IMPACT OF FINANCIAL GLOBALIZATION ON EMPLOYEE

PRODUCTIVITY OF LIC

A Dissertation submitted for the degree of Master in Business Administration

2016

Submitted By:

Miss K. Renuka Patnaik

Roll No. PC14MBA002

Under the Guidance of:

Sri Sisir Ranjan Dash

Department of Professional Courses

Gangadhar Meher University,

Sambalpur – 768004

Odisha

DECLARATION

I, K.Renuka Patnaik, do hereby declare that the work incorporated in the dissertation

is original and dissertation entitled “Impact Of Financial Globalization On Employee

Productivity Of LIC” submitted by me for the MBA degree is the record of work carried out

by me during the period from January to April 2016 under the guidance of Sri Sisir Ranjan

Dash, Department of Professional Courses, Gangadhar Meher University, Sambalpur –

768004 and has not been formed the basis for the award of any degree in this or any other

University.

I further declare that the material obtained from other sources has been duly

acknowledged in the dissertation.

(Miss K.Renuka Patnaik)

Signature of the Candidate

Sri Sisir Ranjan Dash

MA (Economics), MBA, Ph. D. (Cont.), NET

Sr. Lecturer

Department of Professional Courses

Gangadhar Meher University, Sambalpur – 768004, Odisha

Phone: 0663 2522543, 9439213351(M),

email: dash.sisir@rediffmail.com

CERTIFICATE

This is to certify that dissertation titled “Impact Of Financial Globalization On

Employee Productivity Of LIC” submitted by Miss K. Renuka Patnaik bearing Roll No.

PC14MBA002 to Department of Professional Courses, Gangadhar Meher University,

Sambalpur – 768004, Odisha for a Master in Business Administration degree, is the product

of an authentic research work undertaken by the candidate under my supervision and

guidance.

As far as I know, the materials in this work have not been submitted previously to any

University for obtaining any degree/ diploma. I am satisfied that this dissertation adequately

meets the academic standards for a MBA Degree.

Sri Sisir Ranjan Dash

Supervisor

This project has been published in the website of Golden Research Thought. The

project was submitted on 10th March 2016 and was published online on 18th march 2016.

Below are the certificates issued by the publication team.

ACKNOWLEDGEMENT

Behind every study there stands myriad of people whose help and contribution make it

successful.

At the very outset, I would like to thank to my esteemed Faculty Dr. Srinibash Dash

(Head of the Department of Professional Courses) and Mr.Sisir Ranjan Dash (Sr. Lecturer)

respectively their constant support continued and invaluable guidance at each step of this

project.

Also, thankful to all other Professors and Lectures of our Department for their kind help

rendered me.

There are several employees at LIC who contributed significantly to my successful journey of

project work that, I would like to thank my deepest gratitude to each of them. My special

thanks to my family members and friends who contributed towards this achievement.

Thanks everyone......

K.Renuka Patnaik

G.M.University,

Department of Professional courses

Sambalpur

PREFACE

The conceptual knowledge acquired by management students is best

manifested in the projects. As a part of curriculum of MBA, I have got a

chance to prepare a report on “Impact of Financial Globalization on

Employee productivity of LIC”. The present project gives a perfect vent to my

understanding of the insurance sector.

The project report entitled ― Impact of Financial Globalization on

Employee productivity of LIC.

The report will provide all the information regarding the impact of

globalization on the employee productivity after the nationalization of the

Life Insurance Corporation and their impact on employees after globalization

of insurance sector.

I also hope that this report will be beneficial for my next batches and for

those who are related to this topic.

LIST OF CONTENTS

TOPIC NO. TITLES PAGE NO.

CHAPTER 1.

Introduction

1.1- History of Life Insurance In INDIA

1.2- Nationalization of LIC

1.3- LPG of Insurance Sector

1.4- Current Scenario of LIC

2

3

4

12

CHAPTER 2.

Review of Literature

2.1- Research Question

2.2- Significance of the Study

2.3- Scope of the Study

2.4- Limitations of the Study

16

16

16

17

CHAPTER 3.

Research Design

3.1- Research Methodology

3.2- Type of Research

3.3- Source of Data

3.4- Sampling Technique

3.5- Scaling Technique

3.6- Statistical Method

18

18

18

19

19

20

CHAPTER 4.

Analysis & Findings

4.1- Graphical Representation

4.2- Tabular Representation

21

22

CHAPTER 5. Conclusion & Suggestion 25

References 26

APPENDIX I (Questionnaire)

APPENDIX II (Journal)

27

30

1

ABSTRACT

In 1956, LIC (Life Insurance Corporation) got nationalised with the objective

to bring the sector under direct control of public as well as to increase the employee

productivity and efficiency. In August 2000, the insurance sector was liberalised and

opened up for the private sector with the constitution of IRDA. Now after more than

one and half decade of liberalisation been completed in the year 2015, the insurance

sector is worth going through an assessment of its productivity. The purpose of this

study is to measure the employee productivity of Insurance sector after globalisation.

To measure the employee productivity, we have gone for a survey of the employees in

this sector (LIC) by collecting primary data. In this connection, we have used a non-

parametric test i.e. chi square test to detect whether there is any impact of sample

characteristics like gender and age on the overall productivity of employees in the post

globalization era. The test results revealed that irrespective of gender and age, the

employee productivity has increased due to financial globalization in the insurance

sector.

Keyword: Financial Globalisation, Insurance Sector, Chi-Square test, Employee

Productivity.

