AICTE APPROVED 3RD NATIONAL SEMINAR

Innovation & Creativity: Tools for success in Contemporary Management

Era
(To be held on 25th-26th Feb, 2011)
Organized by:
DISHA INSTITUTE OF MANAGEMENT AND TECHNOLOGY, RAIPUR

A RESEARCH PAPER
ON
AN ANALYTICAL STUDY BETWEEN LIC & PRIVATE LIFE INSURANCE COMPANY
Submitted By
#
Ms. Babita Yadav
Faculty, Dept. of Management Studies
Guru Ghasidas Central University, Bilaspur
E:mail babitas.yadav@rediffmail.com
Mobile: 9424313690, 9584341999

MR. H.L Yadav

Faculty, Dept. of Management Studies
Guru Ghasidas Central University, Bilaspur
E: mail hori1942@gmail.com

ABSTRACT:
Insurance is presently the booming sector in India, with more and more players constantly striving to gain
a foothold. LIC is the giant of the insurance sector. The overall size of LIC is much more than that of all
private insurance companies. Private insurers are in expansion mode and are increasing their size but are
still much behind LIC. Privatization of Insurance Industry witnessed many robust changes in terms of
innovation and newer product development, improvement in service quality; concepts like bancassurance
were introduced by the companies in view of targeting huge untapped Indian population. The present
analytical study was undertaken with an aim to find out problem areas and compare the performance of
LIC & Private Life Insurance Companies in India based on some selected parameters like growth, size,
productivity and efficiency. The information is collected from various secondary data sources and simple
ratio analysis, bar graph and pie chart methods were used for presentation and analysis of the data. LIC is
very famous and dominate player in the market but private insurance companies are growing at
exceptionally fast pace are some major findings of the study. The research findings will be useful for both
LIC and Private life insurers in finding out their weaknesses and relative market share. In nutshell, new
life Insurance business is increasingly going towards private insurance companies but still the customer
base of LIC is very strong.

Keywords: LIC, Private Life Insurance Company, Performance, Market Share, Privatization.

INTRODUCTION:
LIC is the giant of the insurance sector. The overall size of LIC is much more than that of all private
insurance companies. Private insurers are in expansion mode and are increasing their size but are still
much behind LIC. Entry of private players brings tremendous changes in the Insurance Industry. The
availability of variety of products and better customer services attract large number of customers towards
Investment in Life Insurance. Insurance is not only risk covering device but also plays a very vital role in
the economic development of a nation.
LIFE INSURANCE CORPORATION
Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading
life insurance much more widely and in particular to the rural areas with a view to reach all insurable
persons in the country, providing them adequate financial cover at a reasonable cost. Today LIC functions
with 2048 fully computerized branch offices, 100 divisional offices, 7 zonal offices and the corporate
office. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance.
LIC has crossed many milestones and has set unprecedented performance records in various aspects of life
insurance business.
PRIVATIZATION OF LIFE INSURANCE INDUSTRY
Until 1999, the business of life insurance in India was the monopoly of Life Insurance Corporation of
India (LIC). Privatization witnessed dynamic changes in the Insurance Industry. Most of the private
insurance companies are joint ventures with recognized foreign players across the globe. Consumer
awareness has improved. Competition has brought more products and improved the customer service. It
has a positive impact on the economy in terms of income generation and employment opportunities in the
sector. The life insurance market in India is emerging and growing at the rate of 32-34% in the year 2009
which was limited up to 15-20% before the entry of private & foreign players.

Life Insurance Companies

Sl.

Insurers

Foreign Partners

No.
1.

HDFC Standard Life

Standard Life

Insurance Co. Ltd.

Assurance, UK

Regn.

Date of

Year of

No.

Registration

Operation

101

23.10.2000

2000-01

Sl.

Insurers

Foreign Partners

Regn.

Date of

Year of

No.

Registration

Operation

New York Life, USA

104

15.11.2000

2000-01

Prudential , UK

105

24.11.2000

2000-01

Om Kotak Life Insurance

Old Mutual, South

107

10.01.2001

2001-02

Co. Ltd.

