final project icici

8/9/2019 Final Project ICICI

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A SUMMER TRAINING PROJECT

REPORT ON

CONSUMER AWERENESS, PREFERANCES

& ESTIMATION OF MARKET SHARE OF

LIFE INSURANCE COMPANIES

AT NOIDA (UP)

FOR THE AWARD OF

PARTIAL COMPLETION OF THE COURSEPARTIAL COMPLETION OF THE COURSE

MASTER OF BUSINESS ADMINISTRATION (MBA)MASTER OF BUSINESS ADMINISTRATION (MBA)

FROM

U P Technical University, LucknowU P Technical University, Lucknow

Under Supervision of

Mr. Bhupesh Chandra Mahadani

(Sales Development Manager)HDFC SL CO. LTD. Noida(UP)

Under Guidance of

Mrs. Rati Shukla

(Faculty MBA Department)

IPEM, Ghaziabad

Submitted by

Rajesh Kumar

MBA (2004-2006)

Institute of Professional Excellence & ManagementA-13/1, S.S. G.T. Road Industrial Area, NH-24, Ghaziabad-201001


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ACKNOWLEDGEMENT

In order to accomplish a task, facts, situations and persons integrate togetherto form a background. Greatness lies in being grateful and not in beinggreat. This research report is a result of contribution of distinct

personalities whose guidance here made my effort a producing oneas notask is a single mans effort.

First of all, I would like to thank the management of HDFC SL Co Ltd., Noida

For giving me an opportunity to work with them.

I am heavily Indebt full to Mr. Bhupesh Chandra Mahadani(SDM) Forassigning me a project which Involved using and applying my knowledgeacquired during the first two semesters of the MBA & and especially for

providing me with a cordial and co-operative atmosphere to work in.

I express my deep gratitude and Indebtedness to Mrs. Rati Shukla (facultymember, IPEM), under whose kind & constant guidance I had the opportunityto expand my horizons and view the various problems from different

prospective. I am also thanking her for sparing her valuable time to listen myproblems and difficulties faced by me during the completion of this projectreport.

I would also like to extend my sincere thanks to Mrs. Ruchika Jaiswal (Co-ordinater MBA, IPEM, Ghaziabad), Mrs. Nidhi mathur & Mrs. ReenaPandey (faculty members, IPEM)under their kindguidance, I have learnedthe basic lessons of management, which made me able to understand differentaspect of

this training

Last but not least, it was the blessing of my parents & friends (especially Mr.Saurabh Dixit, Mr.Arun srivastava & Shubham) for keeping me motivatedthroughout the training period their close attitude and expressions of love and

patience have been nothing short of incredible.

(RAJESH KUMAR)


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PREFACE

As a part of course requirement of the course Master of BusinessAdministration , we are asked to undergo a project training in an organization soas to give us exposure to practical management and to get familiarize withvarious activities taking place out in the market.

The customer is king: finally 15 years after the liberalization of India's economyits marketplace has, suddenly become frighteningly competitive. New playersincluding a host of powerful translation, stormed into the country, now more

brands available then ever in every segment of market. Befittingly, for the time inabove 50 years since Independence, delivering the final verdict will be thecustomer who is already finicky about what will buy, in future, only that whichmeets her every desire. This demands more intimate understanding of thecustomer by the smart companies'.

I got an opportunity to undergo my summer training in HDFC SL Co. Ltd., Noida branch. I got my practical work on-Consumer awareness, Preferences &estimation of market share at Noida (UP).

I am hereby presenting the essence of market study done by me during thissummer training. I have divided this project report in several topics whichcontains different aspects of my study.

I have done my best efforts to fulfill the need and requirements of the

company are carried out, so it can be fruitful to the company.

(RAJESH KUMAR)


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DECLARATION

I, Rajesh Kumar hereby declare that in this summer trainingproject report entitled-Consumer awareness, Preferences & estimation of market

share of Different life insurance companies at Noida (UP),has been completed based on actual Survey carried out by me. I am

presenting an authentic record of my own work carried out underthe supervision of Mr. Bhupesh Mahadani (SDM), HDFC SL,Noida,which is required in the partial fulfillment for the Degreeof Master of Business Administration affiliated to U.P. TECH.University, Lucknow.

The dissertation is original and the information, data & factsfurnished therein are factual, based on the survey carried out.I havent submitted the matter embodied in this project report forthe award of any other degree or diploma in the best of myknowledge.

(RAJESH KUMAR)


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TABLE OF CONTENTS

INTRODUCTION

EXECUTIVE SUMMARY

INDUSTRY REVIEW

COMPANY PROFILE

SWOT ANALYSIS

OBJECTIVE OF THIS STUDY

RESEARCH METHODOLOGY

SAMPLING PLAN

DATA ANALYSIS

FINDINGS

CONCLUSION

RECOMMENDAIONS & SUGGESTIONS

LIMITATIONS

ANNEXURE

BIBLIOGRAPHY


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Insurance is a social device where uncertain risks of individuals

may be combined in a group and thus made more certain -

small periodic contribution by the individuals provide a fund

out of which those who suffer losses may be reimbursed. In

addition to being a means to protect oneself, the Insurance

Industry is an effective conduit for the savings of people to be

channeled towards economic growth. In India, the Insurance

Industry is more than 150 years old. Today, it is monopolsed by

two PSU's in their respective fields of Life and General

Insurance.

Insurance plays a very important role in the day-to-day activities of

the common man, business houses, industries, agriculturists andother service providers. Insurance not only provides protection

for individual and industry through risk coverage; it also

mobilizes funds for economic activity, and encourages savings.

The insurance industry is a key sector in the economy of any

country.


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The liberalization of the financial sector was started in 1991 and

carried forward by successive governments. These reforms

were carried out in a phased manner and affected the entire

financial sector. Till now, however, the insurance sector had

been left out of this reform process. With the passage of the

IRDA bill in December, 2004, the way has been paved for the

entry of private

players into this long neglected aspect of the Indian economy.

However, the opening up of this sector does not mean that its

character will undergo a sea change. The public sector

behemoths will continue to enjoy a huge market share. It is up

to the new players to device innovative strategies to both grabbusiness from the existing companies a as well as expand the

size of the pie itself.

The main benefits of this new competitive environment will be to

the consumer, who till now, has had to put up. With shoddy

products and even shoddier service. The new entrants will lookfor new channels of distribution for their products, and banks

will play a very important part as the likely interfaces between

the insurance companies and their prospective customers.


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The report gives a brief background of the sector and proceeds to

highlight the shortcomings of the existing setup and players.

The benefits of a liberalized sector are enumerated. The report

also tried to identify the market potential for insurance products

and the strategies that can be employed to exploit the same.

INSURANCE MARKET SCENARIO IN INDIA

India with about 200 million middle class household shows a huge untapped

potential for players in the insurance industry. Saturation of markets in many

developed economies has made the Indian market even more attractive for

global insurance majors. The insurance sector in India has come to a

position of very high potential and competitiveness in the market.

Innovative products and aggressive distribution have become the say of the

day. Indians, have always seen life insurance as a tax saving device, are now

suddenly turning to the private sector that are providing them new products

and variety for their choice.

Life insurance industry is waiting for a big growth as many Indian and

foreign companies are waiting in the line for the green signal to start their

operations. The Indian consumer should be ready now because the market is

going to give them an array of products, different in price, features and


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benefits. How the customer is going to make his choice will determine the

future of the industry.

CUSTOMER SERVICE

Consumers remain the most important centre of the insurance sector. After

the entry of the foreign players the industry is seeing a lot of competition

and thus improvement of the customer service in the industry.

