TABLE & CONTENT

CHAPTER PREFACE PAGE NO.

CHAPTER 1 INTRODUCTION TO INSURANCE

1.1 INTRODUCTION

1.4 FUNCTION OF LIFE INSURANCE

1.2 LIFE INSURANCE

1.3 TYPES OF LIFE INSURANCE

1.5 ROLE OF INSURANCE

1.6 IMPORTANCE OF INSURANCE

1.7 CONTROLING AUTHORITY

CHAPTER 2 INTRODUCTION TO INDIAN INSURANCE INDUSTRY

2.1 INDIAN INSURANCE INDUSTRY

2.2 A BRIEF HISTORY OF INSURANCE SECTOR

2.3 MILESTONES IN THE INSURANCE SECTOR

2.4 LIST OF INSURANCE COMPANIES WORKS IN INDIA

2.5 HOW BIG IS THE INSURANCE MARKET?

2.6 INDIAN SCENERIO

CHAPTER 3 INTRODUCTION OF TATA AIG

3.1 TATA GROUP

3.2 TATA GROUP IN INSURANCE

3.3 AIG

3.4 THE JOINT VENTURE- TATA-AIG

3.5 HOW COMPANY WORKS

CHAPTER 4 LEARNINGS FROM THE PROJECT

CHAPTER 1

INTRODUCTION TO INSURANCE

1.1. INTRODUCTION:-

"Insurance is a contract between two parties whereby one party called insurer undertakes in

exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount

of money on the happening of a certain event." Insurance may be described as a social device

to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of

people associate themselves by sharing risk, attached to individual. With the help of Insurance,

large number of people exposed to a similar risk makes contributions to a common fund out of

which the losses suffered by the unfortunate few, due to accidental events, are made good.

Insurance is a tool by which fatalities of a small number are compensated out of funds

collected from plenteous. Gradually as competition increased benefits given by industry to its

customers increased by leaps and bounds. Insurance is a basic form of risk management which

provides protection against possible loss to life or physical assets. Person who seeks protection

against such loss is termed as insured, and company that promises to honor claim, in case such

loss is actually incurred by insured, is termed as Insurer. In order to get insurance, insured is

required to pay to insurance company a certain amount called premium. Premium is collected

by insurance companies which acts as trustee to pool created through contributions made by

persons seeking to protect themselves from common risk. Any loss to the insured in case of

happening of an uncertain event is paid out of this pool. Insurance business is divided into

following parts:

Life Insurance

Property Insurance

Health Insurance

Auto Insurance

Travel Insurance etc.

1.2. LIFE INSURANCE:-

Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a

premium paid undertakes to pay a fixed sum of money on The death of the insured or on the expiry of

a specified period of time Whichever is earlier. In case of life insurance, the payment for life insurance

policy is certain. The Event insured against is sure to happen only the time of its happening is not

known. So life insurance is known as “Life Assurance”.The subject matter of insurance is life of

human being. Life insurance provides risk coverage to the life of a person. On death of the person

insurance offers protection against loss of income and compensate the titleholders of the policy.

1.3. TYPES OF LIFE INSURANCE: -

Term Insurance Policy

Whole life Insurance Policy

Endowment Policy

Pure Endowment Policy

Money Back Policy

Most of the products offered by Indian life insurers are developed and structured around these "basic" policies and are usually an extension or a combination of these policies.

Term Insurance Policy:- A term insurance policy is a pure risk cover for a specified period of time. What this means is that the sum assured is payable only if the policyholder dies within the policy term. For instance, if a person buys Rs 2 lakh policy for 15-years, his family is entitled to the money if he dies within that 15-year period. there is no element of savings or investment in such a policy. It is a 100 per cent risk cover. It simply means that a person pays a certain premium to protect his family against his sudden death. He forfeits the amount if he outlives the period of the policy. This explains why the Term Insurance Policy comes at the lowest cost.

Whole life Insurance Policy:- As the name suggests, a Whole Life Policy is an insurance cover

against death, irrespective of when it happens. Under this plan, the policyholder pays regular

premiums until his death, following which the money is handed over to his family.

