hdfc standard life insruance corporation ltd. - marketing concepts

7/29/2019 Hdfc Standard Life Insruance Corporation Ltd. - Marketing Concepts

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SUMMER TRAINING PROJECT REPORTSUMMER TRAINING PROJECT REPORT

HDFC STANDARD LIFE INSURANCEHDFC STANDARD LIFE INSURANCE

COMPANY LIMITEDCOMPANY LIMITED

MARKETING CONCEPTS

Training SupervisorTraining Supervisor Submitted By:Submitted By:

Enrolment No.: 07511242

Session- 2007-2010

GURU JAMBHESHWAR UNIVERSITY

HISAR

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PREFACE

This project aims at providing information regarding insurance sector and how

emergence of private players proved to be a boom to this sector.

It explains about the concept of insurance, its purpose and need in contemporary world.

This also includes origination of insurance; its nationalization in India; benefits;

advantages; basic principles that make insurance remain a popular and fair arrangement;

mechanism

IRDA (Insurance Regulatory and Development authority) governs insurance industry. Its

duties, powers and functions are mentioned. The corporate profile of HDFC SLIC. The

competitive information of HDFC SLIC is also explained. The conclusion made on the

basis of this project is that New players are leading the sector due to their strategic

management and tailor made projects. People opting for HDFC SLIC plans are more as

compared to other private players but the latter are gaining momentum in the market day

by day.

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ACKNOWLEDGEMENT

The success of my research report would not hint at any one individual, but it was a

consolidated effort on the part of all who contributed to this report.

I am thankful to NITIN GARG (BRANCH MANAGER) for providing me an

opportunity to gain both theoretical and practical knowledge in the field of Marketing and

extending their full support.

Last but not the least, I would like to thanks my parents and friends for their moral

support throughout the project.

SHUKTI NAYYAR

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CONTENTS

Chapter 1. INTRODUCTION1.1 Overview of the Industry

1.2 Profile of the Industry

1.3 Problems of the Company

1.4 Competition Information

1.5 S.W.O.T- Analysis

Chapter 2. OBJECTIVES AND METHODOLOGY

2.1 Significance

2.2 Managerial usefulness of the study

2.3 Objectives

2.4 Scope of the study

2.5 Methodology

Chapter 3. CONCEPTUAL DISCUSSION

Chapter 4. DATA-ANALYSIS

Chapter 5. FINDINGS AND RECOMMENDATIONS

ANNEXURES

BIBLIOGRAPHY

INTRODUCTION

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1.1 Overview Of The Industry

Man has always been in search of security and protection from the beginning of

civilization. This urge led him to the concept of insurance. The basis of insurance was the

sharing of the losses of a few amongst many. Insurance provides financial stability and

strength to the individuals and organization by the distribution of loss of afew among

many by many by building up over a period of time.

The legal definition of insurance is that, it is a contract between the insurer and

insured whereby, in consideration of payment of premium by the insured the

insurer agrees to make good any financial loss the insured may suffer due to

consideration of an insurance peril.

Insurance means Spreading of Losses or Sharing of Risks. Life is full of risks. For

property, there are fire risks; for shipment of goods, there are perils of sea; for human life

there are risks of death or disability; so on and so forth. The risks are uncertain-may or

may not occur. People facing common risks come together and give their small

contribution to the common fund. While it may not be possible to tell before, which

persons will suffer, but it is possible to tell how many persons on an average out of the

group will suffer loss. If any case risk occurs, loss is made good out of common fund. In

this way, all shares common risk. Insurance, thus broadly can be understood as the

process of spreading of losses of an individual, over the group of individuals or the

process of sharing of risk by those who face common risk. People who suffer loss get

relief because their loss is made good out of common fund. People who do not suffer loss

get relief because they are free of any worry of loss. Following 2 e.g. explain the above

concept of insurance.

Example 1:

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There are 1000 persons who are all aged 50 and standard lives. It is expected that 10

persons out of the group die during the year. If the economic value of the loss suffered by

the family of each dying person were taken to be Rs. 20,000, the total loss would work

out to Rs. 20,000/-. If each person of the group contributes Rs. 200 a year, the Common

Fund would be Rs. 2,00,000 this would be enough to pay Rs. 20,000 to the family of each

of the 10 dying persons. Thus 1000 persons are sharing the risks in cases of these 10

persons.

The insurance sector has a long history in India. It began in the early years of the 19 th

century. The 1st

legal enactment was made in 1870. The 1st

Indian Insurance Act was

passed in 1938 and amended in 1950, when it was nationalized. However, the sector was

once again thrown open to the private sector on December 1999, followed by the

establishment of the Insurance Regulatory and Development Authority (IRDA) in April

2000.

Though the Insurance Sector is now open for private players as a consequence of the new

liberalization policies of the Government, the existing government owned Insurance

companies will, nevertheless, continue to be in the government sector. These existing

companies will, however, have to strive for better realization of their corporate objectives

and goals to meet the demands and expectations of the public.

Quality of service and product that an industry offers must move forward with progress in

the state of the economy. As the quantum and quality of service change over time, the

levels at which customers continue to remain satisfied with the services provided, also

keep on increasing. Ultimately, the success of any industry depends upon its positioning

in the state of economy and on meeting the expectations of the service users.

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With competition, the performance level of individual companies is expected to increase.

Segmentation is taking place within the economy with a need for socially responsive

service sector.

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, India stands to gain with

the following major advantages:

Globalization will provide improved opportunities to the customer for better

products, with more reasonable and affordable pricing.

The customer will get faster servicing.

It will enhance the savings rate.

Long-term funds for infrastructure development will be available to the

Country.

It will secure for India larger inflows of foreign capital needed to sustain our

GDP growth.

INSURANCE OPPORTUNITIES IN INDIA

Not even 25% of the insurable population has been extended the insurance

cover. Market penetration is quite low and hence the potential to exploit is very high.

Insurance premium per capita is very low ($4).

Lack of a comprehensive social security system/state benefit and welfare

means that demand for pension products should be high.

There is a huge middle class section of approximately 300 million.

Existing insurance companies score very low on the customer service front.

With steadily increasing corporate asset values, need for insurance is on the

rise. Competition can help ensure the best products with best services.

(ref.bibliography)

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THE INSURANCE REFORMS ROUTE

So, its clear that the insurance was in private hands before 1971 and was nationalized in

1972 with all private companies merged into General Insurance Corporation of India as

the parent company with 4 subsidiaries as National Insurance Company Ltd. with Head

Office at Calcutta, New India Assurance Company Ltd. with Head Office at Bombay,

Oriental Insurance Company Ltd. with Head Office at New Delhi and United India

Insurance Company Ltd. with Head Office at Madras.

In 1993 the need for Private Insurance Companies and Multinational Companies was felt

and beginning of liberalization process started. (ref.bibliography)

April 1993R N Malhotra Committee an Insurance Sector reforms &

deregulation set up.

January 94 Malhotra Committee submits report to Finance Ministry.

January 96 An interim INSURANCE REGULATORY AUTHORITY

set up thru a resolution.

September 96 INSURANCE REGULATORY AUTHORITY Bill drafted.

December 96 The INSURANCE REGULATORY AUTHORITY Bill

introduced in the Parliament and referred to a standing

committee.

August 97 The INSURANCE REGULATORY AUTHORITY Bill is

withdrawn following opposition to foreign participation in

the domestic insurance sector.

November 97 Union government gives greater autonomy to LIC, GIC

and its 4 subsidiaries.

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June 98 Union Budget announces opening up of the insurance

sector.

January 99Notification of IRA is statutory authority and amendments

LIC & GIC Acts.

March 99 INSURANCE REGULATORY AUTHORITY sets the

procedure for filing applications.

AprilJuly 99 3 months open window for receipt of application.

