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PREFACE
The liberalization of the Indian insurance sector has been the subject of
much heated debate for some years. The policy makers where in the catch 22
situation wherein for one they wanted competition, development and growth
of this insurance sector which is extremely essential for channeling the
investments in to the infrastructure sector. At the other end the policy
makers had the fears that the insurance premia, which are substantial, would
seep out of the country; and wanted to have a cautious approach of opening
for foreign participation in the sector.
As one of the rare occurrences the entire debate was put on the back burner
and the IRDA saw the day of the light thanks to the maturing polity
emerging consensus among factions of different political parties. Though
some changes and some restrictive clauses as regards to the foreign
participation were included the IRDA has opened the doors for the private
entry into insurance.
Whether the insurer is old or new, private or public, expanding the market
will present multitude of challenges and opportunities. But the key issues,
possible trends, opportunities and challenges that insurance sector will have
still remains under the realms of the possibilities and speculation. What is
the likely impact of opening up Indias insurance sector? The large scale of
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operations, public sector bureaucracies and cumbersome procedures
hampers nationalized insurers. Therefore, potential private entrants expect to
score in the areas of customer service, speed and flexibility. They point out
that their entry will mean better products and choice for the consumer. The
critics counter that the benefit will be slim, because new players will
concentrate on affluent, urban customers as foreign banks did until recently.
This seems to be a logical strategy. Start-up costs-such as those of setting up
a conventional distribution network-are large and high-end niches offer
better returns. However, the middle-market segment too has great potential.
Since insurance is a volumes game. Therefore, private insurers would be
best served by a middle-market approach, targeting customer segments that
are currently untapped.
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EXECUTIVE SUMMARY
In todays corporate and competitive world, I find that insurance sector has
the maximum growth and potential as compared to the other sectors.
Insurance has the maximum growth rate of 70-80% while as FMCG
sector has maximum 12-15% ofgrowth rate. This growth potential attracts
me to enter in this sector and HDFC Standard Life Insurance Company Ltd
has given me the opportunity to work and get experience in highly
competitive and enhancing sector.
The success story of good market share of different market
organizations depends upon the availability of the product and services near
to the customer, which can be distributed through a distribution channel. In
Insurance sector, distribution channel includes only agents or agency holdersof the company. If a company like RELIANCE LIFE INSURANCE, TATA
AIG, MAX etc have adequate agents in the market they can capture big
market as compared to the other companies.
Agents are the only way for a company of Insurance sector through which
policies and benefits of the company can be explained to the customer
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INTRODUCTION TO THE INDUSTRY
THE HISTORY OF INDIAN INSURANCE
INDUSTRY
Life Insurance
In 1818 the British established the first insurance company in India in Calcutta, the
Oriental Life Insurance Company. First attempts at regulation of the industry were made
with the introduction of the Indian Life Assurance Companies Act in 1912. A number of
amendments to this Act were made until the Insurance Act was drawn up in 1938.
Noteworthy features in the Act were the power given to the Government to collect
statistical information about the insured and the high level of protection the Act gave to
the public through regulation and control. When the Act was changed in 1950, this meant
far reaching changes in the industry. The extra requirements included a statutory
requirement of a certain level of equity capital, a ceiling on share holdings in such
companies to prevent dominant control (to protect the public from any adversarial
policies from one single party), stricter control on investments and,
generally, much tighter control. In 1956, the market contained 154 Indian
and 16 foreign life insurance companies. Business was heavily concentrated
in urban areas and targeted the higher echelons of society. Unethical
practices adopted by some of the players against the interests of the
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consumers then led the Indian government to nationalize the industry. In
September 1956, nationalization was completed, merging all these
companies into the so-called Life Insurance Corporation (LIC). It was felt
that nationalization has lent the industry fairness, solidity, growth and
reach.
Some of the important milestones in the life insurance business in India are:
1912: The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business. interests of the insuring public.
1956: The market contained 154 Indian and 16 foreign life insurance
companies.
General Insurance
The General Insurance industry in India dates back to the Industrial
Revolution and the subsequent increase in trade across the
1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the
oceans in the 17th century. As for Life Insurance, the British brought
General Insurance to India, and a similar path was followed in the
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development of this industry. A number of private companies were in
existence for years and years until, in 1971, the Indian Government decided
that the public interest would be served by nationalizing the industry,
merging all the 107 companies into four companies, depending on the sort of
business transacted (Marine, Fire, Miscellaneous). These were the National
Insurance Company Ltd., the Oriental Insurance Company Ltd., the New
India Assurance Company Ltd., and the United India Insurance Company
Ltd. located in Calcutta, New Delhi, Bombay and Madras respectively. The
General Insurance Corporation (GIC) was set up in 1972 as a holding
company, having these four companies as its subsidiaries.
Some of the important milestones in the general insurance business in India
are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of
India, frames a code of conduct for ensuring fair conduct and sound business
practices.
1968: The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
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1972: The General Insurance Business (Nationalization) Act, 1972
nationalize the general insurance business in India with effect from 1st
January 1973. 107 insurers amalgamated and grouped into four companies
viz. the National Insurance Company Ltd., the New India Assurance
Company Ltd., the Oriental Insurance Company Ltd. and the United India
Insurance Company Ltd. GIC incorporated as a company.
MAJOR PLAYERS IN THE INSURANCE
INDUSTRY IN INDIA
Life Insurance Corporation of India (LIC)
Life Insurance Corporation of India (LIC) was established on 1 September
1956 to spread the message of life insurance in the country and mobilise
peoples savings for nation-building activities. LIC with its central office in
Mumbai and seven zonal offices at Mumbai, Calcutta, Delhi, Agra,
Hyderabad, Kanpur and Bhopal, operates through 100 divisional offices in
important cities and 2,048 branch offices. LIC has 5.59 lakh active agents
spread over the country.
The Corporation also transacts business abroad and has offices in Fiji,
Mauritius and United Kingdom. LIC is associated with joint ventures abroad
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in the field of insurance, namely, Ken-India Assurance Company Limited,
Nairobi; United Oriental Assurance Company Limited, Kuala Lumpur; and
Life Insurance Corporation (International), E.C. Bahrain. It has also entered
into an agreement with the Sun Life (UK) for marketing unit linked life
insurance and pension policies in U.K.
