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TABLE OF CONTENTS
Executive Summary
Chapter 1: Introduction To Insurance 1.1: Introduction 1.2: Definitions Of Insurance 1.3: History Of Insurance In India 1.4: Characteristics Of Insurance: 1.5: Function Of Insurance:
Chapter 3: Introduction Of Life Insurance Corporation Of India 3.1: INTRODUCTION TO LIC 3.2: MILESTONES 3.3: TYPES OF LIFE INSURANCE : 3.4: OBJECTIVES OF LIC
Chapter 4: Role Of Life Insurance Corporation 4.1: ROLE OF LIC 4.2: CURRENT STANDING OF LIFE INSURANCE COMPANIES IN Urban SECTOR. 4.3: NETWORK OF LIC 4.4: CURRENT STATUS 4.5: LIC THE BEST-KNOWN INDIAN BRAND: CHIDAMBARAM 4.6: WHY LIC IS T RUSTED BRAND OF INDIA?
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Chapter 5: Role Of Lic In International Market 5.1: ROLE OF LIC IN INTERNATIONAL MARKET 5.2: INTERNATIONAL OPERATIONS/ASSOCIATES
Chapter 7: Findings, Recommendations & Conclusion 7.1: Findings 7.2: Recommendations 7.3: Conclusion
Bibliography
Questionnaire Format
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EXECUTIVE SUMMARY
Someone has greatly said that practical knowledge is far better than classroom teaching. During this project I fully realized this and come to know about the present real world of Insurance sector . It includes all the activities involved in providing insurance products to the final customers. I am pleased to know about the consumers wants and competitors activities in the real world of Insurance. The subject of my study is to analyse the present insurance sector and products offered by LIC by applying various tools like cold calling and through direct interaction with customers. I have also done research on the growth of private life insurance companies. The report contains first of all brief introduction about the company. Then it contains the current status of private insurance companies and foreign insurance companies in India. I also put forward recommendations of the consumers and conclusions that will help LIC to provide consumer satisfactory services in the insurance sector
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CHAPTER 1
INTRODUCTION TO INSURANCE
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The insurance industry in India has come a long way since the time when businesses were tightly regulated and concentrated in the hands of a few public sector insurers. Following the passage of the Insurance Regulatory and Development Authority Act in 1999, India abandoned public sector exclusivity in the insurance industry in favor of market-driven competition. This shift has brought about major changes to the industry. The inauguration of a new era of insurance development has seen the entry of international insurers, the proliferation of innovative products and distribution channels, and the raising of supervisory standards. By mid-2004, the number of insurers in India had been augmented by the entry of new private sector players to a total of 28, up from five before liberalization. A range of new products had been launched to cater to different segments of the market, while traditional agents were supplemented by other channels including the Internet and bank branches. These developments were instrumental in propelling business growth, in real terms, of 19% in life premiums and 11.1% in non-life premiums between 1999 and 2003.
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There are good reasons to expect that the growth momentum can be sustained. In particular, there is huge untapped potential in various segments of the market. While the nation is heavily exposed to natural catastrophes, insurance to mitigate the negative financial consequences of these adverse events is underdeveloped. The same is true for both pension and health insurance, where insurers can play a critical role in bridging demand and supply gaps. Major changes in both national economic policies and insurance regulations will highlight the prospects of these segments going forward. Insurance or assurance, device for indemnifying or guaranteeing an individual against loss. Reimbursement is made from a fund to which many individuals exposed to the same risk have contributed certain specified amounts, called premiums. Payment for an individual loss, divided among many, does not fall heavily upon the actual loser. The essence of the contract of insurance, called a policy, is mutuality. The major operations of an insurance company are underwriting, the determination of which risks the insurer can take on; and rate making, the decisions regarding necessary prices for such risks. The underwriter is responsible for guarding against adverse selection, wherein there is excessive coverage of high risk candidates in proportion to the coverage of low risk candidates. In preventing adverse selection, the underwriter must consider physical, psychological, and moral hazards in relation to applicants. Physical hazards include those dangers which surround the individual or property, jeopardizing the well-being of the insured. The amount of the premium is determined by the operation of the law of averages as calculated by actuaries. By investing premium payments in a wide range of revenueproducing projects, insurance companies have become major suppliers of capital, and they rank among the nation's largest institutional investors.
