Role of Life Insurance Corporation in Insurance Sector of India

By

Dhruva Ravani StudentMBA Semester IIIR.D. Gardi Department of Business ManagementRajkot 

ABSTRACT It is worth interesting to note that the origin of the concept of insurance is very old and dates back almost 4500 years ago in the ancient empire of Babylonia. This concept prevailed and developed during the medieval period in Europe. The emphasis of insurance was on traders' merchants and seafarers in marine industries at that time to provide them safety in terms of money against certain unseen risks including death. The concept of insurance has its origin in Indian scriptures. The Vedas give the idea of 'Yougkshema' means a promise to provide community insurance to the risk bearers as back as around 1000 B.C., which was practised by the Aryans. In 1956 a radical step was taken by the central govt. regarding nationalization of insurance industries which emerged as the Life Insurance of India the major objective of this corporation was to give maximum benefits to maximum citizens of India by providing them wide range of benefits against a number of risks. The details of Lick's business during last 5 years are given in the paper, which are self – explanatory. INTRODUCTION Almost 4500 years ago, in the ancient Land of Babylonia, traders used to bear risk of the caravan trade by giving loans that had to be later repaid with interest when the goods arrived safely. In 2100 B.C. the code of Hammurabi granted legal status to the practice. That perhaps, was how insurance made its beginning. Life insurance had its origins in ancient Rome, Where citizens formed burial clubs that would meet the funeral expenses of its members as well as help survivors by making some payments. In 1347, in Genoa, European maritime nations entered into the earliest known insurance and decided to accept marine insurance as a practice. Back to the 17th century, in 1693, astronomer Edmond Halley constructed the first mortality and compound interest. In 1756, Joseph Dodson reworked the table, linking premium rate to age. The 19th century saw huge developments in the field of insurance, with newer products being devised to meet the growing needs of urbanization and industrialization. LIFE INSURANCE IN INDIA Insurance in India can be traced back to the Vedas. For instance, Yougkshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term suggests that a form of 'community insurance' was prevalent around 1000

BC and practised by the Aryans. Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870. Other companies like Oriental, Bharat and Empire of India were also set up in the 1870 – 90s. The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into investments, expenditure and management of these companies' funds. By the mid – 1950s, there were around 170 insurance companies and 80 provident fund societies in the country's life insurance scene. However, in the absence of regulatory systems, scams and irregularities were almost a way of life at most of these companies' funds. As a result, the government decided to nationalise the life assurance business in India. The Life Insurance Corporation of India was set up in 1956 to take over around 250 life assurance companies. After the RN Malhotra Committee report of 1994 became the first serious document calling for the re-opening up of the insurance sector to private players – that the sector was finally opened up to private players in 2001. WHAT IS LIFE INSURANCE Life Insurance is a contract for payment of a sum of money to the person assured on the happening of the event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or at unfortunate death, if it occurs earlier. It is concerned with two hazards that stand across the life- path of every person that of dying prematurely leaving a dependent family to fend itself and that of living to old age without visible means of support. GROWTH OF NEW BUSINESS

During the 1997-98 LIC sum assured through policies 63927.83 Crore Rs. In 1998-99 LIC sum assured 75606.26 Crore Rs. In 1999-00 LIC sum assured 91490.94 Crore Rs. In 2000-01 LIC sum assured 124950.63 Crore Rs. In 2001-02 LIC sum assured 192784.96 Crore Rs. We can see that LIC gets success in new business. NUMBER OF POLICIES

In 1997-98 LIC's number of polices are 850.03 in lakh. In 1998-99 LIC'S number of polices are 917.26 in lakh. In 1999-00 LIC's number of polices are 1013.89 in lakh. In 2000-01 LIC's numbers of policies are 1131.11 in lakh. In 2001-02 LIC's number of policies 1258.76 in lakh.  We can see that LIC's position is very good. Numbers of policies are increased.

