A Study on performance appraisal of life insurance corporation of India with special reference to pudukottai branch-tamilnadu Introduction:- Kanaga Raju & N. Venkatesan, Thanthai Hans Roever College, Perambalur, Tamilnadu In modern times, life insurance is widely recognized as an important need to every individual to cover the life risk and to provide economic security to the dependent members of the family. Under life insurance, the insured transfers the risk of life by paying an amount to the insurer. The insurance contract by paying an amount to the insurer. The life insurance contract provides that the insurer accept to pay an agreed amount at the time of death to the dependents of the life assured by accepting premium. The amount which is paid by the insured, will be returned as per the terms of contract. Thus, insurance is a social device, where by the uncertain risks of individuals may be combined and security is provided to the people from the fund mobilized through the nominal contribution of its customer s. In India, life insurance services are offered by life insurance Corporation of India (LIC) established in 1956 as a public sector undertaking by merging about 245 private insurance and provident fund companies, LIC enjoys a monopolistic position in offering life insurance services in the countries. Being a monopolistic public sector organization, it has a great responsibility to look after the insurance requirements of millions of people in India. Apart from covering the life risk of millions of people, LIC is endowed with task of meeting various social and economic obligations for the development of the country. However, its main task is to provide efficient life insurance services to its customers. Since its inception, life insurance corporation of India (LIC)has been desiring plans to achieve the objective of spreading life insurance business widely and and in particular to the rural areas and to socially and economically backward classes. To meet the above objective LIC has opened several branch offices and divisional offices in different parts of the country. New plans of assurance with attractive terms have been introduced. Plans which are not popular were withdrawn. The premiums were modified from time to time and reduced to a considerable extent. New procedures were developed and some of the existing procedures were simplified to do the effective service. Insurance Regularity Development Authority Act 1999(IRDA):- The IRDA is a national agency of the government of India, based on Hyderbad.It was formed by an act of India parliament known as IRDA Act 1999, which was amended in 2002 to in corporate some emerging requirements. Mission of IRDA as stated in the act is To product the interest of the policy holders to regulate, promote and insure orderly growth the insurance industry and for matters connected there with or incidental there to Objectives of the study:- 1) To study the services rendered by the LIC. 2) To study about the opinion of the policy holders about the LIC performance. 3) To study about the over all performance of pudukottai branch. 4) To know claim procedures. 5) To suggest measures to improve the efficiency of life insurance services. www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 1
Scope of the study:- With the change in the economic policy of the government of India brought about by GATT agreement and also the globalization policy, insurance market was considered a potential source of good business by the foreign entrepreneurs. The decision of the government of India to denationalize the insurance, sector has really thrown the challenges to the Life Insurance Corporation a novo discussion on evolving newer strategies to meet the changing scenario with the passing of the Insurance Regularity Development Authority(IRDA) bill the need for change as become more eminent and immediate. The corporation in the path of evolving newer strategies in the field of product, development, customer satisfaction and economy in management. LIC of India, the one of the mighty financial organization has its root which has spread over a period of four decades. Over this period of years LIC of India which government started by the grant of Rs 500 lakhs, by the central government of India on 1.9.1956 has now to its credit, a balance of life insurance