Term Paper

CRM Programs at Life Insurance Corporation of India

(With special reference to Special Plans- Health Plans)

Course: Customer Relationship Management

Course Code: MGT 631

Submitted By:

Varun Puri

10800464

RR 1805 A 19

Submitted To:

Rajan Giridhar

Department of Management

Lovely Professional University

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 Acknowledgement

Words are the dress of thoughts, appreciating and acknowledging those, who are responsible for
the successful completion of the project.

My sincere gratitude goes to Mr. Rajan Giridhar who assigned me responsibility to work on this
project and provided me all the help, guidance and encouragement to complete this project.

The encouragement and guidance given by him have made this a personally rewarding
experience. I thank him for her support and inspiration, without which, understanding the details
of the project would have been exponentially difficult

With Sincere Thanks,

(Varun Puri)

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 DECLARATION

I, "Varun Puri”, hereby declare that the work presented herein is genuine work done originally
by me and has not been published or submitted elsewhere for the requirement of a degree
programme. Any literature, data or works done by others and cited within this dissertation has
been given due acknowledgement and listed in the reference section.

(Varun Puri)

Registration No.:- 10800464

Date: 09-05-2010

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Conents
1 Introduction to Subject..................................................................................................................1
1.1 CRM: Meaning......................................................................................................................1
1.2 Company Profile....................................................................................................................1
1.3 Special Plans: - Health Protection Plans................................................................................3
2 Review of Literature.....................................................................................................................6
3 CRM Initiatives being taken by the given organization...............................................................8
3.1 Policy Locator........................................................................................................................8
3.1.1 Features:..........................................................................................................................8
3.2 Insurance Selector..................................................................................................................9
3.3 Phone Helpline.....................................................................................................................11
3.4 Grievance Redressal System................................................................................................12
4 Sales Force Account Leads.........................................................................................................13
5 New Initiatives by LIC in CRM .................................................................................................15
5.1 Beware! - Life Insurance Corporation of India gets serious about customer service..........15
5.2 LIC ropes in Wipro, IBM for CRM project.........................................................................15
5.3 Insurance: Waking Up to a New Life..................................................................................16
5.4 LIC’S Wan/Man Network Serving Insurance Policies on the Net .....................................16
6 Suggestions:................................................................................................................................17
6.1 M-CRM: ..............................................................................................................................17
6.2 Cross-Selling: ......................................................................................................................17
6.3 De-Materialized Policies: ....................................................................................................17
6.4 One counter Payment of Claims..........................................................................................17
7 Reference....................................................................................................................................18

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1 Introduction to Subject

1.1 CRM: Meaning

CRM is an acronym for ‘Customer Relationship Management’. It’s a set of strategies, processes,
metrics, organizational culture and technology solutions that enhance an organization's ability to
see the differences in its present & prospective customers, track new opportunities to better serve
customers and act, instantly and profitably, on those differences and opportunities. Recently
CRM has taken a center stage in the business world with businesses concentrating on saving
money and increasing profits by redefining internal processes and procedures. It costs a company
dramatically less to retain and grow an existing client, than it does to court new ones. The aim of
CRM is to optimize the use of technology and human resources.

CRM services consist of the following major segments:

• Consulting services

• Implementation services

• CRM Outsourcing services

• Training services

1.2 Company Profile

The Life Insurance Corporation of India (LIC) is the largest life insurance company in India, and
also the country's largest investor; it is fully owned by the Government of India. It also funds
close to 24.6% of the Indian Government's expenses. It has assets estimated of Rs. 8 trillion
(US$ 178.4 billion). It was founded in 1956.

Current status

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Over its existence of around 50 years, Life Insurance Corporation of India, which commanded a
monopoly of soliciting and selling life insurance in India, created huge surpluses, and
contributed around 7 % of India's GDP in 2006.

The Corporation, which started its business with around 300 offices, 5.6 million policies and a
corpus of INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a
US $, has grown to 25000 servicing around 180 million policies and a corpus of over Rs. 8
trillion.

