Naresh Project 2

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Doon Valley Institute of Engineering & Technology 1

ASUMMER TRAINING PROJECT REPORT

ON

Comparative Analysis of Competitive Strategies of various Insurance

Companies with SBI Life Insurance

Submitted in partial fulfillment of the requirementFor the award of the degree

Of

MASTERS OF BUSINESS ADMINISTRATION

SESSION (2010-2012)

SUBMITTED TO :- SUBMITTED BY:-KURUKSHETRA UNIVERSITY, Name: Ritu choudharyKURUKSHETRA Class: MBA 3rd sem

Specilisation: Finance/HRCollege Roll No: 14310042

DOON VALLEY INSTITUTE OF COMPUTER APPLICATION,

KARNAL(APPROVED BY AICTE AND AFFILIATED TO KURUKSHETRA

UNIVERSITY,KURUKSHETRA


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ACKNOWLEDGEMENT

In the completion of the internship project work, there is a feeling of satisfaction and in

this moment of happiness, I feel prompted to record my sincere gratitude for those who

were a source of inspiration, encouragement and guidance.

With great happiness and gratitude, I would like to extend my sincere thanks to Dr.G.S.

Sharma (Worthy Director) and Mrs. Monika Sharma (H.O.D MBA), for all their

support and guidance. My heartfelt gratitude to Mr. Pawan Sharma(Territorymanager) for their precious guidance and suggestions.

Lastly, I would like to thank the almighty & my parents for their moral support and my

friends with whom I shared my day-to-day experience and received lots of suggestions

that improved my quality of work.

Ritu Choudhary


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DECLARATION

I, Ritu Choudhary, a Student of MBA III semester, studying at Doon Valley Institute Of

Computer Application, Karnal, hereby declare that the Training report on ComparitiveAnalysis of competitive strategies of various insurance companies with SBI life

Insurance submitted to Kurukshetra University, Kurukshetra in partial fulfillment for the

requirement of the degree of Masters of business administration is the original work done

by me.

The information and data given in the report is authentic to the best of my knowledge.

This report is not being submitted to any other university for the award of any other

degree, diploma and fellowship.

RITU CHOUDHARY


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PREFACE

A Little bit about project

2 small paras

In my report, I have made an attempt to study the comparative analysis of competitive

strategies of various insurance companies with sbi life insurance. It required study of

annual reports for getting required information. It gave me a great deal of exposure and I

found the study of annual reports quite tedious but interesting.

I have tried my level best to prepare this report an error free report every effort has beenmade to offer the most authenticate position with accuracy.

In nut shell, whole of my training report was invaluable experience in the pursuit of

knowledge. and the overall gain to me will be reflected in the report itself.


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TABLE OF CONTENTS

S.No. Particulars Page No.

1. Introduction Of The Project

2. Objectives Of The Study

3. Industry Profile

4. Company Profile

5. About the Topic- _____________________

6. Research Methodology

7. Data Analysis And Interpretation.

8. Findings

9. Conclusion

10. Limitations Of The Study

11. Suggestions

12. Bibliography

Annexure


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INTRODUCTION OF

THEPROJECT


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Introduction

The story of insurance is probably as old as the story of mankind. Tendency of a human

being to secure themselves against loss and disaster has been from the starting of world.

They sought to avert the evil consequences of fire and flood and loss of life and were

willing to make some sort of sacrifice in order to achieve security. Though the concept of

insurance is largely a development of the recent past, particularly after the industrial era

past few centuriesyet its beginnings date back almost 6000 years as per records.

Insurance business is divided into four classes-

Life Insurance

Fire Marine

Miscellaneous Insurance.

Insurance provides-

Protection to investor.

Accumulation of savings.

Channeling these savings into sectors needing huge long term investment.

FUNCTIONS OF INSURANCE:

Provides Protection- The primary function of insurance is to provide protection

against future risk, accidents and uncertainty. Insurance cannot check the

happening of the risk, but can certainly provide for the losses of risk. Insurance is

actually a protection against economic loss, by sharing the risk with others.

Collective bearing of risk- Insurance is an instrument to share the financial loss

of few among many others. Insurance is a mean by which few losses are shared


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among larger number of people. All the insured contribute the premiums towards

a fund and out of which the persons exposed to a particular risk is paid.

