• Preface
  • History, Origin. and development
  • Meaning and Definition
  • Recruitment
  • Work
  • Organization and working of the corporation
  • Principles of Organization of Life Insurance Corporation of India,
life insurance corporation in india

Life Insurance Corporation of India is the leading organization doing life insurance business in India. Prior to the inception of the Corporation, the life insurance business was in the private sector. In order to prevent discrepancies coming in the field of life insurance business, to protect the interests of the insured and keeping in mind the national interest in this field, the Government of India nationalized this business in the year 1956. As a result of nationalization, the life insurance business operating in the private sector came under the ownership, control and operation of the government. After the announcement of nationalization of life insurance business, the operation of this business was with the Central Finance Department for some time. For the establishment of the corporation, a separate act ‘Life Insurance Corporation Act 1956’ was passed by the government and from September 1, 1956, the corporation started work.


Being established as a corporation, it is an autonomous organization with independent statutory existence. All the powers for the operation and control of the corporation are given by the Act and its scope is determined by the Act itself. The Central Office of the Corporation is located in Mumbai and it has a four-tier organization – Central, Regional, Divisional and Branch Office Organization. A total of 8 Regional Offices are functioning under the Central Office of the Corporation. The working area of ​​each regional office is divided into different divisional offices. And under each divisional office, many branch offices are doing the work of insurance business.

There is no irrefutable evidence regarding the origin of insurance, but on the basis of the available evidence and characteristics, its origin and development can be estimated. Scholars are of the opinion that insurance was initially prevalent in India and Babylonia. In Rigveda, Manusmriti and Hammuravi texts, the words ‘Yogaksham‘ and ‘Batamari bond‘ are mentioned which are related to assurance of safety and welfare. There is also a mention of the creation of death rate tables in those times. The present form of insurance is believed to have originated in England. At that time in 1583 the life of Mr. William Gibbons of London was insured for one year. The spread of life insurance gained momentum with the establishment of the ‘Mutual Life Insurance Company’ in London in 1669. Gradually the number of life insurance companies started increasing and in 1801 the number of such companies increased to 8. Due to the improvement in mortality tables, this business grew at a more rapid pace. This business started in India in 1818 with the establishment of ‘Oriental Life Insurance Company’ in Calcutta by the British. Institutions were established for this in Bombay in 1823 and Madras in 1829, but this business was widely spread only from 1870 onwards.

Before 1871, Indian lives were considered sub-standard risks and were insured with an additional premium of 15 percent to 20 percent. ‘Bombay Mutual Life Insurance Society’ in 1871, ‘Oriental Government Securelife Insurance Company Ltd.’ in 1874. was established. At the same time many foreign companies like Sun Life Insurance, New York Life Insurance etc. were also established. The establishment of United India, Bombay Life, Hindustan Cooperative etc., in the background of the Swadeshi movement in the early 20th century, widened the field of life insurance. In order to control the activities of insurance companies, the Insurance Act was passed in 1938, in which there was a provision for the establishment of the Insurance Department and the appointment of an insurance controller. Before nationalization, 245 insurance companies were doing business in the country. On January 19, 1956, the President issued an ordinance to nationalize the life insurance business. In June 1956, the Life Insurance Corporation Act was passed by the government. Under this act Life Insurance Corporation of India was established which started business from 1st September, 1956.

Life Insurance Corporation of India Organization means the organization established by the Life Insurance Corporation Act, 1956 for the conduct of life insurance business.  Corporation is an autonomous organization with independent statutory existence.  The Central Office of the Corporation is established in Mumbai and it conducts the life insurance business through a four-tier organization structure.  These four levels include central level, regional level, divisional level and branch level organizations.

Prior to the establishment of Life Insurance Corporation of India, the life insurance business was operated in the private sector.  Its operation in the private sector led to many discrepancies.  Achievement of national objectives, establishment of socialist society, curbing of unhealthy competition, complete protection of the interests of the insured, connecting every section of the life insurance, especially the rural people, these have been some of the bases by which Life Insurance Corporation of India in this area.  The installation had become necessary. 


The organizational structure of the corporation has been structured with the view of efficient management system and the intention of widening the insurance business to the national and international level.

The functions of Life Insurance Corporation of India have been determined on the basis of its objectives. According to the Act, the main functions of the corporation are as follows: –

  1. To do life insurance business in India and outside India
  2. Safe appropriation of funds collected
  3. Buying, using and selling property to achieve the purpose
  4. To provide money or to give loan against the security of any property.
  5. Borrowing money from someone else. 
  6. To carry on any business in the interest of the Corporation which may be conveniently carried on with the business of the Corporation. 
  7. To perform all such functions as may be connected with the exercise of the powers of the Corporation.