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General definition:
In the words of John Magee, Insurance is a plan by which large number of people associate themselves and transfer to the shoulders of all, risks that attach to individuals.
Fundamental definition:
In the words of D.S. Hansel, Insurance may be defined as a social device providing financial compensation for the effects of misfortune, the payment being made from the accumulated contributions of all parties participating in the scheme.
Contractual definition:
In the words of justice Tindall, Insurance is a contract in which a sum of money is paid to the assured as consideration of insurers incurring the risk of paying a large sum upon a given contingency.
General Definition:
The general definitions are given by the social scientists & they consider insurance as a device to protection against risks, or a provision against inevitable contingencies or a co-operative device of spreading risks. Some of such definitions are given below:
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In the words of John Magee, Insurance is a plan by which large number of people associate themselves & transfer to the shoulder of all, risks that attach to individuals. In the words of Sir William, The collective bearing of risks is insurance. In the words of Boone & Kurtz, Insurance is a substitution for a small known loss (the insurance premium) for a large unknown loss, which may or may not occur. In the words of Thomas, Insurance is a provision, which a prudent man makes against for the loss or inevitable contingencies, loss or misfortune. In the words of Allen Z. Mayer, Insurance is a device for the transfer to an insurer of certain risks of economic loss that would otherwise come by the insured. In the words of Ghosh & Agarwal, Insurance is a co-operative form of distributing a certain risk over a group of persons who are exposed to it.
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There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business.
An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.
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Sharing of Risks
Insurance is a co-operative device to share the burden of risk, which may fall on happening of some unforeseen events, such as the death of head of the family, or on happening of marine perils or loss of by fire.
Co-operative Device
Insurance is a co-operative form of distributing a certain risk over a group of persons who are exposed to it (Ghosh & Agarwal). A large number of persons share the losses arising from a particular risk.
Evaluation of Risk
For the purpose of ascertaining the insurance premium, the volume of risk is evaluated, which forms the basis of insurance contract.
Amount of payment
The amount of payment in indemnity insurance depends on the nature of losses occurred, subject to a maximum of the sum insured. In life insurance, however, a fixed amount is paid on the happening of some uncertain event or on the maturity of the policy.
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Spreading of risk
Insurance is a plan, which spread the risks & losses of few people among a large number of people. John Magee writes, Insurance is a plan by which large number of people associates themselves & transfer to the shoulders of all, risks attached to individuals.
Transfer of risk
Insurance is a plan in which the insured transfers his risk on the insurer. This may be the reason that Mayerson observes, that insurance is a device to transfer some economic losses to the insurer, and otherwise such losses would have been borne by the insured themselves.
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Ascertaining of losses
By taking a life insurance policy, one can ascertain his future losses in terms of money. This is done by the insurer to determining the rate of premium, which is calculated on the basis of maximum risks.
A contract
Insurance is a legal contract between the insurer & insured under which the insurer promises to compensate the insured financially within the scope of insurance policy, & the insured promises to pay a fixed rate of premium to the insurer.
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ii)
Collective bearing of risk Insurance is a device to share the financial loss of few among many others.
Dinsdale opines, insurance is a mean by which few losses are shared among longer people. Similarly, William Bevridge observes, "The collective bearing of risks is insurance." All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid.
iii)
Assessment of risk Insurance determines the probable volume of risk by evaluating various factors
that give rise to risk. Risk is the basis for determining the premium rate also.
iv)
Provide certainty Insurance is a device which helps to change from uncertainty to uncertainty. This
may the reason that John Magee writes that the function of insurance is to provide certainty. Similarly, Riegel and-Miller observe, "Insurance is device whereby the uncertain risks may be made more certain".
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SECONDARY FUNCTIONS i) Prevention of losses Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses causes lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured. ii) Small capital to cover larger risks Dinsdale observes, insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty. iii) Contributes towards the development of larger industries Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.