December 99 In principal approvals to be granted.

2000 Private Insurance products hit the market.

After a long wait, however, there was light at the end of the tunnel when the Union

Cabinet first gave its nod for 26% direct foreign equity in any insurance JV, and later

allowed foreign institutional investors (FIIs) to hold 14% stake in such ventures

effectively pushing up the foreign equity proportion to 40%.

THE ROADMAP TO PRIVATIZATION

Insurance Regulatory Authority Bill was placed before Parliament. New act to

grant statutory powers to Insurance Regulatory Authority to issue guidelines and

regulate industry.

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GIC and LIC Acts were amended. Such an amendment was crucial as the Acts

disallows any other entity to issue policies.

Guidelines for new private insurance companies were announced by Insurance

Regulatory Authority, which would include capital requirement, solvency marginsetc.

Legislation was framed to permit institution of brokers to operate in the country.

Guidelines for intermediaries such as surveyors, insurance agents and actuaries

were formulated.

Invitation of business plans and applications from prospective participants, and

actuaries were formulated.

1.2 PROFILE OF THE ORGANISATION

INTRODUCTION OF HDFC STANDARD LIFE

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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.),

It is India's leading housing finance institution and a Group Company of the Standard

Life, UK. HDFC as on March 31, 2007 holds 81.9 per cent of equity in the joint venture

At HDFC Standard Life, they offer 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, they have a range of protection, investment, pension and savings plans

that assist and nurture dreams apart from providing protection. There are a range of

products to suit every life-stage and needs.

For organizations they have 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..

Analysis of performance of HDFC Standard life in financial year 2004-2005

The company has achieved a total sum of Rs 1,266 crore on its individual insurance,

individual pensions and group insurance business nationally and has covered 44.311 lives

The total sum assured in the first quarter of the current financial year is Rs 800 cr. HDFC

Standard life is also the first new life insurance company to declare a bonus on its with

profits policies. The company has declared a lower interim bonus of 7 % on single

premium policies and 3.75% on regular premium policies.

HDFC Standard life has declared a non-recurring founders bonus.

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The company has earned Rs 789 crore from its individual life insurance and pension

business, of which 20% has come from the HDFC personal pension plan, which was

introduced in February 2004. Of the individual policies, endowments from 52%, while

single premium policies brought in business worth Rs 10crore

HDFC GROUP OF COMPANIES

HDFC Limited

HDFC Bank

HDFC Asset Management Co. Limited

HDFC Securities Limited

HDFC Standard Life Insurance Company

Intelenet Global

CIBIL Credit Information Bureau Investigation Ltd

HDFC Chubb General Insurance

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VALUED BANKASSURANCE COMPANY

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http://www.hdfc.com/http://www.bankofbaroda.com/http://www.bajajcapital.com/http://www.saraswatbank.in/http://www.unionbankofindia.com/http://www.hdfcbank.com/http://www.indian-bank.com/http://www.hdfc.com/


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ABOUT HDFC AND STANDARD LIFE JOINTVENTURE

STANDARD LIFE based at Edinburgh, Scotland (UK).

The company started in 1825, and operates in all the important markets of the world like

Canada, Ireland, Germany, Austria, Spain, Hong Kong, China and India through its

network. Standard Life Assurance Co. is the largest mutual insurance Company in

Europe. As at 31st Dec 2006, Standard Life has total Assets under Management UK

125 billion (more than Rs.7, 50,000 lakhs crores).

Inaugurated on 14th Aug 2000

SHARE HOLDING PATTERN

HDFC Standard Life Insurance a joint venture between

HDFC Ltd, a leading Housing Finance Company in India &

Share HoldingPattern76.4%

23.6%

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Standard Life Assurance, is the largest Mutual Insurance Company in Europe

The financial expertise of HDFC Group, combined with the Insurance expertise of

Standard Life is committed to offer better financial solutions to the customers.

VISION of HDFC Standard Life Insurance

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.

In short, The most obvious choice for all

VALUES

Integrity

Innovation

Customer Centric

People Care

Team Work

Joy & Simplicity

KEY STRENGTHS

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 customized to

specific needs. Our group solutions have been designed to offer you complete flexibility

combined with a low charging structure.

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Track Record so far

The cumulative premium income, including the first year premiums and renewal

premiums is Rs. 1532.21 Crores Apr-Mar 2005 - 06.

We have covered over 1.6 million individuals out of which over 5,00,000 lives have been

covered through our group business tie-ups

FINANCIAL ANALYSIS

Analysis of performance of HDFC Standard life in financial year 2004-2005

The company has achieved a total sum of Rs 1,266 crore on its individual insurance,

individual pensions and group insurance business nationally and has covered 44.311

lives. The total sum assured in the first quarter of the current financial year is Rs 800 cr.HDFC Standard life is also the first new life insurance company to declare a bonus on its

with profits policies. The company has declared a lower interim bonus of 7 % on single

premium policies and 3.75% on regular premium policies.

HDFC Standard life has declared a non-recurring founders bonus.

The company has earned Rs 789 crore from its individual life insurance and pension

business, of which 20% has come from the HDFC personal pension plan, which was

introduced in February 2004. Of the individual policies, endowments from 52%, whilesingle premium policies brought in business worth Rs 10crores

PARTICULARS FY 2004-05 FY 2005-06

Total premium Rs 298 crores Rs 687 crores

Insurance coverage Rs 5000crores Rs30000 crores

new business premium Rs 132 crores Rs 486 crores

growth rate 260% 132%

number of offices in India 44 104

number of FC 10500(approx) 23000

Group business insurance coverage 2000 crores 10,000 crores

Lives insured in groups business 22,000 lives 200,000 lives

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BONUS

Bonus

The company declared the sixth consecutive bonus on all with profits policies as follows:Product Premium Reversionary Interim Terminal

Bonus Bonus Bonus

HDFC Endowment Assurance Plans,

HDFC Childrens Plans, Regular Regular 2.25% 2.25%

HDFC Money Back Plans, Regular

HDFC Personal Pension Plans Single

Savings Assurance Plan Single

HDFC Assurance Plan Regular 3.25% 3.25%

Single Premium Whole of Life Policies Single 5% 5%

Personal Pension Plan Single 5% 5% 15%

New Business

The first year premium income increased by over 58% from Rs. 1,026.18 crores in the

previous year to Rs.1, 624.23 crores in the current year. The cumulative Sum Assured in

respect of policies issued increased fromRs.47, 730.40 crores as at 31st March, 2006 to

Rs.67, 192.97 crores as at 31st March, 2007

During the year, the company introduced revised version of the Group as well as

Individual Unit Linked Plans to conform to the new guidelines issued by the IRDA. The

company now has a portfolio of 21 retail and 6group products, along with five optional

rider benefits catering to the savings, investment, protection and retirement needs of the

customer. Most retail products are offered on both, the conventional and unit linked

platforms. The endeavor of the sales force is to help Customers assess their financial and

insurance insurer is required to meet the prescribed obligations pertaining to rural and

social sectors.

The company has focused its attention in a few rural areas and has seen gratifying results.

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As against a regulatory requirement of writing18% of all policies in rural areas, the

company has issued over 1, 21,000 policies accounting for more than 23% of all policies

issued during the year.

Two of our financial consultants operating exclusively in rural areas have also qualified

for the internationally recognized Million Dollar Round Table (MDRT) club. In addition,

during the current financial year, the company has covered 27,284 lives under the social

sector category, as against the requirement of 25,000 lives.

FOCUS AREA

Basically companies have to take a look at the intermediaries they are using, whether it is

optimal to use them, and what are the alternatives?