The organizational set up of Life Insurance Corporation of India is based on decentralized system in which each level of office is engaged in achieving the objectives of life insurance business under the direction of the Central Office. The organization structure is set in such a way that the policy function is central, but the purpose of execution is to sell the letter of insurance to every potential insurance customer across the entire geographic area. Each level of organization has an important role in the functioning of the corporation in an integrated manner.


The organizational and functioning functions of each level of the corporation can be understood under the following headings.

  1. Central Level Organization and Functions (Central Office) – The highest and primary policies of the corporation are determined by the central level organization itself. In this the role of the following is important –
    1. Board of Directors – According to the Life Insurance Corporation Act, the place of the Board of Directors is paramount in the entire organization. It consists of a maximum of 15 members appointed by the Central Government. The meeting of the Board of Directors is held once in a month. The organization of the business of the nature it carries out in the meetings can be understood by the following chart –
      1. Determination of the long term top policies of the Corporation.
      2. Decentralization / Delegation of officers throughout the organization.
      3. Formation of committees as per requirement for the corporation.
      4. Service related decisions of subordinate chief officers.
      5. Decision to do any work under the Act.
    2. Chairman of the corporation – The chairman of the corporation is the chief executive officer who presides over the board of directors and various committees. The Chairman can use the powers of the Board of Directors and various committees according to his instructions, but it is necessary for him to allocate funds according to the instructions of the Appropriation Committee.
    3. Managing Director – It is a full time officer of the corporation who performs the tasks directed by the various committees and chairman. The Corporation may appoint one or more persons to the post of Managing Director. It can delegate powers to subordinate officers only with the prior permission of the Board of Directors or the Chairman. The Managing Director is responsible to the Chairman for his actions.
    4. Various Committees of the Corporation – The Corporation has the right to appoint various committees as per Section 19 of the Life Insurance Act. The Board of Directors can appoint various committees to advise on special tasks and special subjects. The constitution and functions of various committees are as follows –
      1. Executive Committee – There are total 5 members in this committee, in which one chairman, two members of the board of directors and two nominated members are included. It is the highest committee of the corporation which performs the work of general supervision, direction and control of its entire business. The committee does the work of issuing any insurance letter / document, re-insurance of risks, buying, selling, leasing movable and immovable properties, advising the appropriation committee, appointing advocate etc. under the rules of the corporation.
      2. Appropriation Committee – This committee can have a maximum of 8 members including the chairman. Out of these, at least 3 members are members of the board of directors, the rest are experts in the field of investment. The committee advises the corporation on the policies regarding the appropriation of funds of the corporation.
      3. Other Advisory Committees – With the intention of providing advice to the Corporation on various subjects, unmarked committees have been constituted.
        1. Personnel Advisory Committee
        2. Consumer Affairs Committee
        3. Audit Committee of the Board
        4. Building Advisory Committee
        5. Legal Advisory Committee
        6. Insurance Letter Holder Service Advisory Committee, Personnel Advisory Committee Human Resource Planning to the Corporation Provides consultation in The Consumer Affairs Committee was constituted in the year 1997 and there is a provision for the appointment of maximum 8 members. The committee provides necessary advice to provide best services to the consumers, to involve more and more persons in the insurance business., The Audit Committee of the Board was constituted in the year 2001 with the intention of making the corporation administration transparent, in which there are 5 members including the Chairman. The Building Advisory Committee provides advice to the Corporation regarding the construction and development of buildings. The Legal Advisory Committee provides legal advice to the Corporation in settlement of claims received and disputes arising between the insured and the insurance company. The insured’s service advisory committee provides necessary advice on matters such as premium, renewal, underwriting, surrender, underwriting, etc. of the insured.
      4. Various Departments of the Central Office – The management system of the Central Office was divided into different departments according to the work. Which disseminates instructions for their related work and prepares directories. Each department is headed by an in-charge named as the Executive Director / Chief Executive. These departments and their functions are as follows:
        1. Appropriation Department – This department does the work of preparing the planning and implementation of the appropriation account details related to the appropriation of funds collected by various offices of the corporation from premium, interest, rent etc.
        2. Finance and Accounts Department – This department maintains the accounts of all the accounts of the Central Office and examines, coordinates and integrates the accounts of the subordinate offices. It prepares the annual statement of account and presents it to the authorized officer. Preparation of annual budget, making necessary arrangements for audit, giving necessary guidance to all the offices are the main functions of the department.
        3. Planning Department – This department prepares future long-term plans by forecasting the future development plans of the corporation. Truth of Personnel Planning for the Corporation This department prepares plans with reference to the five year plans of the country.
        4. Actuarial Department – This department sets standards, underwriting process, premium rates, terms and conditions with regard to the selection of risks. Performs related tasks like claim settlement process, determination of mortality chart, preparation of prospectus, development of new insurance plan, etc.
        5. Human Resource Department – This department determines the service related policy for all the employees working in the entire corporation and performs the departmental work of the employees of the Central Office. Keeping service records of officers and personnel, considering their demands, determining the process of recruitment, setting up of training centers, determining the promotion process, doing work related to various committees and meetings of the Board of Directors, etc. are the main functions of this department.
