LIC: An Organized Structured in Insurance Market
Life Insurance Corporation (LIC) is one of the leading insurance firms in India for five decades. It is the most trusted company enjoying more than 60 years of trust, faith and confidence of people. It is known as the “Pension Provider” of the country.
Well, an analysis of the available data shows that the year 1956 was very prominent in terms of changes that took place in the insurance sector and other private sector companies.
- On January 19, 1956, the Central Government of India took over the charge of all 154 Indian, 16 Non-Indian and 75 provident societies (consolidated 245 private insurance companies) which were working in India at that time.
- The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956.
- LIC was created on 1st September 1956 with the merger of more than 245 insurance companies and provident societies.
- It was formed under an act of the parliament viz. LIC Act, 1956 with an initial capital of Rs. 5 crores from the Government of India.
Objective of LIC
- The primary objective of LIC is to provide life insurance policies to all sections of society.
- To provide life insurance services and financial cover to the low-income segment at an affordable cost in rural areas of the country.
It is the largest life insurance company in India. The headquarters of LIC is in Mumbai. It comprises of 8 zonal offices which are located in:
- New Delhi
- LIC has 113 divisional offices with 2048 branch offices in India. It has 1408 satellite Sampark branches, and all offices are connected by a vast network that is enabled to ensure the payments of premiums anywhere across the nation.
- It also consists of 54 customer zones and 25 metro-area service hubs located in different cities of India.
- It is the only Insurance company that has an individual agent base of 1,537,064 which itself marks a robust approach to provide proper channelisation into the insurance market.
- Apart from the agents of LIC, it also covers 342 corporate agents, 109 referral agents, 114 brokers and 42 banks for soliciting life insurance business from the public.
- LIC is present in 14 countries through branch offices, wholly-owned subsidiaries and joint ventures in the following countries:
- Sri Lanka
- New Zealand
The motto of the company
- The motto of the LIC is "Yogakshemam Vahamyaham" which means - your welfare is our responsibility.
- The tag Line of LIC is – “Zindagi Ke Sath Bhi, Zindagi Ke Bad Bhi”.
LIC Executive Board
The LIC Executive board consists of a total of five members in which one seat is of the Chairman, and the other four are the Managing Directors.
1. M.R Kumar (Chairman) -
2. V. Venugopal (Managing Director)
3. Hemant Bhargava (Managing Director)
4. Vipin Anand (Managing Director)
5. T C Susheel Kumar (Managing Director)
- On March 13, 2019, the government-appointed MR Kumar as the Chairman of LIC. He was the Zonal Manager of North Zone and will hold the post of LIC Chairman for five years.
- T C Suseel Kumar and Vipin Anand have been appointed as the Managing Directors of the LIC for five years.
Insurer or investor?:
- LIC has been usually considered as the ‘white knight’ of the disinvestment programmes of the government since it has helped several such offers sail through, be it the NTPC stake sale or the State Bank of India mega QIP in 2014
- Even LIC has also made massive investments in the initial public offerings of companies like Hindustan Aeronautics, General Insurance Corporation of India and New India Assurance.
LIC acquire IDBI Bank
- On January 21, 2019, LIC completed the acquisition of a 51% controlling stake in IDBI bank making it the majority shareholder of the bank.
- The cabinet approved the acquisition of controlling stake by Life Insurance Corporation (LIC) as a promoter in the IDBI Bank in August 2018.
- LIC’s stake will help IDBI Bank to get a capital support of Rs 10,000 - Rs. 13,000 crore.
IDBI bank debt record:
- From the last few years, IDBI bank suffers from some significant financial losses. In December 2018 (third quarter as per Financial year), IDBI reported a loss of Rs 4,185.48 crore as a bad loan debt.
- The bank also reported a net loss of 1,524.31 crores rupees in the corresponding quarter of the previous fiscal. Also, the total income decreased to Rs 6,190.94 crore for the quarter, compared with the Rs 7,125.20 crore last quarter of last fiscal.
- As promised by IDBI Bank’s MD and CEO the employees will keep getting the same benefits and enjoy the job security even after the LIC gets the status of a promoter, although the bank may hire only contract-based employees in future who will not enjoy the benefits as bestowed on current employees.
IDBI Bank, LIC ink bancassurance pact:
- IDBI Bank has signed an agreement with LIC to act as a corporate agent for the insurer. The bank will offer LIC policies to its 1.8 crore retail customers through its 1,800 branches and receive a commission in return for the same. The bank will become the preferred bank for LIC premium payments and function as a premium point to boost the sale of LIC products thereby gaining from fees and float income.