fund is Rs 1,62,122 cores as on 31.3.2009. Methodology:- The entire study is based on primary and secondary data collected by the researcher. Required secondary data have been collected from the record of LIC such as divisional office Annual reports, all India Annual reports, divisional office balance sheet, pudukottai branch balance sheet, socio economic profile of divisional office. Primary data collectors through interview schedule. Period of the study:- The period covered under study extended over five years from 2003-2008 for the proper analysis of the performance of LIC in pudukottai. Sampling design:- For the meaningful analysis the policy holders has been classified into four categories by adopting stratified random sampling. Among the total policy holders there are classified in to four categories. They are:- 1. Professional 2. Business people 3. Employed 4. Agriculturist The 10 policy holders from each group have been selected for the field survey. Result analysis:- To study the performance of the LIC pudukottai branch this researches has conducted field survey with the help of a questionnaire and some official records. Table 1 New business performance of pudukottai branch Years No of polices (Rs. in croses) First premium (Rs. in lakhs) 2003-04 9,961 45.91 106.48 2004-05 11,158 54.89 127.45 2005-06 13,852 85.35 205.80 2006-07 14,522 110.01 286.50 2007-08 14,946 111.29 288.31 Sources:-official records in the branch of pudukottai LIC www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 2
The performance of the pudukottai branch in all sense is highly commendable. They insured 9,961 people in the year 2003-04 and it steadily went up to 14,946 people in the year 2007-08.In the same way the sum assured is also gradually increased year by year. The first premium is also increased year by year. Table 2 Total Volume of sales in various polices at Pudukottai Barnch Year 2002-03 2003-04 2004-05 2005-06 2006-07 EndowmentPolicy 8570 8340 7400 8100 7760 73.20 75.60 65.40 70.40 68.50 (Rs in lakhs) Jeevan mitra 112 123 146 206 228 0.53 0.76 1.21 1.51 1.62 Jeevan saanthi 20 10 10 10 40 0.10 0.20 0.20 0.10 0.30 Marriage endowment / education annuity plans 50 50 60 50 70 0.50 0.40 0.40 0.30 0.70 New Jana raksha policy 10 10 30 40 80 0.20 0.10 0.20 0.20 0.60 New children s 20 30 20 10 40 Deferred assurance plan 0.40 0.60 1.50 0.10 0.50 New money 927 1012 843 1210 1483 Back policy 10.00 12.90 21.70 24.00 19.70 Jeevan dhara 150 170 480 110 180 (No: of polices) 2.80 3.30 6.20 1.10 2.60 Sources: offices records In the Branch of The LIC of pudukottai www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 3
Table 3 Age group of different policy holders S. no Age group No. of respondents Percentage 1 21-30 3 7.5 2 31-40 17 42.5 3 41-50 16 40.0 4 51-60 4 10.0 Age group is highly influential factor for the savings. Here the policy holder under different age group reveals which age groups are more responsible for savings. Between the age group 21-30(7.5%) is having less attitude of saving and use of between 31-40(42%) is more concentrate in keeping more savings. In the age group 41-50(40%) of the policy holders are keeping their savings. Only (10%) respondents are in the age of 51-60. Table 4 Details showing the income range of the respondent S. no Income range (In Rs) No: of respondents Percentage 1 3000-5000 18 45.00 2 5001-7000 1 2.50 3 7001-9000 6 15.00 4 9001-11000 5 12.50 5 11001-13000 3 7.50 6 13001-15000 3 7.50 7 15000 & Above 4 10.00 From the above table the income range of the policy holders can be known. The income of an individual is an important factor because in most issues it decides many things.in this study more number of respondents it coming under the income range between 3000-5000 i.e. 18(45%)If the total respondent. Only one respondent (2.5%) is coming under the 7001-9000 range. In the group of 11001-13000 and 13001-15000 the number of respondent is equal. Only 4(10%) of the respondents are earning more than 15001 and above. Table 5 Reason for savings with LIC S. no Reason No: of respondents Percentage 1 Risk coverage 18 45.10 2 Income tax relief 7 17.50 3 Loan facilities 3 7.50 4 Old age pension 1 2.50 5 Children s marriage 5 12.50 6 Children s education 2 5.00 7 Secured savings 4 10.00.00 Out of the 40 respondents 18(45%)saved their surplus with life insurance corporation(lic)because of risk coverage. 7(17.5%)respondent for saved for income tax concession. www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 4