The new companies have attempted appealing only to the middle, upper middle and elite

classes in the major cities. Contrasted with Public sector insurance companies, with their

offices across the country, the new companies have miles to go before they reach

anywhere. They must overcome the mindset of the customer that life insurance is Life

Insurance Corporation of India (LIC) and general insurance is General Insurance

Corporation of India (GIC) if they hope to grow in the market. Meanwhile, the public

sector companies are going to great lengths to revamp their image to look and feel more

contemporary.

Both the public and new private sector companies are fighting their own battles from the

perspective of customer perception management:

Though a multi-channel strategy is better suited for the Indian market as well, it is

important to keep in mind that this market is really a conglomeration of multiple markets.

Each of the markets within this conglomeration requires a different approach. Apart from

geographical spread the socio-cultural and economic segmentation of the market is very

wide, exhibiting different traits and needs. Let us look at the various insurance

distribution channels and the challenges

ACHIEVEMENTS

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First Private Life Insurance Co. to declare bonuses.

Bonus Declaration for 6 consecutive years from inception.

First Private Life Insurance Co. to introduce certification to sell Unit Linked

Policies.

First to implement Need Based Selling in insurance.

First Life Insurance Co. to introduce Fund with 100 % exposure to Equities.

First Life Insurance Co. to offer 24 free switches to their Unit Linked

Policyholders.

First Private Life Insurance Co. to get license from IRDA.

Customer Base of more than 10,00,000 customers..

Best New Insurer Award from Outlook Money 2003.

Most Respected Private Insurance Company Award from Business World

-2004.

Intelligent Enterprise Award from Technology Senate.

BOARD MEMBERS

Mr. Deepak S. Parekh is the Chairman of the Company. He is also the Executive Chairman

of Housing Development Finance Corporation Limited (HDFC Limited). He joined

HDFC Limited in a senior management position in 1978. He was inducted as a whole-

time director of HDFC Limited in 1985 and was appointed as its Executive Chairman in

1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the

Institute of Chartered Accountants (England & Wales).

Mr. Keki M. Mistry joined the Board of Directors of the Company in December, 2000. He is

currently the Managing Director of HDFC Limited. He joined HDFC Limited in 1981

and became an Executive Director in 1993. He was appointed as its Managing Director in

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November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered Accountants of

India and a member of the Michigan Association of Certified Public Accountants.

Mr. Alexander M. Crombiejoined the Board of Directors of the Company in April, 2002. He

has been with the Standard Life Group for 34 years holding various senior management

positions. He was appointed as the Group Chief Executive of the Standard Life Group in

March 2004. Mr. Crombie is a fellow of the Faculty of Actuaries in Scotland.

Ms. Marcia D. Campbell is currently the Group Operations Director in the Standard Life

group and is responsible for Group Operations, Asia Pacific Development, Strategy &

Planning, Corporate Responsibility and Shared Services Centre. Ms. Campbell joined the

Board of Directors in November 2005.

Mr. Keith N. Skeoch is currently the Chief Executive in Standard Life Investments Limited

and is responsible for overseeing Investment Process & Chief Executive Officer

Function. Prior to this, Mr. Skeoch was working with M/s. James Capel & Co. holding

the positions of UK Economist, Chief Economist, Executive Director, Director of

Controls and Strategy HSBS Securities and Managing Director International Equities. He

was also responsible for Economic and Investment Strategy research produced on a

worldwide basis. Mr. Skeoch joined the Board of Directors in November 2005.

Mr. Gautam R. Divan is a practising Chartered Accountant and is a Fellow of the Institute of

Chartered Accountants of India. Mr. Divan was the Former Chairman and Managing

Committee Member of Midsnell Group International, an International Association of

Independent Accounting Firms and has authored several papers of professional interest.

Mr. Divan has wide experience in auditing accounts of large public limited companies

and nationalised banks, financial and taxation planning of individuals and limited

companies and also has substantial experience in structuring overseas investments to and

from India.

Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards on Strategy and

Change Management. Mr. Pant, until 2002 was a Partner & Vice-President at Bain &

Company Inc., Boston, where he led the worldwide Utility Practice. He was also

Director, Corporate Business Development at General Electric headquarters in Fairfield,

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USA. Mr. Pant has an MBA from The Wharton School and BE (Honours) from Birla

Institute of Technology and Sciences

Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of India

Limited. Mr. Ravi Narain was a member of the core team to set-up the Securities &

Exchange Board of India (SEBI) and is also associated with various committees of SEBI

and the Reserve Bank of India (RBI).

Mr. Deepak M. Satwalekar is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since

1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian

Institute of Technology, Bombay and a Masters Degree in Business Administration from

The American University, Washington DC.

Ms. Renu S. Karnad is the Executive director of HDFC Limited, is a graduate in law and

holds a Master's degree in economics from Delhi University. She has been employed

with HDFC Limited since 1978 and was appointed as the Executive Director in 2000.

She is responsible for overseeing all aspects of lending operations of HDFC Limited.

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1.3 PROBLEMS OF HDFC SLIC

1.

Since HDFC SLIC is a private player in the insurance industry, it has not yet reached

break-even. Hence, it has high cost due to which its premiums are high as compared

to LIC.

1. It has to create credibility in the public.

2. It has to compete with the wide range of products that its competitors offer.

3. It has to focus towards rural segment also which has a great scope of growth.

4. It has to decide on the strategies to be adopted which will help to counter

competition.

5. It has to increase its no. of branches and also enhance its network of agents so that

it can compete with LIC.

6. It has to focus on providing effective training to its agents so that the customer base

can be increased and moreover customer satisfaction can be ensured.

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1.4 COMPETITION INFORMATION

Insurance Companies in India

Before insurance sector was opened to the private sector Life Insurance Corporation

(LIC) was the only insurance company in India. After the opening up of Insurance sector

in India there has been a glut of insurance companies in India. These companies have

come up with innovative and flexible insurance policies to cater to varying needs of the

individual. Opening up of the Insurance sector has also forced the Lic to tighten up its

belt and deliver better service. All in all it has been a bonanza for the consumer.

Vision :

"A trans-nationally competitive financial conglomerate of significance to societies and

Pride of India."

Mission

"Explore and enhance the quality of life of people through financial security by providing

products and services of aspired attributes with competitive returns, and by rendering

resources for economic development."

Types Of Plans Offered:

1. Individual plans

2. Group schemes

3. Pension plansIndividual plans

1. Whole life schemes

a. Whole life with profit

b. Limited payment whole life

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c.Single premium plan

2. Endowment schemes

a. Endowment plan with profit

b. Limited payment endowment

c. Jeevan mitra (double cover)

d. Jeevan mitra (triple cover)

e. Jeevan anand

f. New janaraksha

3. Term assurance plan

a. Jeevan anurag

b. Komal jeevan

c. Jeevan kishore

d. Jeevan chhaya

e. Marriage/endowment annuity

f. Deferred endowment

4. Periodic Money Back Plan

a. Bima Gold

b. Jeevan Rekha Plan

c. Money Back Plan

d. Jeevan surabhi

e. Jeevan Bharati

5.. For Benefit Of Handicapped

a. Jeevan Aadhar

b. Jeevan Vishwas

7. Joint Life Plan

a. Jeevan Saathi

8. Plan For High-Worth Individual

a.Jeevan Shree-I

b. Jeevan Pramukh

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9.Capital Market Linked Plan

a. Bima plus

10. Special Plan

a. Jeevan Saral

b. Future Plus

11. Investment Plan

a. Bima Nivesh 05

Group Schemes

1. Group Term Insurance Scheme

2. Group Gratuity Scheme

3. Group Superannuation Scheme

4. Group Savings Link Insurance Scheme

5. Group Mortgage Redemption Assurance Scheme

Social Security Schemes

Janashree Prima Yojana

Krishi Shramik Samajik Yojana

Samajik Suraksha Yojana

Shiksha Sahayog Yojana

Pension Plans

a. Jeevan Nidhi

b. Jeevan Akshay III

c. New Jeevan Dhara I

d. New Jeevan Suraksha I

e. Future Plus

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Major Life insurance Companies in India are:

Aviva Life Insurance

Bajaj Allianz

Birla S un Life Insurance

HDFC Standard Life Insurance

ICICI Prudential

ING Vysya

Kotak Mahindra

LIC

MetLife India Insurance

Reliance Life Insurance

SBI Life Insurance

Shriram Life Insurance

Tata AIG Life Insurance

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Aviva Life Insurance, India

Aviva Life Insurance Company India Pvt. Ltd. is a joint venture between Aviva of UK

and Dabur, one of India's leading producer of traditional healthcare products. Aviva holds

a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent

share.