OTHER FUNCTIONS Means of savings and investment: insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insureds For the purpose of availing income-tax exemptions also, people invest in insurance. Source of earning foreign exchange: Insurance is an international business. The country can earn foreign exchange ^ by way of issue of marine insurance policies. Promotes exports insurance makes the foreign trade risk free with the help of different types of policies under marine insurance cover.
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CHAPTER 2
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Insurance has been playing protective role towards the development of industry and commercial institutions. The major protective measures have been:
i)
Protection from risks arising out of natural calamities Insurance has also been playing important role in protecting the industry and
commercial activities from natural calamities like fire, marine losses, floods, earth quakes, cyclones etc.
ii)
Protection from the risks caused by human beings Insurance provides protection against risks caused by human beings such as
strikes by workers, their negligence in carrying out work, theft and decoity, evil disturbances and many other such acts. In addition to the issue of policies against such causes, insurance also issues policies to protect the industry and commercial institutions from the loss of money in transit.
iii)
Protection against statutory liabilities Insurance also plays the role of protecting the industry and commerce in
fulfilling statutory liabilities towards the workers, arising out of industrial accidents. The employer is bound to compensate such workers under the provision of Workers' Compensation Act. In case the employer obtains an accidental policy in favour of employees; the money to be paid as compensation to the accident victims, can be chimed from the insurance company.
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iv)
Financial security Insurance provides financial security also to industry and commerce. Exports
of goods to other countries by sea, storage of goods in safe godowns and various other kinds of financial losses are secured by insurance policies.
v)
Protection from loss of profits Insurance also has extended its role of prot6cting different industrial and
commercial activities, it provides protection against losses arising from shops or factories. It also undertakes to indemnity the loss of profits from business functions. This way, the loss of profits and property / both are protected.
vi)
Protection of debts A trader can protect himself by taking appropriate policy against the credit sales or
property kept on security against goods or property. Thus, the insurance protests the trader even in case the debtor dies or of damages to the goods.
vii)
Protection to the business institution due to sudden death of the me key man
The successful operation and development of a business largely depends on its directors, managers and administrative personnel. Sudden and untimely death of such person may badly affect the functioning of the business and many problems may also arise in day-to-day functioning of business. Insurance plays important role by insuring the life of key man in the business so that the future can be protected safely from uncertainties.
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viii)
Insurance companies extend various kinds of assistance to business enterprise to run the business regularly and continuously. It plays important role in partnership business by insuring the life of partners so that in case of death of any partner, the claim received from the insurance company can be used for meeting payment to the dependents of deceased partner.
i)
Extension of credit facilities Insurance extends credits to industrial and commercial institutions. An
entrepreneur can get insurance of unit, plant and machinery, or permanent assets purchased by him and get them mortgaged with the financial institutions for getting credit.
ii)
Facilities industrialization and commercialization Insurance contributes for the development of various commercial activities like
buying-selling, transportation, communication, warehousing, packaging, advertising and publicity, and agricultural marketing etc. It is due to the insurance facility that many utility serves are created and the business solves various problems arising out of business conducts.
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iii)
Increases business and industrial efficiency The efficient management of industrial and commercial activities become
possible due reductions in business risks. Insurance provides protection from various risks and thus it increases the business efficiency.
iv)
Investment in shares and debentures Insurance companies extends its support for the development and expansion
industrial and commercial activities by investing in shares and debentures issued by the industrial units.
v)
Contribution towards the development of basic industries Insurance has contributed much towards the development and expansion of
basic industries like iron and steel cement, engineering, chemicals, petro-chemicals, electric goods, fertilizers, etc. by investing in shares and debentures.
vi)
Contribution towards fulfillment of social and statutory obligations Insurance institutions in the country also have been contributing much in
fulfilment of social and statutory obligations by contributing well in social welfare schemes operated by industrial establishments, social security, schemes, workers compensation plan, payment of gratuity etc.
vii)
Contribution towards development of international trade The various policies issued by marine insurance companies help for the
development of international trade by protecting the exporters/ importers from marine losses and risks. This role of insurance companies has been helpful in earning more foreign exchange by increased participation by traders in international trader
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viii)
Extension of export credit Export Credit and Guarantee Corporation (ECGC) extends export credit to the
exporters and in cases where the importers commit defaults in making payment to the exporter, the ECGC compensate the exporter through its policy issued for this purpose.
ix)
Increase competing ability among small and medium-scale units Insurance acts as a source among the small and medium scale industrial units to
compete with larger industrial units. Large-scale industries can bear the expenses for protection against risks and uncertainties by getting insurance against such losses.