ANALYSIS OF INCOME

This chart shows various income of LIC. LIC gets 14.11 % income through first year premium. LIC gets 40.74 % income from Renewal Premium. LIC gets 12.43 % income from Single Premium. LIC gets 31.19 % income from investments. LIC gets income 1.53 % from Miscellaneous. CONCLUTION LIC gets achievement in various fields. We can see that LIC gets success in new business. Numbers of policies are increased.  We can see LIC's income from various fields. Overall LIC has doing profitable business. But it is only LIC's own business. But it is not compared with other's insurance institute. So it is not completed. Role Of Life Insurance Adjuster by Alec Morgan

The role of a life insurance adjuster begins from the time an individual files a claim. It is the adjusters’ brains that work when planning for and processing a claim. They have the power to decide what to do with a certain policy claim and how to go about it.

After an individual makes a policy claim, the process is undertaken by an adjuster. The claimant and witnesses may be interviewed along with the hospital records, police records and examining the property damage in order to make an estimate on the amount of the company’s liability. Other professionals like architects, engineers, physicians, lawyers, accountants and construction workers may also be consulted for more detailed opinion on the claim.

The life insurance adjusters gather information through photographs, statements

and video tape (written/audio). After the claim is evaluated and made legitimate, the adjuster negotiates the deal with the claimant and finally settles the amount to be reimbursed. It is the responsibility of the adjuster to defend the position of the insurance company once the claim is filed by the insured.

Sometimes, there is a centralized claim center for companies. These centers are like bodily injury is passed on to senior adjusters. In some cases an individual may not take the help of the insurance company’s adjuster but hire a public adjuster. These adjusters are meant to help the claimant in settling his claim for a fee. The advantage of hiring such an adjuster is that they work for the interest of the client instead of the company.

Author's Bio Alec Morgan has been a part of the insurance industry for the past several years. He has also written various insurance articles and is now a contributing writer for www.allinsuranceprofessionals.com This site is an attempt to help budding insurance professionals with the required information regarding different insurance processes.

Life Insurance: Basics and Types

Life insurance is a type of financial security that guarantees monetary protection to the insured and his family according to the terms and conditions of the policy. It is important that every individual should have a life insurance policy according to his budget because no one knows when an accident can happen.

What is Life Insurance?

People have various wrong conceptions about life insurance. They feel that life insurance is needed during the latter years of one�s life. Life insurance is actually an agreement between the insured and the insurer in which the policy holder accepts to pay regular premium to the insurer. In return, the insurer guarantees monetary protection to the insured in case of any accident or mishaps. If the insured dies in accident, financial help is provided to his family members. Thus, life insurance is necessary as it provides protection to not only you but also to your family in case of any unwanted disaster.

Types of Life Insurance:

There are various types of policies and schemes prepared to suit the need of different individual. You can avail the one that satisfy your budget and need. Life insurance can be broadly divided into 3 types:

Term life insurance Whole life insurance Universal life insurance

What is Term Life Insurance?

In this type of life insurance, financial coverage is provided for a certain period of time according to the terms of the policy. When the term period gets over, the policy holder can either end the policy or continue it by paying annual premiums.

Term life insurance does not provide permanent coverage but is good for those who want temporary protection on a limited budget. If you are thinking of availing a short term life insurance policy to pay off loans, term life insurance policy is the right option for you. It can be renewed according to the policy holders wish and need.

What is Whole Life Insurance?

In this type of life insurance, the insured is provided with permanent financial protection. It is a long term insurance plan where the policy holder needs to pay premiums annually. There are various types of whole life insurance that individuals can avail in accordance to their needs such as Non-participating, Participating, Indeterminate premium, Economic, Limited Pay, Single Premium and Interest sensitive. But all life insurance companies may not offer all the types of whole insurance policies stated above.

What is Universal Life Insurance?

This is a permanent life insurance plan which has flexible terms. It allows some of the benefits such as death benefits, saving benefits to be reviewed and changed according to the policy holder�s need. In this policy, the insured enjoys not only benefits of term life insurance but also cash value (premiums that are above the cost insurance are credited as cash value). You can choose from the 3 types of universal life insurances, i.e. Single premium, fixed premium and flexible premium, in accordance to your requirement.