This policy, however, fails to fulfill the additional needs of the insured during his post-retirement

years. It doesn't take into account a person's increasing needs either. While the insured buys the

policy at a young age, his requirements increase over time. By the time he dies, the value of the

sum assured is too low to meet his family's needs. As a result of these drawbacks, insurance firms

now offer either a modified Whole Life Policy or combine in with another type of policy

Endowment Policy:- Combining risk cover with financial savings, endowment policies is the

most popular policies in the world of life insurance.

In an Endowment Policy, the sum assured is payable even if the insured survives the policy term.

If the insured dies during the tenure of the policy, the insurance firm has to pay the sum assured just as any other pure risk cover.

Pure Endowment Policy:- A pure endowment policy is also a form of financial saving, whereby

if the person covered remains alive beyond the tenure of the policy, he gets back the sum assured

with some other investment benefits.

Money Back Policy:- These policies are structured to provide sums required as anticipated

expenses (marriage, education, etc) over a stipulated period of time. With inflation becoming a big

issue, companies have realized that sometimes the money value of the policy is eroded. That is

why with-profit policies are also being introduced to offset some of the losses incurred on account

of inflation.

A portion of the sum assured is payable at regular intervals. On survival the remainder of the sum assured is payable.

In case of death, the full sum assured is payable to the insured.

The premium is payable for a particular period of time..

In addition to the basic policy, insurers offer various benefits such as double endowment and marriage/ education endowment plans. The cost of such a policy is slightly higher but worth its value.

1.4. FUNCTION & CHARACTERSTICS OF INSURANCE:-

Provide protection:- The primary function of insurance is to provide protection against future

risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can

certainly provide for the losses of risk. Insurance is actually a protection against economic loss,

by sharing the risk with others.

Sharing of risk:- Insurance is an instrument to share the financial loss of few among many

others. Insurance is a mean by which few losses are shared among larger number of people. All

the insured contribute the premiums towards a fund and out of which the persons exposed to a

particular risk is paid.

Small capital to cover larger risk:- Insurance relieves the businessmen from security

investments, by paying small amount of premium against larger risks and uncertainty.

Contribute towards the Development of country :- Insurance provides development

opportunity to those larger industries having more risks in their setting up. Even the financial

institutions may be prepared to give credit to sick industrial units which have insured their

assets including plant and machinery.

Means of savings and investment:- Insurance serves as savings and investment, insurance is

a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the

purpose of availing income-tax exemptions also, people invest in insurance.

1.5. ROLE OF THE LIFE INSURANCE:-

Life insurance as an investment:- Insurance products yield more than any other investment

instruments and it also provides added incentives or bonus offered by insurance companies.

Life insurance as risk cover:- Insurance is all about risk cover and protection of life. Insurance

provides a unique sense of security that no other form of invest can provide.

Life insurance as tax planning:- Insurance serves as an excellent tax saving mechanism.

government gives tax relaxation on every life insurance policy.

1.6. IMPORTANCE OF THE LIFE INSURANCE:-

Protection against untimely death:- Life insurance provides protection to the dependents of

the life insured and the family of the assured in case of his untimely death. The dependents or

family members get a fixed sum of money in case of death of the assured.

Saving for old age:- After retirement the earning capacity of a person reduces. Life insurance

enables a person to enjoy peace of mind and a sense of security in his/her old age.

Promotion of savings:- Life insurance encourages people to save money compulsorily. When

life policy is taken, the assured is to pay premiums regularly to keep the policy in force and he

cannot get back the premiums, only surrender value can be returned to him. In case of

surrender of policy, the policyholder gets the surrendered value only, after the expiry of

duration of the policy.

Initiates investments:- Life Insurance Corporation encourages the public savings and

canalizes the same in various investments for the economic development of the country. Life

insurance is an important tool for the collection of small savings.

Credit worthiness:- Life insurance policy can be used as a security to raise loans. It improves

the credit worthiness of business.

Social Security:- Life insurance is important for the society as a whole also. Life insurance

enables a person to provide for education and marriage of children and for construction of

house. It helps a person to make financial base for future.

Tax Benefit:- Under the Income Tax Act, premium paid is allowed as a deduction from the

total income under section 80C.

1.7. CONTROLING AUTHORITY:-

Insurance Regulatory & Development Authority is regulatory and development authority

under Government of India in order to protect the interests of the policyholders and to regulate,

promote and ensure orderly growth of the insurance industry. It is basically a ten members'

team comprising of a Chairman, five full time members and four part-time members, all

appointed by Government of India. This organization came into being in 1999 after the bill of

IRDA was passed in the Indian parliament.

