Dear students,This project file provides an overview and analysis of the Marketing Strategies Of The LIC Of India. It will give you insights into how India’s largest life insurance company has maintained its dominant position in the market since nationalization in 1956, while facing increased competition from the entry of private players since 2000.
Through this project, you will learn about:
The history, objectives, and organization structure of LIC
LIC’s product mix, pricing, promotion, distribution, and other marketing strategies
Trends and metrics like insurance density and penetration to assess India’s life insurance sector
Challenges faced by LIC after India opened up the insurance sector to private companies
Suggestions for LIC and the overall insurance industry going forward
You can utilize this background to better understand marketing of financial services like life insurance. The project analysis provides a blueprint which you can adapt to study the marketing done by other insurance providers in India or globally.
Modify sections or add your own analysis to create a customized project report. The conclusion offers specific pointers for additional research you can undertake. Reach out if any clarification or guidance is needed while working on your own projects.
Now let’s get started understanding LIC’s marketing journey over the years and what lessons it holds for aspiring insurance professionals like you.
You Can Find Main Project Pdf File Of “Marketing Strategies Of The LIC Of India” Below
Brief Summary Of The “Marketing Strategies Of The LIC Of India”
Introduction
Life insurance facilitates financial protection against loss of income due to premature death. By evaluating and pooling risks among many insured individuals, insurers provide resources to dependents when the earning member passes away. India’s life insurance industry has evolved over nearly 200 years since Oriental Life Insurance Company was formed in 1818 in Kolkata.
With nearly 250 private firms operating, regulation was inadequate and misselling was commonplace. After independence, the Government of India brought regulatory oversight by nationalizing the life insurance sector in 1956. The Life Insurance Corporation (LIC) was incorporated on 1st September 1956 to consolidate the business of Indian and foreign life insurers existing then.
The Life Insurance Corporation Act of 1956 outlined LIC’s key objectives as:
Spreading life insurance widely across India, especially rural areas
Maximizing mobilization of savings for nation-building needs
Investing funds to earn reasonable returns while serving public priorities
Meeting evolving insurance needs of society with appropriate products
LIC is wholly state-owned and the country’s largest insurer, financial conglomerate, and investment manager. It has over 100 divisional offices, 2000+ branches, and over a million agents. LIC continues to dominate India’s life insurance space despite privatization and entry of many players from 2000 onwards due to the Insurance Regulatory and Development Authority (IRDA) Act.
Literature Review
Academic studies credit LIC with spreading life insurance across India rapidly after nationalization. Pre-existing insurers were mainly urban-focused, but LIC drives targeted rural penetration. Over 290 million policies are in force currently, insulating households from financial shocks upon premature death of earning members. Studies also highlight that policyholder interests have not been compromised while mobilizing long-term funds for national development.
Research also evaluates LIC’s responses and results after India opened up the insurance industry to private firms like ICICI Prudential, SBI Life etc. in 2000. Most analyses are positive about LIC leveraging its early mover advantage, large distribution network, and brand reputation to stay profitable. But many experts note that gradual market share loss to newer players offering innovative products implies LIC cannot be complacent.
Studies document several steps LIC has taken to counter competition – launching unit-linked insurance plans (ULIPs), improving customer service, partnering with banks, and enhancing digital capabilities. However, concerns remain around agency force productivity and claims settlement delays due to legacy processes. Research also compares LIC’s financial performance with private players using metrics like claims ratios, expense ratios and solvency margins.
Research Methodology
This project employs quantitative and qualitative analyses to holistically examine LIC’s marketing strategies over six decades.
Secondary data was extensively leveraged from government reports, industry publications, news articles, LIC annual statements and other public sources. Quantitative techniques like ratio analysis, segmentation and linear trend forecasts are utilized.
Qualitative assessments are done of parameters like product mix, pricing, advertising, distribution innovations and servicing levels. The methodology also benchmarks LIC across aspects like operational efficiency, rural reach and digital adoption.
Limitations include primary consumer research insights and proprietary data access constraints. The analysis is also aligned more from a marketer’s perspective rather than technical actuarial assessments. But the multi-pronged evaluation provides a comprehensive view of LIC’s marketing and suggestions to enhance effectiveness.
LIC Marketing Strategies and Performance
LIC deploys all elements of the marketing mix to serve policyholders while fulfilling national socio-economic objectives. Let us analyze how each P of the 7 Ps of marketing has been leveraged:
Products
LIC’s offerings cater to insurance needs across life stages and occupations. It has term insurance plans covering risk of death, endowment products for family security, pension and annuity plans for retirement etc. New policies are regularly introduced aligned to consumer trends like unit-linked or health insurance plans. Relevant riders are also launched to customize base policy coverage.
Pricing
Premium rates are decided based on actuarial mortality estimates balancing policyholder interests and viability. Discounts reward healthier lifestyles and incentives promote voluntary participation. Special loading and sub-standard policy facility for higher risk categories like smokers. Policy revivals allowed to prevent lapsation due to temporary nonpayment.
Promotion & Advertising
Mass media campaigns created strong LIC brand positioning and relay key messages. Field force conducts one-on-one education for prospective clients. Digital content informs tech-savvy segments. Sponsorships, prizes and events build engagement, especially in rural areas.
Place & Distribution
Extensive office network even at tehsil level due to early mover advantage. Agents contact potential customers door-to-door, facilitating financial inclusion. New partnerships with banks, brokers offer additional channels. Digital ecosystem via portal, payments integration and callers support tech-based purchase.
People & Employees
Huge workforce of 1.5 million agents promotes personalized sales. In-house training institutes continually upgrade field force skills. Dedicated verticals like microinsurance targeting specialist segments. Recent IT integration empowers staff to better service clients.
