Life Insurance Corporation of India: Future Prospects


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Case Details:

Case Code : BSTR110
Case Length : 26 Pages
Period : 1992 - 2002
Organization : Life Insurance Corporation of India
Pub Date : 2002
Teaching Note :Not Available
Countries : India
Industry : Insurance

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"To be identified as an epitome of customer care and concern in the entire Service industry - globally, we would need individual excellence woven into a fabric of team spirit, where the enterprise of leadership would transcend organizational hierarchy and geographical boundaries leaving a trajectory of history with untold success stories."

- www.licindia.com

Introduction

The Life Insurance Corporation of India (LIC), a public sector enterprise, is the largest insurance company in India, selling insurance products and related services.

In March 2001, LIC had a total asset base of Rs 1936.2 billion and a total premium income of Rs 342.07 billion. By April 2002, the total sum assured under 23.2 million policies stood at Rs 1925.7 billion. LIC had a variety of insurance plans to cater to various categories of people and their diverse needs.

The company offered life insurance and group insurance. It also provided social security schemes and pension schemes. Each of its business products offered a variety of different plans to suit different customers and situations. Investment in LIC was considered by a majority of its customers to be reliable and secure.

Housing loans were granted through its subsidiary and LIC sold its market savings and investment products through its mutual fund subsidiary, LIC Mutual Fund Ltd. To serve its 140 million policyholders (2001 end), the insurance giant had 1.25 lakh employees and 6.51 lakh agents across the country.

The company, which was based in Mumbai, had seven zonal offices, 100 divisional offices, and 2,048 branch offices that spanned the country. LIC's penetration in rural areas was very high; 18% of its total business came from rural areas.

Since LIC enjoyed monopoly status for over four decades, it emerged as one of the key public fundraisers in India. However, things began changing in the mid-1990s, when the Government of India decided to privatize the insurance sector.

The Malhotra committee's (formed to explore the possibility/feasibility? of privatizing the Indian insurance industry) recommendations in 1994 brought about a sea change in the industry.

LIC found itself in a difficult situation when the newly formed Insurance Regulatory Development Authority (IRDA) issued licences to many private insurance companies (starting November 2000).

To sustain its growth in an intensely competitive environment, the company, on the recommendations of Booze, Allen and Hamilton, started initiated organizational changes and became more customer-focussed initiatives.

The company's attitude towards the changing insurance scenario was summarized by its Managing Director, N C Sharma, "The element of competition will bring out the best (in us)."

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