Group # 1

Rajendra
Maneesh
Kumar
Sameer
Ranjita
Kinjal
Megha
 IRDA Mission
• "To Protect the interests of the policyholders,
to regulate, promote and ensure orderly
growth of the insurance industry and for
matters connected therewith or incidental
thereto."
Road Map
• Background
– Life Insurance
– Products
– Company [LIC]
• Business Model
• Till 2000 Market share & Afterwards
• Current Scenario
– Financials
– Industry Update
 What is life insurance
Life insurance or life assurance is a contract between the policy owner and the
insurer, where the insurer agrees to pay a designated beneficiary a sum of money
upon the occurrence of the insured individual's or individuals' death or other
event, such as terminal illness or critical illness.

The value for the policyholder is derived, not from an actual claim event, rather it
is the value derived from the 'peace of mind' experienced by the policyholder, due
to the negating of adverse financial consequences caused by the death of the Life
Assured.

Life policies are legal contracts and the terms of the contract describe the
limitations of the insured events.

Specific exclusions are often written into the contract to limit the liability of the
insurer; for example claims relating to suicide, fraud, war, riot and civil
commotion.
 life insurance
• Policy Holder (Policy Owner)
• Insured person
• Beneficiary
• Insurable interest
• Maturity Age
• Suicide or 100 years age.
• Contestable period
 life insurance
• Mortality
• Morbidity
• Cost
• Underwriting
• Health category
• Insurance Vs. Assurance
 History of Life insurance & LIC
• Started in 1818 – Oriental life insurance company – Kolkata
• To service the needs of European community
• 1870 - Bombay Mutual Life Assurance Society – first Indian
company
• 1912, the Life Insurance Companies Act and the Provident
Fund Act were passed - Actuary
• The Insurance Amendment Act of 1950 abolished Principal
Agencies
• An Ordinance was issued on 19th January, 1956 nationalizing
the Life Insurance sector – LIC came in existence.
• LIC absorbed 154 Indian, 16 non-Indian insurers as also 75
provident societies—245 Indian and foreign insurers
 History of Life insurance & LIC
• Life Insurance Corporation of India was created on 1st
September, 1956, with the 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.

• LIC had 5 zonal offices, 33 divisional offices and 212 branch

offices, apart from its corporate office in the year 1956.

• Expand the operations & place a branch office at each district

headquarter.

• 200 crores of New Business in 1957, 1000.00 crores in1969-70.

• 1985-86, Crossed 7000.00 crore Sum Assured on new policies

 LIC..

•1985-86, Crossed 7000.00 crore Sum Assured on new policies

• 2048 fully computerized branch offices, 109 divisional offices, 8

zonal offices, 992 satellite offices and the Corporate office.

• LIC’s Wide Area Network covers 109 divisional offices and

connects all the branches through a Metro Area Network.

• Agents – 10,02,149
 Mission & Vission
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."
 Objectives of LIC
• Maximize mobilization of people's savings by making
insurance-linked savings adequately attractive.

• Bear in mind, in the investment of funds, the primary

obligation to its policyholders, 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 as well as the community as a whole, keeping in
view national priorities and obligations of attractive return.

• Conduct business with utmost economy and with the full

realization that the moneys belong to the policyholders.

• Act as trustees of the insured public in their individual and

collective capacities.
 Objectives of LIC

• Meet the various life insurance needs of the community that

would arise in the changing social and economic environment.

• Involve all people working in the Corporation to the best of

their capability in furthering the interests of the insured public
by providing efficient service with courtesy.

• Promote amongst all agents and employees of the

Corporation a sense of participation, pride and job satisfaction
through discharge of their duties with dedication towards
achievement of Corporate Objective.
 Objectives of LIC

• Meet the various life insurance needs of the community that

would arise in the changing social and economic environment.

• Involve all people working in the Corporation to the best of

their capability in furthering the interests of the insured public
by providing efficient service with courtesy.

