INSURANCE Inoovation

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INNOVATIVE EYE OF INSURANCE

CHAPTER. 1

INSURANCE

Insurance protects and safeguards the interest of the individuals andbusinessmen. It also creates diversification of risk among specializedprofessional agencies called Insurance companies.

Insurance promotes rate of saving and investment and leads to capitalformation in the economy. Our family counts on you every day for financialsupport, Food, shelter, transportation, education, and much more. Insurance

provides you with that unique sense security that no other form of investmentprovides. It gives you a sense of financial support especially during that time

of crisis irrespective of the fluctuation in the stock market. Insuranceprovides for your career goals right from childhood years.

V.E.S COLLEGE OF ARTS, SCIENCE &COMMERCE

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The document which contains the contract is called the Insurance Policy.The person who is insured is called the Insured and the firm which

insures is called as the insurer.

DEFINITION:-

Insurance is a form of contract or agreement under which one party agrees

in return for a consideration to pay an agreed amount of money to another

party to make good a loss, damage, or injury to something of value, as a

result of some uncertain event in which the insured has pecuniary interest.


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CHAPTER.2

EVOLOUTION OF INSURANCE

The business of life insurance in India in its existing form started in India inthe year 1818 with the establishment of the Oriental Life InsuranceCompany in Calcutta.

Some of the important milestones in the life

insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statuteto regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-lifeinsurance businesses.

1938 : Earlier legislation consolidated and amended to by the Insurance Actwith the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over bythe central government and nationalised. LIC formed by an Act ofParliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore

from the Government of India.


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The General insurance business in India, on the other hand, can trace itsroots to the Triton Insurance Company Ltd., the first general insurancecompany established in the year 1850 in Calcutta by the British.

Some of the important milestones in the generalinsurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company totransact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association ofIndia, frames a code of conduct for ensuring fair conduct and sound business

practices.

1968: The Insurance Act amended to regulate investments and set minimumsolvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalisation) Act, 1972nationalised the general insurance business in India with effect from 1stJanuary 1973.

107 insurers amalgamated and grouped into four companies viz. the NationalInsurance Company Ltd., the New India Assurance Company Ltd., the

Oriental Insurance Company Ltd. and the United India Insurance CompanyLtd. GIC incorporated as a company.


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CHAPTER.3

INSURANCE SECTOR REFORMS

1)MALHOTRA COMMITEE

In 1993, Malhotra Committee headed by former Finance Secretary andRBI Governor R.N. Malhotra was formed to evaluate the Indian insuranceindustry and recommend its future direction.

The Malhotra committee was set up with the objective of

complementing the reforms initiated in the financial sector. The reformswere aimed at "creating a more efficient and competitive financial systemsuitable for the requirements of the economy keeping in mind the structuralchanges currently underway and recognizing that insurance is an important

part of the overall financial system where it was necessary to address theneed for similar reforms"

In 1994, the committee submitted the report and some of the keyrecommendations included:

1) Structure

Government stake in the insurance Companies to be brought down to50%.

All the insurance companies should be given greater freedom tooperate.

Government should take over the holdings of GIC and its subsidiariesso that these subsidiaries can act as independent corporations.

2) Competition


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Private Companies with a minimum paid up capital of Rs.1bn shouldbe allowed to enter the industry.

No Company should deal in both Life and General Insurance througha single entity.

Foreign companies may be allowed to enter the industry incollaboration with the domestic companies.

Postal Life Insurance should be allowed to operate in the rural market. Only One State Level Life Insurance Company should be allowed to

operate in each state.

3) Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry)

should be made independent.

4) Investments

Mandatory Investments of LIC Life Fund in government securities tobe 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 periodof time).

5) 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. Computerisation of operations and updating of technology to be

carried out in the insurance industry The committee emphasized that inorder to improve the customer services and increase the coverage ofthe insurance industry should be opened up to competition.


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2.) IRDA ACT

Insurance sector has been opened up for competition from Indianprivate insurance companies with the enactment of Insurance Regulatoryand Development Authority Act, 1999 (IRDA Act). As per the provisionsof IRDA Act, 1999, Insurance Regulatory and Development Authority(IRDA) was established on 19th April 2000 to protect the interests of holderof insurance policy and to regulate, promote and ensure orderly growth ofthe insurance industry. Under the new dispensation Indian insurancecompanies in private sector were permitted to operate in India with thefollowing conditions:

Company is formed and registered under the Companies Act, 1956. The aggregate holdings of equity shares by a foreign company, either

by itself or through its subsidiary companies or its nominees, do not

exceed 26%, paid up equity capital of such Indian insurance company; The company's sole purpose is to carry on life insurance business or

general insurance business or reinsurance business. The minimum paid up equity capital for life or general insurance

business is Rs.100 crores. The minimum paid up equity capital for carrying on reinsurance

business has been prescribed as Rs.200 crores.