Composition of Authority:-

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority

(IRDA, which was constituted by an act of parliament) specify the composition of

Authority. IRDA was constituted by an act of parliament. The Authority is a ten member team

consisting of:

(a) a Chairman 

(b) five whole-time members 

(c) four part-time members 

(all appointed by the Government of India)

Powers and Functions of IRDA:-

It issues the applicants in insurance arena, a certificate of registration as well as renewal,

modification, withdrawal, suspension or cancellation of such registrations.

It protects the interests of the policy holders in any insurance company in the matters

related to the assignment of policy, nomination by policy holders, insurable interest, and

resolution of insurance claim, submission value of policy and other terms and proposals

in the contract.

It also specifies obligatory credentials, code of conduct and practical instructions for

mediator as well as the insurance company. Apart from this, it also defines the code of

conduct for the surveyors and loss assessors involved with the insurance business.

One of the major functions of IRDA includes endorsing competence in the insurance

business. Apart from this, upholding and regulating professional organizations in

insurance and re-insurance business is also a major duty of IRDA.

IRDA is also entitled to for asking information, undertaking inspection and investigating

the audit of the insurers, mediators, insurance intermediaries and other organizations

related to the insurance sector.

It is also concerned with the regulation of the rates, profits, provisions and conditions

that may be offered by insurers in respect of general insurance business if it is not

controlled or regulated by the Tariff Advisory Committee.

It is also entitled to supervise the functioning of the Tariff Advisory Committee.

IRDA specifies the terms and pattern in which books of accounts are to be maintained

and statement of accounts shall be provided by insurers and other insurance mediators.

It also regulates investment of funds by insurance companies as well as the maintenance

of margin of solvency.

It is also empowered to be involved in the arbitration of disagreements between insurers

and intermediaries or insurance intermediaries.

It is meant to specify the proportion of premium income of the insurer to finance

policies.

IRDA also specifies the share of life insurance business and general insurance business

to be accepted by the insurer in the rural or social sector.

Impact of IRDA on Indian Insurance Sector:-

The creation of IRDA has brought revolutionary changes in the Insurance sector. In last 10 years of its establishment the insurance sector has seen tremendous growth. When IRDA came into being; only players in the insurance industry were Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC), however in last decade 23 new players have emerged in the field of insurance. The IRDA also successfully deals with any discrepancy in the insurance sector.

CHAPTER 2

INTRODUCTION TO INDIAN INSURANCE INDUSTRY

2.1. INDIAN INSURANCE INDUSTRY:-

The Insurance sector in India governed by Insurance Act, 1938, the Life Insurance Corporation

Act, 1956 and General Insurance Business (Nationalization) Act, 1972, Insurance Regulatory and

Development Authority (IRDA) Act, 1999 and other related Acts. With such a large population

and the untapped market area of this population Insurance happens to be a very big opportunity in

India. Today it stands as a business growing at the rate of 15-20 per cent annually. Together with

banking services, it adds about 7 per cent to the country’s GDP .In spite of all this growth the

statistics of the penetration of the insurance in the country is very poor. Nearly 80% of Indian

populations are without Life insurance cover and the Health insurance. This is an indicator that

growth potential for the insurance sector is immense in India. It was due to this immense growth

that the regulations were introduced in the insurance sector and in continuation “Malhotra

Committee” was constituted by the government in 1993 to examine the various aspects of the

industry. The key element of the reform process was Participation of overseas insurance companies

with 26% capital. Creating a more efficient and competitive financial system suitable for the

requirements of the economy was the main idea behind this reform. Since then the insurance

industry has gone through many sea changes .The competition LIC started facing from these

companies were threatening to the existence of LIC .since the liberalization of the industry the

insurance industry has never looked back and today stand as the one of the most competitive and

exploring industry in India. The entry of the private players and the increased use of the new

distribution are in the limelight today. The use of new distribution techniques and the IT tools has

increased the scope of the industry in the longer run.

