Life Insurance Marketing in India (C) The Changing Product & Pricing Norms

"We will design our products specifically for every segment of Indian consumers and not just hawk our North American products in the country."

- Gary M C Standard, Vice President, Sun Life Canada, in 1997.

"We would not lack in our efforts to innovate new products."

- G. Krishnamurthy, former LIC Chairman, in 2000.

The Changing Product Profile

In July 2002, India's state-owned insurer Life Insurance Corporation of India (LIC) launched a new insurance policy, 'Anmol Jeevan' (Priceless Life). This was seen by industry observers as something LIC 'had' to do in the wake of the increasing competition in the insurance sector. Before the launch of Anmol Jeevan, two of LIC's major competitors, ICICI Prudential Life and HDFC Standard Life had launched similar, competitively priced insurance products. In the newly opened Indian insurance sector, private insurers were coming up with many innovative products, offering riders¹ on the policies in order to woo the consumers. LIC, which had been exercising monopoly in the Indian insurance sector, had been offering only 'plain' policies without any riders to its policyholders.

Analysts pointed out that LIC never seemed to have had any proper strategy for bringing out innovative products and customer-friendly pricing of its products. Though LIC offered around 60 products, only seven to eight were popular with policyholders.

With almost all private players' premium rates being more or less similar to LIC's premium rates, the only areas where they could distinguish themselves was in the marketing, distribution and product innovation. The private insurers decided to develop products that would not compete with LIC's money back and endowment policies at the initial stages (Refer to Exhibit I for a note on various kinds of insurance products).

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1] An attachment to a policy that modifies its conditions by expanding or restricting benefits or excluding certain
conditions from coverage. For instance, a life insurance policy can have an 'accident cover' as a rider for a marginally
higher premium.

Case Details

Case Code : MKTG028
Themes: Pricing
Case Length : 14 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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