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Adding Life to Insurance

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DQI Bureau
New Update

Everything about Life Insurance Corporation of India is huge.

With assets totaling a colossal $48 billion and over 115 million policies to

manage, LIC has one of the largest customer records in the world. It’s 123,000

salaried employees and 800,000 commissioned employees, dispersed among 2,048

branches nationwide, would find it almost impossible to coordinate and work

together without a robust communications and technology backbone.

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The number of transactions LIC sees handles each day is over

a million. Close to 500 x 2,048 policy transactions and another half a million

towards payment against commissions, loans, agents’ payments and so on.

In the last financial year ending March 2001, LIC achieved a

growth rate of 65% in new premium income. In the first 7-8 months of this year,

the company’s premium income has been growing by a healthy 270%. NO mean

achievement, if you take cognizance of the multitude of new private players in

insurance.

So what keeps LIC going? The company attributes its growth,

especially in the last few years, to its IT-savvy approach. "With the

implementation of front-end applications, most problems faced by the employees

have disappeared and they are now more comfortable in responding to queries

instantly," says company managing director A Ramamurthy. He also credits

this change for the dramatic improvement in the satisfaction level of agents

who, it turn, have improved productivity considerably. LIC has been able to send

post-dated cheques in almost 90% of the cases, settling claims without much

trouble. "Life insurance is a long-term contract and customers judge the

company on the basis of reliability, safety of payments and good services,"

says Ramamurthy. "The end result this year–our customers are a happier

lot."

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Early days, learning ways

As early as 1965, those at LIC knew that computers and IT

were the next big thing, and it was at this point that the insurance major first

introduced mainframe computers at its Mumbai office. Ramamurthy takes pride that

the company started with its first phase of computerization at a time when

barely 4-5 companies were using mainframes. "The branches at that time were

using unit record machines–which were around till 1981," he recalls.

Noisy machines, bulky systems and not-so-tech-savvy users…

those were the days of making mistakes, learning from them and inventing ways of

working better. In 1981, LIC decided to introduce a microprocessor-based system

in its branches for back-end jobs, essentially involving batch processing.

However, data had to be captured at the front-end by employees not too familiar

with the requirements of data processing. The result–inaccuracy and time lags.

"Things were not easy. The entire process of managing data and processing

needed improvement since a lot of inadequacies had crept in while collecting

data," he says.

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In 1995, therefore, the company made a switchover to

front-end applications that would address processing needs better. The person

handling customers would also enter data, retrieve data and update the

transactions. The idea was to avoid irregularities during data processing. The

entire data would then be made available to all the employees through a local

area network.

IT Policy: The next phase

LIC completed the LAN implementation in all 2,048 branches in

record time–three years flat. This was the first major move towards automating

the required services to customers, agents and employees. Standardization of

hardware and software commenced. Standard computer packages were developed and

implemented for ordinary and pay savings scheme policies. It is interesting to

note that the entire application software was developed in-house by LIC

personnel themselves. "We started at a time when there weren’t many

readymade packages available, especially for our varied needs. We had no choice

but to frame our policies in-house," explains Ramamurthy.

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Now, in order to ensure uniformity of applications across the

country, the corporate office circulates application software to all branches by

e-mail after due testing. LIC also offers services to its agents and

policyholders via the Net. Policyholders can receive immediate status reports,

online acceptance of premium and get revival and loan quotations on demand,

apart from the regular feature of changing addresses online.

In 1997, a metro area network (MAN) was commissioned to

connect LIC’s 74 branches in Mumbai. Policyholders in that city could now pay

their premium or get their status reports, surrender value and loan quotations,

among other facilities, from any branch in the city. Over 10,000 transactions

began to be carried out over this network every working day. Based on this

success, similar networks have been implemented in other cities, including

Chennai, Delhi, Bangalore, Ahmedabad, Pune, Hyderabad and Calcutta. In the

2000-2001 financial year, 33 additional cities were added to the existing MAN,

which is gradually being upgraded and extended to include all other branches as

well. An interactive voice response system (IVRS), which operates in 28 centers

all over the country, has also been set up to enable customers to receive ploicy

information over the phone. They can find the next premium amount, loan amount,

maturity payment due date, accumulated bonus or any other such queries related

to their policies.