The organization now comprises 2048 branches, 109 divisional offices and 8 zonal offices, and
employs over 1,002,149 agents.The corporate Office of LIC is in Mumbai. It also operates in 12
other countries, primarily to cater to the needs of Non Resident Indians.

With the change in the India's economic philosophy from the early 1990s, and the subsequent
relaxation of state control over several sectors of the economy, the monopolistic position of the
Life Insurance Corporation of India was diluted, and it has had to compete with a number of
other corporate entities, Indian as well as transnational Life Insurance brands. However, it still
manages to be the largest player in the Indian market, with the lion's share of 55%.

The recent Economic Times Brand Equity Survey rated LIC as the No. 1 Service Brand of the
Country.

In the financial year 2006-07 Life Insurance Corporation of India's number of policy holders are
said to have crossed a whopping 200 million (fourth in terms of population of the countries of
the world). (http://data.un.org/Data.aspx?d=CDB&f=srID:6080).

People

LIC is one of the largest employers in India. The organization is headed by 4 officers, namely the
Chairman and three Managing Directors. The top brass is appointed by the Government of India
after an intensive selection procedure. Though the company was accused to go by mere seniority
in number of years for the selection of the senior management, this has changed as seen in the
case of Thomas Matthew and A. Dasgupta (Managing Directors).

 The Chairman assumes authority of the CEO and chairs the board while the Managing
Directors are allotted the three main categories of the organization's functioning.

 The current Chairman, Mr. T.S. Vijayan, is particularly responsible for the major IT
infrastructure turnaround that the organization has witnessed and for its advanced EDMS
structure.

 D.K. Mehrotra manages the Marketing Units of LIC, which also happens to be one of the
largest spenders on advertising in India.

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  Thomas Mathew manages the close to $187 billion investment portfolio of the company,
which is the largest investor in the country.

 A. Dasgupta manages the engineering and other functions, many of which are very
advanced in the Indian corporate scenario.

1.3 Special Plans: - Health Protection Plans1

LIC’s Special Plans are not plans but opportunities that knock on your door once in a lifetime.
These plans are a perfect blend of insurance, investment and a lifetime of happiness.

Features:

Health is a major concern on everybody’s mind these days. With sky rocketing medical
expenses, the possibility of any illness leading to hospitalization or surgery is a constant source
of anxiety unless the family has actively provided for funds to meet such an eventuality. Most
families rarely provide for healthcare, and even if they do, it is grossly inadequate. Given this
scenario, LIC has launched LIC’s Health Protection Plus plan, a unique long term health
insurance plan that can combine health insurance covers for the entire family (husband, wife and
the children) Hospital Cash Benefit (HCB) and Major Surgical Benefit (MSB) along with a ULIP
component (investment in the form of Units) that is specifically designed to meet Domiciliary
Treatment Benefit (DTB) / Out Patient Department (OPD) expenses for the insured members.

Vital Information

Accumulation period

Age Principal Insured Spouse Insured Child Insured

Min Policy Entry Age- Age Last

18 18 3months
Birthday

Min Age- HCB Cover, Age Last

18 18 3months
Birthday

Min Age- MSB Cover- Age Last

18 18 18
Birthday

Maximum Entry Age Age Nearest

55 55 17
Birthday

1
http://www.licindia.in/Health_Protection_Plus_features.htm
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remium Payment.

Mode of Payment: Yearly, Half-Yearly & Monthly (ECS Mode only)

Minimum Annual Premium Conditions

Number of Lives
Higher of the two conditions in each category listed below:
covered

Single Life 6 times the HCB of the Principal Insured OR Rs.5000 p.a.

The arithmetic sum of 6 times the HCB of PI and 3 times the HCB of the
Two Lives
second insured. OR Rs.7500 p.a.

More than two The arithmetic sum of 6 times the HCB of PI and 3 times the HCB of each
Lives of the others insured OR Rs.10,000 p.a.

Annualized Premiums are payable in multiples of Rs.500.

Sum Assured.