Assessment of risk- Insurance determines the probable volume of risk by

evaluating various factors that give rise to risk. Risk is the basis for determiningthe premium rate also.

Provide certainty- Insurance is a device, which helps to change from uncertainty

to certainty. Insurance is device whereby the uncertain risks may be made more

certain.

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

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

uncertainty.

Contributes towards the development of industries- Insurance provides

development opportunity to those larger industries having more risks in their

setting up. Even the financial institutions may be prepared to give credit to sick

industrial units which have insured their assets including plant and machinery.

Means of savings and investment- Insurance serves as savings and investment,

insurance is a compulsory way of savings and it restricts the unnecessary

expenses by the insured's For the purpose of availing income-tax exemptions also,

people invest in insurance.

Source of earning foreign exchange- Insurance is an international business. The

country can earn foreign exchange by way of issue of marine insurance policies

and various other ways.

Risk free trade- Insurance promotes exports insurance, which makes the foreign

trade risk free with the help of different types of policies under marine insurance

cover.


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LIFE INSURANCE

Life insurance is a contract under which the insurer (Insurance Company) inConsideration of a premium paid undertakes to pay a fixed sum of money on

the death of the insured or on the expiry of a specified period of time

whichever is earlier. In case of life insurance, the payment for life insurance policy is

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

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

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

death of the person insurance offers protection against loss of income and compensate the

titleholders of the policy.

Roles of life insurance-

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

investment instruments and it also provides added incentives or bonus offered by

insurance companies.

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

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

provide.

Life insurance as tax planning- -

Insurance serves as an excellent tax saving

mechanism too.

Importance of life insurance-


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Protection against untimely death- - Life insurance provides protection to the

dependents of the life insured and the family of the assured in case of his untimely

death. The dependents or family members get a fixed sum of money in case of

death of the assured.

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

Life insurance enables a person to enjoy peace of mind and a sense of security in

his/her old age.

Promotion of savings- - Life insurance encourages people to save money

compulsorily. When life policy is taken, the assured is to pay premiums regularlyto keep the policy in force and he cannot get back the premiums, only surrender

value can be returned to him. In case of surrender of policy, the policyholder gets

the surrendered value only after the expiry of duration of the policy.

Initiates investments- - Life Insurance Corporation encourages and mobilizes

the public savings and canalizes the same in various investments for the economic

development of the country. Life insurance is an important tool for the

mobilization and investment of small savings.

Credit worthiness- - Life insurance policy can be used as a security to raise

loans. It improves the credit worthiness of business.

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

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

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

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

deduction from the total income under section 80C.

Type of life insurance policies--


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Endowment policies-This type of policy covers risk for a specified period, and

at the end of the maturity sum assured is paid back to policyholder with the

bonuses during the term ofthe policy.

Money back policies-

This type of policy is for periodic payments of partial

survival benefits during the term of the policy as long as the policy holder is alive.

Group insurance- This type of insurance offers life insurance protection under

group policies to various groups such as employers-employees, professionals, co-

operatives etc it also provides insurance coverage for people in certain approved

occupations at the lowest possible premium cost.

Term life insurance policies-This type of insurance covers risk only during the

selected term period. If the policy holder survives the term, risk cover comes to anend. These types of policies are for those people who are unable to pay larger

premium required for endowment and whole life policies. No surrender, loan or

paid up values are in such policies.

Whole life insurance policies- This type of policy runs as long as the

policyholder is alive and is covered for the entire life of the policyholder. In this

policy the insured amount and the bonus is payable only to nominee on the death

of policy holder.

Joint life insurance policies- These policies are similar to endowment policies in

maturity benefits and risk cover, but joint life policies cover two lives

simultaneously such as married couples. Sum assured is payable on the first death

and again on the death of survival during the term of the policy.

Pension plan- A pension plan or annuity is an investment over a certain number

of years but does not provide any life insurance cover. It offers a guaranteed

income either for a life or certain period.


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Unit linked insurance plan- ULIP is a kind of insurance plan which provides

life cover as well as return on premium paid over a certain period of time. The

investment is denoted as units and represented by the value called as net asset

value (NAV).