Single premium universal life insurance: In single premium universal life insurance, the policy holder pays a big premium amount at the beginning of the policy. The policy remains active as long as the cost of insurance (COI) is covered by the initially paid amount.

Fixed premium universal life insurance: In fixed premium universal life insurance, the policy holder makes monthly or yearly payments of fixed amount for a certain period of time.

Flexible premium universal life insurance: In this option of universal life insurance, the policy holder can pay monthly premiums of his choice as long as the minimum payment amount is covered.

Life insurance is therefore an essential step towards safeguarding the future of your family. People should understand how these life insurance policies work and avail the one that seems suitable to their needs. Take the help of a good insurance agent who will help you with details of the policies available.

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Role of rural area

India’s largest government owned life insurance company, Life Insurance Corporation of India (LIC), set a new target of selling 4 million micro insurance policies this year. In a speech given at the SKOCH Banking, Financial Services and Insurance Summit, LIC Chairman TS Vijayan said that two years ago, the corporation had sold 0.8 million micro insurance policies and this year, planned to increase its sales five fold.

LIC’s micro insurance product, ‘Jeevan Madhur’, is a life insurance plan, first launched in 2006. Under the plan a minimum coverage of Rs5,000 (USD 110) and a maximum of Rs30,000 (USD 650) can be obtained. Minimum premium payments range from Rs25 (USD 0.55) per week to Rs250 (USD 5.5) yearly.

According to India Invest Incomes and Savings Survey 2007 by IIMS Dataworks, a Noida-based retail finance research firm, insurance penetration in urban India is 47%, while it is only 27% in rural areas.  In 2006, LIC entered into a memorandum of understanding (MoU) with the Confederation of NGOs of Rural India (CNRI), an apex body of Non-Governmental Organisations of rural India that has over 4,000 NGOs across the country. The MoU authorized the NGOs that are members of the CNRI to distribute micro insurance to rural areas.

In his speech at the Summit, Vijayan underlined the high-cost of distribution in rural areas, giving the estimated cost of distribution as double the cost of a policy.

Along with suggesting alternative distribution mechanisms such as privately owned rural kiosks   that serve as information centers, Vijayan also called for a technology fund to be made available for micro insurance as there is one for microcredit.

LIC was founded in 1956 and as of 2007, has total assets of USD 165 billion. Headquartered in Mumbai, the corporation has 8 zonal offices and 101 divisional offices located in different parts of India.

The summit was organized by SKOCH, a commercial strategy and management consultancy company spread in eleven countries. SKOCH was founded in 1997 and in India extensively works towards ICT (information and communication technology) led development.

By Ipek Kuran, Research Assistant

Review of Literature

1. Sumninder Kaur Bawa, Life Insurance Corporation of India : Impact of Privatisation and Performance, Regal Publication New Delhi, 2007.

Contents: Preface. 1. Introduction. 2. Life insurance: review of studies made. 3. Methodology for analysis. 4. Performance evaluation of Life Insurance Corporation of India: I. Performance evaluation of LIC. II. Determinants of performance of Life Insurance Corporation of India. 5. Productivity of Life Insurance Corporation of India. 6. Investment portfolio of Life Insurance Corporation of India. 7. Impact of privatisation on the performance of Life Insurance Corporation of India. 8. Conclusions. Bibliography. Index. 

    "Life Insurance Corporation of India : Impact of Privatisation and Performance presents an in-depth analysis of LIC's performance in respect of various indicators since the policy of liberalisation was introduced in the country. The productivity analysis of the corporation has been carried out using different parameters. The portfolio management of the corporation has been studied in detail in respect of loans and investments. The impact of privatisation on the performance of LIC has been evaluated in terms of its market share in various parameters of insurance vis-a-vis the private players. The book also identifies key determinants of the performance of LIC and makes recommendations for improving it. 

