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A SUMMER TRAINING REPORT ONANALYSING ADMINISTRATION OF VARIOUS DEPARTMENTS

AT LIC OF INDIA

SUBMITTED IN THE PARTIAL FULFILLMENT OF THE REQUIREMENT OFMASTERS OF BUSINESS ADMINISTRATION (MBA)

BY

NEHA PATEL - (95)

AT

BHARATI VIDYAPEETH DEEMED UNIVERSITY, PUNE

INSTITUTE OF MANAGEMENT AND

ENTREPRENEURSHIP DEVELOPMENT, PUNE

SESSION: 2010 2012

COMPANY GUIDE: INTERNAL GUIDE:

Mrs. PRITI VIHIRE Mr. SACHIN AREKARE

ASST. MANAGER ASST.PROFESSOR

(I.M.E.D), PUNE

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BHARTI VIDYAPEETH DEEMED UNIVERSITY, PUNE

INSTITUTE OF MANAGEMENT AND ENTREPRENUERSHIP DEVELOPMENT, PAUD ROAD,

ERANDWANE

PUNE-38

CERTIFICATE OF COMPLETION

This is to certify that Mr. is a bonafide

student of MBA program of the university in this institute for the year . As a

part of the University curriculum, the student has completed the project report

titled

. The

project report is prepared by the student under the guidance of

Prof.

(Teacher Guide) Program Co-ordinator

Director

Date:

Place:

ACKNOWLEDGEMENT

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I am very thankful to a great many people who helped andsupported me during the summer training.

My deepest thanks to Lecturer, Priti Vihire the Guide of the

project for guiding and correcting various documents of mine with attention and

care. She has taken pain to go through the project and make necessary correction as

and when needed.

I express my thanks to the Principal of, BHARATI VIDHYAPEETH DEEMED UNIVERSITYPUNE (IMED) , for

extending his support.

My deep sense of gratitude to Nitin Nayak Sir,

support

and guidance. Thanks and appreciation to the helpful people at LIC of India, for their support.

I would also thank my Institution and my faculty members without whom this project

would have been a distant reality. I also extend my heartfelt thanks to my family and well wishers.

INDEX

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Sr.No

Contents Page No

1 Introduction 4-6

2 Objective of Summer Training 7

3 Scope of Summer Training 8

4 Company Profile

a) History of Organization

b) Nationalization of Organization

c) Current Status of Organization

d) Vision , Mission & Objectives of Organization

e) Organizational Structure

9-26

5 Insurance What is Insurance? 27-39

6 Different Departments of Organization 40

7 Findings 41-42

8 Conclusion 43

INTRODUCTION

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The Life Insurance Corporation of India (LIC) (Hindi: ) is the largest

state-ownedlife insurancecompany in India, and also the country's largest investor. It is fully

owned by the Government of India. It also funds close to 24.6% of the Indian Government's

expenses. It has assets estimated of 13.25 trillion (US$295.48 billion). It was founded in 1956

with the merger of 243 insurance companies and provident societies.Headquartered in Mumbai, financial and commercial capital of India, the Life Insurance

Corporation of India currently has 8 zonal Offices and 113 divisional offices located in different

parts of India, around 3500 servicing offices including 2048 branches, 54 Customer Zones, 25

Metro Area Service Hubs and a number of Satellite Offices located in different cities and towns of

India and has a network of 13,37,064 individual agents, 242 Corporate Agents, 79 Referral Agents,

98 Brokers and 42 Banks (as on 31.3.2011) for soliciting life insurance business from the public.

The slogan of LIC is "Zindagi ke saath bhi,Zindagi ke baad bhi" (Hindi:,

) which means "during life and after life".

OBJECTIVE OF THE SUMMER TRAINING

The Life Insurance Corporation of India (LIC) is the largest state-owned lifeinsurance company in India and also the country's largest investor. It is fully owned bythe Government of India. My objectives for this summer training in LIC of India are:

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1. To learn the basic concept of insurance.

2. To understand the administration of various departments of LIC.

3. To understand all the practical aspects of insurance right from customermobilization to claim settlement.

4. To understand the process of all types of loan (Home loan, Auto loan, Personal

loan) provided by LIC.

5. To know the requirements and process of internal Audit & Inspection held other

branches.

6. To know how Information technology and LIC relates with each other.

SCOPE OF THE SUMMER TRAINING

Scope of my training is to understand basic concept of life insurance, its working, basic principles

of insurance & rules governing life insurance in India. Insurance is an essential service which a

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welfare state must make available to its people. Insurance is a measure conceived in a genuine

spirit of service to the people.

From the training I learned that how LIC has spread life insurance widely and in particular to the

rural areas and to the socially and economically backward classes with a view to reaching all

insurable persons in the country and providing them adequate financial cover against death at a

reasonable cost.

In conclusion I can say that a life insurance policy can provide the much-needed financial support

to the beneficiaries or the family members of the policyholder on his death. Though it cannot cover

the emotional damages but it can for sure help them lead a good and financially secure life. This is

what life insurance policy provides and the agents make this point clear to the policy buyers,

getting them to buy their policy and making sales for their respective companies.

Company Profile

History of LIC of India

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Life Insurance Corporation of India was created on 1st September, 1956, with the objective ofspreading life insurance much more widely and in particular to the rural areas with a view to reachall insurable persons in the country, providing them adequate financial cover at a reasonable cost.

LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporateoffice in the year 1956. Since life insurance contracts are long term contracts and during thecurrency of the policy it requires a variety of services need was felt in the later years to expand theoperations and place a branch office at each district headquarter. re-organization of LIC took placeand large numbers of new branch offices were opened. As a result of re-organisation servicingfunctions were transferred to the branches, and branches were made accounting units. It workedwonders with the performance of the corporation. It may be seen that from about 200.00 crores ofNew Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it tookanother 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organisationhappening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assuredon new policies.

Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7 zonaloffices and the Corporate office. LICs Wide Area Network covers 100 divisional offices andconnects all the branches through a Metro Area Network. LIC has tied up with some Banks andService providers to offer on-line premium collection facility in selected cities. LICs ECS andATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosksand IVRS, Info Centres have been commissioned at Mumbai, Ahmedabad, Bangalore, Chennai,Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of providing easyaccess to its policyholders, LIC has launched its SATELLITE SAMPARK offices. The satelliteoffices are smaller, leaner and closer to the customer. The digitalized records of the satellite officeswill facilitate anywhere servicing and many other conveniences in the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insuranceand is moving fast on a new growth trajectory surpassing its own past records. LIC has issued overone crore policies during the current year. It has crossed the milestone of issuing 1,01,32,955 newpolicies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding periodof the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented performancerecords in various aspects of life insurance business. The same motives which inspired ourforefathers to bring insurance into existence in this country inspire us at LIC to take this message

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of protection to light the lamps of security in as many homes as possible and to help the people inproviding security to their families.

NATIONALISATION

In 1955, parliamentarian Amol Barate raised the matter of insurance fraud by owners of privateinsurance companies. In the ensuing investigations, one of India's wealthiest businessmen, RamKishan Dalmia, owner of the Times of Indianewspaper, was sent to prison for two years.Eventually, theParliament of Indiapassed the Life Insurance of India Act on 1956-06-19, and theLife Insurance Corporation of India was created on 1956-09-01, by consolidating the life insurance business of 245 private life insurers and other entities offering life insurance services. Nationalization of the life insurance business in India was a result of theIndustrial PolicyResolution of 1956, which had created a policy framework for extending state control over at leastseventeen sectors of the economy, including the life insurance.

Current Status

Over its existence of around 50 years, Life Insurance Corporation of India, which commanded

a monopolyof soliciting and selling life insurance in India, created huge surpluses, and contributed

around 7 % of India'sGDP in 2006.

The Corporation, which started its business with around 300 offices, 5.6 million policies and

a corpusof INR 459 million (US$ 92 million as per the 1959 exchange rate of roughly Rs. 5 for a

US $ , has grown to 25000 servicing around 350 million policies and a corpusof over 8 trillion

(US$178.4 billion).

Vision, Mission & objectives of LIC of India

VISION OF THE GOVERNMENT IN 1956

1. Insurance is an essential service which a welfare state must make available to its people.

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2. The nationalisation of life insurance will be another milestone on the road the country has

chosen to reach its goal of a socialistic pattern of society.

3. It is a measure conceived in a genuine spirit of service to the people.

Shri C.D.Deshmukh, Finance Minister on 19-1-1956.

Objectives of L.I.C

1. Spread life insurance widely and in particular to the rural areas and to the socially and

economically backward classes with a view to reaching all insurable persons in the country

and providing them adequate financial cover against death at a reasonable cost.

2. Maximize mobilization of peoples savings by making insurance linked savings adequately

attractive.

3. Bear in mind, in the investment of funds, the primary obligations to its policyholders,

whose money it holds in trust, without losing sight of the community as a whole; the funds

to be deployed to the best advantage of the investors as well as the community as a whole,

keeping in view national priorities and obligations of attractive return.

4. Conduct business with utmost economy and with the full realization that the moneys

belong to the policyholders.

5. Act as trustees of the insured public in their individual and collective capacities.

6. Meet the various life insurance needs of the community that would arise in the changing

social and economic environment.

7. Involve all people working in the Corporation to the best of their capabilities in furthering

the interests of the insured public by providing efficient service with courtesy.

8. Promote amongst all agents and employees of the Corporation a sense of participation,

pride and job satisfaction through discharge of their duties with dedication towards

achievement of Corporate objectives.

VISION of LIC

To Transform ourselves into a transnationally competitive financial

Conglomerate of significance to societies and the Pride of India

MISSION

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31-3-2003 91.36 96.70 8.64 3.3

31-3-2004 86.05 94.21 13.95 5.79

31-3-2005 76.72 91.51 23.28 8.49

31-3-2006 70.25 89.09 29.75 10.91

31-3-2007 72.46 82.84 25.81 17.16

Objectives & Scope

1. To learn the basic concept of insurance.

2. To understand the administration of various departments of LIC.

3. To understand all the practical aspects of insurance right from customer mobilization to claim

settlement.

Organization Structure

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Insurance- Introduction & Need of insurance

WHY ONE SHOULD GO FOR INSURANCE ?

Mr. X , working in a private firm, is the sole bread earner of his family. His wife is a housewife

and he has two children one daughter studying in College (class 12 th) and one son studying in

school (Class 9th). Entire family is dependant on him for their needs.

Mr. X dies all of a sudden due to an accident.