• Promote amongst all agents and employees of the

Corporation a sense of participation, pride and job satisfaction
through discharge of their duties with dedication towards
achievement of Corporate Objective.
Awards
Awards - 2
Awards - 3
 PRODUCTS
• Term Insurance

• Permanent Life Insurance

• Whole life, universal life, limited pay and endowment.

• Accidental Death
 TYPE OF PRODUCTS
• Insurance Plans

• Pension Plans

• Unit Plans

• Special Plans

• Withdrawn Plans

• Group scheme
 LIC PRODUCTS - 1
• Endowment plans

• Children plan

• Money back plan

• Joint life plan

• Term assurance plans

• Plan for handicapped dependents

 LIC PRODUCTS - 2
• Pension Plans

• Unit plans

• Special plans

• Group Scheme

• Withdrawn plans
 Business Model
• The business model is to collect more in premium and
investment income than is paid out in losses, and to also offer
a competitive price which consumers will accept. Profit can be
reduced to a simple equation.
• Profit = earned premium + investment income - incurred loss -
underwriting expenses.
• Insurers make money in two ways:
• Through underwriting, the process by which insurers select
the risks to insure and decide how much in premiums to
charge for accepting those risks.
• By investing the premiums they collect from insured parties.
LIC Business Model
Life Insurance Distribution Model
LIC Distribution Model
 Issues with LIC Business model
• LIC’s overdependence on its network of agents is a significant
problem.
• October 2006, they had 79% of market share. But by October
2009, they had new market share of 65%
• New firms are gaining becoz of expansion of distribution and
products.
• LIC agents sell policies which they want to sell & commission
from them, they don’t have much control over the products
sold.
• They had tied up with 18 banks five years ago, but today they
have such relationship with only 4 banks. (December 2009)
• Internet business is not picking up.
 Solution - LIC Business model
• LIC hired Accenture for reviving their business plan strategies

• There were 13 firms who qualified in the final round of

bidding like BCG, PWC, E&Y & MCKINSEY & Co.

• In order to overhaul LIC’s marketing strategy through

integration of all sales channels, Accenture suggest changes in
technology, infrastructure and existing reporting systems.

• Accenture’s recommendations the insurer’s branding and

advertising strategies, management structure and alliances
with banks for sale of policies

• Two critical aspects of LIC’s business—agents’ commissions

and investments—have been kept out of the consulting
 Solution - LIC Business model
• However, Two critical aspects of LIC’s business—agents’
commissions and investments—have been kept out of the
consulting mandate.

• Few line of ours????

• LIC had appointed consulting firm first time in 1981, after

which they went ahead with decentralization to spread its
network
• After 2 decade they appointed Booz Allen Hamilton,
suggested changes in branding, advertising, tie-up and
corporate governance strategies for LIC
 Solution - LIC Business model
New changes are seen particularly in the distribution side of
Insurance. Agents and Brokers are becoming much more savvier
to reach End-customers by using latest IT enabled Marketing and
Management tools viz :

a) Direct Marketing (DM) – Mailers

b) Co-brand Marketing
c) Tele-Marketing
d) Web Based Marketing
e) Email Marketing &
f) Data-base Marketing
The Insurance distribution is no more old “Feet-on-Street” (FOS),
Agency Model but has become sophisticated and effective,
thereby reducing Cost of Acquisition (COA).
 Solution - LIC Business model
• In the year FY 2010 they have done Rs. 1140 crore from Bank
assurance and alternate distribution channels.

• This year we are aiming for Rs. 5000 crore. (AK Shaoo)

• Tie up with Net Ambit ( India’s leading financial service

• distribution company. (17th August 2010)

• Today they have tie up with 39 Banks.

• Currently they have 73% share. (August 2010)

Cost for insurance company
52 Reason Why you should buy Life
Insurance from LIC of India
Porter 5 forces model