A

PROJECT

ON

A COMPARATIVE STYUD ON MANAGING THE FINANCES BY

LIFE INSURANCE CORPORATION OF INDIA

SUMMER TRAINING PROJECT

Submitted in partial fulfillment of the requirements for the

2016

Submitted by Submitted to

MEENAKSHI Mrs. Surinder Walia

BHARATI VIDYAPEETH UNIVERSITY

School of Distance Education

(A Constituent Unit of Bharati Vidyapeeth University, Pune)

“A” Grade Accreditation by NAAC

An ISO 9001:2000 Certified Institute

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DECLARATION

This is to certify that I have completed a Project title "LIFE INSURANCE CORPORATION OF INDIA” under the guidance of MRS. SURINDER WALIA in the partial fulfillment of the requirement for the award of Bachelors of Business Administration of Bharati Vidyapeeth University, New Delhi. This is an original piece of work & I have not submitted it earlier elsewhere.

(MEENAKSHI)

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PREFACE

It is designed in such a way that student can grasp maximum knowledge and can get practical exposure to the corporate world in minimum possible time. Business schools of today realize the importance of practical knowledge over the theoretical base. The research report is necessary as it provides an opportunity to the researcher in understanding the industry with special emphasis on the development of skills in analyzing and interpreting practical problems through the application of management theories and techniques. It is a new platform of learning through practical experience.

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ACKNOWLEDGEMENT

I would like to take this opportunity to express my sincere thanks and gratitude to my college

BHARATI VIDYAPEETH for all their guidance, inspiration, constructive suggestions which

helped me in the project.

The successful start of this project was made by their guidance and co-operation.

I also owe my heartfelt gratitude and deep regards towards my guide MRS. SURINDER

WALIA for leading and directing me at every step of the project. I would like to thank her for

her invaluable help and for her crucial role throughout the course.

Last but not the least I would like to thanks all the people who directly indirectly who have helped and encouraged me in completing the project effectively and timely.

Signature of the student

(Meenakshi)

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Table of Content

CHAPTER 1: INTRODUCTION

1. About the company (formation, vision, mission, objectives, functions, product & services, organizational structure, SWOT analysis).

2. Environmental scanning- Political Environment, Economic environment, Socio-cultural environment, technological environment, environmental issues and Legal environment.

3. Porter’s five forces model of competition – Michael porter.

CHAPTER 2: RESEARCH METHODOLOGY

1. Statement of the problem.2. Objectives & Scope of Study.3. Managerial usefulness of study.4. Type of research and research design.5. Data collection methods6. Limitations of study.

CHAPTER 3: CONCEPTUAL DISCUSSION

1. Review of literature (discussion about the work done by others on similar issues and published articles/ books/ research projects etc.)

2. Current issues (from newspaper, journals- for company and industry).3. History and development of company and industry.4. New development of company and industry.

CHAPTER 4: DATA ANALYSIS

1. Methods and techniques of data analysis (questionnaire, graphs, statistical methods, SPSS etc.)

2. Primary data analysis.3. Secondary data analysis.

CHAPTER 5: FINDINGS AND RECOMMENDATIONS

CHAPTER 6: CONCLUSIONS AND SUGGESTIONS

CHAPTER 7: ANNEXURE

CHAPTER8: BIBLIOGRAPGHY

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CHAPTER 1: Introduction

About the Company

FORMATION OF COMAPNY

Life Insurance the Corporation of India was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalized the private insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state owned Life Insurance Corporation.

The Oriental Life Insurance Company, the first company in India offering life insurance coverage, was established in Calcutta in 1818 by Anita Bhavsar and others. Its primary target market was the Europeans based in India, and it charged Indians heftier premiums. Surendranath Tagore (son of Satyendranath Tagore) had founded Hindustan Insurance Society, which later became Life Insurance Corporation.

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

Postal Life Insurance (PLI) was introduced on 1 February 1884 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) Sahyadri Insurance (Merged into LIC, 1986)

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 worldwide 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 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.

VISION

“To be the preferred life insurer of the people of Fiji by providing innovative life insurance products and world class service at affordable rates”.

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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.”

