Life Insurance Corporation
|Type||Statutory Corporation established by an |
Act of Parliament-
LIC Act 1956
|Industry||Insurance and Financial services|
|Founded||1 September 1956|
|Revenue||₹56,078,439 lakh (US$79 billion) (2019)|
|₹270,348 lakh (US$380 million) (2019)|
|₹268,849 lakh (US$380 million) (2019)|
|Total assets||₹311,184,727 lakh (US$440 billion) (2019)|
|Owner||Government of India (100%)|
Number of employees
|Parent||Ministry of Finance , Government of India|
The Life insurance Corporation of India was established on September 1, 1956, when the Parliament of India passed the Life Insurance of India Act that nationalized the insurance industry in India. Over 245 insurance companies and provident societies were merged to create the state-owned Life Insurance Corporation of India.
As of 2019, Life Insurance Corporation of India had total life fund of ₹28.3 trillion. The total value of sold policies in the year 2018–19 is ₹21.4 million. Life Insurance Corporation of India settled 26 million claims in 2018–19. It has 290 million policy holders.
The Oriental Life Insurance Company, the first company in India offering life insurance coverage, was established in Kolkata in 1818. Its primary target market was the Europeans based in India, and it charged Indians heftier premiums. Surendranath Tagore had founded Hindustan Insurance Society, which later became Life Insurance Corporation.
The Bombay Mutual Life Assurance Society, formed in 1870, was the first native insurance provider. Other insurance companies established in the pre-independence era included
- Postal Life Insurance (PLI) was introduced on 1 February 1884
- Bharat Insurance Company (1896)
- United India (1906)
- National Indian (1906)
- National Insurance (1906)
- Co-operative Assurance (1906)
- Hindustan Co-operatives (1907)
- Indian Mercantile
- General Assurance
- Swadeshi Life (later Bombay Life)
- Sahyadri Insurance (Merged into LIC, 1986)
The first 150 years were marked mostly by turbulent economic conditions. It witnessed India's First War of Independence, adverse effects of the World War I and World War II on the economy of India, and in between them the period of worldwide economic crises triggered by the Great depression. The first half of the 20th century saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of and liquidation of life insurance companies in India. This had adversely affected the faith of the general in the utility of obtaining life cover.
Nationalization in 1956Edit
In 1955, parliamentarian Feroze Gandhi raised the matter of insurance fraud by owners of private insurance agencies. In the ensuing investigations, one of India's wealthiest businessmen, Ramkrishna Dalmia, owner of the Times of India newspaper, was sent to prison for two years.
The Parliament of India passed the Life Insurance of India Act on 19 June 1956 creating the Life Insurance Corporation of India, which started operating in September of that year. It consolidated the business of 245 private life insurers and other entities offering life insurance services; this consisted of 154 life insurance companies, 16 foreign companies and 75 provident companies. The nationalization of the life insurance business in India was a result of the Industrial Policy Resolution of 1956, which had created a policy framework for extending state control over at least 17 sectors of the economy, including life insurance.
Finance Minister Nirmala Sitharaman announced a proposal to conduct an initial public offering for LIC in the 2021 Union Budget. The IPO is expected to be held in FY22. The Government of India will remain the majority shareholder after the public listing. Ten percent of shares are proposed to be allotted to existing LIC policyholders. In year 2021, government of India had proposed to significantly enhance the authorised capital of Life Insurance Corporation of India (LIC), to INR 250bn ($3.4bn) to facilitate its public listing scheduled for the next fiscal year which will begin on 1st April.
The Central Office of LIC is based out of Mumbai which sits The Chairman, all four Managing Directors, and all Executive Directors (Department Heads). LIC has a total of 8 Zonal Offices namely Delhi, Chennai, Mumbai, Hyderabad, Kanpur, Kolkata, Bhopal & Patna.
LIC's Contribution to the five year plans over the yearsEdit
Growth as a monopolyEdit
From its creation, the Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses and by 2006 was contributing around 7% of India's GDP.
The corporation, which started its business with around 300 offices, 5.7 million policies and a corpus of ₹45.9 crores (US$92 million as per the 1959 exchange rate of roughly ₹5 for US$1), had grown to 25,000 servicing around 350 million policies and a corpus of over ₹800,000 crore (US$110 billion) by the end of the 20th century.
Liberalisation post 2000sEdit
In August 2000, the Indian Government embarked on a program to liberalise the insurance sector and opened it up for the private sector. LIC emerged as a beneficiary from this process with robust performance, albeit on a base substantially higher than the private sector.
In 2013, the first year premium compound annual growth rate (CAGR) was 24.53% while total life premium CAGR was 19.28% matching the growth of the life insurance industry and outperforming general economic growth.
Today LIC functions with 2048 fully computerized branch offices, 8 zonal offices, around 113 divisional offices, 2,048 branches and 1408 satellite offices and the Central Office; it also has 73 customer zones and 25 metro-area service hubs located in different cities and towns of India. It also has a network of 1,537,064 individual agents, 342 Corporate Agents, 109 Referral Agents, 114 Brokers and 42 Banks for soliciting life insurance business from the public.