2

1. INTRODUCTION

Insurance is a promise of compensation for potential future losses in exchange

for periodic payments. It is a contract in which an individual or an entity receives

financial security or reimbursement against losses form an insurance company. It has a

deep-rooted history in Indian. The writings of Manusmrithi, Dharmasastra and

Arthasastra talks in terms of pooling the resources that could be again distributed in

times of calamities such as floods, famine, fire etc.

1.1 HISTORY OF LIFE INSURANCE IN INDIA:

Life Insurance came to India from England in the year 1818, with the

establishment of Oriental Life Insurance Company, started by Europeans in Calcutta.

It was the first life insurance company on Indian Soil. However it failed in the year

1834. Soon in 1829, Madras Equitable had begun transacting its life insurance

business in Madras Presidency. In 1870 the British Insurance Act was enacted and the

Bombay Mutual in 1871 was the first Indian life insurance company which covered

Indian lives at normal rates, Oriental in 1874 and Empire of India in 1897 were started

in the Bombay Residency, in the last three decades of 19th century. The main motive

of these companies were to insure the Indian lives and provide social security by

insuring various sectors of the society, these companies were highly patriotic.

However, this era was dominated by the foreign insurance offices such as Royal

Insurance, Albert Life Assurance, London Globe and Liverpool, which did a good

business in India. Insurance and the Indian offices had hard competition from these

foreign companies. At that period of time, all the foreign insurance companies were

established only to look after the needs of European communities and not to insure the

Indian natives. However, later on, with the efforts of renowned people like Babu

Muttylal Seal, these foreign life insurance companies started to insure the Indian lives,

but instead they were charged with heavy extra premium. Then, in 1896, Bharat

Insurance Company was established, which was one of such companies inspired by

nationalism. Many more insurance companies came up during the Swadeshi

movement of 1905-1907, some of them are United India in Madras, Co-operative

Assurance at Lahore and National Insurance and National India in Kolkata were

CHAPTER: 1- INTRODUCTION TO FINANCIAL GLOBALIZATION & THE

RESTRUCTURING OF INSURANCE SECTOR IN INDIAIN LIC

3

established in 1906, Hindustan Co-operative Insurance Company in Calcutta, in the

year 1907, Indian Mercantile, Swadeshi Life (later on Bombay Life) and General

Assurance etc.

Prior to 1912, there was no legislation in India to regulate insurance business.

The Life Insurance Companies Act and the Provision Fund Act were passed in the

year 1912. This Life Insurance Companies Act made it necessary, that the premium

rate tables and periodic valuation of companies should be verified and certified by an

actuary. But this act discriminated between Indian and foreign companies in many

accounts, thus putting the Indian companies in a negative aspect.

In the year 1928, Indian Insurance Companies act enabled the Government to

collect statistical data on both life and non-life business transacted in India by both

Indian as well as foreign companies. In the year 1938, with a view to protect the public

interest, the earlier legislation was consolidated and the Insurance Act 1938 was

amended, with provisions having better control over the activities of insurers. The first

two decades of 20th century saw a tremendous growth of insurance business. In 1938,

from 44 companies it rose to 176 companies, with a total business-in-force of Rs.

22.44 crore.

1.2 NATIONALISATION OF LIC:

The Insurance Amendment Act 1950 abolished principal agencies, but still

there were a large number of insurance companies and the level of competition was

also very high, along with it there was also an allegation of unfair trade practices. Thus

the government of India decided to nationalise the insurance business. The

nationalisation of Life Insurance got its momentum in1944, however, much later in

19th June 1956, the Life Insurance in India got nationalized. At the time of

nationalisation nearly 154 Indian, 16 non- Indian insurance companies and 75

provident were operating in India. Nationalisation was accomplished in two stages: at

first the management of the companies were taken over by means of an ordinance and

then the ownership by means of a comprehensive bill. The main objective of

nationalisation was ‘to bring the insurance sector under direct ownership and control

of the public.’ This decision coincided with the second five year plan as well as the

announcement of the Industrial Policy Resolution 1956, which replaced the 1948

resolution. The Parliament of India passed the Life Insurance Corporation Act on the

4

19th June 1956 and the Life Insurance Corporation of India started operating from 1st

September 1956, with an objective to ‘spread Life Insurance much more widely and in

particular to the rural areas with a view to insure all the person in the country and

providing them adequate financial cover at a reasonable price.’

The LIC commanded a monopoly till the late 90s, creating a huge surplus and

contributing about 7% of India’s GDP by 2006.

1.3 LIBERALISATION, PRIVATISATION AND GLOBALISATION (LPG) OF

INSURANCE SECTOR IN INDIA:

In the year 1999, after Malhotra committee submitted a report (in 1994),

Insurance Regulatory and Development Authority (IRDA), an autonomous body was

constituted to regulate and develop insurance industry. The Malhotra committee’s

recommendations were as follows:-

1. Raise the capital base of LIC up to Rs. 200 crores, half retained by the

government and rest sold to the public at large with suitable reservations for its

employees.

2. Granting private sector to enter insurance industry with a minimum paid up

capital of Rs. 100 crores.

3. Foreign insurance be allowed to enter by floating an Indian company

preferably a joint venture with Indian partners.

4. Steps are initiated to set up a strong and effective insurance regulatory in the

form of a statutory autonomous board on the lines of SEBI.

5. Limited number of private companies to be allowed in the sector. But no firm

is allowed in the sector and no firm is allowed to operate in both lines of

insurance (life or non-life).

6. Tariff Advisory Committee (TAC) is delinked form GIC to function as a

separate statuary body under necessary supervision by the insurance regulatory

authority.