INSURANCE RISK

Insurancenormally insure only pure risks .However, not all pure risk is insurable .certain

requirements usually must be fulfilled before a pure risk can be privately insured .From

the view point of the insurer, there are ideally six requirement of an insurable risk

There must be a large number of exposure units

The loss must be accidental and unintentional.

The loss must be determinable and measurable.

The loss should not be catastrophic.

The chance of loss must be calculable.

The premium must be economically feasible


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Objective

To compare insurance companies competitive strategies on various

parameters with SBI Life Insurance.

To understand the working of insurance industry.


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INdustry profileHistory-

Life insurance came to India from England in 1818 when oriental life

insurance company started in Calcutta by Europeans. After this many insurancecompanies had been started in India. But these companies were looking after only the

needs of European community established in India. Indian people were not being insured

by these companies. First Indian life insurance company came as Bombay mutual life

insurance assurance. Second company was Bharat insurance company came in 1896.

After this the united India in madras, national Indian and national insurance in Calcutta

and the co-operative assurance in Lahore were established in 1906.

To regulate Indian insurance business first insurance act came in 1912 as

life insurance company act and provident fund act. These acts consist of premium rates

tables and periodical valuations of companies. In the first two decade of 20th century

many life insurance companies were started. So the insurance act came in 1938 to

governing life and non life insurance companies and to provide strict state control. In

1956 the life insurance business in India was nationalized. In 1956 life insurance

corporation of India (LIC) was created to spreading life insurance much more widely

particularly in rural areas. In that year LIC had 5 zonal offices, 33 divisional offices and

212 branch offices. In 1957 the business of LIC of sum assured of 200crores, 1000crores

in 1970, and 7000crores in 1986.

Indian regulatory development authority

In 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as

an autonomous body to regulate and develop the insurance industry. The IRDA was

incorporated as a statutory body in April, 2000. The key objectives of the IRDA include

promotion of competition so as to enhance customer satisfaction through increased


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consumer choice and lower premiums, while ensuring the financial security of the

insurance market. The IRDA opened up the market in August 2000 with the invitation for

application for registrations. Foreign companies were allowed ownership of up to 26%.

The Authority has the power to frame regulations under Section 114A of the Insurance

Act, 1938 and has from 2000 onwards framed various regulations ranging from

registration of companies for carrying on insurance business to protection of

policyholders interests.

Role of IRDA-

Protecting the interests of policyholders.

Establishing guidelines for the operations of insurers, and brokers.

Specifying the code of conduct, qualifications, and training for insuranceintermediaries and agents.

Promoting efficiency in the conduct of insurance business.

Regulating the investment of funds by insurance companies.

Specifying the percentage of business to be written by insurers in rural sectors.

Handling disputes between insurers and insurance intermediaries.

Changing perception of Indian customers-

Indian Insurance consumers are like Indian Voters, they are soft but when time is right

and ripe, they demand and seek necessary changes. De-tariff of many Insurance Products

are the reflection of changing aspirations and growing demand of Indian consumers.

For historical years, Indian consumers were at receiving end. Insurance Product was

underwritten and was practically forced onto consumers on a Take-it-As-it-basis. All

that got changed with passage of IRDA act in 1999. New insurance companies have

come into existence leading to open competition and hence better products for customers.


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Indian customers have become very sensitive to Coverage / Premium as well as the

Products (read Risk Solution), that is given to them. There are not ready to accept any

product, no matter even if that is coming from the market leader, should that product is

not serving the purpose. A case in point is ULIP Product / Group Life and Credit Life in

Life Insurance segment and Travel / Family Floater Health and Liability Insurance in the

Non-life segment are new age Avatar. The new products are constantly being demanded

by Indian consumers, which is putting huge pressures on Insurance companies (Read

Risk Under-writers) and Brokers to respond.

Customers are looking at Insurance for covering Pure Risk now which I have covered in

my next section. Another good reason why we are seeing quick changes in the buying

behavior of Insurance from mere Investment to risk mitigation is the cost of Replacement

of Goods (ROG) or Cost of Services (COS).