Aviva is UK's largest and the world's sixth largest insurance Group. It is one of the

leading providers of life and pensions products to Europe and has substantial businesses

elsewhere around the world.

Aviva pioneered the concept of Banc assurance in India. Currently, Aviva has

Bancassurance tie-ups with ABN Amro Bank, American Express Bank, Canara Bank,

Centurion Bank of Punjab, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank, 11

Co-operative Banks in Gujarat, Rajasthan, Jammu & Kashmir and Maharashtra and one

regional Bank in Sikkim.

Aviva has 40 Branches in India (including rural branches) supporting its distribution

network. Through its Bancassurance partner locations, Aviva products are available in

378 towns and cities across India.

Bajaj Allianz

Bajaj Allianz is a joint venture between Allianz AG one of the world's largest insurance

companies, and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the

world. Bajaj Allianz is into both life insurance and general insurance.

Allianz Group is one of the world's leading insurers and financial services providers.

Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost

174,000 employees. Bajaj group is the largest manufacturer of two-wheelers and three-

wheelers in India and one of the largest in the world.

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Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies.

Currently, it has presence in more than 550 locations with over 60,000 Insurance

Consultants.

Birla Sun Life Insurance

Birla Sun Life Insurance Company Limited is a joint venture between Aditya Birla Group

and Sun Life Financial of Canada. Aditya Birla Group is an Indian multinational

conglomerate with presence in India, Thailand, Indonesia, Malaysia, Philippines, Egypt,

Canada, Australia and China.

Sun Life Assurance, Sun Life Financial's primary insurance business, is one of the

leading insurance companies of the world and ranks amongst the largest international

financial services organizations in the world. The Group has presence in several countries

such as Canada, United States, Philippines, Japan, Indonesia, India and Bermuda.

ICICI Prudential Life Insurance

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 was established in 1955 to lend money for industrial development. Today, it has

diversified into retail banking and is the largest private bank in the country. Prudential plc

was established in 1848 and is presently the largest life insurance company in the UK.

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ICICI Prudential is curently the No. 1 private life insurer in the country. For the financial

year ended March 31, 2005, the company garnered Rs 1584 crore of new business

premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies.

ICICI Pru offers a complete range of insurance products.

1. Protection Plans

2. Savings Plans

3. Child Plans

4. Investment Plans

5. Retirement Plans

6. Group Plans7. Rural Plans

8. Plans for NRIs

9. Key man Plans

Protection Plans

a. Life guard

b. Invest shield life

c. Invest shield cash

d. Invest shield gold

e. Premier life

f. Life Time & Life Time II

g. Secure Plus

h. Cash Plus

i. Save n Protect

j. Cash Bank

Child Plans

a. Smart Kid regular premium

b. Smart Kid unit-linked regular premium

c. Smart Kid unit-linked regular premium II

29
http://www.iciciprulife.com/ipru/savings1.jsphttp://www.iciciprulife.com/ipru/childplan1.jsphttp://www.iciciprulife.com/ipru/investment1.jsphttp://www.iciciprulife.com/ipru/retire1.jsphttp://www.iciciprulife.com/ipru/groupplan1.jsphttp://www.iciciprulife.com/ipru/ruralplan1.jsphttp://www.iciciprulife.com/ipru/nriplan1.jsphttp://www.iciciprulife.com/ipru/keymanplan1.jsphttp://www.iciciprulife.com/ipru/savings1.jsphttp://www.iciciprulife.com/ipru/childplan1.jsphttp://www.iciciprulife.com/ipru/investment1.jsphttp://www.iciciprulife.com/ipru/retire1.jsphttp://www.iciciprulife.com/ipru/groupplan1.jsphttp://www.iciciprulife.com/ipru/ruralplan1.jsphttp://www.iciciprulife.com/ipru/nriplan1.jsphttp://www.iciciprulife.com/ipru/keymanplan1.jsp


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d. Smart Kid unit-linked single premium II

Investment Plans

a. Life Link II

Retirement Plans

a. Golden Years

b. Invest Shield Pension

c. Lifetime Pension II

d. Lifeline Pension II

e. Secure Plus Pension

f. Forever Life

ICICI Prudential offers 2 specially designed rural plans.

a. ICICI Pru Mitr endowment plan

b. ICICI Pru Suraksha regular premium

ING Vysya Life Insurance

ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and

ING Group of Holland, the world's 4th largest financial services group, with presence

across 50 countries, and a heritage of over 150 years.

ING Vysya Life Insurance Company Private Limited entered the private life insurance

industry in India in September 2001. With in a short span of time ING Vysya Life

Insurance has registered an impressive growth. The company currently has over 10,000

active advisors working from 75 branches (in 30 cities) across the country and over 2300

employees.

Kotak Mahindra Old Mutual Life Insurance Limited

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak

Mahindra Bank Ltd.(KMBL), and Old Mutual plc. Kotak Mahindra is one of India's

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leading financial institutions and offers a range of financial services such as commercial

banking, stock broking, mutual funds, life insurance, and investment banking.

Old Mutual was established more than 150 years ago and offers a diverse range of

financial services in South Africa, the United States and the United Kingdom. The

company is listed on the London Stock Exchange with a market capitalization and has its

headquarters in London.

Life Insurance Corporation of India (LIC)

Life Insurance Corporation of India (LIC) is an autonomous body authorized to run the

life insurance business in India with its Head Office at Mumbai. It has been established

by an act of the Parliament and started functioning from 1/9/1956.

LIC is the biggest insurance player in the country. Out of the total premium of Rs 3766

crore generated by the insurance industry through group business in the year 2005-06,

LIC alone accounted for Rs 3051 crore.

In the financial year 2005-06, LIC has grown at 30.68%. In respect of number of lives

insured, LIC has shown a growth of over 152%. In respect of number of schemes, LIC

has a growth of 2%. LIC's market share in number of individuals covered and number of

policies stands at 77% and 81%, respectively.

MetLife India Insurance

MetLife India Insurance Co. Pvt Ltd is a joint venture between MetLife Group and its

Indian partners. The Indian partners include J&K Bank, Dhanalakshmi Bank, Karnataka

Bank, Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu.

Met Life Group has presence in America and Asia and has an experience of over 137

years in providing financial services. The MetLife companies are the number one life

insurer in the U.S. with approximately US $2.8 trillion of life insurance in force. MetLife

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serves 88 of the top one hundred FORTUNE 500 companies. MetLife entered Indian

insurance sector in 2001.

Reliance Life Insurance

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the

Reliance - Anil Dhirubhai Ambani Group. The company acquired 100 per cent

shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over

AMP Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a

portfolio.

AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar

Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country,

9,000 agents, and more than 900 employees.

SBI Life Insurance

SBI Life Insurance is a joint venture between the State Bank of India and Cardif SA of

France. SBI Life Insurance is registered with an authorised capital of Rs 500 crore and a

paid up capital of Rs 350 crores.