    The book will be of immense use to students, teachers, researchers and those involved in policy making for LIC." (jacket)  

2.LIC for Social Sector Development/Sandhya Rani Mahapatra and Sovan Kumar Patnaik. New Delhi, Sonali, 2007, xii, 108 p., tables, ISBN 81-8411-082-0.

    Contents: Preface. 1. Introduction. 2. Insurance and human welfare. 3. LIC of India: growth and diversification. 4. Contribution of LIC to social sector and economic development of India. Conclusions. References. 

    "The LIC of India has emerged as one of the important financial institutions entrusted with the responsibility of financing economic growth of our country. It has been playing a catalytic role in strengthening the financial and social fabric of our nation. There has been a major thrust in the activities of LIC both at covering the poorer and vulnerable sections of India socially through group insurance scheme and investing the income for building infrastructure for socially oriented projects.

    Based on secondary sources of data the present work highlights the role of LIC in the social sector development of our country. The analysis of various dimensions of LIC finance has relevance to the future growth trend, their implications on socio-economic development of our country. Such studies are of much significance to the economists, researchers, policy makers and planners of our country in formulating policy for accelerated development of the economy." (jacket)

Insurance Law and Practice/Rajiv Jain and Rakhi Biswas. New Delhi, Vidhi, 2001, lxviii, 1084 p., ISBN 81-87310-40-5.

Contents: I. Genesis and growth of insurance law and liberalised private sector investment policy and procedure: 1. Genesis of insurance law. 2. Privatisation of insurance sector. 3. Investment in insurance sector. 4. Registration of insurance company. 5. New provisions applicable to existing insurers. 6. Obligations of insurers to rural and social sectors. 7. Advertisements and disclosure norms for insurers. 8. Norms for insurers(s’) reinsurance. 9. Valuation of assets—liabilities and solvency margins of insurers. 10. Preparation of financial statements and auditor’s report by insurer in life insurance business. 11. Preparation of financial statements by companies engaged in general insurance business. 12. Actuary—role and challenges. 13. Licensing of insurance agents. 14. Insurance surveyors and loss assessors. II. Conceptual review of legal maxims in insurance sector: 1. Contract of insurance. 2. Principles of interpretation of clauses in a policy. 3. Maxims applicable to insurance policies. 4. The policy. 5. Premium. 6. Days of grace. 7. Insurable interest. 8. Void and voidable contracts. 9. Risk. 10. Causes of loss. 11. Enforcement of claim. 12. Conditions in a policy. 13. Motor insurance. 14. Accident insurance. 15. Agents. 16. Consumer Protection Act and insurance. 17. Insurance Ombudsman scheme. 18. Income tax benefits

extended to policyholders. 19. Policies for non-resident Indians. 20. Insurance education in India. III. Policies and schemes—life/health/non-life: 1. Life and health-care policies. 2. Industries and corporate sector insurance policies. 3. Other important policies. IV. Annotated laws relating to insurance sector: 1. Insurance Regulatory and Development Authority Act, 1999: I. Preliminary. II. Insurance regulatory and development authority. III. Transfer of assets, liabilities, etc., of interim insurance regulatory authority. IV. Duties, powers and functions of authority. V. Finance, accounts and audit. VI. Miscellaneous. 2. Insurance advisory committee (meetings) regulations, 2000. 3. Insurance regulatory and development authority (appointed actuary) regulations, 2000. 4. insurance regulatory and development authority (actuarial report and abstract) regulations, 2000. 5. Insurance regulatory and development authority (licensing of insurance agents) regulations, 2000. 6. Insurance regulatory and development authority (assets, liabilities and solvency margin of insurers) regulations, 2000. 7. Insurance regulatory and development authority (general insurance, reinsurance) regulations, 2000. 8. Insurance regulatory and development authority (registration of Indian insurance companies) regulations, 2000. 9. Insurance regulatory and development authority (insurance advertisements and disclosure) regulations, 2000. 10. Insurance regulatory and development authority (obligations of insurers to rural or social sectors) regulations, 2000. 11. Insurance regulatory and development authority (meetings) regulations, 2000. 12. Insurance regulatory and development authority (preparation of financial statements and auditor’s report of insurance companies) regulations, 2000. 13. Insurance regulatory and development authority (investment) regulations, 2000. 14. Insurance surveyors and loss assessors (licencing, professional requirements and code of conduct) regulations, 2000. 15. Insurance regulatory and development authority (life insurance-reinsurance) regulations, 2000. 16. Insurance Act, 1938. 17. Life Insurance Corporation Act, 1956. 18. General Insurance Business (Nationalisation ) Act, 1972. 19. Insurance Ombudsman Redressal of Public Grievances Rules, 1998. 20. The Personal Injuries (Compensation Insurance) Act, 1963. 21. Relevant sections of the Motor Vehicle Act, 1988. 22. Relevant sections of the Indian Contract Act, 1872. 23. (The) Marine Insurance Act, 1963. 24. Public Liability Insurance Act, 1991. V. Glossary of terms and expressions generally used in or in connection with insurance. Glossary.