Now Indian customers are aware of insurance industry and insurance products provided

by companies. They have become more sensitive. They would not accept any type of

insurance product unless it fulfills their requirements and needs. In historic days

customers looking at insurance products as a life cover which can provide security

against any unacceptable events, but now customers look at insurance products as an

investment as well as life cover. So todays customers wants good return from the

insurance companies. The Indian customers forms the pivot of each companys strategy.

Investment of Indian household savings (as a % in different sector)

BANK DEPOSITS 39%

CORP. BANKS 2%

SHARES AND DEBENTURES 1%

MUTUAL FUNDS 2%

NBFCS 3%

GOVT. BONDS 13%


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INSURANCE 13%

PF/ RETIRE FUNDS 21%

CURRENCY 6%

Source - www. irdaindia.com

Changing Face of Indian Insurance Industry-

After the Insurance Regulatory and Development Authority Act have been passed

there has been establishment of many private insurance companies in India. Previously

there was a monopoly business for Life Insurance Corporation of India (L.I.C.) who was

the only life-insurance company for the people till 2000. L.I.C. still holds 71.4% of the

market share in 2006. But after the introduction of private life insurancecompanies there

is a great competition in Indian market now. Everyone is trying to capture the fresh

market here and penetrate it with aggressive marketingstrategies. Today life-insurance is

not only limited up to just life risk cover and maturity period bonuses but changed to

greater return from the investments. With the introduction of the unit linked insurance

policies these companies are investing the money in different investment instruments likeshares, bonds, debentures, government and other securities. People are demanding for

higher returns with the life risk cover and private companies are giving 30-40% average

growth per annum. These life-insurance companies have every kind of policies suiting

every need right from financial needs of, marriage, giving birth and rearing up a child, his

education, meeting daily financial needs of life, pension solutions after retirement. These

companies have every aspects and needs of our life covered along with the death-benefit.

In India only 25% of the population has life insurance.

So Indian life-insurance market is the target market of all the companies who either want

to extend or diversify their business. To tap the Indian market there has been tie-ups

between the major Indian companies with other International insurance companies to

start up their business.


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The government of India has set up rules that no foreign insurance company can set up

their business individually here and they have to tie up with an Indian company and this

foreign insurance company can have an investment of only 24% of the total start-up

investment.

Indian insurance industry can be featured by-

Low market penetration.

Ever growing middle class component in population.

Growth of customers interest with an increasing demand for better insurance

products.

Application of information technology for business.

Rebate from government in the form of tax incentives to be insured.

Today, the Indian life insurance industry has a dozen private players, each

of which are making strides in raising awareness levels, introducing innovative products

and increasing the penetration of life insurance in the vastly underinsured country.

Several of private insurers have introduced attractive products to meet the needs of their

target customers and in line with their business objectives. The success of their effort is

that they have captured over 28% of premium income in five years.

The biggest beneficiary of the competition among life insurers has been the

customer. A wide range of products, customer focused service and professional advice

has become the mainstay of the industry, and the Indian customers forms the pivot of

each companys strategy. Penetration of life insurance is beginning to cut across socio-

economic classes and attract people who have never purchased insurance before.

Life insurance is also now being regarded as a versatile financial planning

tool. Apart from the traditional term and saving insurance policies, industry has seen the

entry and growth of unit linked products. This provides market linked returns and is

among the most flexible policies available today for investment. Now products are


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priced, flexible, and realistic and sustain so people in better position to understand the

risk and benefits of the product and they are accepting these innovative products.

So it is clear that the face of life insurance in India is changing, but with

the changes come a host of challenges and it is only the credible players with a long term

vision and a robust business strategy that will survive. Whatever the developments, the

future and the opportunities in this industry will surely be exciting.

There are 12 private players in Indian life insurance market.

6 bank owned insurers- - HDFC standard life, ICICI prudential, ING Vysya, MetLife,

OM Kotak, SBI life.

6 independent insurers- - Aviva, ANP Sanmar, Birla sun life, Bajaj Allianz, Max New

York life, Tata AIG.

Major international insurers are- Prudential and Standard life

from UK, Sun life of Canada, AIG, MetLife and New York life of the US.

Increasing growth after Regulation-

YEAR LIC (in bn Rs.) PRIVATE PLAYER(in bn Rs.)

