Human beings not only think about their present but also about their future, so it is significant to do something that will at least give them financial security and help them in growing their wealth. None of us is aware of our future, so instead of sitting quietly and doing nothing, it is better to invest in something that can at least play the role of an umbrella for us during a rainy day.
Life Insurance Corporation of India also known as LIC is the biggest life insurance company in the country. If you live in India, there is no way, you haven’t heard about LIC. This life insurance company has captured 70% of the market share and is under the Government of India. In this, we are going to talk about LIC IPO, what it exactly is and what are the things we need to know before investing in them. So, let’s get right into it.
“It’s not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for.” —Robert Kiyosaki
LIC IPO is LIC’s Initial Public Offering where they are offering shares of LIC as the Government has decided to sell some of its stakes. Recently LIC made headlines after submitting Draft Red Herring Prospectus (DRHP).
The Government of India has decided to sell 5% of its stake, therefore 95% stake of the company will remain under the Government. Among the public offering, 35% will be booked for the retail investors, the other 5% for the employees of LIC and 10% will be reserved for the policyholders.
Things You Need to Know Before Investing In LIC IPO
Investing in something is a very important decision that one has to take; you have been very clear and careful before doing anything related to this as it is about the financial security of your future.
As per the information, LIC policyholders who got their policy on or before the 13th of February, 2022 are eligible to invest in the 10% of public offerings that is reserved for the policyholders.
If anyone wants to be eligible in the quota for the policyholders, their PAN has to be linked with their policyholders. Those who have already linked their policyholders with their PAN on or before the 28thof February 2022 are eligible for the 10% quota.
Policyholders who have their Demat account are eligible for the 10% quota.
As 35% are reserved for retail investors, it means anyone who is not a LIC employee or a policyholder can apply to this quota. Policyholders, as well as employees of LIC, can also apply to this quota.
A retail investor is allowed to invest max to max INR 2 Lakhs, not more than that in their quota of LIC IPO.
LIC policyholders are allowed to invest INR 2 Lakhs under their quota of IPO.
LIC Employees are also eligible to invest a maximum of INR 2 Lakhs under their quota of IPO.
A policyholder who is not a LIC employee can invest a total of INR 4 Lakhs that is INR 2 Lakhs in the quota of retail category and INR 2 Lakhs in the policyholder category.
A LIC employee can invest up to INR 6 Lakhs if they are also a LIC Policyholder. It means INR 2 Lakhs under the quota of retail category, INR 2 Lakhs under the quota of policyholder category and another INR 2 Lakhs under the quota of LIC employee category.
If policyholder wants to avoid getting their application rejected under the policyholder quota, then they must ensure that they are primary Demat account holder.
If there are joint policyholders then they can apply under the policyholder’s quota, if only they have separate Demat accounts.
LIC IPO will be open to the public in the month of April 2022. The total offering is 31.6 Crore shares. It is also said that LIC employees and policyholders are eligible to get discounts on the floor price as well.
Conclusion
LIC is one of the biggest insurance companies in India founded in 1956 and is completely owned by the government. It is one of the most awaited IPOs since the launch of Zomato, Nykaa and Paytm IPO. It is expected to be one of the biggest IPO launches. People are eagerly waiting for LIC IPO so that they can invest in it.
FAQs
Who are the shareholders of LIC?
The government of India is the major shareholder and will remain the majority shareholder of LIC, only 10% is being sold to policyholders.
When will LIC IPO launch?
The LIC IPO will be open to the public on March 11, 2022.
How can I buy LIC shares?
If you’re a retail investor you can buy LIC shares using your UPI id.
Sales of life insurance policies are a vital source of revenue for any life insurance company and their primary motivation for doing business. Because today’s business operations are so intertwined, claim settlement services significantly influence life insurance policy sales. People can use life insurance plans to cover a variety of hazards throughout life.
The insurance industry grew rapidly in the first two decades of the twentieth century. In 1938, it increased from 44 firms with a total business-in-force of Rs.22 crore to 176 companies with a total business-in-force of Rs.298 crore. The call for the life insurance sector to be nationalised had been voiced before, but it gained traction in 1944 when a measure to modify the Life Insurance Act 1938 was filed in the Legislative Assembly. However, it was not until 1956 that life insurance was nationalised in India when the Life Insurance Corporation was passed by the Indian Parliament on June 19.