What will happen to his - Wife, Daughter, Son

WHAT INSURANCE MEANS

* Mitigating of loss or damage or injury to property, life or person in case of unforeseen event(damage).

* Sharing of risk or mishappening by many.

* Protection of the economic values of assets.

* A mechanism to reduce the effect of adverse or unpleasant situations such as death accident

etc.

* It also means the reduction of the impact of the risk on the owner of the asset and those who

depend on that asset.

CONCEPT OF INSURANCE

Insurance has developed from the concept of sharing. Sharing exists from the beginning of human

civilization i.e. from stone age to barter to joint family to nuclei family.

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HISTORY OF INSURANCE INDIA

Year of Name of the Company

Inception1818 Oriental Life Insurance Society

1870 Indian Insurance Company:

Bombay Mutual Assurance Society Ltd.

1870 English Insurance Company:

The European and the Albert.

1874 Oriental Life Assurance Company

1896 Bharat

1897 Empire of India

Year of Name of the Company

Inception

1900s - The Hindusthan Cooperative,Calcutta

The United India, Madras

The Bombay Life, Bombay

The New India, Bombay

The Jupiter, Bombay

The National, Calcutta

The Lakshmi, New Delhi

NATIONALIZATION OF LIFE INSURANCE BUSINESS

Life insurance business was nationalized by merging 170 companies and 75 provident fund

societies transacting life business in India.

Life Insurance Corporation of India came into being on 1st September 1956, having the exclusive

privilege of doing life insurance business in India.

ENTRY OF PRIVATE INSURERS IN THE INDIAN MARKET

* In 1999, the relevant laws were amended due to which L.I.C. no longer has the exclusiveprivilege of doing life insurance business in India.

* As on 31st March 2002, 11 new insurers got registered and are carrying on life insurance

business.

PURPOSE AND NEED OF INSURANCE

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* Human Beings are income-generating assets: Manual labour, professional skills, business

acumen etc are assets of an individual and he earns money (livelihood) through it.

* Death can snatch away this asset:

Due to the untimely death of an individual there is loss to the dependants of the deceasedindividual.

* Insurance is necessary to help those dependent on this asset:

Insurance help those who are dependant on the income of the deceased individual.

MORE INFORMATION ON INSURANCE

Insurance is done for both, tangible as well as for intangible assets.

Tangible Assets: Car, House etc.

Intangible Assets: Voice of a singer, legs of a dancer etc.

BUSINESS OF INSURANCE

The business of insurance is to:

a) Bring together persons with common insurance interest (sharing the same risk)

b) Collect the share or contribution (called premium) from them, and

c) Pay out compensations (called claims) to those who suffer.

INSURANCE FOR

SOCIAL SECURITY

ECONOMIC WELFARE OF THE FAMILY

ECONOMIC WELFARE OF THE SOCIETY

ADVANTAGES OF LIFE INSURANCE

Policy monies are protected against attachments by courts

Income-tax benefits and capital gains tax exemptions are available

Marketability and liquidity are better i.e. life insurance policy can be transferred,

mortgaged or loan can be raised against it.

POINTS FOR THE AGENTS

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* Life insurance is one of the best ways for protecting family against economic loss due to

untimely death of the BREAD WINNER

Insurance acts as a friend in need while family is in financial crisis

It helps family to survive and maintain social status

*Life insurance is superior to other forms of savings in terms of security, marketability,

stability of value or liquidity.

*Life insurance enhances the existing standard of living

*Life insurance perpetuates life, liberty and the pursuit of happiness

*Life insurance makes lives live

Duty of Disclosure

The duty of disclosure in life insurance, operates till the risk commences.

However, if the policy is issued with a condition that any change in occupation must be notified to

the insurer or if the terms of the policy are to be altered or if a lapsed policy is to be revived or a

surrendered policy is to be reinstated, there would be a duty to disclose all material facts at that

time since what follows is a contract novell or a new contract.

Breach of Principle of Utmost Good Faith

The breach of the principle of utmost good faith arises due to misrepresentation or non-disclosure

of material facts.

Any statement made in the Proposal for insurance or any report of a Medical Examiner or refree or

friend of the insured or any other document leading to the policy, was on a material matter

fraudulently suppressed by the policy holder who knew at the time of making it that the statement

was false, amounts to misrepresentation or non-disclosure.

Declaration

In a proposal for life insurance, the proposer makes a declaration to the effect that all thestatements in the proposal form are true and that he agrees that these statements as also any further

statement made or to be made by him before the medical examiner shall be the basis of the contract

between him and the insurer and if any untrue statement be contained therein, the insurer would be

entitled to treat the contract as null and void and forfeit all the moneys paid therefor.

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Different Departments of LIC of INDIA

SALES DEPT. OF LIC

Recruitment of agents

The Agents Regulations, 1972 -to define the method of recruitment of agents of LIC Terms &

conditions of their appointment Framed under Section 49 of LIC Of India Act , 1956.

Procedure for taking agency

- Agency application form

- Photographs

- Proof of age

- Proof of educational qualification

- Details of the relations with LIC employees, LIC Agents, LIC Medical Examiners, ex

agents

- Details of the employment of spouse & N.O.C.

Appointment of Agents Rules.

Life Insurance Agent is appointed by LIC of India (Agents) Regulation 1972 and IRDA Regulation

2000.

The qualifications required for appointing a person as an agent is -

Completed 18 years of age.