OBJECTIVES OF LIC

o Spread Life Insurance widely and in particular to the rural areas and to the economically backward classes with a view to reaching all insurable people in the country and providing them adequate financial cover against death at a reasonable cost.

o Maximize mobilization of people's savings by making insurance linked savings adequately attractive.

o Bear in mind, in the investment of funds, the primary obligation to its policy holders, 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 and the community as a whole, keeping in view national priorities and obligations of attractive return.

o Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders.

o Act as trustees of the insured public in their individual and collective capacity.

o Meet the various life insurance needs of the community that would arise in the changing social and economic environment.

o Involve all people working in LICI to the best of their capabilities in furthering the interests of the insured public by providing efficient services with courtesy.

o Promote amongst all agents and employees of the LICI a sense of participation, pride and job satisfaction through the discharge of their duties with dedication towards achievement of the corporate objectives.

FUNCTIONS OF LIFE INSURANCE CORPORATION OF INDIA

The life insurance business was nationalized on 19th January, 1956 and the Life Insurance

Corporation of India came into being on 1st September, 1956 to carry on life business in India

with capital of Rs.5 crores contributed by the Central Government. The Corporation is a body

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corporate having perpetual succession with a common seal with powers to

acquire, hold and dispose of property and may by its name sue and be sued.

The functions of the Corporation shall be to carry on and develop life

insurance business to the best advantage of the community.

The Corporation shall have power –

(a) To carry on capital redemption business, annuity certain business or reinsurance business in

so far as such reinsurance business relating to life insurance business;

(b) to invest the funds of the Corporation in such manner as the Corporation may think fit and to

take all such steps as may be necessary or expedient for the protection or realization of any

investment; including the taking over of and administering any property offered as security for

the investment until a suitable opportunity arises for its disposal;

(c) To acquire, hold and dispose of any property for the purpose of its business;

(d) To transfer the whole or any part of the life insurance business carried on outside India to any

other person or persons, if in the interest of the Corporation it is expedient so to do;

(e) To advance or lend money upon the security of any movable or immovable property or

otherwise;

(f) To borrow or raise any money in such manner and upon such security as the Corporation may

think fit;

(g) To carry on either by itself or through any subsidiary any other business in any case where

such other business was being carried on by a subsidiary of an insurer whose controlled business

has been transferred to and vested in the Corporation by this act;

(h) To carry on any other business which may seem to the Corporation to be capable of being

Conveniently carried on in connection with its business and calculated directly or indirectly to

render profitable the business of the Corporation; and

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(i) To do all such things as may be incidental or conducive to the proper

exercise of any of the powers of the Corporation.

(j) In the discharge of any of its functions the Corporation shall act so far as

may be on business principles.

PRODUCT AND SERVICES

LIC offers a variety of insurance products to its customers such as insurance plans, pension plans, unit-linked plans, special plans and group schemes.  Online Child insurance Plans.

 The Parliament of India passed the Life Insurance of India Act on June 19, 1956 creating the Life Insurance Corporation of India, which started operating in September of that year. It consolidated the life insurance business of 245 private life insurers and other entities offering life insurance services, this consisted of 154 life insurance companies, 16 foreign companies and 75 provident companies. The nationalisation of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least seventeen sectors of the economy, including life insurance.

LIC has eight zonal offices and 105 divisional offices located in different parts of India. It compromises of 2,048 branches and employs over 10, 02, 149 agents for soliciting life insurance business from public.

LIC has extended its activities in 12 countries from outside India, primarily to cater to the insurance needs of non-resident Indians. LIC aims at strengthening its relationship with its vast customers base by providing valueadded service such as credit cards and offering premium payment facility to the policyholders. It is the largest insurance player in India and its objective is to channelize its funds for the benefit of the community at large. It enjoys a near monopoly power in the solicitation and sale of life insurance policies in India. The corporation has major business houses as clients, under the group business of India. It has more than 1,18,000 corporate clients covering more than 3,15,00,000 members. Apart from the corporate group insurance business the pension& group schemes is responsible for ‘Aam Aadmi Bima Yojna’,a social security schemes for the rural landless households under the aegis of the Government of India. LIC has been investing a major portion of its funds in socially-oriented sectors with a view to reach every insurable person in the country and provide adequate financial cover against death at a reasonable cost. Another goal is to mobilize people’s savings adequately attractive. LIC has recently tied up with Policybazaar.com an insurance portal that enables the consumers to get detailed information on the policy. It is one of the leading online non-life and life insurance aggregator to sell its policy Jeevan Aastha on the internet.