Africa

Birla Sun Life Insurance

Sun Life, Canada

109

31.01.2001

2000-01

Tata-AIG Life Insurance

American International

110

12.02.2001

2000-01

Co. Ltd.

Assurance Co., USA

SBI Life Insurance Co.

BNP Paribas Assurance

111

29.03.2001

2001-02

Ltd.

SA, France

ING Vysya Life Insurance

ING Insurance

114

02.08.2001

2001-02

Co. Ltd.

International B.V.,

Allianz, Germany

116

03.08.2001

2001-02

Metlife India Insurance Co.

Metlife International

117

06.08.2001

2001-02

Ltd.

Holdings Ltd., USA

Reliance Life Insurance

---

121

03.01.2002

2001-02

Aviva International

122

14.05.2002

2002-03

---

127

06.02.2004

2004-05

Sanlam, South Africa

128

17.11.2005

2005-06

No.
2.

Max New York Life

Insurance Co. Ltd.

3.

ICICI-Prudential Life
Insurance Co. Ltd.

4.

5.

Co. Ltd.
6.

7.

8.

Netherlands
9.

Allianz Bajaj Life

Insurance Co. Ltd.

10.

11.

Co. Ltd. (Earlier AMP

Sanmar Life Insurance
Company from 3.1.02 to
29.9.05
12.

AVIVA

Holdings Ltd., UK
13.

Sahara Life Insurance Co.

Ltd.

14.

Shriram Life Insurance Co.

Ltd.

Sl.

Insurers

Foreign Partners

Regn.

Date of

Year of

No.

Registration

Operation

AXA Holdings, France

130

14.07.2006

2006-07

Future Generali India Life

Pantaloon Retail Ltd.;

133

04.09.2007

2007-08

Insurance Company Ltd.

Sain Marketing

Fortis, Netherlands

135

19.12.2007

2007-08

HSBC, UK

136

08.05.2008

2008-09

Religare, Netherlands

138

27.06.2008

2008-09

DLF Pramerica Life

Prudential of America,

140

27.06.2008

2008-09

Insurance Co. Ltd.

USA

No.
15.

Bharti AXA Life Insurance

Co. Ltd.

16.

Network Pvt. Ltd.

(SMNPL), Generali,
Italy
17.

IDBI Fortis Life Insurance

Company Ltd.

18.

Canara HSBC OBC Life

Insurance Company Ltd.

19.

Aegon Religare Life

Insurance Company Ltd.

20.

21.

Life Insurance Corporation

512

of India

Source: ( www.irda.ac.in)

RESEACH METHODOLOGY:
Research Objectives:
1. To compare the performance of LIC and private insurance companies in India.
2. To study the major challenges and opportunities of Life Insurance Industry.

3. To provide appropriate suggestions for improving overall performance of Life Insurance.

Research Design:
Type of Research

: Analytical Research

Data Collection

: Secondary Based

Statistical Tools

: Ration analysis & Bar graphs

Significance of the Study:

The detailed study has been done with the purpose of finding out the relative share of LIC and Private
Insurance in India. Insurance Industry has a significant contribution in economic development and GDP of
country. More than one fourth Indians population is non-insured and potential of the Insurance Industry
is unlimited. An attempt is made to compare the performance of LIC and Private Life Insurance
companies and also identify reasons for low market penetration.
Limitations:
1. Due to the limited time could not study all insurance companies original documents individually.
2. Non-proficiency in technical aspects of insurance companies might have hindered the best analysis of
the findings.
ANALYSIS & INTERPRETATIONS:
The researcher has made use of secondary data for analytical study. The present study is an attempt to
compare the performance of LIC and Private Life Insurance Company in India. The analysis is done on
some selected parameters such as: growth, size and productivity.
1. GROWTH:
Table 1. FIRST PREMIUM:

Insurance Companies

FY

FY

FY

FY

FY

03-04

04-05

05-06

06-07

07-08

LIC

17347

20653

28515

55934

59996

Private Insurer
Total

2440
19787

5564
26217

10270
38785

19425
75359

33715
93711

Figure1. First Premium of LIC (2003-2008)

Figure2. First Premium of Private Insurers (2003-2008)

Interpretation: LIC has attained more growth of Rs.42649 crores but private players being so
less in number five years back has achieved a significant growth of 1281.76 %.
Table 2. INCREASE IN NUMBER OF POLICIES :
LIC
Private
Insurers
TOTAL

FY 03-04

FY 04-05

FY 05-06

FY 06-07

FY 07-08

1475992
804696

-2989946
574228

7632584
1638335

6638585
4050884

-616693
5339264

2280688

-2415718

9270919

10689469

4722571

FY 06-07

FY 07-08

PERCENTAGE INCREASE IN NUMBER OF POLICIES:

FY 03-04

FY 04-05

FY 05-06

LIC
Private
Insurers
TOTAL

5.79
94.21

-11.09
34.62

31.75
73.37

21.01
104.64

-1.6
67.4

8.6

-8.4

35.3

30.1

10.2

Fig 3. Growth in number of policies (2003-2008)

Interpretation: Private players are doing extremely well as they are increasing their customer base
rapidly.

MARKET SHARE:
Fig. 4 Market share of LIC and Private Insurers

(Source:

Secondary compiled from IRDA Annual Reports)

LIC is still the market leader in insurance industry with 63.4 % share. But we cannot forget that in last six
years market share of LIC has decreased. It was 87.7 % in year 2003-04 which came down to 63.4 % in
2008-09.
The new entrants into the insurance market introduced innovative product lines in order to tap the
customers. In the wake of all this, even LIC has been forced to change its outlook and has to take certain
steps to remain as a market leader in life insurance business.

2. SIZE
Table 3. TOTAL PREMIUM

LIC
Private Insurer
Total

(Rs. In crores)
FY

FY

FY

FY

FY

03-04

04-05

05-06

06-07

07-08

63533
3120
66653

75127
7727
82854

Figure5. Total Premium of LIC (2003-2008)

90792
15083
105875

127822
28253
156075

149789
51561
201350

Figure 6. Total Premium of Private Insurer (2003-2008)

Interpretation: LIC average premium of the last five years is nearly five times the average premium of the
all other private insurance companies. LIC is the king of market despite of too many private players.
Table 4. TOTAL NUMBER OF POLICIES

LIC
Private Insurer
Total

FY

FY

FY

FY

FY

03-04

04-05

05-06

06-07

07-08

26968069
1658847
28626916

23978123
2233075
26211198

31590515
3871410
35462117

38229292
7922294
46151586

37612599
13261558
50874157

Figure 7. Total No. of policies of LIC & Private Insurers (2003-2008)

Interpretation: It is seen that private insurance companies are gaining market share and are trying
to defeat LIC in case of new insurances. Main reason behind LIC success is that its a government
agency has got a faith of Indian mass. People are not yet prepared to give their savings in the hands
of private players.
Table 5. NUMBER OF BRANCHES:
FY

FY

FY

FY

FY

03-04

04-05

05-06

06-07

07-08

LIC

2196

2197

2220

2301

2522

Private Insurer

416

804

1645

3072

6391

Total

2612

3001

3865

5373

8913

Figure 8. Total No. of Branches of LIC & Private Insurers (2003-2008)

Interpretation: LIC being the oldest existing insurance company in India has the large number of
offices in the country. Since the number of private insurance companies is increasing, with
continuous expansion in their business, now the number of branches of all private players has
crossed the number of branches of LIC.
3. PRODUCTIVITY
Table 6. BUSINESS PER BRANCH :
(Rs. In crores)
FY 03-04

FY 04-05

FY 05-06

FY 06-07

FY 07-08

LIC

28.93

34.20

40.9

55.55

59.20

Private

7.5

9.61

9.17

9.2

8.07

Insurers

Figure 9. Per Branch Business of LIC & Private Insurers (2003-2008)

Interpretation: Average business per branch of LIC is much higher than that of whole private
insurance companies.