In 1995-96, LIC had a total income from premium and investments of $ 5
Billion while GIC recorded a net premium of $ 1.3 Billion. During the last
15 years, LIC's income grew at a healthy average of 10 per cent as against
the industry's 6.7 per cent growth in the rest of Asia (3.4 per cent in Europe,
1.4 per cent in the US).
LIC has even provided insurance cover to five million people living below
the poverty line, with 50 per cent subsidy in the premium rates. LIC's claims
settlement ratio at 95 per cent and GIC's at 74 per cent are higher than that of
global average of 40 per cent. Compounded annual growth rate for Life
insurance business has been 19.22 per cent per annum
General Insurance Corporation of India (GIC)
The general insurance industry in India was nationalized and a governmentcompany known as General Insurance Corporation of India (GIC) was
formed by the Central Government in November 1972. With effect from 1
January 1973 the erstwhile 107 Indian and foreign insurers which were
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operating in the country prior to nationalization, were grouped into four
operating companies, namely, (i) National Insurance Company Limited; (ii)
New India Assurance Company Limited; (iii) Oriental Insurance Company
Limited; and (iv) United India Insurance Company Limited. (However, with
effect from Dec'2000, these subsidiaries have been de-linked from the parent
company and made as independent insurance companies). All the above four
subsidiaries of GIC operate all over the country competing with one another
and underwriting various classes of general insurance business except for
aviation insurance of national airlines and crop insurance which is handled
by the GIC.
Besides the domestic market, the industry is presently operating in 17
countries directly through branches or agencies and in 14 countries through
subsidiary and associate companies.
IN ADDITION TO ABOVE STATE INSURERS THE
FOLLOWING HAVE BEEN PERMITTED TO ENTER
INTO INSURANCE BUSINESS: -
The introduction of private players in the industry has added to the colors in
the dull industry. The initiatives taken by the private players are very
competitive and have given immense competition to the on time monopoly
of the market LIC. Since the advent of the private players in the market the
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industry has seen new and innovative steps taken by the players in this
sector. The new players have improved the service quality of the insurance.
As a result LIC down the years have seen the declining phase in its career.
The market share was distributed among the private players. Though LIC
still holds the 75% of the insurance sector but the upcoming natures of these
private players are enough to give more competition to LIC in the near
future. LIC market share has decreased from 95% (2002-03) to 82 %( 2004-
05).
1. HDFC Standard Life Insurance Company Ltd.
HDFC Standard Life Insurance Company Ltd. is one of Indias leading
private life insurance companies, which offers a range of individual and
group insurance solutions. It is a joint venture between Housing
Development Finance Corporation Limited (HDFC Ltd.), Indias leading
housing finance institution and The Standard Life Assurance Company, a
leading provider of financial services from the United Kingdom. Their
cumulative premium income, including the first year premiums and renewal
premiums is Rs. 672.3 for the financial year, Apr-Nov 2005. They have
managed to cover over 11,00,000 individuals out of which over 3,40,000
lives have been covered through our group business tie-ups.
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2. Max New York Life Insurance Co. Ltd.
Max New York Life Insurance Company Limited is a joint venture that
brings together two large forces - Max India Limited, a multi-business
corporate, together with New York Life International, a global expert in life
insurance. With their various Products and Riders, there are more than 400
product combinations to choose from. They have a national presence with a
network of 57 offices in 37 cities across India.
3. ICICI Prudential Life Insurance Company Ltd.
ICICI Prudential Life Insurance Company is a joint venture between ICICI
Bank, a premier financial powerhouse and prudential plc, a leading
international financial services group headquartered in the United Kingdom.
ICICI Prudential was amongst the first private sector insurance companies to
begin operations in December 2000 after receiving approval from Insurance
Regulatory Development Authority (IRDA). The company has a network of
about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent
tie-ups.
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4. Om Kotak Mahindra Life Insurance Co. Ltd.
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between
Kotak Mahindra Bank Ltd. (KMBL), and Old Mutual plc.
5.Birla Sun Life Insurance Company Ltd.
Birla Sun Life Insurance Company is a joint venture between Aditya Birla
Group and Sun Life financial Services of Canada.
Tata AIG Life Insurance Company Ltd.
SBI Life Insurance Company Limited
ING Vysya Life Insurance Company Private Limited
Allianz Bajaj Life Insurance Company Ltd.
Metlife India Insurance Company Pvt. Ltd.
AMP SANMAR Assurance Company Ltd.
Dabur CGU Life Insurance Company Pvt. Ltd.
1. Royal Sundaram Alliance Insurance Company Limited
The joint venture bringing together Royal & Sun Alliance Insurance and
Sundaram Finance Limited started its operations from March 2001. The
company is Head Quartered at Agra, and has two Regional Offices, one at
Mumbai and another one at New Delhi.
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2. Bajaj Allianz General Insurance Company Limited
Bajaj Allianz General Insurance Company Limited is a joint venture
between Bajaj Auto Limited and Allianz AG of Germany. Both enjoy a
reputation of expertise, stability and strength.
Bajaj Allianz General Insurance received the Insurance Regulatory and
Development Authority (IRDA) certificate of Registration (R3) on May 2nd,
2001 to conduct General Insurance business (including Health Insurance
business) in India. The Company has an authorized and paid up capital of Rs
110 crores. Bajaj Auto holds 74% and the remaining 26% is held by Allianz,
AG, Germany.
3. ICICI Lombard General Insurance Company Limited
ICICI Lombard General Insurance Company Limited is a joint venture
between ICICI Bank Limited and the US-based $ 26 billion Fairfax
Financial Holdings Limited. ICICI Bank is India's second largest bank,
while Fairfax Financial Holdings is a diversified financial corporate engaged
in general insurance, reinsurance, insurance claims management and
investment management.
Lombard Canada Ltd, a group company of Fairfax Financial Holdings
Limited, is one of Canada's oldest property and casualty insurers. ICICI
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Lombard General Insurance Company received regulatory approvals to
commence general insurance business in August 2001.
