Académique Documents
Professionnel Documents
Culture Documents
Demographic environment
India has, according to 2001 census, 65.38%
literacy rate. The literacy rate varies across rural (59.4%) and urban (80.3%) India. These contrasts in literacy levels are significant and have important implications for insurers. Literacy and education increases employability of the person in higher earning jobs and also brings about a change in perception about need for insurance. The median age in country was 23.8 years in 2005. Increase in double income families.
Education level
Year
Number of graduates
1991
2001 2004
20.5 million
37.6 million 48.7 million
Economic environment
Inflation rate: Inflation can also be one of the causes to change the scenario of the insurance sector. High inflation for instance, would tend to reduce the insurance business, particularly life, because the real value of the money paid back to the policyholder on maturity of the policy would go down and would, therefore, lose its attraction for the investor. Impact of income on insurance: Income level significantly affects the demand for life insurance. Life insurance becomes more affordable when income increases((Rubayah and Zaidi (2000)).
for insurance. New channels like Bancassurance, corporate agents and websites selling life insurance products are ubiquitous testaments to how the channels have grown in terms of not only selling, but also increasing awareness about life insurance. More innovative channels like a supermarket, a bank, a post office, an ATM, an internet kiosk or a departmental store could be introduced in the future. . For example MetLife India, a subsidiary of global insurance giant, entered into a strategic tie up with Viswas, a Hyderabad based retail chain, to
Company- LIC
Life
Insurance Corporation was formed as a government regulated monopoly in September 1956 by an Act of Parliament, (LIC Act 1956) with a capital contribution of Rs. 50 million. The total life insurance market can be judged on two parameters premium collected and number of new policies underwritten. It can be seen that LIC has a market share of 53% which roughly amounts to Rs. 20000000 crores out of a total market of 4.3 crore crores. The number of players in this segment have increased to 30 (15 in private sector), with Life Insurance Corporation (LIC) being the dominant player (market share of over 53%)
Objectives
When The Life Insurance Corporation of India was
set up in 1956, its primary objective was to propagate the idea and practice of life insurance in rural areas among financially backward people so that their risks were covered in the event of death. The Life Insurance Corporation of India intends to increase the mobility of individual savings to the maximum extent possible. The Life Insurance Corporation of India seeks to employ the investments of its customers in the best possible manner while at the same time prioritizing matters of national importance. The company aims at meeting the dynamic expectations of its investors by adding innovative schemes and products to its portfolio.
Culture
LIC has had many problems relating to the
efficient use of its human resources since the time it was set up. Many of these problems related to the fact that it was a public sector organization. The corporation's managers were too bureaucratic. The work culture in the organization was sloppy. Strong trade unions made it difficult for managers to get the work done. The corporation's development officers focused on their own earnings and incentives, rather than on customer satisfaction.
Product line
Schemes: money back plans, whole life plans, and
term assurance plans, several special insurance plans for children, women, physically challenged dependants, and high net-worth individuals. Pension plans - Jeevan Nidhi, Jeevan Akshay, Jeevan Dhara, and Jeevan Suraksha. The company has 3 Unit plans - Market Plus, Profit Plus, and Fortune Plus. Group schemes - Gratuity Plus, Group gratuity Scheme, and Group Leave Encashment Scheme. New plans- ULIP, health insurance In 2005-06 , LIC added as many as 100,00,000 policies to its already impressive portfolio and grew by almost 17% during the given period.
Competitors of LIC
Private players allowed in the market in 2000
Competitors of LIC
Market Share (Premium wise) 2007-2008 (Rs. 1.5 lakh crores)
39%
53%
5% 3%
Source: IRDA annual report 2008
BUYERS SWITCHING TO DIFFERENT INVESTMENT SECTORS FOR BETTER RETURNS, UNDIFFERENTIATED PRODUCT
SUPPLIERS GROWING POWERS BANKS, CA ARE IMPORTANT CHANNELS TO REACH THE CLIENT. HIGH BARGAINING POWER
8 zonal offices, 100 divisional offices, 2048 branch offices. Agents over 10 lakhs and 26 bancassurance partners
ICICI Prudential
1200 branches, agents over 2.5 lakhs, tie-ups with 5 cooperative banks
Prudential, 81% for Bajaj Allianz and 12% for LIC Promotion expenditure
LIC - Rs. 116 crore in 2008 Bajaj Allianz Rs. 17.7 crore in 2008 ICICI Prudential Rs. 15.4 crore in 2008
0.091
0.087 0.124
0.033
0.329
0.146
0.003
0.002 0.318
0.048 0.229
0.103 0.105
-0.35 0.245
Marketing Efficiency
Return on equity 0.553 Premium earned per agent 11.25 20.04 1.06
7.9
0.16
3.07
Opportunities Threats
Weaknesses
Opportunities
Threats
LIC S.W.O.T.
Strengths Brand Image, Govt. Guarantee, Claim settlement ratio, Large product portfolio Ultra-slow decision making process, typical government organizational problems Pension market, health insurance, large real estate portfolio Internal discord, new players, redtapism
Weaknesses
Opportunities Threats
LIC
13/50
Rs. 50000
5,10,15,20
ICICI Prudential
16/55
Rs. 75000
4,8,12,16,2 50% of 0 sum assured + bonuses 4,8,12,16,2 125% of 0 sum assured + bonuses
Bajaj Allianz
CashGain
14/50
Rs. 50000
2006-07 (19.9% growth vs 2.9% growth in world market) Life Insurance penetration 3 %
Unnatural events Sub culture (Urban-Rural divide) Awareness, Per Capita Income Middle class for protection & savings Upper class for investment, tax benefit & savings
Social Factors
Reference group, family, status In joint families less stress on buying insurance Women factor
Personal Factors
Buyers age Stage in Life cycle Occupation Economic Circumstances Personality Life style
Age Profile
45 and above 20%
15 - 30 years 35%
30 - 45 years 40%
3. Student
2. Business
10
1. Service
16
Consumer Behaviour
Benefit that consumer is seeking
1. Security 50%
Consumer Behaviour
Where are the present investments?
Where have you invested in?
Percentage of respondents
5.00%
6. Other
45.00%
5. Promotion
4. Customer service 3. Brand Name 2. Policy scheme 1. Reliability
15.0%
72.5%
60%
25% 10%
Term Plans Endowment ULIP
5%
Not sure
10% 7%
4%
12% advertisement agent friends and nieghbours family co workers 55% others
12%
1. Agent/Broke r 55%
market It would employ 11 lakh more agents to double its field workforce
socio-economically backward classes Maximize mobilization of peoples savings by making insurance-linked savings more attractive Involve all people working the Corporation to the best of their capability in furthering the interests of the insured public
References
www.irdaindia.org http://www.mouthshut.com/review/Life_Insurance_Corporation-129119-1.html http://www.financialexpress.com/news/lic-to-hike-advertising-spend-to-targetyouth/131089/ www.licindia.com The Marketing Whitebook 2009-2010 Marketing Management 13th Edition, Kotler, Keller, Koshy & Jha http://www.business-standard.com/india/news/insurers-miss-outrural-socialobligations/351625/ Life Insurance in India : Emerging Issues (Indira Gandhi Institute of Development Research) http://www.financialexpress.com/news/pvt-players-snuffing-life-out-of-marketleader-lic/171530/0 http://www.icmrindia.org/casestudies/catalogue/business%20strategy5/CLBS0 16.htm http://www.rediff.com/money/2005/dec/19guest1.htm http://en.wikipedia.org/wiki/Tertiary_education_in_India http://www.topnews.in/lic-invest-rs-4000-cr-stock-markets-march-20092115764
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