ORGANISATIONAL STRUCTURE

To perform the functions of tile Life Insurance Corporation of India, a conunittee consisting of 15 members is appointed by the Central Government. One of these members is also appointed as the chairman. The organization structure of Life Insurance Corporation of India has four-tier

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structure. They are (A) Central Office (B) Zonal Offices (Seven) (C) Divisional Offices (100) (D) Branch Offices (2048). The Central Office is to perform the activities relating to investments, framing and administering the rules and laws of the corporation. Branch Offices carryout almost 90% of the functions related to policyholders. There are seven Zonal Offices and 100 Divisional Offices, which are established on the basis of geographical areas. They are discharging their co-ordinating functions relating to the Central Offices and Zonal Offices. The Central Office of Life Insurance Corporation of India is located in Mumbai. There are several executive committees appointed by the Govemment of India from time to time to review the activities of the Life Insurance Corporation of India.

SWOT Analysis

Strengths

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HEAD OFFICE

Chairman

Board of directors

Directors and General

Managers

Deputy(or Asistant) General

Manager

ZONAL OFFICE

Regional managers inspection

Departmental zonal managersChief accountantsSecretary audit

1. Largest state-owned life insurance company in India, and also the country's largest investor2. Has over 2000 branches across all parts of India and more than 10,00,000 agents.3.  With Largest fund base it is the biggest investor in India4. Have over 115,000 employees across India5. According to The Brand Trust Report, LIC is the 8th most trusted brand of India6. 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)

Weaknesses

1.  It has an image of a Government agency and hence lacks innovation2. Being a Government agency, red tape and bureaucracy causes problems3. 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 Schemes implementation

Threats

1. Economic crisis2. Entry of new NBFCs in the sector3. Varying Govt policies

Environmental Scanning

Political environment: - Political environment highlight the probable government laws and regulations, security measures and restrictions that can apply to the industry as a whole. The probable environment that effect the automobile industry are:

1. Laws and regulations had affected the automobile industry since its outburst. These laws generally revolved around the environmental norms that were to be fulfilled by any car industry. Thus the car manufacturers had to take care of the environmental issues during manufacturing of cars.

2. Taxes and government foreign policies are critical for the automobile industry. The foreign policies help to us decide the probability of success in the global market.

3. Introduction of new schemes in the US and Europe automobile industry wherein regulation led to produce high mileage cars along with increase in automobile sales and production.

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Economic environment: - Ecomomical environment related to the exchange rates, economic growth globally and the business setting prevailing in the industry. Economic environment for the LIC Bank are:

1. There was excess capacity of cars produce thus giving rise to high amount of revenue in marketing and new product designs. Thus there was lot of revenue withheld even through demand was less than supply.

2. Total increase in the GDP globally from 2.0% to 3.1% in the year 2008.

3. Decrease in the exchang rate if euro has hampered the European car makers in a big way.

4. Economic downturn in the US market.

5. Surplus capital and buying power in the developing economies like India and China and their personal emergence in the global market place.

Socio-Cultural Environment: - Socio-cultural environment include the changes in cultures and demo graphics globally apart from change in buying pattern and capacity of the customer. Socio-cultural environment having an impact on the LIC are:

1. Changes in the customer predilection from insurance being a status symbol.

2. Changes in buying pattern of the consumers due to recession in mature market.

3. Environmental issues and awareness.

Technological environment:-1. Increase in use of technology to gain a clear competitive advantage.

2. Use of new and sophisticated design to overcome the decreased margins in the LIC.

Legal environment:-1. Restrictions and strict to show or not telling all the procedure of LIC.