4. Cholamandalam General Insurance Company Ltd.
Cholamandalam MS General Insurance Company Limited (Chola-MS) is a
joint venture of the Murugappa Group & Mitsui Sumitomo.
Chola-MS commenced operations in October 2002 and has issued more than
1.4 lakh policies in its first calendar year of operations. The company has a
pan-Indian presence with offices in Agra, Hyderabad, Bangalore, Kochi,
Coimbatore, Mumbai, Pune, Indore, Ahmedabad, Delhi, Chandigarh,
Kolkata and Vizag.
5. TATA AIG General Insurance Company Ltd.
Tata AIG General Insurance Company Ltd. is a joint venture company,
formed from the Tata Group and American International Group, Inc. (AIG).
Tata AIG combines the strength and integrity of the Tata Group with AIG's
international expertise and financial strength. The Tata Group holds 74 per
cent stake in the two insurance ventures while AIG holds the balance 26 per
cent stake.
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Tata AIG General Insurance Company, which started its operations in India
on January 22, 2001, offers the complete range of insurance for automobile,
home, personal accident, travel, energy, marine, property and casualty, as
well as several specialized financial lines.
6. Reliance General Insurance Company Limited.
7. IFFCO Tokio General Insurance Co. Ltd
8. Export Credit Guarantee Corporation Ltd.
9. HDFC-Chubb General Insurance Co. Ltd.
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Marketing of Insurance In India
Insurance is in a manner of speaking the last frontier in the financial sector
to open. It is also a sector, which leads to benefits across the full spectrum,
from the individual who now have wider choices, to the economy, which see
increased savings, to the infrastructure sector, which can look forward to
long term funding being available. In an under-insured economy, newer
channels of distribution have to be utilized to intensify the reach of
insurance both in urban and rural markets. This will create huge employment
opportunities not only within insurance companies but also as agents and
consultants of insurance companies.
Marketing Mix Policies
Different companies can choose to position themselves differently and hencethe Marketing Mix is different. However, there are certain common
characteristics that one can cull out from the possible strategies that
companies adopt.
Product:
The development of flexible products to suit individual requirements is what
will differentiate the winners from the also-rans. The key to success is in
providing insurance solutions, not standardized insurance products. The
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concept of riders/optional benefits has already been a huge innovation
brought about by the new players, which has led to customization of
products for individual needs. However, companies may differentiate
themselves on the basis of product segments that they choose to focus on
and excel in.
Place:
Different companies may however choose different channels and different
geographies to focus on. The channel options are - tied agency force,
corporate agents and brokers and this is an area where different companies
will make different choices. Many companies like HDFC Standard Life are
focusing on all channels whereas companies like Max New York Life are
focusing on the tied agency force only. Customer interface will be a key
challenge for life insurance companies and includes every that interaction
that the customer has with the company, such as sales, new business
underwriting, policy servicing, premium payments, claim processing and so
on. Technology can play a crucial role in delivering the highest standards of
service set by the company and it will be imperative for any serious player toexcel in all of these.
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Price:
Price is a relevant differentiator only in two segments - pure term insurance
and in pure annuities. Here too, service delivery and financial strength will
need to be present at a minimum acceptable level for price to be a relevant
differentiator. In case of savings oriented products, long-term returns
generated are more relevant than just the price of the product. A focus on
generating good investment performance and keeping a tight control on
costs help in generating good long-term maturity value for customers.
Norms have been laid down on all of these by IRDA and adhering to these
while delivering good returns will be a challenge.
Promotion and Advertising:
The level of demand is latent and will have to be activated considerably. Themarket needs to be developed. Greater awareness of insurance and the need
to have it as a protection tool rather than as a tax planning measure needs to
be appreciated by the Indian people. Various communication tools including
advertising, direct marketing and road shows contribute to all this and
different companies take different approaches on these.
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Process:
Cashless settlement: One of the most defining and customer-friendly
changes that weve seen in recent years relates to the way claims settlements
are made. The advent of the third-party administrator (TPA) regime has
facilitated the transition to the hugely convenient era of cashless settlement
of health and auto insurance claims. TPAs are entities who process claims
on behalf of insurers: the IRDA licenses them after it is satisfied that they
have the financial strength, the trained manpower, the infrastructure and the
skills to undertake this activity.
Likewise, with auto insurance, the TPA ties up with garages and authorized
service centers for cashless settlement of auto insurance claims.
Lower premiums: The spirit of competition and the broadening of the risk
experience of insurance companies have contributed to a fall in premiums
over the years. Thats because, other things being equal, an insurer who
covers the lives just of 10 people bears a higher risk than an insurer who
covers the lives of, say, 100 people. Further, a broader base will provide
greater efficiencies on costs such as distribution, management and claims. Abroad basing of the mortality experience, therefore, gives insurers the
elbowroom to compete by lowering premiums, and that trend is expected to
continue.
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Premium payment flexibility: Insurers have imparted certain flexibility to
premium payment options in order to address this concern. For instance, one
now have the option to pay your premiums upfront, which is then carried
forward for the tenure of the policy. The yearly premiums are drawn from
the initial corpus. Insurers have also introduced the concept of automatic
cover maintenance to protect your policy from lapsing owing to your
omission to pay your premium on time. Under this, in the event of your not
paying the premium, the insurer dips into your investment account to the
extent of the premium. Of course, this comes with an in-built drawback:
your investment portion diminishes year on year to the extent of the amount
paid to cover your risk.
Physical Evidence:
This can play a significant role for marketing in the Indian scenario. Since
Internet users are comparatively lesser than countries such as US, the offline
mode will be preferred in India. Although the distribution model is largely
agent-based, wherever the customer is in contact with the company, this
factor can play a significant role in luring the customer.
People:
The most important factor that materializes sales and maintains customer
relationships on a long-term basis is this factor. No matter what distribution
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strategy a company adopts, customer relationship has to be taken care of in
order to maintain the customer base on a long-term basis.
