Transcript
PROJECT REPORT ON
³PROBLEM AND PROSPECTS OF INSURANCES AGENCIES ´ by NARPAL SINGH CHAUHAN ENROLLMENT NO. 249090039 In partial fulfillment of the requirements of final year MBA curriculum of Two years Full time MBA (Industry Integrated) Programme. Submitted to:
Through
STUDENT¶S DECLARATION
I hereby solemnly affirm, declare and state that report titled ³PROBLEM AND PROSPECTS OF INSURANCES AGENCIES ´ was done by me with due diligence and sincerity and this report based on that study is a bonafied work by me and submitted to ANNAMALAI UNIVERSITY through RAMAIAH INSTITUTE OF MANAGEMENT SCIENCES under the guidance and supervision of Prof. LAKSHMAN, Faculty RIMS is my original work and not submitted for the award of any other degree, diploma, fellowship or other similar title or prizes.
PLACE: DATE:
BANGALORE
Signature: ENROLLMENT NO. 2490900039
CERTIFICATE FROM THE GUIDE
This is to certify that the project report titled³PROBLEM AND PROSPECTS OF INSURANCES AGENCIES´ by NARPAL SINGH CHAUHAN, ENROLLMENT NO. 2490900039carried out in partial fulfillment for the award of degree of MBA (Industry Integrated) programme of Annamalai University at RIMS, Bangalore under my guidance and direction. This study report is an original work and not submitted earlier to any University/Institute.
PLACE: BANGALORE DATE:
Signature: Guide Name Prof. LAKSHMAN
ACKNOWLEDGEMENT
A project report seems to be an individual effort is in fact teamwork. Internship at ICICI Prudential Life Insurance Co. Ltd., Jaipur, was just like an opportunity to shake hand with the practical world of business. I am indebted to all those individuals who helped me in gaining knowledge & insight into various aspects of organization. The source of learning have been one too many & a complete list of individual references would become encyclopedic. I want to express my deepest gratitude to all marketing team in ICICI Prudential Life Insurance Co. Ltd., Jaipur, without their help this summer internship in ICICI would not be possible. My deepest appreciation also extends to Prof. U.N. LakshmanProject guide, Faculty of RIMS, who critically reviewed my project report & provided suggestions. Finally, I would express my gratitude towards my classmates, facility guide and my family members those always ready to help me out from any problem throughout my internship.
NARPAL SINGH CHAUHAN
TABLE OF CONTENTS
S. NO.
TOPIC
PAGE NO.
1 2 3 4 5 6 7
EXECUTIVE SUMMARY GENERAL INTRODUCTION INDUSTRY PROFILE FUTURE OF INDIAN INSURANCE MARKET COMPANY PROFILE ICICI PRUDENTIAL PRODUCT PROFILE PORTERS FIVE-FORCE OF INSURANCE INDUSTRY
1 3 8 24 25 32 39
8 9 10 11 12 13 14 15 16
SHARE OF PRIVATE INSURANCE PALYERS REVIEW OF LITERATURE RESEARCH METHODOLOGY DATA ANALYSIS & FINDINGS CONCLUSIONS & RECOMMENDATIONS LIMITATIONS BIBLIOGRAPHY APPENDIX ± I APPENDIX - II
41 46 52 55 68 72 73 74 75
EXECUTIVE SUMMARY
With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. It¶s a business growing at the rate of 15-20 per cent annually and presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per cent to the country¶s GDP. Gross premium collection is nearly 2 per cent of GDP and funds available with LIC for investments are 8 per cent of GDP.
Yet, nearly 80 per cent of Indian population is without life insurance cover, health insurance and non-life insurance continue to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. This itself is an indicator that growth potential for the insurance sector is immense.
A well-developed and evolved insurance sector is needed for economic development as it provides long-term funds for infrastructure development and at the same time strengthens the risk taking ability. It is estimated that over the next ten years India would require investments of the order of one trillion US dollar. The Insurance sector, to some extent, can enable investments in infrastructure development to sustain economic growth of the country.
With a large capital outlay and long gestation periods, infrastructure projects are fraught with a multitude of risks throughout the development, construction and operation stages. These include risks associated with project implementation, including geological risks, maintenance, commercial and political risks. Without covering these risks the financial institutions are not willing to commit funds to the sector, especially because the financing of most private projects is on a limited or non- recourse basis.
Insurance companies not only provide risk cover to infrastructure projects, they also contribute long-term funds. In fact, insurance companies are an ideal source of long-term debt and equity
for infrastructure projects. With long-term liability, they get a good asset- liability match by investing their funds in such projects.
IRDA regulations require insurance companies to invest not less than 15 percent of their funds in infrastructure and social sectors. International Insurance companies also invest their funds in such projects.
Insurance is a federal subject in India. There are two legislations that govern the sector- The Insurance Act- 1938 and the IRDA Act- 1999.
INTRODUCTION
GENERAL INTRODUCTION Meaning of Insurance
Insurance in which the risk insured against is the death of a particular person, the insured,upon whose death while the policy is in force, the insurance company agrees to pay a statedsum or income to the beneficiary. Insurance on human lives including endowment benefits, additional benefits in event of deathor dismemberment by accident or accidental means, additional benefits for disability, andannuities.
Why Life Insurance?
Buying Insurance cannot be compared with any other form of investment. Insurance gives onea life long benefit and the returns will definitely come but only when one needs it the most i.e.at the right time. Insurance is not about how much more it can offer you when the stock market is at its peak. Itmay not be an attractive investment option. But weigh the pros and cons and consider howmuch more it offers at a small price. Most important of all it provides you with that unique sense of security that no other form ofinvestment provides. It gives you a sense of financial support especially during that time ofcrisis irrespective of the fluctuations in the stock market. Insurance provides for career goalsright from childhood years.
If the earning member of the family is no more children s educational needs will not suffer. Infact his higher education too will be provided for. One need not spend sleepless nights thinkingabout how to save for his child's marriage. Life Insurance will take care of that typical once-in-a-life-time spending on marriages.
An accident or a disability may be devastating but an insurance policy can be of utmostsupport for the family during such times too. Besides it provides for additional benefits such asbonuses. One need not worry about your retirement years. The rising prices, taxes, and yourlifestyle will be taken care of easily. And you can relax and spend your old age in comfort andpeace. People invest in life insurance owing to a few key reasons, mainlyInsurance creates financial provisions for the deceased's dependants. Insurance provides for the policyholder's old age after his earning power diminishes.After all, interest rates may fall and invested holdings may lose value and stop gainingdividends, but the value of an insurance policy once set, never reduces. Insurance also provide a legally authorized way to reduce the incidence of Income Tax. Insurance as an Investment Agreed, insurance may not be the best place to invest your hard-earned money. But there aresufficient reasons for one to believe that it can be a highly lucrative avenue to facilitatesavings. People often talk about yield on investment and tend to compare their values with those available on various insurance schemes. This is particularly typical within the Indian sub- continent where one conveniently forgets the element of risk covered by life insurance.
It is extremely unfair to compare the performance of insurance against other investmentswithout considering the core features of insurance. The very essence of insurance is to protectyour family from the uncertainty of your life. Hence it proves very logical to evaluate the costsinvolved towards this feature. One must accept that out of the total amount paid by one for his life insurance, a certainamount is used for providing the risk cover and only the balance can be utilized as savings. Inother words, the total premium one pays minus the amount evaluated, as
the cost of insurancemust be considered as the amount invested to get the maturity amount.
What does life insurance have to offer?
Life insurance is many different things to many different people. For some, it is a premium tobe paid on time. For others it offers liquidity since cash can be borrowed when needed. For theinvestment-minded, it denotes a constantly growing capital account and numerous otherbenefits.
