SWOT Analysis Comparison and Market growth of LIC
“This paper analyses and discusses SWOT of LIC, its growth in market, its comparison with its competitors in insurance market and its products with its target customer. This report is presented in very simple and understandable language on the basis of primary data. The data analysis technique used in this report is quantitative in nature”
Chapter: 1 Introduction
In 1944 life insurance Act 1938 was introduced in assembly. But in India life insurance was nationalized on 19 January 1956. At the time of nationalization 154 Indian, 16 non Indian companies are introduces in insurance sector. On 19 June of 1956 parliament of Indian passed the life insurance corporation Act and on 1 September 1956 Life Insurance Corporation was created.
Main objectives of this were:
To reach the insurable persons in the country; this insurance was spreading to all the rural areas of the country with reasonable cost.
The Life Insurance Corporation of India intends to increase the mobility of individual savings
The Life Insurance Corporation of India seeks to employ the investments of its customers in the best possible manner.
In 1956 LIC had 5 zonal offices, 33 divisional offices and 212 branch offices all these offices were apart from its corporate office. Later years to expand the operations LIC placed its branch offices each in district headquarter. Due to this reorganization large no of branch offices were opened. It may see that from about 200 crores of new business in 1957 the corporation crossed 1000 crores only in 1969-70. And it crossed 2000 crores in next 10 years. And in 1985-86 LIC crossed 7000 crores.
Today LIC has 2048 computerized branch offices and 100 divisional offices, 7 zonal offices and the corporate offices. In some selected cities LIC also tied up with some banks and service providers to offer online collection facility. For customer convenience LIC provide ATM premium payment facility.
LIC is still dominant in life insurance of Indian insurance sector and is moving fast on a new growth. LIC has issued over one crore policies. It has crossed the milestone of issuing 1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the year2004.
From then to now, LIC has crossed many milestones and records in life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC to take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.
Some of the important milestones in the life insurance business in India are:
1818: Oriental Life Insurance Company, the first life insurance company on Indian soil started.
1870: Bombay Mutual Life Assurance Society, the first Indian life insurance company started.
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.
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 to by 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. LIC formed by an Act of Parliament, viz.
In 1956 Indian govt. invest 5 crores as the capital of LIC.
Insurance sector reforms:
In 1993, RBI Governor R.N. Malhotra was formed a Committee to evaluate the Indian insurance industry and determine its future direction.
The main objective and reform of this committee was:
The reforms were aimed at “creating a more efficient financial system suitable for the requirements of the economy and keeping in mind that insurance is an important part of the overall financial system.”
So in 1994, the committee submitted the report.
Some of the key recommendations included in that report was:
Structure:
Government should take over the holdings of GIC and its subsidiaries, so that these subsidiaries can act as independent corporations.
All the insurance companies should be given greater freedom to operate.
Competition
Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry. No Company should deal in both Life and General Insurance. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies. Only One State Level Life Insurance Company should be allowed to operate in each state.
Investments
Investments of LIC in government securities to be reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company.
Customer Service
LIC should pay interest on delays in payments beyond 30 days. The committee says that in order to improve the customer services and increase the coverage of the insurance, industry should be opened up to competition
CURRENT STATUS OF LIC OF INDIA
From last 50 years, LIC has acquired almost monopoly power in the sale of life insurance policies in India. Currently, LIC has extended its activities in 12 countries other than India with the objective to spreading the insurance needs of NRI’s.
Other subsidiaries of LIC are:
life Insurance Corporation (LIC) of India International – A joint venture offshore company promoted by LIC which commenced its operations in July, 1989 with the objective of offering policies denominated in US $ to NRIs residing in the Gulf.
LIC Nepal – Formed in 2001 in joint venture with Vishal Group of Industries, Nepal.
LIC Lanka – Formed in 2003 in joint venture with Bartleet Group of Companies, Sri Lanka.
LIC Housing Finance – Established in 19 th June,1989 in Dubai with the objective of providing long term finance for construction of houses or apartments.
LIC Housing Finance Limited Care Homes – A wholly owned subsidiary of LIC Housing Finance for senior citizens
Products of LIC:
Children’s insurance plans:
Komal jeevan
Educational Annuity plan
Jeevan Chhaya
Child Future plan.