State Bank of India is the largest banking franchise in India. Along with its 7 Associate

Banks, SBI Group has a network of over 14,000 branches across the country, the largest

in the world.

Cardif is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone's leading

Bank. BNP is one of the oldest foreign banks with a presence in India dating back to

1860

Shriram Life Insurance

Shriram Life Insurance Company Ltd is a joint venture between the Chennai-based

Shriram Group and the South African insurance major Sanlam.

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The company launched its operations in India in December 2005.

Shriram Life has set a target of achieving a premium income of Rs 110 crore during the

first year of operations. While focussing largely on the strong network of over 65,000

agents and distribution network of more than 550 branches, Shriram Life is also

contemplating bancassurance alliances with couple of banks.1.3.14 Tata AIG Life

Insurance

Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and

American International Group, Inc. (AIG). Tata Group is one of the oldest and leading

business groups of India. Tata Group has had a long association with India's insurance

sector having been the largest insurance company in India prior to the nationalization ofinsurance. The Late Sir Dorab Tata, was the founder Chairman of New India Assurance

Co. Ltd., a group company incorporated way back in 1919.

American International Group, Inc is the leading U.S. based international insurance and

financial services organization and the largest underwriter of commercial and industrial

insurance in the United States. AIG has one of the most extensive life insurance networks

in the world.

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1.5 S.W.O.T ANALYSIS

Both Strengths and Weaknesses are inherent with the company while Opportunities and

Threats are usually outside factors, which affect the existence of the company at large.

Let us make the SWOT Analysis for Life Insurance Corporation:

Strengths

The early bird advantage

More penetration in the rural parts of India

The trust they have created so far

Established agency network during the last decades

The incomparable supremacy in the number of agents

More awareness among the people

Weakness

The marketing approach is not that much professional

The sluggishness of the activities has given at times a bad repute

As a public company lacks sincerity and activeness.

Opportunities

As people become more internet savvy, the Ad. Expenditure will come down as

the prospective clients can be approached through net.

The high growth rate of Indian Economy

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The penetration of Insurance in rural area is minimal.

The Government policies are offering more and more rebates on the insured

amount and such a scenario will help more people getting interested in itThe

people are becoming more aware of Insurance and started considering it.

Threats

Now as India is on the brim of emerging out as an economic power center,

stringent laws can be expected in the coming future.

As the number of agents are considerably huge, efficient management of all the

field force need greater strain and effort

The aggressive style of marketing by the private players is a threat to LIC

More and more companies are coming into the field and the existing ones have to

struggle hard to keep the customers loyal and to get more customers

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OBJECTIVE AND METHODOLOGY

2.1 SIGNIFICANCE

The main objective of my project is to know the need of Life Insurance in Delhi and to

recruit quality agent advisors for the company for providing life Insurance solutions to

the customers. Agent advisors play a vital role in the growth of company with respect of

companys earnings as well as they create value for the organization after achieving some

milestones. Agent advisors are an integral part of the team and sales manager assigned to

them help them to groom in terms of personality development, selling skills and

handling objections of customers.

2.2 Managerial usefulness of the study

A thorough research and a detailed study of the market is very important for the

management to take the right strategy suiting the market condition.The study gives the information regarding the market competition, innovative products

offered by competitors, present demand of the products in the market etc.

Market survey will help to know the prevailing market condition and also help

in framing the policies accordingly.

The study will help the management to understand the customer mindset and

also estimating the present and future market demand for the products.

It will help to estimate the level of awareness established in the market and in

deciding the extent of promotion required.

It will help in finding out the customers expectations about the product and

also help to know the customer physiology.

It will help to know the class on which HDFC SLIC must concentrate.

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2.3 OBJECTIVES

Main objective:

To determine customer-buying behavior with a focus on market segmentation.

To study the reasons of salaried persons taking up Insurance Services

Specific objective:

To determine reasons behind opting for an insurance.

To provide the company with information of customer's Insurance policy if

they have any and reasons for opting for that particular policies.

To know the most preferred policy.

To determine customers perception towards private insurance companies and

their expectation form private insurance companies.

To determine the feedback on services provided by any other insurance

agent.

To study the types of benefits provided by insurance services.

To determine the use of Internet for valuable information and decision-

making process.

To know the impact of privatization of insurance sector on public.

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2.4 SCOPE OF THE STUDY

The initial step was to understand the process of how to go about the project itself. The

aim was to understand better vision, mission objectives & culture of the organization. So

as to ensure that the work done is in the consonance with the main goal of the company.

In this regard various magazines, journals and newspapers were gone through. Various

Internet sites were also looked upon which provide me with valuable input into the

Insurance Sector.

The project was strictly confined to the Delhi Region - The people contacted during the

course of this project were from different regions of Delhi. This project is a sincere

compilation of all the data and information collected by each team member.

This report can be a valuable input for the people who are involved with the Insurance

Services, in order to have an overview of customer's perception in Delhi RegionIN

.

2.5 RESEARCH METHODLOGY

1. Research and Design

a. Explanatory Research

2. Data collection method

a. Primary Research

i. Questionnaire

ii. Focus Group Interview

b. Secondary Research

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i. Journal/Brochure of IRDA

ii. Published Reports

iii. Internet

3. Sampling Plan

a. Sampling unit employed people having salary between Rs. 10000 Rs.

40000 per month.

b. Sampling size 90-120 people

c. Sampling procedure non probability judgement sampling

4. Data collection instrument

a. Questionnaire

b. Focus group interview

5. Analysis

a. Though a detailed study was planned but due to time constraint it was

restricted to around 90-120 people only.

STEPS IN THE MARKET RESEARCH

Identification of the Objective (problem)

Initial collection of the data from secondary sources.

Identification of sample size and sampling area.

Formulation of the questionnaire.

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Collection of the primary data thru fieldwork.

Analysis and interpretation of the collected data.

Preparation of the research report along with observations & recommendations

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CONCEPTUAL DISCUSSION

Private players in the life insurance business are growing at a scorching pace. Within

three years of their inception, they have seized about 14 per cent of the market.

Compare this to new generation private-sector banks, which took nine years for 20 per

cent share in the Indian banking industry. And after seven years in the industry, in 2000,

private mutual funds accounted for just 9 per cent of a market that had been dominated by

the Unit Trust of India.

There's another dimension to the insurance numbers game. While the private insurance

companies have attained 13 to 14 per cent share of the overall insurance market, theirshare in the key metros (Mumbai and Delhi) is as high as 30 to 40 per cent.

"We have to struggle to complete a deal in the metros now, because policyholders are

comparing products and asking for better deals," says S B Mathur, chairman of the Life

Insurance Corporation of India.

Private insurance companies are essentially joint ventures with global insurance

companies holding a maximum of 26 per cent stake. The foreign partners are investingheavily in the Indian market and, thereby, driving sales, because they see India emerging

as one of the biggest markets in the Asian region.

"India will become the biggest market for us in the next three to four years," predicts Dan

Bardin, Prudential Corporation Asia managing director south Asia and greater China.

Private players have certainly done their bit to increase the penetration levels of

insurance, mainly by creating alternative distribution channels--such as associations with

banks, brokers and corporate agents.

"Our banc assurance channel--with tie-ups with four banks--contributes almost 70 per

cent of our total sales," says Aviva CEO Stuart Purdy.

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What is life insurance?

Life insurance is an agreement or a contract between you (the insured) and an

insurer. Under the terms of a life insurance contract, the insurer promises to pay a

certain sum to someone (a beneficiary) when you die, in exchange for your premium

payments.

Why would you need life insurance?

The most common reason for buying a life insurance is to replace the income lost

when one dies.

For e.g., say that you work, and that your income is used to support yourself and your

family. When you die, and your paychecks stop, the life insurance proceeds can be

used to continue to support the family members you've left behind.