Recent Trends in Insurance Sector in India/edited by K. Ravichandran. Delhi, Abhijeet Pub., 2007, xvi, 256 p., tables, ISBN 81-89886-26-4.

    Contents: Foreword/S. Gidwani, P. Sivaprakasam and S. Nakkiran. Preface. 1. The trend of recent trends in insurance sector in India--an analytical view/M. Karthikeyan. 2. Term insurance schemes of LIC of India and other insurance companies--a comparative study/S. Banumath and G. Karunanithi. 3. Trends in life insurance industry--unit linked insurance products/Sankara Raman Narayanan. 4.

Emerging challenges in insurance sector/S. Mythili. 5. Indian general insurance business in detariffed era/P. Kamaraj and B. Tamilmani. 6. Present trends in insurance industry in India/K. Dhevan and A. Shanmugasundaram. 7. FDI in insurance--the Indian perspective/V. Bharathiraja, M. Sasi Siddharth and R. Muruganandham. 8. Insurance sector: question of its financial stability?/Aravind S. and Chandra Sekhar Kancheti. 9. Performance of Life Insurance Business in India/B. Manoharan. 10. Bancassurance--emerging challenges/R. Varadarajan and K. Natarajan. 11. Bancassurance--a new buzzword/C. Anitha and J. Esther Rajathi. 12. Bancassurance--the most challenging insurance distribution channel with special reference to ICICI Prudential Life/G. Parimalarani. 13. Health insurance for sustainable living: need of the hour/S. Kumar, M. Sathis Kumar G and Ramaswamy S. 14. Health insurance in India: opportunities, challenges and concerns/B. Revathy. 15. The unorganised labourers and insurance/A. Balakrishnan and P.G. Balasubramanian. 16. Crop insurance: a risk management tool/Frank Ratna Kumar. 17. Crop insurance a safety net for beleaguered farmers/P. Sivaprakasam and D. Karthika. 18. Insurance information system: an emerging model/R. Sudharsana Raamanujan, P. Nandakumar and T. Suthakar. 19. CRM--a boon for insurance/A. Savarimuthu and M. Revathi Bala. 20. Customer satisfaction on the services provided by life insurance corporation of India in Namakkal branch of Tamilnadu/D.R. Chitra, T. Saraswathi and K. Devan. 21. Basic Insurance Knowledge (BIK) for growth and development of insurance industry in rural India/Samwel Kakuko Lopoyetum and P. Selvamani. 22. CRM in life insurance corporation of India/Jelsy Josep, M. Uma Maheswari and L. Ethirajan. 23. Health insurance products: challenges and opportunities/P. Vijiyalakhsmi. List of contributors.