10 th pass where population is less than 5000 and 12 th pass where population is more than 5000 .

Appointment of Agents

IRDA regulations directly deal with the Licensing of Insurance Agents.

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Application form is provided to Dev. Officer/ candidates for Rs. 75/- along with Pre-Recruitment

Examination book. Examination fee of Rs. 500/- and training fee of Rs. 150/- is collected at branch

counter.

Duly completed agency application form should be checked at branch level.

Before Pre-recruitment test candidate has to under go 50 hours training at D.T.C. /A.T.C.

Recommendation by Development Officer and Branch Manager.

Test ( IRDA ).

Application for license.

License fee of Rs 250/ by D. D.

Interview by Designated Person ( Marketing Mgr ).

If successful in interview , Designated Person will issue license.

License is valid for three years.

For renewal of license after three years.

Application for renewal.

License of Rs 250/-.

Training for renewal of license at ATC , DTC for 25 hours for IRDA Agents.

Before sending Agency application to Insurance Institute the same should be registered through

module.

After result of pre-recruitment test, other papers of successful candidates should be sent to

Divisional Office along with Demand Draft of Rs. 250/- for interview.

Divisional Office shall allot agency code number to agent and return all papers to branch along

with copy of license. Again agency code number shall be allotted to agent through module.

No agent is allowed to canvass the insurance business unless he/she possess a valid license.

.

AGENCY MATTERS.

50 hours training for individual Agency and 75 hours training for composite Agency for pre-

licensing test of Agents.

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License fees:Rs.250/- IRDA will issue a License, Valid for 3 years.

License has to renew before one month prior to date of expiry. Renewal of license fee Rs.250/-.

Renewal within 30days from the date of expiry of license.Rs.350/- After date of expiry of license

Rs.1000/-.

Renewal of License after Date of expiry Revised Procedure

A PERSON DESIRING TO OBTAIN OR RENEW A LICENCE TO ACT AS AN INSURANCE

AGENT SHALL PROCEED AS FOLLOWS-

Application form VA.

Reason for not renewing the license in time- letter by agent and Development officer.

Data Sheet and recommendation by Marketing Manager.

Training Certificate of 25 hours training in case of Post IRDA agents.

DD OF Rs.1000/- drawn in favor of LIC of India payable at Mumbai.

Attested copy of old license

AGENCY YEAR -

In the first year of the appointment, the period from the date of his appointment to the end of the

month in which he completes 12 months.

In the subsequent years, every successive period of 12 months.

Probation & confirmation

The competent authority may confirm the agent If his work record & conduct have been

satisfactory.

Competent authority may terminate the agency during probation-

Without giving any notice

Without giving any reason

Functions of the agents- Reg. 8

1) Every agent shall solicit & procure business which shall not be less than the minimum

prescribed shall endeavor to conserve the business already secured.

2) An agent shall consider the needs of the proposer and his financial capacity.

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Insurance Broker

Agency matters.

Insurance Broker : Broker is an agent who sells insurance product and also provide servicing

facilities to the Policyholder by means of collecting premiums, settling claims etc.

Category of Insurance broker

1. Direct broker

2. Reinsurance broker

3. Composite broker

Amount of licence fee payable

- Rs.25,000

- Rs.75,000

- Rs.1,25,000

Renewal of licence fee-Broker

1. Category of insurance broker

2. Direct broker

3. Reinsurance broker

4. Composite broker

Amount of license fee payable per annum A sum calculated at the rate of 0.50% of remuneration

earned in the preceding financial year subject to minimum of Rs.25,000 and maximum of

Rs.100,000 on every renewal.

A sum calculated at the rate of 0.50% of remuneration earned in the preceding financial year

subject to minimum of Rs.75,000 and maximum of Rs.300,000 on every renewal.

A sum calculated at the rate of 0.50% of remuneration earned in the preceding financial year

subject to minimum of Rs.125,000 and maximum of Rs.500,000 on every renewal.

Commission

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Commission is consideration for the agent for his service as an agent.

There are 4 types of commission:

a) First Premium Commission

b) First Year Premium Commission

c) Bonus Commission

d) Renewal Commission.

Commission in case of death

In the event of the death of an agent while his agency subsists -

The commission shall be payable to nominee or his legal heirs provided he has continually worked

for not less than 2 years from the date of his appointment and policies of total sum assured of not

less than Rs 1 lac were in force on the date prior to his death.

Term Insurance.

Eligibility --

Age of the agent is less than 50 years on the date of his appointment.

He has an insurance on his own life for a sum assured of not less than Rs 5000/ in force on the date

of death.

Term insurance benefit is available till he completes 60 years of age.

Completed minimum 3 years as qualifying agency years.

The term insurance benefit is available minimum Rs.3000/- and maximum Rs 10,000/ ,depends

upon the average annual renewal commission earned in the three agency years preceding the

death.

Average commission. Rs 1000 /- : Term Insurance.3000/-

Average comn. from1001 to 15000/-: Term Insurance Rs. 3000+1/2 of excess commission over

Rs.1000/-.

Average commission above 15000- Term Insurance Rs 10000/-.

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Housing Loan to Agents

Group Insurance Scheme for Agents..

Group Insurance Scheme : In lieu of annual memento. Up to age 65.

Memento (for those agents who are not covered by Group Insurance) Above age 65 yrs.

Group Medi-claim to club Member.