The Life Insurance Corporation of India was established on September 1, 1956, by the Ministry of Finance of the Government of India, with the goal of making life insurance more widely available, particularly in rural areas, with the goal of reaching all insurable persons in the country and providing adequate financial cover at a reasonable cost.
LIC’s Objectives
The primary goal of LIC is to promote life insurance across the country, particularly in rural regions and among the socially and economically disadvantaged, to reach all insurable individuals and provide them with appropriate financial protection against death at a fair cost.
Maximise people’s savings mobilisation by making insurance-linked savings sufficiently appealing. Another goal is to function as trustees for the insured public in their individual and collective capacities, meeting the community’s diverse life insurance demands as the social and economic environment changes.
LIC intends to involve all employees to the best of their abilities to advance the insured public’s interests by delivering prompt and courteous service.
Growth of LIC
In 1956, LIC had 5 zone offices, 33 divisional offices, and 212 branch offices in addition to its corporate office. Because life insurance contracts are long-term contracts that require a range of services during the policy’s life, LIC felt the necessity to extend operations and open a branch office at each district headquarters in subsequent years.
The LIC was reorganised, and it created a considerable number of new branch offices. It shifted servicing tasks to branches due to the reorganisation, and departments were declared accounting units. It had a significant impact on the company’s success. You can observe that from about INR 200 crores in new business in 1957, the company only exceeded INR 1000 crores in 1969-70, and it took another ten years for LIC to reach the INR 2000 crore barrier. However, after reorganisation in the early 1980s, LIC had already surpassed INR 7000 crores in Sum Assured on new policies by 1985-86.
LIC has practically monopolised the solicitation and sale of life insurance plans in India, having existed as a massive insurance business for almost 60 years. LIC has expanded its operations outside of India to 14 countries to meet the insurance needs of Non-Resident Indians.
With an asset value of INR 2,529,390 crores, LIC is now India’s largest life insurance business, controlled by the government. LIC’s headquarters are in Mumbai.
It currently operates eight zonal offices and 113 divisional offices around the nation. It has 2,048 branches across India in various towns and cities.
In addition, LIC maintains a network of over 15 million agents that sell life insurance to the general population. The LIC had a total life fund of $28.3 trillion as of 2019. In the 2018–19 fiscal year, the total value of sold insurance was $21.4 million. In 2018–19, LIC resolved 26 million claims. With 290 million policyholders, it is the largest insurance company in the world.
The Life Insurance Corporation of India (LIC of India) is one of India’s largest financial organisations, providing comprehensive financial solutions for all aspects of life. It has a customer base of around 23 crores, making it the largest insurance company globally. After Indian Railways, it is the second-largest real estate owner in the country. The LIC advertises through newspapers, radio, television, billboards, and other media.
LIC’s Products and Services
The Life Insurance Corporation of India (LIC) offers a variety of life insurance plans. As a government-owned Life Insurance Firm, LIC’s policies are in high demand and appeal to a broad spectrum of consumers.
LIC For endowment, LIC offers the Jeevan Pragati, LIC Jeevan Labh, LIC Single Premium Endowment Plan, LIC’s New Endowment Plan, New Jeevan Anand, LIC’s Jeevan Rakshak, LIC’s Limited Premium Endowment Plan, LIC’s Jeevan Lakshya, LIC’s Aadhaar Shila, and LIC’s Aadhar Stambh.
LIC Jeevan Umang specialises in life insurance.
LIC’s Bima Shree, LIC’s Jeevan Shiromani, LIC’s New Money Back Plan- 20 years, LIC’s New Money Back Plan-25 years, LIC New Bima Bachat, LIC’s Jeevan Tarun are some of the money-back plans available. Money-back plans include LIC’s Anmol Jeevan II and LIC’s e-term Plan.
Their pension schemes include the Pradhan Mantri Vaya Vandana Yojana, LIC New Jeevan Nidhi, and LIC’s Jeevan Akshay.