Life insurance is nothing but the creation of capital funds on an installment basis. Only here, the results are guaranteed. Life insurance is basically a property that is bought under acontract, accompanied by contractual guarantees that ensure large sums of money at thedeath of the insured. The contractual guarantee is the promise to pay, backed by one of the oldest and most stably regulated financial industry operating in the Indian sub-continent today. Insurance Buys Time and Money: People like to refer to life insurance as time insurance, thereason being that life insurance proceeds are paid to the insured's beneficiaries in case ofdeath. The money proffered by life insurance helps buy time to adjust to the change ofcircumstances. Insurance provides large amounts of cash that will keep the lifestyle for thesurvivors the way it was before the insured's death. InsuranceOffersPeace of Mind: For the person who buys an insurance policy, it offers absolute and complete peace of mind. He or she knows that the decision made by him willprovide sound benefits in the future, whether or not the individual may live to see it. The lifeinsurance policy will subsequently prove this in the future if and when funds are needed. Thisis the guarantee of the insurance contract.
Multiple Applications: The future is uncertain for each and every one. No one knows how long he or she will live. The investment benefit is paid to the insured's beneficiaries after hisdeath or it can be used during the life as well. Life insurance policy owners can turn to the cashvalue of the policy in case of a financial emergency when all avenues are either blocked ordenied. They know that they can avail of loans based on their insurance policies.
Insurance policy owners can use the cash value of their policies to meet their longtermfinancial needs as well. They may have purposefully invested in insurance to use the cash inthe policy for their children's future marriage expenses or higher education fees.
Enduring Elasticity:Since life insurance is flexible enough to serve several needs, the insured can keep several long-term goals in mind once he or she invests in the insurance plan.The cash value of the policy can be allocated towards augmenting the monthly income duringthe retirement years. Leisure years should be turned into pleasure years. Permanent lifeinsurance is designed on the concepts of long-term flexibility. Financial Security: The insurance policy offers contractual guarantees to people looking forpeace of mind when they buy life insurance. Life insurance offers complete financial security. The purchase of life insurance demonstrates concern for a family's future financial well being. Regard forFamily: The purchase of life insurance clearly displays care and concern for the people the policy owner loves. Insurance is Safer: No financial institution can do what life insurance does. No industry can back its products with reserves and surplus as sound as those of the insurance industry.
The proof of strength and safety that insurance companies have ensured even under the mostadverse of conditions is a matter of pride for the entire insurance industry. For generation aftergeneration, life insurance has been acclaimed as the very benchmark of security against whichthe other industries are measured.
INDUSTRY PROFILE
Insurance in India The insurance sector in India has come a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries.
A Brief history of 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 in India. 1912: The Indian Life Assurance For over 50 years, life insurance in India was defined and driven by only one company the Life Insurance Corporation of India (LIC). With the Insurance
Regulatory and Development Authority (IRDA) Bill 1999 paving the way for entry of private companies into both life and general sectors there was bound to be newfound excitement- and new success stories. Today, just three years since their entry, their cumulative share has crossed 13% (source: IRDA), far exceeding expectations. Clearly insurance is on a growth path. The percentage of premium income to GDP, which was just 2.3% in 2000-01 rose to 3.3% in 2002-03; and life insurance has emerged as the dominant contributor to this growth. The industry presented a huge opportunity. Life insurance penetration, for instance, was at an abysmal 22% of the insurable population. However, private players have had to rise to many challenges. They were faced with attitudinal barriers towards the category and the perception that insurance was only a tax saving tool. Insurance per se had lost it basic rationale: protection. It wasn¶t surprising then that its potential lay frozen and unexploited. The challenge for private insurance players was to change the established category driver and get customers to evaluate life insurance as an investment-coproduction tool.
Brief Review of Scenario ± Insurance Insurance in India started without any Regulation in Nineteenth century. It was story of a typical colonial era. A few British companies dominated the market mostly in large urban centers. Insurance was nationalized mainly on 3 counts First, Indian lives were not insured. Second, even if they were insured, they were treated as substandard lives and extra premium was charged. Third, there were gross irregularities in the functioning of Life insurance was nationalized in the year 1956, and then general insurance was nationalized in the year 1972. In 1999, the private insurance companies were allowed back again into insurance sector with
maximum cap of 26 percent foreign holding.1818 The British introduce to India, with the establishment of the Oriental Life Insurance Company in Calcutta. ¨ 1850 Non life insurance debuts, with Triton Insurance Company. ¨ 1870 Bombay Mutual life Assurance Society is the first Indian-owned life insurer ¨ 1907 Indian mercantile Insurance is the first Indian non-life insurer. ¨ 1912 The Indian life assurance companies¶ act enacted to regulate the life insurance business. ¨ 1938 the insurance act, which forms the basis for most current insurance laws, replaces earlier act. ¨ 1956 Life insurance nationalized, government takes over 245 Indian and foreign insurers and provident societies. ¨ 1956 Government sets up LIC ¨ 1972 Non life insurance nationalized, GIC set up. ¨ 1993 Malhotra committee, headed by former RBI governor R.N.Malhotra, set up to draw up a blue print for insurance sector reforms. ¨ 1994 Malhotra Committee recommends re-entry of private players, autonomy to PSU insurers. ¨ 1997 Insurance regulator IRDA (Insurance Regulatory and Development Authority) set up. ¨ 2000 IRDA starts giving licensed to private insurers ¨ 2001 ICICI Prudential Life Insurance came into the market to sell a policy. ¨ 2002 Banks were allowed to sell insurance plans, as TPAs enter the scene, insurers start settling non-life claims in the cashless mode.
The Insurance Regulatory and Development Authority (IRDA): Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidious stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies were the launch of the IRDA¶s online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered. With the demographic changes and changing life styles, the demand for insurance cover has also evolved taking into consideration the needs of prospective policyholder for packaged products. There have been innovations in the types of products developed by the insurers, which are relevant to the people of different age groups, and suit their requirements. Continued innovations in product development has resulted in a wide range of flexible products to meet the requirements for cover at different stages of life -today a variety of products are available ranging from traditional to Unit linked providing protection towards child, endowment, capital guarantee, pension and group solutions.
A number of new products have been introduced in the life segment with guaranteed additions, which were subsequently withdrawn/toned down; single premium mode has been popularized; unit linked products; and add-on/riders including accidental death; dismemberment, critical illness, fixed term assurance risk cover, group hospital and surgical treatment, hospital cash benefits, etc. Comprehensive packaged products have been popularized with features of endowment, money back, whole life, single premium, regular premium, rebate in premium for higher sum assured, premium mode rebate, etc., together with riders to the base products.
Historical Perspective Þ Prior to 1956 -242 companies operating Þ 1956 -Nationalization- LIC monopoly player -Government control Þ 2001 -Opened up sector
Contribution to Indian Economy ØLife Insurance is the only sector, which garners long term savings. ØSpread of financial services in rural areas and amongst socially less privileged. Ø Long-term funds for infrastructure.
ØStrong positive correlation between development of capital markets and insurance/pension structure. ØEmployment generation.
Insurance Industry prior to de-regulation Prior to deregulation in 2000, market was a public monopoly. ØPublic Monopoly - 2000 Offices - Over 800,000 agents ØDistribution through tied agents only ØSales approach primarily on a tax savings platform ØTraditional style product offering : Endowment and money back plans ØInadequate and inflexible products ØPensions: Small part of product offer ØLimited focus on customer needs
Improving Service Standards Pre Deregulation ± Limited Distribution Post Deregulation ± Service through Distribution
Insurance companies in India
IRDA has till now provided registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are considered then there are presently 13 insurance companies in the life side and 13 companies functioning in general insurance business. General Insurance Corporation has been sanctioned as the "Indian reinsurer" for underwriting only reinsurance business.