7. All insurance companies be treated on equal footing and governed by the

provisions of insurance Act. No special dispensation is given to government

companies.

5

8. Setting up of a strong and effective regulatory body with independent source

for financing before allowing private companies into sector.[1]

In April 2000, IRDA was incorporated as a statutory body. Section 14 of IRDA

Act, lays down the duties, powers and functions of the authority which includes:-

1. Issue to the applicant a certificate of registration, to renew, modify withdraw,

suspend or cancel such registration.

2. To protect the interest of policy holders in all matters concerning nomination

of policy, surrender value f policy, insurable interest, settlement of insurance

claims, other terms and conditions of contract of insurance.

3. Specifying requisite qualification and practical training for insurance

intermediates and agents.

4. Specifying code of conduct for surveyors and loss assessors.

5. Promoting efficiency in the conduct of insurance business

6. Promoting and regulating professional regulators connected with the insurance

and reinsurance business.

7. Specifying the form and manner in which books of accounts will be maintained

and statement of accounts rendered by insurers and insurance intermediaries.

8. Adjudication of disputes between insurers and intermediates.

9. Specifying the percentage of life insurance and general and general business to

be undertaken by the insurers in rural or social sectors etc. [2]

In August 2000, the insurance sector was liberalised and opened up to the

private sector by the IRDA, with an invitation for application for registration. It is the

phase when India opened up its boundaries for the rest of the world, which allowed

free flow of goods, services, labour and money.

1.3.1. Impact of LPG

The introduction of private players has added value to the Insurance industry as

well as, they have given tough competition to the one time monopoly of LIC. With the

advent of the private players, the market has seen new and innovative steps taken by

the players. With the increasing competition because of new players, the service

[1] https://licindia300.wordpress.com/tag/liberalisation/ [2] https://licindia300.wordpress.com/tag/liberalisation/

6

quality of Insurance also improved. The LPG has opened up various opportunities for

this insurance sector.

Some of these opportunities are:-

1. Privatization eliminated the monopolistic business of LIC of India. It

may help in reducing wide range of risk in LIC and also will help in

introducing new range of products.

2. It would result in providing better customer services and also would

help in improving the price and variety of insurance products.

3. It would speed up the spread and availability of life insurance. It will

boost the insurance saturation and measure of density.

4. It can ensure the mobilization of funds which can be utilized for the

infrastructure development.

5. It will help in mobilizing the funds from various rural and urban areas

due to the availability of multiple players.

6. Most important but not the least is that, tremendous employment

opportunities will be generated in the field of insurance.

After opening up of insurance to private sector, various private companies as

well as joint ventures have entered the fields of insurance both life and non-life

business, few of them are: Birla Sun life, Reliance General Insurance, HDFC standard

life Insurance, SBI Life Insurance, Bajaj Allianz Life Insurance Company etc.

Table 1.1: List of Life Insurance Companies in India after privatisation

Sl.

No. Company Name

Public/Private

Sector

Joint Venture

Between

Establishment

year

1. LIC Public NA 1956

2.

Bajaj Allianz Life

Insurance

Company Limited

Private

Bajaj Finserv

Limited and Allianz

SE

2001

3.

Birla Sun-Life

Insurance

Company Ltd

Private

Aditya Birla Group

and Sun Life

Financial Inc.

2000

4.

HDFC Standard

Life Insurance Co.

Ltd.

Private

Housing

Development

Finance

Corporation Ltd

and Standard Life

plc.

2000

5. ICICI Prudential

Life Insurance Co. Private

ICICI Bank and

Prudential plc 2000

7

Ltd

6.

Exide Life

Insurance

Company Limited

Private NA 2001

7.

Max New York

Life Insurance Co.

Ltd.

Private

Max Financial

Services Ltd. and

Mitsui Sumitomo

Insurance Co. Ltd.

2000

8.

PNB MetLife

Insurance

Company Ltd.

Private MetLife and PNB. 2001

9.

Kotak Mahindra

Old Mutual Life

Ins. Co. Ltd.

Private

Kotak Mahindra

Bank Ltd and Old

Mutual.

2001

10. SBI Life Insurance

Company Limited Private

State Bank of India

& BNP Paribas

Cardif.

2001

11. TATA AIA Life

Insurance Co. Ltd. Private

Tata Sons and the

AIA Group 2001

12. Reliance Life

Insurance Co. Ltd. Private NA 2001

13.

Aviva Life

Insurance Co. Pvt.

Ltd.

Private Dabur Invest Corp

and Aviva Group. 2002

14. Sahara India Life

Insurance Co. Ltd. Private NA 2004

15. Shriram Life

Insurance Co. Ltd. Private NA 2005

16. Bharti AXA Life

Insurance Co. Ltd. Private

AXA Group and

Bharti Enterprises 2006

17.

Future Generali

India Life

Insurance Co.Ltd.

Private

Future Group,

Generali group and

Industrial

Investment Trust

Limited (IITL).

2007

18. IDBI Fortis Life

Insurance Co. Ltd. Private

IDBI Bank,

Federal Bank and

Ageas. 2008

19. Private

20.

AEGON Religare

Life Insurance

Company Ltd

Private

Aegon, Religare

and Bennett,

Coleman and

Company

2008

21.

Canara HSBC

Oriental Bank of

Commernce Life

Insurance

Corp.ltd.

Private

Canara Bank,

HSBC Insurance

Holding Ltd and

Oriental Bank of

Commerce.

2008

22. DHFL Pramerica Private Dewan Housing 2013

8

Life Insurance

Co.ltd.

Finance

Corporation Ltd.

(DHFL) and

Prudential

International

Insurance Holdings,

Ltd.