The Principal Insured must first choose the respective levels of HCB for each member to be
covered under the policy. The sum assured for major surgical benefits will be 200 times of the
HCB you choose.

Principal Insured Spouse Insured Child Insured

Major Surgical
Sum Assured 200 times the HCB applicable to each insured life
under the policy.

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Investment of Funds

The premiums allocated to purchase units will be strictly invested in a Health Protection Plus
Fund (Income and Growth – Low Risk) as follows:

A. Government/ Government Guaranteed/ Corporate

Not less than 50%
Securities/ Debt

B. Short term investments: Money Market instruments

Not more than 90%
including A above

Not less than 10% & Not more

C. Investment in listed equity shares
than 50%

Benefits

Hospital Cash Benefit (HCB). A daily benefit is payable in case the insured is hospitalized due
to either accidental body injury or sickness. The quantum of benefit depends upon the level of
cover opted.

Initial Daily Benefit (IDB)*#

Insured
Minimum Maximum

Principal Insured Rs.250 Rs.2500

Spouse/Child Rs.250 Rs.1500

Major Surgical Benefit (MSB). In the event of the insured undergoing one of the major
surgeries defined in the Annexure I, a lump sum benefit (regardless of the actual costs incurred)
equivalent to the percentage of the sum assured mentioned against that surgery will be payable
on providing proper proof of surgery to the satisfaction of the corporation.

Domiciliary Treatment Benefit (DTB). The Principal Insured can claim an amount equivalent to
the actual expense he or she has incurred in respect of any domiciliary treatment or to meet the
medical expenses incurred over and above the hospital cash/major surgical benefits in respect of
either oneself or the others insured under the policy.

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BEFORE CESSATION OF HCB AND MSB COVERS ON ALL MEMBERS COVERED

Minimum domiciliary claimable Rs.2500

Maximum amount that can be claimed/ Up to 50% of the policy fund at the date of
payable* payment

* Subject to a minimum balance of one annualized premium being left in the policy fund after
making the payment.

AFTER CESSATION OF HCB AND MSB COVERS ON ALL MEMBERS COVERED

Minimum domiciliary claimable Rs.2500*

No limit on maximum amount that can be claimed/ payable

* If the balance in the Policy Fund is less than Rs. 2,500/-, then the payment of entire amount
shall be made in one lump sum only.

Death Benefit. No death insurance cover is available under the plan. Following benefits/charges
will take place on the happening of unfortunate death of principal insured (PI) and/or other
insured member.

a) On death of the PI (if policy is issued on

single life) or on death of all Insured members The Policy Fund Value will be payable to the
(if more than one life is covered under the nominee/ legal heir.
policy).

The payment of premiums will cease and the

cover will continue for the other Insured lives till
b) On death of PI (if other Insured members
the fund is sufficient to recover all the charges or
are there).
till the maximum benefit ceasing age for each of
the Insured lives, whichever is earlier.

c) On death of insured member(s), other than The payment of premiums and the cover for PI
PI and other Insured members, if any, will continue.

2 Review of Literature
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Goswami. P.(2006),2 This paper attempts to understand the dimensions of service quality, which
helps ensuring maximum customer satisfaction, and hence , helps life insurers to acquire a larger
share of the market. Findings reveal that to maximize customer satisfaction, different players in
the competitive life insurance industry in India needs to concentrate on the responsiveness
dimension of the service quality. The examination of the items of the responsiveness dimension
indicates that promptness and timeliness in service as well as willingness to help the customers,
satisfies the customer the most. This would not only involve implementation of CRM solutions,
but also internal marketing of the CRM concept. This would naturally require giving more
emphasis on giving training to the insurance agents. Proper CRM implementation would not only
ensure increased customer satisfaction but also help in acquiring new customers, at the same
time retaining the old customers. Improved customer satisfaction would also result in positive
word-of-mouth and consequently better customer acquisition and retention.