The Authority has notified Regulations on various

issues:- Registration of Insurers,


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Regulation on insurance agents,

Solvency Margin, Re-insurance,

Obligation of Insurers to Rural and Social sector,

Investment and Accounting Procedure,

Protection of policy holders' interest etc.

Applications were invited by the Authority with effect from 15th August,2000 for issue of the Certificate of Registration to both life and non-lifeinsurers. The Authority has its Head Quarter at Hyderabad.

Insurance companies:

IRDA has so far granted registration to 12 private life insurancecompanies and 9 general insurance companies.

If the existing public sector insurance companies are included, thereare currently 13 insurance companies in the life side and 13 companiesoperating in general insurance business. General Insurance Corporation has

been approved as the "Indian reinsurer" for underwriting only reinsurancebusiness. Some of the life insurance companies and general insurancecompanies including their web address are given below:

LIFE INSURERS Websites

Public SectorLife Insurance Corporation of India www.licindia.com

Private SectorAllianz Bajaj Life Insurance CompanyLimited

www.allianzbajaj.co.in

Birla Sun-Life Insurance Company

Limited

www.birlasunlife.com

HDFC Standard Life Insurance Co.www.hdfcinsurance.com


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Limited

ICICI Prudential Life Insurance Co.Limited

www.iciciprulife.com

Om Kotak Mahindra Life Insurance Co.Ltd.

www.omkotakmahnidra.com

GENERAL INSURERS

Public SectorNational Insurance Company Limited www.nationalinsuranceindia.com

New India Assurance Company Limited www.niacl.com

Oriental Insurance Company Limited www.orientalinsurance.nic.in

Private SectorBajaj Allianz General Insurance Co.Limited

www.bajajallianz.co.in

Reliance General Insurance Co. Limited www.ril.com


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REINSURERGeneral Insurance Corporation of India www.gicindia.com

Protection of the interest of policy holders:

IRDA has the responsibility of protecting the interest of insurancePolicyholders. Towards achieving this objective, the Authority has taken the

following steps:

IRDA has notified Protection of Policyholders Interest Regulations2001 to provide for: policy proposal documents in easily

understandable language; claims procedure in both life and non-life;setting up of grievance redressal machinery; speedy settlement ofclaims; and policyholders' servicing. The Regulation also provides for

payment of interest by insurers for the delay in settlement of claim. The insurers are required to maintain solvency margins so that they are

in a position to meet their obligations towards policyholders withregard to payment of claims.

It is obligatory on the part of the insurance companies to discloseclearly the benefits, terms and conditions under the policy. Theadvertisements issued by the insurers should not mislead the insuring

public.

CHAPTER.3

GLOBALIZATION IN INSURANCE

While nationalized insurance companies have done a commendable job

in extending the volume of the business, opening up insurance sector toprivate players was a necessity in the context of globalization of financial


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sector. Its impact has to be seen in the form of creating various opportunitiesand challenges.

The introduction of private players in the industry has added colours to

the dull industry. The initiatives taken by the private players are verycompetitive and have given immense competition to the on time monopolyof the market LIC. Since the advent of the private players in the market theindustry has seen new and innovative steps taken by the players in the sector.

The new players have improved the service quality of the insurance. As aresult LIC down the years have seen the declining in its career. The marketshare was distributed among the private players. Though LIC still holds 75%of the insurance sectors the upcoming nature of these private players areenough to give more competition to LIC in the near future. LIC market share

has decreased from 95 %( 2002-03) to 81% (2004-05).

The following company holds the rest of the market

share of the insurance industry:-


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MARKET SHARE %

LIC

ICICI PRUDENTIAL

BIRLA SUN LIFE

BAJA ALLIANZ

SBI LIFE

HDFC STANDARD

TATA AIG

MAX NEW YORK

AVIVA

OM KOTAK MAHINDRA

ING VYASA

AMP SANMAR

METLIFE

Nearly 80 per cent of Indian population is without life insurance coverwhile health insurance and non-life insurance continues to be belowinternational standards. And this part of the population is also subject toweak social security and pension systems with hardly any old age incomesecurity. This it is an indicator that growth potential for the insurance sectoris immense. Global insurance premiums grew by 3.4% in 2008 to reach

$4.3 trillion. For the first time in the past three decades, premium incomedeclined in inflation-adjusted terms, with non-life premiums falling by0.8% and life premiums falling by 3.5%.