23.

Star Union Dai-

ichi Life Insurance

Co.ltd.

Private

Bank of India,

Union Bank of

India and Dai-ichi

Life

2009

24.

India First Life

Insurance

Company Limited

Private

Bank of Baroda and

Andhra Bank and

Legal & General.

2009

25.

Edelweiss Tokio

Life Insurance

Company Limited

Private

Edelweiss Group of

India, and Tokio

Marine Holdings of

Japan.

2011

1.3.2. BIRLA SUN LIFE

It was established in 2000, after the insurance sector was liberalised in India. It is a

joint venture between the Aditya Birla Group and Sun Life Financial Inc. from

Canada. The combination of local knowledge of Aditya Birla and expertise knowledge

of Sun Life Financial Inc. helped in offering a formidable protection to its customer’s

future. It has significant contribution towards the growth and development of India,

today it ranks amongst the top 7 private insurance companies in the country.

It was the first insurance company in India to introduce “Free Look Period”,

which was made mandatory by the IRDA for all other life insurance companies. It also

pioneered the launch of new strategies and plans like unit linked Life Insurance plans

among the various private players in India.

Investment Philosophy - “Our goal is to assist you in ensuring a more comfortable

and secure tomorrow. To this effect, our endeavour is to build a quality investment

portfolio

(Within defined guidelines) which offers both – liquidity and long-term wealth

creation.”[3]

[3] http://insurance.birlasunlife.com/Pages/Individual/About-Us/Know-Our-

Funds.aspx

9

1.3.3. RELIANCE GENERAL INSURANCE

It was incorporated in 17th August 2000 and got its license for conducting

insurance business in India from IRDA on 23rd October 2000. There are nearly 139

offices and more than 12,000 intermediaries across India. It provides various insurance

solutions regarding to motor, health, home, travel etc. Through its various products

and services, it tries to provide customers with customized plans. It always tries to

come up with innovative ideas like home insurance policies, Over The Counter health

etc.

Vision

We want to score perfectly for world standard services & products, and want to be

your first choice in domestic as well as global markets. [4]

Mission

Satisfy your need of insurance cover in that crucial hour

Offer incomparable customer service

Provide innovative products

Better reach through presence across India and abroad. [5]

Goals

Make affordable insurance accessible to all

Keeping you, our customers, as focal point in all our operations

Protect policy holders’ interests

Be the most innovative in product development. [6]

1.3.4.HDFC STANDARD LIFE INSURANCE

It was constructed in 1999 as an independent body in the insurance industry. In

the year 2000, IRDA opened up the Indian market for HDFC. It was the first private

sector Life Insurance Company in India. It is a joint venture between India's leading

[5] [6] https://www.reliancegeneral.co.in/Insurance/About-Us/Reliance-General-

Insurance.aspx [7] http://www.hdfclife.com/about-us

10

housing finance institution i.e. Housing Development Finance Corporation Limited

(HDFC) and the leading provider of financial services in the United Kingdom,

i.e.Standard Life plc. In the joint venture HDFC Ltd. holds 70.65% where as Standard

Life holds 26% , while the rest is held by others.

By 2001, company gained its position in the market and strengthen its

employee force. In 2005, it launched its first advertising campaign ‘Sar Utha k jiyo’.

At present the company has 27 retail, 8 group product and 10 optional rider benefits in

its portfolio for saving, retirement, protection and investment needs of the customers.

Vision

‘The most successful and admired life insurance company, which means that we are

the most trusted company, the easiest to deal with, offer the best value for money and

set the standards in the industry.’[7]

'The most obvious choice for all'.

Values

Our vision and values that we observe at work:-

1. Excellence

2. People Engagement

3. Integrity

4. Customer Centricity

5. Collaboration [8]

1.3.5.SBI LIFE INSURANCE

It is a joint venture, formed in 2001, between State Bank of India, which is

India’s largest bank and BNP Paribas Cardif, which is French’s banking and financial

service provider. In the joint venture, SBI holds 74% of the total capital where as BNP

holds the remaining 26%.

Vision:

[8][8] http://www.hdfclife.com/about-us

11

"To be the most trusted and preferred life insurance provider."[9]

Mission:

"To emerge as the leading company offering a comprehensive range of life insurance

and pension products at competitive prices, ensuring high standards of customer

satisfaction and world class operating efficiency thereby becoming a model life

insurance company in India in the post liberalization period ". [10]

Values:

• Trustworthiness

• Ambition

• Innovation

• Dynamism

• Excellence [11]

1.3.6.BAJAJ ALLIANZ LIFE INSURANCE COMPANY

It was founded in 2001 and its headquarter is in Pune. It is a joint venture

between Bajaj Finserv Limited , formally known as Bujaj Auto Limited and Allianz

SE, an Europian financial services provider. Both these companies enjoy a reputation

of stability, expertise and strength. The technical experience and expertise of Allianz

and in-depth market knowledge of Bajaj combined to provide better and innovative

solutions.