COMPANY PROFILE
HDFC STANDARD LIFE INSURANCE
COMPANY LTD
ABOUT HDFC STANDARD LIFE INSURANCE
HDFC Standard Life Insurance Company Ltd. is one of India's leading
private insurance companies, which offers a range of individual and group
insurance solutions. It is a joint venture between Housing Development
Finance Corporation Limited (HDFC Ltd.), India's leading housing finance
institution and a Group Company of the Standard Life, UK. HDFC as on
December 31, 2007 holds 72.38 per cent of equity in the joint venture.
HDFC STANDARD LIFE INSURANCE PARENTAGE
HDFC Limited.
HDFC is India leading housing finance institution and has helped
build more than 23, 00,000 houses since its incorporation in 1977.
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In Financial Year 2003-04 its assets under management crossed Rs.
36,000 Cr.
As at March 31, 2004, outstanding deposits stood at Rs. 7,840 crores.
The depositor base now stands at around 1 million depositors.
Rated AAA by CRISIL and ICRA for the 10th consecutive year
Stable and experienced management
High service standards
Awarded The Economic Times Corporate Citizen of the year Award
for its long-standing commitment to community development.
Presented the Dream Home award for the best housing finance
provider in 2004 at the third Annual Outlook Money Awards.
Standard Life Group (Standard Life plc and its subsidiaries)
The Standard Life group has been looking after the financial needs of
customers for over 180 years
It currently has a customer base of around 7 million people who rely
on the company for their insurance, pension, investment, banking and
health-care needs
Its investment manager currently administers 125 billion in assets
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It is a leading pensions provider in the UK, and is rated by Standard &
Poor's as 'strong' with a rating of A+ and as 'good' with a rating of A1 by
Moody's
Standard Life was awarded the 'Best Pension Provider' in 2004, 2005
and 2006 at the Money Marketing Awards, and it was voted a 5 star life and
pensions provider at the Financial Adviser Service Awards for the last 10
years running. The '5 Star' accolade has also been awarded to Standard
Life Investments for the last 10 years, and to Standard Life Bank since its
inception in 1998. Standard Life Bank was awarded the 'Best Flexible
Mortgage Lender' at the Mortgage Magazine Awards in 2006
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HDFC KEYS STRENGHS
FINANCIAL EXPERTISE
AS A JOINT VENTURE OF LEADING FINANCIAL SERVICES
GROUPS, HDFC STANDARD LIFE HAS THE FINANCIAL EXPERTISE
REQUIRED TO MANAGE YOUR LONG-TERM INVESTMENTS
SAFELY AND EFFICIENTLY.
RANGE OF SOLUTIONS
WE HAVE A RANGE OF INDIVIDUAL AND GROUP SOLUTIONS,
WHICH CAN BE EASILY CUSTOMISED TO SPECIFIC NEEDS. OUR
GROUP SOLUTIONS HAVE BEEN DESIGNED TO OFFER YOU
COMPLETE FLEXIBILITY COMBINED WITH A LOW CHARGING
STRUCTURE.
TRACK RECORD SO FAR
OUR GROSS PREMIUM INCOME, FOR THE YEAR ENDING MARCH
31, 2008 STOOD AT RS. 4,859 CRORES AND NEW BUSINESS
PREMIUM INCOME STOOD AT RS. 2,685 CRORES.
THE COMPANY HAS COVERED OVER 9,59,000 LIVES YEAR
ENDING MARCH 31, 2008.
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CORPORATE OBJECTIVE
Our 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'.
'The most obvious choice for all'.
Our Values
Values that we observe while we work:
.Integrity
.Innovation
.Customer centric
.People Care One for all and all for ones
.Teamwork
.Joy and Simplicity
Accolades and Recognition
.Rated by 'Business world' as 'India's Most Respected Private Life
Insurance Company' in 2004.
.Rated as the "Best New Insurer - 2003" by Outlook Money magazine,
India number 1 personal finance magazine
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HDFCs main goals are to:
a) Develop close relationships with individual households.
b) Maintain its position as the premier housing finance institution in the
country.
c) Transform ideas into viable and creative solutions.
d) Provide consistently high returns to shareholders.
e) To grow through diversification by leveraging off the existing client base.
STANDARD LIFE:
The Standard Life Assurance Company ("Standard Life") was
established in 1825 and the first Standard Life Assurance Company Act was
passed by Parliament in 1832. Standard Life was reincorporated as a mutual
assurance company in 1925.
Standard Life is Europe's largest mutual life assurance company.
Standard Life, which has been in the life insurance business for the past 182
years, is a modern company surviving quite a few changes since selling its
first policy in 1825. The company expanded in the 19th century from its
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original Edinburgh premises, opening offices in other towns and acquiring
other similar businesses.
Standard Life currently has assets exceeding over 70 billion under its
management and has the distinction of being accorded "AAA" rating
consequently for the past six years by Standard & Poor.
STANDARD LIFE ASIA LIMITED/JOINT VENTURES:
The groups Hong Kong subsidiary, Standard Life Asia Limited (SL
Asia), was incorporated in 1999 as a joint venture and became a wholly-
owned subsidiary of Standard Life in 2002. The groups operations in Hong
Kong were established to give the group a presence in the Far East from
which it could expand into China. The groups joint ventures in India with
Housing Development Finance Corporation Limited (HDFC) were
incorporated in 2000 (in relation to the life assurance and pensions joint
venture) and 2003 (in relation to the investment management joint venture).
The groups joint venture in China with Tianjin Economic Development
Area General Company (TEDA) became operational in 2003.
STANDARD LIFE GROUP:
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The Standard Life group has been looking after the financial needs of
customers for over 185 years
It currently has a customer base of around 7 million people who rely
on the company for their insurance, pension, investment, banking
and health-care needs
Its investment manager currently administers 125 billion in assets
It is a leading pensions provider in the UK, and is rated by Standard &
Poor's as 'strong' with a rating of A+ and as 'good' with a rating of
A1 by Moody's
Standard Life was awarded the 'Best Pension Provider' in 2004, 2005,
2006 2007 and 2008 at the Money Marketing Awards, and
It was voted a 5 star life and pensions provider at the Financial
Adviser Service Awards for the last 10 years running.