List of Insurance companies in India
LIFE INSURERS
Websites
Public Sector
Life Insurance Corporation of India
www.licindia.com
Private Sector
Allianz Bajaj Life Insurance Company Ltd.
www.allianzbajaj.co.in
Birla Sun-Life Insurance Company Limited
www.birlasunlife.com
HDFC Standard Life Insurance Co. Limited
www.hdfcinsurance.com
ICICI Prudential Life Insurance Co. Limited
www.iciciprulife.com
ING Vysya Life Insurance Company Limited
www.ingvysayalife.com
Max New York Life Insurance Co. Limited
www.maxnewyorklife.com
MetLife Insurance Company Limited
www.metlife.com
Om Kotak Mahindra Life Insurance Co. Ltd.
www.omkotakmahnidra.com
SBI Life Insurance Company Limited
www.sbilife.co.in
TATA AIG Life Insurance Company Limited
www.tata-aig.com
AMP Sanmar Assurance Company Limited
www.ampsanmar.com
Dabur CGU Life Insurance Co. Pvt. Limited
www.avivaindia.com
GENERAL INSURERS
Public Sector
National Insurance Company Limited
www.nationalinsuranceindia.com
New India Assurance Company Limited
www.niacl.com
Oriental Insurance Company Limited
www.orientalinsurance.nic.in
United India Insurance Company Limited
www.uiic.co.in
Private Sector
Reliance General Insurance Co. Limited
www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd.
www.royalsun.com
TATA AIG General Insurance Co. Limited
www.tata-aig.com
Cholamandalam General Insurance Co. Ltd.
www.cholainsurance.com
Export Credit Guarantee Corporation
www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd.
REINSURER
General Insurance Corporation of India
www.gicindia.com
Indian Insurance Market
The Indian insurance market in spite of having a history covering almost two centuries took a turn after the establishment of the Life insurance corporation in India in 1956. From being an open competitive market to being nationalized and then back to a liberalized market again, the insurance sector has witnessed all aspects of contest.
The Indian insurance market conventionally focused around life insurance until recently, a various range of other insurance policies covering sectors like medical, automobile, health and other classes falling under general insurance came up, generally provided by the private companies. The life insurance of India added 4.1% to the GDP of the economy in 2009, an immense growth since 1999, when the gates were opened for the private company in the market.
Private Insurers in Indian Insurance Market
Registration No.
Date of Registration
Name of the Company
101
23.10.2000
HDFC Standard Life
104
15.11.2000
Max New York Life
105
24.11.2000
ICICI Prudential Life
107
10.01.2001
Om Life
Kotak
Mahindra
109
31.01.2001
Birla Sun Life Insurance
110
12.02.2001
TATA Insurance
AIG
Life
111
30.03.2001
SBI Life Insurance
Competitor¶s Insurance Companies LIFE INSURANCE CORPORATION OF INDIA On January 19, 1956 the President of the Indian Union issued anordinance, providing for the taking over, in public interest, of theManagement of life insurance pending nationalization of suchbusiness, & the then Finance Minister explained the objectives ofnationalization of life insurance business. In June 1956, the parliament passed a bill for nationalization oflife insurance business in India and for setting up a corporation asthe sole agency for carrying on this business in India. Thecorporation, set up under this Act, is known as ³Life InsuranceCorporation of India´, which started functioning on September 1,1956.For the purpose of servicing of policies issued before September 1,1956, some integrated head offices & integrated branch office unitswere created. These offices have nothing to do with the policiesissued by the corporation. Corporation also took over foreign lifebusiness of the Indian insurers.
HDFC STANDARD LIFE INSURANCE COMPANY
HDFC Standard Life Insurance Co. Ltd. is a joint venture between HDFC, India¶s largest housing finance institution and Standard Life Assurance Company, Europe¶s largest mutual life company. HDFC manages Rs. 21,450 Crores in assets and Standard Life manages over US $100 billion in assets. Both the promoters are well known for their ethical dealings, their
financial strength and their commitment to be a long-term player in the life insurance industry.
MAX NEW YORK LIFE INSURANCE COMPANY Max New York Life Insurance Company is a joint venture between New York Life International Inc. and Max India Limited. New York Life, a Fortune 100 Company, is one of the world¶s experts in life insurance with over 156 years of experience in the business and over US$ 165 billion (Rs. 775,000 Crores) in assets undermanagement. Max India Limited is a multi-business corporate, focused on the knowledge, people, and service-oriented business of life insurance, healthcare and information technology.
OM KOTAK MAHINDRA LIFE INSURANCE Om Kotak Mahindra Life Insurance, a company under Kotak Mahindra Group is a 74:26 life insurance joint venture between Kotak Mahindra Finance Limited with Old Mutual, U.K.The philosophy of Om Kotak Mahindra is helping their customers take financial decisions at every stage in life. Their aim is toconsistently offer a wide range of innovative life insurance products, to help their customers remain financially independent, which is why they believe that freedom to take life on "Jeene Ki Aazadi".The alliance of Om Kotak Mahindra with Old Mutual has given it unmatched expertise in life insurance area. With 156 years of experience in life insurance business, Old Mutual is today an International Financial Service Group based in London.
BIRLA SUN LIFE INSURANCE COMPANY It is a joint venture of Aditya Birla Group and Sun Life Financial Services with the objective that
Insurance is not about something going wrong. It's often about things going right. One of the wonders of human nature is that we never believe anything can actually go wrong. Surely, life has its share of ifs. At Birla Sun Life however, we believe it has its equally pleasant share of buts as well. We at Birla Sun Life stand committed to helping you realize those happy moments, which make a life. Be it living the same lifestyle in your post retirement days or providing a secure future for your loved ones, in case something happens to you.
TATA AIG LIFE INSURANCE COMPANY Tata AIG is a joint venture that is backed by the Tata Group ± India¶s most respected industrial conglomerate, with revenues of more than US $8.4 billion, and American International Group, Inc. (AIG) ± the leading US-based international insurance and financial services organization, with a presence in over 130 countries and jurisdictions throughout the world. Tata AIG offers a gamut of innovative products in the Life Insurance sector.
SBI LIFE INSURANCE COMPANY SBI Life Insurance Company Ltd. is a joint venture betweenState Bank of India and Cardiff of France. SBI is the largest bank in India and Cardiff is a leading insurance company in France operating in 29 countries. Cardiff is a wholly owned subsidiary of BNP Paribas, the largest European Bank.
Policy Change in the Indian Insurance market
The Insurance Regulatory Development Act, 1999 (IRDA Act) allowed the entry of private companies in the insurance sector, which was so far the sole prerogative of the public sector
insurance companies. The act was passed to protect the concerns of holders of insurance policy and also to govern and check the growth of the insurance sector. This new act allowed the private insurance companies to function in India under the following circumstances: The company should be established and registered under the 1956 company Act The company should only the serve the purpose of life or general insurance or reinsurance business
y
y y
The minimum paid up equity capital for serving the purpose of reinsurance business has been decreed at Rs 200 crores
y
The minimum paid up equity capital for serving the purpose of reinsurance business has been decreed at Rs 100 crores
y
The average holdings of equity shares by a foreign company or its subsidiaries or nominees should not go above 26% paid up equity capital of the Indian Insurance Company.
Investment policy in the Indian insurance market
y
A policy known by the name of 'Health plus Life Combi Product', offering life cover along with health insurance has been granted permission by the IRDA act and insurance companies are allowed to provide it now.
y
The FDI limit in the insurance sector has been capped at 26% for the foreign marketers but the government is thinking to increase it to 49% and a bill of this offer is pending at the Rajya Sabha.
y
A low cost pension scheme is supposed to be formed by the Pension Fund Regulatory and Developmental Authority (PFRDA) on 1st April, 2010 to provide social security to the the poorer class.
y
The compulsory ceding by every General Insurance Corporation (GIC), would go on to stay at 10% under current regulations as specified by IRDA.