Computerization of operations and updating of technology has become

imperative in the current scenario. Foreign players are bringing international

best practices in service through use of latest technologies. The one

monopoly of the LIC and its agents are now going through a through

revision and training programmes to catch up with the other private players.

Though lot is being done for the increased customer service and adding

technology to it but there is a long way to go and various customer surveys

indicate that the standards are still below customer expectation levels.

DISTRIBUTION CHANNELS

Till date insurance agents still remain the main source through which

insurance products are sold. The concept is very well established in the

country like India but still the increasing use of other sources is imperative.

It therefore makes sense to look at well- balanced, alternative channels of

distribution.

LIC has already well established and have an extensive distribution channel

and presence. New players may find it expensive and time consuming to

bring up a distribution network to such standards. Therefore they are looking


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to the diverse areas of distribution channel to have an advantage. At present

the distribution channels that are available in the market are:

Direct selling

Corporate agents

Group selling

Brokers and cooperative societies

To make all these channels a success the companies have to be very alert

and skillful to know how to use these channels in a proper way.

Bancassurance is on of the most upcoming channels of distribution and

therefore is being discussed in details.

BANCASURANCE

India has an extensive bank network established over the years. What

Insurance companies have to do is to just take advantage of the customers'

long-standing trust and relationships with banks. This is a mutually

beneficial situation as banks can also expand their range of products on offer

to customers, while the insurance company will also earn profits from the

exposure.

Another advantage is that banks, with their network in rural areas, help to

fulfill rural and social obligations stipulated by the Insurance Regulatory and

Development Authority (IRDA) recently. Insurance companies should see

bancassurance as a tool for increasing their market penetration in India.


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It is also good for the one who sees bancassurance in terms of reduced price,

high quality product and delivery at doorsteps. Everybody is a winner here.The creation of bancassurance operations has made an important impact on

the financial services industry at large. This is though a new concept but it

has gained a lot of importance in the industry at present and has a great

future.

PRODUCT INNOVATION

There has been a plethora of new and innovative products offered by the

new players. Customers have tremendous choice from a large variety of

products from pure term (risk) insurance to unit-linked investment products.

Customers are offered unbundled products with a variety of benefits as

riders from which they can choose. More customers are buying products and

services based on their true needs and not just traditional money-back

policies, which is not considered very appropriate for long-term protection

and savings. There is lots of saving and investment plans in the market.

However, there are still some key new products yet to be introduced - e.g.

health products.

INFORMATION TECHNOLOGY AND INSURANCE

In the insurance industry today, there is a clear trend away from selling a

broad range of products to a large volume of customers in a one size-fits-all


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manners. Instead of focusing on their different products lines as silos (i.e.,

life, property and casualty etc) insurers are looking for ways to offer highly

targeted insurance products that are tailored to the individuals customerswith the highest propensity to buy them. There is an evolutionary change in

the technology that has revolutionized the entire insurance sector. Insurance

industry is a data-rich industry, and thus, there is dire need to use the data for

trend analysis and personalization. With increased competition among

Insurers, service have become a key issue. Moreover, customers are getting

increasingly sophisticated and tech-savvy. People today dont want to accept

the current value propositions, they want personalized interactions and they

look for more and more features and add ones and better service. The

insurance companies today must meet the need of the hour for more and

more personalized approach for handling the customer. Today managing the

customer intelligently is very critical for the insurer especially in the very

competitive environment.

Companies need to apply different set of rules and treatment strategies to

different customer segments. However, to personalize interactions, insurers

are required to capture customer information in an integrated system. With

the explosion of Website and greater access to direct product or policy

information, there is a need to developing better techniques to give

customers a truly personalized experience. Personalization helps

organizations to reach their customers with more impact and to generate new

revenue through cross selling and up selling activities.


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To ensure that the customers are receiving personalized information, many

organizations are incorporating knowledge database-repositories of content

that typically include a search engine and let the customers locate the alldocument and information related to their queries of request for services.

Customers can hereby use the knowledge database to mange their products

or the company information and invoices, claim records, and histories of the

service inquiry.

These products also may be able to learn from the customers previous

knowledge database and to use their information when determining the

relevance to the customers search request. The insurance sector remains a

very competitive market and those companies that are able to best utilize

their data and provide their customer with the most personalized options will

have the distinct competitive advantage. The insurers that come up to the top

will be those who leverage the appropriate technology solutions effectively

in order to foster customer loyalty attract new customers and improve

operational efficiency by providing common information across their lines

of business.

MERGERS AND AQUISITIONS

This is an era of mergers and acquisitions. Private companies including

MNCs are amalgamating the world over to get more competitive edge.

Currently, the general insurance industry has been opened up. The question

here is that for over two years, eight private companies have operated and


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has the size of the cake expanded. We here find that this is not true. The

insurers are doing enough to raise the level of risk awareness or are they

merely content to compete in the markets organized and established.However sooner or later the private sector players will have to put in place

strategies aimed not at winning the existing accounts of the public players

but at diversifying markets penetration as a whole. The private players in the

future would have to turn their attention to working in the unorganized and

under served markets.

What is likely to happen is that the private players would continue to skim

the profitable segments of the already organized business in the urban areas?

The time has already come for the government of India to evaluate the

performance of private companies vis--vis their declared objective of

opening up the industry. However it is high time for the government to

realize that importance of merging the public sector general insurance

companies into single entity.

The resent scenario calls for a better performance from part of each of the

public sector insurance companies against each other; or in other words a

competition to be the best. The result what we see is the undercutting of

premium to retain or wrest business and quoting an uneconomical rate ofpremium. While this allows one of the Public Sectors Company to win a

business form another in this manner.

The others suffer a loss and the resultant effect is a cannibalization with a

fall in the average premium of the public sector itself. This at many times


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brings advantage to the private players who grab the business because of the

unethical competition among the public players.

The purpose of having four companies all subsidiaries of General Insurance

Corporation of India (GIC) National Insurance Company, New India

Assurance Company, Oriental Insurance Company, And The United India

Insurance Company; at the time of nationalization was to have competition

among themselves in service and products at the same price. The service

provided by them was also equally good or bad depending on the experience

of the customers. Now with real competition coming in with most of the

global insurance players setting footprints here, it is felt that the time for

merger has come and to enjoy the benefits if the size. It is to be sated that

size does matter in insurance business. All over the worlds mergers and

acquisitions in the risk-underwriting sector is common. The benefits if the

four insurance companies merge will be enormous.

The merged entity will enjoy higher underwriting and risk retention

capacity; increase in reinsurance premium, reduction in reinsurance outflow,

healthy solvency margins, setting right the asset liability mismatch and

reduction in cost. The insurance market thus becomes a gambling place. Hadthe public sector companies made into a single entity, perhaps the total

premium of the four public sector companies in the year 2003-04 would

have gone up but 25 percent. But the public sector alone is forced to

underwrite the loss making motor third party liability (TPL) insurance.


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The public insurance companies insured a loss of Rs 1943 crore on this

portfolio on just one year (03-04). The cumulative loss under this portfolio is

astronomical. The loss of profitable business in view of undeservedcompetition among the public sector companies is hampering the

subsidization of social insurance including the motor TPL. It is thus clear

that it is good for the public sector companies to merge immediately when

they are still strong, lest a merger becomes inevitable later after the

independent public sector companies fail one after another.

This does not bid well for the public sector, nor fort he insuring public and

not for the economic development either. For a progress me require merger

of strong public sector companies. Else it would render public sector

companies weak and destroy them.

IMPACT OF BUDGET IN INSURANCE

The 2005-06 Budget has dampened the spirit of insurance companies.

Hardly any changes have been made in the general insurance sector. The

change in the tax structure may have some impact on the life insurers. With

the removal of the Section 88 relief there is not much for the insurance

players to cheer for.