The turning point

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Even though LIC was among the first few to initiate the use

of IT, it was only during the 1990s that it became particularly aggressive in

its approach. During the last five years, LIC has been spending an average of Rs

60 crore per year on IT and the total investment so far has been about Rs 300

crore.

As the economy was thrown open to competition, there was a

sudden upsurge in the number of insurance companies. LIC could no longer take it

easy, and knew it would have to spruce up its act to retain its position. The

company needed a more reliable system that would increase efficiency and provide

better services for a lifetime. "While selecting the vendor, we had to keep

our balance sheet in mind. It is important to judge whether the vendor will

continue to provide service for another 10 years or so," says Ramamurthy.

Having offices across the country, and with 49% of the

overall business coming in from rural areas, the ability to operate remotely and

under harsh conditions was a necessity. The company needed an operating system

to implement connectivity in its offices that would allow each branch to act as

a standalone entity–with access to all transactions, information and computer

support for policyholders.

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"We were looking for a software solution that would

connect our 2,048 offices and provide customers, agents and employees with the

required services," says Ramamurthy. "We had to connect our existing

systems– LAN, MAN, WAN, IVRS–and other technologies. We knew we needed a

solution that was not only cost-effective, reliable and stable, but one that was

compatible with our existing applications, would reqire minimum maintenance, low

downtime and minor support cost."

On weighing the options available, LIC selected Caldera

UnixWare to run its servers and implementing connectivity across all branches.

Ramamurthy says UnixWare has the ability to integrate huge amounts of data and

OS functions, is sturdy and has added advantages like Intel compatibility and

Internet optimization. "We observed that UnixWare requires much less

resources than other comparable operating systems," he says. Currently,

nearly half of LIC’s branches run UnixWare 7 and, eventually, all branches

will migrate to it. "This is a planned migration process."

Happiness insured

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As LIC moves towards achieving its IT goals, it has been

trying to ensure satisfaction at all ends. And the organization has been able to

manage it quite well.

On the one hand, it has happy employees, with increased

levels of productivity and efficiency. At he same time, it has been able to keep

customers satisfied with better services. "Apart from driving growth, the

accuracy of data has improved considerably. This not only brings about

satisfaction, but also results in more business for us," says Ramamurthy.

LIC also takes care of upgrading employee skills through

regular training so that the information systems can be utilized to their

optimum levels. It has set up 100 computer training centers for its employees,

one each at every divisional office, and has identified its zonal training

center at Chennai for providing intensive IT training in collaboration with IIT,

Chennai. "The organizational culture is to take employees into confidence

whenever moving in for a major change," says Ramamuthy. When LIC decided to

implement front-end applications in 1995, all employee unions were taken into

confidence and asked to give in their feedback on the need to implement

front-end services to increase efficiency of services and retain the dominant

market position. "Employees agreed readily to the suggestion and since

then, have been partners in the implementation process."

Improved policy servicing has resulted in substantial

improvement in satisfaction levels among agents who sell life insurance

policies. In the last financial year, LIC’s new premium income increased by

65%, a record since its formation. This year, it is planning to spend Rs 100

crore on IT, which includes an additional 8,000 PCs, networking all the 100

divisional offices and connecting another 48 centers to the wide area network.

Next on the agenda–a wide range of plans to further enhance

customer services. LIC recently introduced some new facilities such as paying

premium online and access of policy status over the Internet. This removes

geographical boundaries and time constraints, apart from eliminating the need

for the policyholder to go to the branch for every query. The service is

becoming popular among the top segment of policyholders. The department has

already prepared a customer relationship management (CRM) module, which will

identify all the policies of an individual based on name and date of birth. This

will be extensively used for marketing purposes.

Whether the organization is able to reach global standards of

customer services or not, it has certainly made an attempt in the direction. An

interesting point that comes up at this stage is how many policyholders are

actually aware of the offerings from LIC and how many are actually making use of

these facilities. Along with its endeavor to add life to its services, what the

organization probably needs is a good branding campaign and image-building

exercise. And of course, it has to continue building confidence in the people,

for it is all about their lives, and how to make them sweeter.

Shweta Verma–Dataquest

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