Vision

'To be the BEST Life Insurance Company, To Buy From, Work For & Invest

In'[12]

Culture @ Bajaj Allianz

[10][11] https://www.bajajallianz.com/Corp/aboutus/life-insurance-company.jsp

[11] http://www.sbilife.co.in/sbilife/content/8_2881 [13] [14][15] https://www.bajajallianz.com/Corp/aboutus/life-insurance-company.jsp

12

Bajaj Allianz will be

A winning team

Have a passion for excellence & hate bureaucracy

Be empowered, have the confidence to take decisions quickly & be

accountable

Be driven to achieve results, to deliver

Be professional & socially committed

Be open to ideas, sharing, transparent & trust

Focus everything we do on our customers

Make BALIC a 'great place to work'

Have a sense of humour. [13]

The Bajaj Allianz Philosophy

Invest in people - Pay / develop / career planning

Dominate your market - Be decisive / communicate clear goals

Never sit still - change continually / revolutionize

Think service; service; service - continuous improvement

Learn & Lead - Be prepared to listen

Tell the facts are they are - clear communication

Kill bureaucracy - boundary less / idea non management layers / informality

/speed

Manage the business like a corner shop - customer satisfaction / cash flow[14]

From the above discussion it is clear that the privatisation of insurance

business is justifiable in order to achieve greater density and enhance the efficiency of

operations, greater mobilization of funds, insurance coverage in the country and for a

long term savings and utilisation in infrastructure development. The new players can

supplement in achieving the objectives of insurance business in India.

1.4 CURRENT SCENARIO OF LIC

13

Headquarter of LIC is in Mumbai. Today LIC functions in 2048 fully

computerized branch offices, 113 divisional offices, 8 zonal offices and the corporate

office at Mumbai.

LIC's slogan ‘yogakshemam vahamyaham’ is in Sanskrit language which can

be translated in English as "Your welfare is our responsibility". This is derived from

the Bhagavad Gita's 9th chapter, 22nd verse. This slogan is written in Devanagari

Script on the LIC’s logo. LIC offers its customers a variety of insurance products such

as pension plans, insurance plans, group schemes and special plans.

Mission – “Ensure and enhance the quality of life of people through financial

security by providing products and services of aspired attributes with competitive

returns, and by rendering resources for economic development.”[15]

Vision – “A trans-nationally competitive financial conglomerate of

significance to societies and Pride of India.”[16]

OBJECTIVES OF LIC

Some of the objectives of LIC are as follows:-

1. Spreading Life Insurance widely and in particular to the rural areas and to

the socially and economically backward classes with the view to reach all

insurable persons in the country and providing them adequate financial

cover against death at a reasonable cost.

2. Maximize mobilization of people’s saving by making insurance linked

savings adequately attractive.

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

policyholders, whose money it holds in trust, without loosing sight of the

interest 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

money belong to the policyholder.

[15][17] http://www.licindia.in

14

5. Act as trustee 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 capability

in furthering the interests of the insured public by providing efficient service

with courtesy.

8. Promote among all agents and employees of the corporation a sense of

participation, pride and job satisfaction through discharge of their duties

with dedication of their duties with dedication towards achievement of

corporate objectives.[17]

The above objectives are framed by the LIC at the time of its establishment and it is

trying to materialize its objectives over the subsequent years. However, the Indian Life

Insurance industry is facing several challenges and issues throughout its career and is

establishing meaningful strategies to overcome these challenges and issues from time

to time. Since its establishment it has earmarked a steady growth, but many factors

affected its abnormal growth and progress, few of them are:-

1. The mega illiteracy percentage.

2. Improper awareness among the general public regarding the policies and

schemes.

3. Least percentage of employment opportunities.

4. Lowest wage and salary pattern.

When compared with the developed foreign countries, the Indian Life Insurance

Industry has achieved only a little because of:-

- Lack of quality strategies adopted by LIC.

- Lack of standard education.

- Awareness about savings etc.

But after introduction of LPG, the Indian Insurance Industry has geared up and thus

many private players entered into this industry, who poses challenges and threat to its

[17] http://www.licindia.in

15

competitors and these new challenges forced the industry to establish colourful

strategies and plan for its survival and strategy growth.

A well-developed insurance sector is an advantage for economic development

as well as, at the same time strengthens the risk taking ability of the country.

• Balasubramaniam,T.S. and S.P.Gupta.(2000) in their book on “Insurance

Environment” explained at length, the global and Indian pictures of

Insurance system. The impact of Globalization on the Insurance business

environment is also discussed analytically to have a clear understanding of

the industry. [18]

• Srivastava and D.C. (2001) in their book on “Indian Insurance Industry-

Transition and prospects” discuss analytically the financial significance of

insurance industry, its contribution to Indian economy and also the

transitory prospects and challenges of insurance industry due to

liberalization and the opening up of the sector to private players.[19]

• Chakraborty (2007), examined that the Indian insurance industry

underwent a drastic transformation with the entry of private players who

captured a significant market share (26.6%) during 2005-06.[20]

• Rajendran and Natarajan, 2009 found that the acceptance and adaptation of

LPG has brought about remarkable improvement in Indian Life Insurance

industry, specifically to LIC of India. They first compared the overall

performance of LIC of India between pre and post LPG era and secondly

examined the current status, volume of competitions and challenges faced

[18][21][22][23] http://www.slideshare.net/Somnath143/sip-report-44409688 [19]https://www.researchgate.net/publication/268341520_The_impact_of_liberalization_privatization_and_globalization_LPG_on_life_insurance_corporation_of_India_LIC

CHAPTER: 2- REVIEW OF LITERATURE

16

by LIC of India. The growth of LIC was compared in terms of

performance indicators such as annual business, 50 business in force,

group business in force and life fund between the period 1957 and 2007.