FUTURE OF INDIAN INSURANCE MARKET
As per the report of 'Booming Insurance Market in India' (2008-2011), concentration of insurance markets in many developed countries of the world has made the Indian insurance market more magnetic in terms of international insurance players. Furthermore, the report says Home insurance sector is likely to achieve a 100% growth since home insurance are made compulsory for housing loan approvals by the financial institutions.
y
y
In the coming three years Health insurance sector is all set to become the second largest business after motor insurance.
y
During the period of 2008-09 to 2010-11 the non life insurance premium is likely to have a growth of 25%.
COMPANY PROFILE
ICICI Bank is India¶s second-largest bank with total assets of about Rs.112.024 crore and a network of about 450 branches and offices and about 1750 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customer through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital, asset management and information technology. ICICI Bank¶s equity shares are listed in India on stock exchanges atChennai. Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New
York Stock Exchange (NYSE).ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly owned subsidiary. ICICI¶s shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank¶s acquisition of Bank of Mathura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank, In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the management of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group¶s universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity¶s access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payment system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI¶s strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, Particularly fee-based services, and access to the vast talent pool of ICICI Bank approved the merger of ICICI and two of its wholly-owned
retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, With ICICI Bank. Shareholders of ICICI and ICICI BANK approved the merger in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group¶s financing and banking operations, both wholesale and retail, have been integrated in a single entity. ICICI Bank is the only Indian company to be rated above the country rating by the international rating agency moody ³s and the only Indian company to be awarded an investment grade international credit rating. The Bank enjoys the highest AAA (or equivalent) rating from all Leading Indian rating agencies.
Prudential P.L.C.
Established in 1848, today prudential plc is a leading international financial services company with some 16 million customers, policyholders and unit holders and some 20,000 employees worldwide. In the UK Prudential is a leading life and pensions provider with around seven million customers. M&G was acquired by Prudential in 1999 and is the Group¶s UK and European fund manager, responsible for managing over of 111 billion of funds (as at December 2003). Launched by Prudential in 1998, Egg is an innovative financial services company, with over three million customers, with nearly six per cent of UK credit card balances. In Asia, Prudential is the leading European life insurer with 23 life and fund management operations in 12 countries serving some five million customers. In the US, Prudential owns Jackson National Life, a leading life insurance company, and has more than 1.5 millions policies and contracts in force. Prudential has brought to market an integrated range of financial services products that now includes life assurance, pensions, mutual funds, banking, investment management and general
insurance. In Asia, Prudential is UK´s Largest life insurance company with a vast network of 22 life and mutual fund operations in twelve countries ± China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam. Since 1923, Prudential has championed customer-centric products and services, supported by over 60,000 staff and agents across the region. Prudential plc¶s strong mix of business around the world positions us well to benefit form the growth in customer demand for asset accumulation and income in retirement. Our international reach and diversity of earnings by geographic region and product will continue to give us significant advantage.Our commitment to the shareholders who own Prudential is to maximize the value over time of their investment. We do this by investing for the long term to develop and bring out the best in our people and our businesses to produce superior products and services, our international peer group in terms of total shareholder returns. At Prudential our aim is lasting relationships with our customers and policyholders, through products and services that offer value for money and security. We also seek to enhance our Company¶s reputation, built over 150 years, for integrity and for acting responsibly within society.
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 Prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from insurance Regulatory Development Authority (IRDA). ICICI Prudential¶ s equity base stands at Rs.6.75 billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the year ended March 31,2004 the company had
issued over 430,000 policies, for a total sum assured of over Rs 8,000 crore and premium income in excess of Rs.980 crore. The company has a network of about 30,000 advisors; as well as 12 banc assurance tie-ups. Today the company is the number one private life insurer in the country.
Board Committees
Audit Committee
Board Governance & Remuneration Committee
Mr. Sridar Iyengar Mr. Narendra Murkumbi Mr. M. K. Sharma
Mr. N. Vaghul Mr. Anupam Puri Mr. M. K. Sharma Mr. P. M. Sinha Prof. Marti G. Subrahmanyam
Customer Service Committee Mr. N. Vaghul Mr. Narendra Murkumbi Mr. M .K. Sharma Mr. P. M. Sinha Mr. K. V. Kamath
Credit Committee
Mr. N. Vaghul Mr. Narendra Murkumbi Mr. M .K. Sharma Mr. P. M. Sinha Mr. K. V. Kamath
Fraud Monitoring Committee Mr. M. K. Sharma Mr. Narendra Murkumbi Mr. K. V. Kamath Ms. Kalpana Morparia Ms. Chanda D. Kochhar
Risk Committee
Mr. N. Vaghul Mr. Sridar Iyengar Prof. Marti G. Subrahmanyam Mr. V. Prem Watsa Mr. K. V. Kamath
Share Transfer & Shareholders'/ Investors' Grievance Committee Mr. M. K. Sharma Mr. Narendra Murkumbi Ms. Kalpana Morparia
Asset-Liability Management Committee
Ms. Lalita D. Gupte Ms. Kalpana Morparia Ms. Chanda D. Kochhar Dr. Nachiket Mor
Ms. Chanda D. Kochhar
Committee of Directors Mr. K. V. Kamath Ms. Lalita D. Gupte Ms. Kalpana Morparia Ms. Chanda D. Kochhar Dr. Nachiket Mor
ICICI PRUDENTIAL PRODUCTS PROFILE
Insurance solution for individuals« ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its 17 products cab is enhanced with up to 6 riders, to create a customized solution for each policyholder.
Savings Solutions« Secure plus is a transparent and feature-packed savings plan that offers 3 levels of protection. Cash Plus is a transparent, feature-packed savings plan that offers 3 levels of protection as well as liquidity options. Save n Protect is a traditional endowment savings plan that offers life protection along with adequate returns. Cash Back is an anticipated endowment policy ideal for meeting milestone expenses like a child¶s marriage, expenses for a child¶s higher education or purchase of an asset.
Protection Solutions« LifeGuard is a protection plan, which offers life covers at very low cost. It is available in 3 coupons ± level term assurance, level term assurance with return or premium and single premium.
Child Solutions« Smart kid child plans provide guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in the child¶s life. Smart Kid child planed are also available with in unitlinked form ± both single premium and regular premium.
Market-linked Solutions LifeLink is a single premium Market Linked Insurance Plan, which combines life insurance cover with the opportunity to stay, invested in the stock market. Life Time offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers 3 investment options ±Growth Plan, Income plan and Balance plan.
Retirement Solutions« Forever Life is a retirement products targeted at individual in there thirties. Secure Plus Pension is a flexible pension plan that allows one to select between 3 levels of cover.
Market-linked retirement products Life Time Pension is a regular premium market-linked pension plan. Life Link Pension is a single premium market linked pension plan. ICICI Prudential also launched ³Salaam Zindagi´, a social sector group insurance policy targeted at the economically underprivileged sections of the society.
Group Insurance Solutions« ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees.
Group Gratuity Plan« ICICI Pru¶s group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also customize to structure schemes that can provide benefits beyond the statutory obligations.
Group Superannuation Plan ICICI Bank offers flexible defined contribution superannuation scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options or opting for partial commutation of the annuity at the time of retirement.
Group Term Plan« ICICI Pru´s flexible group term solution helps provides affordable cover to members of group. The cover could be uniform or based on designation/rank or a multiple of salary. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death.
Flexible Rider Options ICICI Pru Life offers flexible riders, which can be added to the basic policy at marginal cost, depending on the specific of the customer.
