LIC Vision 2020

A policy from the basket of options

Risk, Endowment, Pension,
Child-life, Health, Group

Policy ticket-size
to match all
pocket-sizes

A Policy
in
Every
Pocket
Policy in pocket also
means a policy in form
of an electronic card

Every insurable
Indian to have at
least one policy

Pocket indicates
buying capacity and
also human life value

GDP Growth
Rate
Financial
Savings
Growth

Demographic
Structure

Insurance
Penetration

A Policy
in
Every
Pocket
Population
Growth

Mortality
Protection
Gap

Preference
Shift

Population Trends &

Demographic Segments

Total Population 2012

120 Crore

Females
582670
48%

Males
625446
52%

Total Population 2021

133 Crore

Females
645660
48%

Population number in 000s

Males
694080
52%

Population 2012

Urban
365357
30%

Population 2021

Rural
842759
70%

Urban
432615
32%
Rural
907126
68%

Population number in 000s

Age - Segments: 2011

8%

29%
0-14
15-34
35-59
60 above

27%
36%

Age-Wise Segment: Trend from 2011 to 2026

500000

Drop after Increase

Sharp Increase

450000

Population in 000s

Declining
400000

2011

350000

2016
2021

300000

2026

250000

Increasing

200000
150000
100000
50000
0

2011
2016
2021
2026

0-14
346942
340291
336907
327004

15-34
430625
456441
464844
458563

35-59
316468
354130
394745
441089

60 above
98470
118099
143245
173183

Total Population 2011

119 Crore

BPL Population 2011

37 Crore

Children
24 Crore

APL Population 2011

82 Crore

Youth
29 Crore

Middle-Aged
22 Crore

Working Population
52 Crore

Unemployed
3.21 Crore

Self Employed
24.64 Crore

Retired
7 Crore
Males: 27 Crore
Females: 25 Crore

Regular Employed
7.49 Crore

Casual Labour
16.19 Crore

Total Population 2021

134 Crore

BPL Population 2011

31 Crore

Children
26 Crore

APL Population 2011

103 Crore

Youth
36 Crore

Middle-Aged
30 Crore

Working Population
66 Crore

Unemployed
6.5 Crore

Self Employed
30.39 Crore

Retired
11 Crore
Males: 34 Crore
Females: 32 Crore

Regular Employed
9.24 Crore

Casual Labour
20 Crore

10

Working Population
52 Crore (2011)

Unemployed
3.21 Crore

Self Employed
24.64 Crore
Agriculture:

15.57

Industry:

3.25

Services:

5.82

NRI
Population
2.5 Crore

Regular Employed
7.49 Crore
Agriculture
Fishing
Mining
Manufacturing
Electricity, Gas and
Water Supply
Construction
Trade

0.35
0.01
0.10
1.83

Hotels & Restaurants

0.19

Casual Labour
16.19 Crore
Agriculture:

11.20

Industry:

3.95

Services:

1.04

0.14
0.16
0.79

Transport, Storage and

0.92
Communication
Financial
Intermediation
Real Estate

0.26
0.20

Public Administration 0.85

HNI
Population
1,25,500

Education

0.99

Health and Social Work 0.24

Other Community
Social Personal
services
Undifferen- tiated
Production

0.18
0.26

11

TARGET MARKET
Expected population
Age 65 and above
Population to be covered
BPL Population
Balance to cover
Existing Customers
People expected to continue
New lives to be covered
Lives leaving by Maturity (To be retained)
Net New lives to be covered

133 Crores
11 crores
122 crores
37 crores
85 crores
26 crores
18 crores
67 Crores
5 Crores
62 Crores

2020 Highlights:
Total Population will be approx 132 crs.
Insurable population will be approx 122 crs.
APL Population 85 Crs.
BPL Population 37 crs.
Net APL Target 65 Crores Lives Hence, Ratio of 1.6 to 1

100 crore Policies are to be sold

Targeted Growth Rate 26% YOY.
13

Indian Economy
Macro View

14

GDP

GDS

(Current Market price)

2010-11
Rs. 76,74,148 Cr.

(Current Market price)

2010-11
Rs. 24,81,931 Cr.

HHS
Rs. 17,49,311 Cr.