The '5 Star' accolade has also been awarded to Standard Life
Investments for the last 10 years, and to Standard Life Bank since its
inception in 1998.
Standard Life Bank was awarded the 'Best Flexible Mortgage Lender'
at the Mortgage Magazine Awards in 2006 ,2007 and 2008
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INCORPORATION OF HDFC STANDARD LIFE INSURANCE CO.
LTD.:
The company was incorporated on 14th August 2000 under the name
of HDFC Standard Life Insurance Company Limited.
Their ambition from the beginning was to be the first private company
to re-enter the life insurance market in India. On the 23rd of October 2000,
this ambition was realised when HDFC Standard Life was the first life
company to be granted a certificate of registration.
HDFC are the main shareholders in HDFC Standard Life, with 81.4%,
while Standard Life owns 18.6%. Given Standard Life's existing investment
in the HDFC Group, this is the maximum investment allowed under current
regulations.
HDFC and Standard Life have a long and close relationship built upon
shared values and trust. The ambition of HDFC Standard Life is to mirror
the success of the parent companies and be the yardstick by which all other
insurance companies in India are measured.
HDFC Standard Life Insurance Company Ltd. is one of Indias
leading private life insurance companies, which offers a range of individual
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and group insurance solutions. It is a joint venture between Housing
Development Finance Corporation Limited (HDFC Ltd.), Indias leading
housing finance institution and one of the subsidiaries of Standard Life plc,
leading providers of financial services in the United Kingdom.
Both the promoters are well known for their ethical dealings and
financial strength and are thus committed to being a long-term player in the
life insurance industry.
2.2 PRODUCT SCOPE:
HDFC Standard Life offers a bouquet of insurance solutions to meet
every need. The company caters to both, individuals as well as to companies
looking to provide benefits to their employees.
For individuals, the company has a range of protection, investment,
pension and savings plans that assist and nurture dreams apart from
providing protection. The customers can choose from a range of products to
suit their life-stage and needs.
Fororganizations they have a host of customized solutions that range
from Group Term Insurance, Gratuity, Leave Encashment and
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Superannuation Products. These affordable plans apart from providing long
term value to the employees help in enhancing goodwill of the company.
The products of the company are categorized into various sections
which are as follows :
A. INDIVIDUAL PRODUCTS
B. GROUP PRODUCTS
C. RURAL PRODUCTS
D. SOCIAL PRODUCTS
E. TAX BENEFITS
For Individuals, HDFC Standard Life has a range of protection,
investment, pension and savings plans that assist and nurture dreams apart
from providing protection. Customer can choose from a range of products to
suit his life-stage and needs.
For Organizations, HDFC Standard Life has a host of customized solutions
that range from Group Term Insurance, Gratuity, Leave Encashment and
Superannuation Products. These affordable plans apart from providing long
term value to the employees help in enhancing goodwill of the company.
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Individual Products:
1. HDFC Children's Plan,
2. HDFC Endowment Assurance Plan,
3. HDFC Loan Cover Term Assurance Plan,
4. HDFC Money Back Plan,
5. HDFC Personal Pension Plan,
6. HDFC Single Premium Whole Of Life Plan,
7. HDFC Term Assurance Plan,
8. HDFC Unit Linked Endowment,
9. HDFC Unit Linked Endowment Plus,
10.HDFC Unit Linked Pension,
11.HDFC Unit Linked Pension Plus,
12.HDFC Unit Linked Young Star,
13.HDFC Unit Linked Young Star Plus
At HDFC Standard Life realize that not everyone has the same kind of
needs. Keeping this in mind, varied range of products that customer can
choose from to suit all needs. These will help secure customer future as well
as the future of family.
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Protection Plans:
Customer can protect his family against the loss of his income or the
burden of a loan in the event of his unfortunate demise, disability or
sickness. These plans offer valuable peace of mind at a small price.
HDFC Standard Life Protection range includes Term Assurance Plan &
Loan Cover Term Assurance Plan.
Investment Plans:
HDFC Standard Life Single Premium Whole of Life plan is well
suited to meet long term investment needs. HDFC Standard Life provides
with attractive long term returns through regular bonuses.
Pension Plans:
HDFC Standard Life Pension Plans help secure financial
independence even after retirement. Pension range includes Personal
Pension Plan, Unit Linked Pension, and Unit Linked Pension Plus Savings
Plans.
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Savings Plans:
HDFC Standard Life Savings Plans offer flexible options to build
savings for future needs such as buying a dream home or fulfilling childrens
immediate and future needs.
Group Products:
1. Group Term Insurance,
2. Group Variable Term Insurance,
3. Group Unit Linked Plan,
4. Gratuity Group Unit Linked Plan,
5. Superannuation Group Unit Linked Plan ,
6. Leave Encashment
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What is child plan
Planning does not necessarily mean about what you wish your child
would grow up to be, or have certain characteristics, but it also
essentially means you as a responsible parent having various obligations
to fulfill that would help him to grow better in this world. The first thing
that strikes is providing for education (graduation as well as post
graduation).
The most often repeated statement, Assume that a two year MBA
program in a leading business school costs Rs 5,00,000 at present. Your child is
five years old now and will pursue the management degree at the age of 20
years. This gives you a time frame of 15 years. Assuming that the inflation rate
is 10% per annum, the education would cost Rs 2,088,624. Now that seems a
handful, doesn't it?
The dynamics of planning for the child's future have changed radically
over the years. The conventional method of providing for the child was
to just set aside some amount of money in a savings bank account. These
funds would then be utilized for the child's life stages. A few parents would also
make investments in fixed deposits with the intention of utilizing the maturity
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amount. However, it would be safe to say that such an approach is not only
outdated, but also inadequate in the present scenario.
Life insurance plays an important role in an individual's financial planning
exercise. Insurance can assist individuals in planning for their own life stages
as well as provide for their child's future. It also secures the childs future in case
of any unfortunate event. Various types of child insurance products are
available in the market today.