2.2. A BRIEF HISTORY OF INDIAN INSURANCE MARKET:-

Insurance has a long history in India. In India, insurance has a deep-rooted history. It finds mention

in the writings of Manu ( Manusmrithi ), Dharmasastra and Kautilya ( Arthasastra ). The writings

talk in terms of pooling of resources that could be re-distributed in times of calamities such as fire,

floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. 

Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company

began its operations in India. General Insurance was however a comparatively late entrant in 1850

when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be

broadly bifurcated into three eras: a)- Pre Nationalization b)- Nationalization and

c)- Post Nationalization. Life Insurance was the first to be nationalized in 1956. Life Insurance

Corporation of India was formed by consolidating the operations of various insurance companies.

General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of

India was set up as the controlling body with New India, United India, National and Oriental as its

subsidiaries. The process of opening up the insurance sector was initiated against the background

of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee

was formed during this year who submitted their report in 1994 and Insurance Regulatory

Development Act (IRDA) was passed in 999. Resultantly Indian Insurance was opened for private

companies and Private Insurance Company effectively started operations from 2001.

2.3. MILESTONES IN THE INSURANCE SECTOR:-

The business of life insurance in India in its existing form started in India in the year 1818 with

the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important

milestones in the life insurance business in India are given in the following table.

Years Important milestones in the Indian life insurance business

1912: The Indian Life Assurance Companies Act came into force for regulating the life

insurance business.

1928: The Indian Insurance Companies Act was enacted for enabling the government to

collect statistical information on both life and non-life insurance businesses.

1938: The earlier legislation consolidated the Insurance Act with the aim of

safeguarding the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies were taken over by the

central government and they got nationalized. LIC was formed by an Act of

Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that

too from the Government of India.

2.4. LIST OF INSURANCE COMPANIES WORKS IN INDIA:-

Following is the list of all life insurance company granted permission by IRDA. 

1. Bajaj Allianz Life Insurance Company Limited 

2. Birla Sun Life Insurance Co. Ltd 

3. HDFC Standard Life Insurance Co. Ltd 

4. ICICI Prudential Life Insurance Co. Ltd. 

5. ING Vysya Life Insurance Company Ltd. 

6. Life Insurance Corporation of India 

7. Max New York Life Insurance Co. Ltd 

8. Met Life India Insurance Company Ltd. 

9. Kotak Mahindra Old Mutual Life Insurance Limited 

10. SBI Life Insurance Co. Ltd 

11. Tata AIG Life Insurance Company Limited 

12. Reliance Life Insurance Company Limited. 

13. Aviva Life Insurance Co. India Pvt. Ltd. 

14. Sahara India Life Insurance Co, Ltd. 

15. Shriram Life Insurance Co, Ltd. 

16. Bharti AXA Life Insurance Company Ltd. 

17. Future Generali Life Insurance Company Ltd. 

18. IDBI Fortis Life Insurance Company Ltd. 

19. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd 

20. AEGON Religare Life Insurance Company Limited. 

21. DLF Pramerica Life Insurance Co. Ltd. 

22. Star Union Dai-ichi Life Insurance Comp. Ltd. 

23.India First Life Insurance Company Ltd.

2.5. HOW BIG IS THE INSURANCE MARKET?

The insurance sector was opened up for private participation four years ago. For years now, the

private players are active in the liberalized environment. The insurance market have witnessed

dynamic changes which includes presence of a fairly large number of insurers both life and non-

life segment. Most of the private insurance companies have formed joint venture partnering well

recognized foreign players across the globe. There are now 29 insurance companies operating in

the Indian market – 14 private life insurers, nine private non-life insurers and six public sector

companies. With many more joint ventures in the offing, the insurance industry in India today

stands at a crossroads as competition intensifies and companies prepare survival strategies in a

detariffed scenario. There is pressure from both within the country and outside on the Government

to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would

help JV partners to bring in funds for expansion. There are opportunities in the pensions sector

where regulations are being framed. Less than 10 % of Indians above the age of 60 receive

pensions. The IRDA has issued the first license for a standalone health company in the country as

many more players wait to enter. The health insurance sector has tremendous growth potential, and

as it matures and new players enter, product innovation and enhancement will increase. The

deepening of the health database over time will also allow players to develop and price products

for larger segments of society. Insurance is a Rs.400 billion business in India, and together with

banking services adds about 7% to India's Gap.

