I am delighted to participate in the Golden Jubilee Celebrations of the Life Insurance Corporation of India (LIC) and launch the ‘Jeevan Madhur’ micro insurance policy. LIC during the last five decades has been a partner of the Government in every economic activity. LIC has a mission to reach every segment of the society through career agents, development officer and NGOs to the remotest corner of the country. I am sure very soon you will accept authenticated digital signature for all LIC transactions including financial audit. I congratulate the LIC community both present and past who have built a robust institutional framework for risk coverage to Indian citizens during the last fifty years. I extend my greetings to the organizers, economists, societal transformers, policy holders, academicians, government functionaries and all the LIC employees, particularly young executives, who will carry LIC into the next decade. I understand that the LIC has settled over 12.5 Cr. claims from policy holders and has paid over Rs.1,71,000 crores as final settlement during the last five decades. You are heading for Rs.2,00,000 crores settlement payments. This shows the magnitude of operation and the service which has been rendered by LIC to the welfare of Indian community. LIC can definitely cross the oceans to increase the business. I have selected the topic for discussion “LIC and its Multi Missions”.
Life Insurance Corporation (LIC) unlike in erstwhile years has to do business in a competitive environment. Competitive environment has multi-dimensions. I have described it through a Law of Development which is indeed applicable to LIC business. Law of development

 

I was studying the development patterns and the dynamics of connectivity between nations, especially in trade and business. As you all know the world has few developed countries and many developing countries. What is the dynamics between them and what connects them? Developed country has to market their products in a competitive way to different countries to remain as developed country. The developing country to get transformed into developed country; they too have to market their products to other countries in a competitive way. Competitiveness is the common driving factors between the two types of nations. Competitiveness has three dimensions: quality of the product, cost effectiveness and product is in the market just-in-time. Indeed this dynamics of competitiveness in marketing of products by developing and developed countries is the law of development. There is a relationship between the core competence and the competitiveness of the country. Such a law applies to LIC as well. Competitiveness has to give strength within the country and expanding LIC’s services in foreign countries.

 

Economic development: Transforming India into a developed nation

We have a population of over one billion people of which 220 million are still living below the poverty line. They need education, they need habitat, they need health care, and creation of employment potential. To meet their needs we have the second vision of transforming India into a developed nation by the year 2020. We have identified five areas where India has a core competence for integrated action: (1) Agriculture and food processing (2) Reliable and quality electric power and surface transport for all parts of the country. (3) Education and Healthcare (4) Information and Communication Technology (5) Self reliance in critical technologies. These five areas are closely inter-related and if implemented in a co-ordinated fashion will lead to food, and economic security, and national security. A strong partnership among the R&D, academy, industry, banking, insurance and the community as a whole with the Government departments will be essential to accomplish the vision for a developed India. Indian GDP is growing at an average rate of 8% p.a. whereas the economists suggest that to remove the poverty of 220 million people we have to grow at the rate of 10% p.a. consistently for over a decade. One of the components through which the rural-urban divide will be bridged and prosperity will be brought to the seven hundred million people living in six hundred thousand villages is Providing Urban Amenities in Rural Areas (PURA).

 

The Mission of PURA (Providing Urban amenities in Rural Areas)

The number of PURA units for the whole country is estimated to be 7000. This envisages integrated connectivities to bring prosperity to rural India. These are - physical connectivity of the village clusters through quality roads and transport; electronic connectivity through tele-communication with high bandwidth fiber optic cables reaching the rural areas from urban cities and through Internet kiosks; and knowledge connectivity through education, vocational training for farmers, artisans and craftsmen and entrepreneurship programmes. These three connectives will lead to economic connectivity through starting of enterprises with the help of banks, LIC, micro credits and marketing of the products.

Each PURA cluster will connect about 20-30 villages depending upon the region and population and will cost about twenty million dollars. There are three types of PURA’s: Plain terrain PURA, Costal PURA and Hill PURA. This is a viable and sustainable business proposition. After initial short-term employment during construction etc., we have to plan for initiating actions for providing regular employment and self employment opportunities in nationally competitive small enterprises in agro processing, manufacturing and services sectors for about 10% to 15% of the population of the village cluster. If the industrial/business parks are marketed well, they can generate employment opportunities in support and services sector for about 30% eligible people. This will provide sustainable economy for the rural sector. I would request LIC to participate in this national mission. This will lead to the removal of urban-rural divide.

 

Mission of LIC

While LIC is celebrating its Golden Jubilee, it is worthwhile to study its mission which is to ensure and enhance the quality of life of the people by providing financial security and also venturing into the field of economic development by making available resources for productive development and products and services useful and essential for society. This study should enable provision of additional products and services to the citizens taking the dynamics of development into account such as increase in the life expectancy of the population. In essence the renewed mission should enable fulfillment of the expectations and aspirations of the people of the country, particularly the economically and socially disadvantaged sections of society. This can be achieved by developing unique insurance products specifically directed towards rural India.

 

Growth in LIC business

I am happy that the operations of this Corporation have multiplied manifold over the years - from 9 lakh policies in a year to more than 3.15 crore policies annually. Also the resources available to the Corporation through its operations have been gainfully deployed for the development of vital and crucial sectors of the nation’s economy, namely water supply, sewerage, housing and even railways, airports and ports. Truly enough, the LIC’s motto underscores the principles underlined in nation building in all its progressive manifestation. It is therefore, unquestionably worthwhile celebrating its 50 years of its noble existence today. Particularly, I would suggest LIC to become partner of Rural Development programmes in providing physical and electronic connectivity to the PURA complexes since they are already in the infrastructure development business.