FDI HIKE IN INSURANCE SECTOR

The Finance Minister commended on the growth in the insurance sector,

there was no mention of the steps being taken for increasing FDI in

insurance sector. There is a dire need to attract more foreign capital in the


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sector. However it seems that the Union Finance Ministry is looking at

proposals to delink the FDI limit from the Insurance Act, when it is

amended. This move would empower any future government to increase theFDI limit through an executive order without taking the issue to the

Parliament. Removal of Sec 88 tax relief: With the removal of the Section

88 tax relief on life insurance products there would be a sever blow on the

life insurance companies.

Removal of tax relief will have an adverse impact on the flow of investments

into life insurance products.

Continuation of Sec 10(10) (d): The continuations of this section create

sever blow for the insurance players. Here by the life insurance companies

for availing the optimum benefit under this section need to change their

strategy. Till now, life insurers were selling life insurance products mostly

on tax-benefit grounds. However, now they will have to sell products with

an investment pitch.

The investment limit in pension plans is unaltered at Rs 10,000 so these

plans may not enjoy the luxury of the expanded limit of Rs 1 lakh allowedfor investments/expenditures that could be claimed as a deduction from

income. This is likely to have an adverse impact on the overall growth of the

sector. Pension plans are the only Investment Avenue where specific limits

continue to apply.


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CONCLUSION

The size of the market has grown and the size of the insurable population in

India is indeed vast and the existing player has managed to cover about one-

fourth of it. The opportunities before the players are therefore a plenty in

terms of target audience. The falling interest rates, the collapse of many

small-time financial institutions, the scope for entering related areas like

banking and pensions in a bid for synergy and the promise of e-commerce

are some of the other opportunities knocking at the doors of the insurance

majors.

There is a probability of a spurt in employment opportunities. A number of

web-sites are coming up on insurance, a few financial magazines exclusively

devoted to insurance and also a few training institutes being set up hurriedly.

Many of the universities and management institutes have already started or

are contemplating new courses in insurance. Health insurance, which is still

in its infancy, is also likely to get a major boost, ultimately leading to

improvement in the quality of medical treatment and facilities in the country.

Life insurance has today become a mainstay of any market economy since it

offers plenty of scope for garnering large sums of money for long periods of

time. A well-regulated life insurance industry which moves with the times

by offering its customers tailor-made products to satisfy their financial needs

is, therefore, essential if we desire to progress towards a worry-free future.


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INTRODUCTION

R e s p e c t y o u r s e l f

HDFC Standard Life Insurance Company Limited is a joint venture of

HDFC Ltd. & Standard life Ltd. It was incorporated on 14th August 2000.

Now it is one of the biggest market players of Indian life insurance market.

It was awarded as Most respected life insurance company by

Businessworld. HDFC Standard Life Insurance has crossed Rs. 10,000 crore

in Sum Assured. HDFC Standard Life Insurance Company Limited was one

of the first companies to be granted license by the IRDA to operate in life

Insurance sector. Both the JV player is highly rated and been conferred with

many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly,

Standard Life is rated 'AAA' both by Moody's and Standard and Poors.

These reflect the efficiency with which HDFC and Standard Life manage

their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.


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Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC

has since emerged as the largest residential mortgage finance

institution in the country. The corporation has had a series of share

issues raising its capital to Rs. 119 crores. The net worth of the

corporation as on March 31, 2000 stood at Rs. 2,096 crores.

HDFC operates through 75 locations throughout the country with

its Corporate Headquarters in Mumbai, India. HDFC also has an

international office in Dubai, V.A.E., with service associates in

Kuwait, Oman and Qatar. Now it has become a market giant in

financial sector of India.


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SUBSIDIARY COMPANIES OF HDFC LTD.

HDFC Bank

HDFC Deposits

HDFC Mutual Fund

HDFC Standard Life Insurance

HDFC Home loan

HDFC Chubb General Insurance Company Ltd.

Intel net Global Services Ltd.

Credit Information Bureau (India) Limited

Other Companies Co-Promoted by HDFC

HDFC Trustee Company Ltd.

GRUH Finance Ltd.

HDFC Developers Ltd.

HDFC Ventures Trustee Company Ltd.

HDFC Venture Capital Ltd.

HDFC Investments Ltd.

HDFC Holdings Ltd.

Home Loan Services India Pvt. Ltd.
http://www.hdfcfund.com/http://www.hdfcinsurance.com/http://www.hdfcrealty.com/http://www.hdfcchubbindia.com/http://www.hdfcchubbindia.com/http://www.intelenetglobal.com/http://www.intelenetglobal.com/http://www.cibil.com/http://www.hdfcinsurance.com/http://www.hdfcrealty.com/http://www.hdfcchubbindia.com/http://www.intelenetglobal.com/http://www.cibil.com/http://www.hdfcfund.com/


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STANDARD LIFE

Standard Life is Europe's largest mutual life assurance company.

Standard Life, which has been in the life insurance business for the

past 175 years, is a modern company surviving quite a few changes

since selling its first policy in 1825.Standard Life has been looking

after its customers for over 180 years, and currently over 7 million

people rely on us for their financial needs.

We have assets under management which are worth more than the

combined market value of Shell, Reuters, Tesco, Cadbury

Schweppes and Marks & Spencer. Standard Life places a great

deal of importance on getting investors money to work hard for

them; that's why its customer has believed confidence in the

company.

The company expanded in the 19th century from its original

Edinburgh premises, opening offices in other towns and acquiring


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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.

THE JOINT VENTURE:

HDFC and Standard Life first came together for a possible joint

venture, to enter the Life Insurance market, in January 1995. It was

clear from the outset that both companies shared similar values and

beliefs and a strong relationship quickly formed. In October 1995

the companies signed a 3 year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC,

further strengthening the relationship. The next three years were

filled with uncertainty, due to changes in government and ongoing

delays in getting the IRDA (Insurance Regulatory and

Development authority) Act passed in parliament. Despite this

both companies remained firmly committed to the venture.

In October 1998, the joint venture agreement was renewed and

additional resource made available. Around this time Standard Life

purchased 2% of Infrastructure Development Finance Company

Ltd. (IDFC).


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Standard Life also started to use the services of the HDFC

Treasury department to advise them upon their investments in

India. Towards the end of 1999, the opening of the market looked

very promising and both companies agreed the time was right to

move the operation to the next level. Therefore, in January 2000 an

expert team from the UK joined a hand picked team from HDFC to

form the core project team, based in Mumbai. Around this time

Standard Life purchased a further 5% stake in HDFC and a 5%

stake in HDFC Bank.

In a further development Standard Life agreed to participate in the

Asset Management Company promoted by HDFC to enter the

mutual fund market. The Mutual Fund was launched on 20th July

2000.


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INCORPORATION OF HDFC SL CO. LTD.

The company was incorporated on 14th August 2000 under the

name of HDFC Standard Life Insurance Company Limited.

Our ambition from as far back as October 1995 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

Realized when HDFC Standard Life was the only life insurance

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 company's in India are

measured. HDFC is the majority stakeholder in the insurance JV

with 81.4 % stake and Standard Life has a stake of 18.6%. Mr.

Deepak Satwalekar is the MD and CEO of the venture. HDFC

Standard Life.


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MISSION OF THE COMPANY:

We aim to be the top new life insurance company in the market.

This does not just mean being the largest or the most productive

company in the market; rather it is a combination of several things

like:-

Customer service of the highest order

Value for money for customers

Professionalism in carrying out business

Innovative products to cater to different needs of different

customers

Use of technology to improve service standards

Increasing market share

Their mission is to be the best new life insurance company inIndia and these are the values that will guide us in this.


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VALUES OF THE COMPANY

SECURITY: Providing long term financial security to the policy

holders will be our constant endeavor. We are doing this by

offering life insurance and pension products.