FY06 110 60

FY07 120 78

FY08 130 98

FY09 180 120

FY10 240 160

Source- Insurance Industry (IRDA Public Release)

Possibilities for insurance companies in India-

Further deregulation of the market.

Greater concern for the customers.

Newer products and services.


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Competition and quality consciousness.

Cost effective operations.

Restructuring of the public sector.

Consolidation of domestic insurance markets.

Technology driven shift in product design.

Actual operations and distribution.

Convergence of financial services

GLOBAL INSURANCE INDUSTRY

Globally, insurers increasingly are pressured by the demands of their clients. The

development of global insurance industry over the past few years was influenced by

booming stock markets which enabled considerable capital gains to be made in non life

business. Increase in insurers equity capital increased underwriting capacity, while

demand did not develop at the same pace, resulting in decrease in insurance policies

prices. The stock market boom of the past few years led to demand for unit linked

insurance products.

The global insurance industry is growing at rapid pace. Most of the markets are

undergoing globalization. Lot of mergers and acquisition are taking place in the insurance

world. The rapidity in the industry, technological improvement has resulted in pressures

on a few economic parameters. The world insurance industry is at peak of its

globalization process.

Global insurance market is increasing by an average of six percent per year

since 1990. Insurance companies have collected $2443.7 billion premium worldwide


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according to the global development of premium volume in 144 countries in 2009.

$1521.3 has been generated as life insurance premium and $922.7 as non life insurance

premium. The US accounted for 35% of global life and non life premium, Japan had

global share of 21%, and UK was having 10% of global share.

Influence on Indian insurance industry-

In this era of globalization, insurance companies face a dynamic global environment.

Dramatic changes are taking place owing to the internationalization of activities,

appearance of new risk, new types of covers to match with new risk situations, and

unconventional and innovative ideas on customer services. Low growth rates in

developed markets, changing customers needs, and the uncertain economic conditions in

the developing world are exertingpressure on insurers resources and testing their ability

to survive. Now the existing insurers are facing difficulties from non-traditional

competitors those are entering the retail market with new approaches and through new

channels.India has a rapidly growing middle class and this section can afford to buy

insurance products. This shows the attraction that the Indian market holds for foreign

insurers who have been putting pressure on developing countries as well as on India to

open up its market.

Life insurance penetration as a % of GDP

United kingdom 8.9%

Japan 8.3%

Korea 7.3%

United states 4.1%

Malaysia 3.6%

India 3.0%


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China 1.8%

Brazil 1.3%

Source- www.indianinsuranceresearch.com

Functioning of insurance industry

Insurers business model-Profit = earned premium + investment income - incurred loss - underwriting expenses

Insurers make money in two ways- (1) through underwriting, the processes by which

insurers select the risks to insure and decide how much in premiums to charge for

accepting those risks and (2) by investing the premiums they collect from insured.

The most difficult aspect of the insurance business is the underwriting of policies. Usinga wide assortment of data, insurers predict the likelihood that a claim will be made

against their policies and price products accordingly. To this end, insurers use actuarial

science to quantify the risks they are willing to assume and the premium they will charge

to assume them. Data is analyzed to fairly accurately project the rate of future claims

based on a given risk. Actuarial science uses statistics and probability to analyze the risks

associated with the range of perils covered, and these scientific principles are used to

determine an insurer's overall exposure. Upon termination of a given policy, the amount

of premium collected and the investment gains thereon minus the amount paid out in

claims is the insurer's underwriting profit on that policy.

An insurer's underwriting performance is measured in its combined ratio. The loss ratio

(incurred losses and loss-adjustment expenses divided by net earned premium) is added

to the expense ratio (underwriting expenses divided by net premium written) to determine

the company's combined ratio. The combined ratio is a reflection of the company's

overall underwriting profitability. A combined ratio of less than 100 percent indicates

underwriting profitability, while anything over 100 indicates an underwriting loss.