The LIC has 22 departments each headed by an Executive Director namely Marketing, Bankassurance (B&AC), Corporate Communication, Personnel, CRM, Direct Marketing, E&OS, F&A, IT/BPR, Inspection, Investment, SBU/Estates, Investment Operations, P&GS, Actuarial, Chairman Sectt, F&A, Micro Insurance, RTI, HRD, Engineering, and Vigilance.
The LIC has 8 Zonal Offices headed by a Zonal Manager(I/C) (Executive Director Cadre) who is one of the key decision-makers of the corporation after the Board
|North Zone||New Delhi|
|East Central Zone||Patna|
|North Central Zone||Kanpur|
|South Central Zone||Hyderabad|
The LIC follows a horizontal line of command & vertical line of command, while each department is headed by an Executive Director, the Zonal offices are headed by a Zonal Manager who oversees all the departments & divisions of the Zone – making him de facto CEO of the Zone. The zonal departmental heads are Regional Managers. Divisions are headed by Sr. Divisional Manager(I/C) who oversees all the departments & branches of the division. There are 3 layers of Horizontal Management namely Senior Divisional Manager(I/C), Zonal Manager(I/C) & the Chairman/MD. There are also 3 layers of vertical management namely Managers of Divisions, Regional Managers of Zonal Office & the Executive Directors of Central office. Horizontal Management is considered key managers of the corporation.
|Cadre/Rank Name||Posting Designations|
|Managing Director||Managing Director|
|Zonal Manager(Special)||Zonal Manager(I/C), Executive Director, CEO of Subsidiary|
|Zonal Manager(Ordinary)(3 Year Cadre)||Regional Manager, Chief, Director, CEO of Subsidiary|
|Sr Divisional Manager||Deputy Zonal Manager, SDM(I/C), Principal, Faculty Member, Regional Manager, Secretary|
|Divisional Manager||Chief Manager, DM, Secretary, Dy Secretary, Marketing Manager, Principal, Faculty Member|
|Assistant Divisional Manager||Sr. Branch Manager (I/C), Sr. Branch Manager(Sales), Manager(Admin), Manager, Dy Secretary, Faculty Member|
|Administrative Officer||Branch Manager(I/C), BM(SALES), AO|
|Assistant Administrative Officer||ABM(Sales), AAO, PA, Deputy Manager,|
Now LIC also has the 1899 branches of IDBI bank at its disposal thus it can carry out its insurance business through these branches of the bank.
LIC's slogan योगक्षेमम् वहाम्यहम (yogakshemam vahamyaham) is in Sanskrit which loosely translates into English as "Your welfare is our responsibility". This is derived from the 22nd verse of the Bhagavad Gita's 9th chapter. The slogan can be seen in the logo, written in Devanagari script. This line means "I carry what they lack, and I preserve what they have" (refers to Krishna speaking to Arjuna), when taken in context of the entire verse.
Awards and recognitionsEdit
- The Economic Times Brand Equity Survey 2012 rated LIC as the No. 6 Most Trusted Service Brand of India.
- From the year 2006, LIC has been continuously winning the Readers' Digest Trusted brand award.
- Voted India's Most Trusted brand in the BFSI category according to the Brand Trust Report for 4 continuous years – 2011–2014 according to the Brand Trust Report.
Employees and agentsEdit
As on 31 March 2020, LIC had 1,14,498 employees, out of which 25,602 were women.
|Category of employees||Total Number||No. of Women|
|Class-II Development Officers||24,388||1,458|
|Class III/IV employees||57,677||16,942|
The total number of agents on roll is 12,08,826 (of which 10,80,809 were active agents) as of March 2020 as against 11,79,229 as of March 2019.
Golden Jubilee Foundation
LIC Golden Jubilee Foundation was established in 2006 as a charity organization. This entity has the aim of promoting education, alleviation of poverty, and providing better living conditions for the under privileged. Out of all the activities conducted by the organisation, Golden Jubilee Scholarship awards is the best known. Each year, this award is given to the meritorious students in standard XII of school education or equivalent, who wish to continue their studies and have a parental income less than ₹100,000 (US$1,400).
LIC invests in sectors such as banks, cement, chemicals and fertilizers, electricity and transmission, electrical and electronics, engineering, construction and infrastructure, fast-moving consumer goods, finance and investments, healthcare, hotels, information technology, metals and mining, motor vehicles, and ancillaries, oil and natural resources, retail, textiles, transportation, and logistics.
Among the Nifty companies, LIC's holding in terms of value in 2012 was estimated to be the highest in ITC (₹27,326 crores), followed by RIL (₹21,659 crores), ONGC (₹17,764 crores), SBI (₹17,058 crores), L&T (₹16,800 crores), and ICICI Bank (₹10,006 crores). The share price drop in ITC on 18 July 2017 had caused LIC a major loss of around 7000 crores during the financial year.
LIC also holds a 51% stake in IDBI Bank, making it the only insurer in India to own a bank, since regulations prohibit insurers from holding more than 15% stake in any company, LIC will have to decide a timeline for paring its stake in IDBI bank; also LIC may have to pare its stake in LIC Housing Finance Ltd as a company cannot be the promoter of two finance companies carrying out same housing finance business in India.
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