The insurance industry is exposed to the global economic downturn onthe assets side by the decline in returns on investments and on the liabilitiesside by a rise in claims. So far the extent of losses on both sides has beenlimited although investment returns fell sharply following the bankruptcyof Lehman Brothers and bailout of AIG in September 2008. The financial

crisis has shown that the insurance sector is sufficiently capitalized. Thevast majority of insurance companies had enough capital to absorb lossesand only a small number turned to government for support. Advanced


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economies account for the bulk of global insurance. With premium incomeof $1,753bn, Europe was the most important region in 2008, followed by

North America $1,346bn and Asia $933bn. The top four countriesgenerated more than a half of premiums. The US and Japan alone

accounted for 40% of world insurance, much higher than their 7% share ofthe global population. Emerging markets accounted for over 85% of theworlds population but generated only around 10% of premiums. Theirmarkets are however growing at a quicker pace.

.

CHAPTER.4


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PRIVATISATION

Privatization is the process involving private sector in the ownershipand operation of state owned enterprises.It implies introduction of private

management and control in public sector enterprises. The India governmentnationalized private insurance companies in 1956 [life insurance Corporationof India (LIC) followed by general insurance in 1972] to bring this sectorunder government control. The concept of privatization became popularin mid 1980s and since then it has spread all over the world. WesternEurope and the US find Indian market as having greater growth potentialthan their domestic markets.

The basic reason for privatization is growing disappointment with the

functioning of public sector enterprises. In India, public sector enterpriseshave contributed tremendously in the development of the economy. Theyhave created strong industrial ways in the country. They have generatedtremendous employment opportunities and have also helped in achievementof national objective like distribution of wealth, removal of poverty,economic growth and development, etc.

In spite of all these the public sector enterprises cannot perform alleconomic and developmental activities single handedly. Private sector had to

be involved in various industries of the economy. Private sector has also

contributed for the development but they face problems like higher cost ofproduction, delay in delivery, labour indiscipline, political interference, etc.

The insurance sector could not neglect changes taking place in theeconomy like liberalization, privatization, deregulation and globalization. Ithad to cope up with these new challenges. After 40 years of government

protectionism of this massive sector, the new government initiated theprocess of opening this sector to private Indian houses as well asinternational players. Many international players are eyeing the vast

potential of the Indian market. The entry of the foreign players in the sectorwith more financial resources, better experience and lower operational costswill have an advantage over the Indian companies involved in the business.The bigger private players claim that opening up insurance will give policy


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holders better product and services. The domestic insurance industry will asa result, have to face a greater competition. However, the Indian insurers dueto their extensive branch networking and long-standing association with theclient still have an advantage.

With the entry of private and global players like HDFC Standard life,ICICI Prudential, Kotak Mahindra Club Insurance, Hindustan TimesCommercial Union to name a few, the insurance industry is going to provideto provide many jobs and is going to witness phenomenal.The insuranceindustry in Indian has been lot of changes since the opening of this sector for

private population. Innovation on the service front include providing callcentre facilities, providing personalized planning looks, e- servicing of

products and the most recent is the introduction of third partyadministrations.

They are: -

1. Brokers .

An independent agent who represents the buyer, rather than the

insurance company, and tries to find the buyer the best policy by comparison

shopping.

An insurance broker acts as an intermediary between clients and

insurance companies. Clients may be either individuals or commercial


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businesses and organizations. Brokers use their in-depth knowledge of

risks and the insurance market to find and arrange suitable insurance

policies. Insurance brokers, unlike tied agents, are independent and offer

products from more than one insurer to ensure that their clients get the best

deal.

Insurance policies range from motor insurance, required by law to

drive a vehicle in the UK, to public, employers or product liability

insurance, which pays compensation on the basis of the assessment of legal

liability for damage, injury or harm.

2. Surveyors and loss Assessors.

Surveyors and loss Assessors are independent professionals appointedby the insurance company in order to assess the loss or damage, whenever aclaim is noticified under a policy issued by them. An insurance surveyormust be duly licensed by the IRDA.

3. Third party Administration.

There are new breed of intermediaries in the health insurance sectorwhich facilitate the access of the policy holders to a network of hospitals.

TPAs maintain the database of policy holders and the issue them identitycards with unique identification number and handle all the post policy issuesincluding claim settlements. They run a 24 hour toll-free number which can

be accessed from anywhere in the country.


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CHAPTER.6

CUSTOMER RELATIONSHIP MANAGEMENT

(CRM)

Since most insurance companies are not adequately equipped to helptheir agents deal with customer centered problems CRM insuranceenables insurance organizations to survive in a tough economicclimate by using the data the insurance company has on the existing

customers and then use it to increase the level of profitability. Itmanages to enhance your customer relationships based on customer'sunique requirements.

Customer data is available but insurance companies do not have itreadily assessable nor is it coherent. CRM insurance software creates aholistic view of the customer which helps eliminate customer irritationexperienced due to this, when they need to identify themselvesrepeatedly.

