Lic manendra

BRIEF HISTORY OF LIFE INSURANCE IN INDIA

1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started functioning.

1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started its business.

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.

Cont…

• 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.

• 1938: Earlier legislation consolidated and amended the Insurance Act with the objective of protecting the interests of the insuring public.

• 1956: 245 Indian and foreign insurers and provident societies are taken over by the central government and nationalized.

.

• On September 1st, 1956 Life Insurance Corporation of India was created, by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs 5 crore from the Government of India .

• With an objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost.

The Life Insurance Corporation of India

• It is the largest life insurance company in India and also the country's largest investor.

• It is fully owned by the Government of India. It also funds close to 24.6% of the Indian Government's expenses.

• It has assets estimated of 5 Trillion Rupees.

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."

VISION:• "A trans-nationally competitive financial

conglomerate of significance to societies and Pride of India."

1957: It crossed to Rs.200 crore of new business.

1970: It crossed to Rs.1000 crore.

1986: It crossed to Rs.7000 crore.

June 1989:LIC housing finance limited (LICHFL) was established.

MILESTONES OF LIC

Cont….

July 1989:LIC of India international was established.

In 1990’s: LICHFC grew into a premium housing finance company, disbursing over Rs. 50 billion of loans.

In 2001: LIC NEPAL ,a joint venture company formed with the Vishal Group of Industries ,Nepal .

Cont…. In 2003: LIC LANKA , A joint venture company formed with

the Bartleet group of companies Sri Lanka. In 15th Oct 2005: It has crossed the milestone of issuing

1,01,32,955 new policies.

2006-07: LIC India’s number of policy holder crossed a whopping 200 million.(fourth in terms of population of the countries of the world)

BOARD OF DIRECTORS

Shri. T.S. Vijayan (Chairman)

Shri. D.K. Mehrotra (Managing Director - LIC)

Shri. Thomas Mathew T. (Managing Director - LIC)

Shri. A.K. Dasgupta (Managing Director - LIC)

Shri. Ashok Chawla (Finance Secretary, Ministry of Finance, Govt. of India)

Shri. G.C. Chaturvedi (Additional Secretary, Department of Financial Services, Ministry of Finance, Govt. of India.)

Shri. Yogesh Lohiya (Chairman cum Managing Director, GIC of India)

Shri. T.C. Venkat Subramanian (Chairman & Managing Director. Export Import Bank of India)

Dr. Sooranad Rajashekhran

Shri. Monis R. Kidwai

Shri T. S. Vijayan,Chairman

Shri D.K. Mehrotra

Shri Thomas Mathew T.

Shri. A.K. Dasgupta

Life Insurance Corporation of IndiaType : Government-owned corporation

Founded : September 1, 1956

Headquarters : Headquarters in Mumbai, India. 8 zonal Offices and 101 divisional offices

Branches : 2048

Agents : 1.2 million approx

Industry : Life insurance

Products : Individual Life Insurance,Group Insurance and Pension Plans

Total assets : Rs 5 Trillion ($200 Billion USD)

Employees : 112,184

Parent : NIL

Subsidiaries : LIC Housing Finance Limited, LIC(Nepal)Ltd, LIC(Lanka)Ltd, LIC(International)BSC(C),Behrain,

Website : http://www.licindia.com

OPERATIONS IN INDIA

• LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, and the corporate office in the year 1956.

• Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the Corporate office

FUNCTIONING:

AWARDS

GOLDEN PEACOCK AWARD FOR EXCELLENCE IN CORPORATE GOVERNANCE, 2007

CNBC Awaaz Consumer Awards 2008

ASIA BRAND CONGRESS BRAND LEADERSHIP AWARD 2008 Pitch Award -" Rank 1 " India's Top 50 service Brands

Trusted Brand Award 2009 in the Platinum category

Brand Equity Most Trusted Brand 2009 Top in Insurance Category

Golden Peacock Innovative Product / Service Award - 2009

PROBLEMS RELATED TO LIC HRM:

Many of these problems related to the fact that it was a public sector organization.

The corporation's managers were too bureaucratic.

The work culture in the organization was sloppy.

Strong trade unions made it difficult for managers to get the work done.

The corporation's development officers focused on their own earnings and incentives, rather than on customer satisfaction.

Self-motivation

A master communicator

A go-getter

A graduate

Some Of The Qualities LIC seek in an Agent are:

WHY GRADUATES?

To cater to the needs of the knowledge oriented market place.

To increase the continuous link base with its clientele.