        6. Engineering Department – This department is responsible for getting the construction planning and construction work done for the offices and employees of the corporation, budgeting of construction, maintenance and extension work of buildings, construction of residential settlements for the general public, etc.
        7. Law and Housing Estates Department – This brain performs the tasks related to legal advice in relation to employees and departments, determining the policy of giving loan by keeping the property mortgaged, advising the appointment of legal advisors and appraisers..
        8. Pension and Retirement Insurance Department – This department has been established only a few years back. This group prepares insurance plans, prepares proposals for new plans.
        9. Internal Audit and Inspection Department – The internal audit section of this department deals with the work of audit process and assessment, submission of audit reports of various offices to the central office, taking action according to the audit report. Inspection of the department The department undertakes periodic inspection of the daily working methods and procedures of the offices of the corporation, presenting the inspection report, summary of the inspection report and the report of the action taken on it to the executive committee, etc.
        10. Vigilance Department – When this department investigates the complaints received from the public and takes necessary steps to remove the knowledge irregularities through internal inspection and audit. This department works to prevent misuse of funds, embezzlement.
        11. Public Relations and Publicity Department – This department does the work of promoting the activities and future plans of the corporation. The main functions of this are to advise the managing director in public relations and publicity works, to determine the publicity policy, to create awareness about insurance among the public through various means, to make contact with government departments, to call conferences.
        12. Marketing Department – This department is mainly to plan life insurance business, research for growth prospects, determine the location for new branches, branch manager, development officer, prepare policy for agents, prepare training plans for officers and agents. etc. works.
        13. Management Services Department – This department performs the study of various work costs, methods of simplification of work and development of new methods, improvement in the format of existing documents, renewal of methodology, etc.
        14. Estates and Office Services Department – This department of the corporation works to manage the security and maintenance of the corporation’s estates and to provide better office service.
  1. Regional Level Organization and Functions (Regional Office) – With the intention of proper management, decentralized organization and direction, the Corporation has divided its entire organization into eight regional offices. The areas and headquarters of the regional offices are as follows:
    1. Central Zone Bhopal,
    2. Eastern Zone, Kolkata,
    3. East Central Zone, Patna,
    4. Northern Zone, New Delhi. ,
    5. North-Central Zone Kanpur,
    6. Southern Zone Chennai,
    7. South-Central Zone Hyderabad,
    8. Western Zone, Mumbai, for each regional office of the Corporation. There are many divisional offices functioning under it. The Regional Advisory Board and Regional Interviewer have an important role in every regional office.
      1. Regional Advisory Board – There are 8 to 12 members in the advisory board of each region, in which the chairman of the corporation and the regional manager of the area concerned are ex-officio members. The main functions of these circles are to advise on the subject assigned by the corporation and to advise on the development of the insurance business of their area.
      2. Regional Manager – The regional manager of each region is the chief officer of his office, who does the work of management and operation of the office. Also, it executes the orders, instructions received from the Central Office. After the reorganization of Life Insurance Corporation, his role has been till those functions which are helpful in the development and operation of the insurance business. The functions of these managers are as follows –
        1. Planning for insurance development, branch expansion and market study for insurance requirement.
        2. Determining training programs and making training arrangements.
        3. To increase cost effectiveness so as to get more work results at lower cost.
        4. To develop internal and external contacts and relations with the intent of quality in the performance of the field.
  1. Departments of Regional Offices – After the reorganization done by the Corporation, the departments of the regional offices and their functions are as follows:-
        1. Insurance Enumeration Department – This department is the recording of insurance proposals (which are outside the jurisdiction of the Divisional Office), of the regional doctors. Works for appointment, consultation on insurance claims, coordination with the Insurance Enumeration Department of the Central Office, etc.
        2. Marketing Department – This department is responsible for determining the posts of development officers, issuing recruitment instructions, organizing conferences for promotion agents and development officers, marketing research, product development promotion and evaluation work.
        3. Human Resource Department – This department deals with the planning and development of its own office staff, which includes proper performance of their service conditions. This department also does cadre wise posts, promotion, interview organization etc. for divisional offices. Regional Training Center and Regional Sales Training Center are also operated and managed by this department.
        4. Office Services and Estates Department – This department deals with renting and giving of buildings, renewal of leases, inspection of class IV employees working in buildings, maintenance of guest houses.
        5. Law and Housing Estate Department – This department works to give legal advice to all the departments of branch office, divisional office and regional office, to take legal action for recovery of loans given under housing loan schemes.
        6. Finance and Accounts Department – This department maintains the accounts of its office, supervises the accounting work of the jurisdictional divisional offices, takes action according to the audit report, maintains accounts of mortgage loans, etc.
        7. Management Services Department – This department works to increase managerial efficiency through modern technical communication tools. Arrangement of mechanization for offices, marking their performance, evaluating the usefulness of installed machines are the main tasks of this department.

