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MAHMUL 02922/2011 Hi-TECH RESEARCH ANALYSIS Half yearly Research Journal ISSN 2231- 6671 Vol. I, Issue : I, Feb. 2011 to July. 2011 20 4 RECENT TRENDS IN MARKETING STRATEGY OF LIC OF INDIA S. J. Kulkarni Dept. of Commerce, Rajarshi Shahu College, Latur, Dist. Latur. Dr. P. N. Sagar Voice Principal, Rajarshi Shahu College, Latur, Dist. Latur. Research Paper -Commerce Life Insurance Corporation of India is a public sector giant in the life insurance industry in India. For almost five decades LIC is monolithic company in the life insurance sector.
Since nationalization LIC has built up a vast network of 2048 branches, 109 divisions, 8 zonal offices and 1004 satellite offices spread all over the country. The Life Insurance Corporation of India also transacts business abroad and has offices in Fiji, Mauritius and United Kingdom. With its multinational presence, it is associated with joint venture abroad in field of insurance namely, Ken India Assurance Company Limited, Nairobi, United Oriental Assurance Company Limited, Kualalumpur and LIC (international) E. C. Bahrain.
Insurance Sector Reforms : The Insurance sector in India has completed a full circle from being an open competitive market to nationalization and back to a liberalized market again. From 2000, many private players entered into insurance industry with effect of privatization of insurance sector as per R. M. Malhotra Commission’s recommendations and formation of IRDA. Objectives of the Study : 1. To know market share of LIC of India in Life insurance business. 2. To know new market strategy adopted by LIC of India to increase business volume. MAHMUL 02922/2011 Hi-TECH RESEARCH ANALYSIS
Half yearly Research Journal ISSN 2231- 6671 Vol. I, Issue : I, Feb. 2011 to July. 2011 21 Hypothesis of the Study : Despite of entry of private players LIC plays a dominant role in life insurance business in India. Research Methodology : The research methodology of this study is related to evolutionary research method. Basically, secondary data is used for the study. The secondary data consisted of published annual reports for the concerned years of Life Insurance Corporation of India, website of LIC, website of IRDA, Journal, Magazines of LIC of India, reference books, etc.
Need of Research Study : The insurance sector in India has been completed a full circle from privatization to nationalization and again privatization. LIC of India plays an important role in the life insurance sector of India. Since economic reforms, the insurance sector is also changing. These changes will help both the urban and rural consumers. Present Scenario of Indian Life Insurance Market : As many new players have joined the insurance industry posing a tough competition to LIC. LIC has been reorganizing itself in order to perform better than the new players.
The performance of Life Insurance Corporation and private players has been shown for the year 2008-09 in the figure No. 1. Indian Life Insurance Market Share (2008-09) 1. 05 1. 23 2. 06 2. 5 2. 22 3. 25 4. 79 5. 06 LICI ICICI Bajaj SBI Reliance 6. 92 HDFC Birla Tata Kotak 70. 92 Others MAHMUL 02922/2011 Hi-TECH RESEARCH ANALYSIS Half yearly Research Journal ISSN 2231- 6671 Vol. I, Issue : I, Feb. 2011 to July. 2011 22 At present there are 21 private life insurers operating in the Indian Life Insurance market along with LIC of India, at the end of the financial year 2008-09. The total volume of premium reached to Rs. 21,791 crore in 2008-09 from Rs. 24,630 core in the year 1999-2000 which is little more than 800%. Private life insurers are slowly gaining the momentum to penetrate the market with their new products, services and the global knowledge of expertise in doing life business. It can be observed from their growing market share statistics which shows (fig. 1) nearly 30% of the market are in their hands at the end of 2008-09 financial year. Most important aspect is that acceptability is on the rise in urban areas. New Marketing Strategy : The LIC of India, being old brand and Govt. wned insurer in the market its market share is large as compared to private players. But consumers perception of the insurance is that of an investment rather than as a risk cover. They expect prompt services. The LIC of India has been facing competition pressure, so it has been reorganizing itself in order to perform better and to compete private players. LIC has been formulating new strategies and plans from time to time. No doubt, experience generally improves performance, the LIC has experience of more than fifty years. Even IRDA also aims at innovative and progressive development of insurance sector.
LIC has been taken following steps to increase its market competitiveness and retains its dominant position in the insurance market. 1. Product development : Life Insurance Corporation introduced traditional insurance schemes. To cater consumers needs about protection against risk factor, provision for future, old age provision, by launching whole life plans, Endowment plans, Term insurance plans and pensions plans over a period. Every year by taking market review it introduces new innovative plans and also withdraw, those plans which have less market response.
Now, LIC of India has been changed its products to meet the varied need of the customers. It has been caused due to following reasons. a. Competitive pressure b. Changing behaviour of consumer. MAHMUL 02922/2011 Hi-TECH RESEARCH ANALYSIS Half yearly Research Journal ISSN 2231- 6671 Vol. I, Issue : I, Feb. 2011 to July. 2011 23 In the competitive market there is a greater need to provide insurance products that meet the needs of the customers. Therefore, LIC offers wide variety of products which fulfills the needs of different segments of the society. As at the end of financial years 2009-10 the corporation had 52 plans available for sale.
