Role of Life Insurance Corporation in Insurance Sector of

India

ABSTRACT
It is worth interesting to note that the origin of the concept of insurance is very old and
dates back almost 4500 years ago in the ancient empire of Babylonia. This concept
prevailed and developed during the medieval period in Europe. The emphasis of insurance
was on traders' merchants and seafarers in marine industries at that time to provide them
safety in terms of money against certain unseen risks including death. The concept of
insurance has its origin in Indian scriptures. The Vedas give the idea of 'Yougkshema'
means a promise to provide community insurance to the risk bearers as back as around
1000 B.C., which was practised by the Aryans.
In 1956 a radical step was taken by the central govt. regarding nationalization of insurance
industries which emerged as the Life Insurance of India the major objective of this
corporation was to give maximum benefits to maximum citizens of India by providing them
wide range of benefits against a number of risks. The details of Lick's business during last 5
years are given in the paper, which are self - explanatory.
INTRODUCTION
Almost 4500 years ago, in the ancient Land of Babylonia, traders used to bear risk of the
caravan trade by giving loans that had to be later repaid with interest when the goods
arrived safely. In 2100 B.C. the code of Hammurabi granted legal status to the practice.
That perhaps, was how insurance made its beginning.
Life insurance had its origins in ancient Rome, Where citizens formed burial clubs that would
meet the funeral expenses of its members as well as help survivors by making some
payments.
In 1347, in Genoa, European maritime nations entered into the earliest known insurance
and decided to accept marine insurance as a practice. Back to the 17
th
century, in 1693,
astronomer Edmond Halley constructed the first mortality and compound interest. In 1756,
Joseph Dodson reworked the table, linking premium rate to age. The 19
th
century saw huge
developments in the field of insurance, with newer products being devised to meet the
growing needs of urbanization and industrialization.
LIFE INSURANCE IN INDIA
Insurance in India can be traced back to the Vedas. For instance, Yougkshema, the name of
Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda.
The term suggests that a form of 'community insurance' was prevalent around 1000 BC and
practised by the Aryans.
Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in
1870. Other companies like Oriental, Bharat and Empire of India were also set up in the
1870 - 90s.
The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act
of 1938 that looked into investments, expenditure and management of these companies'
funds.
By the mid - 1950s, there were around 170 insurance companies and 80 provident fund
societies in the country's life insurance scene. However, in the absence of regulatory
systems, scams and irregularities were almost a way of life at most of these companies'
funds.
As a result, the government decided to nationalise the life assurance business in India. The
Life Insurance Corporation of India was set up in 1956 to take over around 250 life
assurance companies. After the RN Malhotra Committee report of 1994 became the first
serious document calling for the re-opening up of the insurance sector to private players -
that the sector was finally opened up to private players in 2001.
AT IS LIFE INSURANCE
Life Insurance is a contract for payment of a sum of money to the person assured on the
happening of the event insured against. Usually the contract provides for the payment of an
amount on the date of maturity or at specified dates at periodic intervals or at unfortunate
death, if it occurs earlier. It is concerned with two hazards that stand across the life- path of
every person that of dying prematurely leaving a dependent family to fend itself and that of
living to old age without visible means of support.
ROT OF NE BUSINESS


During the 1997-98 LIC sum assured through policies 63927.83 Crore Rs. In 1998-99 LIC
sum assured 75606.26 Crore Rs. In 1999-00 LIC sum assured 91490.94 Crore Rs. In 2000-
01 LIC sum assured 124950.63 Crore Rs. In 2001-02 LIC sum assured 192784.96 Crore Rs.
We can see that LIC gets success in new business.
NUMBER OF POLICIES


In 1997-98 LIC's number of polices are 850.03 in lakh. In 1998-99 LIC'S number of polices
are 917.26 in lakh. In 1999-00 LIC's number of polices are 1013.89 in lakh. In 2000-01
LIC's numbers of policies are 1131.11 in lakh. In 2001-02 LIC's number of policies 1258.76
in lakh. We can see that LIC's position is very good. Numbers of policies are increased.

ANALYSIS OF INCOME


This chart shows various income of LIC. LIC gets 14.11 % income through first year
premium. LIC gets 40.74 % income from Renewal Premium. LIC gets 12.43 % income from
Single Premium. LIC gets 31.19 % income from investments. LIC gets income 1.53 % from
Miscellaneous.
CONCLUTION
LIC gets achievement in various fields. We can see that LIC gets success in new business.
Numbers of policies are increased. We can see LIC's income from various fields. Overall LIC
has doing profitable business. But it is only LIC's own business. But it is not compared with
other's insurance institute. So it is not completed.