Physical Evidence
Visibility via owned real estate spanning prime urban properties to small town branches. Collaterals like calendars, diaries display brand to masses. Standardized stationery, document wallets reinforce institutional assurance. Advertisements promote trust in 75+ years of experience.
Process
End-to-end operations streamlined for efficiency to fulfil policy contracts over decades. Digitalization initiatives reduce paperwork and delays. Call centres offer instant query redressal. Online payments ease premium deposits. Processes undergo periodic audits to minimize risks.
Beyond marketing mix, LIC drives societal contribution through insurance schemes as well as corporate social responsibility projects in healthcare, education etc. Sustainability commitment via green building offices, renewable energy investments etc.
Insurance Industry Growth Metrics
Industry analysis studies measure potential and actual achievement using two key ratios – a) Insurance Density and b) Insurance Penetration. This helps benchmark across countries and highlights growth areas.
Insurance Density
Density indicates how much life insurance coverage populace has secured to cover income loss from premature death. It is calculated asRatio of Total Insurance Premium (Year) / Total Country Population (Year)
India’s life insurance density was $9.1 per capita in 2000 when private sector was allowed entry. This increased over 5X to $52 per capita by 2009-10 showcasing market expansion. However, India continues to lag developed nations significantly because insurance literacy is still low. Rising incomes should boost security awareness and density will grow.
Insurance Penetration
This gauges the level of insurance activity relative to the country’s economic wealth.
Calculated as Ratio of Total Insurance Premium (Year) / GDP (Year)
Life insurance penetration in India has risen steadily from 2.15% of GDP in 1999 to 4.9% by 2009-10 as new distribution channels get tapped. Higher penetration will result as complex product options requiring advice enter mass market. While India has displayed faster penetration growth versus other developing countries, ample headroom exists to catch up with European or East Asian countries.
Opportunities and Challenges
Despite dominant position, LIC faces multiple opportunities and competitive threats due to insurance sector opening for private players. Let us analyze key aspects.
Market Share Changes
Liberalization triggered industry growth with insurers targeting untapped niches. LIC market share has reduced from 100% in 2000 to ~65% of new business premiums in 2010 per IRDA data. Private firms introduced innovative products and achieved deeper penetration initially.
For instance, LIC lagged in fast-growing segments like unit-linked life plans which provide investment flexibility – private players have over 90% share here. Some also scaled bancassurance models for distribution faster vis-à-vis LIC. This indicates complacency can erode LIC’s positioning. However, recent foodsteps in partnerships and product innovation have stabilized its lead due to strong brand franchise.
Operational Metrics
Private insurers initially displayed better expense management, leveraging latest technology. LIC’s large infrastructure and legacy systems necessitate higher operational costs. Its huge agent network also escalates costs unless their productivity is enhanced. However, strict regulatory norms have impacted growth of smaller firms while LIC achieved economies of scale.
Analysis shows LIC’s performance on key insurance ratios like claims settlement, solvency margins, risk retention etc. is better or comparable to private players. For instance, its settlement ratio has exceeded 96% continually showcasing customer centricity. This highlights that despite competition, policyholders’ interests remain protected by LIC due to state ownership.
Future Focus Areas
Industry reports suggest major opportunities for life insurance companies lie in:
Retirement segment as population age increases
Rural markets where insurance literacy is still very low
Health insurance demand growth due to rising lifestyle diseases
Digital ecosystem around customer acquisition and monitoring
For LIC, recommendations focus on:
Sales productivity via improved agent training and technology adoption
Customer retention efforts through superior service and flexibility
Operations streamlining by reengineering processes with IT leverage
Innovative products aligned to changing demographic segments like millennials
If such measures are implemented, LIC can consolidate strengths on distribution reach, trust and reinvest surplus for sustainable long-term growth.
Conclusion
In summary, this project of “Marketing Strategies Of The LIC Of India” analysis provides comprehensive perspectives into how India’s life insurance leader LIC has deployed marketing strategies across the 7 Ps while balancing viability and national priorities. The learning can serve as a primer for students on how financial service offerings can be structured and targeted to vast diverse target groups.
While privatization triggered some market share loss, LIC continues to leverage brand equity, scale and distribution presence to stay profitable and protect policyholder interests. This is reassuring for citizens looking for risk solutions as well as surplus allocation for nation building.
However, ongoing improvements across efficiency, customer centricity and new product development are crucial for LIC to tap the full potential. Students can extend the assessment framework used here to evaluate other insurance providers, while customizing suitable modules for their specific research. Reach out for any queries!
Main Project File
Instructions for Students
As part of your project report for this topic “Marketing Strategies Of The LIC Of India”, you could:
Select 2 private life insurance companies in the Indian market for detailed comparative analysis vis-a-vis LIC across parameters like marketing mix adoption, financial performance using trends and ratios, operational efficiency benchmarks, product portfolio assessment, etc.
Analyze micro-marketing trends for one specific region in India – study demographics, income patterns, distribution structure, product preferences, etc. Propose an optimal marketing plan for insurance firms
Assess digital marketing readiness for tier 2/3 cities to identify online customer acquisition opportunities targeted at millennials/Gen Z
Research key challenges faced for rural insurance penetration compared to urban centers. Suggest innovative pricing/promotion approaches to drive adoption
Identify key trends within retirement products category and evaluate strategic focus of life insurance companies here through secondary data
Please build upon included analysis or customize entirely based on your interests for the overall project. Reach out in case any guidance or clarification is needed while brainstorming or developing your project report on “Marketing Strategies Of The LIC Of India”.