2.6. INDIAN SCENERIO:-

Indian economy is the 12th largest economy in the world, with a GDP of $1.25 trillion and 3rd

largest in terms of purchasing power. With factors like a stable 8-9 per cent annual growth,

rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI

inflows, it is on the hinge of an ever increasing growth curve. Indians have a tendency to invest

in properties and gold followed by bank deposits. They selectively invest in shares also but the

percentage is very small, 4-5%. This is itself is an indicator that growth potential for the

insurance sector is very high. It’s a business growing at the rate of 15-20% per annum and

presently is of the order of $47.9 billion. India is a vast market for life insurance that is directly

proportional to the growth in premiums and an increase in life density. With the entry of

private sector players backed by foreign expertise, Indian insurance market has become more

vibrant. Competition in this market is increasing with company’s continuous effort to lure the

customers with new product offerings. However, the market share of private insurance

companies remains very low, in the range of 10-15%. Even to this day, Life Insurance

Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of government

still dominates the market, with price controls, limits on ownership, and other restraints. The

upward growth trend started from 2000 was mainly due to economic policies adopted by the

then Indian government. In this year everyone saw the initiation of an era of economic

liberalization and globalization in the Indian economy followed by several reforms and long-

term policies that created a perfect roadmap for the success of Indian financial markets.

CHAPTER 3

INTRODUCTION TO

TATA-AIGLIFE INSURANCE COMPANY

3.1. TATA GROUP:-

The Tata group comprises over 90 operating companies in seven business sectors: communications

and information technology, engineering, materials, services, energy, consumer products and

chemicals. The group has operations in more than 80 countries across six continents, and its

companies export products and services to 85 countries.

The total revenue of Tata companies, taken together, was $67.4 billion (around Rs319,534 crore) in 2009-10, with 57 per cent of this coming from business outside India. Tata companies employ around 395,000 people worldwide. The Tata name has been respected in India for 140 years for its adherence to strong values and business ethics.

Every Tata company or enterprise operates independently. Each of these companies has its own board of directors and shareholders, to whom it is answerable. There are 28 publicly listed Tata enterprises and they have a combined market capitalization of about $97.99 billion (as on November 22, 2010), and a shareholder base of 3.4 million. The major Tata companies are Tata Steel, Tata Motors, Tata Consultancy Services (TCS), Tata Power, Tata Chemicals, Tata Global Beverages, Indian Hotels and Tata Communications.

Founded by Jamsetji Tata in 1868, Tata’s early years were inspired by the spirit of nationalism. It pioneered several industries of national importance in India: steel, power, hospitality and airlines. In more recent times, its pioneering spirit has been showcased by companies such as TCS, India’s first software company, and Tata Motors, which made India’s first indigenously developed car, the Indica, in 1998 and recently unveiled the world’s lowest-cost car, the Tata Nano.

3.2. TATA GROUP IN INSURANCE:-

The Late Sir Dorab ji Tata, was the founder Chairman of New India Assurance Co. Ltd.,

established in 1919. Government of India took over the management of this company as a part of

nationalization of general insurance companies in 1972. Not deterred by the move, Tata group

have ventured into risk management services having tied up with AIG group, back in 1977, with

the incorporation of Tata AIG Risk Management Services Pvt. Ltd.

3.3. AIG:-

American International Group, Inc. (AIG), is a major American insurance corporation based at the

American International Building in New York City. The British headquarters are located on

Fenchurch Street in London, continental Europe operations are based in La Defense, Paris, and its

Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was the 18th-

largest company in the world.

Company Background: AIG’s history dates back to 1919, when Cornelius Vander Starr

established an insurance agency in Shanghai, China. Starr was the first Westerner in Shanghai to

sell insurance to the Chinese. • In 1962, Starr gave management of the company's less than

successful U.S. holdings to Maurice R. \"Hank\" Greenberg, who shifted the company's U.S. focus

from personal insurance to high.1969. 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. Its member companies write a wide

range of commercial and personal insurance products through a variety of distribution channels in

over 130 countries and jurisdictions throughout the world. AIG's Life Insurance operations

comprise of the most extensive worldwide network of any life insurer. AIG's global businesses

also include financial services and asset management, including aircraft leasing, financial products,

trading and market making, consumer finance, savings products.