 

Injecting Positive Dynamism through Risk Coverage

Security in any facet of life is the primary prerequisite that impels an individual and the society to push forward to get to the heights of social and economic prosperity. Feeling of insecurity would totally dampen any enthusiasm to move forward and would certainly act as a negative factor inhibiting growth, nipping initiatives in the bud. In such a scenario, the contribution being made by the LIC to nullify such negativities and injecting a positive dynamism in the lives of millions of people in the country can hardly be over-emphasized. I am particularly happy also to note that the Corporation is continuously engaged in exploring more and more avenues for its meaningful operation so as to fulfill the noble mission carved for it in the national socio-economic spectrum. Further special schemes are being envisaged for immediate implementation that would bring meaning and depth to the sustenance of poorer classes of society even encompassing the health sector. I wish LIC total success in these ventures.

 

Promptness in Service

Let me discuss another aspect. It is good to provide security to individuals against the uncertainties of life but the actual test of success consists in ensuring that the deliverables as envisaged in the policies are delivered to those entitled to receive them well in time and in adequate measure. Any delay in this would be totally counter-productive and, in my view, tantamount to committing a sin. I am saying this not because I have received any complaint in this regard but as a note of caution so that we who owe it to the society do our duty in time and true to the spirit of the mission enjoined on us so that the noble ideals set forth by us and for us are achieved meaningfully, in full and on time.

 

Micro Insurance

LIC is now engaged also in micro insurance which is directly aimed at the Lower Income Groups who have only small saving capacity. LIC has highlighted simplicity as the hallmark of micro insurance products. They have also mentioned that the products have simple and easily understandable features and are priced low enough to become affordable by the poor. Such a step will lead to protection against risks in various phases of life, health and well-being of the needy. Partners of LIC are NGOs, Self Help Groups and Micro Financial Institutions for its operations. May the coming years see LIC blossoming out still further to afford many more socially productive projects and schemes for the welfare of the Indian people.

 

Missions for Life Insurance Corporation

I would suggest the following seven missions for the consideration of LIC for implementation:

a. LIC may consider increasing the total policy holders of the Corporation from the existing 190 million to 380 million within the next five years by large scale penetration into the rural and unorganized sector.

b. As you are aware the technology is fast changing and we are working towards a near paperless system. It is time that Life Insurance Corporation may like to consider provision of dematerialized policies in electronic form to the policy holders. This will enable easy storage of policies by the Policy holders. There may be a need for the change of certain provisions in the Insurance act both at the centre and the State. I am sure, the Government may consider implementation of such changes for introducing dematerialized policies.

c. LIC is the largest institution providing risk cover to the citizens. Whereas I find that there is no institution in the country imparting education on insurance system. It is desirable to think of an Institute of Insurance Management created on the lines of Indian Institute of Management or Indian Institute of Rural Management. Also, there is a need to include insurance topics in the curriculum of B.A., B.Com. and in distance education programmes so that better trained assessors and sale personnel are available. Apart from providing the quality man power required for the insurance industry, this institute can work on research projects for promoting quality insurance products and systems in the country.

d. LIC has constantly been attempting to increase the number of people being brought under risk cover. Also, LIC has been funding number of infrastructure projects particularly in power sector. PURA (Providing Urban Amenities in Rural Areas) indeed is an economically viable proposition. PURA has to be managed by financial institutions, small scale industries and state government. I would suggest LIC to take the leadership in commissioning of 1000 PURAs in different States in partnership with bankers, small scale entrepreneurs, NGOs and the respective state governments. The rural economic prosperity brought about by this scheme will enhance the number of policy holders in the chosen region.

e. LIC may consider increasing the awareness of insurance products among rural people through the Village Knowledge Centres being established in each of the Panchayats.

f. LIC may consider funding of power plants run on municipal and other bio-waste in Tier-2 cities and Tier-3 towns. This will enable provision of clean green environment in the city or town and also release the land which is occupied by waste.

g. LIC has certain number of branches abroad. There are over 20 million Indians settled in different countries. LIC may consider creation of more number of foreign branches where it can be more competitive. This will enable mobilization of more business from persons of Indian origin to an extent of over 10 million and also foreign nationals.

 

Conclusion

As I am in the midst of leaders from the Insurance industry, I would like to talk to you about the linkage between the national economic development and creative leadership:

- Developed India has to be powered by economic development.

- Nation’s Economic development is powered by competitiveness.

 

- The competitiveness is powered by knowledge power.

- The knowledge power is powered by Technology and innovation.

- The Technology and innovation is powered by resource investment.

- The Resource investment is powered by revenue and return on Investment.

- The Revenue is powered by Volume and repeat sales through customer loyalty.

- The customer loyalty is powered by Quality and value of products.

- Quality and value of products is powered by Employee Productivity and innovation.

- The Employee Productivity is powered by Employee Loyalty, employee satisfaction and working environment.

- The Working Environment is powered by management stewardship and sound project management.

- Management stewardship is powered by Creative leadership.

For success in all the missions we need creative leaders. Creative leadership means exercising the vision to change the traditional role from the commander to the coach, manager to mentor, from director to delegator and from one who demands respect to one who facilitates self-respect. I am sure creative leadership spearheads all the institutions and the future aspiring institutions. For realizing the goals of a prosperous and developed India, we are in difficult and complex missions which have high risks. Where there is risk, challenges are heavy. Where there is high intensity of challenges, the chances of higher turn over and profit are possible. I am sure the creative leaders of LIC will rise to the occasion and provide risk cover and meet the development challenges of the nation.

 

With these words, I launch the micro insurance policy, an innovative insurance cover designed to service the needs of rural population. Once again, let me greet all the members of Life Insurance Corporation in this Golden Jubilee Year. My best wishes to the LIC community in their mission of providing hassle-free financial security to its customers.

May God bless you.

 

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