Insurance companies also earn investmentprofits on float. Float or available reserve

is the amount of money, at hand at any given moment that an insurer has collected in

insurance premiums but has not been paid out in claims. Insurers start investing insurance
http://en.wikipedia.org/wiki/Earned_premiumhttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Actuarial_sciencehttp://en.wikipedia.org/wiki/Actuarial_sciencehttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Probabilityhttp://en.wikipedia.org/wiki/Underwriting_profithttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Investmenthttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Underwriting_profithttp://en.wikipedia.org/wiki/Probabilityhttp://en.wikipedia.org/wiki/Statisticshttp://en.wikipedia.org/wiki/Actuarial_sciencehttp://en.wikipedia.org/wiki/Actuarial_sciencehttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Underwritinghttp://en.wikipedia.org/wiki/Earned_premium


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premiums as soon as they are collected and continue to earn interest on them until claims

are paid out.

Naturally, the float method is difficult to carry out in an economically depressed

period. Bear markets do cause insurers to shift away from investments and to toughen uptheir underwriting standards. So a poor economy generally means high insurance

premiums. This tendency to swing between profitable and unprofitable periods over time

is commonly known as the "underwriting" or insurance cycle.

Finally, claims and loss handling is the materialized utility of insurance. In managing the

claims-handling function, insurers seek to balance the elements of customer satisfaction,

administrative handling expenses, and claims overpayment leakages.

Investment management-

Investment operations are often considered incidental to the business of insurance, and

have traditionally viewed as secondary to underwriting. In the past risk management was

the most important part of business, whereas today the focus has shifted to fund

management. Investment income is a large component of insurance revenues, skilful and

careful management of funds. Insurance is a business of large numbers and generates

huge amount of funds over time. These funds arise out of policyholder funds in the caseof life insurance, and technical and free reserves in the non-life segments. Time lag

between the procurement of premium and the payment of claim provides an interval

during which the funds can be deployed to generate income. Insurance companies are

among the largest institutional investors in the world. Assets managed by insurance

companies are estimated to account for over 40% of the worlds top ten asset managers.

Returns on investments influence the premium rates and bonuses and

hence investment income will continue to be an important component of insurance

company profits. In life insurance, benefits from insurance profits accrue directly to

policy holders when it is passed on to him in the form of a bonus. In non life insurance

the benefits are indirect and mostly by the creation of an investment portfolio. Investment

income has to compensate for underwriting results which are increasingly under pressure.
http://en.wikipedia.org/wiki/Insurance_cyclehttp://en.wikipedia.org/wiki/Insurance_cycle


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In the case of insurance, the difference between revenue and the expenses is known as

operating surplus.

Revenue =premium.

Expenses =sum of claims + commission payable on procurement of business +

operating expenses.

Operating surplus =revenue-expenses.

Net investment income includes income from trading in and holding stock market

securities including government securities, special deposits with the central government,

loans to several public utilities and service providers in state government.

Insurance premium collected is converted in a pool of fund then divided in to four

expenses.

To pay the expenses of the management.

To pay agency commission.

To pay for the claims.

Surplus money will be invested in govt. securities.

Insurance and economy Indian economy is growing in reference to global market. Business of insurance

with its unique features has a special place in Indian economy.

It is a highly specialized technical business and customer is the most concern

people in this business, therefore this business is able to spur the growth of

infrastructure and act as a catalyst in the overall development of Indian economy. The high volumes in the insurance business help spread risk wider, allowing a

lowering of the rates of the premium to be charged and in turn, raising profits.

When there is a bigger base, the probabilities become more predictable, and with

system wide risks balanced out, profits improve. This explains the current

scenario of mergers, acquisitions, and globalization of insurance.


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Insurance is a type of savings. Insurance is not only important for tax benefits, but

also for savings and for providing security. It can be serving as an essential

service which a welfare state must make available to its people.

Insurance play a crucial role in the commercial lives of nations and act as the

lubricants of economic activities. Insurance firms help to spread the potentially

financial consequences of risk among the large number of entities, to mobilize

and distribute savings for productive use, facilitate investment, support and

encourage external trade, and protect economic entities against external risk.

Insurance and economic growth mutually influences each other. As the economy grows,

the living standards of people increase. As a consequence, the demand for life insurance

increases. As the assets of people and of business enterprises increase in the growth

process, the demand for general insurance also increases. In fact, as the economy widens

the demand for new types of insurance products emerges. Insurance is no longer

confined to product markets; they also cover service industries. It is equally true that

growth itself is facilitated by insurance. A well-developed insurance sector promotes

economic growth by encouraging risk-taking. Risk is inherent in all economic activities.