CM : Cover Rs 1 lac. ZM Rs 60,000

DM : Rs40,000 BM -Rs 25,000

Premium is shared by club member agent and LIC -share 50:50. Scheme is mandatory.

The coverage is allowed up to age 80.

Scheme is to be maintained by respective Division .Policy is serviced by New India.

Advance to Agents

Various advances are given to agents depending upon his renewal commission and type of his club

membership. Such as

a) Festival advance

b) Vehicle Advance for two wheeler/four wheeler

c) Office furniture advance

d) Lap-top Advance

c) computer advance

e) Medical treatment

f) Marriage/tread ceremony etc.

.

FLOOD, CYCLONE AND DROUGHT ADVANCE:

The rules for deciding eligibility for flood/cyclone /drought advances shall be the same as are

applicable to the permanent employees of the Corporation, i.e. whenever the permanent employees

are sanctioned advances for damage due to flood/cyclone/drought,the agents request can also be

considered.

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The Zonal Manager of the concerned Zone will issue necessary instructions for the purpose.

Period of repayment shall be same as for employees.

The advance under this head together with other advances excluding advance for purchase of a fast

conveyance, should not exceed the last year's renewal commission and also subject tomiscellaneous condition No. xiv.

Only agents who are eligible for Renewal commission.

The maximum flood advance that can be granted to an agent is the actual amount of loss incurred

or last year's renewal commission

FESTIVAL ADVANCE

General Conditions:

i) An agent to become eligible for festival advance should have worked for at least two full agency

years.

ii) The agent should have brought in a completed new business of atleast 6 lakhs sum assured and

12 lives in the previous agency year. However, this condition will not apply for agents who are

exempted from MBG, provided, they have brought in a minimum business of Rs. 2 lakhs sum

assured in the previous agency year.

iii) The advance will be granted only for one festival in the calendar year.

iv) Agents who are not eligible for RC payment will

also be eligible for this advance provided they furnish a surety from a confirmed employee of

the Corporation who has served the Corporation for atleast 5 years. An employee can stand surety

only to 2 agents in a financial year.

vi) Festival advance is repayable in 10 Mly instalments

vii) The grant of festival advance and its recovery shall also be subject to the miscellaneous

Condition

Finance & Accounts Dept. OF LIC

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WHY ACCOUNTING IS NECESSARY? Organization without a good Accounting System is like a SHIP WITHOUT A COMPASS.

Accounting is the art of recording business

transactions with a view to having a

permanent record of them and of

showing their effect on wealth.

WHY ACCOUNTING IS NECESSARY?

As X rays reveal the health of a person, Accounts reveal the HEALTH OF AN

ORGANISATION.

Character of a man is reflected in his habits, Character of an Organization is

reflected in its Accounts. What is Book Keeping or ACCOUNTING ?

The art of recording business transactions with a view to having a permanent record of

them and of showing their effect on wealth.

BASIC ACCOUNTING PRINCIPLES & BOOK KEEPING.

BASIC PRINCIPLES OF ACCOUNTS

According to the system, every business transaction has a two fold financial aspect which means

that it affects two accounts, one account to be debited and another account credited with the like

amount.

This is the fundamental principle of Double Entry book keeping.

BASIC ACCOUNTING PRINCIPLES & BOOK KEEPING .

By systematic book keeping a trader is able to ascertain:-

1The nature and value of his assets, including the amount owing to him by sundry debtors.

2The amount of his liabilities including the amount owing by him to his creditors.

3.Whether he has made a profit or loss during a given period and how the amount he has gained or

lost is made up.

4.Whether he is solvent or insolvent and the amount of his capital or deficiency.

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5. To ensure prompt accounting of dishonored cheques returned by bankers.

6. To exercise control over bank charges.

7. To maintain liaison with all bankers to ensure:-

a) Timely receipt of monthly bank statements;

b) Prompt and correct credit in respect of collections lodged into bank account;

c) Immediate rectification of all extraneous items arising in monthly bank account reconciliation

d) Daily monitoring of the balance of funds lying in the various bank current account and To take

daily review of bank balances, exercise proper management of cash flow, Transfer of maximum

possible surplus funds to Higher Office.

e)To take cheque cancellation action and maintenance of cheque cancelled register.

f) To obtain year-end certificate of balances for all bank accounts from bankers for audit purposes.

FUNCTIONS OF GENERAL ACCOUNTS Section.

1. To maintain the Principal Ledger

2. To maintain the Journal.

3. To maintain various Sub-Ledgers

4. To prepare the final consolidation of monthly summaries of transactions.

5. Validation / Vouching

6. To prepare and review monthly Trial Balance.

CHART OF ACCOUNTS

Account codes are given for all accounts pertaining to income ,expenses assets& liabilities

Each account code is stated in six digits

first digit pertains to type of business .e. g life, annuity pension ,second digit states whether it is

participating or non participating,[1 for par,2 for non par & last four digits are of account number.

e. g 113018 conference exp Life business-participating plans.

Classification of accounts

1. Sources of funds-liability codes

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2. Application of funds-Assets

3. Contra accounts

4. Benefits paid- account codes pertaining to claim payments

5. Commission payments

6. Management expenses

7. Income-premium income interest etc

WHAT IS TRIAL BALANCE??