2. Strict implications of the Indian norms in developing countries

Porter’s five forces model of competition

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Chapter 2: Research Methodology

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Statement of the Problem

LIC still continues to be dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on new growth surpassing its own past records. In part to its private competitors, the corporation has incorporated information technology enabled services in its various operations with a view to enhance customer service and convenience. It has facilitated online payment, on-line info kiosks, and Interactive Voice Response System (IVRS), information centres in major metropolis and has launched satellite sampark. Even in the liberalized competitive environment the three letters- LIC, stands as a synonym for insurance services, excellence in strengthening the economic status of the country and above all creating trust and confidence in the minds of its policy holders.

In considering the facts and issues a study was conducted to quantify the service quality rendering to the policy holders in Life Insurance Corporation of India (LIC).

Insurance sector, as a whole has contributed to the development of economy through generation of employment opportunities, acceleration of industrial growth etc. Although Life insurance Corporation of India has its own significance and place in the economy, it is not free from problems. Customer satisfaction is the true differentiator for the success of any business and is more so in insurance, where the products are perceived to be intangible.

The three main aspects i.e. awareness level, service quality, satisfaction level of policyholders. Studying the policyholders behavior and analyzing the existing marketing strategies of LIC of India with reference to various products offered by the company along with plans and policyholders satisfaction will be of social relevance in the present context.

Objectives & Scope of Study

To be precise the study has undertaken the following objectives:

1. To measure the significant difference between the expectations and perceptions towards various aspects of service quality in LIC, and

2. To offer suggestions on the basis of the study for improvement of quality services to the existing policy holders.

3. To understand the perception on Customer Relationship activities of LIC.

4. To identify the factors influencing policyholders satisfaction in LIC products.

5. To study the policyholders’ response towards marketing activities of LIC.

6. To identify the reasons to switch’ over from LIC to other companies.

7. To identify the satisfaction level between rural and urban customers.

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Managerial usefulness of study

LIC has been one of the pioneering organizations in India who introduced the leverage of Information Technology in servicing and in their business. Data pertaining to almost 10 crore policies is being held on computers in LIC. We have gone in for relevant and appropriate technology over the years.

1964 saw the introduction of computers in LIC. Unit Record Machines introduced in late 1950’s were phased out in 1980’s and replaced by Microprocessors based computers in Branch and Divisional Offices for Back Office Computerization. Standardization of Hardware and Software commenced in 1990’s. Standard Computer Packages were developed and implemented for Ordinary and Salary Savings Scheme (SSS) Policies.

1. The factors influencing the selection of policy do not differ between rural and urban Policyholder.

2. The level of perception on Customer Representative Activities of LIC by annual income of the policyholder does not differ significantly.

3. The level of satisfaction between rural and urban customers do not differ significantly.

Type of Research and research Design

The universe for the study is comprised of the policyholders of LIC in Thanjavur Division. The sample, policy holders were picked from sample frame, listed by the three branch managers and five agents. The sample was then grouped as urban and rural clusters. In each cluster, a sample of 150 7 policyholders were approached at the convenience of the researcher and the policyholders. The necessary data were collected from the 300 policyholders in all.

The Researcher used convenience Descriptive Research Design to study the service quality, awareness level, satisfaction level and its key dimensions in life insurance sector. The questionnaire was divided into two sections. In the first part information related to different socio-economic and demographic criteria like income, age, profession, educational qualification, etc. were collected. In the second part, respondents were asked to evaluate parameters on awareness level, satisfaction level, and service quality, relevant to insurance product of LIC on a 5 point scale (“strongly agree “to“strongly disagree”).

Specially, these service quality aspects were identified by a detailed exploratory identification process. This includes two focus group discussions with 300 (Rural and urban) life insurance policyholders and eight in-depth interviews (three with branch managers and five with agents of LIC).Content analysis of focus group discussions and depth interviews were performed.

Data Collection Methods

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The study is mainly based on primary data collected from the field survey using pre-tested questionnaire. Secondary data were collected from various sources such as journals, magazines, publications and various websites including the official websites of IRDA & LIC. The published research reports and market studies also helped the researcher to probe into the problem.

Limitations of Study

As the study made with Primary and Secondary research, there are certain limitations to the study to be noticed.

1. Main limitation to the study was the time available to conduct it, which affected the processing and analyzing of the data.