Kekre P. (2010), Says The insurance sector in India has been a slow adopter of IT so far, but it
seems to be catching up fast. She also highlights that LIC have been an exception in adopting IT
applications frequently. ICICI Prudential is also among the most mature IT adopters. While it has
a robust CRM in place for a few years, it has also recently implemented lots of BI tools, and has
invested in a HRMS which has automated almost 99% of its people systems and processes.

Pasha, A (2008), After telecom and banking, it’s the turn of insurance companies to deploy
customer relationship management (CRM) solutions. As competition intensifies, insurers are
trying every trick in the book to retain existing customers, with a wide range of services driving
the market for CRM applications in the process. Insurance firms spend close to 12 percent of
their IT budgets on CRM software and services. The cost includes operational CRM and
spending on BI tools. If A spokesperson of an upcoming insurance firm adds, “Of our total IT
budget, we are spending 14 percent on CRM applications.” Industry pundits believe that
insurance firms are looking for CRM initiatives with budgets ranging from Rs 50 lakh going
right up to Rs 3 crore.

2
Gosawami, P. (2008), :” Customer Satisfaction with Service Quality in the Life Insurance
Industry in India” Accessed from: http://s3.amazonaws.com/ppt-download/lic-090608051318-
phpapp01.pdf?Signature=fQuLJ5MZdWdggLoqXigFVEXOjKk
%3D&Expires=1273381236&AWSAccessKeyId=AKIAJLJT267DEGKZDHEQ
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3 CRM Initiatives being taken by the given organization

3.1 Policy Locator

LIC of India have special feature on its official website “POLICY LOCATOR”.
This site has been designed for giving a variety of general and policy information to our
policyholders. For viewing the policy related information, new customers are required to go
through a Registration procedure, the details of which are stated in the ensuing paragraph.

3.1.1 Features:
Login

Policy holder’s login facility is provided on the Home Page for the use of registered users.

Registration

All new users are required to complete the Registration Form online selecting username and
password of their choice.

• The username can be alpha, numeric, with characters dot and underscore.

• The password must be in between 8 to 30 characters.

• The information marked with (*) are mandatory fields and cannot be left blank.

• The pin-code cannot be more than 6-digits.

• The e-mail id entered should be a valid one for further correspondence.

• The user-id chosen should be unique.

• Password should be unique and be kept confidential.

An auto-responder mail would be sent to the policy holder as confirmation of successful

registration.

Status

On successful registration, the customer will have access to information regarding status of
policy/s, loan, revival, premium due/ policy calendar, maturity calendar etc.

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Feedback Form

Policyholders may use the ‘Feedback’ link to send their queries and valuable suggestions /
comments

3.2 Insurance Selector

This is an application on their official web site. This helps one in deciding which plan is suitable
according to his/her age, occupation, income and insurance needs.

Following are the some questions which are asked by the application

• How much insurance do I need? (Human Life Value Calculation)

Human Life Value Calculator Main Page

Human Life Value is defined as the Present Value of Future Income that you could
expect to earn in rest of your Working Span

Your Age:

Retirement Age:
The age up to which you expect to continue to work

Current Annual Income(in Rs):

Future Rate of Interest:

The Rate of Interest you expect to earn in future

Calculate

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 • Get insurance advisor

Insurance Advisor Main Page

Your choice:

Age:

Gender:
M F

IncomeGroup:

Occupation:

Display Plan List

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3.3 Phone Helpline
LIC have a phone helpline, i.e. toll free no. A customer can have following interactions with the
executive or with IVR.

Customer Zone

• Change of address

• Issuing premium paid certificate

• Acceptance of life certificate for pension policies

• Resolving any policy related complaints

Information on

• Premium position,

• Bonus,

• Loan ,

• Revival of lapsed policies

Assistance for

• Filling up of forms

• Registration on LIC’s Customer Portal

To know Policy details through IVRS, simply dial 1251 available 24x7 in the following
cities

Asansol Dharwad Kozhikode Patna Shillong

Allahabad Gorakhpur Kota Pondicherry Shimla
Aurangabad Gwalior Kolhapur Rajkot Thanjavur
Bareilly Hazaribagh Meerut Ranchi Vadodara
Coimbatore Jodhpur Mysore Salem Varanasi
Jammu Nashik Surat

For making local call from any MTNL or BSNL number simply dial 1251 and for other than
local users IVRS can be accessed by dialing the city STD code of the IVRS center followed by
1251.

