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PART-I
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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes and growth in the years
ahead. Delivering service, building trust and being innovative are key areas in which any
company will have to excel in order to do well in the long road ahead. Different companies
will take different approaches and it would be myriad of solutions that will be found to delight
the Indian customer.
During the first part, I was given complete classroom training about the various unit linked as
well as the traditional plans and solutions which the company offers.
Later, Market Research was done through various activities and tele-calling which are
discussed further in the report. Activities led to practical exposure and taught me the aspects of
customer dealing.
Finally, interesting conclusions were drawn out of the data collected regarding the Awareness
of Financial Planning among the people in today’s environment.
It was great experience because selling an insurance product demands a great deal of
confidence and product knowledge.
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INDUSTRY PROFILE
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INDUSTRY PROFILE
Overview
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.
Together with banking services, it adds about 7 percent 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 per cent of Indian population is without life insurance cover while health
insurance and non-life insurance continues 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 it-self is an indicator that growth potential for
the insurance sector is immense.
Historical Perspective
The insurance came to India from UK; with the establishment of the Oriental Life insurance
Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body
that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16
foreign and 75 provident firms were been established in India. Then the central government
took over these companies and as a result the LIC was formed. Since then LIC has worked
towards spreading life insurance and building a wide network across the length and the breath
of the country.
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Important milestones in the life insurance business in India:
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life
insurance business.
1956: 245 Indian and foreign insurers and provident societies were taken over by the central
government and nationalized. LIC formed by an Act of Parliament- LIC Act 1956- with a
capital contribution of Rs.5 cr. from the Government of India.
Important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up- the first company to transact all classes of
general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India, frames a code
of conduct for ensuring fair conduct and sound business practices.
1972: The general insurance business in India nationalized through The General Insurance
Business (Nationalization) Act, 1972 with effect from 1st January 1973. 107 insurers
amalgamated and grouped into four companies- the National Insurance Company Limited, the
New India Assurance Company Limited, the Oriental Insurance Company Ltd. and the United
India Insurance Company Ltd. GIC incorporated as a company.
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Insurance Sector Reforms
Prior to liberalization of Insurance industry, Life insurance was monopoly of LIC.
In 1993, Malhotra Committee- headed by former Finance Secretary and RBI Governor R.N.
Malhotra- was formed to evaluate the Indian insurance industry and recommend its future
direction. The Malhotra committee was set up with the objective of complementing the reforms
initiated in the financial sector. The reforms were aimed at creating a more efficient and
competitive financial system suitable for the requirements of the economy keeping in mind the
structural changes currently underway and recognizing that insurance is an important part of
the overall financial system where it was necessary to address the need for similar reforms. In
1994, the committee submitted the report and some of the key recommendations included:
Structure
Government stake in the insurance Companies to be brought down to 50%. Government should
take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as
independent corporations.
Competition
Private Companies with a minimum paid up capital of Rs.1 billion should be allowed to enter
the sector. No Company should deal in both Life and General Insurance through a single
entity. Foreign companies may be allowed to enter the industry in collaboration with the
domestic companies.
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Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set up.
Controller of Insurance- a part of the Finance Ministry- should be made independent
Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to
50%. GIC and its subsidiaries are not to hold more than 5% in any company (there current
holdings to be brought down to this level over a period of time)
Customer Service
LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be
encouraged to set up unit linked pension plans. Computerization of operations and updating of
technology is to be carried out in the insurance industry.
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STATISTICS (INDIAN & GLOBAL)
This section gives the users important and detailed statistics of the Indian as well as the Global
insurance industry. These statistics would give important insights of where the respective
markets are headed for.
The global life insurance market stands at $1,521.2 billion while the non-life insurance
market is placed at $922.4 billion.
The United States itself accounts for about one-third of the $2443.6 billion global
insurance market and Japan stands next with a 20.62% share.
India takes the 23rd position with US $9.933 billion annual premium collections and a
meager 0.41% share.
Out of one billion people in India, only 35 million people are covered by insurance.
India's life insurance premium as a percentage of GDP is just 1.77 per cent.
The income derived by GIC and its subsidiary companies through investment was
Rs.2491.76 crore and the investable fund generated was Rs.2843 crore in 1999-2000.
Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 7
per cent real annual growth in GDP.
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NATURE OF INDUSTRY
The insurance industry provides protection against financial losses resulting from a variety of
perils. By purchasing insurance policies, individuals and businesses can receive reimbursement
for losses due to car accidents, theft of property, and fire and storm damage; medical expenses;
and loss of income due to disability or death.
The insurance industry consists mainly of insurance carriers (or insurers) and insurance
agencies and brokerages. In general, insurance carriers are large companies that provide
insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell
insurance policies for the carriers.
Insurance companies assume the risk associated with annuities and insurance policies and
assign premiums to be paid for the policies. In the policy, the companies states the length and
conditions of the agreement, exactly which losses it will provide compensation for, and how
much will be awarded.
The premium charged for the policy is based primarily on the amount to be awarded in case of
loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be
able to compensate policyholders for their losses, insurance companies invest the money they
receive in premiums, building up a portfolio of financial assets and income-producing real
estate which can then be used to pay off any future claims that may be brought.
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There are two basic types of insurance carriers: Direct and Reinsurance.
Direct carriers are responsible for the initial underwriting of insurance policies and annuities,
while Reinsurance carriers assume all or part of the risk associated with the existing
insurance policies originally underwritten by other insurance carriers.
Direct insurance carriers offer a variety of insurance policies.
Life insurance provides financial protection to beneficiaries—usually spouses and dependent
children—upon the death of the insured.
Disability insurance supplies a preset income to an insured person who is unable to work due
to injury or illness
Health insurance pays the expenses resulting from accidents and illness.
An Annuity (a contract or a group of contracts that furnishes a periodic income at regular
intervals for a specified period) provides a steady income during retirement for the remainder
of one’s life.
Property-casualty insurance protects against loss or damage to property resulting from
hazards such as fire, theft, and natural disasters.
Liability insurance shields policyholders from financial responsibility for injuries to others or
for damage to other people’s property. Most policies, such as automobile and homeowner’s
insurance, combine both property-casualty and liability coverage. Companies that underwrite
this kind of insurance are called property-casualty carriers.
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What is Life Insurance?
Human life is subject to risks of death and disability due to natural and accidental causes.
When human life is lost or a person is disabled permanently or temporarily, there is a loss of
income to the household. The family is put to hardship. Risks are unpredictable.
Death/disability may occur when one least expects it. There are a number of life insurance
products which offer protection and also coupled with savings.
A Term insurance product provides a fixed amount of money on death during the period of
contract.
A Whole Life insurance product provides a fixed amount of money on death.
An Endowment Assurance product provided a fixed amount of money either on death during
the period of contract or at the expiry of contract if life assured is alive.
A Money Back Assurance product provides not only fixed amounts which are payable on
specified dates during the period of contract, but also the full amount of money assured on
death during the period of contract.
