Get complete information on the Progress of Life Business of LIC
The life insurance was carried on by the private insurances before 1956; but since January 19, 1956, the Life business came under the control and ownership of government. In June 1956, a Bill was passed for establishing Life Insurance Corporation of India, which started functioning since September 1, 1956.
The Corporation is a body corporate having perpetual succession and a common seal with powers to acquire, hold and dispose of property and may be its name sue and be sued. There will be not more than 15 members including a Chairman thereof.
The Corporation is charged with the main duty to carry on life insurance business. It has one Central Office, 7 Zonal Offices and several Divisional and Branch offices.
Business in India :
The new business in India has tremendously increased during the period of 25 years. It has gone up from Rs. 277.67 crores in 1957, to Rs. 734.72 crore in 1963 and to Rs. 1,025.80 crores in 1970 and again to Rs. 8,787.26 crores in 1980-81 and Rs. 43,490.34 crores in 1989-90 and Rs. 80,560.88 crores in 1993-94.
Thus, it had shown a satisfactory progress so far new business was concerned upto 31 March 1990 from Rs. 13,033.38 crores in 1985. It has gone to Rs. 2, 88,503.80 crore in 2002.
Business outside India :
The new business outside did not rise satisfactorily. It has gone up from Rs. 5.40 crores in 1957. Rs. 11.73 crores in 1975 and to Rs. 14.41 crores in 1981, and Rs. 28.30 crores in 1984.
The cause of the lesser rate of increase was that the Corporation has to compete with other concerns outside India whereas in India it is a monopolistic concern. However, it improved in 1989-90 when it rose to Rs. 100.00 crores and Rs. 199.07 crores in 1993-94 and Rs. 212.69 crore in 2002.
Total Business :
The total new business had also gone up significantly from Rs. 283.07 crores in 1957 to Rs. 745.96 crores in 1963 to Rs. 2,586.33 crores in 1974 and further to Rs. 3,112.43 crores in 1975 and to Rs. 5,385.34 crores in 1976; but it declined to Rs. 5,119.23 crores in 1977 and increased to Rs. 8,009.38 crores in 1980, Rs. 9,801.67 crores in 1981 and Rs. 13,056.02 crores in 1985.
It touched the highest of Rs. 43,590.34 crores in 1989-90 and Rs. 80,759.95 crores in 1993-94 and Rs. 2, 03,228.40 crores in 2001 and Rs. 2, 88,716.49 crore in 2002.
1. Average amount per policy :
The average amount per policy has also been rising constantly in India and outside India. The average policy has increased from Rs. 3,425 in 1957 to Rs. 7,345 in 1970 and further to Rs. 9,807 in 1975, Rs. 13,041 in 1980, Rs. 14,789 in 1981. Rs. 1, 99,134 in 1985, Rs. 39,125 in 1994 and Rs. 50,945 in 1995. Thus, the average sum assured has risen by about 12.3 times during the period of last 30 years.
The growth in average sum per policy was not as fast as the sum assured had risen. The rise in the average sum outside India was higher than the rise in India. The total average sum assured has also risen more than 12.4 times during this period. The sum assured per policy went upto Rs. 63,539 in 2001 and Rs. 85,682 in 2002.
2. New Business in Rural Areas:
One of the main purposes of nationalisation was to spread the life insurance business to rural areas where population was less than one lakh. The amount of rural business in absolute term is rising whereas the percentage share of rural business to total business is going down.
The definition of Rural/Social Sector has been redefined by the Insurance Regulatory and Development Authority (IRDA) Insurance legislation in India under Section V.
The share or rural business to total business has been continuously declining from 31.8 per cent in 1961 to 24.5 per cent in 1970 and further to 14.9 percent in 1975. It improved from 22.0 per cent in 1980 to 34.68 per cent in 1975. It improved from 22.0 per cent in 1980 to 34.68 per cent in 1990.
Not only this but the percentage of policies issued in rural areas to total policies has also been decreasing from 38.5 percent in 1962-63 to 31.3 per cent in 1974 although it has a slight improvement in 1975. This, evidently, reveals that the percentage of rural business to total new business, instead of going up, is going down which is very discouraging sign.
