The insurance business was carried on by 154 Indian, 16 non-Indian insurance companies, and 75 provident societies, in 1956. During those days, insurance service was not extended to rural areas but was confined only to cities and better-off segments of the society. The parliament passed the Life Insurance Act of 1956, nationalized the insurance business by merging 240 private insurance companies to form the government-owned Life Insurance Corporation of India (LIC) on September 1, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reaching all insurable persons in the country at a reasonable cost.
On the occasion of the nationalization of the Life Insurance Corporation, Prime Minister Jawaharlal Nehru said, “The nationalization of life insurance is an important step in our march towards a socialistic society; its objective will be to serve the individual as well the state. We require life insurance to spread rapidly all over the country and to bring a measure of security to our people”.
After nationalization, the LIC has extended its service to a larger geographical area. In 1957, LIC had only 5 Zonal Offices, 33 Divisional Offices, and 212 Branch Offices. The business of LIC increased from Rs.200 crore in 1957 to Rs.1000 crore in the year 1969-70.
Today
Today, LIC is the largest life insurance company in India owned by the Government of India with an asset value of INR 2,529,390 crores. The headquarters of LIC is in Mumbai. At present, it has 8 Zonal Offices and 113 Divisional Offices situated all around the country and has 2,048 branches located in different towns and cities of India, LIC also has a network of around 15 million agents who solicit life insurance policies to the public.
Existing as a gigantic insurance company for over 60 years, LIC has acquired almost monopoly power in the solicitation and sale of life insurance policies in India. LIC has extended its activities in 14 countries other than India with the objective of catering to the insurance needs of Non-Resident Indians.
The enforcement of New Economic Reforms in 1991 coupled with the formation of the Insurance Regulatory and Development Authority Act (IRDA) of 2000 started issuing licenses to private life insurers and it has diluted the monopolistic attitude commanded by LIC. The only insurance company belonging to the public sector now has to compete with several other corporate entities of its kind which often are heavyweight Indian as well as Multinational Life Insurance Brands in themselves.
LIC Initial Public Offering : A listing everyone is waiting for!
LIC IPO launch is going to be the biggest ever IPO launch in India. The insurer is the oldest and the largest in India, controlling 72 percent of the market and enjoying a 66.24 percent share in total first-year premium collection.
The LIC IPO date has not been announced as of yet. That said, according to the government of India, the LIC IPO is slated to open up for subscription sometime during the second half of this fiscal year. Unfortunately, the upcoming LIC IPO had to witness several roadblocks in the form of the COVID-19 pandemic.
The government of India is likely to dilute not more than 10% of its entire stake in LIC. According to the estimates made by various analysts, the size of the upcoming LIC IPO would range somewhere between Rs. 70,000 crores to Rs. 1 lakh crores.
A glance at the past of the insurance industry in India
In the insurance sector, the journey from private entities to nationalization and back to the private sector has been quite eventful. There were several reasons and certain historical developments nationally and globally which perused the Government of India takes steps to open up the insurance sector. After its initial success, the defects and drawbacks of centralized planning and intervention strategy surfaced over a period of time, there was a swing in policy towards liberalization. This ushered in an era of reforms in all sectors in most of the countries of the world, India included, with the main objective of accelerating the pace of development.
The insurance sector has been opened up for competition from Indian private insurance companies with the enactment of the Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of the IRDA Act, 1999, the Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to protect the interests of the holder of insurance policy and to regulate, promote and ensure orderly growth of the insurance industry. Under the new dispensation, Indian insurance companies in the private sector were permitted to operate in India.
In the pre-reform era, the Life Insurance Corporation of India dominated the Indian Life Insurance market. But the situation drastically changed since the beginning of the year 2000. With the development of the IRDA Act in 1999, private players started entering into the life insurance market.
According to IRDA, at the end of the FY 2016-17, there were 24 life insurance companies (inclusive of 1 public sector player) operating in India. The former is the sole public-sector life insurance player whereas the latter is a dominant private sector life insurance player in India at present. As a result, many private insurers also came into existence.
LIC Services
In India, as the company is a leader in providing the best life insurance products that fit every budget and choice, LIC is synonymous with life insurance. Regardless of what walk/stage of life a person is in reasonable premium rates, LIC of India offers different life insurance policies. The policies offered by LIC are often in demand as a government-owned Life Insurance Firm and appeal to a wide range of clients.
Endowment Plans: LIC Jeevan Pragati, LIC Jeevan Labh, LIC Single Premium Endowment Plan, LIC’s New Endowment Plan, New Jeevan Anand, LIC’s Jeevan Rakshak, LIC’s Limited Premium Endowment Plan, LIC’s Jeevan Lakshya, LIC’s Aadhaar Shila, LIC’s Aadhar Stambh.
Whole Life Insurance Terms: LIC Jeevan Umang.
Money-Back Plans: LIC’s Bima Shree, LIC’s Jeevan Shiromani, LIC’s New Money Back Plan- 20 years, LIC’s New Money Back Plan-25 years, LIC New Bima Bachat, LIC’s Jeevan Tarun.