An Annuity product provides a series of monthly payments on stipulated dates provided that
the life assured is alive on the stipulated dates.
A Linked product provides not only a fixed amount of money on death but also sums of
money which are linked with the underlying value of assets on the desired dates.
There are a variety of life insurance products to suit to the needs of various categories of
people—children, youth, women, middle-aged persons, old people; and also rural people, film
actors and unorganized laborers.
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Life insurance products could be purchased from registered life insurers notified by the IRDA.
Insurers appoint insurance agents to sell their products.
As per regulations, insurers have to give the various features of the products at the point of
sale. The insured should also go through the various terms and conditions of the products and
understand what they have bought and met their insurance needs. They ought to understand the
claim procedures so that they know what to do in the event of a loss.
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INDIAN INSURANCE SECTOR
REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals with insurance
business in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority
Act, 1999.
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
fastidiously stuck to its schedule of framing regulations and registering the private sector
insurance companies.
The other decision taken simultaneously to provide the supporting systems to the insurance
sector and in particular the life insurance companies was the launch of the IrDA’s online
service for issue and renewal of licenses to agents. Since being set up as an independent
statutory body the IRDA has put in a framework of globally compatible regulations.
MISSION-IRDA
“To protect the interests of the policyholders, to regulate, promote and ensure orderly
growth of the insurance industry and for matters connected therewith or incidental
thereto.”
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IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the colors in the dull industry.
The initiatives taken by the private players are very competitive and have given immense
competition to the on time monopoly of the market LIC. Since the advent of the private players
in the market the industry has seen new and innovative steps taken by the players in this sector.
The new players have improved the service quality of the insurance. As a result LIC down the
years have seen the declining phase in its career. The market share was distributed among the
private players. Though LIC still holds the 79% of the insurance sector but the upcoming
natures of these private players are enough to give more competition to LIC in the near future.
LIC market share has decreased from 95% (2002-03) to 81 %( 2004-05).
LIC has the current market share of 79%.
Among the private players ICICI Prudential has the maximum of appx. 5.60%
Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life of about 3.11%.
Below is the table that shows the market share of various players of the industry.
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The following companies
have the rest of the market
share of the insurance
industry.
COMPANY NAME MARKET SHARE
LIC 79.30
ICICI PRUDENTIAL 5.63
BAJAJ ALLIANZ 3.27
HDFC STANDARD LIFE 3.11
BIRLA SUNLIFE 2.32
TATA AIG 1.45
SBI LIFE 1.24
MAX NEWYORK 0.90
AVIVA LIFE 0.82
ING VYSYA 0.66
OM KOTAK LIFE 0.54
AMP SANMAR 0.38
METLIFE 0.33
RELIANCE LIFE 0.05
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The liberalization of the Indian insurance sector has opened new doors to private competition
and the new and improved insurance sector today promises several new job opportunities. With
private players now in the field, there will be innovative products, better packaging, improved
customer service, and, most importantly, greater employment opportunities.
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There are a number of options to choose from for a career in Insurance. Ideally an
insurance company will have openings in the following fields:
Actuaries
Underwriter
Surveyor
Investment
Marketing & Distribution
Actuaries
Evaluates the risk for companies to be used for strategic management decisions.
Actuaries use their analytical skills to predict the risk of writing insurance policies
through the use of mathematical, statistical and economic models.
An actuary not only fixes the premium rates for new products, but also revises both
products and prices. They calculate costs to assume risk
Underwriters
Insurance underwriters review insurance applications and decide whether they should
be accepted or rejected based on the degree of risks involved in insuring the people or
objects of concern.
In the life insurance business, an underwriter is expected to filter the "bad or
substandard lives". Whereas, in the general insurance segment, he takes care of risk
management.
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Agents/Brokers:
Insurance agents may work for one insurance company or as independent agents selling
for several companies.
Insurance agents and brokers can find openings in the health insurance sector, financial
planning services, retirement planning counseling or even provide other services, for
e.g. sell mutual funds, annuities etc.
Surveyor/Loss Assessor:
Surveyors are professionals who assess the loss or damage and serve as a link between
the insurer and the insured.
They usually function only in non life business.
Their job is to assess the actual loss and avoid false claims.
Sales/Marketing:
And who can forget the guys who make and break a brand. They would be required in a
large number in order to promote the number of products that will be launched by
numerous companies in the insurance sector.
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CURRENT SCENARIO OF THE INDUSTRY
INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge untapped potential for
players in the insurance industry. Saturation of markets in many developed economies has
made the Indian market even more attractive for global insurance majors. The insurance sector
in India has come to a position of very high potential and competitiveness in the market.
Innovative products and aggressive distribution have become the say of the day. Indians, have
always seen life insurance as a tax saving device, are now suddenly turning to the private
sector that are providing them new products and variety for their choice. Life insurance
industry is waiting for a big growth as many Indian and foreign companies are waiting in the
line for the green signal to start their operations. The Indian consumer should be ready now
because the market is going to give them an array of products, different in price, features and
benefits. How the customer is going to make his choice will determine the future of the
industry.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After the entry of the
foreign players the industry is seeing a lot of competition and thus improvement of the
customer service in the industry. Computerization of operations and updating of technology
has become imperative in the current scenario. Foreign players are bringing in international
best practices in service through use of latest technologies. The one time monopoly of the LIC
and its agents are now
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going through a through revision and training programs to catch up with the other private
players. Though lot is being done for the increased customer service and adding technology to
it but there is a long way to go and various customer surveys indicate that the standards are still
below customer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which insurance products are
sold. The concept is very well established in the country like India but still the increasing use
of other sources is imperative. It therefore makes sense to look at well- balanced, alternative
channels of distribution.
LIC has already well established and have an extensive distribution channel and presence. New
players may find it expensive and time consuming to bring up a distribution network to such
standards. Therefore they are looking to the diverse areas of distribution channel to have an
advantage. At present the distribution channels that are available in the market are:
• Direct selling/Retail
• Corporate agents
• Group selling
• Brokers and cooperative societies
• Bancassurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the company. This is the main
distribution channel due to the complexity of most
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insurance products (Endowment, Whole of Life, Unit Linked). This tends to be the focus of
most companies due to its past success as well as its ability to deliver the right advice.
However, this channel can be expensive and it is a time consuming sales process. An agent is
the public face of an Insurance company. Hence it is important that this face is always smiling
and presentable and the facts and figures at his/ her command are updated and correct.
An agent should be a pleasing personality with complete knowledge about the various plans
and solutions which the company has to offer and must also understand the customer’s
psychology well to deal in an efficient manner.
BANCASSURANCE
Bancassurance is the distribution of insurance products through the bank's distribution channel.
It is a phenomenon wherein insurance products are offered through the distribution channels of
the banking services along with a complete range of banking and investment products and
services. To put it simply, Bancassurance, tries to exploit synergies between both the insurance
companies and banks.
Advantages to banks
Productivity of the employees increases.
