Privatisation On Life Insurance Corporation Of India Economics Essay

Privatisation On Life Insurance Corporation Of India Economics EssayWith the advent of new players in the field of Life policy sector, the degree of aspiration has increased multifold. The private indemnity companies are launching new innovative insurance plans for their survival and growth. At the very(prenominal) time, Life Insurance Corporation of India has upgraded their lineament of service to retain, maintain and attract new business.An attempt has been made to larn the impact of privatization on LIC. The Development officers were contacted to know their observations about the impact of privatization on their look insurance business and their views as how their life insurance business has been influenced by the opening of the sector.LIC has made a standoff of changes in its operation and latest engineering science is being used to serve the customer. The customer grievances are properly attended and exclusively maturity claims are settled to the entire satisfaction of the policyholders. The privatization of the sector has brought lot of opportunities for all the players. Under such situation, fittest of the fit forget survive and the rest will vanish over a period of time.In the year 2000, when the insurance sector was privatized, many companies entered into the insurance sector and as a result competition has increased multifold. Initially, roughly of the private life insurance companies spent big amount of money on advertisement. The purpose of the advertisement was to inform the public about their existence and the importance of life insurance policies in human life. With the jump-start in the degree of competition among the life insurance companies in India, the companies realized the need of developing new life insurance policy plans which can conform to the multi needs of policyholders and as a result, the concept of riders were introduced. New channels of distributions agree been introduced which have been economical and effective in serving the public.NEED FOR THE STUDYWith the privatization of the insurance sector, efforts have been made by the government to regulate the business of insurance finished Insurance Regulatory and Development Authority ( IRDA). IRDA has formulated discordant guidelines to lend transparency in the working(a) and make the system customer friendly. As a result, most of the companies are practicing Customer Relationship strategies to keep their customers delighted. Keeping in view such changes in the insurance sector, a need is felt to find out as what is the change in the attitude of general public before and after the Privatization.OBJECTIVES OF THE STUDYThis study is an attempt to find out the impact of privatization on Life Insurance Corporation of India. The basic purpose of conducting this study includesTo find out the difference in the attitude of general public before and after thePrivatization.To analyse the LIC business procurement in terms of first Premium Income (F PI) over the last 4 years.To study the attitude of Development surenessrs towards impact of privatization on their insurance businessRESEARCH METHODOLOGYA descriptive study on the General Public and Development Officers have been undertaken to find out the answers to the objectives of the study. The study has been conducted in the selected cities of Haryana viz. Ambala Cantt, Ambala city, Kurukshetra Panipat, Karnal, Yamuna Nagar, Panchkula and Jagadhari. A structured dubiousnessnaire has been framed with quintuple answers and their views have been noted and analysed to draw important conclusions.TYPE OF DATA COLLECTEDBoth primary and secondary data has been used to study the impact of privatization on Life Insurance Corporation of India. Primary data has been self-possessed from General Public and Development Officers through structured questionnaire where as secondary data has been collected from the IRDA journal(s) pertaining to the FPI of life Insurance Corporation of India over the last 4 years.SAMPLING TECHNIQUESStratified random sample distribution technique has been used in the study. Out of the viii cities selected for the study, 50 respondents from general public, representing different stratas of the society have been included.Similarly, 35 Development Officers from each city have been chosen on snow ball sampling basis.HYPOTHESISH o Privatisation of the Insurance Sector has adversely abnormal the working of LIC.H a Privatisation of the Insurance Sector has favourably affected the working of LICHo After the privatisation, whether your business as Development Officer has been adversely affected?H a After