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Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company stated by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and Indian natives were not being insured by these companies. However, later with the efforts of eminent people like Babu Muttylal Seal, the foreign life insurance companies started insuring Indian lives. But Indian lives were being treated as sub-standard lives and heavy extra premiums were being changed on them. Bombay Mutual Life Assurance Society heralded the birth of first Indian life insurance company in the year 1870, and covered Indian lives at normal rates. Starting as Indian enterprise with highly patriotic motives, insurance companies came Tito existence to carry the message of insurance and social security through insurance to various sectors of society. Bharat Insurance Company (1896) was also one of such companies inspired by nationalism. The Swadeshi movement of 1905-1907 gave rise to more insurance companies. The United India in Madras, National Indian and National Insurance in Calcutta and the Hindustan Co-operative Insurance Company took its birth in one of the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay Life) were some of the companies established during the same period. Prior to 1912. India had no legislation to regulate insurance business. In the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were passed. The Life Insurance Companies Act, 1912 made it necessary that the premium rate tables and periodical valuations of companies should be certified by an actuary. But the act discriminated between foreign and Indian companies on many accounts, putting the Indian companies at a disadvantage.
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The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in force as Rs. 22.44 crore, it rose to 176 companies with total business-in-force as Rs. 298 crore in 1938. During the mushrooming of insurance companies many financially unsound concerns were also floated which failed miserably. The Insurance Act 1938 was the first legislation governing not only life insurance but also non-life insurance to provide strict state control over insurance business. The demand for nationalization of life insurance industry was made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was much later on the 19th of January, 1956, that life insurance in India was nationalized. About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were operating in India at the time of nationalization, nationalization was accomplished in two stages; initially the management of the companies was taken over by means of an Ordinance, and later, the ownership too by means of a comprehensive bill. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter, re-organization of LIC took place and large numbers of new branch offices were opened. As a result of re-organization servicing functions were transferred to the branches, and branches were made accounting units. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies.
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Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate office. LICs Wide Area Network covers 100 divisional offices and connects all the branches through a Metro Area Network. LIC has tied up with some Banks and Service providers to offer on-lint premium collection facility in selected cities. LICs ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized records of the satellite offices will facilitate anywhere servicing and many other conveniences in the future. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over one crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.
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3.2 MILESTONES
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.
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There are various types of policies and schemes prepared to suit the need of different individual. You can avail the one that satisfy your budget and need. Life insurance can be broadly divided into 3 types:
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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 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 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 agent and employees of the corporation a sense of participation, pride and job towards achievement of corporate objective.
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Others like ING, AMP Sanmar, Met Life and Sahara India have less than 1 % share. The detail of the market share of life insurance companies is attached. The market share of the private players has doubled every year from 5.6% in 2002-03 to, 12% in2003-04 and close to 22% in 2004-05.The state run insurance company has the biggest advantage of its huge network which the company can use to penetrate into rural market that is still lying untapped. Another option with the life insurance companies to capture more and more market share could be product innovation and constantly developing an insurance product in order to meet the ever-changing requirements of the customer. Quality customer service and education can be another area where a company can differentiate itself 48 from other companies.
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Life insurance is possibly the most- retail of all financial services, and is required by people of all segments and in all locations. At a broad level, ICICI Prudential aims to secure the families of the middle and upper class working people in urban India. To this end, they have pursued a pan-India distribution strategy and backed it up with arrange of products that meets the needs of a wide range of people, be they from rural or urban areas. Today, they have branches in 74 locations and rural presence in more than 15 states. Certainly, the majority of the business still comes from urban areas such as metros and mini-metros. However, they have seen rural business grow significantly and expect it to continue making greater contribution in the years to come.