Accident & disability benefit: If death occurs as the result of an accident during the term of the policy, the beneficiary receives an additional amount equal to the sum assured under the policy. If the death occurs while traveling in an authorized mass transport vehicle, the beneficiary will be entitled to twice the sum assured as additional benefit.
Accident benefit: This rider option pays the sum assured the rider on death due to accidents.
Critical Illness Benefit: protects the insured against financial loss in the event of 9 specified critical illnesses. Benefits are payable to the insured for medical prior to death.
Major Surgical Assistance Benefits: provides financial support in the event of medical emergencies, ensuring that benefits are payable to the life assured for medical expenses
Incurred for surgical procedures. Cove is offered against 43 different surgical procedures.
Income Benefit: This rider pays the 10% of the sum assured to the nominee every year, till maturity, in the event of the death of the life assured. It is available on SmartKid, SecurePlus and Cashplus.
Waiver of Premium: In Case of total and permanent due to an accident, the premiums are waived till maturity. This rider is available with Secure Plus and Cash Plus.
India and the World Market:
Unfortunately, the progress achieved by the life insurance industry in India, it compares unfavorably not just with the developed countries. But also even with the developing world. The global market for the life insurance is estimated to be around $ 1412.3 billions.
PORTERS FIVE-FORCE ANALYSIS
Porters fives forces model is an excellent model to use to analyze a particular environment of an industry. So for example, if we were entering the PC industry, we would use porter¶s model to help us find out about: 1.Competitive Rivalry 2.Power of suppliers 3.Power of buyers 4.Threats of substitutes 5.Threat of new entrants. The above five main factors are key factors that influence industry performance; hence it is
common sense and practical to find out about these factors before you enter the industry. Lets look at them below.
Competitive rivalry A starting point to analyzing the industry is to look at competitive rivalry. If entry to an industry is easy then competitive rivalry will likely to be high. If it is easy for customers to move to substitute products for example from coke to water then again rivalry will be high. Generally competitive rivalry will be high if: There is little differentiation between the products sold between customers. Competitors are approximately the same size of each other. If the competitors all have similar strategies. It is costly to leave the industry hence they fight to just stay in (exit barriers).
Power of suppliers Suppliers are also essential for the success of an organization. Raw materials are needed to complete the finish product of the Organisation. Suppliers do have power. This power comes from: If they are the only supplier or one of few suppliers who supply that particular raw material. If it costly for the organisation to move from one supplier to another (known also as switching cost). If there is no other substitute for their product.
Power of buyers Buyers or customers can exert influence and control over an industry in certain circumstances. This happens when: There is little differentiation over the product and substitutes can be found easily.
Customers are sensitive to price. Switching to another product is not costly.
Threat of substitutes Are their alternative products that customers can purchase over your product that offer the same benefit for the same or less price? The threat of substitute is high when: Price of that substitute product falls. It is easy for consumers to switch from one substitute product to another. Buyers are willing to substitute.
Threat of new entrant The threat of a new organisation entering the industry is high when it is easy for an organisation to enter the industry i.e. entry barriers are low. An organisation will look at how loyal customers are to existing products, how quickly they can achieve economy of scales, would they have access to suppliers, would Government legislation prevents them or encourages them to enter the industry. Legislation prevents them or encourages them to enter the industry.
PORTERS FIVE-FORCE OF INSURANCE INDUSTRY
Competitive rivalry: There is cut thought competitions among rivals in life insurance industry. There are mainly 13 private organizations and 1 public organization in life insurance competition. Insurance companies deal in identical policies as service levels offered are similar. Ministry of finance controls all the insurance companies that are in the industry at present hence there are less chance of exit.
Power of suppliers: § Policy designer tend to have less leverage to Bargain over premium. § Insurance is tax exempted so that suppliers bargaining power increases. § Solvency of private players is not certain.
Threat of Substitutes: §Customers deposits in their amount in to bank & post deposits & Purchase gold & silver §Investment in government securities §Money market investment §Capital market investment
Power of buyer: § Market is highly segmented
§ Insurance industry very return oriented and switches easily § High switching cost creates buyers lock in and makes a buyers bargaining power § Exercise bargaining leverage over premium
Threat of new entrants: Life insurance industry entry barriers is moderate The Indian market is highly brand oriented .so it is difficult to introduce new brand The acceptability of new brand is also very low Economies of scale is difficult to find in the initial stage of entry in to market Special permission is required from the government to enter in the insurance sector.
SHARE OF PRIVATE INSURANCE PALYERS
As per the figure available with IRDA reports for the period ended in August 2005, the 13 private
players have grabbed nearly 26% market share from LIC in terms of premium underwritten as against 17.70% in August 2004´ The list of insurer with premium underwritten, investment and their market share have been presented in table. Table shows that the life insurance market has collected Rs. 16,604cr as a fresh premium. It grew about 2.8 times bigger than he 3 players put together in terms of premium collection. It is still growing at the rate 26% per annum. It is relevant to that the market share by them. Out of 13 Pvt. Players, ICICI prudential has leading Pvt. Player in the Life insurance, invested Rs. 625 cr which is the highest investments among the private players and captured first position with 7.11% of the market share. Secondly, Max New York life has invested Rs. 305 cr and had failed to capture the second position in terms of market share and was satisfied with only 1.32% Followed by HDFC standard Life had invested Rs. 255 cr and 2.96% of the market share was captured and stood third position interims of investments and capturing market share. Allianz Bajaj has invested Rs. 250 cr and stands fourth in terms of investment but captured second position with 6.12% of the market share. This indicates that there is no relation between investment and acquiring market share and mere capital is not alone playing any significant role in terms of capturing market share. There may be some other variables like: (a) innovative schemes, (b) brand loyalty, (c) professionaloutlook, (d) transference in their transactions, etc. It can be noticed that the capital is not playing any attaching, kindly significant role in terms of premium collection and capturing market share. It seems to be Bajaj Allianz would occupy the first position in near future in terms of market share as well as annual growth rate. Chart 1 shows that. Among private players, the ICICI prudential has captured the 28% of the market share up to December 2005, followed by Allianz Bajaj with 23% and HDFC Standard Life with 11% TATA Aig life and Birla Sunlife with 7% each and remaining other players have captured less than 5% of market share.
4% 3% 7% 7%
2%
2% 2% 6% LIC 28% ICICI Pru. Life New York MaxLife 5% 11% 23% HDFC Standard Life Alliance Bajaj TATA AIG OM Kotak Mahindra AVIVA Life ING Vysya
It is interesting to note that Allianz Bajaj has achieved 264.09% annual growth rate in terms of premium collection and the fastest growing insurance players, followed by HDFC Standard with 143.1% and Metlife with 136.45%, and remaining other players have doubled their premium in a span of one year, whereas Birla Sunlife and SBI life have failed to collect the premium consistently and registered negative growth rates 7.93% and 2.48% respectively. Surprisingly, ICICI Prudential Co. has not been retrained in their leading position in 2005. The market share of the LIC has been declining since 2000, after opening up of the sector to private companies, LIC¶s higher market share in the number of policies sold compared with premium income, so it is to be inferred that the private players are cornering a larger share of high premium policies. Further all policymakers are expected that, insurance business will take wings under banc assurance but despite the belief SBI Life was registered negative 2.48% annual growth rate in corresponding period. It is need to be viewed serious by the RBI and IRDA authorities.
INSURANCE ADVISOR
³Persons who sell insurance policies, for a single insurance company, in return for a commission are called ADVISORS.´
Insurance Advisors are the bridge or the channel partners between the policyholder and insurance company. They make the base for the insurance company. In other words, it can be said that advisors are those people in the organization who can give business to the company.
They are the representatives of an insurance company who sells insurance. An insurance advisor locates prospective insurance customers, determines the insurance needs of each customer, and assists the customer in applying for insurance. Typically, an insurance advisor will deliver the policy when the application is approved, will collect the initial premium, and will provide customer service to policy owners. An advisor is also called a field underwriter or a life underwriter.