3(7.5%)respondents saved for the purpose to avail loan from LIC. Only one respondent (2.5%) saved his surplus money for old age use 5(12.5%) out of 40 respondents saved. To meet our their children s marriage. 2(5%) policy holders put their savings with the LIC to spend on their children s education. Remaining 4 respondents (10%) felt that the LIC savings is secure one. Table 6 Details of another savings mode S.no Other Savings Mode No: of respondent Percentage 1 Bank deposits 9 22.50 2 Post office savings 8 20.00 3 Mutual funds 4 10.00 4 Shares and debentures 1 2.50 5 Chits funds 18 45.00.00 Source: Primary data From the above table the mode of savings of the policy holders can be known easily. Out of 40 respondent 9(22.5%) opted bank deposits. 8 respondents (20%)opted post office savings.4(10%)of the total respondents opted mutual funds as their savings mode. Only one respondent (2.5%) is opted shares and debentures as his savings mode. Rest of the 18 respondents (45%) chosen private chit funds as their mode of savings. Table 7 Details of types of polices token by the respondents S. No Types OF Polices No: of Respondents Percentage 1 Endowment 13 32.50 2 Money back 18 45.00 3 Jeevan dhara 4 10.00 4 Whole life 3 7.50 5 Bima kiran 2 5.00.00 Sources: primary data To know which policy holders the question has been asked With respondents merely 13(32.5%) have chosen endowment policy, 18(45%) out of 40 respondent selected money back policy. Jeevan dhara Policy has been opted by 4(10%) policy holders in this study 2(5%) out of total policy holders taken for the study have opted Bima Kiran. Majority of the policy holders prefer money back policy because it has many advantages. Table 8 Details of the sum assured by the policy holders S. no No: of Respondents Percentage 1 50,000-1,00,000 27 67.50 2 1,00,001-2,00,000 9 22.50 3 2.00,001-3,00,000 2 5.00 4 3,00,001-4,00,000 0 0.00 5 4,000,001 & Above 2 5.00.00 Sources: primary data www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 5
The range of sum assured has been fixed between Rs 50,000 to 4, 00,000 and above. Nearly 27 (67.5%) respondents have insured their lives Between Rs 50,000 to 1, 00,000. Rs 1, 00,000 to 2, 00,000, 9(22.5%) respondent insured their lives. 2(5%) of 40 respondents has their policy between Rs 2, 00,000-3, 00,000. In the last category i.e. Rs 4, 00,000 and above only 2(5%) respondents have the policy. Most of the policy holders insured their life for a sum between Rs 50,000-1, 00,000. Table 9 Details showing how frequently agents meet the policy holders S. no Frequency No: of respondents Percentage 1 Two to three times in a month 11 27.50 2 every month 11 27.50 3 Whenever help sought 9 22.50 4 While failed to pay premium 5 12.50 5 Never meets 4 10.00 Source: Primary data Whether the agents meet the policy holders. Regularly or not can be Known for their above table. According to 11(27.5%) policy holders some agent Meet the policy holders 2 to 3 times in a month. Another 11(27.5%) policy holders states that agent meet their every month. Some agents meet the policy holders whenever the policy holders seek his help 9(22.5%). 5(12.5%) policy holders told that the agent meet them while the 4 policy holders reveals that their agents never meet them. Table 10 Details shows when the agents help the policy holders S. no Nature of help No: of respondents Percentage 1 Policy selection 12 30.00 2 Helpful incomplete the Application 13 32.50 3 Payment of premium 6 15.50 4 Policy claim 9 22.00 5 Rendering other services - - Sources: primary data From the above table we can know the role of agent. 12(30%) Respondent s reveals help them while selecting the policy, 13(32.5%) policy Holders stated that agents assist them while complete the policy application. 6(15%) out of 40 policy holders accepted that while paying premium, agents are Doing great assistance. 9(22.50%) respondents reveals that agents their best While making claims with LIC. Table 11 Mode of payment of premium S. no Mode No: of Respondents Percentage 1 Monthly 5 12.50 2 Quarterly 10 25.00 3 Half-yearly 8 20.00 4 Annual 9 22.50 5 Salary saving schemes 8 20.00 www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 6