Role oI LIC

1)Largest Insurance Company in India-55 percent share in 2009,monpoly Ior 50
yea
rs,insurance is not an option but necessity in current times
2)largest institutional investor-
3)Provides expenses oI Central government-24.6 percent oI the expenses oI the ce
ntral govt
4)Maximum types oI schemes which touch every aspect oI liIe-40 schemes
5)Covers diIIerent economic sections oI the society
6)Largest insurer in rural areas
7)Help in Channelizing Money oI NRI's through schemes-Currency Policy
8)One oI the biggest Employer-8 zonal OIIices and 101 divisional oIIices located
in diIIerent parts oI India, at least 2048 branches,1.2 million agents
9)Non inIlationary source oI Iunds Ior the government
10)Funds to Private sector
11)Contribution to national GDP- In 2006, LIC created huge surpluses and contrib
uted 7 percent to the national GDP.
12)Social service with proIit
Objectives oI LIC oI India

* Spread and provide liIe insurance to the masses at a reasonable cost.
* Spread LiIe Insurance widely and in particular to the rural areas and to the
socially and economically backward classes with a view to reaching all insurable
persons in the country and providing them adequate Iinancial cover against deat h
at a reasonable cost.
* Maximize mobilization oI people's savings by making insurance-linked savings
adequately attractive.
* Bear in mind, in the investment oI Iunds, the primary obligation to its polic
yholders, whose money it holds in trust, without losing sight oI the interest oI the
community as a whole; the Iunds to be deployed to the best advantage oI the
investors as well as the community as a whole, keeping in view national priorit
ies and obligations oI attractive return.
* Conduct business with utmost economy and with the Iull realization that the m
oneys belong to the policyholders.
* Act as trustees oI the insured public in their individual and collective capa
cities.

* Meet the various liIe insurance needs oI the community that would arise in th
e changing social and economic environment.
* Involve all people working in the Corporation to the best oI their capability
in Iurthering the interests oI the insured public by providing eIIicient
ser
vice with courtesy.
* Promote amongst all agents and employees oI the Corporation a sense oI partic
ipation, pride and job satisIaction through discharge oI their duties with dedi cation
towards achievement oI Corporate Objective.


History
Objectives
Trustees

LIC GOLDEN 1UBILEE FOUNDATION
LIC as a responsible Corporate Citizen has been IulIilling its social responsibilities Irom time to
time. In Iact, most oI our investments are geared towards industrial growth, inIrastructure growth
and national development.
We have been donating various amounts to social causes/community development in diIIerent
parts oI the country. We have also been contributing to Prime Ministers` National RelieI Fund,
ChieI Ministers` RelieI Funds oI various states as also Rajiv Gandhi Foundation to help relieI
measures in case oI calamities such as Earthquake, Tsunami etc.
With a view to channelise our social responsibilities and give a Iormal shape to the same we
have Iormed a Public Trust named LIC Golden Jubilee Foundation`.
The main objectives oI the Golden Jubilee Foundation are:
1. RelieI oI poverty or distress.
2. Advancement oI Education
3. Medical RelieI
4. The advancement oI any other object oI general public utility.
An important development in the role oI corporate houses has been the increasing Iocus on their
corporate social responsibility. Corporate Social Responsibility is the continuing commitment by
business to behave ethically and contribute to economic development while improving the
quality oI the workIorce as well as oI the local community and society at large.
The concept oI corporate social responsibility (CSR) is not new to Indian companies. However,
what is new is the way it has caught on with Corporates in India and the direct involvement oI
employees in implementation oI these projects. Dedicated departments in many organizations are
looking into much more than just Iunding or getting involved in one-time projects.
CSR activities have their advantages. The beneIits are in terms oI building a positive image,
encouraging social involvement oI employees, which in turn develops a sense oI loyalty Ior the
organization. CSR activities help bond employees as a team with the organization, which, in turn
helps in creating a dedicated workIorce that is proud oI its employer.
However, one oI the biggest advantages oI such activities is the creating oI an internal brand
among employees. Employees Ieel a sense oI pride when they are involved in such activities.
Besides, with hectic work schedules, these activities help in de-stressing employees and create a
much involved and conscious person.
The Foundation has been created with an initial corpus oI Rs.50 Crore with the provision that
Rs.10 Crore will be inIused every year Ior the next Iive years taking the total corpus to Rs.100
crore.
The Foundation has been registered with the Charity Commissioner Mumbai and we have also
got exemption under Section 80G oI Income Tax.
Divisions have been advised to send proposals that come under the purview oI the objectives as
mentioned above.
The activities in the areas selected will be planned in a way that encourages maximum employee
participation and involvement.
LIC is one oI the largest Iamilies in India consisting oI over 1 lac employees and 11 lac agents.
Our geographical spread and reach is pervasive. Our brand immediately evokes the Ieeling oI
trust. The Golden Jubilee Foundation would provide a great avenue oI IulIilling our social
responsibility at the corporate level and our philanthropic needs at the individual level