Life Insurance Corporation of India: Future Prospects|Business Strategy|Case Study|Case Studies

Life Insurance Corporation of India: Future Prospects

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Case Details:

Case Code : BSTR110
Case Length : 26 Pages
Period : 1992 - 2002
Organization : Life Insurance Corporation of India
Pub Date : 2002
Teaching Note :Not Available
Countries : India
Industry : Insurance

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Subsidiary Companies

In the late 1980s, LIC established a few subsidiaries with a view to expanding its services. These were LIC Housing Finance Limited, LIC Mutual Fund, Life Insurance Corporation (International) E.C. and LIC (Nepal).

LIC Housing Finance Limited:

LIC Housing Finance Limited (LICHFL) was started in June 1989, to provide long-term finance for purchase/construction of houses/flats, particularly to policyholders of LIC. During the 1990s, the subsidiary grew into a premium housing finance company, disbursing over Rs 50 billion of loans. Its loan delivery system was the largest in the country...

The Post-Liberalisation Years

The Indian government's decision to privatize the insurance industry broke the monopoly of LIC. With the advent of competition, LIC was forced to change its organizational outlook and its business processes. In January 2000, it adopted a three-pronged business strategy for business, which involved reduction in premiums, higher returns and introduction of new products. International consultants Booze Allen & Hamilton were hired in 2000, to advise LIC on the changes needed in the organization. In 2001, LIC tied up with two payment gateways - and to set up a facility for policyholders to pay premiums through the Internet. It also tied up with ICICI Bank, HDFC Bank, UTI Bank and Bank of Punjab to directly remit customers' policy premiums and debit their accounts after the transaction...

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Products and Pricing

Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. A large number of people form an association that shares the risks attached to individuals. The risks, which can be insured against, include fire, the perils of sea, death, accidents and burglary. Any risk contingent upon these may be insured against at a premium commensurate with the risk involved. Thus, insurance is the collective bearing of risk. The insurance business is broadly divided into two broad categories across the world - life insurance and general insurance...


In the late 1950s, LIC began using Unit Record Machines (electro mechanical machines) to process data punched into cards. Computers were introduced for the processing of data in 1964. By the 1980s, the Unit Record Machines were phased out and computers based on microprocessors were introduced for back-office computerisation. During the 1990s, the software and hardware infrastructure at the company was standardized. There was a tremendous increase in the use of technology by LIC during the late 1990s. The company launched its website,, in mid-1995, to offer policyholders basic services such as modifying policies (change of address, change of nominee) and querying the status of the policy...


Until the Indian insurance industry was liberalized, LIC did not have any clear marketing strategies. Since it enjoyed monopoly status, it could afford to have a very limited focus on marketing. For the average Indian, LIC became synonymous with life insurance, and over the years it built up an enviable brand image in both rural and urban areas. The company grew by leaps and bounds, with people buying its policies due to the tax concessions attached to it. On account of its position as a monopoly, LIC did not standardize its practices nor did it focused on providing better customer service to the policyholders...

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