HHS

32%

70%

HHFS
40%

LIC TPI
2010-11
Rs. 2,03,473 Cr.

LIC
70%

Life
Industry

38%

Industry TPI

Financial Savings

Rs. 2,91,605 Cr.

Rs. 7,67,691 Cr.

15

10 Year Savings Trends in India

(Rs. In crore)
30000.00

25000.00

20000.00

Financial Savings
Household Savings
Gross Domestic Savings

24,81,931

17,49,311

15000.00

10000.00

7,67,691

5000.00

0.00

16

100.00%

Life Insurance & Bank Deposit as a %age of Financial Savings

90.00%

80.00%

70.00%

60.00%

Bank Deposits

50.00%

58.25%

37.83%
40.00%
29.10%

30.00%

20.00%

10.00%

0.00%

11.28%

Life Insurance Premium

Life Insurance Penetration of major countries

& the world average

18

16

Penetration is ratio of Premium (in USD )to GDP (in USD)

South Africa

14

12

UK
10

Japan
Singapore
Hong Kong
World

3.80

U
S

3.40

India

PR China

1.80

Brazil
Russia

0
2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

GDP
Growth Rate
Financial
Savings
Growth

Demographic
Structure

Insurance
Penetration

A Policy
in
Every
Pocket

Population
Growth

Mortality
Protection
Gap

Preference
Shift

Projections for 2020 with current trends

Business & Financial
Measures

New Business Policies

(in Crore)
Total Existing Policies
(in Crore)
First Year Premium
Income (Cr)
Total Premium Income

2013-14

2015-16

2017-18

2019-20

4.02

4.52

5.09

5.72

35.15

36.90

40.33

45.27

1,10,175

1,35,079

1,65,236

2,01,777

2,58,030

3,28,295

4,17,695

5,31,441

Predicted using Regression method,

assuming current growth rate of
business & economy.

Projections with Vision 2020

Business & Financial
Measures

New Business Policies

Total Premium Income
(Cr)
Annual Accretion to
Investments (Cr)
Total Investment Funds
(Cr) (Incl Reinvestment)

2013-14

2015-16

2017-18

2019-20

5.14

7.48

11.31

18.06

2,92,036

4,20,532

6,05,567

8,72,016

1,13,594

2,14,099

2,51,510

5,08,552

1,84,022

3,46,841

4,07,446

8,23,854

Value Gap in Number of Policies

Number of Policies (in crore)

20.00

18.07

18.00

14.18

16.00
14.00

Trend

12.00

11.31

Vision

9.15

10.00

7.48
8.00

6.18
5.14

6.00
4.00
2.00

3.57
3.57

4.31
3.79

4.02

4.26

4.52

4.79

5.09

5.39

5.72

0.00

2012

2013

2014

2015

2016

2017

2018

2019

2020
23

Value Gap in Total Premium Income

1000000

872016

Total Premium Income (in crore)

900000
800000

726680

Trend
Vision

700000

605567

600000

504639
420532

500000

531441

350444

471148

400000

417695

292036
370307

243364

300000

328295

202803
258030

200000

291050

228756
202803

100000
0

2012

2013

2014

2015

2016

2017

2018

2019

2020
24

GDP
Growth Rate
Financial
Savings
Growth

Demographic
Structure

Insurance
Penetration

A Policy
in
Every
Pocket

Population
Growth

Mortality
Protection
Gap

Preference
Shift

GDP
Growth
Rate
Financial
Savings
Growth

Demographic
Structure

Insurance
Penetration

A Policy
in
Every
Pocket

Mortality
Protection
Gap

Preference
Shift
Population
Growth

e-Policies
Operational
Cost Efficiency

Merger & Acquisitions

Geographical Expansion
Virtual Offices

Anywhere-Anytime
Services

Mini Offices
Organizational
Restructuring
Synergy with
Sister-Concerns

Growth
Opportunities

GDP
Growth
Rate
Financial
Savings
Growth

Demographic
Structure

Career Growth
Knowledge
Management
Change Management
Enhanced Productivity
Reward Performance
Effective
Manpower Planning

Technology
Partnership

Insurance
Penetration

A Policy
in
Every
Pocket

Mortality
Protection
Gap

Business-Model
Transformation

Pull Products

Preference
Shift
Population
Growth

Communication
More Marketers

Market Research
Training
Profitability
Better Returns through
Efficient Investments

People
Issues
Target
Market &
Distribution
Issues

Infrastructure
Issues

Actuarial &
Solvency
Issues

Technology
Issues

Investments
Issues

Target Market & Distribution Issues

Keeping in view the age-wise
segments, preference and pocketsize of each segment, what kind of
products are required?
Which are the competitive financial
products in each age-segment?

