 22 M G Road AgraUTTAR PRADESH 282002 LIC of India,P&GS Unit 3rd Floor, 18/4 Tagore Town Allahabad UTTAR PRADESH 211002 LIC of India,P&GS Unit 156 Civil Lines Bareilly Bareilly UTTAR PRADESH 243001 LIC of India,P&GS Unit 2nd Floor,City Branch Office-I Cannaught place DehradunUTTAR PRADESH 248001 Prathiba Complex Jubilee Road Post Box No 21 Gorakhpur UTTAR PRADESH 273001 Jeevan Vikas 16/98 M G Road Post Box No 170 Kanpur UTTAR PRADESH 20800 w Jeevan Prakash30 Hazratganj Post Box No 111, Lucknow, UTTAR PRADESH 226001 Jeevan Prakash Prabhat Nagar Post Box No 69 Meerut UTTAR PRADESH 250001 Jeevan Prakash B-12/120 Gauriganj Post Box No 1155 Varanasi UTTAR PRADESH 221001

. South Central Division Location Bangalore Cuddapah Address Jeevan PrakashPost Box No 6694 J C Road, Bangalore KARNATAKA 560002 Jeevan PrakashPost Box No 10 College Road, CuddapahANDHRA PRADESH 516004 LIC of India,P&GS UnitJeevan Prakash,College Road, Post Box No.23 Dharwad KARNATAKA 580001

Dharwad

Hyderabad

LIC of India,P&GS Unit Jeevan Prakash 5/9/21, Secretariat Road Hyderabad ANDHRA PRADESH 500063 27-6-86 3rd Floor PB No.347 Shri Krishna Estates, Prakasam Road Vijaywada Andhra Pradesh 520002 LIC of India,P&GS UnitBranch-I Annexe Building, Post Box No 26 K.R.S Road Mysore KARNATAKA 570020 LIC of India,P&GS Unit 1st Floor, Uma Hotel Complex Station Road Raichur KARNATAKA 584101 LIC of India,P&GS UnitPopular Building,3rd Floor, P.B.No.117 Mangalore KARNATAKA 575001

Vijayawada

Mysore

Raichur

Mangalore

Jeevan Prakash Post Box No 411 Jeevitha Bhima Vishakapatnam Road, Vishakapatnam ANDHRA PRADESH 530004 Warangal Jeevan Prakash Balasamudram Post Box No 17, Hanamkonda Warangal ANDHRA PRADESH 506001

. East Central Division Location Patna Jamshedpur Sambalpur Address Jeevan Prakash Mazharul Haque Path, Post Box No 135 Patna BIHAR 800001 Jeevan PrakashMain Road P O Bistupur, Post Box No 41 Jamshedpur BIHAR 831001 LIC of India,P&GS Unit Jeevan Prakash P.B.NO.4, Ainthapali Sambalpur ORISSA 768004

4. PROMOTION: The insurance services depend on effective promotional measures. In a country like India, the rate of illiteracy is very high and the rural economy has dominance in the national economy. 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. They also have to be given proper training in order to create impulse buying. Advertising and Publicity, organisation of conferences and seminars, incentive to policyholders are impersonal communication. Arranging Kirtans, exhibitions, participation in fairs and festivals, rural wall paintings and publicity drive through the mobile publicity van units would be effective in creating the impulse buying and the rural prospects would be easily transformed into actual policyholders. Promotional strategies of LIC :

Sales promotions are being increasingly used to influence the purchase behavior of consumers in a desired way. The major reasons for the phenomenal use of sales promotional measures can be attributed to increased competition, declining brand loyalty, consumer's sensitivity to promotional deals, and increased advertising clutter. LIC, having realized its importance has undertaken sales promotion in all its three forms, such as consumer-oriented promotion, trade-oriented promotion and sales force promotion. In view of its importance in the highly competitive life insurance market, an attempt is made in this article to examine the sales promotional measures of LIC. Sales promotion, a key ingredient in marketing campaigns, consists of a diverse collection of incentive tools, mostly short-term, designed to stimulate a quicker or greater purchase of a particular product or

