It is a tribute to the Nehruvian vision that the large number of institutions created in the post-independence era have stood the test of time and many of them have risen to global standards. From oil to steel, from dams to highways, from prestigious IITs to prestigious institutes of design, they have covered almost every sphere of economic activity.
Jawaharlal Nehru, the first Prime Minister of India, described them as the temple of modern India. Undoubtedly, India’s rise as an economic superpower today rests on the foundation of these remarkable institutions built in the early years of independent India. In 1947, India with a population of 345 million, a per capita income of ₹249.6 and a literacy rate of 12% was one of the poorest countries in the world. Even in the midst of such an environment of deprivation and low income, Nehru realized the importance of social security and the need to promote a culture of insurance. Thus, the idea of a state-run Life Insurance Corporation was born and LIC was established on September 1, 1956.
initiative for women
LIC has grown steadily over the past six decades and is today one of the largest insurance companies in the world, with over 290 million policy holders and assets of ₹38 lakh crore ($520 billion). Yet, when LIC celebrated its 60th anniversary in 2017, its biggest achievement was hardly mentioned – the fact that LIC created massive employment for women since its inception in 1956. Thousands of women became LIC agents in the 1950s and 60s, when job opportunities were scarce. There was no entry barrier in terms of age or fixed time for work. Education required was only high school pass. Many of these women were housewives who could earn extra income by selling LIC policies.
This was the era before the advent of digital technology and mobile phones. Very few households had landlines and these women had to sell policies through personal contacts. In fact, most of them had no marketing experience, yet LIC was able to create a vast army of motivated agents and inspiring stories emerged from them.
Usha Sangwan, the first woman to become the Managing Director of Life Insurance Corporation of India, described the initiative as “one of the great social experiments of the time, transforming raw talent into mature professionals”. LIC had an innovative reward scheme for agents, which offered membership of particular clubs based on their performance. These clubs went on to rise progressively higher and higher levels from the Managers Club to the top level of the Chairman Club. Many agents climb these stairs quickly to reach the top level to earn a substantial amount as commission.
A milestone in the history of India’s insurance industry was the opening of the sector to private participation in the year 2000 and this caused widespread concern that LIC would find competition tough and could very well be marginalised. Today, there are 24 private companies in the life insurance sector and many of them have foreign collaborations. Nevertheless, LIC continues to be a major player, capturing 75% of the life insurance business in the country. Its claim settlement at 99.87% is far higher than the industry average of 84%.
Ms. Sangwan says, “Most of the success has come from the incomparably dedicated 1.2 million agents. Many of them were women who have chosen a career that is essentially suited to the personality and talent of women. Their success in spreading the value of insurance is unimaginable.
Savings Focused Policies
Innovation has been the single most important factor that underpins LIC’s marketing strategy. In a country with immense poverty and low income, LIC believed from the very beginning that it could not sell insurance on premature death as a risk cover. So it created policies focusing on savings and children’s education and daughter’s marriage which are fundamental to family values in India. These policies also ensured that a portion of the premiums paid were returned at regular intervals before maturity, thereby providing liquidity for emergencies. They simultaneously covered the risk due to death. LIC is also different from its new generation competitors in its marketing style and culture. While private companies focused on technology-driven marketing, LIC’s approach was significantly people-centric.
About LIC From its logo to wielding the flame with two hands to its focus on India’s rural population, it has a powerful impact on ordinary life.
When Prime Minister Narendra Modi Launched the Highly Publicized Pradhan Mantri Jan Dhan Yojana For financial inclusion of more than 300 million rural population as on 15th August 2014, LIC was already covering the rural population of 200 million with its policies. It also established itself as a unique organization among the Public Sector Enterprises of India. Yet that distinction is hardly recognized in India.
Skill India Mission
In his biography of master filmmaker Satyajit Ray, Andrew Robinson says, “Indians have an incredible ability to ignore domestic success stories until the rest of the world discovers them”. The fact remains that LIC kept a low profile despite its many-sided achievements. When the Prime Minister launched Skill India MissionSeveral foreign agencies and institutions saw a honeypot there and rushed to lay their hands. Yet no institution was more equipped to undertake this massive task other than LIC of India.
Its over one million strong agents provide case studies that touch the real India. It’s a wealth of real-life situations that can form the basis of a strong skill mission. Eminent management guru CK Prahlad once said that these case studies should be a part of the curriculum of management schools in India and replace cases borrowed from foreign universities. With a mix of online learning and real-life case studies, LIC’s training program offers the best model for skill development programs in India.
In India, education is more of a means of job search than a process of acquiring knowledge. The relevance of LIC comes from its track record of generating a large number of employment opportunities for common Indians, male and female, urban and rural.
LIC is now in a transformative moment. Its listing on the exchanges should elevate LIC to be a part of the elite corporate community in India. Nevertheless, the nation must not forget the fact that LIC was built on the sweat and tears, pain and sacrifice of common Indians. It is democratic credentials that remain LIC’s most valuable asset.
(C. Sharath Chandran is Senior Fellow, London School of Economics)