2. Sufficient number of respondents from all the LIC service could not be included.

3. The study is confined only to policyholder satisfaction of LIC and other related issues are beyond the purview of present study

4. Due to time constrain the researcher covered only a limited period of study i.e. 2005-2006 to 2009-2010.

5. Sample size is limited to 300 people only. The sample size may not adequately represent the whole market

6. It is difficult to know if all the respondents gave accurate information; some respondents tend to give misleading information.

Chapter 3: Conceptual Discussion

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Review of Literature

In order to find out the gaps in research, the literature already available pertaining to the problem is to be reviewed. The literature on life insurance industry in India includes books, compendia, theses, dissertations, study reports and articles published by academicians and researchers in different periodicals. The review of this literature gives an idea to concentrate on the unexplored area and to make the present study more distinct from other studies. The literature available is presented below:

Mishra, K.C. and Simita Mishra (2000)1 in their article on “Insurance Industry: Recipe for a Learning Organization” say that like any other industry, insurance industry in India suffers from one challenge repeatable a hundred times, that is the constraints of infrastructure.

Balasubramanian, T.S. and Gupta, S.P. (2000)2 in their book on “Insurance Business Environment” explain at length the global and Indian pictures of Insurance systems. The impact of globalization and also liberalization on Insurance business environment is also discussed analytically to have a clear understanding of the challenges faced by the insurance industry.

Mitra Debabrata (2000)3 in the thesis entitled “Employees and the PSU: A Study of their Relationship with Special reference to Jalpaiguri Division of the Life Insurance Corporation of India” opines that the State-owned Undertakings provide all sorts of facilities and amenities to employees along with usual emoluments. But, their productive rate is low when compared it with the private sector undertakings. In the Jalpaiguri Division, the employee relationship with the LIC is clearly discussed and some suggestions are also given in the thesis.

Wadikar Ashok Laxaman (2001)4 in his thesis on “Innovativeness in the Insurance Industries”, confirms a general opinion that innovativeness in every activity alone rules and dominates the industry. But, at the same time, the practicality and economic justification of that innovativeness are also to be considered. With the introduction of the latest technology into the industry, innovativeness in the insurance industry is the order of the day.

Balachandran, S. (2001)5 in his book on “Customer Driven Services Management” concludes that the insurance industry is fast growing and mostly becoming a customer-driven and customer-centric one. He also advocates that when the insurance products are attractive to the customers, then only the insurance industry flourishes in the market and serves its purpose of profit earning and also income generation.

Srivastava, D.C. and Srivastava, S. (2001)6 in their book on “Indian Insurance Industry–Transition and Prospects” discuss analytically the financial significance of insurance industry, its contribution to Indian economy and also the transitory prospects and challenges of insurance industry due to liberalization and the opening up of the sector to private players.

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Mark S. Dorfman (2002)7 in his book on “Introduction to Risk Management and Insurance” reviews the salient features of the insurance industry and also the role played by the private enterprise.

LIC to infuse Rs 200 crore to Indian Overseas Bank

Life Insurance Corporation of India (LIC) is infusing Rs 200.04 crore into Chennai-based Indian Overseas Bank (IOB) by increasing its stake to 14.50% from 10.21%, said the loss-making public sector bank in filing with the BSE.

The bank, which saw its Q3 losses widen to Rs 1,425 crore as it set aside more money to cover bad loans, has called for a shareholders' meeting to get their approval for the preferential issue to LIC at Rs 23.18 a share. In a note to shareholders, the bank said that there is a pressing need to increase its capital to meet regulatory norms.

At the request of IOB, LIC will buy about 8.62 crore equity shares of the troubled bank on a preferential basis for Rs 200.04 crore, bringing down the Indian government's stake to 77.32% from 81.19% and the stake of public shareholders' marginally to 8.18% from 8.60%.

The bank, which saw Q3 gross NPAs at an uncomfortable 12.64%, has been pulled by the Reserve Bank of India (RBI) for failure to check bad loans. The bank was directed to put in place more stringent credit-quality checks and not payout dividends or enter new lines of business till its asset quality improves, following which IOB increased its Q3 provision for loan losses by 60% to Rs 1,896.06 crore year over year.