To set higher standards of quality in service and salesmanship in competition to those provided by private insurance players in the market.

TRAINING

100 hours training regarding insurance business and its products.

A written examination is conducted and the qualifiers are issued license by the IRDA Act 1999

The license issued under the Act as per the norms of the Regulations is valid for a period of 3 years.

A 17-18 days training schedule covers the mandatory IRDA training requirements and LIC product training module.

REWARDS & RECOGNITION

Depending upon level of business generated, agent becomes member of Clubs, such as Corporate Club, Chairman Club, etc.

Advisors can also qualify for the renowned MRDT (Million Dollar Round Table), an exclusive international insurance advisors club.

Attend seminars held at exotic international and domestic locations each year.

Attractive Commission Rates

On most of the standard policies LIC agents gets paid commission as per the following rates:

Up to 25% of 1st year premium with 10% Bonus Commission

Up to 10% of 2nd and 3rd year premium

Up to 5% thereafter till the policies continues

Every time a policy holder pays his installment premium, the agent receives his commission

CORPORATE SOCIAL RESPOSIBILITY

The Corporation has been promoting Social Welfarethrough investments in Infrastructure and Social Sector which includes:

Projects/Schemes for generation and transmission of Power,

Housing Sector,

Water Supply and Sewerage Projects/Schemes,

Development of Roads, Bridges & Road Transport.

LIC GOLDEN JUBILEE FOUNDATION

The main objectives of the Golden Jubilee Foundation are:

Relief of poverty or distress.

Advancement of Education

Medical Relief

The advancement of any other object of general public utility.

It also provides scholarships to students from economically weaker families for pursuing higher studies under the scheme “LIC GOLDEN JUBILEE SCHOLARSHIP”

Prime Ministers’ National Relief Fund

Chief Ministers’ Relief Funds of various states

Rajiv Gandhi Foundation to help relief measures in case of calamities such as Earthquake, Tsunami etc.

OTHER CSR ACTIVITIES

PRODUCTS AND SERVICES OF LIC

• INSURANCE PLANS• PENSION PLANS• UNIT LINKED PLANS• SPECIAL PLANS

INSURANCE PLANS:

• Children plans (Jeevan Kishore,Jeevan Chhaya etc)

• Plan for handicapped dependents (Jeevan Aadhar , Jeevan Vishwas)

• Endowment assurance plans (Jeevan Mitra Jeevan Janraksha,Jivan Amrit etc)

• Money back plans (Jeevan Varsha, Jeevan Surabhi 15 ,20 ,25 years bima bachat etc.)

• Whole life plan (Jeevan Anand , Jeevan Tarang etc.)

• Term assurance plan (Anmol Jeevan-1, Amulya Jeevan-1)

CONTD..

Jeevan NidhiJeevan AkshayNew Jeevan DharaNew Jeevan Suraksha

PENSION PLANS:

• Market Plus • Profit plus• Fortune plus• Money Plus

UNIT LINKED PLANS

SPECIAL PLANS

Health plan Health protection plus Health plus. Special plan

Bima nivesh 2005 Jeevan saral Jeevan madhur

SWOT ANALYSIS

Strengths:

• High penetration rate in rural area.

• It is the oldest and most well experienced player having a Pan India presence.

• LIC has a strong and very well developed distribution network

• It has a large product portfolio and claim settlement is easier to get.

• It has the advantage of government guarantee accompanied with it.

Weakness:

• The corporation's managers are too bureaucratic.

• Inefficient use of its human resources.

• After sales ,customer grievance redressal mechanism is inefficient.

• Agents not taking into account the needs of people and promote policies having high commissions only.

Opportunity:

• Emergence of a huge middle class income consumer market in the country.

• People becoming more aware and demanding so there is scope for a whole lot of innovative products.

• Pension markets, health insurance and large real estate portfolio.

• Strong growth potential.

HOW?

AWARENESS PENETRATION

URBAN AREA 78% 24%

RURAL AREA 73% 19%

Threats:

• There is too much internal discord.

• Red-tapism is very much persistent.

• Entry of new private players in industry

COMPETITORS OF LIC

MARKET SHARE

0

10

20

30

40

50

60

70

1

LIC INDIA

ICICI PRUDENTIAL

BAJAJ ALLIANZ

SBI LIFE INSURANCE

RELIANCE LIFE

HDFC STANDARD

BIRLA SUN LIFE

MAX NEW YORK

KOTAK MAHINDRA

AVIVA LIFE INSU

OTHERS

2008-09

Strategy:

• In January 2000, International consultants Booze Allen & Hamilton were hired And it adopted a three-pronged business strategy for business, which involved

• Reduction in premiums,• Higher returns and • Introduction of new products.