WHY TO BE AN ADVISOR?
No start up capital required Flexible working environment Be your own boss Unlimited earning potential
To be part of a world-class team
WHO CAN BE THE ADVISORS?
While making advisors for the company, certain characteristics have to be kept in mind. They are as under:
A person should be between the age group of 25-40 years. Should be a graduate or old SSC Pass. Should preferably be married. Should be a localite.
Apart from this, there is a certain target audience that has to be targeted: Chartered Accountants Company Secretaries Tax Consultants Businessmen Beauty Parlors Management Consultants Advocates Engineers Tour and Travels owners Air ticket bookings Two and Four wheeler finance companies Courier services Retailers of different products Computer Hardware Business Software Business Furniture shops
REVIEW OF LITERATURE
ICICI Prudential Life Insurance Company
ICICI Prudential Life Insurance is one of the largest Insurance networks in the country, and 2nd Life Insurance Company in India. The ICICI Group has been in existence since 1955 when ICICI Ltd., was created. ICICI Prudential started in 2002 as subsidiary of ICICI Ltd., Today ICICI Life Insurance has a customer base of 4 million with total assets exceeding Rs.1, 00,000 Cr. making it the 2nd largest life insurance company in the country, next only to LIC.
The Insurance sector, after the opening up, provides greater opportunities. Several global players have emerged and the market has changed significantly. In the changed scenario, the expectation is that the low Insurance premium as a percentage of GDP prevailing in India will improve and will offer better opportunities to the insurance players.
Life Insurance sector is one of the key areas where enormous business potential exists. In India currently the life insurance premium as a percentage of GDP is 1.3 per cent against 5.2 per cent in the US, but in the liberalized
scenario, the life insurance premiums were projected to grow at around 18% to 20% from Rs 215 billion in 199899 to Rs 592 billion in 2004-05 and to Rs.
1450 billion by 2009-10. Corporate non-life premium was projected to grow from Rs. 84 billion in 1998-99 to Rs 386 billion in 2009-10 and personal line non-life from Rs 4 billion to Rs 51 billion.
In the life Insurance segment the Life Insurance Corporation of India (LIC) is the major player. The LIC has 2050 branches. It is constituted in to seven Zones. Currently there are 5, 60,000 LIC agents in India. General Insurance is another segment, which has been growing at a faster pace.
Max New York Life Insurance Company New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States and one of the largest life insurers in the world. Headquartered in New York City, New York Life¶s family of companies offer life insurance, annuities and long-term care insurance. New York Life Investment Management LLC provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as institutional and retail mutual funds. The mission of New York Life is to maintain its superior 'financial strength', adhere to the highest standards of 'integrity' and demonstrate 'humanity' by treating its customers, agents and employees with compassion, consideration and respect. New York Life is one of the largest and strongest life insurance companies in the world with more than USD$215 billion assets under management and has received among the highest ratings for financial strength from the life insurance industry's principal rating agencies: A.M. Best (AA+), Standard & Poor's (AA+), Moody's (Aa1), Fitch (AAA). According to Moody's, "New York Life's rating reflects the company's good quality investment portfolio, ample liquidity, and sound capitalization, as well as the good growth potential of its international business.´
As a leader in the insurance industry, New York Life continues to bring to its operations new management concepts, advanced technologies, new distribution and training systems and innovative insurance products.
HDFC Standard Life
HDFC Standard Life, one of India's leading private life insurance companies, offers a range of individual and group insurance solutions. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India's leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom. HDFC Ltd. holds 72.43% and Standard Life (Mauritius Holding) Ltd. holds 26.00% of equity in the joint venture, while others hold the rest. HDFC Standard Life's product portfolio comprises solutions, which meet various customer needs such as Protection, Pension, Savings, Investment and Health. Customers have the added advantage of customizing the plans, by adding optional benefits called riders, at a nominal price. The company currently has 32 retail and 4 group products in its portfolio, along with five optional rider benefits catering to the savings, investment, protection and retirement needs of customers. HDFC Standard Life continues to have one of the widest reaches among new insurance companies with 568 branches servicing customer needs in over 700 cities and towns. The company has a strong presence in its existing markets with a base of 2,00,000 Financial Consultants.
Life Insurance Corporation of India Life Insurance in its modern form came to India from England in the year 1818. Oriental Life Insurance Company started by Europeans in Calcutta was the first life insurance company on Indian Soil. All the insurance companies established during that period were brought up with the purpose of looking after the needs of European community and these companies were not insuring Indian natives. The first two decades of the twentieth century saw lot of growth in insurance business. From 44 companies with total business-in-force as Rs.22.44 crore, it rose to 176 companies with total business-in-force as Rs.298 crore in 1938. It worked wonders with the performance of the corporation. It may be seen that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of new business. But with re-organization happening in the early eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum Assured on new policies. Birla Sun Life Insurance Company Established in 2000, Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group, a well-known and trusted name globally amongst Indian conglomerates and Sun Life Financial Inc, leading international financial services organization from Canada. The local knowledge of the Aditya Birla Group combined with the domain expertise of Sun Life Financial Inc., offers a formidable protection for its customers¶ future. The extensive reach through its network of 600 branches and 1,75,000 empanelled advisors. This impressive combination of domain expertise, product range, reach and ears on ground, helped BSLI cover more than 2 million lives since it commenced operations and establish a customer base spread across more than 1500 towns and cities in India. To ensure that our
customers have an impeccable experience, BSLI has ensured that it has lowest outstanding claims ratio of 0.00% for FY 2008-09. Additionally, BSLI has the best Turn Around Time according to LOMA on all claims Parameters. Such services are well supported by sound financials that the Company has. The AUM of BSLI stood at Rs. 8165 crs as on February 28, 2009, while as on March 31, 2009, the company has a robust capital base of Rs. 2000 crs.
SBI Life Insurance SBI Life Insurance is a joint venture between State Bank of India and BNP Paribas Assurance. SBI owns 74% of the total capital and BNP Paribas Assurance the remaining 26%. SBI Life Insurance has an authorized capital of Rs. 2,000 crores and a paid up capital of Rs 1,000 crores. Along with its 5 Associate Banks, State Bank Group has the unrivalled strength of over 16,000 branches across the country, arguably the largest in world.
BNP Paribas is the 1st largest French company and ranks 5th in the banking industry worldwide, 1st bank in Euro Zone as per Global 2000 Forbes¶ 2008. It is 6th most valuable international banking brand as per Brand Finance 2008.BNP Paribas Assurance is the insurance arm of BNP Paribas. BNP Paribas, part of the world¶s top 10 group of banks by market value and part of Europe top 3 banking companies, is one of the oldest foreign banks with a presence in India dating back to 1860. BNP Paribas Assurance is the fourth largest life insurance company in France, and a worldwide leader in Creditor insurance products offering protection to over 50 million clients. BNP Paribas Assurance operates in 41 countries mainly through the banc assurance and partnership model.
RESEARCH METHODOLOGY
Objective-
Main objective of the project is to find out the strategies of different insurance agencies and to evaluate them. Conclusion of this project can give an idea how strategies of different companies will work. Now days all the insurance companies are trying to establish themselves in the competitive market. They are introducing innovative marketing strategies to survive in the market. Many other private companies are looking to enter in the insurance market, so it is very essential to a company to innovate their marketing strategies in terms of ·Recruiting their advisors ·To make their advisors active ·Well educated and capable employee in the agency
·Marketing of their products ·Deployment of their products ·Targeting the right and potential customers ·Differentiating from other companies ·Future plan of the company
This study tries to find out the marketing strategies of different insurance companies. This research requires the interview of branch managers of different insurance companies and find out their branches are working in terms of above-mentioned factors.
