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."

MILESTONES OF LIC
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.

Cont.
July 1989:LIC of India international was established.
In 1990s: 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 Indias 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 T. S. Vijayan,Chairman

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. A.K. Dasgupta Shri D.K. Mehrotra

Shri Thomas Mathew T.

Shri. Monis R. Kidwai

Life Insurance Corporation of India

Type Founded : Government-owned corporation : September 1, 1956

Headquarters : Headquarters in Mumbai, India. 8 zonal Offices and 101 divisional offices Branches Agents Industry Products Total assets Employees Parent : 2048 : 1.2 million approx : : Individual Life Insurance,Group Insurance and Pension Plans : Rs 5 Trillion ($200 Billion USD) : 112,184 : NIL

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

Website

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:

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.

Some Of The Qualities LIC seek in an Agent are:

Self-motivation

A master communicator

A go-getter

A graduate

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 Welfare through 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

OTHER CSR ACTIVITIES

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.

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)

CONTD..
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)

PENSION PLANS:
Jeevan Nidhi Jeevan Akshay New Jeevan Dhara New Jeevan Suraksha

UNIT LINKED PLANS

Market Plus Profit plus Fortune plus Money Plus

SPECIAL PLANS
Health plan Health protection plus Health plus. Special plan Bima nivesh 2005 Jeevan saral Jeevan madhur

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
70 60 50 40 30 20 10 0 1

2008-09

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

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 DURING RECESSION

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.

SUMMARY OF FINANCIAL STATEMENTS 2007-08 POLICYHOLDERS ACCOUNT NET PREMIUM INCOME INCOME FROM INVESTMENT (NET) OPERATING EXPENSES RELATED TO INSURANCE BIZ TOTAL FUNDS TOTAL INVESTMENTS SURPLUS/DEFICIT (FROM OPERATIONS) SHAREHOLDER'S ACCOUNT TOTAL FUNDS TOTAL INVESTMENTS 14970559 5552218

(Rs. IN LAKHS) 2006-07

12778225 4568329

2005-06 9075920 4004640

830932 77659709 68258187 82959

707086 62566418 54555072 75780

604156 53121335 46493427 62177

30785 29319

29281 27945

17700 16640

TOTAL INCOME UNDER SHAREHOLDERS A/C PROFIT AFTER TAX

MISCELLANEOUS NET WORTH TOTAL ASSETS

1561 84463

1585 77362

995 63158

30785 80382014

29281 65188289

17700 55244733

PROFIT AND LOSS A/C IN RESPECT OF TOTAL BUSINESS

SHAREHOLDERS A/C (NON TECHNICAL A/C) PARTICULARS BAL. B/F FROM THE POLICY HOLDERS A/C ( TECHNICAL A/C) INCOME FROM INVESTMENTS A. INTEREST, DIVIDEND AND RENT- GROSS B. PROFIT ON SALE/REDEMPTION OF INVESTMENTS C. LOSS ON SALE/ REDEMPTION OF INVESTMENTS D. OTHER INCOME TOTAL (A) EXPENSES OTHER THAN THOSE DIRECTLY RELATED TO THE BUSINESS PROVISIONS (OTHER THAN TAXATION) a. FOR DIMINUTION IN THE VALUE OF INVESTMENTS b. OTHERS ( TO BE SPECIFIED) TOTAL (B) PROFIT/(LOSS) BEFORE TAX PROVISION FOR TAXATION PROFIT/(LOSS) AFTER TAX 2007-08 82959 1562 0 -9 0 84511 (Rs. IN LACS) 2006-07 75781 1585 0 -4 0 77362 2005-06 62177 995 0 0 0 63172

49 0 0 49 84462 0 84462

0 0 0 0 77362 0 77362

14 0 0 14 63158 0 63158

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

B. DIVIDENDS PAID URING THE YEAR

C. PROPOSED FINAL DIVIDEND

0
82959

0
75781

0
62177

D. DIVIDEND DISTRIBITION ON TAX

E. TRANSFER TO GENERAL RESSERVE

0
1503

0
1581

0
981

PROFIT CARRIED TO THE BALANCE SHEET

CASH FLOW STATEMENT IN RESPECT OF TOTAL BUSINESS

PARTICULARS CASH FLOW FROM OPERATING ACTIVITY INFLOW: PREMIUM INCOME (NET) OTHER INCOME FUND CONTRIBUTED BY GOVT. OF INDIA TOTAL INFLOW (A) OUTFLOW OPERATING EXPENSES AND COMMISSION BENEFITS PAID DECREASE IN UNIT CAPITAL INC./(DEC.) IN ADVANCE DEPOSITS TOTAL OUTFLOW (B) CASH GENERATED FROM OPERATIONS (A-B) 2007-08 2006-07 2005-06