Without some kind of cover against risk, some of these activities will not be carried out at

all. Also insurance and more particularly life insurance is a mobilizer of long termsavings and life insurance companies are thus able to support infrastructure projects

which require long term funds. There is thus a mutually beneficial interaction between

insurance and economic growth. The low income levels of the vast majority of

population have been one of the factors inhibiting a faster growth of insurance in India.

To some extent this is also compounded by certain attitudes to life. The economy has

moved on to a higher growth path. The average rate of growth of the economy in the last

three years was 8.1 per cent. This strong growth will bring about significant changes in

the insurance industry.

At this point, it is important to note that not all activities can be insured. If that

were possible, it would completely negate entrepreneurship. Professor Frank Knight in

his celebrated book Risk Uncertainty and Profit emphasized that profit is a


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consequence of uncertainty. He made a distinction between quantifiable risk and non-

quantifiable risk. According to him, it is non-quantifiable risk that leads to profit. He

wrote It is a world of change in which we live, and a world of uncertainty. We live only

by knowing something about the future; while the problems of life or of conduct at least,

arise from the fact that we know so little. This is as true of business as of other spheres

of activity. The real management challenges are uninsurable risks. In the case of

insurable risks, risk is avoided at a cost.

Company ProfileSTATE BANK OF INDIAThe State Bank of India, the countrys oldest Bank and a premier in terms ofbalance sheet size, number of branches, market capitalization and profits istoday going through a momentous phase of Change and Transformation the two hundred year old Public sector behemoth is today stirring out of its

Public Sector legacy and moving with an ability to give the Private andForeign Banks a run for their money.

The bank is entering into many new businesses with strategic tie ups Pension Funds, General Insurance, Custodial Services, Private Equity,Mobile Banking, Point of Sale Merchant Acquisition, Advisory Services,


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structured products etceach one of these initiatives having a huge potentialfor growth.

The Bank is forging ahead with cutting edge technology and innovative newbanking models, to expand its Rural Banking base, looking at the vastuntapped potential in the hinterland and proposes to cover 100,000 villagesin the next two years.

It is also focusing at the top end of the market, on whole sale bankingcapabilities to provide Indias growing mid / large Corporate with a

complete array of products and services. It is consolidating its globaltreasury operations and entering into structured products and derivativeinstruments. Today, the Bank is the largest provider of infrastructure debtand the largest arranger of external commercial borrowings in the country. It

is the only Indian bank to feature in the Fortune 500 list.

The Bank is changing outdated front and back end processes to moderncustomer friendly processes to help improve the total customer experience.With about 8500 of its own 10000 branches and another 5100 branches of itsAssociate Banks already networked, today it offers the largest bankingnetwork to the Indian customer. The Bank is also in the process of providingcomplete payment solution to its clientele with its over 21485 ATMs, andother electronic channels such as Internet banking, debit cards, mobilebanking, etc.

With four national level Apex Training Colleges and 54 learning Centresspread all over the country the Bank is continuously engaged in skillenhancement of its employees. Some of the training programmes areattended by bankers from banks in other countries.

The bank is also looking at opportunities to grow in size in India as well asInternationally. It presently has 82 foreign offices in 32 countries across theglobe. It has also 7 Subsidiaries in India SBI Capital Markets, SBICAP

Securities, SBI DFHI, SBI Factors, SBI Life and SBI Cards - forming aformidable group in the Indian Banking scenario. It is in the process ofraising capital for its growth and also consolidating its various holdings.


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SBI Life insurance

SBI LIFEa joint venture between

74% 26%

SBI Life Insurance is a joint venture between the State Bank of India andCardiff SA of France. SBI Life Insurance is registered with an authorizedcapital of Rs 1000 crore and a paid up capital of Rs 350 crore. SBI owns 74%of the total capital and Cardiff the remaining 26%.

State Bank of India enjoys the largest banking franchise in India. Along with its7 Associate Banks, SBI Group has the unrivalled strength of over 14,000

branches across the country, the largest in the world.