What should be the strength of

distribution to achieve the planned
annual FPI and Policy growth?
What is the required growth in
number of intermediaries?

What returns and benefits are

available on competing products?

What would be share of each

channel of distribution?

What type of products are required

to be introduced and how do we
schedule the introductions?

What is the desired productivity of

each channel?

What are the positioning and

publicity issues?

What needs to be done to increase

productivity of intermediaries?

What is the present productivity of

people in terms of New Business
Processing, Customer Service &
Support Activities?
What is the number of people
required to manage the planned
growth till 2020?
What will be the exit by way of
retirement in the next 8 years?

What should be the recruitment

schedule for the next eight years?
Keeping in view salary expense
ratio, what should be the pattern
and mix of recruitment
What is the desired productivity of
people in terms of New Business
Processing, Customer Service &
Support Activities?

People Issues
How to increase productivity?
How to create Career Growth
opportunities for people?
How to manage performance with
in-built incentive system?
How to ensure effective Talent
Management and Succession
Planning.

What steps are needed to increase

commitment levels and for effective
Change-Management

What is our present geographical reach in

term of State penetration, and presence in
districts and towns?
Which are the uncovered geographical
areas and segments?

How to decongest Branch offices and

increase presence in newer townships?

Infrastructure
Issues
Which operational activities should be
further decentralized and which ones
should be centralized in view of
technological developments?
Which are the attractive overseas markets
for expansion?

What should be the design of a sleek and

cost effective front office to increase
marketing and servicing reach?

Which are the areas where diversification

can be considered to create synergy
resulting in cost savings / increase in
profits?

How to increase our virtual presence

through on-line business and mobile
servicing?

How to leverage our sister concerns for

creating mutually beneficial business
opportunities?

How to restructure the organizational

design in view of technological
infrastructure?

How to develop effective tie-ups with other

participants in the financial market to create
win-win business opportunities

Technology
Issues
What is the targeted efficiency-addition by
use of technology to human-productivity?
What kind of newer business models can
be developed with use of latest and
emerging technology?
Which are the priority areas for Business
Process Re-engineering for cost-effective
operations and better customer-service?

What changes in Accounting and Servicing

processes are needed to implement AnyTime-Any-Where Servicing?
How to increase on-line services by
empowering customers, thereby reducing
demand on internal resources?

Which are the technological services that

can be out-sourced effectively and which
core ones must be retained in-house?

Which are the areas where new

technological partnership can be
developed?

What should be our roadmap for reaching

electronic issuance of policies?

How can we further leverage technology

for supporting marketing activities?

How can we further leverage technology

for bring down cost of operations ?

How to maximize ratio of Surplus-Fund

Transferred to Total Premium Income and
Surplus-Fund Transferred to Available
Surplus?

In view of targeted TPI growth, will there

be sufficient demand for Funds in the
market to find Investment avenues?

What is the present and projected size of

market for long-term bonds?

Investments
Issues
How to ensure better performance of
Fund-Managers?

What are the avenues and possibilities of

leveraging Derivative markets, Forex,
Commodities and Venture Capital?

Possibilities of overseas Investment

avenues?
Who are the competing finance-providers
in the market and what is their strength
and weakness?

How to Bench-mark yield under different

categories of Investments ?

Possibility of Investment in diversified

businesses?
What steps are needed for ensuring
efficient management and monitoring of
Investments?

Solvency
Issues
How Solvency-margin requirements in
future will be funded ?

What will be the technology-requirement to

ensure proper solvency compliance?

What will be the talent requirement to

ensure proper solvency compliance?

What should be the ideal Product mix and

related marketing strategies vis--vis the
solvency requirement (current and future)?
How to address the issue of Regulator
determined Product Pricing (e.g. Pension
products guarantee)?