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All Life Insurance Corporation branches in the country would be interconnected under Metro Area Network (MAN) inaugurated here on Thursday. Speaking at the function, K Vaidyalingam, LIC southern zonal manager, said about 1500 branches would be getting covered under MAN in which the premium amount of the policy holder could be remitted in any branch. Besides, the policy holder gets his status report, policy position, revival and quotation from the network. In every one hour the system got upgraded, he said. In southern region there are about 10 lakh new policy holders with a business of Rs 6500 crore. About settlement of claims, 92 per cent of policies were settled on or before maturity, he said, adding, LIC was in a better position and 100 per cent connectivity was taking place. Kottayam stood third in premium collection during the period between April to August 2002, the first being Kozhikode and Thiruvananthapuram in second position in southern region. The premium amount collected in 2001 was Rs.74,000 crore through 2.32 crore new policies by 8.2 lakh agents. LIC has introduced a new group insurance scheme for Corporation Bank deposit holders.
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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, has grown to 2,048 offices servicing around 180 million policies and a corpus of over INR 3.4 trillion. The organization now comprises 2048 branches, 100 divisional offices and 8 zonal offices, and employs over 1 million agents. 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. 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)
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FROM STRENGTH TO STRENGTH: Union Finance Minister P. Chidambaram launching LICs web portal in Chennai on Tuesday. Others from left are D.K. Mehotra, Managing Director, LIC, and A.K. Shukla, Chairman. Photo: Shaju John
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CHENNAI: Describing Life Insurance Corporation of India as the best-known Indian brand, Union Finance Minister P. Chidambaram, said on Tuesday that even after the opening up of the insurance sector to private firms, the Corporation remained the market leader. Launching LIC's e-portal here, he said the Corporation "supported us (government) when we opened up insurance because it was confident of doing better in a competitive environment. LIC continues to be the market leader with 88 per cent market share of new policies and 78 per cent of premium. It is clearly recognised as the market leader." The e-portal (licindia.com) will provide information on policy status, bonus, premium payment, loans and change of address. It will facilitate online payment of premium and has details of the doctors and agents. It also has a branch locator and `maturity alert' facility. The objective is to provide world-class service. Noting that the State-owned Corporation utilised information technology in its relentless effort to remain the leader, Mr. Chidambaram said: "My goal is to make LIC a world class insurance company. It is nearly world class now." All 2,048 branches of LIC, which had been adjudged the best user of IT by NASSCOM, were fully automated. Barring ten, all the branches were networked. Mr. Chidambaram said the e-portal was another example of LIC's constant innovation using information technology. Some of the multi-interfaces it offered to customers included call centres, IVRS, SMS and satellite branches.
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1) As a Govt of India owned Company, LIC is 51 + years old in the field of life insurance and money management. LIC's Life Fund size as on day is more than Rs 5 Lakh Thousand Crores. 2) Any LIC policyholder or the nominee will vouch for the best claims settlement from LIC. Perhaps, this is the only institution where you as a policyholder are virtually chased till such time your claim cheques is handed over to you! 3) LIC has won `NDTV Profit Leadership Award 2007 under Life Insurance Category', `Outlook Money Award 2007 as the best Life Insurer', `CNBC Awaaz Consumer Award 2007 as the best Life Insurance Company', `Golden Peacock Award for excellence in Corporate Governance 2007', `Web 18 Genius of the Web Award 2007 and many more'. 4) LIC adjudged No.1 Trusted Service Brand for the 4th successive year by ET Brand Equity Survey. 5) LIC has been adjudged Superbrand India for 2004-06 and Reader's Digest `Trusted Brand' Asia 2007. 6) This is the only corporation that is catering to more than 190 million satisfied policyholders in India and abroad. 7) This is one of the very few institutions that pays ex-gratia interest on pending maturity claims! 8) More than 2050 LIC branches all over India are connected together to serve you. You can pay your premium anywhere in the country. 9) During its long existence, LIC has kept on updating its portfolio by bringing in new plans depending on public requirement. More than 50 of them are most popular and can be customized to meet any of your requirements. LIC ULIPs have become extremely popular due to the returns they offer. Money Plus- latest LIC Unit Linked Plan is a case in point.