    "This introduction of new economic policy and consequent financial sector reforms have brought number of changes in Insurance sector. This sector hitherto owned by the life insurance corporation of India and other General Insurance Companies of the Government of India have been opened to private partners. The formation of IRDA, partnership with insurance business and banking business and the introduction of micro insurance have given new thrust to this sector. All these trends have increased the competition both in life and non-life insurance business, which resulted in more choice for consumers. These trends need in-depth analysis and documentation for policy formulation and future direction. The book has the following objectives:

To create out the historical development of insurance sector To analyze the trends in insurance sector before and after the privatization To analyze the business performance of insurance companies in public,

private and cooperative sectors To analyze the trends in bancassurance

    It is hoped that this edited book will fulfill the requirements of students and executives in insurance education." (jacket)

Insurance in India : Changing Policies and Emerging Opportunities/P.S. Palande, R.S. Shah and M.L. Lunawat. New Delhi, Response Books, 2003, 492 p., ISBN 81-7829-267-X.

Contents: Preface. 1. The growth and development of the Indian insurance industry. 2. The debate about opening up. 3. Preparing for the competitive environment. 4. Proactive and focused strategies of the industry. 5. The new range of products and services. 6. Evolving markets and strategies. 7. Investment of funds—constraints and skills. 8. Regulation of the insurance business. 9. The government as a facilitator of change. 10. The emerging scenario. Annexure. Glossary. Select bibliography. Index.

"Ever since the nationalization of the life insurance industry in 1956 and of non-life business in 1973, Indian consumers have had to live with the state-owned Life Insurance Corporation and the General Insurance Corporation (and its four subsidiaries) as the only providers of insurance. Now that private participation in this sector has been allowed once again, it has created a great deal of excitement due to the enormous potential that the industry holds. As a consequence, the industry has changed completely in the recent past—twenty new entrants armed with new products and a few others waiting in the wings.

"This timely book provides a comprehensive and up-to-date picture of the insurance industry. The authors first trace the origin and working of the insurance industry, and the factors that led to its nationalization. They then closely analyze recent developments, the transformation that has taken place after reforms, and provide a macro perspective on this industry. The authors also examine the measures taken by the existing public sector insurance companies to restructure themselves in the present scenario, and provide an overview of the present and likely policies of the new players that have entered the market. In conclusion the book offers suggestions about the future of the industry in terms of:

Its potential and possible growth; Initiatives needed to give a further impetus to the industry; The products and services offered; Regulatory issues; and The evolving market strategies in the context of the highly competitive

environment.

"Written in a concise and absorbing manner, this is perhaps the first study of the insurance industry to be written in the post-reform era. It will be of enormous interest and use to students of insurance and general management, insurance

intermediaries and professionals in the insurance and financial services sector." (jacket)

Insurance in India/S.K. Bali. New Delhi, A.K. Pub., 2008, viii, 248 p., ISBN 81-906358-3-7.

    Contents: Preface. 1. Introduction. 2. Life Insurance Corporation of India. 3. Life insurance. 4. Insurance industry at present. 5. Significance of life insurance. 6. Non-life (general) insurance. 7. Other types of insurance. 8. Future prospects. Bibliography. Index.

    "The Indian insurance industry book provides insightful analysis, market overview, industry structure and outlook of life and non-life insurance industries in the country. Richly laden with quantitative analysis, the report provides the reader with a rudimentary preface to Indian insurance industry. The closely summarized Indian market report of insurance sector is designed to offer a macro level picture of the trends, challenges, market structure/basics, and recent mergers and acquisitions, and strategic corporate developments witnessed by the industry. The report examines the leading companies' footing in insurance markets at regional level, along with their annual written premiums and/or market shares. Regional key and niche Bajaj Allianz, General Insurance Co., ICICI Prudential Life Insurance Co. Ltd., and Life Insurance Corp. of India." (jacket)

History of Life Insurance Industry in India

In the year 1999 under the impact of globalization the Indian Laws allowed the entry of Private players in the Life Insurance industry. While this ended the monopoly of LIC in the Life Insurance business, this was heralded as a revolutionary decision. Whereas this has not been so. It is only that the wheel has taken a full circle.

When Life Insurance business was nationalized in 1956, there were 245 private companies and PF societies which were transacting the business. Why did the Government take this action? Your guess is as good as mine.

