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Life Insurance Corporation of India
Type Government-owned corporation
Founded 1 September 1956
Headquarters Mumbai, India
Key people T. S. Vijayan (Chairman)
D. K. Mehrotra, Thomas Mathew and A. Dasgupta (Managing Directors)
Industry Life insurance
Products Individual Life Insurance,Group Insurance and Pension Plans
Total assets Rs 8 Trillion ($173 Billion USD)
Employees 112,184
Parent NIL
Subsidiaries LIC Housing Finance Limited, LIC(Nepal)Ltd, LIC(Lanka)Ltd, LIC(International)BSC(C),Behrain,
Website www.licindia.com

The Life Insurance Corporation of India (LIC) (Hindi: भारतीय जीवन बीमा निगम) is the largest life insurance company in India, and also the country's largest investor.; it is fully owned by the Government of India. It also funds close to 24.6% of the Indian Government's expenses. It has assets estimated of 8 Trillion Rupees (or about $170 Billion dollars). It was founded in 1956.

Headquartered in Mumbai, which is considered the financial capital of India, the Life Insurance Corporation of India currently has 8 zonal Offices and 101 divisional offices located in different parts of India, at least 2048 branches located in different cities and towns of India along with satellite Offices attached to about some 50 Branches, and has a network of around 1.2 million agents for soliciting life insurance business from the public.

Contents

History

The Oriental Life Insurance Company, the first corporate entity in India offering life insurance coverage, 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

  • 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)

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 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 AMOL BARATE raised the matter of insurance fraud by owners 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 years. 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.

Current status

LIC building, at Connaught Place, New Delhi, designed by Charles Correa, 1986.

Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a monopoly of soliciting and selling life insurance in India, created huge surpluses, and contributed around 7 % of India's GDP in 2006.

The Corporation, which started its business with around 300 offices, 5.6 million policies and a corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a US $ http://data.un.org/Data.aspx?d=CDB&f=srID:6080), has grown to 25000 servicing around 180 million policies and a corpus of over INR 8 trillion (US$ 173 billion).

The organization now comprises 2048 branches, 109 divisional offices and 8 zonal offices, and employs over 1,002,149 agents.The corporate Office of LIC is in Mumbai. It also operates in 12 other countries, primarily to cater to the needs of Non Resident Indians.

With the change in the India's economic philosophy from the early 1990s, and the subsequent relaxation of state control over several sectors of the economy, the monopolistic position of the Life Insurance Corporation of India was diluted, and it has had to compete with a number of other corporate entities, Indian as well as transnational Life Insurance brands. However, it still manages to be the largest player in the Indian market, with the lion's share of 55%.

The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of the Country.

In the financial year 2006-07 Life Insurance Corporation of India's number of policy holders are said to have crossed a whopping 200 million (fourth in terms of population of the countries of the world)

Subsidiaries

LIC owns the following subsidiaries:

  • Life Insurance Corporation of India International: This is a joint venture offshore company promoted by LIC which commenced operations in July, 1989 with the objectives of offering US$ denominated policies to cater to the insurance needs of NRIs and providing insurance services to holders of LIC policies currently residing in the Gulf. LIC International operates in all GCC countries.
  • LIC Nepal: A joint venture company formed in 2001 with the Vishal Group of Industries, Nepal.
  • LIC Lanka: A joint venture company formed in 2003 with the Bartleet Group of Companies, Sri Lanka.
  • LIC Housing Finance: Incorporated in 19 June 1989, its main objective is to provide long term finance for construction or purchase of houses or apartments. It has a Dubai office.
    • LICHFL Care Homes: A wholly owned subsidiary of LIC Housing Finance, it builds and operates "Assisted Community Living Centres" for senior citizens.

People

LIC is one of the largest employers in India. The organization is headed by 4 officers, namely the Chairman and three Managing Directors. The top brass is appointed by the Government of India after an intensive selection procedure. Though the company was accused to go by mere seniority in number of years for the selection of the senior management, this has changed as seen in the case of Thomas Matthew and A. Dasgupta (Managing Directors).

  • The Chairman assumes authority of the CEO and chairs the board while the Managing Directors are allotted the three main categories of the organization's functioning.
  • The current Chairman, Mr. T.S. Vijayan, is particularly responsible for the major IT infrastructure turnaround that the organization has witnessed and for its advanced EDMS structure.
  • D.K. Mehrotra manages the Marketing Units of LIC, which also happens to be one of the largest spenders on advertising in India.
  • Thomas Mathew manages the close to $187 billion investment portfolio of the company, which is the largest investor in the country.
  • A. Dasgupta manages the engineering and other functions, many of which are very advanced in the Indian corporate scenario.

Objectives of LIC of India

  • Spread Life Insurance widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in the country and providing them adequate financial cover against death at a reasonable cost.
  • Maximize mobilization of people's savings by making insurance-linked savings adequately attractive.
  • Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return.
  • Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders.
  • Act as trustees of the insured public in their individual and collective capacities.
  • Meet the various life insurance needs of the community that would arise in the changing social and economic environment.
  • Involve all people working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy.
  • Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with dedication towards achievement of Corporate Objective.

External links

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