TRUST: We appreciate the trust placed by our policy holders in

us. Hence, we will aim to manage their investments very carefully

and live up to this trust.

INNOVATION: Recognizing the different needs of our

customers, we will be offering a range of innovative products to

meet these needs.

ORGANISATIONAL STRUCTURE:ORGANISATIONAL STRUCTURE:

R E T

G R O

A L T E

S A L E

M A R

S A L

A C C

M E D

U N D

A C T

F I N A N O P E R I T L E G A H R

M D


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RETAIL TEAM SETUP:RETAIL TEAM SETUP:

B D M s

A S M

R e s i d a n t / S

B r a n c h M

R e g i o n a l m

Z o n a l M a n N a t i o n a l S a l e s

( M r . F r e d e r i c

H A R D R E T A

( M r . D i l i p G

G M - S A L

( M r . S u r e s h


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INVESTMENT MANAGEMENT STRUCTRE:

Investment decisions taken by the HDFC SL Investment Committee which

is advised by HDFC AMC.Members of HDFC SL Investment Committee

comprising:

Mr. Deepak Parekh Chairman, HDFC Ltd.

Mr. Deepak Satwalekar - MD & CEO, HDFC SL

Mr. Keki Mistry - MD, HDFC Ltd.

Dr. Nick Taket - Appointed Actuary &

GM (Finance), HDFC Ltd.


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HDFC AMC

Leading fund house in the country.

Assets under management of US $ 3.3 billions

Common reach & dealing

Investment advisory input from the team

Investment philosophy aimed at attractive returns with reasonable risk

Dedicated investment administration

SOCIAL INITIATIVES

The year 2004-05 saw HDFC making renewed efforts in fulfilling

its social commitment by way of several ongoing as well as new

initiatives. The latter included innovative financing of slum up-gradation and low-income housing projects, dialoguing with key

stakeholders on policy issues, responding to the tsunami tidal wave

disaster and staff volunteering and participation in varied


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community development activities. HDFC also gained special

recognition for its corporate social responsibility (CSR) function in

the form of winning The Economic Times Corporate Citizen

Award for 2003-04.

Shelter Assistance Reserve

During the year, the Shelter Assistance Reserve continued to play

its role of participating in and supporting various meaningful

development initiatives by extending grant funding to over 135

NGOs, philanthropic and voluntary agencies, local bodies and


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others. The overall utilization effected out of the Reserve for the

year 2004-05 stood at Rs. 497.36 lacs and its segment-wise break-

up is highlighted in the chart below:

HDFC Standard Life results for 1st quarter ofFY 2005-06

Recording a quarter-on-quarter growth of 167 percent for April-June

2005, HDFC Standard Life saw its new business premium income increase

from Rs.53.11 crores to Rs. 142.02 crores. The growth achieved by the

company was way above the private sector industry average of 73

percent for the first quarter. In terms ofeffective premium income (EPI),

which gives a 10% value to a Single Premium policy and is an

internationally accepted indicator of an insurance company's performance,

HDFC Standard Lifes premium income grew 248% from Rs. 38.77 crores

to Rs. 134.91 crores.

Voted the most respected amongst the private life insurance companies,

HDFC Standard Lifes growth in terms of annualized premiums was 211

percent from Rs. 53 crores in Apr-Jun 2004 to Rs. 165.08 crores in Apr-Jun 2005. A complete product portfolio offering by HDFC Standard Life

on the group business front also led to a robust growth of premium from

Rs. 1.18 crores to Rs. 8.91 crores in effective premium income terms and

from Rs. 2.68 crores to Rs. 16.94 crores in terms of first year premiums a

532 percent growth.


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Commenting on the high growth rate achieved on the back of a robust

growth in 2004-05, Mr. Deepak Satwalekar, MD and CEO, HDFC Standard

Life said, this growth is a clear vindication of the strategy adopted by thecompany of eschewing rapid growth in favor of establishing a firm

foundation in the early years. The decision to establish a geographically

dispersed branch networksupported by a sales force which has undergone

an intensely focused sales training programme to imbibe and practice

HDFC Standard Lifes customer-centric approach has helped reach out to

more customers, helping them find the most suitable insurance solutions.

Leveraging the parent brand and the wide distribution network, HDFC

Standard Life launched a cross media advertising campaign, which has seen

brand recognition almost double to one of the highest amongst all life

insurers.

For the individual business, volume, measured by the number of policies

sold, witnessed a 91 percent quarter-on-quarter growth from 26,752 in

2004 to 51,066 in 2005. Average effective premium on the other hand

more than doubled from Rs. 12,000 to Rs. 25,000.

Contribution to the individual business premium income by the different

channels of distribution also changed significantly compared to the first

quarter last year. The strategy to concentrate on activating a limited number

of bancassurance partners rather than going in for signing up a large number

of banks also paid off. While the alternate channels of distribution

including banks, brokers and other corporate agents accounted for 20


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percent of the business last year, theirshare increased to 36 percent in

Apr-Jun 2005.

HDFC Standard Life added 33 new offices, enhancing its national

footprint and taking the number of offices to 137 by the end of the first

quarteras compared to 53 locations at the end of the first quarter last year.

Our decision almost 18 months ago, to spread to B and C class towns has

paid off with the non-metro locations already accounting for53 percent ofthe individual business. Ongoing training for conventional products

and specialized training for unit linked products for around 25,000

financial consultants representing HDFC Standard life has also helped

its customers choose the products best suited for their need for protection,

savings, investments and pensions. HDFC Standard life had 18,700

financial consultants in the same period last year.

A quick look at the Premium figures:

ParametersQ1 2004-05

(Rs. Cr.)

Q1 2005-06

(Rs. Cr.)

% Growth

(Q1 05-06 over

Q1 04-05)

Total received

premium75.35 187.45 149

I. New Business 53.11 142.02 167

ii. Renewal 22.24 45.43 104

Effective Premium

Income38.77 134.91 248

Annualized Premium 53.00 165.08 211


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Group Business

Premium2.68 16.94 532

Unit Prices

Product(s): HDFC Unit Linked Endowment Plan &

HDFC Unit Linked Young Star Plan

Unit Prices as at 7/10/2005

Unit Linked FundOffer

Price (Rs)Bid Price (Rs)

Liquid Fund 21.6105 21.6105

Secure Managed

Fund 20.4583 20.4583

Defensive ManagedFund 23.6338 23.6338

Balanced Managed

Fund 27.2488 27.2488

PRODUCTS OF HDFC STANDARD LIFE

INSURANCE COMPANY LTD.

HDFC SL has products which are suited to all the people. It has customized

& flexible products. Each of us leads a unique life and so has unique needs.


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HDFC Standard Life offers a range of products and invites you to choose the

one that suits you best.