What are the possible Capital-Adequacy

issues that may arise in future?

What could be the capital funding mix in

case of future eventualities ?

What steps are needed to prepare the

Corporation for Solvency-II requirements?

What should be the view on guaranteed

return products in light of Capital
requirements?
How do we ensure that Mortality / Morbidity
is not understated (Life, health) and not
overstated (annuity)?

External Environment Issues

What kinds of competitive forces the

Corporation is facing, within and outside the
industry?
What market position major competitors
from within and outside the industry
occupy?

What strategic moves the competitors are

likely to make?

How Political-Factors are likely to drive

industry change and what impact it may
have?
How Economic-Factors are likely to drive
industry change and what impact it may
have?

How Social-Factors are likely to drive

industry change and what impact it may
have?

How Technological-Factors are likely to

drive industry change and what impact it
may have?
How Regulatory-Factors are likely to drive
industry change and what impact it may
have?
How Global-Factors are likely to drive
industry change and what impact it may
have?
What are the global bench-marks in lifeinsurance industry?

A Policy
in
Every
Pocket

LIC Vision 2020

From Dream To Reality

Step 1

LIC
Vision
2020

Step 2

Setting
Objectives

Step 3

Crafting
Strategy
BluePrint

Step 4

Implement ation

Revision as needed in light of Actual

Performance, Changing Conditions and
New Opportunities

Step 5

Monitoring,
Evaluating
Performance

Vision 2020
Macro Strategy

37

Strategic Action Needed

Engage government to float a scheme to cover people in the BPL
through an SPV.
Recruit at least 25000 DOs to ensure minimum net addition of
12000.
Engage selected retiring DOs to nurture direct Agents.

Induct Spl. Mktg Official in each branch for alternate channels.

Have captive bancassurance partner by forming a bank
Expansion of Direct Mktg activities to all BO and SOs.
Do away with MBG for agents
Create new roles of Agency Recruitment Officers (ARO) and
Agency Managers (AM) on contractual basis.
38

Central Office
Zonal Offices

DO (Marketing)

Back Offices
Franchise Arrangement

Front Office
SO / BO

Customer Zones
(HNI Branches)

Virtual
Offices

Call Centre
(Rationalize number)

Life Plus Offices /

Premium Points/
One Man Offices/
39
Unmanned
offices

P&GS
Central Office

HR
IT
Actuarial
Service
Accounts
OS

Zonal Hub

Administrative Support
(PGSS)

Zonal Hub

Marketing Hub

Marketing Support
(PGSM)

Zonal Hub

Servicing Hub

Resource
Marketing
Team at
Central
Office

Zonal Hub

Reorganization and BPR

Restructuring of operations

- front office
- back office
FRONT OFFICE
Present day branches / satellite offices to become
frontend offices.
Single Man manned front-end offices
Newer technologies to be used for marketing &
providing basic services at front offices
41

Business Process: 2012 and 2020

How to meet the challenges
Business Processes

Technology 2012

Technology 2020

Business Procurement

Mostly post-procurement

Online

NB Processing

In branches

Premium Collection

70% in branches

Servicing

100% in 2048 branches

At point of sale
90% online or other
than branch
Anywhere anytime
42

LIC Vision 2020

Vision Sharing Meet with ZMs/HODs/Principal ZTCs, 8th
May, 2012, in Mumbai
Formation of Vision Steering Team
Four-Day Strategy Planning Meet of Vision Steering Team
and Strategy Planning Sub-Group: 16-19 July, 2012, Mumbai
Vision Sharing across organization: August-December 2012
Strategy Formulation for achieving Vision 2020: June to
Nov. 2012
First Cut Draft Strategy shared with CMC : Dec. 2012

LIC Vision 2020

Implementation Steps
Business Plan, Implementation Strategy and
Implementation Timelines by ZMs / HODs /others:
March-April, 2013

Vision 2020 Sharing across organization

Change Management Initiatives

Inter-departmental dependency coordination

LIC Vision 2020

Monitoring Steps
Vision Stage Monitoring
Periodic Reporting by VST to Top
Management/CMC/HOD
Create Vision Monitoring & Review Cell
Periodic Review of Strategy

LIC Vision 2020

A Policy
in
Every
Pocket