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3.4 Grievance Redressal System
In a vast organization like LIC, catering to the various needs and aspirations of millions of
policyholders, grievances of customers do arise occasionally. In order to redress this grievance
LIC has established an elaborate Grievance Rederessal Machinery and the details are as under:

Grievance Redressal Officers: Grievance Redressal Officers have been designated at all levels
of the Organization:

At the branch level: The Sr/Branch manager

At the divisional level: Manager, CRM

At the zonal level: The Regional Manager CRM

At the Central level: The Executive Director CRM/Chief(CRM)

For P&GS policies:

At the Zonal level: The Regional Manager (Pension and Group Schemes) in case of P&GS.

At the Central level: Chief (Pension and Group Schemes) in case of P & GS policies.
Policyholders can personally contact these designated Officials and seek redressal of their
grievances.

The respective Grievance Redressal Officers are available at their Offices for personal interviews
with the customers on all Mondays between 2.30 p.m. to 4.30 p.m., except on holidays without
bprior appointment.

The names of the Grievance Redressal Officers are displayed in the respective Offices and are
periodically published in the local newspapers.

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4 Sales Force Account Leads
Username: Varun8987@yahoo.com Password: puri12345

Leads Entered in Sales force Account

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14
5 New Initiatives by LIC in CRM

5.1 Beware! - Life Insurance Corporation of India gets serious about

customer service.3
Life Insurance Corporation of India (LIC) is all set to launch two portals -- one each for
customers and agents -- in the second week of November this year.

The customer portal will help one who has at least one policy with LIC to get information
relating to the

• Status of his policy,

• The amount of loan he can get against the policy and

• Download forms that he requires to start another policy.

The customer would also use the portal to deposit premium and details about change of
address.

5.2 LIC ropes in Wipro, IBM for CRM project4

The Life Insurance Corporation of India (LIC) has roped in Wipro and IBM for its customer
relation management (CRM) project. The project will help the corporation chalk out its future
plan and marketing strategy.

“This CRM project is the largest of its kind in India. It is aimed at studying consumer behaviour
and chalking out our future plans and marketing strategy,” said R N Bhardwaj, managing
director, LIC.

The cost of the project is estimated to be over Rs 50 crore and it is expected to be completed in
the next three years. Wipro and IBM will work together to compile the data of over 15 crore
policyholders of LIC.
3
Karat S., (2005), “Beware! - Life Insurance Corporation of India gets serious about customer
service. Accessed from
http://customerworld.typepad.com/swami_weblog/2005/10/beware_life_ins.html
4
Pandey P, (2004), “LIC ropes in Wipro, IBM for CRM project”, Business Statndard, May 24,
2004.Accessed from: http://www.business-standard.com/india/news/lic-ropes-in-wipro-ibm-for-
crm-project/150982/
15
The data would reflect consumer behaviour of the policyholders. It will also find out the
number of customers going for loans, paying premium within the due date and defaulting in
premium payment.

“Based upon the consumer behaviour of over 15 crore policy holders, LIC will formulate its
new policy accordingly and will chalk out its market plan. Consumer behaviour analysis will
help the corporation play a major role in the competitive and expanding insurance market,” said
Bhardwaj.

5.3 Insurance: Waking Up to a New Life5

LIC has been one exception, and has played the lead role in adopting technology on a very
progressive basis, despite the size of the organization and the number of policy holders it is
among the largest in the world. LIC of India is investing nearly Rs 600 crore on electronic
document management system (EDMS). The corporation is expected to transform more than 175
million policies into electronic format by 2010.