By providing customers with both the services under one roof, they
can Improve overall customer satisfaction resulting in higher customer retention Levels.
Increase in return on assets by building fee income through the sale of
Insurance products.
Can leverage on face-to-face contacts and awareness about the
financial Conditions of customers to sell insurance products.
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Banks can cross sell insurance products e.g.: Term insurance products with loans.
Advantages to insurers
Insurers can exploit the banks' wide network of branches for distribution of products.
The penetration of banks' branches into the rural areas can be utilized to sell products in
those areas.
Customer database like customers' financial standing, spending habits, investment and
purchase capability can be used to customize products and sell accordingly.
Since banks have already established relationship with customers, conversion ratio of
leads to sales is likely to be high. Further service aspect can also be tackled easily.
Advantages to consumers
Comprehensive financial advisory services under one roof. i.e., insurance services
along with other financial services such as banking, mutual funds, personal loans etc.
Enhanced convenience on the part of the insured
Easy accesses for claims, as banks are a regular go.
Innovative and better product ranges
WHAT DOES LIFE INSURANCE HAVE TO OFFER?
Life insurance is many different things to many different people. For some, it is a premium to
be paid on time. For others it offers liquidity since cash can be borrowed when needed. For the
investment-minded, it denotes a constantly growing capital account and numerous other
benefits.
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.
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1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being that life insurance
proceeds are paid to the insured's beneficiaries in case of death. The money proffered by life
insurance helps buy time to adjust to the change of circumstances. Insurance provides large
amounts of cash that will keep the lifestyle for the survivors the way it was before the insured's
death.
2) Insurance Offers Peace 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 will provide sound benefits in the future,
whether or not the individual may live to see it.
3) 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 his death or it can be used during
the life as well. Life insurance policy owners can turn to the cash value of the policy in case of
a financial emergency when all avenues are either blocked or denied.
4) 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 during the retirement years.
Leisure years should be turned into pleasure years. Permanent life insurance is designed on the
concepts of long-term flexibility.
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5) Financial Security
The insurance policy offers contractual guarantees to people looking for peace 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.
6) Regard for Family
The purchase of life insurance clearly displays care and concern for the people the policy
owner loves.
7) 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 most
adverse of conditions is a matter of pride for the entire insurance industry. For generation after
generation, life insurance has been acclaimed as the very benchmark of security against which
the other industries are measured.
OPPORTUNITIES FOR INSURANCE COMPANIES
In the now open sector on insurance, the following is what I feel will determine the success of
the company in particular and the industry in general:
A change in the attitude of the population
Indians have always been wary of employing their hard-earned money in a venture that will
pay them on their death. Insurance has always been used as a Tax saving tool. No more, no
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less. It is upon the insurers to educate the people to secure/insure their future against any
unknown calamity and make a shield around their families and businesses.
An open and transparent environment created under the IRDA.
The reason for this being on the top of our understanding is that when ever we have seen any
sector open up in India there are always grey areas and unsure policies. These are not exactly
what any player, be it Indian or foreign, looks for. It creates an air of uncertainty in all the
decision making process. Insurance as a sector requires players who are strong financially and
are willing to wait for returns. Their confidence can be bolstered only if there is an open and a
transparent policy guidelines. This will also help the consumers feel safe that the regulatory is
an active one and cares to do everything possible to keep things under control and help the
insurance environment grow maturely.
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A well-established distribution network.
To cater to the largest democracy in the world is by no means a cakewalk. Insurance profits are
directly related to number of insured and this is in turn related to the reach.
Trained professionals to build and sell the product.
It is said that the insurance agent is the best salesman in the world. He makes you pay,
regularly, an amount promising to pay back only on your death. Thus the players will require
an excellent sales team to sell their products in the now competitive environment.
Encouragement of new and better products and letting the hackneyed ones die out.
This will itself ensure the market grows. And that every class/society gets a product that best
suits them.
SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies
Under Section 10(10D), any sum received under a Life Insurance policy (not being a Key
Man policy) is also exempt from taxation. But it is wise to remember that Pensions
received from Annuity plans are not exempted from Income Tax.
Section 80C provides a deduction up to Rs.1,00,000/- to an individual assesses for any
amount paid as a premium.
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POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of their policies or their
claims. As per Regulations for Protection of policyholders’ interests, 2002, every insurer
should have in place, a grievance redressal system to address the complaints of policyholders.
The IRDA has a Grievance Redressal Cell which plays a facilitative role by taking up
complaints against insurers with the respective companies for speedy resolution. The IRDA
however does not adjudicate on complaints.
SWOT ANALYSIS OF INSURANCE INDUSTRY
STRENGTH
1. Best returns with the added advantage of 100% life insurance coverage.
2. Good option for new investors into the market as all the money is invested by best fund
managers so with less knowledge also they can earn good Returns.
3. Best commission charges paid to the agents which vary from 12% to 35% which is much
higher as compared to mutual funds i.e. , only 2-2.5%.
WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
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OPPORTUNITY
1. 80 percent of Indian population is still under insured. So there is a big opportunity for
insurance companies.
2. As the stock market can be under the mark any time so it can bring loss to the investors but
as in ULIPs there is proper mixture of debt securities and equity so the loss is incurred
during dark trading days also.
3. Unit-linked products are exempted from tax and they provide life insurance.
4. Increasing consumer awareness about Insurance and its use.
THREAT
1. Cannibalism within the industry by providing misleading figures to the investors.
2. Govt.’s instability has a long term repercussions affecting company’s policies and its
growth.
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COMPANY’S PROFILE
31
COMPANY’S PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.
Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since emerged as the
largest residential mortgage finance institution in the country. The corporation has had a series
of share issues raising its capital to Rs. 119 crores. HDFC operates through 75 locations
throughout the country with its Corporate Headquarters in Mumbai, India.
OBJECTIVES AND BACKGROUND
Background
HDFC was incorporated in 1977 with the primary objective of meeting a social need – that of
promoting home ownership by providing long-term finance to households for their housing
needs. HDFC was promoted with an initial share capital of Rs. 100 million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country through
the provision of housing finance in a systematic and professional manner, and to promote
home ownership. Another objective
is to increase the flow of resources to the housing sector by integrating the housing finance
sector with the overall domestic financial markets..
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ORGANIZATION AND MANAGEMENT
HDFC is a professionally
managed organization with
a board of directors
consisting of eminent
persons who represent
various fields including
finance, taxation,
construction and urban
policy & development. The
board primarily focuses on 33
strategy formulation, policy
and control, designed to
deliver increasing value to
shareholders.
FOUNDER – Mr. Hasmukhbhai Parekh
Brief profile of the Board of Directors
Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive Chairman
of Housing Development Finance Corporation Limited (HDFC Limited). He joined HDFC
Limited in a senior management position in 1978. He was inducted as a whole-time
director of HDFC Limited in 1985 and was appointed as its Executive Chairman in 1993.
He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the Institute
of Chartered Accountants (England & Wales).