INDIVIDUAL PRODUCTS

Plan Benefits

Savings Plans

Endowment Assurance Plan Life Insurance with Savings

Unit Linked Endowment PlanLife Insurance & Savings with choice ofinvestment funds

Childrens Plan Financial Security for your child

Unit Linked Young Star PlanFinancial security for your child withchoice of investment funds

Money Back Plan Life Insurance with Savings

Investment Plans

Single Premium Whole Of LifePlan

Investment with Life Insurance

Protection Plans

Term Assurance Plan Life Insurance at an affordable price

Loan Cover Term Assurance

Plan

Life Insurance customized for home

loansRetirement Plans

Personal Pension Plan Savings for retirement

Unit Linked Pension PlanRetirement Savings with a choice ofinvestment funds
http://www.hdfcinsurance.com/InsuranceProducts/EndowmentAssurance.htmhttp://www.hdfcinsurance.com/InsuranceProducts/endownmentplan.htmhttp://www.hdfcinsurance.com/InsuranceProducts/ChildrensPlan.htmhttp://www.hdfcinsurance.com/InsuranceProducts/youngstarPlan.htmhttp://www.hdfcinsurance.com/InsuranceProducts/MoneyBack.htmhttp://www.hdfcinsurance.com/InsuranceProducts/FlexibleBond.htmhttp://www.hdfcinsurance.com/InsuranceProducts/FlexibleBond.htmhttp://www.hdfcinsurance.com/InsuranceProducts/TermAssurance.htmhttp://www.hdfcinsurance.com/InsuranceProducts/LoanCoverTerm.htmhttp://www.hdfcinsurance.com/InsuranceProducts/LoanCoverTerm.htmhttp://www.hdfcinsurance.com/InsuranceProducts/PersonalPension.htmhttp://www.hdfcinsurance.com/InsuranceProducts/pensionplan.htmhttp://www.hdfcinsurance.com/InsuranceProducts/EndowmentAssurance.htmhttp://www.hdfcinsurance.com/InsuranceProducts/endownmentplan.htmhttp://www.hdfcinsurance.com/InsuranceProducts/ChildrensPlan.htmhttp://www.hdfcinsurance.com/InsuranceProducts/youngstarPlan.htmhttp://www.hdfcinsurance.com/InsuranceProducts/MoneyBack.htmhttp://www.hdfcinsurance.com/InsuranceProducts/FlexibleBond.htmhttp://www.hdfcinsurance.com/InsuranceProducts/FlexibleBond.htmhttp://www.hdfcinsurance.com/InsuranceProducts/TermAssurance.htmhttp://www.hdfcinsurance.com/InsuranceProducts/LoanCoverTerm.htmhttp://www.hdfcinsurance.com/InsuranceProducts/LoanCoverTerm.htmhttp://www.hdfcinsurance.com/InsuranceProducts/PersonalPension.htmhttp://www.hdfcinsurance.com/InsuranceProducts/pensionplan.htm


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SWOT ANALIYSIS

STRENGTH

Multi -channel d is tr ibut ion and one of the largest

distribution networks in India.

Implementing Six-Sigma process.

Customer centric products and services.

Superior investment and risk management framework

1 Million Policies sold within 3 and half years.

Company has maximum number of MDRT as well as

good number of HNI advisors.

Training process of the company is very strong .

Different plan for different peoples

According to the change in surrounding environment

like changes in customer requirement.

WEAKNESS

COMPANY does not penetrate on the rural market at a

time.

There is no plan for the low income group.

Fees for the advisor is high than the other company.


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OPPORTUNITY

Insurance market is very big, where company can expand

its horizon in insurance industry .

Though good investment and insurance it is easy to

top Indian customers.

The huge insurance market (77%) is left so company

has opportunity to expand our products.

To associate with the more number of HNI.

THREATS

OLD HABITS DIE HARD: Its still difficult task to win

the confidence of public towards private company.

The company is facing major threats from LIC -which

is an only government company.

Plans for all income groups are not available which

can create adverse effect later on the market share of the

company.


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The objectives of this summer training project are as

follows:-

1. To study the awareness of consumers about life insurance

2. To get the feedback of the consumers about life insurance product

of HDFC SL3. Estimate the market share of Different life insurance life insurance

company in Noida

4. To study the market potential of HDFC standard life insurance

company ltd

5. To determine the prospective market for life insurance product of

HDFC SL

6. To determine the consumer preferences of purchasing life

insurance products.


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Marketing research

In order to produce superior value and satisfaction for consumers,

companies need information at almost every turn. Companies also

need an abundance of information on competitors, resellers and otherfactors and forces in the market-place. Now-a-days, marketers are

viewing information not only as an input for making better decisions

but also as an important strategic asset and marketing tool.

In todays more rapidly changing environment, managers need up-to-

date information to make timely high-quality decisions. It is said that

running an organization without adequate marketing information

reduces business to guess work. In such cases, managers running an

organization fails to obtain right information, in the right form, at the

right time, which hampers in the decision making process.

Managers can obtain the needed information in a number of ways,

viz., internal data, marketing intelligence, marketing research, etc. In

addition to information about competitor and environmental

happenings, marketers sometimes need formal studies of specific

situations, managers need to go for marketing research.


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Defining the market research

Marketing research may be defined as:-

The systematic design, collection, analysis, and reporting of datarelevant to a specific marketing situation facing an organization.

In 1987, the American Management Association defined marketing

research as:-

Marketing research is the function which links the customer and

public to the marketer through information that is used to identify and

define marketing opportunities and problems, refine and revaluate

marketing actions; monitor marketing performance and improve

understanding of marketing as a process.

The following steps are followed in marketing research:-

Defining the problem and research objectives-

The starting point of any market project is to define the problem

and agree on research objectives. Objectives are a statement of why

the research is being carried out and links to what information is being

sought.

Research planning


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A plan of how this objective is to be met and how the

information is to be obtained is then required. The main elements of

an effective research plans are as follows-

1. Research objectives

2. Information coverage

3. Accuracy levels

4. Research methods

5. Resources

6. Time table

Data collection

It is a vital part of the whole process. When data is gathered,

collected, and presented in some understandable form to people such

as table or graph, it becomes information.

To meet the managers information needs, the researcher

gathers secondary data, primary data or both.

Collection of primary data (raw data)-

It involves primary or field research i.e., when data is directly

collected from people through research questions or observations.

Collection of secondary data-

It involves desk research which is obtaining data or information

that has already been collected by others for their own purpose.

Conducting market research survey-


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When we undertake research to extract and evaluate

quantitative and qualitative information regarding a sample of people

as representative of the total market, we refer the study as survey.

There are four popular methods of obtaining data from respondents to

questions that form a part of market research surveys, namely:

1. Telephonic interviews

2. Personal interviews

3. Observations

4. Questionnaire

Field work

Market research field-work is faced on sampling. Once a

questionnaire is designed, the next step is to take sample of people to

be interviewed to ensure that they are the representatives of the total

people we wish to reach.

Sample may be selected in two ways-

1.Randomly

2.Non-randomly

Sampling can be practically planned in three steps:

1.Defining the population to be sampled.

2.Defining the sample size and structure.

3.Choosing the method of selecting the sample.


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Data analysis and interpretation

The end result of field-work is the complete questionnaire or

similar records. Individual questionnaire are of a little value and

interest. What is required is aggregated data for the whole sample, as

far sub-samples. Data analysis is the process of producing this

aggregated data from the individual response as raw data.

Reporting the findings

After analysis of the field-work data, the results of the research project

need reporting. The reporting stage is therefore concerned with

effective communication of the result to those who are going to take

some action on the basis of what they learn the research results.

During the completion of this research project, the researcher covered

a portion of the Noida city. The area covered is as follows:-


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Why Life Insurance

Life Insurance has come a long way from the earlier days when it was

originally conceived as a risk covering medium for short periods of time,

covering temporary risk situations, such as sea voyages. As life insurance

became more established, it was realized what a useful tool it was for a

number of situations, including -

a) Temporary needs / threats:

The original purpose of life insurance remains an important element, namely

providing for replacement of income on death etc.

b) Regular Savings:

Providing for one's family and oneself, as a medium to long term exercise

(through a series of regular payment of premiums). This has become more

relevant in recent times as people seek financial independence for their

family.

c) Investment:

Put simply, the building up of savings while safeguarding it from the

ravages of inflation. Unlike regular saving products, investment products are


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traditionally lump sum investments, where the individual makes a one off

payment.

d) Retirement:

Provision for later years becomes increasingly necessary, especially in a

changing cultural and social environment. One can buy a suitable insurance

policy, which will provide periodical payments in one's old age.