The figure of 1981 has revealed that the percentage Share of rural business in total number of policies and in total amount of business has been improved slightly in 1985. It has improved in 1990 and touched the highest figure in 1994. It decline to 13.7 per cent to total policies and 16.9 per cent of total sum assured.
The most discouraging sign is that the number of policies and amount of insurance in rural areas had been fluctuating. Thus the Corporation could not achieve its main objective of expansion of rural insurance.
The amount of annuities has been declining with fluctuations. The deferred annuity in India has gone down from Rs. 14.05 crores in 1966 to Rs. 12.68 crores in 1970 and further to Rs. 9.67 crores in 1975.
However, there has been a slight improvement so far immediate annuities are concerned. It has gone up from Rs. 1.90 crores in 1966 to Rs. 2.07 crores in 1975. Thus, the immediate annuity was gaining popularity.
Moreover, the Group Super Annotation Scheme has given a significant rise; it has gone up from Rs. 106.20 lakhs per annum. During 1979-80, 681 Immediate Life Annuity amounted to Rs. 30.78 lakhs per annum and 141 Deferred Life Annuity amounted to Rs. 6.98 lakhs per annum.
It declined in 1985 to the level of 28 Immediate Life Annuity Policies of Rs. 1.27 lakhs and 88 Deferred Life Annuity Policies of Rs. 4.10 lakhs per annum. The number of annuities has been Rs. 1.85 lakhs to the extent of Rs. 1261.19 crores in 1989-90.
Immediate annuities of Rs. 2.50 crores and Deferred Life Annuities of Rs. 7.11 crores were sold during 1994-95 which were Rs. 6.54 crores and Rs. 6.48 crores respectively in 1998-99.
The increase in non-medical insurance is a sign of rapid progress of the insurance business. The amount of non-medical business has increased from Rs. 155.67 crores in 1963 to Rs. 223.65 crores in 1970, to Rs. 447.26 crores in 1974 and further to Rs. 375.0 crores in 1975 and Rs. 422.86 crores in 1977, although the percentage share to total business has declined from 21.2 per cent in 1963, to 21.8 per cent in 1970, 17.3 per cent in 1974 and further to 12.0 per cent in 1975 and increased to 20.0% in 1977.
The number of policies issued under this scheme has also gone up from 7.12 Lakhs in 1963 crores Rs. 8.42 lakhs in 1975 although it touched the highest number of 6 lakhs in 1977.
New Business under the Non-Medical Scheme amounted to Rs. 519.3 lakhs under 8.35 lakhs policies in 1980 and Rs. 1,508.94 crore under 13.63 lakhs policies in 1985. New business under the Non-Medical schemes increased to Rs. 10,234.94 crores under 40.37 lakhs in 1989-90.
New Schemes :
The Group Insurance Scheme has been extended to groups other than those of employees working for a single employer. Deposit Linked Insurance and Cooperative Housing Financial Societies schemes have been formulated in 1970.
Centenary Policy Unit Link Insurance Plan, Group Insurance Schemes for handloom weavers, for Government employees, for teachers of Primary and Junior High Schools has also been extended to the employees of Military, Navy and Air Force departments in 1975.
The Corporation is, thus making every effort to popularise the insurance benefits among the masses. Money Back, Cash and Cover Plan and Progressive Protection Policies had been introduced during 1976-77.
With effect from 1st April 1980, Grihalakshmi Policies, Anticipated Endowment Assurance, Cash and Cover, Centenary Policy and Convertible Whole Life Policies have been withdrawn. Jeevan Sathi and modified New Jana Raksha Policies were introduced in 1985.
Jeevan Chhaya has been introduced in March 1991 and Jeevan Shree in 1995. Bima Kiran Plan and Jeevan Shree Plan were introduced in 1996. The sum assured under Bima Nivesh was Rs. 3,594.85 crore under 357665 policies in 2002-2003. Jan Shree was Rs. 3,285 crore under 636116 policies in 2002-2003.