Individual Business :
The life insurance business in Force in India has been continuously from Rs. 1,473 crores in 1957 to Rs. 3,168 crores in 1963; to Rs. 6,425 crores in 1970; and further to Rs. 11,852 crores in 1975 and Rs. 19,114 crores in 1980; and Rs. 94408 crores in 1990.
Thus the business, in force, has been increased by more than 4 times during the period of last 10 years. The total business in force has increased to Rs. 19,243 crores in 1980 and Rs. 30,426 crores in 1984, Rs. 94,823 crores in 1990, Rs. 2,08,619 crores in 1994 and Rs. 2,54,572 crores in 1995 and Rs. 645042 crores in 2001 and Rs. 8,11,017 crore in 2002.
The business in-force of Group Insurance Schemes has rapidly been increasing from Rs. 39.0 crores in 1967 to Rs. 6137.46 crores in 1980 and Rs. 1021856 crores in 1985, Rs. 23049.64 crores in 1990, Rs. 46,742.75 crores in 1994 and Rs. 51,034.71 crores in 1995.
The business-in-force of Group Superannuation Schemes has increased from Rs. 1.79 crores of annuities in 1967 to Rs. 61.02 crores of annuities in 1980 and Rs. 146.51 crores in 1985 and further to Rs. 245.11 crores in 1990 and Rs. 403.51 crores in 1994 and Rs. 422.66 crores in 1995.
This reveals that the Group Insurance has been constantly and rapidly rising in India. It is a very good indicator of the popular form of life insurance which can be adopted to benefit the masses, individually as well as a group.
The group insurance scheme amounted Rs. 89,326.19 crores under 84,203 schemes and group Superannuation Scheme 5753 giving Rs. 1,137.72 crores in 2001, and Rs. 1,271.94 crore in 2002.
The lapsation of policy is harmful for the insurers as well as insured because the goodwill and reputation of the former decline whereas the benefits of insurance are not available to the latter one. Therefore, attempts should be made to reduce the lapse-per-cent age.
It is a very encouraging sign that the percentage of net lapses to mean life insurance-business-in-force has declined from the highest of 8.1 percent in 1963 to 3.8 percent in 1980 and 5.6 percent in 1990.
Even this percentage is very high and Corporation should try to minimise the lapse-ratio. But it could not improve the problems of lapses as the lapse-ratio.
But it could not improve the problems of lapses as the lapse-ratio increased to 4.5 per cent in 1984 but declined to 4.2 per cent in 1985 and again increased to 5.8 per cent in 1990 and 6.3 per cent in 1994 and 6.1 per cent in 1995 and 5.0 per cent in 2003.
Working Results :
The working results of LIC can be evaluated by various indicators such as Life Insurance Fund, Premium-Income, Total Income, Expenses, Interest Rates, Investment, Claims-settlements, Number of offices, Productivity of Agents and so on.
(i) Life Insurance Fund:
An increasing trend of life insurance found is a clear indication of progressive business. If the rate of increase of life insurance fund is progressive, it is undoubtedly a significant increase in life insurance business.
The, life insurance fund has been increasing at a faster rate bring the period of 33 years. It is a very encouraging sign that the life insurance fund has increased from Rs. 410.47 crores on Dec. 31, 1957 to Rs. 5,818.09 crores on March 31, 1980 by more than 13 times.
It increased to Rs. 9,800.38 crores in 1984 by more than 24 times and again to Rs. 11,191.09 crores in 1985. It has gone up to Rs. 9,568.79 crores in 1989, Rs. 23,471.84 crores in 1990. Rs. 8,667.53 1994 and Rs. 10,313.08 crores in 1995.
(ii) Total Income:
Total income has also increased from Rs. 107.98 crores in 1957 to Rs. 2,519.99 crores in 1985 by more than 23 times during the period. It has increased to Rs. 6,835.04 crores in 1990. Rs. 15,212.31 crores in 1994, Rs. 18102.32 crores in 1995 and Rs. 53,968.46 crores in 2001 and Rs. 72,769.91 crore in 2002.
(iii) Total Outgo:
Total outgo includes payment to policy-holders, expenses of management, commission to agents, salaries and other benefits to employees. Other outgo such as other expenses, taxes, reserves etc. It has increased from Rs. 58.97 crores in 1957 to Rs. 1,194.56 crores in 1985 by more than 19 times.
Thus, the income has increased at a faster rate than the increase in III outgo. The outgo has gone upto Rs. 2,931.99 crores in 1990 and Rs. 6,544.78 crores in 1994 and Rs. 7,789.24 crores in 1995 and Rs. 21,987.45 crores in 2001 and Rs. 28,283.50 crore in 2002.
(iv) Premium Income:
Increase in premium income has been considerably high as it has increased in absolute as well as in relative term. The percentage increase per annum has been rising year after year. The percentage change over previous year was the highest 15.06 per cent in 1976 and the lowest 7.90 per cent in 1963.
The Premium income has increased from Rs. 88.6,5 crores in 1957 to Rs. 875.37 crores in 1980 by about 10 times and to Rs. 1,355.10 crores in 1984 by more than 15 times and again to Rs. 1,559.33 crores in 1985.