For this, they have taken the secondary data from the annual reports of LIC

of India. Their analysis concluded that LPG was incorporating a positive

influence on the performance of LIC of India showing that the business in

India and the business outside India as well as the total businesses of LIC

are always in an increasing trend.[21]

• Kshetrimayum Sobita Devi (2011) in her thesis on “A study of the impact

of Liberalization on the Indian Life Insurance Industry”, Ph.D thesis

submitted to the department of Economics, University of the Maharaja

Sayajirao university of Baroda, Vadodara, 2011. Confirms a general

opinion that innovativeness in every activity alone rules and dominates the

industry. But, at the same time, the practicality and economic justification

of that innovativeness are also to be analyzed.[22]

2.1 RESEARCH QUESTIONS

From many decades LIC has been operating in India and thus it has

experienced both pre and post globalization era. Thus the main research questions

explored in this study are:-

– Is there any impact of globalization on the employees productivity of

LIC ?

– After about two decades of liberalization in insurance sector, has the

productivity of employees in this sector increased ?

– Is there any impact of sample characteristics such as gender and age on

perception of employees regarding productivity in the post

globalization era?

2.2 SIGNIFICANCE OF THE STUDY

Indian economy is consistently growing along with the increasing need for life

insurance. With the liberalization of insurance sector, LIC lost its monopoly and had

17

to compete with many private players. Liberalization gave tremendous opportunity to

the new players even though, till now LIC has maintained its position in the market.

Hence, productivity of employees in LIC has become an all time concern.

2.3 SCOPE OF THE STUDY

The scope of the study is very wide as it includes:

– Personal aspects such as training and development, performance

appraisal, management’s strategy, employee’s productivity etc

– Competitiveness among the insurance players, survival of LIC in the

competitive market etc

2.4 LIMITATIONS OF THE STUDY

Like the other social research work, present study equally suffers from some

limitations.

– Sometimes management is reluctant to show some records as it is

confidential.

– The employees are not able to spare much time for interview and

discussion due to their professional engagement.

– Moreover, the study is conducted within a short duration of time only in

the district of Sambalpur.

18

3.1.RESEARCH METHODOLOGY

To conduct the research, first of all it is necessary to create a research design.

A research design is basically a blue print of how a research is to be conducted. It is

the conceptual structure within which research is conducted.

3.2.Types of Research:

Basically there are 3 types of approaches used during any research:

1. Exploratory

Exploratory research is research conducted for a problem that has not been

clearly defined. It often occurs before we know enough to make conceptual

distinctions or posit an explanatory relationship. Exploratory research helps determine

the best research design, data collection method and selection of subjects.

2. Descriptive

Descriptive research is a study designed to depict the participants in an

accurate way. More simply, descriptive research is all about describing people who

take part in the study. Descriptive research is used to describe characteristics of a

population or phenomenon being studied. It does not answer questions about

how/when/why the characteristics occurred. Rather it addresses the "what" question

3. Hypothesis testing.

CHAPTER: 3- RESEARCH DESIGN

19

A hypothesis test is a statistical test that is used to determine whether there is

enough evidence in a sample of data to infer that a certain condition is true for the

entire population. A hypothesis test examines two opposing hypotheses about a

population: the null hypothesis and the alternative hypothesis.

During this study, exploratory research has been taken into consideration.

3.3.Source of Data :

Primary data:

The primary sources of data refer to the first hand Information. Primary data is

collected during the survey with the help of Questionnaires.

Secondary data:

Secondary data is one which already exists and is collected from the published

sources. The source from which secondary data was collected Internet.

Primary data has been collected during the study with the help of Quantitative

Questionnaires

3.4.Sampling Techniques:

Sampling Methods can be classified into one of two categories:

– Probability Sampling: Sample has a known probability of being

selected.

– Non-probability Sampling: Sample does not have known probability of

being selected as in convenience or voluntary response surveys.

- Here, Quota sampling technique has been used. Nearly 50% of the samples are

above 47 years of age and 50% are below 48 years of age.

3.5.Scaling Techniques:

o Nominal Scale

The nominal type differentiates between items or subjects based only on

their names or categories and other qualitative classifications they belong

to. Numbers may be used to represent the variables but the numbers do

not have numerical value or relationship.

o Ordinal scale

20

The ordinal type allows for rank order (1st, 2nd, 3rd, etc.) by which data

can be sorted, but still does not allow for relative degree of difference

between them.

o Interval scale

The interval type allows for the degree of difference between items, but

not the ratio between them. Examples include temperature with the

Celsius scale, which has two defined points (the freezing and boiling

point of water at specific conditions) and then separated into 100

intervals, date when measured from an arbitrary epoch (such as AD),

percentage such as a percentage return on a stock, location in Cartesian

coordinates, and direction measured in degrees from true or magnetic

north. Ratios are not meaningful since 20 °C cannot be said to be "twice

as hot" as 10 °C, nor can multiplication/division be carried out between

any two dates directly.

o Ratio scale

The ratio type takes its name from the fact that measurement is the

estimation of the ratio between a magnitude of a continuous quantity and

a unit magnitude of the same kind (Michell, 1997, 1999). A ratio scale

possesses a meaningful (unique and non-arbitrary) zero value.

The study has used both Nominal and Interval scales.

3.6.Statistical Method :

There are two types of statistical Methods-

- Parametric statistics is a branch of statistics which assumes that sample data

comes from a population that follows a probability distribution based on a

fixed set of parameters.

A non-parametric model differs precisely in that the parameter set is not fixed

and can increase, or even decrease if new relevant information is collected. Non

parametric test is mainly used on small sample size. It is distribution free method, do

not relay on assumptions that the data are drawn from given probability distribution.

In this study, Non-parametric test i.e. chi square test has been used to detect

whether there is any impact of sample characteristics like gender and age on

21

perception of employees. Generally chi square test is used to investigate

whether distribution of categorical variable differ from one another.