The above table exposes the mode of premium payment opted by the respondents. Monthly mode is opted by 5(12.5%) respondents, 10(25%) Policy holders chose quarterly mode. Half-yearly is opted by 8(20%) out of 40 Respondents. 9(22.5%) policy holders have annual mode. Salary Saving Scheme (SSS) is chosen by 8(20%) policy holders. Majority of the samples opted quarterly Mode for premium payment because it is more convenient to them. Table 12 Preference of private Insurance companies S. no Preference No: of respondent Percentage 1 Yes 27 67.50 2 No 13 32.50 The table 10 indicates a very crucial matter. Whether the policy holders have an acceptance of entry of private insurance companies. 27(67.5%) policy holders accepted the entry of private insurance companies. 13(32.5%) policy holders express negative answer. More than 50% of the sample expects the entry of private insurance companies because they will do better consumer services. Table 13 Opinion about premium rates S. no Opinion No: of Respondents Percentage 1 Too high 6 15.00 2 Affordable 8 20.00 3 Moderate 23 57.50 4 Low 3 7.50 Sources: primary data Above the table reveals that the opinion of the policy holders about the premium rate for different polices. About 6(15%) policy holders felt that premium rates are too high. But 8(20%) respondents felt that it is affordable. Most of the 23(57.5%) respondent stated that the premium rates for different Polices are moderate. Only 3(7.5%) respondents stated the premium rate very Low. Premium rates for different policies are moderate. Table 14 Details show why policy holders prefer policy loan S. No Reason No: of respondents Percentage 1 Low rate of Interest 11 27.50% 2 Quick realization of loan amount 15 37.50% 3 Convenient repayment terms 7 17.50% 4 No compulsion for immediate payment 7 17.50% Sources: of Primary data To know the reasons why policy holders preferred LIC policy loan Few opinion has been given 11(27.5%) respondents reveals that the rate of Interest is very low. 15(37.5%) out of 40 policy holders stated that the loan is Quickly realizable. The loan term is convenient for 7(17.5%) policy holders. 7(17.5%) told that there is no compulsion from corporation for immediate repayment. www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 7
Suggestions and conclusion: To reduce the first year lapses the corporation will take necessary steps in future, it gives a better growth for the corporation. The customer Service is main drawback of the corporation. The technological changes help to Remove it. But the policy holders want more. So increase the staff strength only gives better customer service. The advertisement given by the corporation through different media is useless because it is given mainly in English dailies. But the subscribers of the English dailies are very less. The training program for employees and development officer will enhance the service rendered by them, help to achieve better position in Insurance business. Now in the present scenario, of private companies and multinationals who are increasing to make their entry into the insurance industry at the earliest. LIC has either to tap the target potential or to maximize its operating efficiency. The first one is market oriented and this research study is concerned only with the later one. In maximizing its operating effectiveness and efficiency the negative point cited here and there should be taken care of and remedial measure to rectify there shortcomings must be taken. The positive aspects like the growth in the LIC fund, a steady growth in the investment made, declining trend in the outstanding claims payable must be Maintained and if possible the corporation must aim at achieving 100% efficiency in these areas. Last but not least in the maintenance of good industrial relations and industrial peace. Reference 1) R.S Sharma -Principles and practice of Insurance. 2) B.S Bhir and M.D.limaye-Insurance principles and practice. 3) V. Appireddy-Marketing of life insurance services. 4) LIC of India-fact books. 5) Literatures of the planning department of pudukottai divisional office of LIC of India. 6) Annual reports-lic of India from 2003-2008. 7) Insurance Institute of India-principles and practice of life Assurance. www.theinternationaljournal.org > RJSSM: Volume: 02, Number: 12, April-2013 Page 8