Life Insurance Corporation's Future Prospects
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Case Details:
Case Code : FINC002
Case Length : 5 Pages
Period : 1999 - 2001
Pub. Date : 2002
Teaching Note : Available
Organization : LIC (Life Insurance Corporation)
Industry : Financial Services
Countries : India
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FINC002) click on the button below, and select the case from the list of available cases:
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Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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"I don't think service can be a plank. What the customer is bothered about is the returns he gets at the end of 20 years, and our returns are very good." 1
- G.N Bajpai, Chairman, LIC in 2000.
LIC Under Siege
Ravi Bhargava (Bhargava), Assistant Marketing Manager, Life Insurance Corporation of India (LIC) was disconcerted by the full-page advertisement in the newspaper.
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The advertisement, by an Indian company in alliance with a US insurance company declared, 'Till now we were all buying insurance blindfolded, wake up. Experience the new phenomenon, one giving shape to all your dreams and driving away all your fears.' On the next page was another advertisement by an Indian bank, inviting applications from agency managers, promising a very good work atmosphere and 'best in the industry' remuneration. Bhargava had been Marketing Manager at LIC for the past eighteen months and eight of his best performing agents had submitted their resignations. He feared more would follow suit. The new players in the life insurance market were already affecting LIC.
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The Monitor Group, a Boston-based strategy consulting firm, which studied the trends in the Indian insurance market after it was thrown open to private players, predicted that LIC would find the going tough.
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But Prakash Sharma, (GM, Marketing Division) was more optimistic:
"It is obvious they will look for the best of our people, but we are not unduly worried. LIC offers a commission of 35% of the premiums for the first year and 7.5% for the next two years, and 5% for the rest of the period for which the sum is assured.
At the most, the new players will be able to offer 40% - not good enough to attract our people. These are all new players and none can beat our 44 years of experience." But Bhargava and Sharma knew that the issues involved were not that simple... |
Life Insurance Corporation's Future Prospects
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