3 Divisional Level Organization and Functions (Divisional Office) – From the point of view of geographical decentralization, the work area of ​​each regional office has been divided into several divisional offices. Every divisional office has an important place in the working system of the corporation. Area wise number and location of divisional offices are as follows –

No.No.Of Circle OfficesLocation of Circle Offices
1Central Zone 08Bhopal, Bilaspur, Gwalior, Indore, Jabalpur, Raipur, Satna Shahdol.
2Eastern Zone11Asansol, Bongaigam, Guwahati, Howrah, Kharagpur, Kolkata, Jalpaiguri, Jorhat, (Metropolitan-1), Kolkata (Metropolitan-II), Kolkata (Suburban), Silchar.
3East Central Zone09Behrampur, Bhagalpur, Bhubaneshwar, Cuttack, Hazaribagh, Jamshedpur, Muzaffarpur, Patna, Sambalpur.
4Northern Zone18Ajmer, Amritsar, Bikaner, Chandigarh, Jaipur (1), Jaipur (II) Jalandhar, Jodhpur, Karnal, Ludhiana, Delhi (I), Delhi (II), Delhi (III), Rohtak, Shimla, Srinagar, Sailu Jammu Udaipur.
5North-Central Zone12Agra , Aligarh , Allahabad , Bareilly , Dehradun , Faizabad , Gorakhpur , Haldwani , Kanpur , Lucknow , Meerut , Varanasi .
6Southern Zone12Chennai (I) Chennai (II) Coimbatore, Ernakulam, Kottayam, Kozhikode, Madurai, Salem, Tirunelveli, Thanjavur, Thiruvananthapuram, Vellore.
7South-Central Zone17Bangalore (1) , Bangalore ( II ) , Belgaum , Dharwad , Hyderabad , Cuddapah , Karimnagar , Machilipatnam Mysore , Nellore , Raichur , Rajahmundry , Secunderabad , Shimoga , Udapi Visakhapatnammu Warangal .
8Western Zone23Ahmedabad, Amravati, Aurangabad, Bhavnagar, Gandhinagar, Goa, Kolhapur, Mumbai (1), Mumbai (II), Mumbai (III), Mumbai (IV), Mumbai (S.S.S.). Nanded, Nagpur, Nadiad, Nashik, Pune (I), Pune (II) Rajkot, Satara, Surat, Thane, Vadodara.

Each divisional office carries out the guidance, control, and personnel service related work of its branch offices. Those subjects which do not come under the purview of branch offices are taken by the divisional offices.

Divisional Manager – The Divisional Manager is the highest officer of the Divisional Office, who runs his office and is responsible to the Regional Manager. There are many departments under the divisional manager. This manager, reviewing the performance of all the branches of his division, provides necessary guidance to them.

Divisional Management Committee – Divisional manager is the chairman of this committee and all the department heads of the divisional office are its members. The committee organizes meetings to discuss various subjects. The main objective of the committee is to fulfill the objectives of the corporation with the establishment of coordination in various departments.