Child insurance plans have traditionally played an important role in securing the
child's future. With a plethora of children insurance plans available in the
market, it becomes difficult for most parents to evaluate them objectively.
Individuals need to understand the dynamics for planning their children so that
they can best utilize the alternatives available in the market.
Parents must consider at the outset that they would have to build as
sufficient corpus for their children especially if the child is to be sent
abroad for education or a professional post graduation degree from the
premier institutes in the country itself. As in our above example, a 15 year
planning time frame has raised the amount required considerably, parents must
keep this in mind.
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As a parent, one would generally plan from the perspective of making funds
available for
Education
Marriage
Seed capital for business
The factors to consider while planning,
Time frame for building a corpus
Age at which the fund would be required.
Approximate amounts to build the corpus.
Investment avenues to be considered.The amount available to the child in case of death of parents or disability
of the premium-paying parent.
Child plans come in two broad variants Traditional child plans and unit linked
insurance plans (ULIPs). The primary difference between the two lies in the
way they invest their premium. Traditional plans invest a major portion of their
money in debt instruments like corporate bonds and government securities (as
specified by the regulator). Conversely, ULIPs can invest across equity and debt
markets in varying proportions.
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Parents have plenty of choice; they can either opt for a regular Traditional
endowment plan which carries relatively lower risk since it is invested mainly
in corporate bonds and government securities. The bonuses are stable and give
the parent considerable comfort knowing roughly how much he can expect.
Regular endowment plans are suited for parents with a low risk appetite.
Parents with some risk appetite can opt for a ULIP child plan that invests
across equity and debt markets.
The reason why ULIP child plans can prove to be significant is because
over the long-term (15-20 years), equities can add considerably to the corpus
you plan to build for your child's needs. Equities are best placed to beat
inflation over the long term. However, to achieve \ this, one must invest wisely.
Debt on the other hand brings stability to a portfolio. While the returns for debt
at times may seem unattractive as compared to equities, their importance in
a portfolio (ULIP) cannot be understated.
Parents should consider taking on some risk (by investing in equities) to
beat inflation, which is the main reason the cost of everything right from your
child's education to his marriage is forever spiraling. Over a 15-20 year time
frame, if wisely selected, a ULIP even with moderate equity allocations could
add considerably to your child's corpus Life insurance has much to offer to
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parents looking to accumulate wealth for their child's future. There are several
plans offering enough flexibility to help parents with the same.
In the end, it all boils down to making an informed choice and ensuring
that your plan is working in line with your expectations.
Child plan
Childrens Endowment to 18 (par)
Plan overview
Life has innumerable surprises stored for us. Parenthood is wonderful and it
is one such stage, when you experience various emotions you never thought
you had. But parenthood also brings its own set of apprehensions and
worries. What will your child grow up to be in the future? Will his/her
future be as secure as you want it to be? Or more importantly what can you
do to make sure his/her future is hassle-free and secure? So, planning ahead
for your childs future needs such as higher education is extremely
important and ensuring that you have the ability to fulfill those needs is
even more critical.
Hdfc presents Children's Endowment Participating Insurance to age 18 with
an option to buy a permanent life insurance policy without medical
underwriting (irrespective of his/her health at that time). This policy which
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is especially designed to enable you to provide for higher education of your
child and take care of your childs future needs in case of spiraling costs.
Childrens Endowment to 24 (Par)
Plan overview
Parenthood is wonderful. However, this is a phase in life when you are
expected to fulfill various responsibilities, which grows as your child gets
older. Its important that you plan in advance to meet your childs future
needs and be financially prepared. Its important that you plan in advance to
meet your childs future needs and be financially prepared.Hdfc Children's
Endowment Participating Insurance to age 24 provides an option to buy a
permanent life insurance policy without medical underwriting (irrespective
of his/her health at that time). This policy enables you to provide for various
events in your childs life such as a grand wedding of your child. This
excellent plan is a participating plan, which is also eligible for bonuses and
Max New York Life may declare these bonuses from time to time and from
the third policy year. An important feature of this plan is that the entire sum
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assured is paid out on maturity and the plan automatically vests when the
child turns 18.
Smart step
Plan overview
As a responsible parent, it is your responsibility to ensure that your \ child
has a safe and a bright future. Higher education, marriage, and financial
security for your child are just some of the most important things that you
would want to save your money for. However, with ever-rising cost of
living in todays world, simple savings would not be enough. As a good
planner, you need to look ahead and plan accordingly. As you work hard to
ensure that your child receives quality education and has a secured future,
you need a plan, which would provide you the helping hand and the desired
financial support at times of unavoidable crisis in the future.
Introducing Hdfc regular premium unit linked life insurance childrens plan
SMART Steps, which will help you plan for your child's future in a
SMART way and takes your worries away. This plan offers the required
financial protection for your loved ones if you are not alive and provides an
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unmatched investment opportunity by way of well managed investment
funds. This policy also entitles you to make partial withdrawals for various
unplanned expenses in the future.
Smart step Plus
Plan overview
It is your responsibility to ensure that your child has a safe and a bright
future. Higher education, marriage, and financial security for your child are
just some of the most important things that you would want to save your
money for. However, with ever-rising cost of living in todays world,
simple savings would not be enough. As you work hard to ensure that your
child receives quality education and has a secured future, you need a plan,
which would provide you the helping hand and the desired financial support
at times of unavoidable crisis
in the future. Children plans ensure that money is made available at
the crucial junctures in a child's education and to fund crucial commitments
for the child's future.
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A regular premium unit linked life insurance plan, Max New York Lifes
SMART Steps Plus will help you plan for your child's higher education,
marriage, and financial security. This plan offers no- compromise 360
degree protection to your children even if you are not alive and provides an
unmatched investment opportunity by way of well managed investment
funds. This policy also entitles you to make partial withdrawals for various
unplanned expenses in the future.
Smart step single premium plan
Plan overview
Higher education, marriage, and financial security for your child are some
of the most important things that you would want to save your money for. It
is your responsibility to ensure that your child has a safe and a bright future.