Another common use of life insurance proceeds is to pay off any debts you leave

behind. For e.g., mortgages, car loans, medical bills, and credit card debts are often

left unpaid when someone dies. These obligations must be paid from the assets left

behind. This can deplete the resources that your family needs. Life insurance can be

used to pay off these debts, leaving your other assets intact for your family to use.

Life insurance provides liquidity to your estate. When you die, you may leave some

liquid assets (such as cash, CDs, and savings bonds), and some illiquid assets (such

as real estate, an automobile, and stocks). Your liquid assets may not be enough to

pay all the debts that you leave behind, plus all the expenses that arise because of

your death (such as funeral expenses and estate taxes). Your illiquid assets may have

to be sold in order to meet these obligations when they come due. This may cause a

financial loss if the assets must be sold cheaply in order to get the money on time.

Life insurance can avert this situation, because the proceeds are available almost

immediately upon your death.

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Life insurance creates an estate for your heirs. After your debts and expenses are

paid, there may not be much left over for your family. Life insurance can

automatically provide assets for them after your death.

Life insurance is a great way to give to charity when you die. You may have always

had a great philanthropic desire, but not the means to make it a reality. Life insurance

can do that for you.

Life insurance can be a critical component for specialized business applications, such

as funding a buy-sell agreement. Under a buy-sell agreement, life insurance can be

used to provide cash for the purchase of a deceased owner's interest in the business.

Finally, life insurance can be an investment vehicle. Some types of life insurance

policies may actually make money for you, as well as provide the benefits described

above. This can help you with long-term financial goals.

LIFE INSURANCE NEEDS AT VARIOUS LIFE STAGES

Your need for life insurance changes, as your life moves ahead. When you're young,

you typically have no need for life insurance, but this changes as you take on more

responsibility, and as your family grows. Then, as your responsibilities once again

begin to diminish, your need for life insurance drops off. Let's look at how your life

insurance needs change throughout your lifetime.

School days

Childhood is typically a time of no worries, no cares, and no responsibilities. A child

depends on others to take care of them, not the other way around. Although it would

be tragic, a child's death would likely have little financial impact on the child's

family. Thus, there is generally no need for life insurance at this point in an

individual's life.

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A child's death does create one short-term financial problem: funeral expenses. But

buying a life insurance policy just for that purpose doesn't really make sense. Instead,

think about saving the money you would spend on insurance premiums and open a

savings account, or put the money in some type of investment vehicle. That way, the

money can be used for college expenses or a first home, but it will also be available

in case of a tragedy. Alternatively, a burial policy provides enough money for funeral

expenses, at a much lower cost than a typical life insurance policy.

Your growing family

When you have young children, your life insurance needs reach a climax. In most

any situation, life insurance for both parents is appropriate.

Single-income families are completely dependent on the income of the breadwinner.

If he or she dies without life insurance, the consequences could be disastrous. The

death of the stay-at-home spouse would necessitate costly daycare expenses. Both

spouses should carry enough life insurance to cover the expenses that would result

from their death.

Dual-income families need life insurance, too. If one spouse dies, it is unlikely that

the surviving spouse will be able to keep up with the household expenses and pay for

childcare with the remaining income.

Moving up the ladder

For many people, career advancement means starting a new job with a new company.

At some point, you might even decide to be your own boss and start your own

business. It might not be your top priority, but it is important to review your life

insurance coverage any time you leave an employer.

Keep in mind; you probably won't be able to keep any life insurance that was

provided by your employer. If you're going to work for a new company, you might

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receive a comparable life insurance benefit. But if you're going into business for

yourself, you'll need to purchase an individual life insurance policy.

Make sure the amount of your coverage is up-to-date, as well. The policy you

purchased right after you got married might not be adequate anymore, especially if

you have kids, a mortgage, and college expenses to consider. Business owners may

also have business debt to consider. If you're not incorporated, your family would

have to pay those bills if you die.

Single again

Unfortunately, divorce has become a fact of life in our society. You'll have to make

many financial decisions during this stressful time, including the decision of what to

do about your life insurance. Divorce raises both beneficiary issues and coverage

issues. And if you have children, these issues become even more complex.

If you and your spouse have no children, it may be as simple as changing the

beneficiary on your policy and adjusting your coverage to reflect your newly single

status. However, if you have kids, you'll want to make sure that they are provided for

in the event of your death. This may involve purchasing a new policy and naming

them as beneficiaries. The custodial and no custodial parent will need to work out the

details of this complicated situation. If you can't come to terms, the court may make

the decisions for you.

The golden years

Once your children are grown, your life insurance needs decrease. You'll live off

your retirement savings, and hopefully you have accumulated assets that can be

passed on to your heirs when you die. Not only is life insurance expensive at this

point, but also it's probably unnecessary.

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One exception: if you will be leaving a large estate when you die, your heirs may be

stuck paying a hefty estate tax bill. Consider obtaining cash value life insurance

policy, because you don't actually know when you're going to die. Your heirs can

then use the death benefit to pay the IRS. If the policy is held by a trust, the proceeds

won't be included in your estate

INDIAN INSURANCE INDUSTRY: A PERSPECTIVE

A. Life Insurance

Life insurance in its existing form came in India from United Kingdom (UK) with the

establishment of a British firm, Oriental Life Insurance Company in 1818 followed by

Bombay Life Assurance Company in 1823, the Madras Equitable Life Insurance Societyin 1829 and Oriental Life Assurance Company in 1874. Prior to 1871, Indian lives were

treated as sub-standard and charged an extra premium of 15% to 20%. Bombay Mutual

Life Assurance Society, an Indian insurer that came into existence in 1871, was the first

to cover Indian lives at normal rates. The Indian Life Assurance Companies Act, 1912

was the first statutory measure to regulate life insurance business. Later, in 1928 the

Indian Insurance Companies Act was enacted, inter alia, to enable the government to

collect statistical information about life and non-life insurance business transacted in

India by Indian and foreign insurers, including the provident insurance societies.

In 1938, with a view to protecting the interest of insuring public, earlier legislation was

consolidated and amended by Insurance Act, 1938 with comprehensive provisions for

detailed and effective control over the activities of insurers. In order to administer the

aforesaid legislation, an insurance wing was established and attached first with the

Ministry of Commerce and then Ministry of Finance. This ministry was administratively

responsible for policy matters pertaining to insurance. The actuarial and operational

matters relating to the insurance industry were looked after by an attached office in

Shimla, headed first by Actuary to the Government of India, then by Superintendent of

Insurance and finally by the Controller of Insurance. The act was amended in 1950,

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making far-reaching changes such as requirement of equity capital for companies,

carrying on life insurance business, ceilings on shareholdings I such companies, stricter

control on investment of life insurance companies, submission of periodical returns

relating to investments and such other information to the Controller as he may call for,

appointments of administrators for mismanaged companies, ceilings on expenses of

management and agency commission, incorporation of the Insurance Association of India

and formation of councils and committees thereof.

By 1956, 154 Indian insurers, 16 non-Indian insurers and 75 provident societies were

carrying on life insurance business in India. Life insurance business was confirmed

mainly to cities and better off segments of the society.

On 19th January 1956 the management of life insurance business of 245 Indian and

foreign insurers and provident societies, then operating in India, was taken over by the

Central Government and then nationalized on 1st September 1956. An Act of Parliament,

viz. LIC Act, formed LIC in September 1956, with capital contribution of Rs. 5 crore

from the Government of India.

The then Finance Minister, Shri S.D.Deshmukh, while piloting the bill for

nationalization, outlined the objectives of LIC thus: to conduct the business with utmost

economy, in a spirit of trusteeship; to charge premium no higher than warranted by strict

actuarial considerations; to invest the funds for obtaining maximum yield for the policy

holders consistent with safety of the capital; to render prompt and efficient service to

policy-holders, thereby making insurance of recommendations of the Administrative

Reforms Commission as under:

a. To spread life insurance much more widely and in particular to the rural areas and to

the socially and economically backward classes

b. To making mobilization of peoples savings by making insurance linked savings

adequately attractive.