service by the consumers or the traders. Sales promotion is generally defined as those marketing activities that provide extra value or incentives to the salesforce, the distributors, or the ultimate consumer and can stimulate immediate sales.1 Sales promotions add value, provide a `competitive edge', boost sales during periods when demand would otherwise be weak, hasten the introduction and acceptance of new services, and generally get customers to act quicker than they would in the absence of any promotional incentive.2 A decade ago, the advertising to sales promotion ratio was about 60:40. Today, in many consumer goods companies, sales promotion accounts for 65% to 75% of the combined budget. Sales promotion is generally broken into three major categories, such as consumer-oriented, trade-oriented and sales force- oriented activities. Having realized the significance of sales promotion, LIC has vigorously undertaken it and made a significant benefit out of it. The consumer-oriented promotions in fact, are a part of the promotional pull strategy. These promotions include tax benefits, payment of bonus, provision of accidental benefits and higher nonmedical limits. Tax benefit is one of the major weapons in the arsenal of strategies at the disposal of the corporation to promote sales. The corporation was successful in convincing the government to exempt payments made to the corporation from the purview of Income Tax Act, subject to certain limits. In addition to tax benefits, LIC allots bonus as a uniform percentage in addition to the sum assured, or sum assured plus prevailing bonus addition. The former case is known as simple reversionary bonus, and the latter is known as compound reversionary bonus. The former is simple, popular and flexible as every time a bonus is distributed as some addition to the policy payment. The compound reversionary bonus becomes more equitable, but it is hard to calculate.

Distribution Network of LIC :

LIC has the most formidable distribution network among all insurance companies. Today LIC functions with 2048 fully computerized branch offices, 109 divisional offices, 8 zonal offices, 992 satellite offices and the corporate office. LICs Wide Area Network covers 109 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.

Marketing Segmentation :
A market segment is a classification of potential private or corporate customers by one or more characteristics, in order to identify groups of customers, which have similar needs and demand similar products and/or services concerning the recognized qualities of these products, e.g. functionality, price, design, etc. An ideal market segment meets all of the following criteria:

It is internally homogeneous (potential customers in the same segment prefer the same product qualities). It is externally heterogeneous (potential customers from different segments have basically different quality preferences). It responds similarly to a market stimulus. It can be cost-efficiently reached by market intervention.

The term segmentation is also used when customers with identical product and/or service needs are divided up into groups so they can be charged different amounts for the services.

A customer is allocated to one market segment by the customers individual characteristics. Often cluster analysis and other statistical methods are used to figure out those characteristics, which lead to internally homogeneous and externally heterogeneous market segments. Examples of characteristics used for segmentation:

Gender Price Interests Location Religion Income Size of Household

While there may be theoretically 'ideal' market segments, in reality every organization engaged in a market will develop different ways of imagining market segments, and create Product differentiation strategies to exploit these segments. The market segmentation and corresponding product differentiation strategy can give a firm a temporary commercial advantage.

Market segmentation of LIC :

The policies of LIC covers the age group 0-70 can avail the services of LIC. Itm e a n s L I C h a s v e r y v a s t m a r k e t s e g m e n t , c h i l d r e n , y o u n g s t e r , w o r k i n g , married, old people. INSURANCE PLANS a s i nd i v i d u a l s i t i s i nhe re nt to d i ffe r . Ea c h i nd i v i d u a l s i ns u ra nc e ne e d s a nd re q u i re me n ts a re d i f fe re nt f ro m t h a t o f t he o the rs . LI C s I ns u r a nc e P l a ns a re policies that talk to you individually and give you the most suitable options that can fit your requirement.

PENSION PLANS Pension Plans are Individual Plans that gaze into your future and foresee financial stability during your old age. These policies are most suited for senior citizens and those planning a secure future, so that you never give up on the best things in life. TARGETING: Target Marketing involves breaking a market into segments and then concentrating your marketing efforts on one or a few key segments. Target marketing can be the key to a small businesss success. The beauty of target marketing is that it makes the promotion, pricing and distribution of your products and/or services easier and more cost-effective. Target marketing provides a focus to all of your marketing activities. POSITIONING: A marketing strategy that aims to make a brand occupy a distinct position, relative to competing brands, in the mind of the customer. Companies apply this strategy either by emphasizing the distinguishing features of their brand (what it is, what it does and how, etc.) or they may try to create a suitable image (inexpensive or premium, utilitarian or luxurious, entry-level or high-end, etc.) through advertising. Once a brand is positioned, it is very difficult to reposition it without destroying its credibility. Also called product positioning.