However, with ever-rising cost of living in todays world, simple savings
would not be enough for all your childs future needs. Your support and
financial security for your child is of utmost importance and thats the
reason you need a plan, which would provide you the helping hand and the
desired financial support at times of unavoidable crisis. Children plans
ensure that money is made available at the crucial junctures in a child's
education and to fund crucial commitments for the child's future.
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Hdfc SMART Steps Single Premium policy will help you plan for your
child's future in a SMART and organized manner. Apart from offering 360
degree protection to your child if you are not alive, this plan also provides
an unmatched investment opportunity by way of well managed investment
funds. This policy also entitles you to make partial withdrawals for various
unplanned expenses in the future.
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RESEARCH METHODOLOGY
Research: - is a process of collecting, analyzing, interpreting and
summarizing in a significant manner for the purpose of framing out
necessary conclusion and findings of data perceived and formulated for
deriving out the meaningful information. To carry our research necessary
telephonic calls needed to be done, suitable appointments were to be fixed
and therefore market survey is to be followed.
Objective of training: - To understand life insurance and recruitment of
capable life insurance advisors for growth prospects.
Process: Methodology or process involving in the Research followed during
the course of summer training is as follows: -
a) Collection of data : - This is an important aspect in formulating the
objective of research process where the data is collected via two process: - i)
Primary Sources and ii) Secondary sources
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i) Primary sources: - Where the data is collected primarily by
interviewing and personal observation and is original in nature and accurate
to the considerable extent.
ii) Secondary sources: -Where the data is obtained from some
published and printed sources such as newspaper, magazines, websites and
so on.
b) Analyzing of collected data : - The data collected through market
survey and published sources is then processed to obtained necessary
inferences and findings for the purpose of achieving the objective as well as
to derive necessary conclusion. A considerable skill and knowledge is
involved in analyzing the data for the purpose of interpreting thereof.
c) Interpreting of data : - it is the significant step where the data
collected and analyzed is interpreted in the forms of graphs and figures is
depicted in the report called Project report.
d) Summarizing of data : - Thereby necessary summary is prepared
which is essential in the project report of the summer training being done
under an organization.
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Helpful Arms of Research Methodology: -
Questionnaire: - Questionnaire is a set or group of questions being framed
for the purpose of obtaining market perspective about a particular aspect or
topic.
There are two types questionnaire bing carried necessary for the market
survey of the summer training being undertaken and put for the by the
trainee to the sample people taken as a base for entire population:
a) Open ended Questionnaire: - where the people (also called
respondents) are required freedom to present their views and suggestions for
the benefits and success of the organization.
b) Close ended questionnaire: - where the respondents is limited to the
choice of answer being delivered by the interviewer itself so that quick and
fast means of responses be derived out without wasting much time. Here
close ended questionnaire being followed by me during the course of the
summer training market survey.
Sampling: - Sampling is a process of obtaining a number of individuals
taken a base for the entire population since entire population can not be
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asked about the necessary objective upon which a questionnaire is put forth
needed for the responses to be derived for the purpose of generation of facts
and customer view point regarding their perception of particular product or
services.
There are two type of sampling i) Random Sampling and ii) Systematic
sampling.
i) Random sampling: - Random sampling is a process of selecting
the sample size randomly and no choice or preference to be made about the
selection of respondents for the market survey and questionnaire to be put
forth against him. Here, Random sampling being adopted by me.
ii) Systematic sampling: - it is a sampling where the limited number
of selected respondents is figured out based on some criteria so that only
those respondents can be asked for the purpose of filing questionnaire.
Sample Size: - 105 respondents.
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MARKET SURVEY
LIFE INSURANCE IS:
51
38
16
0
10
20
30
40
50
60
Protection of
human asset value
against uncertainty
Tax benefit device Both
CATEGORY
RE
SPONSES
From the survey it was drawn that life insurance is more a protection of
human asset value against uncertainty (conferred by 51 respondents) where
it is a tax saving option (being accepted by 38 respondents). Life insurance
is a service involving both these prerequisites as depicted by remaining 16
respondents. The following depicted this:
Protection of human asset value against uncertainty 51
Tax benefit device 38
Both 16
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78
27
0
10
20
30
40
50
60
7080
NO.OF
RESPONDENTS
Yes No
RESPONSES
IS LIFE INSURANCE ESSENTIAL?
It has been observed and applied as a Life insurance is an essential service
and should be applicable to every one, as favored by considerable 78
respondents where it is not essential to an extent by 27 respondents from the
summer training project survey by putting forth the set questionnaire.
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RESPONDENT'S QUALIFICATION
33%
10%
57%
Post graduate
Graduate
Senior secondary
When further enquired about the qualification of respondents, it was found
that 57% of the respondents were graduates, 33% were post graduates and
remaining 10% were of higher secondary out of total 105 respondents.
Further depicted in the following tabular representation : -
Post graduate 35
Graduate 59
Senior secondary 11
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AGE QUALIFICAITON:
39%20%
6%
35%
18-25 age group
25 35 age group
35 45 age group
Above 45 age group
Further, the age qualification for agency recruitment, it was found that 39%
respondents were belonging to 18 25 age group, 35% were belonging to 25
35 age group where as 20% to 35 -45 age group and remaining 6% to
above 45 age group. Also depicted in the following tale mentioned below: -
18-25 age group 41
25 35 age group 37
35 45 age group 21
Above 45 age group 6
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CAUSES OF DISSATISFACTION
17%
16%
10%23%
34%
Low employment
Low earning / income
Low status
Huge capital investment
All of the above
Respondents had different views about the dissatisfaction from the present
status of working or occupation. Dissatisfaction has been depicted in a table
below and graphically above:
Low employment 24
Low earning 3
6 Huge capital investment 17
Low status 18 All of the above
1
0
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ABOUT CAREER IN LIFE INSURANCE
59
46
0
10
20
30
40
5060
70
Yes NoRESPONSES
NO.OF
RESPONDENTS
When asked about whether they would like to know about a glorified career
in life insurance agency where they can fulfill any and every desire of their
life, 59 respondents agreed while 46 respondents said No and will see later
sometime in future. It has been depicted that life insurance sector should be
promoted at the wide extent as it contribute to the economy as a useful
source beneficial for both nation as well as is citizens.