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19

Current Issues

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History and Development of Company and Industry

Life Insurance Corporation (India) (LIC) is an Indian state-owned insurance and investment company headquartered in Mimbai. It is the largest insurance company in India with an estimated asset value of  1560482₹  crore (US$230 billion). As of 2013 it had total life fund of Rs.1433103.14 crore with total value of policies sold of 367.82 lakh that year.

The Life Insurance Corporation of India was founded in 1956 when the Parliament of India passed the Life Insurance of India Act that nationalized the private insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state owned Life Insurance Corporation.

LIC Zonal Office, Night View from Connaught Place Park

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LIC Zonal Office, at Connaught Place, New Delhi, designed by Charles Correa, 1991

LIC Building at Chennai, was the tallest building in India when it was inaugurated in 1959

LIC holds shares worth about Rs 2.33 lakh crore in all the Nifty companies put together, but it lowered its holding in a total of 27 Nifty companies during the quarter.

The cumulative value of LIC holding in these 27 companies fell by little over Rs 8,000 crore during the quarter shows the analysis of changes in their shareholding patterns.

Individually, LIC is estimated to have sold shares worth Rs 500-1,000 crore in each of Mahindra & Mahindra, HDFC Bank, ICICI Bank, Tata Motors, L&T, HDFC, Wipro, SBI, Maruti Suzuki, Dr Reddys and Bajaj Auto.

The insurance behemoth also trimmed holdings in Ambuja Cements, Cipla, TCS, Lupin and Asian Paints. A marginal decline was also witnessed in its stakes in companies such as IDFC,

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Hindustan Unilever, Grasim, ACC, BPCL, Bank of Baroda, Punjab National Bank, Sun Pharma and Tata Power.

On the other hand, LIC further ramped up its stake in a total of 14 Nifty constituents with purchase of shares worth an estimated Rs 4,000 crore.

The major companies where LIC has raised its stake include Infosys, RIL,Coal India Ltd and Cairn India. Other such companies are ITC, Power Grid Corp, NTPC, Siemens, Bharti Airtel and Hero MotoCorp.

The state-run insurer also marginally hiked its exposure in Ultratech, Gail India, Ranbaxy, Kotak Mahindra Bank and HCL Technologies, while its shareholding remained almost unchanged in companies like ONGC, Tata Steel, BHEL and Reliance Infra.

Among the Nifty companies, LIC’s holding in terms of value is estimated to be highest in ITC (Rs 27,326 crore), followed by RIL (Rs 21,659 crore), ONGC (Rs 17,764 crore), SBI (Rs 17,058 crore), L&T (Rs 16,800 crore), and ICICI Bank (Rs 10,006 crore).

Golden Jubilee FoundationLIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity has the aim of promoting education, alleviation of poverty, and providing better living conditions for the under privileged. Out of all the activities conducted by the organization, a Golden Jubilee Scholarship award is the best known. Each year, this award is given to the meritorious students in standard XII of school education or equivalent, who wish to continue their studies and have a parental income less than  100000₹  (US$1,500).

New Development of Company and Industry

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Today, the LIC has 8 zonal offices, around 113 divisional offices, 2,048 branches and 992 satellite offices and corporate offices; it also has 54 customer zones and 25 metro-area service hubs located in different cities and towns of India. It also has a network of 1,337,064 individual agents, 242 Corporate Agents, 89 Referral Agents, 98 Brokers and 42 Banks for soliciting life insurance business from the public.

Growth as a monoplyFrom its creation, the Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and by 2006 was contributing around 7% of India's GDP.

The Corporation, which started its business with around 300 offices, 5.7 million policies and a corpus of INR 45.9 crores (US$92 million as per the 1959 exchange rate of roughly  5 for ₹US$1), had grown to 25,000 servicing around 350 million policies and a corpus of over 800000₹  crore (US$120 billion) by the end of the 20th century.

Liberalisation post 2000sIn August 2000, the Indian Government embarked on a program to liberalise the Insurance Sector and opened it up for the private sector. Ironically, LIC emerged as a beneficiary from this process with robust performance, albeit on a base substantially higher than the private sector.