Target customer is Children.
Plans for handicapped dependence:
Van Vishwas jee.
Target customer is physically challenged and handicapped persons.
Endowment insurance plan:
Jeevan Anand
Jeevan Mitra
Jeevan Amrit
Plan for high worth individuals:
Jeevan shree-I
Jeevan Parmukh
Money Back Plan:
Money back policy (20 year and 25 year)
Jeevan varsha
Bima Bachat
Jeevan Bharti-I (Specialy for Women)
Whole Life Plan:
The whole life policy.
Jeevan Anand
Jeevan tarang.
Target customer is private sector employ.
Chapter: 2 SWOT Analysis of LIC
Strength
1) Brand Image
2) Govt Guarantee
3) Claims settlement
4) Large product portfolio
Weakness
1) Lethargic Staff
2) Large scale Corruption in Main Office
3) Ultra-Slow decision making process
4) Internal problems between Top Management and lower cadre Employees
Opportunity
1) Pension Market
2) Health Insurance
3) Large Real Estate portfolio
Threat
1) Internal discord
2) New players
We also find a picture of five portal model of insurance sector:
Chapter: 3 Competitors
LIC’s main competitors are:
ICICI PRUDENTIAL
BAJAJ ALLIANZ
HDFC STANDARD LIFE INSURANCE COMPANY
SBI LIFE INSURANCE COMPANY
RELIANCE LIFE INSURANCE COMPANY
BIRLA SUNLIFE INSURANCE COMPANY
ICICI Prudential.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank – India’s foremost financial services companies-and Prudential plc – a leading international financial services group headquartered in the United Kingdom. Total capital invest in this venture is Rs. 47.80 billion, In which ICICI Bank has 74% share and Prudential plc has 26% share.
ICICI Prudential starts their business in December 2000 after getting an approval from Insurance Regulatory Development Authority (IRDA). They have 2100 branches all over the notation.
ICICI Prudential is the first life insurance company in India to receive a rating of AAA (India) from Fitch ratings. ICICI Prudential has been voted as India’s Most Trusted Private Life Insurance Company, by The Economic Times – “AC Nielsen ORG Marg survey of ‘Most Trusted Brands’. As we grow our distribution, product range and customer base, we continue to tirelessly uphold our commitment to deliver world-class financial solutions to customers all over India”.
Bajaj Allianz.
Bajaj Allianz Life Insurance Co Ltd is a joint venture between the global Allianz Group (AG) and Bajaj Auto. Allianz’s establish it among the top insurance companies in the world ranking. Bajaj is the biggest two and three wheeler manufacturer in the world. Bajaj Allianz Life Insurance Company boasts of a nationwide presence with 876 offices and over 4 million satisfied customers.
HDFC Standard Life Insurance Company.
HDFC Standard Life Insurance Company Ltd. is one of India’s leading private insurance companies, which offers a wide range of individual and group insurances. It is a joint venture between HDFC Ltd. and a Group of the Standard Life Plc, UK. On 28 Feb 2009 HDFC Ltd. holds 72.43% share and Standard Life hold 26% of capital in joint venture, while the rest is held by others. They have a range of individual and group solutions, which can be easily customized to specific needs of customers. Their group solutions have been offer complete flexibility combined with a low charging structure. Their gross income, on 31 March 2008 was Rs. 4,859 crores. And on 31 December, 2008 our new business premium income was Rs. 1,839.70 crores.
SBI LIFE INSURANCE COMPANY.
SBI Life Insurance Company Limited is a joint venture between State Bank of India and BNP Paribas insurance. In SBI Life Insurance total capital of Rs 2000 crores was invested. Out of which SBI owns 74% of the total capital and BNP Paribas Insurance has 26%. State Bank of India enjoys the largest banking franchise in India. Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,500 branches across the country. BNP Paribas Assurance is the life and property & casualty insurance unit of BNP Paribas – Euro Zone’s leading Bank. BNP Paribas, part of the world’s top 6 group of banks European leader in global banking and financial services.SBI Life extensively leverages the SBI Group as a platform for cross-selling insurance products along with its numerous banking product packages such as housing loans and personal loans. SBI’s access to over 100 million accounts across the country provides. SBI offers door to door insurance solutions to customers.