INTRODUCTIONTO INSURANCE

Insurance i s not necessari ly an investment f rom which one

expects to get one's money back. Nor is it gambling. A gambler

takes risks, while insurance offers protection against risks that

already exist. Insurance is a way to share risk with others.

Since ancient t imes, communities have pooled some of their

resources to help individuals who suffer loss. About 3,500 years

ago, Moses instructed the nation of Israel to contribute a portion


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of their produce per iodically for "the alien resident and the

fatherless boy and the widow."

Insurance is defined as a cooperative device to spread the loss

caused by a particular r isk over a number of persons who are

exposed to i t and who agree to ensure themselves against that

risk. Risk is uncertainty of a financial loss. The insurance is also

def ined as a socia l device to accumulate funds to meet the

uncertain losses arising through a certain risk to a person injured

against the risk.

LIFE INSURANCE IN INDIA

The Indian Insurance market has a grand history. The

development of insurance dates back of the 19th

century when

the Europeans started the Oriental Life Insurance Company,

Calcutta in 1888. The first Indian Insurance Company Bombay


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Mutual Life Insurance came into existence in 1870 to cover

Indian lives at normal rates. The year 1870 is also important in

the sense at British Government for the first time act that year.

Four years later Firoz Shah Mehta one of the doyen of Indian

Financial Sector, Oriental Government established the Oriental

Government Security Life Assurance Company and after that,

many Insurance companies in surfaced on Indian soil.

However , the f irst Indian Insurance act was passed on 1912,

aga in in 1938 and an amendment in 1950, when it was

nationalized however the sector was once again thrown open to

the private sector in December 1999

followed by the establishment of I.R.D.A. (Insurance

Regulatory and Development Authori ty) in April 2000.

The Indian Insurance Industry was dominated by two states

Insures i.e. The Life Insurance Corporation in Life Insurance

and the General Insurance Corporation

in general insurance before 2000 which were created after the

nationalization of the Life and non Life sector in 1956 and 1972

respectively. In Dec99, the IRDA Act was passed which limited

foreign investors to a 26% cap on equity par ticipat ion, and


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minimum capital requirement of $20 Million. At present, more

than 12 private players are in the market and some are in the

pipeline. The advent of the new kids poses to LIC to somewhat

extent, for which LIC will have to change its current policies

regarding marketing and product management.

LIFE INSURANCE SCENARIO IN INDIA

Since 1956, with the nationalization if Insurance Industry, the

states run Life Insurance Corporation of India (LIC) has held the

monopoly in countrys life insurance sector. General Insurance

Corporation of India (GIC), with i ts four subsidiaries, was its

counterpart in the casua lty sec to r. Over the t ime , t ak ing

advantages of its monopoly and virtual prerogative in

establishing the premiums, LIC has evolved into a monolith.

With around 60,000 agents in every nook and corner of the vast

country, it has created an enviable brand name, particularly

among the rural populat ion of the country. I t has around $40

billion as its financial sector. However, on the qualitative side, it


58/97

has every little pride in, and there lies the potential for players to

challenge this behemoth.

As typical with monopolies, the premiums rates

charged LIC are among the highest in the world, and its track

record in customer service can at best be called shabby. With a

huge unionized, rigid workforce mostly in clerical category. LIC

run the risk of high fixed cost, which will be the deciding factor

productivity in the competit ive scenario. While boasting full-

scale automations of its operation, the truth is that its technology

outdated.

The new p[layers, with the state- of-the- art technology under the

belt, will be in advantageous position. 80% of LICs business is

procured by 20% of i ts i ll -t rained agent force. The foreign

player, with the domestic partners string brand value, can test

the unconvent ional d is tr ibut ion channels l ike brokers , the

Internet, the banking distribution system etc., although foreign

players may be tempted to keep their operations in big cities for

the cream layer of the society, the real market l ies in rural

India , which accounts for the l ions share of LICs present

business.

The foreign players must adapt to Indian real it ies, the well

pub li shed f ai lu res of the wor ld f amous consumer goods


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companies l ike Electrolux, Whirlpool , Reebok, Nike etc. to

gauge the Indian psyche and sentiments demonstrate the concept.

They failed in the area of realistic pricing, product promotion

and reaching to the consumer. The foreign companies know the

ground realities to the details.

REVIEW OF INSURANCE SECTOR

India i s having populat ion of 1 Bil lion with a middle c lass

population estimated up to 300 million. I t being the 5 th largest

economy in the world in terms of Purchasing Power Parity (PPP)

has a GDP growth rate of over 6% per year on an average for the

last decade. The saving rate is estimated to be about 26% of the

GDP. In the total populat ion, the insured the populat ion i s

estimated to be about 70 million.

PRIVATIZATION OF INSURANCE


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The Indian Insurance Sector has finally opened up and it is with

much anticipation that new players are awaiting their share of

market. License have been issued to both Indian and Foreign

Players- Reliance, HDFC Standard-Life, Max India-New York,

Royal Sundaram All iance, ICICI Prudential, IFFCO-Tokyo

Marine, Bajaj Allianz, Birla Sun life, Tata AIG, AVIVA Life

Insurance, SBI Life, Om Kotak Mahindra are some of the

entrants into the newly liberalized Indian Insurance market.ICICI

Prudent ia l and HDFC- Standard Life have i ssued their l ife

policies from the private sector after 45 years.

The f irst move for the l iberal ization came with the Malhotra

Committee Report in 1993 which recommended the privatization

of insurance, set ting of insurance regulatory authori ty and

restructur ing the government monopoly LIC and GIC and i ts

subsidiaries IRDA Act passed in November 1999 had set ball

rolling for the entry of Private Players in domestic sector.

LIBERALIZATION OF INSURANCE SECTOR


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Liberalization commitment of the country to help in disciplining

future economic pol icies wil l include the insurance reforms.

When world over insurance market has been opened up. India

cannot remain in isolation. History has shown that i t is very

difficult to proper in isolation.

Globalization is the new economic reality, which is here to stay,

heralding a new era of Insurance in India. With the opening of

the insurance industry, Indian stands to gain with the following

major advantages.

Globa li za tion wil l p rovide oppor tuni ti es to the

consumer for the better production. With more

reasonable and affordable pricing.

The customer will get quicker service

It will enhance the saving rate.


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Long-term funds for infrastructure development will

be available to the country.

It will secure for India larger inflow of foreign capital

need to sustain our GDP growth

ADVANTAGES OF LIBERLIZATION

The opening up will enable the country to save more

and invest more for the development in infrastructure.

With new insurance intermediaries and more

distribution channels the market is bound to develop by

leaps and bounds

In the next few years it is established that the Indian

insurance sector will develop a better understanding of

consumer requirement leading to more satisfaction of

consumers.

Lead to increase in employment.


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Social and rural obl igations wil l also be served as

IRDA has come out with clear regulation in this regard,

which makes the development in this area mandatory.

Global competi tion wil l help in bui lding expert ise

with their global practice.

Unlike west, in India, insurance is sold as the instrument of

sav ing. About 18% of the poli ci es a re sold as dea th ri sk

consideration. Impression about LIC is that they are not meant

for the market requirements. They are only intended to find

customers. Insurance awareness is therefore low. Unit l inked

insurance products are not available . Insurance covers are

expensive and returns are low. Turn over the agent is high. The

choice available to the insuring public is inadequate in terms of

services, products and prices. These are the areas of weakness,

which may act as opportunities for new players who may work to

offer pol ic ies to the customer with the value addit ions a t a

competitive premium with much improved servicing.


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The IRDA governs the cri tica l aspect of Insurance Sector

Including:

The number and role o f Pr ivate Sector opera tes

including-Roman area intermediaries.