Mr. Keki M Mistry joined the Board of Directors of the Company in December, 2000. He
is currently the Managing Director of HDFC Limited. He joined HDFC Limited in 1981
and became an Executive Director in 1993. He was appointed as its Managing Director in
November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered Accountants of India
34
and a member of the Michigan Association of Certified Public Accountants.
Mr. Alexander M Crombie joined the Board of Directors of the Company in April, 2002.
He has been with the Standard Life Group for 34 years holding various senior management
positions. He was appointed as the Group Chief Executive of the Standard Life Group in
March 2004. Mr. Crombie is a fellow of the Faculty of Actuaries in Scotland.
Ms. Marcia D Campbell is currently the Group Operations Director in the Standard Life
group and is responsible for Group Operations, Asia Pacific Development, Strategy &
Planning, Corporate Responsibility and Shared Services Centre. Ms. Campbell joined the
Board of Directors in November 2005.
Mr. Keith N Skeoch is currently the Chief Executive in Standard Life Investments Limited
and is responsible for overseeing Investment Process & Chief Executive Officer Function.
Prior to this, Mr. Skeoch was working with M/s. James Capel & Co. holding the positions
of UK Economist, Chief Economist, Executive Director, Director of Controls and Strategy
HSBS Securities and Managing Director International Equities. He was also responsible
for Economic and Investment Strategy research produced on a worldwide basis. Mr.
Skeoch joined the Board of Directors in November 2005.
Mr. Mr. Gautam R Divan is a practicing Chartered Accountant and is a Fellow he Institute of
Chartered Accountants of India. Mr. Divan was the Former Chairman and Managing Committee
Member of Midsnell Group International, an International Association of Independent
Accounting Firms and has authored several papers of professional interest. Mr. Divan has wide
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experience in auditing accounts of large public limited companies and nationalised banks,
financial and taxation planning of individuals and limited companies and also has substantial
experience in structuring overseas investments to and from India.
Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards on Strategy
and Change Management. Mr. Pant, until 2002 was a Partner & Vice-President at Bain &
Company, Inc., Boston, where he led the worldwide Utility Practice. He was also Director,
Corporate Business Development at General Electric headquarters in Fairfield, USA. Mr.
Pant has an MBA from The Wharton School and BE (Honours) from Birla Institute of
Technology and Sciences.
Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of India
Limited. Mr. Ravi Narain was a member of the core team to set-up the Securities &
Exchange Board of India (SEBI) and is also associated with various committees of SEBI
and the Reserve Bank of India (RBI).
Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since
November, 2000. Prior to this, he was the Managing Director of HDFC Limited since
1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian Institute
of Technology, Bombay and a Masters Degree in Business Administration from The
American University, Washington DC.
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Ms. Renu S. Karnad is the Executive director of HDFC Limited, is a graduate in law and
holds a Master’s degree in economics from Delhi University. She has been employed with
HDFC Limited since 1978 and was appointed as the Executive Director in 2000. She is
responsible for overseeing all aspects of lending operations of HDFC Limited.
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HDFC has a staff strength of 1029, which includes professionals from the fields of finance,
law, accountancy, engineering and marketing.
SUBSIDIARY & ASSOCIATE COMPANIES
HDFC Bank
HDFC Mutual Fund
HDFC Standard Life ++
Intelenet Global Services Ltd.
HDFC Chubb General Insurance Company Ltd.
HDFC Reality
Other Companies Co-Promoted by HDFC
HDFC Trustee Company Ltd.
HDFC Developers Ltd.
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HDFC Venture Capital Ltd.
HDFC Ventures Trustee Company Ltd.
HDFC Investments Ltd.
HDFC Holdings Ltd.
Home Loan Services India Pvt. Ltd.
Credit Information Bureau (India) Ltd
HDFC STANDARD LIFE INSURANCE
INTRODUCTION:
HDFC Standard Life Insurance Company Limited was one of the first companies to be granted
license by the IRDA to operate in life insurance sector. Each of the JV player is highly rated
and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL and ICRA.
Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and Poors. These reflect
the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr
and Rs. 600,000 Cr respectively.
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HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is
the majority stakeholder in the insurance JV with 81.4 % stake and Standard Life has a stake of
18.6%. Mr. Deepak Satwalekar is the MD and CEO of the venture.
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THE PARTNERSHIP :
HDFC and Standard Life first came together for a possible joint venture, to enter the Life
Insurance market, in January 1995. It was clear from the outset that both companies shared
similar values and beliefs and a strong relationship quickly formed. In October 1995 the
companies signed a 3 year joint venture agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the
relationship.
In October 1998, the joint venture agreement was renewed and additional resource made
available. Around this time Standard Life purchased 2% of Infrastructure Development
Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC
Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising and both
companies agreed the time was right to move the operation to the next level. Therefore, in
January 2000 an expert team from the UK joined a hand picked team from HDFC to form the
core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in
HDFC Bank.
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COMPANY’S MISSION:
To be the top life insurance company in the market.
This not only means being the largest or the most productive company in the market, but a
combination of several things like-
Customer service of the highest order
Value for money for customers
Professionalism in carrying out business
Innovative products to cater to different needs of different customers
Use of technology to improve service standards
Increasing market share
COMPANY’S VALUES:
SECURITY: Providing long term financial security to our policy holders will be our
constant endeavor. This is done by offering life insurance and pension products.
TRUST: Company appreciates the trust placed by our policy holders in us. Hence,
company will aim to manage their investments very carefully and live up to this trust.
INNOVATION: Recognizing the different needs of our customers, company will be
offering a range of innovative products to meet these needs.
Company’s mission is to be the best new life insurance company in India and these are the
values that will guide us in this.
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KEY MANAGEMENT PERSONNEL
Chairman
Mr. Deepak S. Parekh
Board of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain
Managing Director & CEO
Mr. D. M. Satwalekar
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants
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Bankers
HDFC Bank Ltd.
Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank
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KNOWLEDGE MANAGEMENT
When Should One Go For Insurance?
Your insurance need will change as your life does, from starting to work to enjoying your
golden years and all the stages in between. Each one of these stages may pose a different
insurance need/cover for you. In this section, we have drawn up the basic life stages and help
you analyze various insurance needs accordingly.
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Stage 1: Young and Single
This is an important stage where one lays down the foundation of a successful life ahead. Take
advantage of the time and power of compounding to ensure that you build up your dreams, so
start saving early.
Your needs:
o Save for a home and wedding
o Tax Planning
o Save for Golden years
Stage 2 - Just Married
Marriage brings about a significant change. New dreams and new opportunities also bring in
additional responsibilities. While both of you look forward to a happy and secure life, it is
equally important to ensure that eventualities don’t come in the way of shaping your dreams.
Your needs:
o Planning for home / securing your home loan
Liability
o Save for vacation
o Save for your first child
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Stage 3 - Proud Parents
Once you have children, your need for life insurance is even more. You need to protect your
family from an untoward incident. Ensure your protection umbrella takes into account the
future cost of securing your child’s dream. You will want life to go on for your loved ones, and
having enough life insurance is a way to help ensure that.