Reliance Life Insurance Company.
Reliance Life Insurance Company Ltd. is one of the major market players in insurance sector. It is a SBU of Reliance Capital Ltd., a part of Reliance – Anil Dhirubhai Ambani Group. It is one of the top 3 private financial services companies of India, Reliance Insurance aims at “empowering everyone live their dreams”. Reliance Life Insurance has insured more than 1.7 Million people in 2 years. To add another feather to its hat, Reliance Life Insurance was awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007- as a Certificate of Merit.
Birla Sunlife Insurance Company
Birla Sun Life Insurance Company Limited is a joint venture between the Sun Life Financial Inc and the Aditya Birla Group. Birla Sun Life Insurance was the first company in the sector of insurance solutions to begin Business Continuity Plan. In fact, policies were first issued by this insurance company on the Internet. It is one of the top players in the industry of Private Life Insurance Scheme.
Chapter: 4 Quantitative Data
Interpretation:
Out of 100 respondents 88 have their insurance policies where 12 have no insurance policy.
Out of these 88 respondents 65 are LIC customers and 23 are private customer.
News related to LIC
And according to economic times news:
” LIC still remainsp the largest life insurance company accounting for 64% market share. Its share, however, has dropped from 74% a year before, mainly owing to entry of private players with innovative products and better sales force.
LIC experienced growth of only 5% during 2007-08 in new business premium. It had an estimated 1.1 million licensed agents, with the private insurers adding another 900,000.
LIC witnessed decline in sales by 24% for new business premium for the first four months for the current financial year.
Total sales stood at Rs 10,797.1 crore during April-July as against new sales of Rs 14,186.04 crore in the corresponding period last financial year.
This is was mainly due to slowdown in economy and crash of stock market. Also, private companies are eating the share of LIC by introducing innovative products”
According to times of India:
“LIC achieve 26.19% growth on first premium
2 Sep, 2010 2246hrs IST TNN
DHARWAD: The Dharwad division of Life Insurance Corporation (LIC) which has 15 branches and 12 satellite offices transacting in four districts of Dharwad, Haveri, Uttara Kannada and Gadag, has collected Rs 256.67 crore as first premium selling over 3,53,000 policies during this financial year registering a growth of 6.56% on policies and 26.19% on the first premium.
Addressing a press conference here on Wednesday divisional manager G D Verendani said, LIC has declared a valuation surplus of Rs 23,478 crore out of which Rs 1,029 crore has been given to the Union Government as dividend.
The total premium income of the corporation for the year is Rs 1,85,985 crore as against last year’s premium of Rs 1,57,186 crore, showing an increase of 18.32%.
Similarly, the gross total income of the corporation stands at Rs 2,98,721 crore, with a growth of nearly 50% for the financial year 2009-10. The first year’s premium income of the corporation has risen to Rs 70,891 crore from Rs 52,954 crore with a growth of 33.87%, he added.
MARKET SHARE
Verendani said, the market share of the corporation has reached 64.86% growth in the first premium income, while it has achieved 73.02% growth in the number of policies. Nearly 91 lakh policies have been sold by collecting first premium income of Rs 14,384 crore registering a growth of 102%.
During the financial year 2009-10, the corporation has settled a total of 6.65 lakh death claims amounting to Rs 7,033 crore, while 2.06 lakh maturity benefit claims to the tune of Rs 46,921 crore has been settled.
Maturity claims speed ratio of the division is 95.60% and non-death claims is 91.22%. An effective claims review committee has been set up to give an opportunity to the claimant to make representation for consideration by the committee. “
Chapter: 5 Conclusions
Conclusion:
The maximum respondents were agreeing to invest their money in LIC.
Private players finished the Monopoly of LIC in insurance sector. All private companies create a threat for LIC.
LIC is still a first choice of the customer to invest their money.
LIC is a single govt. company in insurance sector and other companies are private companies.
LIC achieve 26.19%:- Therefore we say that LIC still growing very repadly.
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