- Summary of Net Balances as reflected in the Principal Ledger - Heads of Accounts

- The balance can be either a Debit / Credit

- It captures all financial transactions

A tallied T.B indicates the Arithmetic Accuracy

With Basic Knowledge & Inquisitive Mind - it reveals both Qualitative & Quantitative issues as

well

TRIAL BALANCE

T.B. is extracted from accts module at periodic intervals

T.B. basically proves arithmetical accuracy of accounts.

Errors of principle, omissions, commission, compensating errors not reflected in TB

T.B. is still effective management tool of performance appraisal

REVENUE ACCOUNT & BALANCE SHEET

From trial balance , revenue account is prepared which finds out surplus/deficit .All income &

expenses codes are considered.

Balance sheet shows position of assets & liabilities as on particular day.

Balance sheet-contd

We are preparing separate revenue accounts for life &annuity[JD8JA] business & one balance

sheet giving bifurcation for par-non par plans. Separate revenue accounts & balance sheets

prepared for VBPY, JS& Linked business like Bima plus, future plus etc

What the trial balance for a month basically show:

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Income of the branch from first April to the end of that month under each account head.

Outgo from 1st April to the end of that month.

Position of each of the assets of the branch as at the end of that month.

Position of every liability of the branch as at end of that month.

Trial Balance shows cumulative figure.

Trial Balance - an affective Management Tool

MIS data generated on the basis of Trial balance

can be used by operating departments :

1) To compare the growth in various activities

2) To evaluate the performance of various units

3) Budgetary control and cost analysis

4) To take timely remedial measures for improving the working of the organization

Review of Trial Balance

To have affective use of Trial Balance , It should be reviewed every month.

Review of Trial balance may be classified under three heads

1. Accounting

2. Statutory

3. Managerial

4. Various Ratios

CONSERVATION RATIO =

Renewal premium of current year

-------------------------------------------- * 100

Total First Year premium +

Renewal premium of Previous Year

Ideal ratio is 96% to 98%.

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OVERALL EXPENSE RATIO =

Total management expenses

------------------------------------------ * 100

Total Premium Income

Various Ratios

FIRST YEAR COMMISSION TO FIRST PREMIUM =

First year commission

------------------------------- *100

First year premium

Expected percentage =20% to 22%

RENEWAL COMMISSION TO RENEWAL PREMIUM

Renewal commission

= ------------------------ * 100

Renewal premium

Expected percentage= 5% to 6%

Various Ratios

AVERAGE FIRST PREMIUM PER 1000 SUM ASSURED

AVERAGE FP PER POLICY

O/S PROPOSAL DEPOSIT TO F.PREM

O/S POL. DEPOSIT TO OFYP & RENL PREM

O/S CLAIMS TO TOTAL CLAIMS PAYABLE RATIO =

O/s claims at the end of the year

---------------------------------------------------------------- * 100

O/s claims at the Beginning + O/s claims intimated

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of the year during the year

CLAIMS DEPT. OF LIC

What is claim?

A policy becomes claim either by Death or Maturity. It is the performance of the promise by the

insurer on the happening of an event contingent upon human life, or on the date of maturity if

maturity proceeds are payable.

Types of claims

Maturity claim [includes survival benefits and discounted claims]

1. Death claim

2. Maturity claim

Payable at the end of the stipulated term under the endowment type of policy. A maturity claim is

usually free from complications as the policy holder is alive and invariably the payment is

Death Claims

- Early

- Non early

- Intimation

To be given by the nominee [Immediate relative] detailing

- Policy Number

- Name of the deceased LA

- Date of death

- Place of death

- Cause of death

- Relationship of the claimant

- Requirements for non-early D/C

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- Claim form- A & Death Certificate

- Original policy bond

- Proof of Age, if not admitted

- Add Requirements for early D/C

- Claim form B - Medical attendants Cert

- Claim form B1 - Hospital Certificate

- Claim form C - Cremation Certificate

- Claim form E - Employers Certificate

- Claim form A1 - Agents Confidential Report

Office Services Dept. OF LIC

O. S. DEPARTMENT

The role of the office services department is to provide environmental support to the staff, working

in the office.

This department is service giving department for the employees who are the internal customers.

Main sections of O. S. Deptt.

Estate / property section

Deals with the problems related to acquiring of new premises on ownership / leasehold / rental

basis for offices and residential quarters, generating income from house property, payment of

property tax, water & electricity bills, rent recovery, taking action against the unauthorized

occupants in our property etc.

Furniture section:- This deals with purchase and maintenance of furniture and fixtures, service

contracts for maintenance.

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Stationery section:-Deals with the purchase of various types of stationery items, cleaning materials,

printing of various forms, registers etc.

Maintenance section:- Repairs and maintenance of various machines, water coolers, air coolers,

water pumps, air conditioners, etc.

Personnel section:- Looks after muster and leave matters, payment of salaries.

Advances, other benefits like medical benefit, GSLI, Medi - Claim, LTC, retirement benefits like

P.F., Gratuity, Pension, etc.

Mail section:- receipt of mail, its distribution, dispatch of outgoing mail, matters relating to

postage, franking machine. Maintenance of R. R. Register for cheques, money orders etc.

Pension section:--

Deals with payment of pension, commutation of pension, to retired, voluntarily retired employees,

family pension to the eligible family members of the deceased employees.

Miscellaneous section:--

Matters like payment of electricity bill, telephone bills, renewal of licenses under shop and

establishment act, disposal of unserviceable old furniture, canteen matters, sports etc.