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10)
All LIC Plans come with Sovereign Guarantee i.e., Govt of India Guarantee
regarding repayment. Infact, as of now, only LIC plans enjoy this Govt Guarantee. Beneficiary for this Sovereign Guarantee is you and you alone as the policyholder/ would-be policyholder. 11) All LIC plans are characterized by low premium, high life insurance coverage and a vast package of benefits offered by them. Add to this package, section 80C benefit and section 10(10D) benefit on the maturity proceeds, you will find investment on LIC plans one of the most coveted investment options available to you. 12) Premium paid under Key-Man Insurance plan is a recognized business expense under section 37(I) of the Income-Tax Act. For companies making profits, this is a very good incentive indeed. 13) 14) Through Employer-Employee Insurance scheme, you can recognize the Entire contribution to LIC Group Gratuity Scheme is a recognized business worth of your most valuable employees whose absence you can ill afford to lose. expense in the hands of the employer. In addition, through this scheme, the employer can transfer his gratuity liability to the corporation and fund the same under cash accumulation scheme. The most popular among all the companies. 15) LIC is declaring quite an impressive bonus (profits) on all its with-profits policies every year. Extra attraction under LIC Bonus is (a) it is calculated every year on the insured amount and not on the premium paid and (b) entire bonus received along with insured amount either by you on maturity of your policy(ies) or by your nominee in your absence during the currency of your policy(ies) is free from income-tax under section 10(10D) of the Income-tax Act. 16) On most of the LIC plans, you can borrow to take care of your immediate monetary requirements. None of the policy benefits get affected as a result of borrowal. Infact, policy loans offer one of the most attractive investment opportunities. 17) You can pay your premium 3 years in advance at 5% discount. Chief attractions of this advance payment of premium are (a) there is no possibility of your overlooking your premium payment and getting your policy(ies) lapsed wherever you are in the world and (b) you will be earning 5% tax-free interest
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on the unutilized portion of the amount left with LIC after apportioning the regular instalment. 18) Most of the LIC plans come with Riders to take care of Total and Permanent Disablement due to Accident and some of the most dread diseases that may result in loss of income. 19) LIC pension plans that guarantee your life pension are extremely popular. You can park your hard earned money safely with the corporation and enjoy pension as long as you are alive. Due to these reasons and lot more, LIC should be your obvious choice for all your life insurance requirements.
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INTERNATIONAL OPERATIONS
LIC Fiji LIC Mauritius LIC United Kingdom LIC (International) B.S.C (C), Bahrain LIC (Nepal) Ltd LIC (Lanka) Ltd Saudi Indian Company for Co-op. Insurance, KSA. LIC Mauritius Offshore Ltd. LIC Co-ordinating Office in India
ASSOCIATES LIC Housing Finance Ltd. LICHLF Care Homes Ltd. LIC Mutual Fund AMC Ltd.
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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
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RESEARCH PROBLEMS
After doing the literature review and understanding the motives of the INSURANCE in India and benefits achieved there by, question arises whether LIC is beneficial for Insurance sector. . This report gaps lead to the following objectives of the study
RESEARCH OBJECTIVE:
Objective of a research work defines the driving force for a research action. It is the focal point around which the whole action revolves. This dissertation was undertaken to fulfil the following objectives: To study the insurance sector. To study Role of LIC on Insurance Industry
Sample Design:
a) Population: c) Sampling Unit: d) Sample size: Customers of Lic Of India LIC OF INDIA 20 customers
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RESEARCH PLAN:
A systematic and planned move to accomplish the research objective is always appreciable in conducting a resourceful research work. My dissertation was also accomplished in a systematic way. The flowchart of my research plan was as follows:
The motives and benefits of LIC in Insurance Industry. . Collection of data with regard to secondary research
Secondary research was conducted with regard to the short term & long term impact study. Analysis of the research findings was done, which led to certain conclusions and recommendations.
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OPTION YES NO
RESPONSE 20 -
25
20
15 YES 10 NO
0 YES NO
CONCLUSION
100% People Are Having Life Insurance Policy.