3.4. THE JOINT VENTURE - TATA-AIG:-

Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent has been

brought in by Tata Sons and the American partner brings in the balance 26 per cent. Mr. George

Oommen has been named managing director of Tata AIG Life. Tata-AIG plans to provide broad

array of life insurance plans to cover to both individuals and groups. The company headquartered

in Mumbai, with branch operations in Delhi, Chennai, Hyderabad, Bangalore Calcutta, Pune and

Chandigarh.

Tata AIG Insurance Solutions is one of the leading insurance companies that provide both life

insurance as well as general insurance. This pioneer company is a joint collaboration between the

American International Group, Inc. (AIG) and Tata Group. They own the company in the ratio of

26:74. It is a leading financial institution that has carved a niche for itself all over the world.

Tata AIG Insurance provides facilities to both corporate and individuals. Starting its operations on

April 1, 2001, it seeks to serve different categories of people. It acquired its license for carrying out

operations in India on February 12, 2001. Tata AIG Insurance Solutions is one of the most

prestigious organizations in the business world. It employs thousands of employees and offers

various opportunities to people to build a prospective career. As a leading name in the financial

world, it identifies the potential and experience of the individual. This insurance company

identifies the client’s needs and works accordingly. It stresses on innovative aspect and opening of

new markets.

Individual insurance.

Small business insurance.

Corporate insurance.

3.5. PRODUCTS OF TATA-AIG LIFE INSURANCE COMPANY:-

RISK PLANS

Tata AIG Life Raksha

Tata AIG Life Plus

Assure Lifeline Plans

RETIREMENT PLANS

Tata AIG Life Nirvana

Tata AIG Life Nirvana Plus

Tata AIG Life Assure Golden Year

Tata AIG Life Mahalife Gold

Tata AIG Life Easy Retire

WEALTH PLANS

Tata AIG Life Lakshya Supreme

Tata AIG Life Invest Assure Flexi Supreme

Tata AIG Life Invest Assure Plus Supreme

CHILD PLANS

Tata AIG Life Starkid

Tata AIG Life Assure Career Builder

Tata AIG Life Assure Educare

Tata AIG Life Assure 21 Money Saver Plan

HEALTH PLANS

Tata AIG Life Health First

Tata AIG Life Health Protector

Tata AIG Life Health Investor

Tata AIG Life Hospi Cash Back

SAVINGS PLANS

Tata AIG Life Maha Guarantee

Tata AIG Life Assure 10/20/30 Years Security & Growth

Tata AIG Life Assure Golden Years

Tata AIG Life Shubh Life

3.6. How Company Works:-

The TATA AIG life insurance company is an insurance company which basically work on two types of channel.

1. TRADITIONAL CHANNEL :-

There are many insurance company which works on traditional channel of marketing. The traditional channel is an old one and still useful in current scenario to move business towards

success due to its acceptability and ability. In traditional channel a company has a branch manager under which many sales manager and unit manager do their job and under the sales manager many agents perform their work. In traditional channel there is fix payout of branch manager and sales manager.

When we talk about insurance sector the traditional channel of marketing depends on three basics pillars.

Branch Manager :- An executive who is in charge of the branch office of a bank or financial institution. A branch manager is responsible for all of the functions of a branch office, like hiring employees, approving loans and lines of credit, marketing the branch, building a rapport with the community in order to attract business and assisting customers with account problems. A branch manager is also responsible for making sure that the branch's goals and objectives are met in time.

Sales Manager or Unit Manager :- Responsible for the development and performance of all sales activities in assigned market. Staffs and directs a sales team and provides leadership towards the achievement of maximum profitability and growth in line with company vision and values. Establishes plans and strategies to expand the customer base in the marketing area and contributes to the development of training and educational programs for clients and Account Executives.

Insurance Agent :- Insurance agents, who may be referred to as insurance sales agents, help clients choose insurance policies that suit their needs. Clients include individuals and families as well as businesses. Captive agents work for an insurance company, and only sell that company's products.

ADVANTAGE OF TRADITIONAL CHANNEL:-

A. It is broadly accepted.

B. Company provides a fix salary to its member.

C. Company has internal control on this channel.

LIMITATIONS OF TRADITIONAL CHANNEL:-

A. Lack of motivation.

B. Partly utilization of business capacity.

2. B.S.P. CHANNEL :-

BSP Channel of marketing in TATA-AIG LIFE INSURANCE COMPANY is a new concept of marketing

BSP channel is a channel of marketing which is introduced by TATA-AIG life insurance Company. TATA-AIG used it as an external channel to promoting its business. In this cannel company find out a person who has a good team of agents for business.