It has touched the highest level of Rs. 4,489.39 crores in 1990 and Rs. 9,735.34 crores in 1994, Rs. 11,527.80 crores in 1995 and Rs. 34, 207, 78 crores in 2001 and Rs. 48,963.60 crores in 2002.
The expenses as a percentage to total premium should not increase. The overall expense-ratio and renewal. Expense Ratio is the important expense ratio.
The overall expense ratio had touched the highest figure of 30.48 per cent in 1975 and declined to 24.52 percent in 1980 and further to 22.37 per cent in 1984. It increased to 23.84 per cent in 1990 and declined to 21.39 per cent in 1995.
The Renewal Expense ratio has also gone down from 18.97 per cent in 1975 to 13.01 per cent in 1980 and again to 13.92 per cent in 1985. It was merely 3.04 per cent in 1990. Rs. 4.95 percent in 1995, 6.32 per cent in 1995 and 2.43 per cent in 2001 and 4.20 per cent in 2002.
(vi) Interest Rate:
The interest rate reveals the profitability of the concern. The rising rate of interest is a promising sign. In LIC, the gross interest rate has increased from 4.58 per cent in 1957 to 7.89 per cent in 1980 and the net interest rate has increased from 3.74 per cent in 1957 to 7.44 percent in 1980 and 9.76 per cent in 1985.
It has increased to 11.13 percent in 1990, 12.21 per cent in 1995 and 11.60 percent in 2001. Thus, it is clear that the profitability position of LIC has been improving gradually.
The amount of investment has been constantly increasing from Rs. 329.75 crores in 1957 to Rs. 5747.51 crores in 1980 by more than 18 times and Rs. 10804.03 crores in 1985 by 30 times.
It had gone upto Rs. 20503.74 crores in 1990, Rs. 46560.63 crores in 1994 and Rs. 56182.44 crores in 1995 and Rs. 221697.50 crore in 2002. The investment has contributed significantly in the development of the nation.
The percentage distribution of LIC investment reveals that LIC has favored public sector as more than 79 per cent of total investment was made in public sector. The investment in cooperative sector has also been rising but in 1980 it declined to 9.7 per cent and increased to 10.2 per cent in 1984 and came down to 6.5 per cent in 1990.
Investment in private sector had gone down from 22.1 percent in 1957 to 11.6 percent in 1977 but it improved to 12.5 percent in 1980, 13.7 per cent in 1990, 13.8 per cent in 1995 and 86.5 per cent 2002. LIC investment has been directed toward: socially oriented securities.
It is a great achievement that LIC has tried to develop electricity, health drinking facilities, water and sewerage schemes, small-scale industries, fertilisers, housing and other infrastructures.
The claims settlement is an indicator of the efficiency of the LIC meeting claims-obligation. The percentage of outstanding claims to claims intimated should decline It has been observed that percentage of outstanding claims to total claims intimated has decrease from 60.52 per cent in 1957 to 14.14 per cent in 1977.
It was a tremendous achievement in the fie of claim-settlements; but it has again deteriorated and percentage of claims outstanding to total Clair intimated has increased to 17.08 percent in 1980. It decreased to 11.23 percent in 1995 and 5.96 p cent in 1990 and 4.86 per cent in 1994 and increased to 5.26 per cent in 1995 and 3.70 per cent 2001 and declined to 1.85 per cent in 2002.
(ix) Number of Offices:
The number of offices has not increased satisfactorily. As compared to the bank-branches, the expansion in LIC offices has been almost negligible. The total offices of LIC have increased from 735 in 1963 to 888 in 1980 and 1160 in 1985 and 1603 in 1990.
The number of branch offices has been growing from 340 in 1963 to 738 in 1980 and 1023 in 1984 and 1528 in 1990. The number of sub-offices increased to 179 in 1963 and declined to only 4 sub-offices in 1980.
The number of development centers has also been decreasing from 175 in 1963 to 100 in 1980 and further to only 5 in 1985. The total number of LIC offices in 1995 was 2128, out of which 2021 were branch offices.
(x) Productivity of Agents:
The productivity or Active Agents has been constantly increasing from Rs. 31,000 in 1957 to Rs. 2,47.641 in 1980 by about 8 times and Rs. 3,63,772 in 1985 by 11 times. The productivity of agent has been Rs. 6, 66,605 in 1990, Rs. 7, 97,324 in 1994, 1063101 in 1995 and Rs. 12, 59,013 in 1999 and Rs. 7, 44,003 in 2002.
The valuation of life assets and liabilities is very important process to assess the solvency of the concern. Prior to nationalisation the insurers were required to make an actuarial valuation at least once in three years.
In terms of the Life Insurance Corporation Act 1956, the Corporation has to conduct valuation of its assets and liabilities at least once in two years. The rate of reversionary bonus has increased very slowly from Rs. 16.00 per thousand in 1957 to Rs. 31.00 per thousand in 1981 in case of Whole Life Policy and form.