LIC stake in Punjab National Bank:
- In December 2017, LIC increased its stake in the Punjab National Bank (PNB) to 13.93% through qualified institutional placement.
Associates of LIC
- LIC HFL Financial Services Ltd.
- LIC Housing Finance Ltd.
- LICHFL Care Homes Ltd.
- LIC Mutual Fund AMC Ltd.
- LIC card services Ltd.
- LIC Pension Fund Limited.
Products of LIC
- Life Insurance
- Health Insurance
- Investment Management
- Mutual fund
A compact list of all LIC Insurance Plans: At present LIC is dealing with five different categories of insurance plans they are as follows:
- Endowment Plan
- Whole Life Plan
- Money-Back Plan
- Term Assurance Plan
- Rider Plan
(A) Further Endowment plan comprises of-
- LICs Jeevan Pragati
- LICs Jeevan Labh
- LICs Single Premium Endowment Plan
- LICs New Endowment Plan
- LICs New Jeevan Anand
- LICs Jeevan Rakshak
- LICs Limited Premium Endowment Plan
- LICs Jeevan Lakshaya
- LICs Aadhar Shila
- LICs Aadhar Stambh
(B) LICs Jeevan Umang comes under Whole Life Plan
(C) Money Back Plans are-
- LICs Bima Shree
- LICs Jeevan Shiromani
- LICs New Money back plan
- LICs New Bima Bachat
- LICs New Children’s Money Back Plan
- LICs Jeevan Tarun
(D) Term Assurance Plans are –
- LICs Anmol Jeevan II
- LICs Amulya Jeevan II
- LICs e-Term
(E) Rider Plans are-
- LICs Linked Accidental Death Benefit
- LICs Accidental Death and Disability Benefit Rider
- LICs Accident Benefit Rider
- LICs New Credit Illness Benefit Rider
- LICs New Term Assurance Rider
LIC posts a profit of Rs 26,147.52 crore in the financial year 2017-18
- According to Shiv Pratap Shukla, Union Minister of State for Finance, LIC has reported a growth of 29 per cent in its net profit at Rs 26,147.52 crore in FY18. While giving a written reply to a question in Lok Sabha Shiv Pratap Shukla stated that the company had posted a profit of Rs 20,269.47 crore in FY17.
- In November 2018, LIC recorded a surplus of Rs 48,444 crore in the current fiscal, paid a Rs 2,430 crore dividend to the government for the financial year 2017-18.
Claim Settlement Ratio - Claim Settlement Ratio is an indicator of how many death claims Life Insurance Company settled in any financial year. It is calculated as the total number of claims received against the total number of claims settled.
Let us say, Life Insurance Company received 100 claims, and among those, it settled 98, then the claim settlement ratio is meant to be 98%. The remaining 2% claims the Life Insurance Company rejected.
- According to IRDAI's annual report, in FY 2017-18, LIC has settled 98.04% of individual death claims.
- According to the LIC, it had settled 215.58 lakh claims amounting to Rs 1,12,700.41 crore during the financial year 2016-17.
Pradhan Mantri Vaya Vandana Yojana (PMVVY)
- Pradhan Mantri Vaya Vandana Yojana (PMVVY) is a pension plan for senior citizens managed and operated by Life Insurance Corporation (LIC).
- Minimum Age: 60 years
- Maximum Age: No limit
- Policy Term: 10 years ( The pension will be paid for 10 years)
- The validity of the scheme - As per the announcement made in the Budget 2018, the scheme will remain open for subscription till 31st March 2020.
New plans launched
LIC launches Micro Bachat plan:
- In Feb 2019, LIC launched a new Micro Insurance Plan called “Micro Bachat”.
- It is a regular premium, non-linked, participating Endowment Micro Insurance Plan, which offers a combination of protection and savings.
LIC's new Navjeevan plan:
- In March 2019, LIC has launched the “Navjeevan Plan”, a new assurance policy that offers a combination of protection and savings plans for people.
Best Life Insurance' title:
- In the 23rd edition of the Business Today-Money Today Financial Awards which was announced on March 7, 2019, LIC was given the 'Best Life Insurance' title.
Interesting facts about LIC
- From 1956 to 2000 LIC was the only company for the life insurance business in India.
- The LIC is a 100% government-owned company. Therefore the government has given a guarantee to provide the claim amount in case LIC defaults.
- LIC is the most significant institutional investor in the Indian Share Market. It invests about 50,000 crores every year in the share market.
- LIC is one of the top -10 most trusted brands in India.
LIC remains to be the dominant life insurer even in the liberalised scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its records.
- We will provide a detailed article on the scheme and plan launched by LIC in the next part of this series.
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