14950680 95868 0 15046548

12682654 110355 0 12803009

9026785 147946 0 9177730

-1688554 -5638996 -144960 32595 -7439914 7606634

-1594198 -5311617 -103217 -241357 -7250389 5552620

-1312515 -3382991 -253889 -288654 -5238049 3939681

LESS: INCOME TAX PAID BONUS PAID TO POLICY HOLDERS DIVIDEND PAID TO SHARE HOLDERS
NET CASH GENERATED FROM OPERATING ACTIVITIES

-379992 -107309 -75781

7043552

-456595 -139511 -62177

4894277

-408621 -29724 -69660

3431676

CONTD..
CASH FLOW FROM INVESTING ACTIVITY
PURCHASE OF FIXED ASSETS (NET OF SALES) PURCHASE OF INVESTMENTS (NET OF SALES) -71714 -10959726 -14141 -8702820 -4372 -6671219

INTEREST AND DIVIDEND INCOME

4431758

3872289

3475010

NET CASH UTILISED IN INVESTING ACTIVITY

-6599383

-4844672

-3200581

NET INCREASE IN CASH AND CASH EQUIVALENT CASH & CASH EQUIVALENT AT THE BEGINNING OF YEAR

444170 1329807 1773977

49605 1280202 1329807

231095 800156 1031251

CASH & CASH EQUIVALENT AT THE END OF YEAR

BALANCE SHEET IN RESPECT OF TOTAL BUSINESS

Rs IN LAKHS

PARTICULARS
SOURCES:
SHAREHOLDERS FUND: SHARE CAPITAL RESERVES AND SURPLUS CREDIT/(DEBIT) FAIR VALUE CHANGE ACCOUNT SUB TOTAL BORROWINGS: POLICY HOLDERS FUNDS: CREDIT/(DEBIT) FAIR VALUE CHANGE ACCOUNT

2007-08
500 30285 0 30785

2007-06
500 28781 0 29281

2005-06
500 17200 0 17700

8637190

6205110

6522245

POLICY LIABILITIES INSURANCE RESERVES PROVISION FOR LINKED LIABILITIES

SUB TOTAL FUNDS FOR FUTURE APPROPRIATIONS

61398837 360874 7262808

77690494 0

52480868 280675 3599764

62595699 2723

44960307 284328 1351731

53118622 2723

TOTAL

77690494 62598422 53139035

APPLICATION OF FUNDS
INVESTMENT: SHAREHOLDERS POLICY HOLDERS ASSETS HELD TO COVER LINKED LIABILITIES LOANS FIXED ASSETS CURRENT ASSETS CASH AND BANK BALANCES ADVANCES AND OTHER ASSETS INTER OFFICE BALNCE SUB TOTAL (A) CURRENT LIABILITIES PROVISIONS SUB TOTAL (B) NET CURRENT ASSETS (A-B) MISC. EXPENDITURE NOT WRITTEN OFF DEBIT BALANCE IN P&L A/c (SHAREHOLDERS A/c) 29320 60539701 7517630 7321356 211770 1773977 2505526 0 4279503 631520 1577265 2208785 2070718 0 0 27945 51111283 3603060 6308152 140356 1329807 2101767 0 3431574 456585 1570087 2026671 1404902 0 0 16640 45278642 1231528 5512438 126214 1280202 1824126 0 3104328 574273 1556483 2130755 973572 0 0

TOTAL

77690494 62595699 53139035

RATIO ANALYSIS
2007-08 2006-07 2005-06

CURRENT RATIO OPERATING EXPENSE RATIO PARTICIPATING POLICIES NON PARTICIPATING POLICIES DEBT EQUITY RATIO FIXED ASSETS NET WORTH RATIO

6.78

7.52

5.41

6.14 3.7

6.82 2.33

7.74 1.81

N.A.

N.A.

N.A.

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