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c. To bear in mind, in the investment of funds, the primary obligation to its

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

community as a whole

d. To conduct business with utmost economy and with the full realization that moneybelongs to the policyholders.

e. To act as trustees of the insured public in their individual and collective capacities.

f. To meet various life insurance needs of the community that would arise in the

changing social and economic environment.

g. To promote amongst all agents and employees of the Corporation a sense of

participation, pride and job satisfaction through discharge of their duties with

dedication towards achievement of corporate objectives.

B. General Insurance

General Insurance developed in India with industrial revolution in the West and

consequent growth of seafaring trade and commerce in the 17th century. It came to India

from UK. The 1st general insurance company, Triton Insurance Company Ltd. was

established in Calcutta in 1850 whose shares were mainly headed by British. The 1 st

general insurance company established by an Indian was Indian Mercantile Insurance

Company Ltd. in Bombay in 1907.

In 1957,the General Insurance Council, a wing of the Insurance Association of India

framed a code of conduct for ensuring fair conduct and sound business practices in the

general insurance industry. An administrative set-up headed by the Controller of

Insurance was set up at Delhi in 1957 with a branch office at Bombay, Calcutta, and

Madras for administrating code of conduct. Further in order to retain the business ofgeneral insurance in India, the insurers started a reinsurance company, viz. India

Reinsurance Corporation Ltd. In 1956 to which they voluntarily ceded 10% of their gross

direct business. In 1961, by arrangement to Insurance Act, this voluntary arrangement

was formalized by notifying the Indian Guaranty and General Insurance Company Ltd., a

government company, along with the Indian Reinsurance Corporation as Indian

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Reinsures. In 1968, the Insurance Act was amended to provide for extension of social

control over insurers transacting general insurance. The amendments provided, inter alia

for regulation of assets, setting up of the Tariff Advisory Committee (TAC) under the

chairmanship of Controller of Insurance. Before the amendments of the act could be

implemented, management of non-life insurers was taken over by the Central

Government in 1971 as a prelude to nationalization. The General Insurance Business Act,

1972, nationalized general insurance business with effect from 1.1.73.

Prior to 1973, general insurance was more cities oriented, catering to the needs of trade

and industry.107 insurers including branches of foreign companies operating here were

amalgamated and grouped into 4 companies, viz. the National Insurance Company Ltd.,

the New India Assurance Company Ltd., the Oriental Insurance Company Ltd., and the

United India Assurance Company Ltd. GIC was incorporated as a company in November,

1972 and it commenced business on January 1, 1973.

Government of India and that of 4 companies subscribe the capital of GIC by GIC. All

the 5 entities are Government companies, registered under the Companies Act.

The purpose of establishment of GIC as a holding company of the four operating

companies as stated in General Insurance Business Act is superintending, controlling, and

carrying on the business of general insurance. (ref.bibliography)

LIFE INSURANCE INDUSTRY

Legislative issues

Based on developments over the last couple of years, it would be fair to say that the long-

term outlook for the policy regime for insurance appears positive. In many ways the

IRDA has exhibited transparency and protectiveness in attending to critical issues this has

not only provided a degree of comfort to existing and prospective insurers, but has also

laid the foundation for the orderly development of the insurance market in India. The

most obvious comparison one could make is with the banking sector liberalization that

took place a few years ago. Unlike the RBI, the IRDA has been transparent, efficient and

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adequately cautions in its process of granting licenses. The hectic lobbying and 'loophole

exploitation' that firms indulged in have been thankfully absent in the insurance business,

thus far.

At a broader level, the government maintains its bullish outlook for insurance reforms,reflected by its willingness to ensure a level playing field for private insurer vis--vis LIC

(e.g. similar tax treatment to all life insurers, similar paid up capital requirement etc) and

to minimize its intervention in operational and commercial issues. Private players in other

recently liberalized sectors (especially telecom and banking where industry regulator and

industry government disputes have severely constrained development) could scarcely

consider themselves as lucky.

Perhaps the only major issue is the cap on foreign investment, which the government is

not keen on increasing in the near future. For the longer term, it may reconsider its stand,

depending among other things, on the Indian partner's ability to continue contributing

financially and technically to the joint venture. (ref.bibliography)

Taxation policy for life insurance firms

After prolonged debate, the Finance Ministry had expressed its desire to accord similar

tax treatment to LIC and private insurers.

Co-operative Banks excluded from Insurance

Based on the strict requirements set out by the RBI for banks entry into insurance,

cooperative banks would be unable to apply for direct insurance at this stage. However,

the norms for participating in non-equity insurance activities (such as marketing and

distribution) are slightly easier and may allow some cooperative banks to enter.

The RBI requires banks to possess a net worth of Rs. 500 crores, a capital adequacy ratio

of 10, a reasonable level of non-performing assets (NPAs), continuos net profit for the

last 3 years, and a 'satisfactory' track of subsidiaries. While capital adequacy norms do

not apply to cooperative banks, they are likely to fail on the grounds of net worth and

NPAs.

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The Kerala State Cooperative Banks (KSCB) and the Maharashtra State Cooperative

Bank (MSCB) had earlier declared their interest in entering the insurance sector. Based

on RBI guidelines, however, they may have to limit their exposure to marketing and

distribution only.

Competitive developments existing insurers

Expectedly, private companies that have commenced operations have done so with a 'soft

launch'. This is presumably in realization of the fact that long term resources are better

spent in consistent and well targeted promotional efforts rather than in 'big-bang' exercise

- especially for non - impulse purchase, long term financial products such as life

insurance. Treading new round carefully by patiently establishing one's credibility and

competence appears to be the preferred strategy over one that involves a head on battle

with LIC.

The other important observation based on industry developments, pertains to the role of

banks. With most banks resigning themselves to the fact that obtaining a license to sell

insurance will be difficult to come by (due to strict RBI norms), they have chosen to

participate in the industry through the banc assurance, route instead. In the Indian

context, this is significant. In the interiors of the country, public sector banks have built

up excellent penetration and enjoy the public's confidence-2 important prerequisites for

selling insurance. On the other hand, in the bigger cities, private banks, which are

constantly looking for ways to enhance customer value and profitability (e.g. through

cross selling), are likely to incorporate insurance in their portfolio of offerings.

(ref.bibliography)

The flip side to selling thru banks is that it raises the risk of channel conflicts for insurers.

In addition, financial stability could become an issue, especially in the context of certain

PSU banks. The manner in which PSU banks are privatized, and the extent to which the

government reduces its stake, will therefore have an important bearing on the success of

banc assurance in

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DATA ANALYSIS

Data gives figures of ranking of insurance company according to the respondents.

Table 1

Company Name Number of respondents Share (%)HDFC 45 45

L.I.C 40 40

ICICI Prudential 10 10

OM Kotak Mahindra 3 3

MAX 2 2

Total 100 100

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Fig. 9

Interpretation:

45% of the people have HDFC SLIC policy and is ranked number one by that percent of

respondent.

Data gives figures of benefits of insurance cover perceived by respondents.

TABLE 2

Benefits Number of respondents Share (%)Cover Future Uncertainty 55 55

Tax Deductions 20 20

Future Investment 25 25

Total 100 100

53

45%

40%

10%3%2%

MAX

L.I.C

ICICI Prudential

OM Kotak

Mahindra

HDFC


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55%

20%

25%Cover Future

Uncertanity

TaxDeductions

Future

Investment

Fig. 10

Interpretation:

55% of the respondents believe that covering future uncertainty is the biggest benefit of

insurance policy. 20% and 25% of them believe that other benefits are tax deduction and

future investment.