22

4.1 Graphical Representation of Demographic Profile of the Sample

Total Respondents = 64

4.1.1. Sample Characteristic (Gender).

LIC of India provides equal opportunities for both the genders. After

globalization, employment opportunities have increased in all the sectors and so in the

insurance sector. Chart 1 shows the percentage of male and female respondents of the

sample.

Source: Primary Data

INFERENCE

This chart clearly shows that majority of

the respondents were male. Only 21% of

the samples were female. This

proportion in the sample has been fixed

basis the underlying proportion of male

and female in the population. Thus, there

is a huge opportunity for the female

employees in insurance sector. Women empowerment has given tremendous

opportunity to the female employees, they must explore it.

4.1.2. Sample Characteristic (Age).

LIC comprises of employees of all the

generation, it reduces the generation gap

among the employees. This study has

found adequate data due to the presence

of respondents from different age groups

as they have experienced both pre and

post liberalization era. Chart 2 shows the

percentage of respondents above 47 years

of age and below 48 years of age.

Source: Primary Data

INFERENCE

This chart clarifies that there is no generation gap among the samples. Equal number

of respondents are present in the sample distribution (quota sampling has been used).

CHAPTER: 4- ANALYSIS & FINDINGS

23

Thus the perception of the respondents on the impact of globalization can be identified

on the basis of age.

4.2 Tabular Representations

4.2.1 Chi- Square Test on the basis of Gender (Top box).

H0 = Impact of Globalization on Male (Top Box) = Impact of Globalization on

female (Top Box) .

H1 = Impact of Globalization on Male (Top Box) ≠ Impact of Globalization on

female (Top Box) .

X2 = ∑(O−E)2

E = 6.22

Degree of Freedom (d.f) = (7-1)*(2-1) = 6

Tabulated value of X2 = d.f at 5% level of significance= 12.592

P value= 0.97

Since, calculated value is less than tabulated value, the null hypothesis is accepted.

That means there is uniform impact of globalization on employee’s productivity of

both males and females, when top box is considered.

4.2.2 Chi- Square Test on the basis of Gender (Top 2 box) .

H0 = Impact of Globalization on Male (Top 2 Box) = Impact of Globalization on

female (Top 2 Box) .

24

H1 = Impact of Globalization on Male (Top 2 Box) ≠ Impact of Globalization on

female (Top 2 Box) .

X2 = ∑(O−E)2

E = 1.91

Degree of Freedom (d.f) = (7-1)*(2-1) = 6

Tabulated value of X2 = d.f at 5% level of significance= 12.592

P value= 0.99

Since, calculated value is less than tabulated value, the null hypothesis is accepted.

That means there is uniform impact of globalization on employee’s productivity of

both males and females, even when top 2 boxes are considered.

4.2.3 Chi- Square Test on the basis of Age (Top box) .

H0 = Impact of Globalization on employees of age below 48 (Top Box) = Impact of

Globalization on employees of age above 47 (Top Box) .

H1 = Impact of Globalization on employees of age below 48 (Top Box) ≠ Impact of

Globalization on employees of age above 47 (Top Box) .

25

X2 = ∑(O−E)2

E = 1.98

Degree of Freedom (d.f)= (7-1)*(2-1) = 6

Tabulated value of X2 = d.f at 5% level of significance= 12.592

P value= 0.98

Since, calculated value is less then tabulated value, the null hypothesis is accepted.

That means there is uniform impact of globalization on employee’s productivity

irrespective of employee’s age, when top box is considered.

4.2.4 Chi- Square Test on the basis of Age (Top 2 box) .

H0 = Impact of Globalization on employees of age below 48 (Top 2 Box) = Impact of

Globalization on employees of age above 47 (Top 2 Box) .

H1 = Impact of Globalization on employees of age below 48 (Top 2 Box) ≠ Impact of

Globalization on employees of age above 47 (Top 2 Box) .

X2 = ∑(O−E)2

E = 0.20

Degree of Freedom (d.f)= (7-1)*(2-1) = 6

Tabulated value of X2 = d.f at 5% level of significance= 12.592

P value= 0.99

Since, calculated value is less then tabulated value, the null hypothesis is accepted.

That means there is uniform impact of globalization on employee’s productivity

irrespective of employee’s age, even when top 2 boxes are considered.

26

5. CONCLUSION

Thus, from the study, the following conclusions can be drawn:-

– The employee’s productivity has increased after globalization as majority

of respondents agree with top box as well as top two 2 box irrespective of

their gender and age.

– Liberalization of insurance sector and the consequent increment in

competition has got a significant impact on productivity of employees in

this sector.

– The impact of liberalization on employee productivity in insurance sector

does not vary on the basis of gender or age.

– The management is also highly interested to increase the productivity and

performance of it’s employees.

– After globalization, insurance sector has experienced technological

advancement in its processes and strategies.

– The employees have successfully adopted themselves with the changes

after globalization.

– Even after loosing monopoly status in the insurance sector and facing

tough competition from many new private players, after globalization,

LIC has succeeded in maintaining a stable position in the market.

– At present LIC is having less number of female employees as compared

to the male employees. Female candidates are provided adequate

employment opportunities, they must explore it.

6. SUGGESTIONS

LIC is hereby recommended to follow the following process:-

– LIC should focus on increasing productivity of its employees through

training and development programmes so that they can beat the increased

competition.

– LIC should also launch programmes to manage the increased stress levels

of its employees caused due to increased competition in the insurance

sector.

– LIC should also emphasize on continuous performance appraisal so that

it can retain its existing employees.

