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

The Changing Product Profile Contd...

Thus, the new players launched a host of group insurance and term-life schemes, as LIC had not focused intensively on these aspects of insurance. However, the private players soon began to launch products that competed with LIC's 'core products.' With innovative product designing and intelligent pricing methods being adopted by these players, industry observers commented, LIC seemed to have realized that it would have to rapidly adapt itself to the changing market dynamics. The decision to launch 'Anmol Jeevan' was, thus, not entirely unexpected.

Background Note

The life insurance industry in India dates back to 1818, when a British firm Oriental Life Insurance Company opened its office in Kolkata, followed by the 'Bombay Life Assurance Company' in 1823.

During the British rule in India, the Indian Life Assurance Companies Act was passed in 1912, which was followed by the Indian Insurance Companies Act, 1928, enabling the government to collect the data regarding life and non-life business conducted by both Indian and foreign insurance companies. The 1928 Act was amended and a new act, 'Insurance Act' was formed 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 only to the higher strata of the society. In 1956, the government of India took over the management of these companies. The LIC was formed in September 1956 through the LIC Act, 1956, with a capital of Rs 50 million. One of the main objectives of setting up LIC was to extend the reach of insurance cover and make it available to the lower segments of the society. In 1972, the government of India took over the management of 106 private general insurance companies and set up the General Insurance Corporation (GIC).

Over the next few years, LIC expanded its network to all parts of the country and emerged as one of the largest corporations in India. The growth of the Indian insurance industry was minimal in the 1960s and 1970s due to factors like low savings, low investment, inadequate infrastructure, and low literacy level.

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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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