Your needs:
o Provide for children’s education
o Safeguarding family against loan liabilities
o Savings for post-retirement
Stage 4 - Planning for Retirement
While you are busy climbing the ladder of success today, it is important for you to take time
and plan for your life after retirement. Having an early start for retirement planning can make a
significant difference to your savings. Think about your golden years even before you have
reached them. The key is to think ahead and plan well using your time and money.
Your needs:
o Provide for regular income post retirement
o Immediate Tax benefits
o Lead a secure, independent and comfortable
Life style after retirement
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PRODUCT MIX
At HDFC Standard Life, there is a bouquet of insurance solutions to meet every need. They
cater to both, individuals as well as to companies looking to provide benefits to their
employees.
For individuals, they have a range of protection, investment, pension and savings plans that
assist and nurture dreams apart from providing protection. One can choose from a range of
products to suit one’s life-stage and needs.
For organizations they have customized solutions that range from Group Term Insurance,
Gratuity, Leave Encashment and Superannuation Products.
PRODUCTS FOR INDIVIDUALS
PROTECTION - You can protect your family against the loss of your income or the burden
of a loan in the event of your unfortunate demise, disability or sickness. These plans offer
valuable peace of mind at a small price.
Plans: Term Assurance Plan
Loan Cover Term Assurance Plan.
INVESTMENT - This includes a plan that is well suited to meet your long term investment
needs. We provide you with attractive long term returns through regular bonuses.
Plan: Single Premium Whole Of Life
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PENSION - Our Pension Plans help you secure your financial independence even after
retirement and live a relaxed retired life.
Plans: Personal Pension Plan
Unit Linked Pension
Unit Linked Pension Plus
SAVING - Our Savings Plans offer you flexible options to build savings for your future needs
such as buying a dream home or fulfilling your children’s immediate and future needs.
Plans: Endowment Assurance Plan,
Unit Linked Endowment,
Unit Linked Endowment Plus,
Money Back Plan,
Children’s Plan,
Unit Linked Young star,
Unit Linked Young star Plus.
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GROUP PLANS
HDFC Standard Life has the most comprehensive list of products for progressive employers
who wish to provide the best and most innovative employee benefit solutions to their
employees. They offer different products for different needs of employers ranging from term
insurance plans for pure protection to voluntary plans such as superannuation and leave
encashment.
Plans: Group Term Insurance with Riders
Group Term Insurance with Profit-Share
Group Unit-Linked Plan
For Gratuity
For Defined Benefit Superannuation
For Defined Contribution Superannuation
Group Leave Encashment Plan
RURAL CUSTOMER - According to research findings, there is keenness among rural
customers to invest in savings cum protection plan with a term of five years, especially, if the
premium amount is low and affordable. Keeping this in view, HDFC STD> LIFE has plans
like:
Plans: Bima Bachat Yojana.
Super Bachat Yojana
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DISTRIBUTION OFFICES
In addition to the corporate office at Mumbai, your Company had 169 offices in over 135
cities/towns in the country. It has a widespread network of Financial Consultants, Corporate
Agents and Brokers servicing customers in these cities and towns.
FINANCIAL CONSULTANTS
The number of licensed Financial Consultants appointed by your Company increased from
over 23,000 in the previous year to over 33,000 in the current year. During the year, the
Company continued its
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CURRENT SALES- HDFC Standard Life
“HDFC STANDARD LIFE PACING AHEAD”
The Financial Express 15th May 2007
“HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period
April-March 2006-07, in comparison to the same period 2005-06, with a new business
first year premium of Rs. 1,029 crore.
In terms of effective premium income (EPI), which gives a 10% value to a Single
Premium policy and is an internationally-accepted indicator of an insurance company's
performance, the EPI grew by 103% to Rs. 887 crore from Rs. 436 crore.
HDFC Standard Life's growth in new business is a manifestation of the number of lives
insured as well as an increase in the average premium. For the individual business,
volume measured by the number of lives insured witnessed a 32% growth.
The average premium also grew by 62% to Rs 27,500 in 2006-07 from Rs 17,000 in 2005-
06.
During the year the company issued over 3,97,000 policies and has covered more than
5,80,000 lives”
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Table Showcasing Financial Results:
Parameters
April-March
2007-08
(Rs. Cr)
April-March
2009-10
(Rs. Cr)
Growth
(%)
Total received premium 668.40 1532.21 129.23
i. New Business 486.15 1028.94 111.65
ii. Renewal 182.25 503.27 176.14
Effective Premium Income
(Total) 436.08 887.30 103.47
Group Business Premium
(EPI) 49.40 135.15 173.58
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55
Fund Name Offer Prices (Rs) Bid Price (Rs)
Liquid Fund 24.5113 23.2857
Secure Managed Fund 24.7568 23.5190
Defensive Managed Fund 29.6157 28.1349
Balanced Managed Fund 34.1340 32.4273
Unit Prices as on 29/08/2007
UNIT PRICE AS ON 30/08/2007
FUTURE PLANS
HDFC has always been market-oriented and dynamic with respect to resource mobilization as
well as its lending program. This renders it more than capable to meet the new challenges that
have emerged. Over the years, HDFC has developed a vast client base of borrowers,
depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client
base for future growth. Internal systems have been developed to be robust and agile, to take
into account changes in the volatile external environment.
HDFC has developed a network of institutions through partnerships with some of the best
institutions in the world, for providing specialized financial services. Each institution is being
fine-tuned for a specific market, while offering the entire HDFC customer base the highest
standards of quality in product design, facilities and service.
FINANCIAL PLANNING
A comprehensive financial advisory service involving financial strategies, tax, corporate/trust
structures, estate planning, legal issues, family law, asset allocation, asset protection and
investment advice.
Financial Planning takes into account:
Desired asset allocation, risk profile and return expectations.
Building cash flows correlating all expenses and income. Inflation and outflows due to
loans are considering in building the financial plan.
Future goals like retirement, housing and children's education / marriage or other needs.
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Why do you need Financial Planning?
You may have many dreams, needs and desires. For example, you could be dreaming of:
Owning a new car,
Buying a dream house,
Providing your children with the best education,
Planning a grand wedding for your children
Having a great time after your retirement
But in today's world of skyrocketing costs and increasing inflation, how many of these dreams
can you hope to turn into reality? By planning well, you can utilize your limited resources to
the fullest.
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EXPERIENCE THE POWER 360º FINANCIAL PLANNING
The only thing permanent in life is change. Times change. People change. So does life. You
expect life to be much better tomorrow than it is today. Tomorrow, you hope to fulfill all your
dreams and aspirations. But what happens if things take an untoward turn? Or, if there is an
eventuality? Perhaps it's time for you to change the way you plan your investments...
How will 360° Financial Planning help?