The LIC of India’s Agents Housing Scheme provides house loans to the company’s agents. It has a separate subsidiary, LIC-HFL, from which many housing plans are moved for fairer distribution.
Employees are given meal coupons.
In September 2010, the Life Insurance Corporation of India (LIC of India) introduced a one-of-a-kind benefit for all workers. The number of meal vouchers is determined by each team member’s position in the hierarchy.
Team member participation in sports is encouraged.
Employees of the LIC of India are encouraged to participate in various sporting activities to improve their physical fitness and overall personality. Employees have also spoken on behalf of the company at different national and international levels. It has recruited numerous workers from its Sports Recruitment Quota to maintain competitive excellence in sports and to compete on an equal footing with other businesses.
Training its employees
LIC has begun to provide training to its staff at all levels of the organisation. It has established a distinct Human Resources Development / Organizational Development (HRD/OD) Department to develop and enhance capabilities, commitment and foster a learning and performance-focused culture.
LIC Life Insurance’s marketing approach is pretty basic. Its primary goal is to educate consumers about the company’s different policies and brands. Personal selling, exhibits, demonstrations at events, advertising, and innovative schemes have all been used by LIC to achieve this goal.
A mobile advertising van circulates across rural regions, raising awareness of the firm. LIC-Life Insurance has a website and a webpage where it provides thorough information on each potential inquiry to satisfy customers.
LIC is continually working to strengthen “Brand LIC” and strengthen the brand’s link with growing market segments. It has done so by maintaining a regular media presence in national and regional outlets.
It has also sponsored several national and international programmes and a variety of activities such as newspaper campaigns and continuous coverage of goods in several publications.
FAQs
Who is the founder of LIC?
LIC has been founded by Government of India in 1956.
What are the Subsidiary companies of LIC?
LIC subsidiary companies are:
LIC Pension Fund Limited
LIC Cards Service Limited
IDBI Bank Limited
What is the number of employees in LIC?
There are 1,14,000 employees (2020) working for LIC, and over 10 Lakh LIC agents.
The Government of India owns the Life Insurance Corporations of India (LIC), which is an insurance and investment business. The Life Insurance Corporation of India (LIC) was established on September 1, 1956, when the Parliament passed the Life Insurance of India Act, which nationalised the Indian insurance business. The state-owned LIC was formed by the merger of over 245 insurance companies and provident organisations. It both encourages and results in the institutionalisation or mobilisation of savings.
Since then in the field of life insurance, the LIC has near-monopoly, as the amount of life insurance business through postal insurance and state insurance is relatively much smaller. Life insurance is a very important form of long term contractual savings. The total volume of the insurance business has been growing in the country with the spread of knowledge and consciousness about insurance in the country.
However LIC can grow at a faster rate if the organizational and operational efficiency of LIC can be improved, new kinds of insurance covers are introduced, its services are extended to smaller lesser-known places and the general price level is kept stable. As of 2019, the Life Insurance Corporation of India had a total life fund of ₹28.3 trillion. The total value of sold policies in the year 2018-19 is ₹21.4 million. Life Insurance Corporation of India settled 26 million claims in 2018–19. It has 290 million policyholders.
LIC invests in various sectors such as cement, banks, chemicals and fertilizers, transmission and electricity, engineering, construction and infrastructure, electrical and electronics, healthcare, hotels, finance and investments, information technology, metals and mining, motor vehicles, oil and natural resources, retail, textiles, transportation and logistics.
Among those companies, LIC’s holding I term of value in 2012 was established to be the highest in ITC (₹27,326 crores), followed by RIL (₹21,659 crores), ONGC (₹17,764 crores), SBI (₹17,058 crores), L&T (₹16,800 crores), and ICICI Bank (₹10,006 crores). The share price drop in ITC on 18 July 2017 had caused LIC a major loss of around 7000 crores during the financial year.
Where LIC also holds a 51% stake in IDBI Bank, making it the only insurer in India to own a bank, since regulations prohibit insurers from holding more than 15% stake in any company.