The business of Insurance company is to bring together people sharing the same risk, collecting their share of contribution (premium) to the common risk and compensate those who suffer from a risks (death) or maturity of term (survival benefit). In order words the insurance business has higher component of the modern day term of “corporate social responsibility” and lesser component towards “profit”.

As of now there are 16 new life insurance companies of which only SBI Life

Insurance is making profit. Rest of them despite of heavy media glitz are yet to break even !!!

A Life Insurance policy creates a financial asset which can be purchased in installments. However this has got a unique facility under which in case of death, the outstanding installments need not be paid by the legal heirs.

Life Insurance Policy is a movable, marketable and liquid asset. It can be transferred or mortgaged. Loans can be taken against a policy.

LIC Nagpur division tops in corporate business

Nagpur (PTI): The Nagpur division of Life Insurance Corporation of India (LIC) has topped in the country for doing 150 per cent sales in corporate business sector, according to LIC's Senior Divisional Manager P Das Gupta.

"The division has done a business of Rs 341 crores during first three months (April to June) which was 150 per cent of the target," Das Gupta, told PTI.

Going by the current trend, the Nagpur division may touch Rs 500 crores in the same sector during the fiscal 2009-10, he said.

Meanwhile, the LIC has launched Jeevan Sathi plus, a joint market linked plan for the benefot of customers.

Claiming to be first of its kind in the industry, LIC has said the Jeevan Sathi Plus was on unit linked insurance policy (ULIP) platform and offers the insured the benefts of markets linked return.

In its plan, the couple can take the insurance cover for their lives under a single policy. The proposer under the plan shall be called Principal Life Assured (PLA) and other life (wife/husband) shall be called Spouse Life Assured (SLA).

The minimum annualised premium will be Rs 10,000 increasing thereafter in multiples of Rs 1000. A minimum monthly premium will be Rs 1,000. Alternatively a single premium can be paid subject to a minimum of Rs 40,000, a press release from LIC said.

New Delhi: It’s an Indian woman’s life, and less likely to be protected by insurance cover.

Data collected by Mint shows that women constitute 20-30% of total lives covered by the country’s life insurers, including Life Insurance Corp. of India, or LIC, the largest insurer by premium collected.

There are many reasons put forward to explain why such a gender gap exists, from the fact that many Indian women are home-bound to their relatively low exposure to risks. “Indian society doesn’t recognize the value of a woman. Importance is not given to a woman unless she is earning and therefore, when the question comes up for insurance, it is very difficult to get women insured,” said S.B. Mathur, secretary general of Life Insurance Council, an umbrella body. “In group insurance schemes, however, the coverage of women is higher because the government pays the premium and they automatically get covered.”

According to the 2001 census, there are 933 women per 1,000 males in India—48% of India’s billion-plus population. In comparison, women had a lower weightage in a life insurance market of Rs2.2 trillion, or 4.4% of gross domestic product, at the end of March.

“In LIC, around 28% of total lives covered are women,” said a senior official of LIC, who didn’t want to be identified because he is not allowed to talk to media. “The figures have risen recently after women in metro cities started working, otherwise around five years back, the percentage was as low as 18-19%. Insurance penetration among women is not sufficient in India.”

Coverage is low with private insurers, too. “Around 24% of our customers are women,” said Gaurang Shah, managing director of Kotak Mahindra Old Mutual Life Insurance Co. Ltd. “Women do not come out so often, resulting in low penetration.”

Rajiv Jamkhedkar, chief executive of Aegon Religare Life Insurance Co. Ltd, says, “Insurance coverage of women is relatively on the lower side...because financial matters are still decided by male members of the family. Currently, around 18% of total lives insured with us are women.”

“Around one third of our customers are women and this number has shown increasing trend over last few years,” said Debashis Sarkar,

director, marketing, products and corporate affairs, with Max New York Life Insurance Co. Ltd.

