Adding Life to Insurance

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.

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."

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.

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.

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

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.

"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

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