LIC subsidiaries
LIC Pension Fund Limited
LIC Pension Fund Limited is India’s first pension fund. It was set up by Life Insurance Corporation (LIC) in November 2007. LIC is one of India three public sector pension fund managers and has a one-third share in all investments made through Central and State Government NPS. It is also open to the private sector as a fund manager. LIC Pension Fund is the first Pension Fund Company in India to be incorporated and to receive commencement of business certificate.
The government of India introduced the New Pension System (NPS), with effect from 2004. Pension Fund Regulatory And Development Authority (PFRDA) through a process of competitive bidding, has appointed Life Insurance Corporation (LIC), State bank of India (SBI), UTI Asset management company (UTI –AMC) and as The Pension Fund under the NPS. “NPS-Lite Model” is designed to ensure ultra-low administrative and transactional costs, so as to make such small investments viable.
National Pension System NPS Lite makes pensions possible for small investors. It is an initiative of the Pension Fund Regulatory and Development Authority (PFRDA), the apex body established by the Government of India to regulate and develop the pension sector in India. NPS extends help to the weaker and economically disadvantaged sections of the society with their limited investment potential. This is why PFRDA has launched NPS Lite to specifically target the marginal investors and promote small savings during their productive life. It also aims at building up a corpus sufficient enough to buy an annuity for their old age.
LIC Cards services limited came into existence in 2008 as a 100% subsidiary of LIC to bring out its own credit cards in the market. LIC offers four types of credit cards and each of these cards come with some common features and some distinct features that make them unique. LIC credit cards are best suited for you if you regularly pay a large LIC premium. LIC cards are uncapped, while other cards have a cap cashback and reward points that can be earned on premium payments.
The types of LIC Cards
The types of LIC cards are:
LIC Gold Credit Cards (for regular users)
LIC Platinum Credit Cards (for shopping and rewards)
LIC Titanium Credit Cards ( for travel and hotel booking)
LIC Signature Credit Card (for premium services)
Fee/Charge
Amount/rate
Finance Charges on Revolving Credit and Cash Advance
3.25% p.m. (46.78% annual)
Free Credit Period
Free Credit Period Up to 50 days
Cash Withdrawal Fee
2.5% of the amount withdrawn (min. Rs. 500)
Cash Payment Fee
Rs. 100
Over Limit Fee
3% of the amount (min. Rs. 500)
Foreign Currency Mark-up Fee
3.5% of the transaction amount
There are certain criteria that the financial institution looks into before accepting your credit card application. Your credit score, age, monthly income, location etc. are some of the parameters that you should keep in mind before you apply for a credit card. To apply for a LIC credit card, you should be above 18 years and should either be a LIC agent or a LIC policyholder. The document required to apply for a LIC credit card are:
Proof of Identity – PAN Card, Aadhaar card, Driver’s License, Passport, Voter’s ID, Overseas Citizen of India Card, Person of Indian Origin Card, Job card issued by NREGA, Letters issued by the UIDAI.
Proof of Address – Aadhaar card, Driver’s License, Passport, Utility Bill not more than 3 month’s old, Ration Card, Property Registration Document, Person of Indian Origin Card, Bank Account Statement.
Proof of Income – Latest one or 2 salary slips (not more than 3 months old), Latest Form 16, Last 3 months’ bank statement.
IDBI Bank Ltd., as a full-service universal bank provides a wide gamut of financial products and services encompassing deposits, loans payment services and investment solutions. Understanding today’s fast-paced and digital world they offer an innovative range of digital services that complement the pan India network of branches and ATMs. The bank also has 24×7 customer care facilities to help its customers reach out. IDBI Bank Ltd is operating as a full-service universal bank that serves customers from all segments.
As a universal bank, IDBI Bank Ltd. touches the lives of millions of Indians through a wide variety of banking products and services. The Bank also has an established presence in associated financial sector businesses including capital market, investment banking and mutual fund business. IDBI’s very business philosophy is to provide relevant financial solutions, ensure maximum customer convenience through easy access to branches and ATMs as well as digital offerings and excellence in customer service.