Instead of investing in an ad-hoc manner, 360°
Financial Planning helps you take a holistic, all-
round view. Briefly, 360° Financial Planning comprises:
Investment Planning
Cash Flow Planning
Tax Planning
Insurance Planning
Children’ Future Planning
Retirement Planning
INVESTMENT PLANNING: To make your wealth grow
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Everyone needs to save for a rainy day. Once you have saved enough to take care of
emergencies, you should start thinking about investing and to make your money grow.
Investment Planning Service includes:
Risk Profiling
Asset Allocation and Portfolio Construction
Creation and Accumulation of Wealth through Systematic Investment Plans (SIP)
Regular review of progress and Portfolio Rebalancing
CASH FLOW PLANNING: To provide for assets and meet the periodic cash requirements
In simple terms, cash flow refers to the inflow and outflow of money. It is a record of your
income and expenses.
Cash flow planning refers to the process of identifying the major expenditures in future (both
short-term and long-term) and making planned investments so that the required amount is
accumulated within the required time frame.
TAX PLANNING: To save on taxes and increase your income
Proper tax planning is a basic duty of every person which should be carried out
religiously.
According to the Income Tax Act, 1961, one will be eligible for Tax Benefits under Section
80C and Section 10(10D) of the act.
One has to compare the advantages of several tax saving schemes and depending upon your
age, social liabilities, tax slabs and personal preferences, decide upon a right mix of
investments, which shall reduce your tax liability to zero or the minimum possible.
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INSURANCE PLANNING: To protect yourself, your family and your Assets.
"Insurance is not for the person who passes away, it for those who survive," goes a popular
saying that explains the importance of Insurance Planning.
It is extremely important that every person, especially the breadwinner, covers the risks to his
life, so that his family's quality of life does not undergo any drastic change in case of an
unfortunate eventuality. Insurance Planning is concerned with ensuring adequate coverage
against insurable risks.
CHILDREN'S FUTURE PLANNING: To give your children a financially secure future
Like every parent, you too must be overjoyed to watch your child grow. All parents want to
give the best possible upbringing to their children. This includes good education and security,
in case of any eventuality. Soon, your little bundle of joy will grow up, and it will be time to
provide for his or her higher education and wedding.
The purpose of Children's Future Planning is to create a corpus for foreseeable expenditures
such as those on higher education and wedding, and to provide for an adequate security cover
during their growing years.
RETIREMENT PLANNING: Because retirement is a time to relax, not to get worried
Some like it. Some don’t. But retirement is a reality for every working person. Most young
people today think of retirement as a distant reality.
However, it is important to plan for your post-retirement life if you wish to retain your
financial independence and maintain a comfortable standard of living even when you are no
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longer earning. This is extremely important, because, unlike developed nations, India does not
have a social security net.
CONSUMPTION PATTERN
*Source-Business world magazine 2nd week April 2006
The consumption pattern is determined by the income so more would be the income more
would be the consumption. The consumption though can differ in terms of areas where the
money is actually spent. The above representation tells us the consumption pattern of the
consumer in India i.e. where do they actually invest their money and in what proportion do
they spend in various areas. The chart shows that people are spending 6.9% of their savings
into savings and investments.
OBJECTIVE: To generate leads for various Unit Linked Plans offered
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40.10%
4.10%8.80
%6.90%
6.60%
3.90%
10.80%
2.30%
7.60%
2.10%
0.80%
1.60% 4.60
%Food & GroceryHome TextilesPersonal CareSaving & InvestmentClothingConsumer DurableVacationEating outFootwearMovies & TheaterEntertainmentAccessoriesBooks & Music
by the company, by interacting with walking and existing customers and to know the
awareness level of Financial Planning among them.
SALES PROCEDURE:
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FIRST CONVERSATION
APPOINTMENT
FILLING THE PROPOSAL FORM
COLLECT THE REQUIRED DOCUMENTS AND THE FIRST PREMIUM
Follow Up Follow Up
STEP 1: FIRST CONVERSATION WITH A KNOWN OR
AN UNKNOWN CUSTOMER
This is the first time, when you interact with a person and try to get the information from him
about the industry or the company and understand the customer’s insight i.e. what actually
does a customer expects from the companies.
The objective was to know the awareness about Financial Planning among the customers and
this was done by getting a questionnaire filled by the people. The various activities performed
were:
1) KRISHNA PLAZA: Here we interacted with the commuters & collected the data.
2) MARKETS: (GOAL MARKET & BHAGAT SINGH MARKET) during this
activity, we interacted with the shopkeepers as well as the walking people regarding their
views about the industry.
3) CANOPY AT MEERUT: This activity was designed to target the people working in
BPOs and other IT companies.
4) TELE-CALLING: This was random calling from the data base provided by the
company and the aim was to collect information from them.
5) CORPORATE PRESENTATION: A presentation was arranged for the employees of
VED RAM AND SONS (Paras), to make them aware about the importance of Financial
Planning in today’s unpredictable environment.
STEP 2: APPOINTMENT
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All the potential and interested customers of all the activities performed are then followed up
and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans offered by the
company. The customer is informed about the procedure and the options he can opt for like:
1) Choose the premium he wish to invest
2) Select the Premium Payment Option i.e. annual mode, half yearly mode, quarterly
mode, or monthly mode.
3) Choose the amount of protection i.e. the sum assured, he desires.
4) With Maturity Benefit, choose the additional benefits like:
a) Life option Death Benefit
b) Life & Health option Death Benefit + Accidental Death Benefit
c) Extra Life & Health option Death Benefit + Critical Illness Benefit +
Accidental Death Benefit
5) Choose the Investment funds or funds one desires.
The various funds available are:
Liquid Fund
Secure Managed Fund
Defensive Managed Fund
Balanced Managed Fund
Equity Managed Fund
Growth Fund
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6) Other information like:
a) Tax Benefit
b) Various Charges
c) Switching option
d) Surrendering
e) Terms & Conditions etc.
STEP 3: FILLING THE PROPOSAL FORM
After the second step, the interested customers are required to fill the proposal form which
requires the following information:
b) Personal details of the policy holder,
c) Personal details of Beneficiary or Nominee
d) The Premium amount selected
e) The Term of the policy
f) The Fund choice for investment
STEP 4: COLLECTING THE DOCUMENTS
Once the form is filled all the necessary documents are collected like:
a) Address proof,
b) DOB certificate etc.
And also the first premium amount in form of cheque or cash is collected.
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Within 15 days, the policy documents reach the customers place, and the customer is required
to read the documents carefully.
66
PART -II
67
INTRODUCTION
TO
THE TOPIC
68
INTRODUCTION TO THE TOPIC
Overall, the life insurance and pension sector is set for rapid changes and growth in the years
ahead. Delivering service, building trust and being innovative are key areas in which any
company will have to excel in order to do well in the long road ahead. Different companies
will take different approaches and it would be myriad of solutions that will be found to delight
the Indian customer.
During the first part, I was given complete classroom training about the various unit linked as
well as the traditional plans and solutions which the company offers.