Leave matters

Maintenance of muster-

Muster marking, submitting applications, notings in leave ledgers, arriving at correct leave balance

when leave applications are pending or not submitted.

Debit for late attendance - one day C L is debited for attending the office late on three occasions.

Types of leave:--

Casual leave, Privilege leave, Sick leave, Maternity leave, Quarantine leave, Special leave, extra

ordinary leave.

Casual leave:-- 15 days. C.L. Year 01/07 to 30/06

Additional casual leave : Equal to the days the number of holidays declared under N.I.act in the

following calendar year fall short of 23.5.

CL can only be joined with special leave.

Can be availed six days at a time. Balance C.L. converted into sick leave.

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For temp. employees 1.25 days of C.L. per month.

Privilege leave :--

1 day for every 11 working days.

P. L. is not earned when employee is on P.L.,S. L., Eol., etc. Except on C. L. & Quarantine leave.

Max. accumulation 240 days.

At a time 120 days can be availed.

Encashment of PL : 15 days in a block of two years. For calculation month is taken as of 30 days.

Encashment block - calendar year 2009-2010

Quantum of Encashment of PL :-

For calculating the amount of Encashment, HRA, conveyance allowance, officiating allowance,functional allowance, entertainment allowances are not considered

salary prior to the date of leave is considered

Sick leave:--

30 days half pay for each year. Max. 480 days.

Converted S. L. 60 days on full pay.

Special sick leave for major diseases like cancer, leprosy, T. B., Paralysis, mental diseases, brain

tumor, cardiac ailment, kidney disease. Maximum 6 months on half pay.

Maternity leave:-

6 months at one time. Total 12 months in entire service period.

For adoption of one child below one year, till child attains one year, max. 2 months.

Adoption through legal process, certificate of adoption required.

Quarantine leave:--

Family member in employees family suffers from infectious disease like cholera, small pox,

plague, diphtheria, meningitis, any other disease declared as such by the Govt.

Max. Leave 21 days. May be extended up to 30 days in exceptional cases.

Declaration by Govt. Medical authority. Fitness certificate of patient required before joining. If not

cured other leave can be granted.

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Special leave:-

(1) accident on duty - 90 days

(2) sports-30 days in a year

(3) family planning

Male- 6 days (vasectomy) & female-14 days (tubectomy)

(4) duty in home guard/civil defence

(5) mountaineering-30 days

(6) blood donation- 1 day

(7) special leave in lieu of joining time

Extra ordinary leave:- no other leave balance at credit- strike, unauthorized absence. Max. 90 days

at a time & 365 days in entire service period. NGI is deferred.

ACCIDENT ON DUTY

The employee must be on duty.

The accident must happen in the course of duty. Mere presence of an employee in office is not

enough.

The accident must have been met with while performing the duty.

SPL Leave up to 90 days up to ADM cadre By SDM

above 90 days & special leave for DMs & above -By ZM

Festival Advance

Class I--13000/- Others--11000/-

To be disbursed 21 days before the date of festival & to be recovered in 10 installments.

Cycle advance:-

Cl III & IV Interest free.

Second advance after 7 years of first advance.

Amount Rs. 1600- or actual price.

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To be recovered in 15 installments

Gratuity:-

As per gratuity act, 1972 min. Service 5 years including period of probation.

Amt.--15 / 26 x terminal pay x no. of yrs. of service

Max. Rs. 3.50 lacs

Pay= basic + allowances (which count for PF deduction) + da + FPA.

Policy Servicing Dept. OF LIC

What is Policy Servicing?

1. Payment of premium

2. Non-forfeiture regulations

3. Revival

4. Alterations

5. Loans & Surrenders

6. Age admission

7. Nomination

8. Assignment

9. Duplicate policy

I.T. DEPT. OF LIC

Information Technology and LIC

Pioneering organizations in India who introduced the leverage of Information Technology in

servicing and in their business.

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Data pertaining to more than 25 crore policies is being held on computers in LIC

Computers were introduced in LIC in 1964.

Unit Record Machines introduced in late 1950s were phased out in 1980s

These were replaced by Microprocessors based computers in Branch and Divisional Offices for

Back Office Computerization

Standardization of Hardware and Software commenced in 1990s.

Standard Computer Packages were developed and implemented for Ordinary and Salary Savings

Scheme (SSS) Policies.

IT ventures in LIC

Branch FEAP

Metro Area Network

Wide Area Network

Interactive Voice Response System (IVRS)

LIC on Internet

LIC Intranet

Information Kiosks

Information Centre

Alternate mode premium payments

Front End Operations in Branches

In July 1995, LIC started a drive of On Line Service to Policyholders and Agents through

Computer.

P & IR Dept. of LIC

GROUND RULES

1. Punctuality in attendance and presence of employees should be ensured.

2. Disposal of files, issues and matters should be on day-to-day basis.

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GROUND RULES

3. Audience should be granted as soon as possible, but certainly within 24 hours of such

request.

4. Grievances redressal of the employees and agents should receive focused attention.

GROUND RULES

5. Maintenance of offices should be given top priority.

6. Response to letters, Telephone calls and requests should be expeditious, if not immediate,

courteous and satisfactory.

GROUND RULES

GROUND RULES

10. Creation of business like environment.

11. All meetings / conferences to be held and concluded in a businesslike fashion

with the view to achieve the objectives of organizing a meeting / conference in toto.