Insurance CRM assists Customer Service Representatives when theyare not able to properly access customer data. Having ample customerinformation on hand enables a CSR to be more confident of dealingwith the client. It removes the chance of errors.


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CRM enables customers themselves to do research on products, haveanswers to their questions etc. In addition to this policyholders or

beneficiaries can check their claim status, change their accountinformation, submit complaints etc. Insurers find that CRM is assistingthem in their marketing efforts as well through a comprehensiveunderstanding of the client base. CRM aids the insurance companies

by ensuring that campaigns are more affective.

ADVANTAGES OF CRM:-

1. Targeted marketing

2. Customer retention

3. Increased growth

4. Increased policy sales5. Increased insurance market share


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6. CRM Insurance integrates marketing with other operations

7. Efficient distribution channels are secured

8. CRM provides the chance to reduce operating expenses

9. It provides for more effective and efficient communication

10.It improves the response time

11.It increases customers satisfaction

12. Insurance application queries/ claim status queries can be

answered sooner

13.It reduces the time that is normally taken for printing

14.It decreases overall costs

15.Aids the call centre activities

CHAPTER.7

INNOVATIVE INSURANCE AGENCY

Innovative insurance service is one of the growing company inInsurance and Reinsurance brokers, established in Delhi, India in theyear2006 and has been operating/servicing in the domestic market.

Innovative insurance service provides their professional services in thearea of insurance and Reinsurance broking/consultancy as well as RiskManagement and Insurance Claims setting consultancy services.

Innovative insurance service has developed a considerable amount ofknowledge and experience in the field of insurance, reinsurance and RiskManagement in the course of handling the insurance and risk management

portfolio of different business organizations and individuals


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The group that doesnt believe in waiting for the innovation, butcreating it. Setting trends, writing success stories and adapting to an evolving


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Fact Sheet

Year of

Establishment

: 2004

Legal Status of

Firm

: Professional Association

Nature of Business: Service Provider

Number of

Employees

: Up to 10 People

Turnover : Up to US$ 0.25 Million (or up to Rs. 1 CroreApprox.)

Major Markets : Indian Subcontinent

Trade

Membership

: The Member of IRDA, LIC of India, Kotak lifeinsurance and Reliance life insurance.


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country. We had always rewritten the rules, but never lost sight our Indianvalues. The innovative group motto is to provide every service in the most

profitable and complete manner.

SERVICES

No matter what you are looking for, you will find it within theinnovative group. At ii in se, you can trust for all financial needs .for yourapparel needs, there is always Innovative Fashions. If you are in need of anycomputer service, head over to Raccord system. If its for home andconstruction, no look further than balaji Properties. And if you just wantwellness and health, come over to forever Living Products, USA. It is nowonder that the Innovative Group is one of the success stories in the country.

1. LIFE INSURANCE

Life insurance or life assurance is a contract between the policyowner and the insurer, where the insurer agrees to pay a designated

beneficiary a sum of money upon the occurrence of the insured individual's

or individuals' death or other event, such as terminal illness or critical illness.In return, the policy owner agrees to pay a stipulated amount called a

premium at regular intervals or in lump sums.

2.HEALTH INSURANCE

Home insurance provides compensation for damage or destruction of ahome from disasters. In some geographical areas, the standard insurances


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exclude certain types of disasters, such as flood and earthquakes that requireadditional coverage. Maintenance-related problems are the homeowners'responsibility. The policy may include inventory, or this can be bought as aseparate policy, especially for people who rent housing. In some countries,

insurers offer a package which may include liability and legal responsibilityfor injuries and property damage caused by members of the household,including pets.[

3. VEHICLE INSURANCE.

Auto insurance protects you against financial loss if you have anaccident. It is a contract between you and the insurance company. You agreeto pay the premium and the insurance company agrees to pay your losses asdefined in your policy. Auto insurance provides property, liability andmedical coverage:

1) Property coverage pays for damage to or theft of your car.

2) Liability coverage pays for your legal responsibility to others for bodilyinjury or property damage.3)Medical coverage pays for the cost of treating injuries, rehabilitation

and sometimes lost wages and funeral expenses.

4. BUSINESS INSURANCE.

Business insurance is a risk management tool that enables businessesto transfer the risk of a loss to an insurance company. By paying a relatively


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small premium to the insurance company, the business can protect itselfagainst the possibility of sustaining a much larger financial loss. All

businesses need to insure against riskssuch as fire, theft, natural disaster,legal liability, automobile accidents, and the death or disability of key

employeesbut it is especially important for small businesses.

Many large corporations employ a full-time risk management expert toidentify and develop strategies to deal with the risks faced by the firm, butsmall business owners usually must take responsibility for risk managementthemselves. Though it is possible to avoid, reduce, or assume some risks,very few companies can afford to protect themselves fully without

purchasing insurance. Yet many small businesses are either underinsured oruninsured.