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86
19
0
20
40
60
80
100
NO.OF
RESPONDENTS
Yes No
RESPONSES
IS LIFE INSURANCE A NOBLE SERVICE?
Indeed Life insurance is a noble business as it provides a needful financial
support in the situation of fatal calamity where the family is deprived by the
fact to live in future and sustains their living. When surveyed about life
insurance as a noble service. 89 respodents agreed and believe that insurance
is a bettering service to human life and society as a whole where as 19
respondents show disagreement.
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18
41
0
10
20
30
40
50
NO.OF
RESPONDENTS
Yes No
RESPONSES
ACCEPT LIFE INSURANCE AS A CAREER?
From the 59 respondents who agreed to know about the life insurance as a
career, 18 of them agreed to join Hdfc insurance for agency and come to the
company fore more information whereas 41 still took time to think and
postponed to some future date. People are highly dissatisfied from the
earning, status and living standard they are sustaining at present and would
definitely like to make some additional source of earning and for this agency
for life insurance would prove a boon.
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92
13
0
20
40
60
80
100
RESPONDENTS
Yes No
RESPONSES
IS LIFE INSURANCE INDUSTRY GROWING?
From all 105 respondents, 92 agreed that life insurance sector is a growing
concern and will grow at a rapid pace in future where as 13 took as a mere
stagnant industry. Financial services are growing at a tremendous pace as
people are urging to make their investment in lucrative opportunities and
therefore life insurance sector is playing a vital role in educating the people
to make their investment which could secure their future, needs and living
despite some fatal calamity that might or might not occur.
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AGREE WITH PRIVATISATION OF LIFEINSURANCE?
74
31
0
10
20
30
40
50
60
70
80
Yes NoRESPONSES
R
ESPONDENTS
Among 74 respondents from 105 respondents favored the privatization of
the life insurance and perceive that the people of India will know be more
aware and knowledgeable with respect to life insurance than that in the past
50 years with the working of LIC.
The myth of LIC since it is a Government concern is still continue to prevail
even though people have become more advanced and they can invest their
hard earned money after undertaking their pros nad cons and company
position in the market.
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SWOT ANALYSIS
STRENGTHS
1. Hdfc insurance offers a range of individual and group insurance
solutions.
2. Hdfc has the financial expertise required to manage your long-term
investments safely and efficiently.
3. The company has covered over 8,77,000 lives year ending March
31, 2007
4. Rated AAA by CRISIL and ICRA for the 10th consecutive year
for High service standards
5. Life insurance industry is a rapid growing and a nobler service
industry.
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WEAKNESSES
1. LIC is prevalent and sustains even today a major source of
population.
2. Low number of offices and network and number of life insurance
agents.
3. Lack of knowledge and expertise.
OPPORTUNTIIES
1. Life insurance has captured its mere15 20% growth therefore a
wide open untapped market is open to the company to develop, grow and
measure its success.
2. Still the number of companies are few and company has every
capabilities to grow and forward its performance areas to the widest
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THREATS
1. People are hesitant to invest and put their hard earned money to the
private life insurance company with the fear of getting lost.
2. Belief towards LIC as it is a government corporation phobia is
continue to surmount the people of India despite lots of flaws and
development and liberalization of life insurance.
3. Alternative financial services such as mutual fund, banking
services, share and securities also pose problems and threats to the working
of the life insurance sector.
4. Illiteracy and unemployment also pose threat.
5. Rising real estate industry also pose threat as people are investing a
bulk of their money over to that industry.
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CONCLUSION
Summer training is a best example for a trainee to learn about the company
working, corporate culture under which is operating the functions. Hdfc
insurance is a life insurance company under which I gained a significant
knowledge with respect to life insurance, its importance and applicability as
well as undertook the task to recruit capable life insurance advisors which is
conducive for the company to grow with more prosperity. What I taught in
the management institute utilized them fruitfully leading to the best
advantage to the company and to the best experience for mine.
At far I can conclude that life insurance is a noble service which is very
important for every citizen to learn and realize its importance because this is
the only source which can remain the status where one is with the family
bread earner and ever when he is not.
With the growing financial sector I would like to opt this industry for my
future career advancement and as an opportunity to service this industry.
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BIBLIOGRAPHY
Following are sources which helped me during my summer training:
BOOKS:
KOTHARI C.R.:Research Methodology Management, 3rd Edition
KOTLER PHILIP:Marketing Management 11th Revised edition ,2002
GUPTA S.P.: Statistical Methods Thirteen revised edition, 2001
MAGAZINES:
India Today
Business World
REFERENCES
Websites: -
www.MAX NEW YORK lifeinsurance.com
www.irdaindia.org
www.liccouncil.org
www.businessconnect.com
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QUESTIONNAIRE
Name: -
Age:-
Location: -
Occupation: -
Q.1. What do you mean by life insurance?
a) Protection of human asset value against uncertainty
b) A sum received after death
c) Both
Q.2. Do you think life insurance is essential for every one?
a) Yes
b) No
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Q.3. What is your qualification?
a) Post graduate
b) Graduate
c) Senior secondary
Q.4. Do you come under:
a) 18-25 age group
b) 25 35 age group
c) 35 45 age group
d) Above 45 age group
Q.5. What dissatisfied you most in your occupation
a) Low employment
b) Low earning / income
c) Low status
d) Huge capital investment
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e) All of the above
Q.6. Would you like to know about a career in life insurance advisor
ship where you can fulfill every desire of your life?
a) Yes
b) No
Q.7 Do you perceive that life insurance business is a noble service
oriented business?
a) Yes
b) No
Q.8. Would you like to become or opt for life insurance advisor under
esteemed and prospering organization Hdfc insurance?
a) Yes
b) No
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Q.9. Do you agree that the life insurance business is a growing industry
and will grow and rapid pace in future?
a) Yes
b) No
Q.10. Do you favor the privatization of life insurance by the
Government where a significant number of companies now in the
market for life insurance to the customers with the alliance of
multinationals?
a) Yes
b) No
Suggestions: -
1.
2.
3.