the privatisation, whether your business as Development Officer has been favorably affected?DATA COLLECTION AND ANALYSISCOMPARATIVE ANALYSIS OF BUSINESS PERFORMANCEOF LIC IN TERMS OF FIRST PREMIUM INCOME (FPI)Table 1.1 relative Analysis of Business Performance of LIC in terms of FPIName of LIC ZONE with FPIIN2006-2007FPIIN2007-2008 ripeningRa te in%age2007-2008FPIIN2008-2009GrowthRate in%age2008-2009FPIIN2009-2010Growth rate in %age2009-2010North Zone862124.66808943.20-6.17637302.71-21.22767438.3120.42North Central463995.25481078.843.68384078.36-20.16493495.8928.49Central Zone251776.58210294.93-16.48183249.12-12.86226104.4123.39 easterly Central Zone261215.49296291.1513.43262577.04-11.38310326.4318.18Eastern Zone342181.75410185.7719.87391795.29-4.48526284.1934.33South Central 596867.00581365.08-2.60448089.37-22.92532827.3218.91Southern Zone586241.87855150.8745.87453414.89-46.98553047.4921.97 westbound Zone589755.23737975.9325.13771614.084.56886520.2914.89TOTAL FIGURE3954157.834381285.7710.803532120.86-19.384296044.3321.63Table 1.1 clearly shows that at that place was increase and decrease in most of the zones of LIC except the Western zone which made a consistent increase in the business from 2006-2007 to 2009-2010. The performance of all the zones were better during the financial year 2009-2010 as all the Eight zones h ave shown a positive growth rate. The maximum business in terms of FPI from the Western Zone followed by North zone and Southern zone. Eastern zone made the maximum growth rate of 34.33 % during the financial year 2009-2010.QUESTION-1 A question was asked to the General public ( 50 IN EACH CITY) about their future intentions to buy any life insurance plan and which insurance company will they preferTable1.2 Interest of the General Public to purchase insuranceRespondents interested to insureLICOther CompaniesmetropolisAmbala Cantt.Count184% within urban center81.8%18.2%Ambala CityCount133% within City81.3%18.8%KurukshetraCount140% within City100.0%.0%PanipatCount143% within City82.4%17.6%KarnalCount102% within City83.3%16.7%Yamuna NagarCount93% within City75.0%25.0%PanchkulaCount115% within City68.8%31.3%JagadhariCount93% within City75.0%25.0%TotalCount9823% within City81.0%19.0%Chi-Square TestsValuedfPearson Chi-Square5.477a7Likelihood Ratio7.8667Linear-by-Linear Association2.1241 N of Valid Cases280a. 8 cells (50.0%) have expected see less than 5. The minimal expected believe is 1.63.81% respondents like to get insured by having LIC policy, Chi square contractificance is .001, which suggests that data is significantly related.QUESTION-2 After the privatisation of the insurance sector, whether your business (Development Officer) has been affected?Table 1.3 Effect of privatization on the businessBusiness has increased or decreasedIncreaseStableCityAmbala Cantt.Count332% within City94.3%5.7%Ambala CityCount314% within City88.6%11.4%KurukshetraCount341% within City97.1%2.9%PanipatCount332% within City94.3%5.7%KarnalCount341% within City97.1%2.9%Yamuna NagarCount332% within City94.3%5.7%PanchkulaCount350% within City100.0%.0%JagadhariCount341% within City97.1%2.9%TotalCount26713% within City95.4%4.6%Chi-Square TestsValuedfPearson Chi-Square6.373a7Likelihood Ratio7.0847Linear-by-Linear Association2.3921N of Valid Cases280a. 8 cells (50.0%) have expected count less than 5. The minimum expected count is 1.63.From the above table it is clear that business of the LIC has increased (95.4%).Chi square significance is .003, which suggests that data is significantly related.QUESTION-3 Do you think that privatization of Insurance sector is a sign of growthfor You as Development Officer and for LIC as a whole?Table1.4 Relationship between privatization and growth for LICprivatization of business sector is a sign of growth for LICYesNoNo CommentsCityAmbala Cantt.Count3320% within City94.3%5.7%.0%Ambala CityCount3212% within City91.4%2.9%5.7%KurukshetraCount2924% within City82.9%5.7%11.4%PanipatCount3410% within City97.1%2.9%.0%KarnalCount3401% within City97.1%.0%2.9%Yamuna NagarCount3320% within City94.3%5.7%.0%PanchkulaCount3500% within City100.0%.0%.0%JagadhariCount3221% within City91.4%5.7%2.9%TotalCount262108% within City93.6%3.6%2.9%Chi-Square TestsValuedfPearson Chi-Square19.118a14Likelihood Ratio21.22114Linear-by-Linear Association1.3861N of Valid Cases280a. 16 cells (66.7%) have expected count less than 5. The minimum expected count is 1.00.According to 93.6% respondents, privatization is a growth sign for LIC. Chi square significance is .002, which suggests that data is significantly related. From the above analysis it is seen that there is only any impact of privatization on the business