IDBI Subsidiaries
The vision is to be the most preferred and trusted bank enhancing value for all stakeholders defining and shaping our day-to-day business, helping us to build long-lasting relationships. IDBI Bank Limited has been categorized as a ‘Private Sector Bank’ for regulatory purposes by the Reserve Bank Of India with effect from January 21, 2019, consequent upon Life Insurance Corporation Of India acquiring 51% of the total paid-up equity share capital of the bank. To cater to its ever-expanding needs, IDBI Bank has formed subsidiaries and joint ventures across diverse areas of the Banking and Financial System.
Some of its subsidiaries are:
IDBI Capital Markets and Securities Limited (ICMS)
Its businesses include Merchant Banking, Stock Broking, Distribution of Financial Products, Corporate Advisory Services, Debt Arranging and undertaking, Portfolio management of pension and Research Services.
IDBI Intech Limited (IIL)
The major business activities of the company are Information technology services, information security practices, national contact centre and outbound sales team.
IDBI Asset Management Limited (IAML)
IAML is the investment manager of schemes launched by IDBI Mutual Fund. The Fund offers a bouquet of products inequity and risk profiles of investors.
IDBI Trusteeship Services Ltd (ITSL)
The company operations are acting as trustees to securitization transactions, acting as Bond/Debenture trustee, Security trusteeship assignments, Share pledge Trustee, Venture Capital Fund, Safe Keeping and other trusteeship services.
IDBI Federal Life Insurance Company Limited (IDBI Federal)
The Company’s life insurance business comprises individual life and pension and group life, including non-participating, health and linked segments.
FAQ
In which sectors LIC invest?
LIC invests in various different sectors such as cement, banks, chemicals and fertilizers, transmission and electricity, engineering, construction and infrastructure, electrical and electronics, healthcare, hotels, finance and investments, information technology, metals and mining, motor vehicles, oil and natural resources, retail, textiles, transportation and logistics.
What is LIC Pension fund limited?
LIC Pension Fund Limited is India’s first pension fund. It was set up by Life Insurance Corporation (LIC) in November 2007. LIC is one of India three public sector pension fund managers and has a one-third share in all investments made through Central and State Government NPS. It is also open to the private sector as a fund manager. LIC Pension Fund is the first Pension Fund Company in India to be incorporated and to receive commencement of business certificate.
How many types of Cards does LIC provide?
LIC Gold Credit Cards (for regular users) LIC Platinum Credit Cards (for shopping and rewards) LIC Titanium Credit Cards ( for travel and hotel booking) LIC Signature Credit Card (for premium services)
The insurance industry in India is a pool of insurance companies hedging insurance seekers against risk through the means of insurance contracts. The contract is an agreement between the insurer and the insured in which the payment of the former guarantee for an uncertain event against a premium paid by the insured regularly. The premium is mentioned in the contract.
Insurance is a method of risk management to protect people and assets from uncertain losses. Life Insurance is precisely planned to protect your legatee financially in case something unfortunate happens to you. For investors, insurance is seen as the slow-growing, safe sector when compared to other financial sectors.
However, there are 58 insurance companies in total among which 24 are life insurance companies. Most of them have international ties.
Under the life insurer segment, LIC is the sole public sector company while there are six public sector companies in the no-life insurer vertical. GIC is the sole national re-insurer in the industry. The chain has many players such as brokers, surveyors and third party administrators serving health insurance claims.
Market Share of Top Companies in terms of Gross Direct Premium
The government has always pushed for insurance penetration in the economy. As per the data from sectoral regulator IRDAI, gross direct premiums of non-life insurers in India grew nearly 7% to Rs 14,809.27 crore in June this year while the 34 non-life insurance companies in the country had reported gross direct premium of Rs 13,842.27 crore in June 2020.
Of these, the 25 general insurance companies registered a 4.9% rise in gross direct premium during the month at Rs 13,041.51 crore as against Rs 12,435.71 crore in the year-ago period.
The five standalone private-sector health insurers witnessed a 46.6% jump in gross direct premium at Rs 1,556.89 crore from Rs 1,061.94 crore in June 2020.