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Data provides features of insurance policy which attracted the respondents the

most.

Table 3

Features Number of

respondents

Share (%)

Money Back Guarantee 15 15

Larger Risk Coverance 37 37

Easy Access to Agents 7 7

Low Premium 30 30Reputation of Company 11 11

Total 100 100

15%

37%

7%

30%

11%

Money Back

Guarantee

Larger Risk

Coverance

Easy Access to

Agents

Low Premium

Reputation of

Company

Fig. 11

Interpretation:

Majority of the respondent found larger risk conversance as the most attracted feature of

their policy.

Data provides type of policy respondents are holding

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Table 4

Policy Type Number of respondents Share (%)Life Policy 60 60

Non Life Policy 25 25Both 15 15

Total 100 100

60%

25%

15%

Life Policy

Non - Life

Policy

Both

Fig. 12

Interpretation:

60% of the respondents have life insurance policy while 15% have both life and non

life insurance policy.

Data provides various instruments of Insurance.

Table 5

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Instrument Number of respondents Share (%)Protection 75 75

Investment 10 10

Tax 6 6

Great Returns 5 5

Risk Management 4 4Total 100 100

75%

10%

6%

5%

Protection

Investment

Tax

Great Retur ns

Risk

Management

Fig. 13

Interpretation:

75% of the respondents say protection is most important.

Data provides how many people are aware of Private Participators.

Table 6

Awareness Number of respondents Share (%)Yes 80 80

No. 20 20

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Total 100 100

80%

20%

Yes

No

Fig. 14

Interpretation:

80% of the respondents are aware of private participators.

DATA SHOWS PEOPLES HAVING INSURANCE

TABLE 7

RESPONSE NO. OF

RESPONDENTS

SHARE (%)

Yes 280 70%

No 120 30%

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Total 400 100%

Interpretation:

Of the sample size of 400 surveyed respondents 70% of the respondents are

having Insurance policy.

30% of the respondents are either not having any Insurance policy at present

or their policy is already matured.

And at present 100% of the respondents are with the view that Insurance is a

tool to protect your family.

DATA GIVES PEOPLE PERCEPTION ABOUT INSURANCE

TABLE 8

RESPONSE NO. OF

RESPONDENTS

SHARE (%)

A saving tool 324 81%

A tax saving device 296 74%

A tool to protect your family 400 100%

59

70%

30%

Yes

No


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Interpretation:

81% of the respondents have perception of Insurance being a saving tool.

And 74% of the respondents have perception of Insurance being a tax saving device.

But 100% of the respondents are with the view that Insurance is a tool to protect yourfamily.

DATA SHOWS WHAT PEOPLE WOULD LOOK FOR IN AN INSURANCE

COMPANY

Table 9

RESPONSE NO. OF RESPONDENTS SHARE (%)

A trusted name 328 82%Friendly service &responsiveness

284 71%

Good plans 326 81.5%

Accessibility 199 49.75%

60

81.00%

74.0%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%90%

100%

share (%)

A saving tool A tax saving device A tool to protect your family


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Interpretation:

82% customers look for a Trusted name in a company for insurance.

81.5% customers look for a good plan in a company for insurance.

Friendly service & responsiveness and Accessibility are also important

factors looked by customers in a company.

61

82%

71%

81.50%

49.75%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

share (%)

A trusted name

Friendly service & responsiveness

Good plans

Accessibility


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FINDINGS & RECOMMENDATIO NS

FINDINGS

The project study report has the following findings with it:

Almost 75% of respondents have an insurance policy.

People have more number of life insurance policies as compared to non life

insurance.

Only 80% people are aware that Insurance has been opened for Private

Participators.

Due to increased in consumerism new product is launched everyday thus non

life/general insurance business is also going to have boom period.

Due to the increasing concern of people towards their health/life the life insurance

business has good prospects.

Majority of the respondent believed that larger risk conversance of their policy

was the main feature of their policy that attracted them to buy that policy. Though

low premium was the next important feature.

Majority of the respondent preferred to have HDFC SLIC policies than other

private companies.

Not many people know about the IRDA Act.

Majority of the respondents believe that covering future uncertainty is the most

important benefit of an insurance policy.

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RECOMMENDATIONS

There are certain flaws existing in this working of the insurance industry. There are some

of the recommendation I come across while doing this thesis. It will help to make

insurance more important sector in todays economy.

The need of the hour is to devise a comprehensive strategy that will help the firms

face the challenges of the future. The financial service industry around the world

over is undergoing a major transformation. It is very important that trained

marketing professionals who are able to communicate specific features of the

policy should sell the policy.

From the research I could find out that people are not aware about the policies and

features of insurance. Therefore LIC and ICICI are recommended to shed light on

policies and explain the benefits, thus increasing the awareness.

The penetration of insurance in India is around 22%. This indicates that a vast

majority of rural population is not covered. The market player needs to explore

this untapped potential through their marketing and sales network.

The returns of the policies are not properly managed and never given in time. So,

these areas must be looked at.

Pricing of insurance products, as empirically available in India, shows that pricingis not in consonance with market realities. Life Insurance premium is generally

perceived, as being too high while general insurance (especially motor insurance)

is priced too low.

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Some insurance products, which are not available in India, should, be introduced

in market. There are areas for new product development like Industry all risk

policies; large projects risk cover, Risk beyond a floor level, extended public and

product liability cover.

Insurance companies will also have to get savvy in distribution. Enhanced

marketing thus will be crucial. Already many companies have full operation

capabilities over a 12-hour period. Facilities such as customer service center are

already into 24-hour mode. These will provide services such as motor vehicle

recovery. Technology will also play an important role on the market.

The lines of distinction between banks insurance companies and brokerages are getting

blurred. The future seems to belong to financial supermarkets that will offer a host of

services and products to the consumer. In the next millennium all these activities would

play a crucial role in the overall development and maturity of the insurance industry.

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CONCLUSION

I have drawn various conclusions from this study. There has been tremendous change in

the insurance history. And with it there has been continuous growth in this sector both in

Indian as well as world context.

The opening up of the insurance sector has changed the whole look of the industry. Whilethe various companies in order to face the competition is coming with new strategies.

New players are leading the sector due to their strategic management and tailor made

projects.

From the research also I conclude that though the awareness and people opting for HDFC

SLIC plans are more as compared to other private players but the latter are gaining

momentum in the market day by day.

So lets conduct this business with utmost economy with the spirit of trusteeship; thereby

making insurance widely popular.

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ANNEXURES

1. QUESTIONNAIRE

1. Are you employed?

Yes { }

No { }

2. Do you think that Insurance is important?

Yes { }

No { }

3. Do you have any insurance policy?

Yes { }

No { }

4. Which insurance policy do you have?

Life { }

Non Life { }

Both { }

5. Do you know about HDFC SLIC?

Yes { }

No { }

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6. Can you rank these in terms of importance?

(5 Most Important, 4 Important, 3 Necessary, 2 Not Important, 1 Least Important)

Life { } 5 { } 4 { } 3 { } 2 { } 1

Auto { } 5 { } 4 { } 3 { } 2 { } 1

Property { } 5 { } 4 { } 3 { } 2 { } 1

Fire { } 5 { } 4 { } 3 { } 2 { } 1

Theft { } 5 { } 4 { } 3 { } 2 { } 1

Any Others { } 5 { } 4 { } 3 { } 2 { } 1

(Pls. Specify)

8. Do you have insurance from any Private Player?

Yes { }

No { }

9. Are you aware as to how many private Life Insurance Companies have set up the

operations in the country?

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hdfc standard life insruance corporation ltd. - marketing concepts

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