Case Studies and Management Resources
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Case Studies and Management Resources
Asia's Most Popular Collection of Management Case Studies |
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The 'Indian Life Assurance Companies Act' was passed in 1912; this was followed by the Indian Insurance Companies Act, 1928. These acts allowed the government to collect data regarding life and non-life businesses conducted by both Indian and foreign insurance companies. Later, the 1928 act was amended and a new act, the 'Insurance Act' was passed in 1938. By the mid-1950s, 154 Indian insurers, 16 foreign insurers and 75 provident societies were operating in the country. The life insurance business was concentrated in urban areas and was confined to the higher strata of society. In 1956, the management of these companies was taken over by the Government of India. LIC was formed in September 1956 through the LIC Act 1956, with a capital of Rs 50 million. One of the main objectives of forming LIC was to make insurance cover available to a large number of people, particularly to the lower segments of society.
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In 1972, the government took over management control of 106 private general insurance companies and formed the General Insurance Corporation (GIC). Over the years, LIC expanded its network all over the country and became one of the largest corporations in India. LIC had seven zonal offices, 100 divisional offices, 2,048 branch offices and army of agents totaling 6,28,031. Growth in Indian insurance industry was minimal in the 1960s and 1970s because of low savings and the low level of literacy. In addition, the insurance industry lacked sufficient funding and infrastructure. However, changes in the economy in the 1980s, such as growth in the rate of industrialization, improvement in infrastructure, the capital markets, increase in the savings rate and substantial capital formation resulted in tremendous growth in the life insurance industry. |
Over the years, LIC launched several group insurance and social security schemes to enhance its reach in the rural areas. In the early 1990s, the government felt it necessary to reform the industry, provide better coverage to the citizens and to increase the flow of long-term financial resources to finance the growth of infrastructure. In 1993, the Indian government set up the Malhotra Committee to suggest reforms in the industry. The committee, which submitted its report in 1994, recommended opening of the insurance sector to private players, improving service standards, and extending insurance cover to larger sections of the population. Various labor unions and political parties in the country opposed the committee's suggestions.
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Case Code : MKTG027
Themes: Distribution
Case Length : 10 Pages
Period : 2000-2002
Organization : ICICI Prudential, Max New York Life, ETC
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Insurance
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