The BSP channel is totally managed by the BSP himself and company never gives them fixed Salary. Company always gives them commission on the basis of their business

The basic aim to use BSP channel for marketing by TATA AIG Life Insurance Company is to the reduction in the company’s expenses and increasing the business capacity of the company.

Often it has been seen that the traditional channels fail to approach some area like typical rural areas for business, but BSP is a person who is well established and well known face in his area. So he can increase companies business with the motive of earn something for himself.

The structure of BSP channel is as following.

And

B.S.P.

B.A.AGENT

BSP (Business Service Partner):- BSP is a operator of external marketing channel of TATA AIG life insurance Company which means “business service partner”. BSP is the supreme authority in the companies external channel of marketing. any person who has a team of minimum 10 peoples with him on first day can be a BSP of company but company gives preference to those people who has their own office, a team of minimum 10 people, a good and sound business background and a accountable turnover of their business.

A BSP receive four types of payout from the company.

1 Agent Identification and Recruitment Fees :- This is a onetime payout for BSP. It is provided to BSP for first five licensed agent who get recruited by the BSP himself called a direct agent. In this payout company gives Rs.500/new agent.

2 Development Bonus :-This is also a onetime payment. In this payout BSP earn commission on development his team. This is based on agent’s commission which he receives on the FYC of an insurance policy.

Commission of B.A. Bonus for BSP 1000 1000 5000 3500 10000 8500

3 Over Right Commission :- This is a monthly commission for BSP. At the end of every month BSP receives this commission from the company. Company gives up to 35% commission to BSP according to predefined payout structure. If a BSP has 60% active member (earn minimum 1000 as their commission) then company gives 150% of this 35% i.e. 52.5%.

4 Operational Expenses :-This is also a monthly payment for BSP. Company gives this payment to BSP by assuming that BSP has expenses to manage his team and etc. company gives this

B.A.

B.A. AGENTS

payment to BSP on the basis of the no. of active members (receives commission of minimum 1000 every month)in the team of BSP.

No. of active member OPEX for BSP1-4 1200/member.5-9 1500/member.10-19 1750/member.20-49 2000/member.50-above 2200/member.

B.A. (Business Associate):-

B.A. is a second position holder in the hierarchy of BSP channel which means business associate. In this BSP channel B.A’s are recruited by BSP and it is necessary that the B.A. has a team of minimum three people on first day.

The basic requirements to be a B.A.:-

He has to clear the IRDA exam. Having a team of minimum three people on first day which have cleared the IRDA exam. A contract in written with company.

A B.A. receives the following types or payouts from the company.

1 Development Bonus :- This is a onetime payment. In this payout BA earn commission on development his team. This is based on agent’s selling of product or on the FYP of an insurance policy.

Business or FYP DB for BA8000 100020000 4000 40000 9000

Etc.

2 Over Right Commission :-This is a monthly payment for BA. In this over right commission a BA can receives up to 30% of FYC of agents. If BA have a totally new team than company gives it double i.e. 30%*2=60%. And if this BA have 5 active members (sell policies of min. Rs. 1200/month) then company gives 150% of this 60% i.e. 90%.

3 Quarterly Bonus :-Company Gives up to 15% quarterly bonus on FYC of agents to BA according to predefined structure.

4 Annual Bonus :-Company gives up to 15% annual bonus on FYC of agents to BA according to predefined structure.

AGENT:-

An agent is the last stage of last member in BSP channel who sales the policies (companies product). Agent receives commission from the company on the basis of their performance. Any person who full fills the given requirements can join the company as an agent.

He has cleared the IRDA exam. Having an authorized license given by the company. Having completed the education till graduation.

Payouts of Agents:-

An agent simply gets only commission from the company as his compensation. The commission is totally based on his selling or his performance. This commission is vary from product to product. For example in

Mahalife Gold (Endowment Plan)

Year percent

1st year 27%

2nd year 6.5%

3rd year 6.5%

4th -15th year 5%

Invest Assured Flexi Supreme (ULIP Plan)

Year Percentage

First year 6%

Second year 6%

Raksha (Term Plan)

10%

Etc.