EXPECTATIONS

1. Punctuality :

a) ATTENDANCE

b) OFFICE HOURS

c) WORKING HOURS

d) RECESS T

EXPECTATIONS

e) LATE COMING

f) EARLY GOING

g) HALF DAY LEAVE

h) LEAVE MATTERS

EXPECTATIONS

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2. ATTENTION:

a) ATTENTIVE WHILE PERFORMING DUTIES.

b) MAINTAIN ABSOLUTE INTEGRITY.

c) DEVOTION TO DUTY

EXPECTATIONS

3. ATTITUDE:

a) POLITNESS

b) COURTCY

c) FAITHFULLNESS

EXPECTATIONS

d) HONESTY

f) PROMPTNESS

g) EFFICIENCY

EXPECTATIONS

4. BEHAVIOUR:

a) WITH THE INTERNAL CUSTOMERS

b) WITH THE EXTERNAL CUSTOMERS

EXPECTATIONS

c) WITH THE SUPERIORS

d) WITH THE SUBORDINATES

e) LIABILITY TO ABIDE BY THE REGULATIONS

EXPECTATIONS

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5. HABITS

a) GOOD LOOK

b) WELL DRESSED

c) AVOID BAD HABITS

EXPECTATIONS

6. SECRECY:

a) GOOD FAITH WHILE PERFORMING DUTIES.

b) OFFICIAL DIRECT / INDIRECT COMMUNICATIONS

EXPECTATIONS

c) OFFICIAL DOCUMENTS

d) INFORMATION TO ANY EMPLOYEE

e) INFORMATION TO ANY UNAUTHORISED PERSON.

EXPECTATIONS

7. POLITICS:

a) PROHIBITION IN TAKING PART IN POLITICS.

b) PREVENT ANY MEMBER OF FAMILY FROM TAKING PART IN POLITICS.

EXPECTATIONS

c) NOT TO TAKE PART IN ANY ELECTION.

d) PARTICIPATION IN ANY DEMONSTRATION.

EXPECTATIONS

e) PARTICIPATION IN EDITING OR MANAGING OF ANY NEWS PAPER.

f) PARTICIPATION IN RADIO BROAD CAST.

EXPECTATIONS

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g) CONTRIBUTE ANY ARTICLE OR WRITE ANY LETTER EITHER

ANONYMOUSLY TO ANY NEWS PAPER.

h) ENGAGED DIRECTLY OR INDIRECTLY IN ANY TRADE OR BUSINESS.

EXPECTATIONS

8. OUTSIDE EMPLOYMENT:

a) NOT TO SEEK ANY OUT SIDE EMPLOYMENT OR OFFICE WHETHER

STIPENDIARY OR HONORARY.

b) NOT TO UNDERTAKE PART-TIME WORK

EXPECTATIONS

c) NOT TO UNDERTAKE ANY PART TIME STUDIES.

Finding

1. According to you, which have played a major role in the field of life insurance companies?

Insurance Business Man Pvt. Employees Govt. Employees

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LIC 10 10 13

HDFC 5 5 3

ICICI 4 3 3

Others 1 2 1

0

2

46

8

10

12

14

Business

Man

Govt.

Employees

LIC

HDFCICICI

Others

Conclusion

Life insurance is a contract between two parties- the insurer & the insured. It is governed

by the basic principles of insurance like utmost good faith, indemnity etc. The basic purpose of life

insurance is to protect family of a person in case of contingencies.

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Insurer has to provide the insured with the services & claims in case of contingencies. The

process of insurance goes from various stages right from customer mobilization to claim

settlement. While going through this process, various departments of insurance industry come into

picture. All the departments are connected to each other by one or the other way. There arelinkages of each department with the other departments. Each department has to keep liaison with

the other departments.

Customer satisfaction & delight should be sole purpose of business. All the procedures &

facilities should be customer friendly. Though IT is playing a vital role in providing customers

with door step facilities, human touch is very much necessary in an industry like insurance

industry. Therefore, sometimes rules & regulation are bent though not broken for welfare of the

policy holder.

Insurance is not bought in India but it is sold in India. There is need to spread insurance

widely so that most of the needy people will be benefited by it & most of the families will be safe

under an insurance cover.

BIBLIOGRAPHY

BROCHURES / INFORMATION BOOKLETS

1. Product list L.I.C.

2. L.I.C. Annual Report, 2006

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3. ICICI Annual Report, 2006

4. HDFC Annual Report, 2006

5. Malhotra Committee Report on Reforms in the Insurance Sector, 1993

6. The Insurance Regulatory and Development Bill.1999

NEWSPAPERS / MAGAZINES

1. The Economic Times

2. The Insurance Times

3. Insurance Post

BOOKS

- Dr. Gupta S.P & Dr. Gupta M.P. ,

- Business Statistics by Addition 2004 , New Delhi

WEBSITES

www.licindia.com

www.irdaindia.org.com

www.indiainfoline.com

www.icici.com

www.hdfc.com
http://www.licindia.com/http://www.irdaindia.org.com/http://www.indiainfoline.com/http://www.icici.com/http://www.hdfc.com/http://www.licindia.com/http://www.irdaindia.org.com/http://www.indiainfoline.com/http://www.icici.com/http://www.hdfc.com/

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