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RESPONSE 8 4 5 3
PERCENTAGE (%) 40 20 25 15
CONCLUSION
Out of all the companies majority of the people prefer LIC of India.
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OPTION YES NO
RESPONSE 17 3
PERCENTAGE (%) 85 15
YES NO
CONCLUSION
85% of the people are satisfied by insurance companies regarding services.
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4. According to you, who have played a major role in the field of Life Insurance Company?
RESPONSE 11 4 5 -
PERCENTAGE (%) 55 20 25 -
CONCLUSION
55% Of The People Agree That LIC Of India Had Plays Major Role In Life Insurance Policies
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5. Which Insurance companies have been successful to make strong public base by advertisement?
RESPONSE 11 2 7 -
PERCENTAGE (%) 55 10 35 -
CONCLUSION According to survey LIC of India have been successful to make strong public base by advertisement.
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RESPONSE 14 1 5 -
PERCENTAGE (%) 70 5 25 -
14 12 10 8 6 4 2 0 LIC HDFC ICICI OTHERS LIC OTHERS ICICI HDFC LIC HDFC ICICI OTHERS
CONCLUSION
LIC of India has massive public support in the current fiscal year which is 70%
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OPTION YES NO
RESPONSE 19 1
PERCENTAGE (%) 95 5
20 18 16 14 12 10 8 6 4 2 0 YES NO YES NO NO
YES
CONCLUSION
95% of people think that Insurance Policy is in the direction of public welfare.
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8. Is retirement bond or pension policy launched by the number of private player as well as public sector Company in the direction of secured old age?
OPTION YES NO
RESPONSE 10 10
PERCENTAGE (%) 50 50
YES NO
CONCLUSION Half of the people agree that retirement bond or pension policy launched by the number of private player as well as public sector Company in the direction of secured old age.
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9. Do you think that risk coverage factor included in Insurance policy attracts general public towards the policy?
OPTION YES NO
RESPONSE 16 4
PERCENTAGE (%) 80 20
YES NO
CONCLUSION 80% of people think that risk coverage factor included in Insurance policy attracts general public towards the policy.
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10.
OPTION YES NO
RESPONSE 12 8
PERCENTAGE (%) 60 40
YES NO NO
YES
10
12
14
CONCLUSION According to survey 60% people think that the arrival of so many private companies in this insurance sector envisage a lot of choice to policy holder.
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11.
OPTION YES NO
RESPONSE 17 3
PERCENTAGE (%) 85 15
18 16 14 12 10 8 6 4 2 0 YES NO NO YES
CONCLUSION
85% OF PEOPLE agree that customer-centricity and transparency are the buzzwords for success in this evolving industry.
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12.
Which sector is better to invest in Life Insurance Company? RESPONSE 15 5 PERCENTAGE (%) 75 25
16 14 12 10 8 6 4 2 0 YES NO NO YES
CONCLUSION
75% of people think that public Sector Is Better To Invest In Life Insurance Company.
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CHAPTER 7
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7.1FINDINGS
1) Now days also insurance is most popular as more plain protection against death and people are unaware about the other aspects of insurance. 2) According to current scenario life and mater insurance are the most popular ones followed by fire insurance. 3) Majority of people consider the insurance premium paid by them as reasonable. 4) Only few counted people are unaware about the entry of private players into. The insurance industry and a very high majority of people support their entry. 5) By the entry of private players. Consumers are expecting the premium to down which would be the biggest blessing. After findings we can see about LIC OF INDIA features and his the tendency to take the expedient approach and focus on the far right of the LIC OF INDIA spectrum, peacetime contingency operations and conduct training as usual, while briefing that the LIC OF INDIA block has been checked, will lead us to a possibly fatal false sense of security. The probability of becoming involved in a LIC OF INDIA operation is high. The potential to attract international attention, even with limited forces, is also great. Units have demonstrated that with a balanced training focus and proper preparation, many pitfalls outlined above can be avoided
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7.2 RECOMMENDATIONS
In the modernized well advanced hi-tech approach to the customer every possible facilities and effort to build up the confidence of the rising policy holders towards. Insurance companies, to complete one another nothing is left to recommend. But some recommendations that are intensely felt and highly required for insures to sustain in the market. These are as follows: a) More and more transparency should be ascertained between insurers and policy holders. b) Particularly, in the emerging boom in the insurance company, every insurance company should be customer cantered, and well versed in the handling of problem and grievances of the policy holders c) Each and Every product launched by the Insurance company should be in favour of increasing need of policy holders. IRDA should be more and more responsible to the insurance sector by determining some standard. It should be mandatory to every insurer to make more and more responsible and responsive to the policy holders so that comprehensive understanding may be developed among policy holders. It may be beneficial on both sides.