Later, Market Research was done through various activities and tele-calling which are
discussed further in the report. Activities led to practical exposure and taught me the aspects of
customer dealing.
Finally, interesting conclusions were drawn out of the data collected regarding the Awareness
of Financial Planning among the people in today’s environment.
It was great experience because selling an insurance product demands a great deal of
confidence and product knowledge.
69
RESEARCH
MEHODOLOGY
70
RESEARCH MEHODOLOGY
The study of awareness about Financial Planning among the people and particularly the
insurance sector covers data collection through observation, questionnaire and interview of
consumers.
Type of research :
Exploratory :
Type of research carried out was EXPLORATORY in nature; the objective of such research is
to determine the approximate area where the drawback of the company lies and also to identify
the course of action to solve it. For this purpose the information proved useful for giving right
suggestion to the company.
Data Collection:
Primary data
Secondary data
Data used for the research work was primary in nature.
Sample unit: -
The research process was done by interacting with number of customers during the activities
performed, which included, markets, cold calling, canopies, etc. Sample Design consists of
Random Sampling.
Sample size: - 100 people
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Method of collection: -
Field procedure for gathering primary data included observation and interview schedule in
which the questionnaires were filed by the interviewer.
Personal interviews through self administered survey was done to collect the data, market
research was undertaken, that was accomplished by performing various activities designed.
Research Instrument:
Questionnaire
The questionnaire was formulated by keep in mind the following Points: -
Giving the respondents clear comprehension of the question.
Inducing the respondents to co-operate.
Giving instructions as to what is wanted.
Identifying the needs to be known.
Limitations:
The following were the limitations that were there during the course of the study:4
1. Limited time period.
2. Less number of respondents.
3. Biasness of the respondents.
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OBJECTIVES
73
OBJECTIVES
To study the awareness of Financial Planning among the people.
To study the importance of Insurance in today’s scenario.
Brand awareness of various private insurance companies.
Preference among different investment tools.
Purpose of buying insurance.
Preference in choosing channel for buying life insurance.
Quality of service provided by agents and clients satisfaction level.
Customer’s perception of improvements brought in by entry of Private
Insurance Companies.
To generate leads for Unit Linked Insurance and the Unit Linked Pension Plans, by interacting
with walking and existing customers of the company.
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DATA ANALYSIS
&
INTERPRETATION
75
DATA ANALYSIS & INTERPRETATION
AGE DISTRIBUTION(yrs.)
35%
41%
24%Below 30
31 - 45
Above 45
Highest number of Respondents (41%) from Age group 31 to 45 yrs.
35% respondents are of age below 30 yrs, small percentage of which is unemployed.
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MARITAL STATUS
MARITAL STATUS
19
4
16
37 24
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Below 30 31 - 45 Above 45AGE(yrs)
SINGLE MARRIED
Total number of single respondents – 23
Total number of married respondents – 77
77
INCOME DISTRIBUTION
INCOME DISTRIBUTION(Annual in Rs.appx.)
16
13
5
1
7
12
12
10
0
6
12
6
<1.5 lacs
1.5 - 3 lacs
3 - 5 lacs
> 5 lacs
INC
OM
E
Below 30 31 - 45 Above 45
Highest, 16 respondents in income bracket below 1.5 lacs, which mainly comprises of
age group below 30 years.
Respondents of the age group 31-45 yrs, lie in all the income slabs.
Minimum, 6 respondents in income bracket of above 5 lacs, which are in age group of
above 45 years.
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ARE YOU AWARE ABOUT FINANCIAL PLANNING?
98%
2%
0
10
20
30
40
50
60
70
80
90
100
NO
OF
PEO
PLE
DO YOU KNOW WHAT IS FINANCIAL PLANNING ?
YES
NO
98% of the respondents were aware about Financial Planning.
79
BRAND RECALL
BRAND RECALL
100
96
92
828672
64
75
71
6051
LICICICI PrudentialHDFC Std LifeTATA AIGBIRLA SUN LIFEKOTAK MAHINDRASBI LIFEAVIVAMAX NEW YORKMETLIFEINGVYSYA
100 % respondents mentioned first name to be LIC
Among private players, ICICI Prudential has the highest
Brand Recall i.e. 96%
HDFC Standard life has Brand Recall of 92%
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INVESTMENT PREFERENCE
INVESTMENT PREFERENCE
11%18%
21%
9%
20%
21%
Banks & PostofficeShare Market
Insurance
Bonds
Mutual Funds
Real Estate
21% respondents prefer banks and post office schemes as an investment tool preference.
Respondents of age group below 30 years prefer Mutual Funds, as they provide higher
returns than banking investment tools.
Insurance ranks 2nd as an investment tool choice, which itself includes various protection,
saving and pension plans.
Govt. Bonds & securities are mostly preferred by people of higher age group rather than
young generation.
Property as an investment option is most lucrative choice. However it is important to
mention that majority of respondents are in age group of above 30 years and people with
high income bracket prefers to invest in Real Estate.
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INSURED PERCENTAGE
ARE YOU INSURED?
87%
13%
YES
NO
87 % of respondents were insured on own life and on life of their family members.
So we had 13 % of potential customers to approach.
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COMPANY PREFERENCE
COMPANY PREFERENCE(in %)
55% 30% 15%
0 20 40 60 80 100 120
1
ONLY LIC BOTH ONLY PVT. COs
55% of respondents have insurance cover provided by LIC only
15% of respondents have insurance cover provided by Private Cos. only
Whereas 30% have got insurance from both LIC and Private Companies.
Total number of LIC policies sums up to 85% and total number of Pvt. Companies policies
sold sums up to 45%.
Data provides that though LIC is still got a maximum market share but Private Companies
are making a fast move in the market.
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TYPE OF PLAN BOUGHT
TYPE OF PLAN
26, 29%
20, 23%
24, 28%
17, 20% MONEY BACK
ENDOWMENT
PENSION PLAN
ULIPs
Money back Policies have been most popular and also the endowment plans.
As people today are more aware about financial planning, so people of the age 30 years
have planned for their Retirement now.
ULIPs are fast gaining popularity as they provide investment
benefit with Insurance.
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PURPOSE OF BUYING INSURANCE
PURPOSE OF BUYING INSURANCE
52%
11%
23%
14%
0 10 20 30 40 50 60
Risk Cover
Investment
Tax Benefit
RetirementPlanning
Risk cover remains the most important purpose for buying insurance followed by option as
Tax saving tools.
Retirement Planning in a early period is also gaining the market share.
ULIPs are responsible for increasing popularity of insurance as an investment tool
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DISTRIBUTION CHANNEL PREFERENCE
CHANNEL PREFERENCE
56 17 14 9 4
0 20 40 60 80 100 120
1
Known/Current Advisor Friends & RelativesGroup Insurance BanccassuranceTelesales/unknown Advisor
According to the data, known/current Advisors remains the 1st choice for buying Insurance.
In retail also known Advisors are preferred over referrals.
Bancassurance is emerging as a popular option for buying life Insurance.
