Taming The Indian Insurance Market: Similarities between LIC & Mc Donald's

Have you ever wondered what if insurance could have been an edible product like say a burger? Who would had been the market leader in that case. Obviously the current market leader in selling burgers worldwide I.e. Mc Donald's. But much to the dismay of most of the insurance sales person including me It is an intangible product which at least at the time of purchase offers no more consumable value then the piece of paper it is written on.

So is it somehow possible to explore similarities in the business models of two giants selling two products as worldly apart as insurance and burgers? I think there are. If we compare the business models of Mc Donald’s selling a product as basic as a burger which can be prepared by rather interns in the first class of their cooking courses and that of LIC the Indian leader in sales of a product as complex as insurance, we will be surprised at finding the similarities in their sales models. The basic advantage of studying the similarities is to position ourselves as a competitor to Mc Donald's and to plan accordingly to achieve our niches and meet the organisational goals.

So what makes Mc Donald’s the giant it is today. Some of the biggest factors in the success story of Mc Donald’s are as follows:

1.      Consistency. Be it the product, the packaging or the outlet. The over all consumer experience in case of Mc Donald’s remains the same across the globe and the company goes a great distance to maintain it that way. In case of LIC I feel the consistency is with the experience of its distributors. Among all the insurance companies I have worked for in the past 12+ years it is only LIC where the sales and incentive models has remained largely consistent. The managers and the agents are not subjected to surprises or shocks every now and then enabling them to develop a foresight and hence plan and execute better. Further even as far the products or the returns thereon are concerned we find at least the underlying idea to be consistent. Often LIC seems to have declared returns from its reserves just to ensure that customer experience remains consistent.

2.      Branding. How many times do you say ‘I am loving it ‘ for a meal taken outside your home? What are you loving? Is it the product, the price or the packaging or is it the overall experience? The untiring effort of Mc Donald’s to cultivate and maintain the brand image goes a long way in establishing their seriousness about their business. In case of LIC ‘Jeevan ke saath bhi Jeevan ke baad bhi’ not only defines the underlying spirit but also the lifelong relationship that the company wants to build with its consumers. Sadly except I-Pru in the intial days – with Bandey Achhey hai – and HDFC SLIC – the sar utha ke jio – none of the remaining companies seems to have taken their branding very seriously.

3.      Presence. With 35000 outlets in more then 195 countries Mc Donald's is amongst the top 5 restaurant chains worldwide. So practically you find a Mc Donald's in every corner of the world, every town, every happening place. Possibly the same stands true for LIC, every city, every town and now with the new extension centre program possibly every village very soon. Again this is one place where the private insurance companies are weak. Though they are ramping up their presence though the bank assurance tie-ups but a cost effective way of boosting presence across the length and breadth of the country needs to be developed if the next phase of growth needs to made a reality.

4.      Choice. A quick look on Mc Donald’s menu will show how it suits every pocket. Whether your budget is a paltry twenty rupees per person or two hundred you will find something that matches in the offering. Same implies with LIC a strong distribution and a well spread presence gives it the flexibility to offer products across the various income segments and hence cater to a much larger audience then its private counterparts. Most of the private insurance companies have their product basket limited by the cost considerations. Hence the focus technically should had been on customer acquisition and distribution development is on premium collection which is more of a survival technique then sustenance strategy. 

5.      Innovation: excitement is as necessary for a brand to survive the test of time as consistency in the product. And this excitement is generated through innovation. Either in the menu or the service part or the overall dining experience. With Mc Donald’s you may rest assure of finding something new very frequently either delivery models like drive thru or products for Indian pallet like Paneer burger or more healthy choices in their meals. Same goes for LIC. A strong product team enables them to come out with products frequently and with a customer oriented USP which enables their team to revisit existing customers and explore cross sell possibilities. Amongst the private sector the innovation is missing or has been dormant. Most of the action appears to be around Online space which is disrupting the FOS.

In the past few years much of the private insurance sector’s focus and efforts have been on benefiting from the digital revolution. It is much like a restaurant depending upon a grofer or zomato for its success. While this may add to the overall top line, ignoring the basics can be detrimental to the overall sustainability. As discussed in earlier articles, the private insurance sector  needs to find its niche and to focus on the 4Ps viz  Products, Payouts, Pride & Passion to ensure the next phase of growth.