5. GENERAL INSURANCE

General insurance or non-life insurance policies, includingautomobile and homeowners policies, provide payments depending on theloss from a particular financial event. General insurance typically comprisesany insurance that is not determined to be life insurance. It is calledproperty and casualty insurance in the U.S. and Non-Life Insurance inContinental Europe.


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6. Mutual funds

A mutual fund is a trust that pools the savings of a number ofinvestors who share a common financial goal. Money thus collected isinvested by the fund manager in different types of securities depending uponthe objective of the scheme. Incomes earned through these investments areshared by its unit holders in proportion to the number of units owned by

them. Mutual fund was established by UTI in India in 1963.


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CHAPTER. 7

TYPES OF LIFE INSURANCE POLICIES

Life insurance is all about making sure your family has adequatefinancial resources to make those plans and dreams come true. It providesfinancial protection to help your family or business to manage after yourdeath.

TYPES OF LIFE

INSURANCE

POLICIES

WHOLE LIFE

POLICY

ENDOWMENT

POLICIES

MONEY

BACK

POLICIES

UNIT

PLANS

PENSION

SCHEMES

CHILDREN

POLICIES

1.Whole life policy cover the insured for life. The insured does notreceive money while he is alive; the nominee receives the sum assured plus

bonus upon death of the insured.


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2.Endowment policies cover the insured for a specific period. Theinsured receive money on survival of the tern and is not covered thereafter.

3.Money back policies the nominee receives money immediatelyon death of the insured. On survival the insured receives money at regularintervals during the term. These policies cost more than endowment with

profit policies.

4. Children policies- the nominee receives a guaranteed amount ofmoney at a pre determined time and not immediately on death of the insured.On survival the insured receives money at the same pre determined time.These policies are best suited for planning childrens future education andmarriage costs.

5.Pension schemes- are policies that provide benefits to the insuredonly upon retirement. If the insured dies during the term of the policy, hisnominee would receive the benefits either as a lump sum of or as a pensionevery month.

6.Unit plans these are the best selling products these days. You canmix n match stability of endowment and gain form share market. These areinvestment plans for those who realize the worth of hard earned money.

These plans help you see youre saving yield rich benefits and help you savetax even if you dont have consistent income.


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LIFE INSURANCE PRODUCT AVAILABLE

FROM COMPANIES OTHER THAN LIC OF

INDIA.

H D F C S t a n d a r d L if e In s u r a n c e C o m p

is o n e o f I n d ia ' s le a d i n g p v t I n s u ra n c

c o m p a n i e s , w h i c h o f f er s a r a n g e o f

in d i v i d u a l a n d g ro u p in s u ra n c e s o l u t i

is a j o in t v e n t u re b e t w e e n H o u s i n g

D e v e l o p m e n t F in a n c e C o r p o r a t io n L i

Ind ia 's lead ing hous ing f inance ins t i t

a n d a G r o u p C o m p a n y o f th e S t a n d a r

P l c, U K . A s o n F e b r u a r y 2 8 , 2 0 0 9 H D F

h o l d s 7 2.4 3 % a n d S t a n d a r d L if e ( M a u

H o l d i n g ) 2 0 0 6 , L t d . h o l d s 2 6 . 0 0 % o f e

the jo in t ve nture , w h i le the res t i s he l

O t h e r s .

L A R GE ST WO R K I NG CA P IT A L

V A ST T A L E NT PO O L

LOW OPER AT ING COST

T E C H N O LO G Y F O C U S

ST R O NG C O R PO R A T E

R E L A T I O N SH I P


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Vision

Values

'Th e most su ccessfu l an d admired l i feinsu rance company, wh ich means th at wthe mos t tru sted compan y, th e easiest towi th, offer the best valu e for money, an d sstandards in the in du stry'.'Th e most obviou s ch oice for all '.

Values that we observe while we work:

1 . In tegr ity2 . Innovation3 . Cu s tomer cen tr ic4. People C are O ne for all and al l for one

5 . Team w ork6 . J oy an d S i mp licity

KEY STRENGTHS:-


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Financial Expertise

As a joint venture of leading financial services groups, HDFCStandard Life has the financial expertise required to manage your long-terminvestments safely and efficiently.

Range of Solutions

They have a range of individual and group solutions, which can be easilycustomised to specific needs. Their group solutions have been designed tooffer you complete flexibility combined with a low charging.

PRODUCTS OFFERED:-

1) PROTECTION PLANS :-

Protection Plans help you shield your family from uncertainties in life due tofinancial losses in terms of loss of income that may dawn upon them incaseof your untimely demise or critical illness. Securing the future of onesfamily is one of the most important goals of life.


