Think life insurance and the image you are most likely to conjure up is that of Life Insurance Corporation’s (LIC) logo. For decades now, ‘the two hands gently circling the lamp’ has been the most enduring image of the life insurance business in India. Yet, just eight years ago, when the insurance business was thrown open to private players, many believed things would change irrevocably for LIC. After all, the multinational giants with their deep pockets and smart marketing strategies would inevitably eat into the humongous customer base of the public sector giant.
But much to the chagrin of the private insurers and their backers, LIC has been able to leverage two of the more crucial attributes — trust and its generic brand image to its advantage. Even as market conditions were hardly anything to talk about in 2008, Brand LIC has demonstrated that trust can also translate into business opportunity. While its performance in Brand Equity’s Most Trusted Brands survey has been stellar (LIC has been the Most Trusted Service Brand in India for five consecutive years in the study), LIC has delivered on the numbers front as well. Even as most Indian businesses have struggled to find their feet on the profitability street, Brand LIC continued to grow stronger in 2008.
The brand has also been able to leverage its positive aura beyond life insurance to its other group businesses like housing finance, asset management and so on. In its mutual fund business, for example, LIC witnessed a growth of almost 4% in the assets under management (AUM) in 2008, a remarkable feat if one considers the timing and the context.
Most players from the mutual fund industry in India saw a decline in their AUMs, while only three other players — Escorts Mutual Fund, Canara Robeco Mutual Fund and Birla Sun Life Mutual Fund were able to demonstrate growth. Just to put this in context, the Indian mutual fund business has 35 players.
Even in housing finance, LICHF also performed impressively. The company’s net profit moved up by 16% to Rs 135 crore in the second quarter of the current financial year, against Rs 116 crore in the same period last year. Analysts believe that the reluctance of banks to lend to the housing sector would provide further opportunity for growth to housing finance players like LICHF. The company currently has a market share of 7% in the housing loan segment.
The flagship life insurance business continued to thrive, of course. As per the latest first year premium figures issued by market regulator Insurance Regulatory Authority of India (IRDA), the total premium collected in the month of November by LIC is more than 145% of the total premium collected by all the private insurers put together. In segments like individual single premium and group single premium, private companies account for merely 11% and 8% of the premium that LIC collected in November 2008. Branding experts attribute the performance of Brand LIC to its ability to connect with the customer base. The more you change, the more you remain the same. By reinventing itself, LIC showed maturity and responsibility which has helped the brand to go to the next level. The strong element of availability and accessibility, on the other hand, ensured that it continues to enjoy proximity to the customers. As consumers took a flight to safety in the ups and downs of the market in 2008, LIC’s credibility was further enhanced.
Life Insurance Corporation caters to every segment of society by addressing individual needs, group needs and needs of special segments. This, in turn, has built trust. The brand loyalty and the customer trust have been built over the years. Underlining the real challenge — time and heritage — that the private insurance players are up against. Others feel that the being generic to the segment has worked for LIC. LIC has become synonymous with the service. One reason why customers still have LIC at the top of their consideration set is because “a brand is not a process, a brand is a promise”. LIC, being fully-owned by the Government of India, delivers a comfort value to its policy holders. Even if things go wrong in the future, LIC’s customers think that the Government will bail it out.
Following the US financial system crisis, the customers are a bit reluctant to turn to private companies for services as they feel government-owned bodies at least carry sovereign guarantee.
Insurance is something that LIC has made a business out of, but the second largest public sector company in India is already insuring its own growth story. Soon the LIC brand plans to foray into venture fund management which will be a dedicated real estate fund. In the long run, this is expected to give a further boost to Brand LIC.