Life Insurance Corporation's Future Prospects

In November 1999, even as the IRDA Act was being debated in Parliament, LIC begun preparations for meeting the threat posed by private players. The company appointed consultants Booz, Allen and Hamilton to do a scenario-building exercise, suggest areas for process re-engineering, and recommend ways to sharpen customer focus. LIC gave top priority to introducing over-the-counter (OTC) facilities that would help it serve its customers better. By 2000 it had computerized and locally networked all its 2,048 branches. The speed of service delivery, particularly in the case of claims-settlement, had also improved. The total outstanding claims were brought down to 2.74% in 2000 from 3.47% in 1995...

This was largely due to IRDA rules and regulations, which stipulated that the partners to a joint venture could not disinvest from the venture for a period of seven years after the license was granted.

This meant that no there was no exit route for companies that wanted to opt out.

Also, foreign insurers were allowed only 26% equity participation. With the majority stake being with the domestic partner, foreign insurers would have little say in the management of the company and important decisions could be easily considered without them...