In 2013 the First Year Premium compound annual growth rate (CAGR) was 24.53% while Total Life Premium CAGR was 19.28% matching the growth of the life insurance industry and also outperforming general economic growth.

A thriving insurance sector is very important to every modern economy. Firstly because it encourages the habit of saving, secondly because it provides a safety net to rural and urban enterprises and productive individuals. And perhaps most importantly it generates long- term invisible funds for infrastructure building. The nature of the insurance business is such that the cash inflow of insurance companies is constant while the payout is deferred and contingency related. This characteristic feature of their business makes insurance companies the biggest investors in long-gestation infrastructure development projects in all developed and aspiring nations. This is the most compelling reason why private sector (and foreign) companies, which will spread the insurance habit in the societal and consumer interest are urgently required in this vital sector of the economy. Opening up of insurance to private sector including foreign participation has resulted into various opportunities and challenges in India.

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Chapter 4: Data Analysis

Methods and techniques of data analysis

Q1. Are you currently covered under any LIC investment policy?

a) Yesb) No

Yes No0

2

4

6

8

10

12

14

1614

6No of respondent

Interpretation

In the above question we have surveyed people who are covered under the LIC investment policy. 14% people say Yes and 6% say No.

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Q2. What is your major reason for opting for an LIC investment?

a) Insuranceb) Investment

Insurance Investment0

2

4

6

8

10

12

14

12

8

No of respondent

Interpretation

In the above question we have surveyed people who are interested in LIC.12% people are covered with Insurance and 8% people are interested in Investment.

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Q3. Are you currently undergoing any medical treatment or are ill?

a) Yesb) No

Yes No0

2

4

6

8

10

12

14

8

12

No of respondent

Interpretation

In this people are going under medical treatment 8% say Yes and 12% say No.

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Q4. Are you satisfied with your insurance policy?

a) Yesb) No

Yes No0

2

4

6

8

10

12

14

16 15

5

No of respondent

Interpretation

In this question we are surveyed that who are satisfied with insurance. 15% people were satisfied with insurance and 5% are not satisfied.

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Q5. Are you looking for a better LIC policy?

a) Yesb) No

Yes No0

2

4

6

8

10

12

14

16

18

2018

2

No of respondent

Interpretation

In this question people who are interested in LIC. 18% who are looking or interested in LIC and 2% not interested.

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Q6. You’re Occupation?

a) Serviceb) Businessc) Retiredd) Other

Service Business Retired Other0

2

4

6

8

10

12

10

43 3

No of respondent

Interpretation

In this question we surveyed the occupation. 10% people say service,4% say business,3% are retired and 3% are other.

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Q7. Your income?

a) 10000-15000b) 15001-25000c) Above 25000

10000-15000 15001-25000 Above 250000

2

4

6

8

10

12

10

5 5 No of respondent

Interpretation

In this question surveyed the income of peoples. 10% say 10000-15000,5% say 15001-25000 and 5% say above 25000.

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Q8. What do you feel after investing in LIC?

a) Goodb) Averagely satisfied with the investment decisionc) Cheated

Good Average Cheated0

2

4

6

8

10

12

14

12

5

3

No of respondent

Interpretation

In this question people who are satisfied after investing in LIC. 12% say Good,5% say average satisfied with the investment decision and 3% say cheated.

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Q9.  Do you invest in Insurance Plans because of Tax Benefits?

a) Yesb) No

Yes No0

2

4

6

8

10

12

14

16

18 17

3

No of respondent

Interpretation

People who invest in insurance plan because of tax benefits.17% people say Yes and 3% say No.

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Q10.Does the Insurance Agent / Marketing Executives Recommend for Life Insurance?

a) Yesb) No

Yes No0

2

4

6

8

10

12

9

11

No of respondent

Interpretation

In this surveyed that people were said that agent is not required for LIC. 9% say Yes and 11% say No.

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Primary Data Analysis

The primary sources of data refer to the first hand Information. Primary data is collected during the survey with the help of Questionnaires.

In primary data collection, you collect the data yourself using methods such as interviews and

questionnaires. The key point here is that the data you collect is unique to you and your research

and, until you publish, no one else has access to it.