Two specialised PSU insurers– Agricultural Insurance Company of India and ECGC Ltd — reported a decline of 38.8% in combined gross direct premium during the month at Rs 210.87 crore from Rs 344.62 crore a year ago.
Cumulatively, the premium written by all the players during April-June 2021-22 was up 13.8% to Rs 44,434.96 crore as against Rs 39,054.82 crore in the same period of 2020-21.
Using data to improve offerings and customer experience is not new for the insurance industry. But doing this well and consistently is a challenge. To use data for better customer experience companies need to leverage digital insurance solutions. The use of an agile cloud system and data analytics can help companies meet customer demands. Chatbots, mobile applications, and AI-generated quotes could be the best solution possible now.
2. Commoditization
Insurers are consistently trying to get new customers while retaining their present ones. Providing lower rates than their competitor is the best way to do that. But along with this modern consumer decides to purchase insurance based on how they are treated by the insurance company working with them.
Commoditization is the process of treating someone as if they are a mere commodity. The “commoditization” of insurance that has received so much press is a misnomer. Insurance is not a commodity but a complex good.
This challenge can be overcome with the help of Artificial Intelligence and automated process which can provide a personalized yet fast customer experience. Digital insurance technologies also help to create unique products quickly.
3. Digitizing small businesses
Small businesses are the most profitable market in the insurance industry. Even though big insurance companies are aggressively trying to move into this market. But this can cause loss to companies who are already serving small commercials.
To maintain their customer base and expand the insurance companies serving small commercials should provide digital interactions and digitize underwriting and claims. Investing in employees and new talent can help them expand their existing business and acquire new customers.
The Government of India has taken several initiatives to boost the insurance industry. Some of them are as follows:
The government has announced an increase in the Foreign Direct Investment (FDI) limit in insurance from 49% to 74% in the union budget of 2021-22.
The government has also taken an initiative to provide for 100 million poor and vulnerable families under the National Health Protection Scheme that was launched in September 2018.
To boost the safety of farmers’ crops and ensure the maximum benefit of crop insurance reaches farmers, the government of India has allocated Rs 16000 crores for Pradhan Mantri Fasal Bima Yojana (PMFBY) for the fiscal year 2021-22.
The Insurance Regulatory and Development Authority of India (IRDAI) plans to issue re-designed initial public offering (IPO) guidelines for insurance companies in India that are looking to divest equity through the IPO route. IRDAI has allowed insurers to invest up to 10% in additional tier 1 (AT1) bonds that are issued by banks to augment their tier 1 capital; this will help expand the pool of eligible investors for the banks.
The future looks promising for the life insurance industry in India. Several changes in the regulatory framework have been proposed which may transform the way the industry conducts its business and engages with customers.
As per the data from sectoral regulator IRDAI, the gross direct premiums of non-life insurers in India grew nearly 7% to Rs 14,809.27 crore in June this year. The general insurance industry is expected to increase by 7-9% in terms of gross direct premium income in FY22, backed by healthy growth from the health and motor segments.
Demographic factors such as the growing middle class, young insurable population and retirement planning will support the growth of the Indian life insurance segment.
FAQs
What does the insurance industry do?
The insurance industry sells the financial product as a method of risk management to protect people and assets from uncertain losses. It pools funds from various insured entities to pay for the losses incurred. However, not all kinds of risks are protected through insurance. For a risk to be ensured it should meet certain characteristics.
What type of industry is insurance?
Insurance is a financial service industry.
What are the 4 types of insurance?
The 4 types of insurance include:
Motor insurance
Health insurance
Travel insurance
Home insurance
How large is the insurance industry?
As per the data from sectoral regulator IRDAI, the gross direct premiums of non-life insurers in India grew nearly 7% to Rs 14,809.27 crore in June this year. The general insurance industry is expected to increase by 7-9% in terms of gross direct premium income in FY22, backed by healthy growth from the health and motor segments.
Which is the biggest insurance company in India?
Life Insurance Corporation of India (LIC) is the biggest and oldest insurance company in India.
How many insurance companies are there in India?
There are 58 insurance companies in total among which 24 are life insurance companies and the other 34 are non-life insurance companies.
Harshit Verma