Term Plans: LIC’s Anmol Jeevan II, LIC’s e-term Plan.
Pension Plans: Pradhan Mantri Vaya Vandana Yojana, LIC New Jeevan Nidhi, LIC’s Jeevan Akshay – VI.
LIC Online Services
Digitalization has become a requirement and is no longer a privilege. An increasingly growing number of companies are incorporating it into their processes after realizing the broad potential of the digital network to link businesses with their customers. LIC has also digitalized its operations, building for its customers an extensive online database. This has made the goods and services of LIC more available at the hands of current and prospective customers.
- Online forms for the products and services from LIC of India
- Registration for e-Services from LIC of India
- Policy schedule
- Status of policy
- Status of claim
- Status of loan
- Status of accrued bonus
- Revival quotation
- Certificate of premium payment
- Premium due calendar
- Policy bond/Proposal form image
- Claim history
- Registration of grievances
Marketing Strategy of LIC
In order to facilitate their consumers expediently, LIC of India has adopted wide-ranging marketing strategies to acquire reach, frequency, and impact onto the panorama of life insurance coverage.
“Individual satisfaction leads to Group satisfaction”
Facilities to their existing employees: LIC of India believes and functions on the principle that if they have to continue as a market leader then it is imperative that the employees of the organization should be satisfied. LIC of India has worked thoroughly and introduced many new strategies as a part of the marketing tools to satisfy their employees. LIC of India provides amenities to their employees
such as:
a) Housing Loan to Agents
LIC of India offers home loans to the agents of the corporation under the Agents Housing Scheme. It has a separate sister concern working under LIC- HFL from where many housing schemes are transferred for a better throw.
(b) Meal Coupons to employees
In Sep. 2010, LIC of India has launched a very unique facility for their employees at every level. The amount of Meal coupon is decided to depend upon the hierarchical position of every employee.
(c) Sports
The employees of LIC of India are encouraged to take part in several sports activities for physical fitness and overall personality development. The employees have also represented the corporation at various national and international echelons. With a view to retain competitive excellence in the field of sports and to compete on equal footing with other organizations, it has recruited many employees from their Sports Recruitment Quota.
(d) Employees’ Training
LIC has started providing training to its employees in every hierarchical position. It has formed a
separate Human Resources Development / Organizational Development (HRD/OD) Department focusing on building and strengthening competencies, commitment, and building a learning and performance-centered culture in the organization.
Increasing the number of individual Agents
The organization is the number one service provider and agents are a pioneer field force in the procurement of the LIC’s business. LIC has authorized Agents across the country, which can collect the premium (including ULIP but excluding HI Policies) in Cash or Cheque and can issue a valid receipt instantly.
Also Read: HDFC Bank – India’s Most Valuable Brand
Introduced Life – Plus Offices
LIC has introduced a new and unique system in May 2009 as Life- Plus office to lower down the heavy rush on Branch offices cash centers. Life- Plus office is being maintained by LIC of India and managed by the top Development officers of the corporation known as Senior Business Associates (SBAs). At Life – Plus counter one can deposit premium, new policy insurance, I. T. certificate, loan/surrender value policy status, etc. which has become a most successful channel and reduce the burden of Branch offices and somehow working as Mini Branch offices of LIC of India.
Increase in Women employees
LIC was finding difficulty in providing services for women, especially in rural and semi urban locations. Henceforth, LIC of India has planned to recruit many women employees in the organization. At every stage in the Corporation, women officers/employees have contributed significantly. In the Corporation, Committees for the prevention of sexual harassment are formed at the workplace. These committees are functioning effectively at Central Office, Zonal Office, and Divisional Office level so that the working of female employees must not get affected and can thoroughly contribute towards the economic development of LIC of India and also for the country as a whole.
Bancassurance and Alternate Channels
There are many Banks who work as corporate agents for the corporation and have contributed to the Bima Bank campaign and has encouraged New Business performance. Dena Bank and Corporation Bank are a few examples of corporate banks. The Bancassurance & Alternate Channels share to total businesses 1.66% in Number of Policies (NOP) and 4.17% in First Premium Income (FPI).
Corporate Communication
LIC always has a thrust to fortify “Brand LIC” and to reinforce the brand connect with emerging market segments. In order to achieve that, it has made a consistent media presence in national and regional media. It has also sponsored many programs of National and International regimes and also conducted many activities such as campaigns in newspapers, consistent coverage of products in several magazines, Radio jingles on FM channels and radio stations on All India Radio, TV channels, and on websites like Facebook, Twitter, YouTube, etc.
International Joint Ventures
LIC has demeanor its operations not only within the country but also have established its various operations outside the country. The company opened its first branch on 23rd July 1989, in Bahrain to cater to the life insurance needs of Non-Resident Indians (NRIs) and the local population in the Gulf by issuing life insurance policies in US Dollars. It directly operates through its branch offices in Mauritius (Port Louis), Fiji (Suva & Lautoka), and United Kingdom (Wembley). It also has its branches in Nepal, Lanka. It has finalized a joint venture company in Saudi Arabia and is now planning to foray into New Zealand, Australia, and some more Asian and African countries.
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