Sampling Area:
The sampling areas of this research are Jaipur.
Sample size: The judgment samples size was 50 in which 50% people were salaried, 30% were students and 20% were self- employed.
In this section of my project, the requirement is to describe the sources of collecting primary and secondary data. For collecting primary data, method adopted was focus group method.
Sampling
Sample will be taken by judgment sampling. Judgment sampling is a process in which the selection of a unit, from the population is based on the pre judgment. This research requires the survey of different insurance agencies. So research concentrates on the branch or agency manager of different insurance companies.
Methodology-
Research is based on primary data. Secondary data can be used only for the reference. Research will be done based on primary data and will collect primary data with the branch and agency manager of different insurance agencies and branches. Giving structured questionnaire will do data collection. This study is based on judgment sampling.
DATA ANALYSIS & FINDINGS
Q.1.Do you have a Life Insurance Policy?
Criteria Yes
No. Of Respondents 50
No
0
As our sample is those people who have insurance so all the respondents are falling under the ³Yes´ criteria.
Q.2.Which Company¶s Insurance Policies do you have?
Company LIC Birla Sunlife SBI
No. of Respondents 50 2 3
ICICI Pru. Life Kotak Mahindra Post Office HDFC
10 3 15 3
No. of Respondents
60 50 40 30 20 10 0 No. of Respondents
As from the above chart it is very clear the all of the respondents have an insurance of the LIC while some of them have an insurance of the other companies like post Office, ICICI Prudential Life insurance Co., HDFC Co. Etc. The reason behind this is that the LIC competitor since more than four decades and the Indian Govt. allowed the Introduction of private player in Insurance in the year 2000.
Q.3What is amount of insurance premium you pay annually?
Criteria Below Rs. 10,000
No. of Respondents 11
10,000 to 20,000
18
20,000 to 30,000
6
30,000 to 40,000
5
Above 40,000
10
No. of Respondents
20 18 16 14 12 10 8 6 4 2 0
No. of Respondents
The analysis of the above available data is merely to find out the percentage of income that one is willing to invest in insurance.
Q.4Whatpriorities would you consider most important,while purchasing a policy?
Criteria/Rank 1
2
3
4
5
Total
Death Benefit
29
10
6
2
3
50
Children¶s Future
7
13
21
3
0
44
Retirement Planning
5
5
6
20
7
43
Tax Planning Financial
8 2
18 5
8 3
8 11
6 25
48 46
60 50 40 30 20 10 0 Total 1 2 3 4 5
From the table and chart it can be say that most of the people rank death benefit first for the decision to make investment in Insurance. Their second priority is tax planning because the premium, which is paid by the people towards Insurance, is deductible up to certain limit from the income and also the maturity amount is also tax free. The third and fourth priorities are children¶s future and retirement planning.
Q.5Do you have any knowledge of the stock market?
Criteria
No. of Respondents
Yes No
32 18
Q.6If ³Yes´ do you have any knowledge about unit linked insurance plans?
Criteria
No. of Respondents
Yes No
25 7
The question number 5 and 6 are designed to know the awareness of people who have knowledge of share market or deals in shares also have the knowledge of the new modern insurance product i.e. Unit Linked Insurance Plan. From the available data it can be say that those who deal in shares are also aware of the ULIP.
Q.7Is your current Insurance policy ³Unit Linked´ or ³Traditional?
Criteria
No. of Respondents
Only Unit Linked Only Traditional
0 39
Both
11
From the Q. No. 7 we can say that even though the modern products available in the market since more than two years and which are having the more flexibility and also giving the higher return than traditional one most of the people do not have or may be not aware of it which shows the lack of brand awareness and it requires an aggressive promotional efforts on the part of company. There is a lot of scope available for the company to attract more customers by giving or introducing most suitable ULIP products and at the same time increase the customer base.
Q.8If given a choice, where would you like to invest your money? (Please Rank Your Choice)
Choice/Rank 1 Mutual Fund Insurance Gold Equities Post Office Debenture Bank Deposit Other 0 4 4 17 22 0 0 10
2 1 12 8 3 12 2 6 5
3 5 14 1 0 12 4 12 0
4 1 4 2 5 2 10 19 2
5 25 8 2 2 2 1 1 1
6 12 3 5 6 0 14 0 0
7 5 0 13 1 0 2 3 0
8 1 0 13 0 0 0 1 2
Total 50 45 48 34 50 33 42 20
60 50 40 30 20 Debenture 10 0 1 2 3 4 5 6 7 8 Total Bank Deposit Other Mutual Fund Insurance Gold Equities Post Office
This question is mainly designed to know the investment priorities of the people of Jaipur town. The objective behind this Q. is that after the Charotar Nagrik Co-operative Bank and other Credit Societies, which are giving higher interest on deposits, the whole scenario of city is changed. Most of the people prefer to invest in post office saving schemes and where their money is safe even though the return is very less. So there is a great need to divert the efforts of the company towards the safety and security as ICICI Prulife is a private insurance Company.
Q.9According to you what are the factors that would affect you decision while purchasing an insurance policy?
Criteria/Rank 1
2
3
4
5
50
Premium Return Safety Liquidity Market Condition
12 21 20 1 1
15 17 14 1 2
15 8 15 9 0
6 2 1 18 16
2 2 0 21 21
50 50 50 50 40
60 50 40 30 20 Series4 10 0 Series5 Series6 Series1 Series2 Series3
The question No. 9 is designed to know which the factors are affecting the most to the prospect while making decision to invest in insurance. As far as investment in insurance is concerned most of the people want that it should be safe and at the same time giving the compatible returns because insurance is not only for death benefit it is also a saving tool for future. So the mix response of respondents is welcomed. Available data is such that there is a bit ambiguity.
But we can say that the most affecting factors to the prospect are return and safety. As per the finance theory risk and return goes in hand in hand but as far as insurance is concerned it is all about the compatible and safe returns over others.
Q. 10Are you or ay of your family members are planning to buy an insurance policy in near future?
Criteria
No. of Respondents
Yes No
13 37
This question is taken to collect the information of those respondents who are going to plan to purchase insurance within near future that is used by the company for making personal contact for sale.
Q. 11Are your needs satisfied with your current investment in insurance?
Criteria
No. of Respondents
Yes No
10 30
Q. 11(a)If ³No´, then gives reasons?
Criteria
No. of Respondents
High Premium Low Return Poor Services Others
0 1 7 2
No. of Respondents
30%
13% 10% Television
47%
Sales Re resentative Others source
The question No.11 and 12 are designed to know the percentage of people who are not satisfied with the current investment in insurance and also to know the reasons behind it. So that the company can focus on those areas where the competitors fail. Because now a days the competition is very stiff in the insurance industry. All companies are trying to attract more customers by anyhow. So it will be useful for designing the promotional schemes of the company. From the above table and chart it can be seen that the respondents who are dissatisfied give the main reason behind it are poor services. There are many others reasons like more time taken by the company for claim settlement, no displacement of cheques and other important vouchers, etc. So the company can improve upon these and increase its market share by offering quality service tothe customers.
Q. 12.Do you know anything ICICI Prudential Life Insurance?
£ £¢ ¡
e s a er
Criteria
No. of Respondents
Yes No
30 20
Q. 13If ³Yes´, from where did you come to know about the company?
Criteria Television News Paper Sales Representative Others source
No. of Respondents 4 3 14 9
0.5 0.45 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 1 2 3 4 5 6 7 8 9 13% 10% 30% 47% No. of Respondents
Q. 14 What do you feel about ³ICICI Prudential Life Insurance? (Open Ended)
The question No.13 and 14 are designed to know the company awareness the respondents of the city and also the source of awareness. But I felt very much difficulty while filling up these questions because most of the people know about the company but they know it as an ICICI Bank not as adifferent identity. So there is a great need to design the advertisement campaignin such a way that it will create the different image of the company. The main reason behind this is that the image of ICICI Bank in city is such that most of the people ask for charges first than the service that it provides.