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Types of Protection Plans

1) HDFC Term Assurance Plan

2) HDFC Loan Cover Term Assurance Plan

3) HDFC Home Loan Protection Plan

2) SAVINGS & INVESTMENT PLANS

As a judicious family man, our priority is to secure the well-being of thosewho depend on us. Not just for today, but also in the long term. More importantly,we have to ensure that our familys future expenses are taken care, even ifsomething unfortunate were to happen to us.

A big factor that we need to consider while building our wealth is inflation. Ithas a dual impact on your hard-earned savings. Sample this: An 35 Yearindividual needs to invest Rs. 36,000/- per year with 8% returns to build a corpusof Rs. 10,00,000/- by the age of 50 Years.


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However, Rs. 10,00,000/- after 15 years would be worth roughly around half of

what it is today once adjusted for inflation at the rate of 4%. Therefore, anindividual will need to save nearer to Rs 50,000/- annually to reach our targetedsavings at the age of 50 Years, if we consider inflation.

TYPES OF SAVINGS & INVESTMENT PLANS

Type Conventional Plans Unit Linked Insurance

Plans

Regular Premium HDFC EndowmentAssurance Plan

HDFC Money Back Plan

HDFC Assurance Plan#

HDFC Savings AssurancePlan

HDFC EndowmentSuper

HDFC EndowmentSupreme

HDFC SimpliLife

HDFC EndowmentSuper Suvidha

HDFC EndowmentSupreme Suvidha


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3.RETIREMENT PLANS

Retirement Plans provide us with financial security so that when our professional

income starts to ebb, you can still live with pride without compromising on your

living standards. Given the high cost of living and rising inflation, employer

pensions alone are not sufficient. Pension planning has therefore become criticaltoday.

Indias average life expectancy is slated to increase to over 75 years by 2050from the present level of close to 65 years. Life spans have been increasing due to

better health and sanitation conditions in the country. However, the averagenumber of years of employment has not been rising commensurately. The resultis an increase in the number of post-retirement years. Accordingly, it has becomenecessary to ensure regular income for life after retirement, so that we can livewith pride.


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PRIORITIES AT DIFFERENT STAGES OF LIFE:-

TYPES OF RETIREMENT PLANS

Type Conventional Plans Unit Linked Insurance Plans

Regular

Premium

HDFCPersonalPension Plan

HDFC Pension Super HDFC Pension Supreme

HDFC SL Pension Champion

Single

Premium/

Investment

HDFC SL Unit Linked PensionMaximiser II


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5. CHILD PLANS

Being a parent is one of the joys of life. Your child looks up to you anddepends on you for love, protection and support. You want to provide yourchild with the best in life.

They help you to save systematically so that you can secure your childsfuture needs. Be it higher education, his or her first home or any other

requirement, you will always be there for your child when he or she needsyou.

TYPES OF CHILDRENS PLANS

Conventional Plans Unit Linked Insurance Plans

HDFC Children's Plan HDFC YoungStar Super HDFC YoungStar Supreme

HDFC YoungStar Super Suvidha

HDFC YoungStar SupremeSuvidha


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6. GROUP PLANS

As an employer, they believe in providing the best opportunities foremployees while keeping the interests of the company in mind.

They offer a win-win solution with Solutions for Groups. Not only are theemployees covered for life from accidents and disablements, you can alsoefficiently manage their future with gratuity and pension plans.

TYPES OF GROUP PLANS

Group Term Insurance Plan

Group Variable Term Insurance Plan

Group gratuity plan


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2. ICICI PRUDENTIAL LIFE INSURANCE

ICICI Prudential Life Insurance Company is a joint venture betweenICICI Bank - one of India's foremost financial services companies-andPrudential plc - a leading international financial services groupheadquartered in the United Kingdom. Total capital infusion stands at Rs.47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plcholding 26%.

We began our operations in December 2000 after receiving approvalfrom Insurance Regulatory Development Authority (IRDA). Today, ournation-wide reach includes 1,960 branches (inclusive of 1,096 micro-offices), over 237,000 advisors; and 6 bancassurance partners.

3.Birla Sun Life Insurance Company Limited

Established in 2000, Birla Sun Life Insurance Company Limited(BSLI) is a joint venture between the Aditya Birla Group, a well known andtrusted name globally amongst Indian conglomerates and Sun Life FinancialInc, leading international financial services organization from Canada. Thelocal knowledge of the Aditya Birla Group combined with the domainexpertise of Sun Life Financial Inc., offers a formidable protection for itscustomers future.

With an experience of over 9 years, BSLI has contributedsignificantly to the growth and development of the life insurance industry in


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India and currently ranks amongst the top 5 private life insurance companiesin the country.