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7.3 CONCLUSION
After overhauling the all situation that boosted a number of Pvt. Companies associated with multinational in the Insurance Sector to give befitting competition to the established behemoth LIC in public sector, we come at the conclusion that : 1) There is very tough competition among the private insurance companies on the level of new trend of advertising to lull a major part of Customers. 2) LIC is not left behind in the present race of advertisement. 3) The entry of the Pvt. Players in the Insurance Sector has expanded the product segment to meet the different level of the requirement of the customers. It has brought about greater choice to the customers. 4) Private insurers have restricted reach to the customers 5) LIC has vast market and very firm grip on its traditional customers and monopoly of life insurance products. 6) Bank assurance - that allows life insurers to leverage on the risk product through bank network, was adopted by private players. But LIC was also not left behind as picking up majority stake in the corporation Bank and large equity stake in the Oriental Bank of Commerce. IRDA is also playing very comprehensive role by regulating norms mandating to private players in this sector, that increases the confidence level of the customers to the private players. After Findings we can see about LIC features and his The tendency to take the expedient approach and focus on the far right of the LIC spectrum, Peacetime Contingency Operations and conduct training as usual, while briefing that the LIC block has been checked, will lead us to a possibly fatal false sense of security. The probability of becoming involved in a LIC operation is high. The potential to attract international attention, even with limited forces, is also great. Units have demonstrated that with a balanced training focus and proper preparation, many pitfalls outlined above can be avoided.
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LIC is not conventional warfare. This is critical for the counterinsurgent to understand. The insurgents violent and coercive strategy is applied so as to achieve political, civil, military and psychological results. Hence, the counterinsurgent must counter all of these strategic elements individually. In addition, the target of the insurgents violence and coercion is the population. This is because the population is the centre of gravity in LIC. Therefore the counterinsurgent must also focus on the population to be successful. In terms of military principles in counterinsurgency, doctrinal precision, professionalism, independence, initiative, force precision, restraint, combined arms, precision engagement, joint force, effective population based intelligence, integrated communications, a civil affairs approach and high levels of training are critical.
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BIBLIOGRAPHY
Magazine
Yogkshem LIC OF INDIA Magazine Outlook Express Business today Finance & Banking Money Outlook
News Paper
Business standard Times of India Economic times Hindustan times
WEBLIOGRAPHY
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QUESTIONNAIRE FORMAT
KES SHROFF COLLEGE OF ARTS AND COMMERCE SURVEY CONDUCTED ON ROLE OF LIC IN INSURANCE INDUSTRY NAME: SAGAR CHITRODA CLASS: TYBBI (VIth SEMESTER)
Yes
2) If yes, then in which company? LIC HDFC
No
ICICI
OTHERS
Yes
No
4) According to you, who have played a major role in the field of Life Insurance Company?
LIC HDFC ICICI OTHERS
5) Which Insurance companies have been successful to make strong public base by advertisement?
LIC HDFC ICICI OTHERS
6) Which Insurance Company has gained massive public support in the current fiscal year?
LIC HDFC ICICI OTHERS
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8) Is retirement bond or pension policy launched by the number of private player as well as public sector Company in the direction of secured old age? Yes No
9) Do you think that risk coverage factor included in Insurance policy attracts general public towards the policy? Yes No
10) Do you think that the arrival of so many private companies in this insurance sector envisage a lot of choice to policy holder? Yes No
11) Do you agree that customer-centricity and transparency are the buzzwords for success in this evolving industry? Yes No
12) Which sector is better to invest in Life Insurance Company? Public Sector Private Sector
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