Contribution to Indian Economy

• Life Insurance is the only sector which garners long term savings.

• Spread of financial services in rural areas and amongst socially less privileged.

•Long term funds for infrastructure.

• Strong positive correlation between development of capital markets and insurance/pension structure.

• Employment generation.

SATISFACTION LEVEL OF SERVICE QUALITIES

RATIONALE BEHIND THE INVESTMENT

LIC of India has for the first time shown a 7 per cent increase in the overall market share in order to affirm its hold in the sector.

People repose a lot of faith in the LIC as when most of the private insurance firms were not showing any upward trend, LIC was one of the few players in the insurance sector to show surplus growth.

LIC have hired about 5,000 employees and 500 officers despite the economic slowdown.

Today LIC have 23-crore policyholders across the country.

LIC DURING RECESSION

SUMMARY OF FINANCIAL STATEMENTS

(Rs. IN LAKHS) 2007-08 2006-07 2005-06

POLICYHOLDERS ACCOUNT NET PREMIUM INCOME 14970559 12778225 9075920INCOME FROM INVESTMENT (NET) 5552218 4568329 4004640OPERATING EXPENSES RELATED TO INSURANCE BIZ 830932 707086 604156TOTAL FUNDS 77659709 62566418 53121335TOTAL INVESTMENTS 68258187 54555072 46493427SURPLUS/DEFICIT (FROM OPERATIONS) 82959 75780 62177

SHAREHOLDER'S ACCOUNT TOTAL FUNDS 30785 29281 17700TOTAL INVESTMENTS 29319 27945 16640

TOTAL INCOME UNDER SHAREHOLDERS A/C 1561 1585 995PROFIT AFTER TAX 84463 77362 63158

MISCELLANEOUS NET WORTH 30785 29281 17700TOTAL ASSETS 80382014 65188289 55244733

PROFIT AND LOSS A/C IN RESPECT OF TOTAL BUSINESS

SHAREHOLDERS A/C (NON TECHNICAL A/C) (Rs. IN LACS)

PARTICULARS 2007-08 2006-07 2005-06

BAL. B/F FROM THE POLICY HOLDERS A/C ( TECHNICAL A/C) 82959 75781 62177INCOME FROM INVESTMENTS A. INTEREST, DIVIDEND AND RENT- GROSS 1562 1585 995B. PROFIT ON SALE/REDEMPTION OF INVESTMENTS 0 0 0C. LOSS ON SALE/ REDEMPTION OF INVESTMENTS -9 -4 0D. OTHER INCOME 0 0 0

TOTAL (A) 84511 77362 63172

EXPENSES OTHER THAN THOSE DIRECTLY RELATED TO THE BUSINESS 49 0 14PROVISIONS (OTHER THAN TAXATION) a. FOR DIMINUTION IN THE VALUE OF INVESTMENTS 0 0 0b. OTHERS ( TO BE SPECIFIED) 0 0 0

TOTAL (B) 49 0 14PROFIT/(LOSS) BEFORE TAX 84462 77362 63158PROVISION FOR TAXATION 0 0 0

PROFIT/(LOSS) AFTER TAX 84462 77362 63158

APPROPRIATIONS

A. BROUGHT FORWARD RESERVES & SURPLUS FROM B/S 0 0 0

B. DIVIDENDS PAID URING THE YEAR 0 0 0

C. PROPOSED FINAL DIVIDEND 82959 75781 62177

D. DIVIDEND DISTRIBITION ON TAX 0 0 0

E. TRANSFER TO GENERAL RESSERVE 1503 1581 981

PROFIT CARRIED TO THE BALANCE SHEET 0 0 0

CONTD…………

CASH FLOW STATEMENT IN RESPECT OF TOTAL BUSINESS

PARTICULARS 2007-08 2006-07 2005-06CASH FLOW FROM OPERATING ACTIVITY

INFLOW: PREMIUM INCOME (NET) 14950680 12682654 9026785OTHER INCOME 95868 110355 147946FUND CONTRIBUTED BY GOVT. OF INDIA 0 0 0

TOTAL INFLOW (A) 15046548 12803009 9177730

OUTFLOW OPERATING EXPENSES AND COMMISSION -1688554 -1594198 -1312515BENEFITS PAID -5638996 -5311617 -3382991DECREASE IN UNIT CAPITAL -144960 -103217 -253889INC./(DEC.) IN ADVANCE DEPOSITS 32595 -241357 -288654