4. Kotak Life Insurance Company

Kotak Mahindra Old Mutual Life Insurance Ltd is a joint venturebetween Kotak Mahindra Bank Ltd., its affiliates and Old Mutual. Acompany that combines its international strengths and local advantages tooffer its customers a wide range of innovative life insurance products,

helping them in taking important financial decisions at every stage in life andstay financially independent. The company is one of the fastest growinginsurance companies in India and has shown remarkable growth since itsinception in 2001. Kotak Life Insurance employs around 5,565 people in itsvarious businesses and has 197 branches across 141 cities.

5. Reliance Life Insurance Company LimitedReliance Life Insurance Company Limited is a part of Reliance

Capital Ltd., a part of Reliance - Anil Dhirubhai Ambani Group. RelianceCapital is one of India's leading private sector financial services companies,which ranks among the top 3 private sector financial services and bankingcompanies. Reliance Life Insurance is not only one of India's fastest growinglife insurance companies, but also counts among the top 4 private sectorinsurers. In just 2 years, the Company has crossed the mark of 1.7 Million

policies.

RLIC launched around 600 branches in 10 months, taking the overallbranch network above to 740.


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CHAPTER.8

BANCASSURANCE

Bancassurance is the marketing of insurance products by Banks.Banks, apart from their regular products of deposits, advances, investmentsetc., are also engaged in selling insurance products, both life and non life, inorder to increase their fee based income, and to leverage their inherentadvantages as well established financial supermarkets.

The Benefits of Bancassurance:

1. Banks enjoy several advantages compared to insurance companies thatmake them ideal vehicles to carry the message of insurance to themasses, across a wide cross section of society, and in the process


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increase their business. By marketing a whole range of insuranceproducts in the life and non life sectors, Banks, not only spreadawareness of these products and facilities among the people, but alsomake a handsome amount of money by extending this service.

2. It is felt that Banks have a more personal relationship with the publicand a better understanding of their financial needs. Hence people aremore responsive to their Banker's advice.

3. Bank personnel are familiar and comfortable with financial language

and terminology, and so can easily learn the subject of insurance, inorder to sell these products. Further they are good at number crunchingand making a sales pitch that gives them a distinct advantage.

4. Banking and Insurance products can often be combined to offer abetter product mix to the consumer, in order to leverage the benefits ofboth the products and services.

5. The provision of insurance products through the banking channelenables the insurance companies to depend less upon the agents to selltheir products. It costs the insurance companies a lot to select, train,motivate, and remunerate the insurance agents to push their products.

6. Banks get an additional source of income from commissions and fees

from their insurance business. Especially the excessive competition forinterest based products has affected the bottomline of the Banks who


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are trying to build up alternative sources of income, through provisionof non banking products and services.

7. Banks cater to both categories of customers- the classes and themasses. Insurers can take advantage of this by pushing relevant

products through these distribution channels. Simple products for themasses, and more sophisticated ones for the classes.

The Flip side of Bancassurance:

1. Bancassurance is not rosy all the way for both Bankers as well asinsurers. There are several issues that both of them are concerned

about.

2. One of the most important issues and indeed the fear of Bankers arelosing business to the Insurers, in relation to similar products. Forinstance, a basic banking product like a fixed deposit may be placed ata disadvantage compared to a money market related insurance productthat offers both growth as well as insurance cover.


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3. Insurers have their own perceptions of Bankers as their marketers andfeel that often Bankers do not do enough to push their products.

4. Banks feel that insurers gain more from Bancassurance, as they do notincur expenditure on infrastructure, manpower, etc., whereas, thereturns accruing to Banks from this business are not worth the troubletaken by them.

5. Banks also stand the risk of facing the wrath of the customers for poorfollow up service, like claim settlement, etc., on part of the insurers.

6. Bankers may not appreciate certain finer points of insurance productsthey sell, and consequently face administrative and legal hassles fromthe customers.

CHAPTER.9

TECHNOLOGYIn todays highly competitive financial services environment, effective

organization employ technology in a strategic role to achieve competitiveedge. Technology plays an important role in aiding design and administeringof products, as a well in efforts to build lifelong customer relationships.

At the same time, technology investment will only help as long as firmsfind the right people: people with the right attitude, values, and ethics,commitment to excellence, and focus on customer service

1. Internet


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As a distribution channel, the internet facilities information flow,negotiation flow, service flow, transaction flow and promotion flow.Compared to the traditional channels, the net is definitely better forconducting research on consumer information seeking and search

behaviours, for getting feedback from consumers in a short period of time,and for creating communities online. Internet sales will experience explosivegrowth this is due to the fact the every $ 100 in first year premiums collected

by insurance company about $ 139 is spent on agents in the form ofcommission and other overhead expenses in the u.s. the same policy soldover the internet would cost just a fraction of the cost at about $ 15 for every$ 100 premium earned. Due to its low cost, almost all the InsuranceCompany in India has resorted to Internet. The future use of internet as adistribution channel is likely to be driven more by the insurance and its

technology suppliers the by consumers themselves.