Various departments and their functions in the divisional office –

  1. New Business and Insurance Enumeration Department – Following are the main functions of this department.
    1. Supervision and control of new business of branch offices.
    2. To get the recording process done properly.
    3. To appoint medical examiners, to fix their remuneration, to keep their records of work.
    4. To decide on insurance proposals which are outside the jurisdiction of the branch office.
    5. To arrange for reinsurance for insurance taken in excess of its limit.
  2. Planning Department – The main work performed by this department is as follows
    1. data collection, analysis, interpretation and economic design for the planning of the divisional office.
    2. To assist branch offices in planning.
    3. To make necessary suggestions based on the monthly progress statements of the branches.
    4. Study of market sector, market pattern, progress of agents.
    5. Implementation of budget and assisting branch offices in preparation of performance budget.
  3. Marketing Department – From the point of view of performance, this department is divided into the following sections:-
    1. Sales Section
    2. Insured Service Section
    3. Customer Relations Management Section
    4. Vertical Training Section
    5. Business Development Management Section
    6. Branch Support Unit.
      1. The main functions of the Sales Section –
        1. Appointment of Development Officers
        2. Training and posting of Development Officers
        3. Conducting market research
        4. Organizing conferences of members of the Board of Management Clubs
        5. Sales ready for publicity Keeping the material accounts Customer Relations Management Section provides necessary instructions to the branch managers to solve their grievances and problems to protect the interests of the customers.
      2. The main functions of the insured’s service section –
        1. Supervising the work of the insurance service department of the branches, solving doubts, providing necessary instructions for performance improvement
        2. Deciding the payment of premature death claims.
        3. To collect data on insurance service and claims settlement
        4. To make necessary efforts to improve the insurance service. Vertical Training Section organizes training programs for Assistant Branch Managers, Development Officers and Agents. Folders, small booklets, etc., are published to provide necessary information regarding the field of work. Business Development Management Section solves the problems and difficulties faced by the agents in their business. The Branch Support Unit provides operational support to the various departments of the office. For this, it does work like analysis of budget proposals, review of monthly progress of branch offices, providing necessary data facts, establishing coordination in branch and divisional office.
  4. Finance and Accounts Department – To establish financial control in the entire divisional office, the main functions of this are as follows –
    1. Execution of accounting works (analysis of trial balances, control over flow of funds, integration of annual accounts of branch offices etc.) .
    2. Training of the personnel of the department.
    3. To ensure compliance of accounting practices and to make necessary suggestions in this regard.
    4. Allowing branch offices to over-expenditure.
  5. Department of Personnel and Industrial Relations – The main functions of this department are as follows –
    1. Recruitment, transfer, promotion, training, service conditions at the branch and divisional office level.
    2. Work related to the welfare of employees and redressal of grievances.
  6. Office Service Department – The main functions of this department –
    1. Work related to providing various types of forms, stationery, furniture, equipment for the use of branch and divisional office.
    2. Inspection and improvement of office services.
    3. Service cost calculation work for efficient service availability in all departments.
  7. Equity Promotion Department – This department prepares records of different types of data and does their analysis work, for this it takes the help of computer and other equipments. This department also performs the work of providing machines, accessories and technical information to the branch offices, preparing periodical reports, working as a record bank, etc.
  8. Law and Mortgage Department – This department does legal work like presenting the side of the corporation in the courts, implementing the order issued by the court, appealing against the order issued by the court, valuation and registration of the property to be mortgaged, mortgage Performs tasks such as maintaining related accounts, contacting defaulting mortgagee of payment.

4 Branch level organization ROB WORK (BRANCH OFFICE) –

The branch office in a corporate organization is the primary place where all the primary functions related to the insurance business are carried out. These offices have direct contact with the insurance customer. There are many branch offices under one divisional office. From taking insurance proposal from customer to issue of insurance letter and settling their grievances/claims, the work is done by this office.

The branch office is managed and operated by the branch manager with the help of assistant branch manager and other officers. Provision has been made to establish a Management Committee in each branch office.

Management Committee – The main function of this committee is to fulfill the objectives of the corporation by establishing a coordinating environment among the various departments. The head of the concerned divisional office is the chairman of this committee and all the heads of departments are its members. The committee provides solutions to the problems of the insurance business and regularly reviews the business progress.

