LIC is one of the oldest insurance companies in India and has been a dominant player in the country’s insurance sector. LIC was established in 1956 to provide life insurance and contribute to the growth of the economy of the country.
LIC offers a unique blend of trust, extensive reach, financial stability, and innovative products which positions it as a benchmark in the insurance sector, both domestically and globally. In this blog, we will explore the different factors that have led to the establishment of LIC as a leader in the insurance market of India.
Historical Significance of LIC
LIC is one of the largest insurance companies in the world and has made a significant contribution to the development of the insurance sector in India.
LIC was established on September 1, 1956, through the Life Insurance Corporation LIC Act, which aimed at nationalizing the Indian insurance sector. It was formed to offer life insurance to the masses.
Over the years, LIC has helped to promote financial inclusion by making life insurance accessible to various socio-economic segments.
Factors Making LIC a Benchmark in the Insurance Sector
There are several reasons behind the success of LIC. Some of them are:
-
Financial Strength
Currently,LIC share price is ₹ 970+ and is ranked among the largest financial institutions in the country. In 2024 for LIC the Profit after Tax (PAT) for the quarter ended June 30th, 2024 was Rs. 10,461 crore, a staggering 9.61% increase from the previous year.
This unprecedented profit surge demonstrates LIC’s financial robustness and sets a new benchmark for profitability insurance stocks.
Comprehensive Product Portfolio
LIC offers a broad portfolio of insurance solutions that fit the needs of different customers. Its offerings include:
- Traditional Life Insurance Plans:Several types of assurance options like whole life, endowment, and money-back plans.
- Term Insurance Plans:Offering financial security at affordable premiums.
- Unit-Linked Insurance Plans (ULIPs): Diversification of the investment with risk mitigation through insurance.
- Pension Plans:Providing for the financial needs of customers in retirement.
Investment Strategy
LIC is also one of the largest institutional investors in India and invests in government securities, infrastructure, and other segments of the economy. Its investment strategy not only secures the funds collected from policyholders but also helps in the development of the country.
The total AUM(assets under management) of LIC is around Rs. 51,21,887 crore as of March 2024, positioning it among the largest players in the market.
Government Backing
As a public sector undertaking, LIC enjoys implicit government backing, which reassures a sense of security among the policyholders. This trust factor has been crucial in a market where financial literacy is still evolving.
High Claim Settlement Ratio
LIC has also been one of the most successful insurance companies in terms of claim settlement ratio. LIC consistently maintains one of the highest claim settlement ratios in the industry, often exceeding 98.74%.
This reliability in honoring claims has significantly contributed to building trust among policyholders and setting a standard for the industry.
Extensive Network and Reach
LIC has the largest network of agents and branches in India, even in remote areas where private insurers are usually not present. Currently, LIC has 113 divisional offices, 8 zonal offices, 2,048 branch offices, and a central office in Mumbai.
This extensive presence has made LIC synonymous with life insurance in India and sets a benchmark for market penetration for other companies in the insurance sector.
Digital Transformation
Recognizing the changing landscape, LIC has also embraced digital channels. Its online platforms facilitate easy policy purchases, renewals, and claims processing, enhancing customer convenience and operational efficiency.
Conclusion
LIC’s journey from a nationalized entity to a benchmark in the Indian insurance sector is a testament to its robust business model, adaptability, and deep understanding of the Indian market. Its unparalleled trust among the Indian masses, extensive reach, financial strength, and contribution to national development have set standards for other companies in the insurance sector.
As India’s insurance landscape evolves, LIC’s ability to innovate while maintaining its core strengths will determine its future trajectory.