There are many methods of collecting primary data and the main methods include:

questionnaires

interviews

focus group interviews

observation

case-studies

diaries

critical incidents

Portfolios.

Secondary Data Analysis

Secondary data is one which already exists and is collected from the published sources. The sources from which secondary data was collected are:

• Newspapers and Magazines like Economic Times, Insurance Times, and Insurance Post.

• Internet.

To study the rural centric marketing management techniques adopted by the life insurance companies.

To identify the lacunae / deficiencies in the existing marketing techniques vis-à-vis the expectations, awareness levels and safety perceptions of the rural people.

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To suggest suitable rural centric marketing management techniques to the life insurance companies for wider rural coverage.

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Chapter 5: Findings and Recommendations

Findings

It is found that the employees of LIC are always busy with respond to the requests of customers/ policy holders.

It is found that the majority of the customers feels safe and expressed their happiness in their transactions with LIC.

It is found that the negligible portion of the employees in LIC don’t pay personal attention to the problems of customers.

It is found that the negligible portion of the employees in LIC don’t have the knowledge of all the policies of LIC.

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 centered, 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 favor 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 insurers 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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Chapter 6: Conclusions and Suggestions

Conclusions

This study has analyzed the data collected from the policy holders and has brought out the expectations of the policy holders and their preferences. It has also offered suggestions that can be implemented for the benefit of the common public and the Government.

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.

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Suggestions

During the study it is found that policy holders prefer banking and insurance together. They prefer private insurance sectors because they provide them the banking facility and a lot of value added services. So it will be beneficial both to the common public and the LIC if it offers banking facility to the policy holders and the common public.

The overall performance evaluation of Life Insurance Corporation of India is consistent. The working groups have been worked hard for their functions but still some drawbacks are left behind, for that suggestions are as under:

1. LIC should try to increase their selling of plans to introduce new plans with different kinds of facilities, so that it can increase its income amount, especially Premium amount.

2. As private insurance companies capture the market now a day, therefore, LIC should strengthen their working & should launch plans with more facilities.

3. The Corporation should strive to increase its business by issuing more and more policies in order to retain its market share in the competitive scenario.

4. Operating cost as compared to premium underwritten should be controlled.

5. A comparative statement of performance between LIC and various insurance companies may help increase the business

6. A comparative statement of performance of operating expenses of LIC and various insurance companies may help to narrow down the cost.

7. LIC of India should continue making investments, but secured investments should be made

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ANNEXURE

PERSONAL DETAILS

Name: __________________________________

Address: ___________________________________

Gender: Male [ ] Female [ ]

Telephone No: ___________________________________

Email: ____________________________________

Q1. Are you currently covered under any LIC investment policy?

a) Yesb) No

Q2. What is your major reason for opting for an LIC investment?

a) Insuranceb) Investment

Q3. Are you currently undergoing any medical treatment or are ill?

a) Yesb) No

Q4.are you satisfied with your insurance policy?

a) Yesb) No

Q5. Are you looking for a better LIC policy?

a) Yesb) No

Q6. Your occupation?

a) Serviceb) Businessc) Retiredd) Other

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Q7. Your income?

a) 10000-15000b) 15001-25000c) Above 25000

Q8. What do you feel after investing in LIC?

a) Goodb) Averagely satisfied with investment decisionc) cheated

Q9. Do you invest in Insurance Plans because of Tax Benefits?

a) Yesb) No

Q10. Does the Insurance Agent/ Marketing Executives Recommend for Life Insurance?

a) Yesb) No

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Bibliography

BROCHURES / INFORMATION BOOKLETS

•Product List L.I.C.

•L.I.C. Annual Report

•HDFC Annual Report

•Malhotra Committee Report on Reforms in the Insurance Sector, 1993.

•The Insurance Regulatory and Development Authority Bill, 1999.

NEWSPAPERS / MAGAZINES

•The Economic Times

•DNA money

•Insurance Post

BOOKS

•Dr. Gupta S.P& Dr. Gupta M.P., Business Statistics by Addition 2004, New Delhi.

WEBSITES

•w.w.w.liclndia.com

•www.lrdaindia.org.com

•www.indiainfoline.com

•www.icici.com

•www.hdfc.com

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