CHAPTER: 5- CONCLUSION & SUGGESTIONS

27

REFERENCES

http://www.licindia.in/history.htm

https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo4

&mid=2

http://shailajaramanallic.blogspot.in/2012/11/introduction-to-lic-of-india.html

https://www.irda.gov.in/ADMINCMS/cms/frmGeneral_Layout.aspx?page=PageNo89

&flag=1

https://licindia300.wordpress.com/tag/liberalisation/

http://www.jstor.org/stable/4376358?seq=1#page_scan_tab_contents

http://insurance.birlasunlife.com/Pages/Individual/About-Us/Company-Profile.aspx

https://www.reliancegeneral.co.in/Insurance/About-Us/Reliance-General-

Insurance.aspx

http://www.hdfclife.com/about-us

http://www.sbilife.co.in/sbilife/content/8_2881

https://www.bajajallianz.com/Corp/aboutus/life-insurance-company.jsp

http://policytiger.com

http://www.yourarticlelibrary.com/insurance/the-overview-of-insurance-sector-in-

india-defined/7544/

http://www.policybazaar.com/insurance-companies/life-insurance/

https://www.irda.gov.in/ADMINCMS/cms/NormalData_Layout.aspx?page=PageNo1

29&mid=3.1.9

http://vassarstats.net/textbook/parametric.html

28

APPENDIX I

Questionnaire

Hello, I’m K.Renuka Patnaik from G.M University , Sambalpur a leading college of western

Odisha . I am conducting a study on the employee productivity of LIC after globalisation

among employee like you. This is for the partial fulfilment of my MBA degree and I assure

you that the information to be provided by you will be used purely for academic purposes.

Would you please give us 15 minutes of your time for asking some questions?

Screener

Q- Are you a fulltime employee of LIC?

01. Yes 02. No

Personal Particulars

Name : Designation :

Age : Gender :

(Note: Tick ( √ ) the option of your choice.)

Q1. How do you find the business environment for life insurance sector after privatization?

5 4 3 2 1

Highly Competitive Competitiv

e No Change Low Competitive No Competition

Q2. Who are mainly your Competitors in life insurance sector in the era of privatization?

5 4 3 2 1

Public Sector Insurance Banks like SBI, PNB etc.

Private Sector Insurance Banks like

ICICI, HDFC etc.

Private Insurance Companies like Bajaj

Allianze, Birla Sunlife etc.

All the above

None of the above

Q3. Does your life insurance company find difficult to survive?

5 4 3 2 1

Most difficult Very difficult Neither difficult nor

easy Difficult Not Difficult

Q4. What strategy your life insurance company has adopted to do insurance business effectively in competitive situation in market?

5 4 3 2 1

Use of advance

technology

Reducing manpower

Change in working process

Improving organizational performance

More focus on customer service

Q5. According to importance, rank the resources being used in your organization for business activities.

5 4 3 2 1

Manpower Machines Money Materials Methods

Q6. What are the advantages of higher employee’s performance to your organization?

5 4 3 2 1

Quality and quantity improve

Higher employees productivity

Employee’s Satisfaction

Higher profitability All the above

Q7. Does your management is interested to manage performance of employees consistently?

5 4 3 2 1

Highly interested

Interested Neither Interested nor

disinterested Little bit Interested Not interested

29

Q8. What are the functions being performed by performance management in your organization?

5 4 3 2 1

Setting Goals and performance standards

Communication, Coaching, feedback

Performance appraisal

Development planning for future

All the above

Q9. What are the benefits from performance management to your organization?

4 3 2 1

Financial gains Non-financial gains Effective Management Control All the above

Q10. Who does play important role in performance management process in your organization?

4 3 2 1

Managers Supervisors Reviewers or experts All the above

Q11. Is management interested to improve productivity of every employee in your organization?

5 4 3 2 1

Highly interested

Interested Neither interested nor

disinterested Little bit

interested Not interested

Q12. Does the performance appraisal is regularly carried by the responsible manger or supervisor?

4 3 2 1

Yes No Sometimes Cannot Say

Q13. Which method is being used for performance appraisal?

4 3 2 1

Traditional methods Modern methods No idea Both (a) and (b)

Q14. Do you feel performance appraisal is beneficial for whole organisation?

4 3 2 1

Yes No Sometimes Cannot Say

Q15. What are the objectives of measuring productivity of employees?

5 4 3 2 1

Search of suitable

technology

Improve working efficiency

Reducing operation costs

Improve overall profitable and goodwill

All the above

Q16. Which factors do affect the employee’s productivity in your organisation?

6 5 4 3 2 1

Physical working conditions

Use of technology

Training and Development opportunity

Adequate Compensation

Favourable All of the Management above. attitude

Q17. How is productivity improved in your organisation?

6 5 4 3 2 1

Setting missions, goals

and performance

standards

Motivating Employees

Training and development

Performance appraisal

Future All of the Performance above. development plan

Q18. Do employees play very crucial role in getting competitive edge over completions in insuring?

5 4 3 2 1

Very Crucial Crucial Cannot say Moderate effect Does not affect

Q19. Do you agree the employees providing life insurance service to customers are the service providers, organisation for customers, brand and marketers?

5 4 3 2 1

Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Q20. The future of life insurance with higher productivity and performance of employees would be bright in highly competitive situation in future.

30

5 4 3 2 1

Strongly agree Agree Neither agree nor disagree Disagree Strongly disagree

Q21. Which sector in life insurance is more conscious about higher productivity and performance of employees?

5 4 3 2 1

Public sector Insurance Banks

Private sector Insurance Banks

Private Insurance Companies Foreign Insurance Companies

All the above

31

APPENDIX II

32

33