Regulate covering investment, solvency norms

Product Range

Accounting Practices

Consumer Protection Norms

Ensuring the Rural and Health Insurance are

developed

Fixing of License fee

Perhaps all the most critical regulation is the 26% equity Capital

for Foreign Insurers. This regulation bring in issues regarding

management control and one of the reasons for joint venture

breaking up Cubb-Kotak, Liberty-Dabur, AllState-Dabur, Manu

Life-UTI are some of the broken up alliances.

IRDA


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(Insurance Regulatory and Development Authority)

The regulatory body for insurance IRDA has been established

with the following mission:

"To protect the interests of the policy holders, to regulate,

promote and ensure orderly growth of the insurance industry

and for matters connected therewith or incidental thereto."

Private Players in Indian Life Insurance

The major players in Indian life insurance sector include:

* Allianz Bajaj Life Insurance Company Ltd.,

* Aviva Life Insurance Co. India Pvt. Ltd.,

* AMP SANMAR Assurance Company Ltd.,

* Birla Sun Life Insurance Company Ltd.,

* HDFC Standard Life Insurance Company Ltd.,

* ICICI Prudential Life Insurance Company Ltd.,

* ING Vysya Life Insurance Company Private Ltd.,

* Life Insurance Corporation of India

* Max New York Life Insurance Co. Ltd.,

* MetLife India Insurance Company Pvt. Ltd.,

* Om Kotak Mahindra Life Insurance Co. Ltd.,

* SBI Life Insurance Company Ltd.,

* Sahara India Insurance Company Ltd.,


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* Tata AIG Life Insurance Company Ltd.,

The market share for LIC is 90 percent and other players share

only the remaining 10 percent.

The insurance sector has been opened up in India, as there was

an urgent need. The international experience indicates those

country with a l iberal ized insurance sector have witnessed a

rapid growth in premium volumes enhancing the domestic saving

rate. This happened in China, Malaysia and Singapore where a

competi tive market has led to improvement in Services and

quicker settlement of claims.

I t is also important to note that competi t ion wil l br ing about

advancement in information, communication and technology.

And rightly therefore a decision was taken by the Government of

India to open up Insurance sector. The establishment of IRDA in

the month of April 2000 has been important development in this

direction, making the end of monopoly in the insurance sector.

W hat if I already have Life Insurance?


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As an individual, for the extent of financial protection you need

is different from that as a married man which in turn is different

from that as a parent. At each life stage, i t is necessary to re-

evaluate the amount of protection and provision you require and

adjust for the same. Below are some of the events in your life for

which you should re-evaluate and plan your life insurance needs.

Life stages

Marriage

Birth of a child

Schooling of child

College education of child

Marriage of child

Retirement

Let us take an example to understand the need

for Insurance:

Mr. Amit is 45 and self-employed. His wife Nandini, who is a

housewife, looks after their two children aged 3 and 7 years.

They s tayed in a rented accommodation , where the rent i s


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Rs.15000/- per month. Mr. Amit has taken a loan of Rs. 2 Lakh.

His monthly earnings on average are Rs.40,000/-. Mr. Amit

passes away in an unfortunate road accident. What are some of

the financial implications of his death on his family?

There may be several f inancial implications on his family.

Some of these are:

The monthly income, previously provided would stop.

His wife and chi ldren may have to seek f inancial

assistance from other relatives.

His wife may not have enough money to pay back the

loan of Rs.2 lakhs.

The families have to move into a cheaper

accommodation.

The widow may have to take up work to earn money.


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The education of their children may suffer.

This simple example illustrates the impact premature death can

have on a family, where the main earner has no life cover.

Had Mr. Amit taken a life cover, his family would not have faced

such hardships in the event of his unfortunate death. A simple

life insurance policy could have provided Mr. Amits family with

a lump sum that could have been invested to provide an income

equal to all or part of his income.

In simple words, insurance protects against unt imely losses.

Insurance has been found useful in the lives of persons both in

the short-term and long-term. Short term needs l ike sudden

medical costs and long-term needs like marriage expenses etc.

can be met with using life insurance.

How much insurance do I need?


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The main purpose of l ife insurance is to provide a f inancial

cushi on to your loved ones in the event that somet hi ng

unfortunate should happen to you. One must provide enough, so

as to generate a future income stream that will take care of the

financial needs of their dependants.

How much insurance you need depends on your annual income,

your expenses and your existing assets.

WHY INSURANCE IN INDIA

Only 22% of the insurance populat ion has been

extended cover . Market penet ra tion i s low and the

potential to exploit is high.

Insurance premium per capita is very low.

Lack of comprehensive socia l system benef it and

welfare means that demand for pension products is high.

Huge middle class of approximately 300 Million.

Existing insurance company score low on customer

service front.


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The insurance market registered growth in the Asian region even

though Indias share in global insurance is less than 0.5% (1988)

as compared to USA (24.2%) and Japan (21%). Studies have

reveled that in an emerging market, as disposable income rises,

Insurance premiums as a ratio of GDP shoots up. The

confederation of Indian Industry projected a growth of Life

Insurance premiums from Rs. 350 Billion at present to Rs.140

Billion. The growth of non-life insurance premium is expected to

increase from 75 billion to 375 billion. Out of which, only 10%

is tapped by the existing insurer.

Insurance even more than banking is a volume game. A

very exclusive approach in view is unl ikely to provide

meaningful numbers. Current ly, insurance is bought for the

purpose of tax-benefits. A higher percentage of business is in the

rural market. The share of rural new business insurance total new

business is 55% in terms of policies and 47% in terms of sum

assured. However, this needs to be viewed in the light of some

recent i ssues tha t have been r ai sed r egarding as to wha t

constitutes the rural market. Therefore, private insurers will be


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best served by middle market approach, targeting the customer

segments that are presently unexploited.

How many Indians are aware that LIC has more than

60Products and GIC has more than 180Products? Not only there

is a reduction in the premiums of Life Insurance products have

long overdue since Indian morality rate has decreased three folds

in the last 50years. There is also scope to increase the yield on

l ife i nsurance policies (presently 6%) with proper risk

management in place.

It is been debated that insurance business does not

produce profi t in the f irst f ive years cross subsidizat ion is a

feature of Indian market. Even the first portfolio vote that is

considered profitable, cross subsidizes other departments. Tariffs

reduction is l ikely to reduce profi ts; fur ther insurers have to

institute proper claims management progress in order to extract

efficiencies. At present life insurance business in the country is

taxed at 12.5% of the profit in financial year. The government is

soon to present a new model of taxing life insurance companies

at international rates.

New entrants should be well advised to look ahead to

the stage where brand strength will be a competitive advantage

and sketch their all iances accordingly. In fact, we believe that


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a ll iance r elated to d is tr ibut ion r ather than to p roduce or

technology will prove most valuable in the long run. Banks and

financial companies will emerge, as attractive distribution

channel for this insurance trend will be led by two factors, which

a lr eady apply in o ther wor ld market . F ir st Banking food

insurance, fund management and o ther financ ia l services

companies are being to increase their profitabili ty and provide

maximum value to their customers.

Therefore, they are themselves looking for a range of products to

distribute. In other market notably Europe; this has resulted in

bank assurance. Bank entering into the insurance business in

India to bank hope to maximize expensive existing network by

sell ing a range of products more of a loss all iance between

insurance and bank than a formal ownership . Some Indian

ent rants l ike ICICI , HDFC and Rel iance hope to r ide their

existing network and customer bases.

NEED OF BRAND NAME IN INSURANCE


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Branding is the new key chal lenge in the f inancial services

industry. Life in the 21s t

century will be longer with more choice

in more f ie ld of act iv ity. The f inancial consequence of the

increased life span is particularly likely to be tough. Inevitably,

this wil l lead to more complexity, which in turn necessi t ies

greater clarity and appeal from the service providers.