TOTAL OUTFLOW (B) -7439914 -7250389 -5238049 CASH GENERATED FROM OPERATIONS (A-B) 7606634 5552620 3939681 LESS: INCOME TAX PAID -379992 -456595 -408621 BONUS PAID TO POLICY HOLDERS -107309 -139511 -29724 DIVIDEND PAID TO SHARE HOLDERS -75781 -62177 -69660 NET CASH GENERATED FROM OPERATING ACTIVITIES 7043552 4894277 3431676

CASH FLOW FROM INVESTING ACTIVITY

PURCHASE OF FIXED ASSETS (NET OF SALES) -71714 -14141 -4372

PURCHASE OF INVESTMENTS (NET OF SALES) -10959726 -8702820 -6671219

INTEREST AND DIVIDEND INCOME 4431758 3872289 3475010

NET CASH UTILISED IN INVESTING ACTIVITY -6599383 -4844672 -3200581

NET INCREASE IN CASH AND CASH EQUIVALENT 444170 49605 231095CASH & CASH EQUIVALENT AT THE BEGINNING OF YEAR 1329807 1280202 800156

CASH & CASH EQUIVALENT AT THE END OF YEAR 1773977 1329807 1031251

CONTD……..

BALANCE SHEET IN RESPECT OF TOTAL BUSINESSRs IN LAKHS

PARTICULARS 2007-08 2007-06 2005-06SOURCES: SHAREHOLDERS FUND: SHARE CAPITAL 500 500 500RESERVES AND SURPLUS 30285 28781 17200

CREDIT/(DEBIT) FAIR VALUE CHANGE ACCOUNT 0 0 0

SUB TOTAL 30785 29281 17700

BORROWINGS: POLICY HOLDERS FUNDS:

CREDIT/(DEBIT) FAIR VALUE CHANGE ACCOUNT 8637190 6205110 6522245

POLICY LIABILITIES 61398837 52480868 44960307INSURANCE RESERVES 360874 280675 284328PROVISION FOR LINKED LIABILITIES 7262808 3599764 1351731

SUB TOTAL 77690494 62595699 53118622

FUNDS FOR FUTURE APPROPRIATIONS 0 2723 2723

TOTAL 77690494 62598422 53139035

APPLICATION OF FUNDS INVESTMENT: SHAREHOLDERS 29320 27945 16640

POLICY HOLDERS 60539701 51111283 45278642

ASSETS HELD TO COVER LINKED LIABILITIES 7517630 3603060 1231528LOANS 7321356 6308152 5512438FIXED ASSETS 211770 140356 126214CURRENT ASSETS CASH AND BANK BALANCES 1773977 1329807 1280202ADVANCES AND OTHER ASSETS 2505526 2101767 1824126INTER OFFICE BALNCE 0 0 0

SUB TOTAL (A) 4279503 3431574 3104328 CURRENT LIABILITIES 631520 456585 574273PROVISIONS 1577265 1570087 1556483

SUB TOTAL (B) 2208785 2026671 2130755 NET CURRENT ASSETS (A-B) 2070718 1404902 973572 MISC. EXPENDITURE NOT WRITTEN OFF 0 0 0

DEBIT BALANCE IN P&L A/c (SHAREHOLDERS A/c) 0 0 0

TOTAL 77690494 62595699 53139035

RATIO ANALYSIS 2007-08 2006-07 2005-06

CURRENT RATIO 6.78 7.52 5.41

OPERATING EXPENSE RATIO

PARTICIPATING POLICIES 6.14 6.82 7.74

NON PARTICIPATING POLICIES 3.7 2.33 1.81

DEBT EQUITY RATIO N.A. N.A. N.A.

FIXED ASSETS NET WORTH RATIO 6.88 4.79 7.13

CORPORATE GOVERNANCE

Transparency

Information sharing

Accountability

Continuous dialogue

RECOMMENDATIONS

1. Need analysis of customer is must before giving any advice.

2. The agent should have good knowledge of various investment instruments.

3. The focus should be on providing solution rather than selling product.

4. Agent ,Advisor should stress on building long term relationship with customer rather than one time selling.

REFERENCES:-

• Websites:-• www.licindia.com• www.wikipedia.org• www.icallinsurance.com• www.bimaonline.com• www.irdaindia.org• THE HINDU

THANK YOU