Various Departments of the Branch Office – The functions of the branch office are divided into different departments according to the subject. Whose details / functions are as follows –

  1. Sales Department – This department is a major department of the branch office, which makes sales of insurance papers and plans related to it. The main functions of this department are as follows: –
    1. To determine the sales plan of the branch office.
    2. Keeping records, inspection, payment of commission bills, income statement, performance appraisal, motivation and reward distribution work of the branch agents and development officers.
    3. Work related to appointment, license, discharge, acceptance of advance amount of insurance agents.
    4. To evaluate the progress of the plan of the branch office, to discuss with the agents and development officers regarding the plan.
    5. Registration of insurance proposal and return of rejected offer.
    6. To send the progress details of the branch office to the divisional office.
  2. Accounts Department – The main functions of this department are as follows.
    1. Issue of receipt after depositing premium amount received from customers.
    2. Keeping daily records on receipt and payment basis and reconciliation with cash.
    3. To pay commission bills of agents.
    4. To give the received checks for collection in the bank, keep their records.
    5. Preparation of final accounts of the branch office.
    6. To remit the amount remaining after the payments to the Central Office through the Divisional Office.
  3. New Business Department – This department is the process of investigating new insurance proposals and accepting or rejecting them. For this, it performs the following tasks –
    1. Scrutiny of insurance proposals, registration of approved proposals, receipt of first premium, issuing receipt, preparing and sending insurance letter.
    2. To keep a record of the insurance letters issued and send it to the insured’s service department.
    3. The proposals which are outside the authority of the branch office, should be sent to the divisional office.
    4. Prepare monthly report of the department and send it to the divisional office.
  4. Insured Service Department – This department does the following types of work for the service of the insured.
    1. To maintain account of insurance papers, to keep record of premium received.
    2. To send information to the non-payment of premium.
    3. To do the work related to loan, nomination and handing, surrender, renewal on insurance papers.
    4. Settlement of insurance claims and send the claims outside your area to the Divisional Office.
  5. Office Service Department –The functions of this department are as follows –
    1. To arrange and maintain furniture, stationery, equipment, office materials etc. for the branch office.
    2. Maintenance of branch office building.
    3. To do all the work related to the service (service record, salary, leave, allowances, advance amount) of the personnel of the branch office.
  6. Machine Department – In the branch offices where data and information are collected and analyzed with the help of computers and other machines, there is this department. It keeps records of particulars and makes them available to any department as and when required.
    1. Components of the field organization related to the branch office –
      1. Development / Satellite Centers – These centers have been opened at the places where the initial stage of the insurance business resides. These centers usually have a development officer who works with the insurance agent to develop the insurance business. Insurance proposals received by these centers are forwarded to the branch office where further action on those proposals is completed.
      2. Development Officer – Development Officers are appointed in each branch office with the intention of speedy development and organized effort of the insurance business. Each Development Officer is appointed for a certain area under the authority of the branch office. The main function of the development officer is to increase the life insurance business with the help of insurance agents. The Development Officer provides necessary guidance and assistance to the insurance agents for more sales of life insurance papers.
      3. Life Insurance Agent – The appointment of a Life Insurance Agent, training etc. is done as per the provisions of the Life Insurance of India (Appropriate) Regulations, 1972. It is necessary to comply with the provisions given in section 42 of the Insurance Act 1938 for grant of permit to them. The insurance agent establishes direct contact with the insurance customer. Getting new insurance business, keeping the existing business safe, assisting the proposers in choosing suitable insurance, giving information regarding the proposal, motivating them to pay premium, etc. are the main functions of an insurance agent,

Compliance of various principles is visible in the establishment of organization and organization structure of Life Insurance Corporation of India.  The main principles of these are as follows: –

  • Theory of Purpose – This theory lays emphasis on setting the objectives of the entire organization and its various departments. The corporation has been established for the specific purpose of operating the life insurance business and the objectives of each level of organization and departments have been set.
  • Principle of specialization – This principle presents the division of work on the basis of work efficiency. It is clear from the departmental structure of the rules that a specific type of department has been established for specific nature of work.
  • Principle of Explanation – This principle underlines the clarity of each position, role, authority, responsibility in the organization. The role and interrelationship in the corporation from the central office to the insurance agent is clear.
  • Theory of Decentralization – This theory propounds the spread of authority to the lowest level in the organization. The corporation has divided the entire organization into several levels (central, regional, divisional, branch organization) for doing insurance business and has given adequate powers by clarifying the functions performed at each level.
  • Hierarchical Theory of Order – This theory provides clarity of formal authority line from top to bottom in the organization. The formal position, role and authority in the organization of the corporation has been explained as per the Explanation Act and the formal hierarchy is properly defined.

The decision to be taken at the Divisional Office / Regional Office) explains the exception principle. The methodology of performing work of a specific nature by the various departments established at each level of the corporate organization informs the principle of unitary direction.

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