Branding is more important in the f inancial services market

which not only faces the problem of securing and retaining

customers in an increasing competit ive market place but also

exper ience the need for heightened relevance of the brand

posi tioning in a world where brand has been termed as new

religion.

Life Insurance

Company Premiums Sum Assured

LIC 0.32 5.52

ICICI Prudential 0.67 30.15

HDFC Standard-

Life

5.97 100

Birla Sunlife 14099.66 2,03,085.28


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Focus and strategies are essential for development of brand in

any sector but the less tangible world of f inancial products

historically has escaped the branding issues that have governed

development and culture in other industries.

I f the re was an indus try, which i s l east , cons idered as an

essentiality it would be the insurance industry. It was always felt

as abstract services or a fall back, more likely a safety net. But it

is more of shifting through competitive products to select most

appropriate one, but with liberalization of the industry, players

have to realize the need for branding in a competitive

environment. Insurance companies need to str ive for a greater

cus tomer focus r egardless the cus tomer i s the end o r the

intermediary.


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Market Share Among Private Companies

Market Share Among Private

Competitors

38%

15%10%

9%

6%

6%

6%4% 4% 1%1%

ICICI Prudendial Birla Sunlife HDFC Standard Bajaj Allianz

MAX. NYL. TATA Aig OM Kotak AVIVA Life

Ing Vyasa Metlife AMP Sammar


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MARKET POTENTIAL FOR PRIVATE LIFE INSURANCE

COMPANIESIN INDIA

It has been found out that:

85 percent o f the Indians p refer LIC than any o ther

insurance companies.

'Prevention of Loss', 'Assured Returns' and 'Long

term Investment' are the important factors

influencing Indians in opting for Life Insurance

Only few of the Indians are aware of private l ife

insurance companies.

Most of the Indians are of the opinion that private

insurance companies would be able to perform well

in the long run.

Most of the Indians are interested in 'Money back'

policies than others

Most of them are interested in insuring for an amount

of Rs. 1- 2 lakhs


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There is significant relationship existing between

monthly household income and amount insured

Based on the monthly household income, Indians

prefer to their investment needs like bank deposit,

Post office schemes, real estate, insurance, gold, chit

funds, shares etc.

Agents are mostly responsible for selling insurance

products in India


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QUESTIONNAIRE ANALYSIS

Total number of Respondents approached 1400

Respondents Responded 1000

Response Rate 71.42%

Number of male respondent 680(68%)

Number of female respondent 320(32%)

(1) What do you understand by insurance?


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020406080

100120140

Pvt.

Employees

Govt.

Employees

Business

Man

Self

employed

U

nemployed

Numberofrespondents Risk minimizati

InvestmentTax saving

Cant say

CommentsPvt.

Employees

Govt.

Employees

Business

Man

Self

employed

Unemployed

Risk

minimization

95 50 45 45 30

Investment 125 40 60 35 30

Tax saving 120 70 45 15 70

Cant say 45 20 15 25 20


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LEARNING EXPERIENCE DURING THE TRAINING

My, project entitled -Consumer awareness, Preferences & estimation of

market share at Noida (UP). It has been a great experience, while during a training

in Noida city. In, my life it was my first experience to get people knows of different

categories through interviewing and getting fill up questionnaires from them. After

doing my survey, I learnt that at each and every level there is a competition.

GAINS


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1. The first and main thing I gained is I removed my hesitations

2. About the consumer behavior towards Insurance.

3. About the current situation of market condition.

4. About handling the work force.

5. How to get people convince for buying the product.

6. How to increase the sales force.

7. Consumer preferences towards insurance.

LOSS

1. During the training some if the sample respondents does not give theirfull information and also hesitate to fill up the Questionnaires.

2. The sample selected by the research was of 1000 consumers so due toa small sample out of a big universe, the results may not becompletely correct.

3. It was too hot, outside, and places were far from each other.


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Conclusion

The consumer awareness for insurance is found to be

greater in the long run as most of the Indians are of the

opinion that, private insurance companies would be able

to perform well in the future. The private and foreign

insurance companies have to immediate steps in

appointing more number of agents and/or advisors in

addition to the employees as it has been found out that

agents are the best channel to reach the general public

regarding selling of insurance products. The private and

foreign insurance companies have to concentrate on the

factors like 'Prevention of Loss', 'Assured Returns' and

'Long term Investment'. They can also focus on an

insurance amount of Rs. 1 2 lakhs with 'money back

policies'. Hence, the market has potential. The private and

foreign insurance companies that are taking immediate


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steps.


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QUESTIONNAIRE

Dear Sir, / Madam

I, Rajesh Kumar a MBA Student from Institute of Professional Excellence &Management (UP Tech. University, Lucknow) A-13/1, S.S. G.T. Road Industrial AreaNH-24, Ghaziabad-201001 (U.P.) is conducting a market survey to study the consumerConsumer awareness, Preferences & estimation of market share of Different life

insurance companies at Noida (UP). Which is a part of my summer training in theHDFC SL CO. Noida.

I will be highly obliged if you could spare some of your valuable time in filling up thisquestionnaire.

1: -. Users Identification Date

Respondents Name.

Address

Age..

Sex

Marital Status

Contact No..

Educational Qualification

Occupation/Profession: -

. A. Pvt. Employee B. Govt. Employee

C. Businessman D. Self employed

E. Unemployed

________________________________________________________________________

(1)What do you understand by insurance?


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A. It is a mean of minimizing risk. B. It is a mean of investment

C. It is a mean of tax saving. D. All of these.

(2) Is insurance necessary for you?

A. Yes B. No

(3)According to you; whether insurance policies are in the direction of public welfare?

A. Yes. B. No

(3) Do you have any life insurance policy?

A. Yes. B. No

(4) From which company you have purchased it?

A. LIC B. ICICI Pru.

C. HDFC SL D. Others.

If, others please mention it.

(5) Which type of policy do you have?

A. Money back B.Unit linked

C. Retirement Plan. D.Children Plan.

(6) Why you have purchased it from that company?

A. It has good financial base. B.It is experienced in its fields

C. Its service Quality is good. D.My friend/relative is workingwith that company.

(7) How you came to know about that company?

A. By advertisement B. By friends/Relatives


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C. By agent D. Others.

(8) Are you planning for purchasing any life insurance policy?

A. Yes B. No

(9) From which company you are planning to purchase it?

A. LIC B. ICICI Pru.

C. HDFC SL D. Others.

If, others please mention it...

(10) Which type of policy you are planning for?

A. Money back B.Unit linked

C. Retirement Plan. D.Children Plan.

(11) What matters you in a life insurance company?

A. Low premium rates B. Better Quality of service.

C. High rate of returns D. Strong financial base.

(12) By which mean of insurance advertisement you appealed more regarding insurance?

A. By television advertisement B.By print media

C. By radio C. By cold callings


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Brochures / Information Booklets

Product List L.I.C.

L.I.C. Annual Report, 2004

ICICI Annual Report, 2004

HDFC Annual Report, 2004

Report/Acts

Malhotra Committee Report on Reforms in the Insurance Sector,

1993.

The Insurance Regulatory and Development Authority Bill, 1999.

Newspapers / Magazines

The Economic Times

The Insurance Times


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Insurance Post

Books

Business Statistics by Addition 2002, New Delhi, Dr. S.P. Gupta, Dr.M.P. Gupta,

Websites

www.licoflndia.com

www.lrdaindia.org.com

www.indiainfoline.com

www.icici.com www.hdfc.com

www.google.co.in
http://www.hdfc.com/http://www.hdfc.com/

final project icici

Documents