5.4 LIC’S Wan/Man Network Serving Insurance Policies on the Net6

Life Insurance Corporation of India (LIC) has now made its services more extensive and
accessible by extending its WAN to the far corners of the nation. The next step is serving
insurance policies on the Web. The LIC WAN/MAN network is a perfect example of technology
being used to streamline operations and take customer satisfaction to higher levels. LIC has now
extended its WAN, voice-enabled it, and set up a Web server.

The nationwide WAN is arranged in a hierarchical fashion. The Central Office (C.O.) at
Nariman Point, Mumbai is the network core. Next in the hierarchy are the seven zonal offices
located at Mumbai, Delhi, Calcutta, Chennai, Kanpur, Hyderabad, and Bhopal. The
district/divisional offices (also known as MAN centers) come next, and these are in turn linked to
the branch offices/branches, which are at the lowest tier in the hierarchy. All branch offices have
LANs. To date, there are a total of 89 MAN centers.

5
Karkre. P., (2010), “Insurance : Waking Up to a New Life”, Dataquest, January 07, 2010,
Accessed from http://dqindia.ciol.com/content/verticals/2010/110010701.asp
6
Cisco, “Case Study Special: LIC’S WAN/MAN Network Serving Insurance Policies on the
Net” http://www.cisco.com/web/IN/about/files/serving_cisco.pdf
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At present, policy holders can pay premiums online through services providers (ICICI bank,
HDFC bank, UTI bank, Bank of Punjab, Corporation Bank, Billjunction.com and
Timesofmoney.com. “Through the website we will be offering a statement of all the premiums
paid during the financial year, for filing of income tax returns.

LIC is benefiting too. Payments via the Web are going up every month, and workflow processes
have been streamlined. As of February 2002, there were 2,872 collections for premiums made
through the Web, amounting to Rs 86,28,410.

6 Suggestions:

6.1 M-CRM:
LIC should move further by using MCRM application to inform its policy holders about the
status of their policy & even informing them about the various due dates that may be for
payment of premium, date of maturity, any discrepancy in documents attached by just sending
them a text message on their mobiles.

6.2 Cross-Selling:
LIC can also go for cross selling; they can offer some other products like Loans & mediclaim
policy with some special benefits to the existing policy holders.

6.3 De-Materialized Policies:

LIC can start issuing policies in dematerialized form than in physical form, enabling customer to
handle the policy more easily.

6.4 One counter Payment of Claims

Payment system should be made such that on the time of payment of claims or at the time of
maturity of policy the customer has to meet only one executive at one counter.

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7 Reference
Books

• Kumar, A, , Sinha, C, & Sharma R,. “Customer Relationship Management Concepts

& Application” , Bizantra Publication, New Delhi (2009)

• Shajahan, “Relationship Management”, Tata McGraw Hill, New Delhi, 2008

Web Sites

• Gosawami, P. (2008), : “Customer Satisfaction with Service Quality in the Life

Insurance Industry in India” Accessed from: http://s3.amazonaws.com/ppt-download/lic-090608051318-
phpapp01.pdf?Signature= fQuLJ5MZdWdggLoqXigFVEXOjKk
%3D&Expires=1273381236&AWSAccessKeyId=AKIAJLJT267DEGKZDHEQ

• Karat S., (2005), “Beware! - Life Insurance Corporation of India gets serious about
customer service”. Accessed from http://customerworld.typepad.com/swami_weblog/2005/10/beware_life_ins.html

• Pandey P, (2004), “LIC ropes in Wipro, IBM for CRM project”, Business Statndard, May
24, 2004.Accessed from: http://www.business-standard.com/india/news/lic-ropes-in-wipro-
ibm-for-crm-project/150982/

• Cisco, “Case Study Special: LIC’S WAN/MAN Network Serving Insurance Policies on
the Net” http://www.cisco.com/web/IN/about/files/serving_cisco.pdf

• Karkre. P., (2010), “Insurance : Waking Up to a New Life”, Dataquest, January 07, 2010,
Accessed from http://dqindia.ciol.com/content/verticals/2010/110010701.asp

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