Table 7. NEW PREMIUM PER BRANCH :

FY 03-04

FY 04-05

FY 05-06

FY 06-07

FY 07-08

LIC

7.90

9.40

12.84

24.30

23.78

Private
Insurers

5.86

6.92

6.24

6.32

5.28

Figure 10. New Premium Per Branch of LIC & Private Insurers (2003-2008)

Interpretation: Here we see that LIC is ahead of private insurance companies in case of
increasing their business.
FINDINGS:
LIC, being the oldest player in the existing insurance market, has the biggest market share
of 73.9 % in the year 2007-08 which was 87.3% five years earlier. We see that private
insurance companies are penetrating in the customer base of LIC.
LIC is certainly having a large customer base. Private insurance companies are not having
that much number of customer base but they are increasing it rapidly.
New business is increasingly going towards private insurance companies but still the
customer base of LIC is very strong. In issuing new policies per branch also, they are ahead
of private insurance companies though not by very large margin.
Average business per branch of LIC is much higher than that of whole private insurance
companies.
Private insurance companies are gaining market share and giving direct threat to the LIC.
The overall performance, growth and productivity of LIC is much more than private
insurers because of public sector, people have more faith and they think their hard
earned money is more safe in the hands of LIC.

SWOT Analysis of Life Insurance Industry

Strength

Risk protection is provided by this sector only.

Insurance having currently good market.

Tax exemption.

The variety of products is increasing.

Insurance to build close relationship with customers.

Weakness

Unable to convenience the people about the products.

Insurance companies instability

Limited working capital

Products or services similar to competitors.

Opportunities

Technology is improving paperless transaction are available.

Busy life, customer need flexible and customizable policies.

Like mobile banking mobile insurance could be a hit.

New innovations in technology-measuring weather variables.

Threats

Weather cycles.

New substitute product emerging.

Increasing expenses and lower profit margins with hard on the smaller agencies and
insurance companies.

Government regulations on issues like health care terrorism can quickly change the
direction on insurance.

SUGGESTIONS:
Innovative and integrated marketing strategies based on the customer needs and the ever-changing
environment would ensure sustainable competitive advantage.
Market information is very crucial element in Insurance business. It deals with the level of consumer
awareness. Lack of awareness is the main constraint specially getting business from the remote areas.
Hence company should bring more awareness program for promotion of the Insurance business.
Company should concentrate on designing policies with fewer premiums. So that every one can
purchase policy to cope with uncertainties or risk.
Aggressive marketing and awareness campaigns need to be promoted in backward areas.
Life insurance companies should provide the necessary information and the importance of life
insurance to the customers.

 Policies should be design by keeping in mind the affordability and income level of the served
customers.
Need to educate people about the Life Insurance benefits.
Need for technology and product innovation to improve insurance growth.
Agents should be professionally trained in order to better communicate with the customers and sell the
policies.

Conclusion:
Though LIC is a market leader but private insurance companies are moving at a fast pace. Though the
income of private Insurance companies is negligible when compared with LIC but then also the pace with
which they are increasing their income is tremendous. Private insurance companies are expanding their
business and will certainly going to give a tough competition to LIC in the coming days.
References:

1. Athma, P. and Kumar, R. (2007)) " An Explorative Study of Life Insurance Purchase Decision
Making: Influence of Product and Non-Product Factors ", ICFAI Journal Risk & Insurance,
Vol. IV, October 2007, Pg. No 19-21.
2. Kumar, R( 2006) Bancassurance-Opportunities and Challenges in India , Bancassurance:
Trends and Opportunities, First Edition, Hyderabad, ICFAI publication, 2006, pp-176-178.
3. Rangachary, N "Life Insurance: Vision for the Future", The Hindu Survey of Indian Industry,
2005, Pg. 6.
4. IRDA, Annual Report, 2007-2008
5. IRDA, Monthly Journals.
6. www.scribd.com
7. www.google.com
8. www.irda.com