2. Advertisement

The insurance services depend on effective promotional measures.Creation of awareness is found very instrumental in the generation ofimpulse buying. In a country like India the rate of illiteracy rate is high andthe rural economy has dominance in the national economy. It is essential tohave both personal and impersonal strategies. Advertising and publicitymeasures, organization of conference and seminars, incentive to policy

holders are impersonal communication.

3. Information technology

The process should be customer friendly in insurance industry thespeed and accuracy payment is of great importance. The processing methodshould be easy and convenient to the customers. IT and data warehousingwill smoothen the process flow. Information technology will help inservicing large numbers of customers efficiently and bring down overheads.

Technology can either complement or supplement the channels ofdistribution cost effectively. It can also help to improve customer servicelevels.


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CHAPTER. 10

GROWTH OF THE INSURANCE SECTOR

India's insurance sector is zooming to show an unprecedentedprogressive growth of more than 200% by the period of 2009-10.

The Associated Chambers of Commerce and Industry of India hasclocked out the fact that during this period, private players in theindustry will see a growth of about 140 per cent, owing to the adoptionof the aggressive marketing techniques in comparison of the growthrate of 35 per cent-40 per cent achieved by the state owned insurancecompanies.


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The chamber is expected to poise the business of insurance to reach atRs.2000 billions in coming 2 years from the present level of Rs. 500

billion.

With the result of adoption of the intense marketing strategies by the

private players, the declination has been witnessed in respect of theshare of the state owned insurance companies captured in the market.

The market share fallout has been noticed in context of such companieslike GIC, LIC, which have come down to nearly 70 per cent in the past4-5 years from the 97 per cent.

The experts have fore casted the more severe competition in theinsurance sector likely to be occurred in the near future. Till recently,insurance sector was majority driven by the government sector players

but now many private sector multinational players have come into the

picture. Like HDFC, ICICI, Kotak, Mahindra and Birla Sunlife. Insurance sector has been characterized as the booming sector of the

Indian arena, which has shown the growth rate of more than 15 percent to 20 per cent.

Insurance in India is put under the federal subject and is governed bythe Insurance Act, 1938, the Life Insurance Corporation Act, 1956 andGeneral Insurance Business(Nationalization) Act, 1972, InsuranceRegulatory and Development Authority(IRDA) Act, 1999 and byvarious other acts.

CHAPTER.11

CONCLUSION

The insurance landscape in India is undergoing a major change.

Insurance protects and safeguards the interest of the individuals and

businessmen.


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With the liberalization, privatization, deregulation and globalization of

this sector, several new players have entered the scene.

Competition will surely cause the market to grow beyond current rates

and offer additional consumer choices through the introduction of new

products, services, and price options.

The domestic insurance industry, have to face a greater competition.

However, the Indian insurers due to their extensive branch networkingand long-standing association with the client still have an advantage.

At the same time public and private sector companies have to work

together to ensure healthy growth and development of the sector.

The insurance sector reforms such as malhotra committee and IRDAact were established for the growth of the insurance sector. The

malhotra committee aimed at "creating a more efficient and

competitive financial system suitable for the requirements of the

economy, whereas IRDA was established on 19th April 2000 to

protect the interests of holder of insurance policy and to regulate,

promote and ensure orderly growth of the insurance industry.


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Bancassurance is a win-win model for insurance companies and banks.Insurance companies, with their relatively limited infrastructure, areable to sell their products throughout the country by using thedistribution channel of bank branches. At the same time, banks,

without investing in additional resources or infrastructure, were able toearn a fee-based income, to supplement their core lending activities.

Technology such as Internet, advertisements and informationtechnology plays an important role in aiding design and administeringof products, as a well in efforts to build lifelong customerrelationships.

India's insurance sector is zooming to show an unprecedentedprogressive growth of more than 200% by the period of 2009-10. ThusInsurance sector has been characterized as the booming sector of theIndian arena, which has shown the growth rate of more than 15 percent to 20 per cent.


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CHAPTER.12

RECOMMENDATION

1) Simple new product which should be economical and result orientedshould be introduced.

2) Provide new product with competitive prices.

3) Focus on aggressive advertising for the success of insurancecompanies.

4) Provide proper training facilities to the intermediaries in order toincrease their efficiency.

5) Appoint trained, skilled and professional agents as intermediaries todevelop and expand insurance market.

6) Analyze the challenges and market opportunities in order to achievethe targets.

7) Provide after sale service at the time of processing a claim,documentation and settlement of claims.

8) Build up a large network of office in order to take insurance close tothe insurance public.

9) Use innovative technology to design and administer insuranceproducts.


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Documents

INSURANCE Inoovation