CONCLUSIONS & RECOMMENDATIONS
Conclusions
In the due course of my summer training I met with around 250 people in the course duration of 90 days. In the course duration of that time period I come to the conclusion that most of the people are having eager to earn more than their current status, but they are not getting any kind right way where they move, in which mode they earn what they need in a legal and better way. Many of them as and when they know about the beneficial aspects of becoming an insurance advisor they grab this opportunity in oneway or other.
This study concluded that most of the people who are salaried are more interested in becoming an insurance advisor than self-employed and students.
In the case of family size a person who is having more than 6 members in the family are more interested than other size less mentioned size.
In the case of persons having sales-experience they are more interested than many that were not having any kind of sales- experience in corporate.
As the point of sales experience of any kind of financial products there are lot of persons having no kind of such.
in the duration of our summer training we concluded followings:
# Most of the people were not having any kind of sales experience to be an insurance advisor.
# The persons having more members in the family were more interested to be insurance advisor.
# Students and self-employed persons are more interested in this business opportunity as their future career.
# Most of the people can¶t devote their time in regular training program.
# We have recruited twelve insurance advisors and they are actively working.
Recommendations
Expand Distribution Network In Semi Rural Areas - Start business in all small towns. Target Semi Rural Market - Offer agencies to localite people.
- Open operation offices with highly educated team.
OTHER RECOMMENDATIONS
1. Provide lower premium policies so that we could target middle class people and generate good cash flow for further growth. As per BCG matrix to ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. ICICI Prudential has highgrowth product in urban market but company should follow the low growth product strategy also in urban market. 2. Start advertisement campaign again on television, radio and Internet also. Do intensive marketing for business opportunity and products both. 3. Keep more seminar and target LI/GI agents, CAS, Tax consultant financial investor etc. 4. Provide best motivation to Agency holders. 5. Build trust upon customers through services and transparency in investment and other policy. 6. Provide all branches in local language. 7. Provide part time training. 8. Focus on any mass marketing activity for generating awareness of company among people and offering them business opportunity too. 9. Hold stalls activity in different places. 10. Do some social activities through which company could get benefit of marketing indirectly.
11. Try to collect data of Life/General insurance agents across India and invite them to associating with ICICI Prudential.
LIMITATIONS
·Companies did not disclose their secrets data and strategies. ·Possibility of Error in data collection. ·Possibility of Error in analysis of data due to small sample size.
BIBLIOGRAPHY
Kothari C.R.´Research Methodology-methods and techniques´. Third edition, 2005 Kotler Philips,´ Marketing Management´. Eleventh revised edition, 2002 Web sites www.icici.com www.irdaindia.org www.indiacore.com
www.iciciprulife.com
Magazines
Business India
Economic Times Material provided by the company Survey
Search Engines
www.google.com www.yagoohoogle.com www.altavista.com
APPENDIX ± I Questionnaires
Q.1. Do you have a Life Insurance Policy? Yes ( ) No ( )
Q.2. Which Company¶s Insurance Policies do you have? (Please specify the numbers) LIC ( ) SBI Life Insurance ( )
HDFC Standard Life Birla Sunlife Cholamandalam TATA AIG Insurance ING Vysya AVIVA Life ( )
( ) ( ) ( ) ( ) ( )
New York MaxLife Alliance Bajaj
( ) ( )
ICICI Pru. Life Insurance ( ) MetLife Insurance OM Kotak Mahindra AMP Sanmar ( ) ( ) ( )
Q.3 what is amount of insurance premium you pay annually?
Amount
Q.4 What priorities would you consider most important, while purchasing apolicy? (Please Rank Your Choice) Death Benefit ( ) ( ) ( ) ( ) ( ) ( )
Children¶s Education Retirements Benefit Tax Planning Financial Planning All of above
Q.5 have you any knowledge of the stock market? Yes ( ) No ( )
Q.6 If ³Yes´ do you have any knowledge about unit linked insurance plans? Yes ( ) No ( )
Q.7 Is your current Insurance policy ³Unit Linked´ or ³Traditional? Yes ( ) No ( )
Q.8 If given a choice, where would you like to invest your money? (Please Rank Your Choice) Mutual Funds Insurance Policies Gold Equities ( ) ( ) ( ) ( ) Post Office Schemes Debentures Banks (FD¶s etc.) ( ) ( ) ( )
If other (specify) ___________
Q.9 According to you what are the factors that would affect you decision while purchasing an insurance policy?(Please Rank Your Choice) Premium Return ( ) ( )
Safety Liquidity Market Condition
( ) ( ) ( )
Q. 10 Are you or any of your family members are planning to buy an insurance policy in near future? Yes ( ) No ( )
Q. 11 Are your needs satisfied with your current investment in insurance? Yes ( ) No ( )
Q. 11 (a) If ³No´, then give reasons? High Premium Low Return ( ) ( ) Poor Services ( )
Other Reasons___________
Q. 12 Do you know anything ICICI Prudential Life Insurance? Yes ( ) No ( )
Q. 13 If ³Yes´, from where did you come to know about the company? T.V. ( ) Newspaper ( ) Magazine ( )
Radio
( )
Internet
( )
Hoarding
( )
Others (Please Specify)_____________________________
Q. 14 What do you feel about ³ICICI Prudential Life Insurance? ______________________________________________________________
APPENDIX - II
PROJECT SYNOPSIS ON ³Problem and prospects of Insurances agencies´(Rajasthan) By Narpal Singh Chauhan Enrolment No: - 2490900039 In partial fulfillment of the requirements of Second year MBA curriculumOf Two years Full time MBA (Industry Integrated) ProgramUnder the guidance of
Prof. Lakshman
ANNAMULAI UNIVERSITY Through
RAMAIAH INSTITUDE OF MANAGEMENT STUDIES
Title-
Problem and Prospects of Insurance agencies. (Rajasthan)
Problem StatementDifferent agencies of different insurance companies are having some strategies to survive in the market. Their strategies may be in the form of: ·How they target their customers. ·How they make their advisors active.
·How they make their operational and sales department effective. ·How they promote their employees.
·How they handle the conflict in agency.
Objective-
Main objective of the project is to find out the strategies of different insurance agencies and to evaluate them. Conclusion of this project can give an idea how strategies of different companies will work. Now days all the insurance companies are trying to establish themselves in the competitive market. They are introducing innovative marketing strategies to survive in the market. Many other private companies are looking to enter in the insurance market, so it is very essential to a company to innovate their marketing strategies in terms of ·Recruiting their advisors ·To make their advisors active ·Well educated and capable employee in the agency ·Marketing of their products ·Deployment of their products ·Targeting the right and potential customers ·Differentiating from other companies ·Future plan of the company
This study tries to find out the marketing strategies of different insurance companies. This research requires the interview of branch managers of different insurance companies and find out their branches are working in terms of above mentioned factors.
Methodology-
Research is based on primary data. Secondary data can be used only for the reference. Research will be done based on primary data and will collect primary data with the branch and agency manager of different insurance agencies and branches. Data collection will be done by giving structured questionnaire. This study will be based on judgment sampling.
Sampling
Sample will be taken by judgment sampling. Judgment sampling is a process in which the selection of a unit, from the population is based on the pre judgment. This research requires the survey of different insurance agencies. So research concentrates on the branch or agency manager of different insurance companies.
Limitations-
·Companies did not disclose their secrets data and strategies. ·Possibility of Error in data collection. ·Possibility of Error in analysis of data due to small sample size.