of LIC.Hence hypothesis H0 is Rejected, which shows that the business of LIC has been affected by privatization but it has positive impact on the business of LIC, and then we accept the alternate Hypothesis..FINDINGSOn the basis of the study undertaken on General Public and Development Officers, some important observations are appended belowCorporate busy Data Warehouse (CADW)LICs CADW is one of the largest life insurance customer database in the world. The project has enabled LIC to launch Customer focused campaign like Customer involvement Program and Global Club Customer Campaigns launched in the various A Class cities during the year 2009-2010. The major achievement has been to send a single reveal for the premium falling due in the same month for the various policies of an individual policyholder. All these initiatives launched have made the brand of LIC more visible in the eyes of the policyholders and public in general.New channels for premium paymentMore channels have been added to facilitate the renewal premium payment by the policyholders. Major addition is in the form of creating PREMIUM POINTS where policyholders can deposit the premium 24*7 and can get a final pass on from the office of the empowered LIC agents who are spread across the country. More than 5000 such empowered agents are authorized to provide this service to policyholders. Apart from this, 350 satellite offices have been opened in various cities to give the feel of physical presence of LIC.Enterprise Document counselling SystemLIC has implemented EDMS in its offices to digitize the customers an Office records.EDMS has been do ne to get the advantage in terms ofEnabling the concept of anywhere-anytime service through electronic files.To make documents and files available to multiple users simultaneously.To eliminate the need to transfer paper records from one branch to another branch.Electronic Bill Presentation and Payment (EBPP)Premium can be paid through various banks like City Bank, HDFC Bank, ICICI Bank, Federal Bank, Corporation Bank, Axis Bank and other service providers-Bill Desk and Tech Process which cover almost all other banks throughout the country. Premium can be paid through credit control board also. Premium can also be made through ATM card and EBPP. Premium can be deposited for the in force policies only and which are not with monthly or salary saving schemes.Customer Grievance Redressal ManagementLIC has grievance redressal officers at Branch/Divisional/Zonal/Central office to redress the grievances of policyholders and for bringing transparency in the operations. IT enabled support sy stem have been operationalised to sink manual intervention and to minimize the grievances. For quick redressal of grievances, LIC has introduced a customer friendly Complaint Management System through customer portal where the policyholder can at one time register any complaint/ grievance/quarry and track its status anytime without going anywhere.CONCLUSIONThe performance of LIC during the year 2006 to 2010 indicates that there has been tremendous amount of authorisation in the insurance business. It is hoped that the spark ignited by the leading insurance company shall be carried forward by all the players and they will generate phenomenal business and fulfills the social obligation to the society. With the privatization of the insurance sector, the degree of competition has increased and as a result, the service standard of insurance companies has improved beyond imagination. In the present set up of life insurance organisations, Development Officer is the most important functi onary of the organisation. The major life insurance business is procured through agents who are supervised by their respective DOs. An agent is the representative of the company who has the maximum interaction with the General public and persuades the prospects to purchase insurance policy. The agents should be swell up trained so that the general public can be made aware about the importance of the concept of life insurance. In the recent past, most of the agents of the life insurance companies are offered lucrative incentives so that the sales force can be always be set in high spirit. In India, insurance market is open, only fittest of the fit will survive.LIC is an old trusted brand, it has to launch new policy plans which can satisfy the multi needs of the public. At the same time, LIC has to train and develop its employees so that they can serve the customer with full commitment and dedication. In short, privatization has favorably affected the LIC organization which has resu lted into the improvement in the general operations of LIC.