During the year corporation had introduced 6 new plans viz Money plus-1, Market plus-1, Jeevan Bharti-1, Child Fortune plus and two term insurance plans i. e. Jeevan Astha and Jeevan varsha. Health insurance plans : LIC has observed that there is a top potential for the health insurances business. So in the year 2007-08 it had started one Health Insurance Department and the first product Health Plus was launched on 4 February, 2008. People also welcomed it. During the year 2008-09, 97357 Health Insurance Policies were sold for a premium income of Rs. 91. 39 crores[3]. 2.
Marketing Activities : In marketing of insurance products effectively, field personnel play pivotal role. The corporation has been developed alternative distribution channels along with channels to increase its business volume. 1. Agents : In LIC of India, the Agent is a pioneer field force, in procurement of the LIC’s business. In the year 2009-10 total number of agents was 13,44,856. The corporation has launched scheme of Urban Career Agents and Rural Career Agents. To promote them the corporation also gives stipends at the start of their career and to enable them to settle down the profession.
As on 31-03-2008 there were 17,684 urban career agents and 22,324 rural career agents[4]. 2. Micro Insurance Plan : The LIC of India, not only concentrates on celebrity marketing and rich class segment but also launched insurance plan under a separate business vertical to extend security to the less privileged section of the society under business vertical ‘Jeevan Madhur’ plan was launched in Sept. 2006 by the LIC. The table No. 1 shows that within 2. 5 years it has provided 4. 3 cover the approx 2. 5 million lives. MAHMUL 02922/2011 Hi-TECH RESEARCH ANALYSIS Half yearly Research Journal ISSN 2231- 6671 Vol. I, Issue : I, Feb. 2011 to July. 011 24 Table 1 : Micro Insurance Business of LIC of India Sr. No. 1. 2. 3. 4. Newlives Total lives Sum assured in force Rs. In crore FPI (Rs in lakh) nd Particulars 2006-07 2007-08 2008-09 80637 80637 110. 63 138 (13. 8 million) 854615 935252 1116. 42 1622 (16. 22 million) 1541218 2476470 2034. 27 3120 (31. 20 million) Source : 52 Annual Report of LIC of India. 3. Banca Assurance and Alternate channels : LIC also tied up with the banks in urban and with Regional Rural Banks (RRB) to spread its business. The percentage share of Alternate channel business to total business went up from 2. 01% to 2. 40% in policies and from 1. 84% to 3. 5% in first premium income. Out of total business of alternate channels, banks (under corporate agency mode) contributed 67. 29% of number of policies and 63. 70%. The table No. 2 shows New Business (Individual Insurance) procured by the different marketing channel. Table No 2 : Statement of Individual New Business Procured Channelwise Sr. No. 1. 2. 3. 4. Conventional Banking and Alternative channel Chief Life Insurance Advisor (CLIA) Micro Insurance Total Individual First Premium nd rd Business 2008-2009 2009-10 No of policies First premium No of policies First premium in Lakh income in Crore in Lakh income in Crore 323. 89 8. 2 10. 99 15. 41 33113. 30 1076. 00 1100. 71 31. 20 340. 09 7. 54 20. 91 19. 85 39227. 40 1132. 92 2563. 88 36. 15 358. 91(35. 89 35321. 21(353. 21 388. 39(38. 83 4296. 44(429. 64 million) million) million) million) Source : 52 and 53 Annual Report of LIC of India. MAHMUL 02922/2011 Hi-TECH RESEARCH ANALYSIS Half yearly Research Journal ISSN 2231- 6671 Vol. I, Issue : I, Feb. 2011 to July. 2011 25 4. Foreign Branches : The corporation directly operates through its branch offices in Mauritius at Port Louis, Fiji at Surva and Lautoka and United Kingdom at werobley. During the year 2007-08 these three foreign branches together issued 10. 77 policies with sum assured of US $ 97. 7 million at FPI of US million. Conclusion : At present, it is needful to take review for what insurance has to be taken. It should be for the benefit of policyholder i. e. common man not only rich class segment. The insurance company should not be a race winner, in the competitive ground. It aims at diverting public saving towards socio welfare and infrastructural development. Obliviously, LIC of India aims at dual objectives i. e. protection of policyholders trust and contribution in economic development. The Insurance Act 1938, the Life
Insurance Act 1956 and IRDAAct 2000 guide with this regard by making rules and regulations. The Life Insurance Corporation is the public sector insurance company and highly obligatory towards these objectives. The private insurer ought to follow these rules and regulation, for their survival in land. References 1. 2. 3. 4. 5. 6. 7. Dr. P. Periasamy Principles Practice of Insurance, Himalaya Publishing House. Website IRDA. 52nd Chairman’s Review 2008-09 LIC of India. Mathew M. J. Insurance (Principles and Practice) RBSA Publishers, Jaipur. 53rd Annual Report 2009-10 of LIC of India. ‘Yogeakshema’ Journal May 2008 LIC of India. Website LIC