CHAPTER 4

Learning from the project

A project is an in-depth study of particular subject which is having a wide analysis of every area of subject. When we talk about the project of in the field of marketing management in a particular company, it will defiantly contain all about

Company. Company’s working process. Company’s product.

And in last the most important thing which is “practical application” of various marketing strategies.

During the SIP, I have learned the following

1. Segmentation :-

Segmentation is a process of dividing the whole market in two groups and selecting those groups which have the population which is suitable for the product .

During the SIP my task is to make BSP but every person can’t be a prospect for BSP because company gives preference to those person who have a good team and a sound business background.

So here I have learned segmentation by selecting hot prospects of BSP from the whole market

2. Targeting :-

Targeting is a further stage of marketing after the segmentation. A target market is a set of buyers having common needs that a marketing firm or a company wants to serve. It is seems like

segmentation but both are different. After segmentation we have some options/ groups but in targeting we choose only those option/ groups which we want to adopt as our target. In the SIP after segmentation, we have many options as our prospects such as,

CAs. BUSINESS FIRMS. INSURANCE/POSTOFFICE AGENTS. CONSULTANTS.

But in the process of targeting we left CAs and decide to approach.

BUSINESS FIRMS INSURANCE/POSTOFFICE AGENTS. CONSULTANTS.

So here I can say that I have learned targeting.

3. Positioning :-

Positioning is the process of making mindset of target market towards the product’s quality and company’s offering in a positive way. In other words we can say that positioning is selecting out the USPs of a product or a offer which can helpful to make is sellable or acceptable.

During the SIP I have to position my offer in the mind of targeted person so that he become agree to accept my offer .

For the purpose of positioning I founded some main points/ USPs for my offer such as,

A chance to be a part of TATA group. Offer for a position equivalent to a branch manager. A chance to be a team leader. A chance to earn money without any monetary investment. Offering various payouts from company.

Etc.

These are the points which I used to make a positive mindset about my offer to my BSP prospects. So here I can say that I have learned positioning.

4. Taking Appointment :-

Appointments mean taking a specific time for meeting from a person which is suitable for him.

The basic motive behind taking an appointment is Respect of privacy of everyone, the assumption that everyone is busy and the feeling of treating every one as a special one.

During the SIP my task of making BSPs is started with taking an appointment from the clients. For this purpose I used the following process.

Collects the data about cell/landline phone number. Make a phone call. If necessary than make phone call again. Take a specific time for meeting and be available that specific time.

LIMITATION OF THE STUDY:

Time limitation

B.S.P. can be search only in Indore.

Possibility of Error in segmentation & targeting.

Possibility of Error in data collection.

Don’t get proper response from potential B.S.P.

Possibility of failure in converting potential B.S.P into B.S.P..

Respondents error .

Limited resources

6.2. RFERENCES

For the references different books, journals, and newspapers have been used and different websites have been used.

Name of websites:

http://www.tata-aig.com/lifeinsurance

http://www.tata-aig-life.com/

https://apps.tata-aig-life.com/CP/news/current-news.jsp

http://www.irda.gov.in/ADMINCMS/cms/frmGeneral_List.aspx?DF=insprdts&mid=27.1

http://www.economy watch.com/insurance-overviewaccess

http://www.managementparadise.com/29381-distribution-channels-tata-aig.html

Name of book and journal:

IC 33 Life Insurance

Tata AIG Life Insurance Company Ltd, India, CGAP Working Group on Micro insurance

Name of newspaper:

The Hindu

The Economic Times,

Business Standard

Business Bhaskar

6.2. BENEFITS TO THE COMPANY AND US:

During the survey time sales have been done. It is a win-win Situation for both company and me.

The benefits of this summer internship program are discussed below.

1. Benefit to the company:

a

2. Benefit to us:

a) Doing internship in TATA AIG have given me immense experience in the insurance industry

for these 45 days.

b) Interaction with the customers for survey and sales has developed our marketing skills.

c) Working in the office premises has given exposure to corporate world and an experience in working in

corporate pressure

d) Learn how make tale call (open & closing)

e) Segmentation, positioning, targeting in market.