Group insurance is a channel which customers expect but it is not so popular because only
few employers have taken the initiative.
Buying insurance from a unknown person or getting a phone call is still not preferred by
most of the people
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CONCLUSION
CONCLUSION
The various conclusions drawn from the project are:
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There has been a tremendous change in the insurance industry. And with it there has been
continuous growth in this sector both in Indian as well as world context.
The opening up of the insurance sector has changed the whole look of the industry. While the
LIC, in order to face the competition is coming up with new strategies. New private players are
leading the sector due to their strategic management and tailored made projects.
From the research, we also conclude that though the awareness and people opting for LIC
plans are more as compared to other private players’ but the latter are gaining momentum in
the market day by day.
The demand for insurance is likely to increase with rising per-capita income, rising literacy
rates, and growth of service sector. In-fact opening up of the insurance sector is an integral part
of the liberalization process being persued by many developing countries.
Life insurance as a form of protection is the single-most important financial product any
earning member of a family must have. Having said this, a well-diversified portfolio is one of
the first rules of financial planning, and as such one should consider different instruments as
the ability to save increases.
Possible investment options range from bank deposits and government small saving schemes to
mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need of protection, with
savings, and hence are an excellent addition to your portfolio.
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All financial products have a certain amount of risk and charges, be it a mutual fund, property,
or even a bank deposit. It would be unrealistic to assume that the features and benefits of a
ULIP come at no cost, though the charges are considerably lower than that of a traditional
product.
In fact, the very reason the product is transparent is because the customer knows the charges
and risks.
There is no right or wrong in this. The success of marketing insurance depends on
understanding the social and cultural needs of the target population, and matching the market
segment with the suitable intermediary segment. All intermediaries can’t sell all lines of
business profitably in all markets. There should be clear demarcation in the marketing
strategies of the company from this perspective. Clients should also receive price differentials
for using different channels.
The intermediaries need to be empowered with the right learning, training and sales tools and
technology enablers. Coupled with the right product mix, this will help the insurers to survive
and flourish in this competitive market scenario. So lets conduct this business with utmost
economy with the spirit of trusteeship; thereby making insurance widely popular.
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LIMITATIONS
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LIMITATIONS
It was difficult to collect some information because of some company rules.
Interaction with the employees was limited because of the work schedule.
It was difficult to cover all the types of ratios because of lack of information i.e. regarding
inventories, debtor’s turnover etc…..
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RECOMMENDATION
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RECOMMENDATION
Positioning insurance as a means to fulfilling one’s duties during one’s lifetime.
Fears relating to thefts, ailments, death could be addressed through ‘sensitive’
communication
Fears relating to claims: Need to promote “trust”. Demonstrating claim testimonials,
positioning as “worry free”.
Low returns: Reposition insurance as a risk cover, security instrument rather than a
financial investment.
Lack of understanding: Training of Channels
To provide quality advice on products best suited
Lack of Knowledge: Ease of Process, simplifying the product and the procedure
Need to promote the quality of awareness
The benefits: Leverage on Risk Protection or Returns oriented or both
The product: catering to life stages
Need for Branding in Insurance: Branding is more relevant in the Insurance market
which not only faces the problem of securing and retaining customers in an increasingly
competitive marketplace but also experiences the need for heightened relevance of the
brand proposition in a world where brand has been termed the new religion.
In rural India, the LIC is especially synonymous with insurance. But in the wake of
competition insurance companies have to do a considerable brand building exercise at
least in urban India.
Adequate time, investment and longer-term management of the brand are essential, not
only for success but also survival. All brands need to be built around well-differentiated
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and credible positioning that springs from the organization’s history. The brand must
not only be believed but lived by management and employees.
Focus on different segments to survive and thrive in a competitive environment. Each
company has to choose its own unique positioning based on its unique strengths. Below-
mentioned positioning alternatives can be worth considering.
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services rather than customer
segments. It is a sensible strategy for those companies who have distinctive advantages or
strengths in offering certain products and services. In the insurance industry too, it is
possible to achieve a unique position by focusing on certain category of products.
NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on the differing needs of
different groups of consumers. This can be done successfully if a company has unique
strengths to service a group of customer needs better than others.
The insurance needs of customers vary significantly for different groups of customers. The
insurance needs of young family with small children will be quite different from that of a
family in which the income-earner is close to retirement. However, in India most of the life
insurance companies have a wide variety of products tailored for different customer needs
and there is no company focusing on a particular customer need.
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ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible. That is different
groups of customers may be accessible in different ways even though they may have
similar needs. Access is typically a function of customer geography or customer scale.
There is excellent opportunity in the insurance industry to employ access-based positioning
by targeting the rural insurance sector.
The rural market for life insurance is very different from the urban market in terms of
needs, income levels and distribution (seasonality, for example), penetration of media and
so on. Rural market can be a highly profitable position if one is able to carefully plan and
tailor an entire set of low-cost activities of advertising, distribution, and product design etc.
to successfully exploit the potential.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
BOOKS
Marketing Management ,By Philip kotaler
Marketing of Service By Dr. S.L Gupta and V.V. Ratna
Finanaial Management By I.M.Panday
Economics Times
Websites
www.rbi.org.in
www.irdaindia.org
www.banknetindia.com
www.hdfcinsurance.com
www.businessworldonline.com
www.google.com (search engine)
Other References:
Brochures of various plans
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QUESTIONNAIRE
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QU ESTIONNAIRE
Name: ________________________
Age: ______
Gender: M F
Marital Status: Married Single
Occupation: ___________________
Contact No: __________________
Annual Income (appx. in Rs.)
Upto 1.50 lacs 1.50 lacs-3 lacs
3 lacs-5 lacs above 5 lacs
Q1) Are you aware about ‘what is financial planning’?
YES NO
Q2) Mention the names of Life insurance companies you have heard of:
1) ________________ 4) ________________
2) ________________ 5) ________________
3) ________________ 6) ________________
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Q3) How much do you save approximately of your annual income?
____________________________________________________
Q4) where do you invest/would like to invest your savings?
(Rank in order of preference, 1 being most preferable)
Banks Share Market
Insurance Bonds & Securities
Mutual Funds Real Estate/Property
Q5) Have you taken any life insurance policy on your own life or on life of any of your family
member?
YES NO
(If no, switch to Q 9)
Q6) which company(s) policy(s) you have?
LIC ICICI PRUDENTIAL
BIRLA SUNLIFE ING VYSYA
BAJAJ ALLIANZ SBI LIFE
HDFC STD. LIFE TATA AIG
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MAX NEW YORK LIFE AVIVA
RELIANCE KOTAK MAHINDRA
MET LIFE OTHER ____________ (specify)
Q7) which type of plan did you buy?
Money Back Plan
Endowment Plan
Pension Plan
ULIP
Q8) What was your purpose/will be your likely purpose of taking insurance?
RANK THEM (1 being most ideal)
a) PROTECTION
OF FAMILY
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENT
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