LIC also offers Jeevan Bharati I, a policy designed for women, but there are few takers. “The response to Jeevan Bharati I is not quite encouraging,” said another LIC official. “We have sold around 1 lakh policies so far.” LIC now manages around 23 crore policies.

Jeevan Bharati is an insurance policy exclusively for women, and has a combination of endowment and mediclaim policies. Certain women-specific problems such as some critical illnesses are covered only under this policy.

“Women do not take only women-specific policies, they take other policies, too,” said LIC managing director Thomas Mathew T. “We have 17 lakh self-help groups covering women. We are also planning to launch several women-specific policies in future.”

LIC has a few group policies especially designed for women, such as Aanganwadi Karyakarti Bima Yojana and Janashree Bima Yojana (with add-on benefits for women). The latest report by a parliamentary committee on empowerment of women, which was presented in Lok Sabha and Rajya Sabha late last year, stated that “the response of intended beneficiaries to these schemes is far from promising”. The report says the committee feels that either there is something amiss with the conceptualization of the scheme, or the government has not taken adequate measures to reach the targeted beneficiaries.

The report says there has been a decrease in the coverage of women under Janashree Bima Yojana, from 5,93,324 in 2004-05 to 4,78,050 in 2005-06. “Janashree Bima Yojana is meant for a head of the family, so insurance coverage for women is very low under the scheme,” said an official in charge of group business, who didn’t want to be identified because he is not allowed to talk to the media.

History of LIC

The Oriental Life Insurance Company, the first corporate entity in India offering life insurance cover was established in Calcutta in 1818 by Bipin Behari Dasgupta and others. Europeans in India were its primary target market, and it charged Indians heftier premiums. 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

The Life Insurance Corporation of India (LICI) is the largest life insurance company in India; it is fully owned by the Government of India. It was founded in 1956.

Headquartered in Mumbai, which is considered the financial capital of India, the Life Insurance Corporation of India currently has 7 zonal Offices and 100 divisional offices located in different parts of India, at least 2048 branches located in different cities and towns of India, and has a network of around one million agents [1] for soliciting life insurance business from the public.

Bharat Insurance Company (1896) United India (1906) National Indian (1906) National Insurance (1906) Co-operative Assurance (1906) Hindustan Co-operative (1907) Indian Mercantile General Assurance Swadeshi Life (later Bombay Life)

The first 150 years were marked mostly by turbulent economic conditions. It witnessed, India's

First War of Independence, adverse affects of the World War I and World War II on the economy of India, and in between them the period of world wide economic crises triggered by the Great depression. The first half of the 20th century also saw a heightened struggle for India's independence. The aggregate effect of these events led to a high rate of bankruptcies and liquidation of life insurance companies in India. This had adversely affected the faith of the general public in the utility of obtaining life cover.

The LIFE INSURANCE Act and the Provident Fund Act were passed in 1912, providing the first regulatory mechanisms in the Life Insurance industry. The Indian Insurance Companies Act of 1928 authorized the government to obtain statistical information from companies operating in both life and non-life insurance areas. The subsequent Insurance Act of 1938 brought stricter state control over an industry that had seen several financially unsound ventures fail. A bill was also introduced in the Legislative Assembly in 1944 to nationalize the insurance industry.

Nationalization

In 1955, parliamentarian Feroze Gandhi raised the matter of insurance fraud by owner's of private insurance companies. In the ensuing investigations, one of India's wealthiest businessmen, Ram

Kishan Dalmia, owner of the Times of India newspaper, was sent to prison for two months. Eventually, the Parliament of India passed the Life Insurance of India Act on 1956-06-19, and the

Life Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. 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 seventeen sectors of the economy, including the life insurance. The company began operations with 5 zonal offices, 33 divisional offices and 212 branch offices.

In 1957, the new Corporation was involved in India's first financial scam, where the stock speculator Haridas Mundhra got LIC to invest Rs 1.2 crores (about USD 3.2 million at the time) in the shares of six troubled companies belonging to Mundhra. The resulting scandal resulted in the resignation of the finance minister, and a considerable loss of prestige for the government.