Cardiff is a wholly owned subsidiary of BNP Paribas, which is The EuroZones leading Bank. BNP is one of the oldest foreign banks with a presence in

India dating back to 1860. It has 9 branches in the metros and other majortowns in the country.

Cardiff is a vibrant insurance company specializing in personal lines such aslong-term savings, protection products and creditor insurance. Cardif has alsobeen a pioneer in the art of selling insurance products through commercial

banks in France and 29 more countries.

SBI Life Insurances mission is to emerge as the leading company offering acomprehensive range of Life Insurance and pension products at competitiveprices, ensuring high standards of customer service and world class operatingefficiency. The company plans to make the insurance buying process quick,simple and based on well-informed judgment.
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In 2004, SBI Life Insurance became the first company amongst privateinsurance players to cover 30 lakhs lives. The company expects to carve a nichein the Indian insurance market through extensive product innovation and aimsto provide the highest standards of customer service through a technologicalinterface. To facilitate this, call centers have been already installed and help

lines will be installed and customers will have access to their accounts throughthe Internet or through SBI branches.

The company proposes to make available ready liquidity to its Life Insurancepolicies by way of loans at SBI counters. This will make Life Insurance aliquid asset in the financial portfolio of households.

SBI Life Insurance is uniquely placed as a pioneer to usher bank assurance intoIndia. The company hopes to extensively utilize the SBI Group as a platformfor cross-selling insurance products along with its numerous banking product

packages such as housing loans, personal loans and credit cards. SBIs accessto over 100 million accounts provides a vibrant base to build insurance sellingacross every region and economic strata in the country.

SBI Life has a unique multi-distribution model encompassingBancassurance, Agency and Group Corporate.

SBI Life extensively leverages the SBI Group as a platform for cross-sellinginsurance products along with its numerous banking product packages suchas housing loans and personal loans. SBIs access to over 100 millionaccounts across the country provides a vibrant base for insurance penetrationacross every region and economic strata in the country ensuring truefinancial inclusion.

Agency Channel, comprising of the most productive force of more than20,000 Insurance Advisors, offers door to door insurance solutions tocustomers.

ADVANTAGES TO SBI LIFE INSURANCE. Customer Satisfaction - many of our customers who have bought an

insurance policy with us have bought a second one! Financially sound with over a 100 years of banking experience, when

you trusted us with your money, why would you trust somebody elsewith your protection needs.


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Affordability Easy to buy (accessibility) Trust & reliability. With us youre sure!

The company hopes to extensively utilize the SBI Group as a platform for

cross-selling insurance products along with its numerous banking product

packages such as housing loans, personal loans and credit cards. SBIs

access to over 100 million accounts provides a vibrant base to build

insurance selling across every region and economic strata in the country.

Under section 88 of insurance act 1961 an individual is entitled to a rebate

of 20 per cent on the annual premium payable on his/her life and life of

his/her children or adult children. The rebate is deductible from tax payable

by the individual or a Hindu Undivided Family. This rebate is can be availed

up to a maximum of Rs 12,000 on payment of yearly premium of Rs 60,000.

By paying Rs 60,000 a year, you can buy anything upwards of Rs 10 lakh in

sum assured. (Depending upon the age of the insured and term of the policy)This means that you get an Rs 12,000 tax benefit. The rebate is deductible

from the tax payable by an individual or a Hindu Undivided Family.

SBI Life Insurance is currently growing at an impressive rate of 200%. As

per the latest IrDA report SBI Life ranks No. 3 amongst the private insurers.

The company's market share has increased to 10% amongst the private

players and is 2.25% in the total industry. This year, the company is aiming

at a growth of 150%. The new business premium of the company from

beginning of the year to September 2006 is Rs 660 crores. The total business

premium of the company from the beginning of the year till September 2006

is Rs 765 crores. The company aims to collect first year premium of over Rs


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2,000 crores. SBI Life follow a multi distribution channel approach and

expect all channels to contribute to the overall growth. Today, the agency

channel contributes over 50% and banc assurance channel contributes to

40% of the business. Other channels like Credit Life and Group Corporate

are also performing very well.

SBI Lifes Key Accomplishments-

Bagged the coveted personal finance award-Outlook Money NDTV Profitbest Life Insurer 2008.

Globally topped at the prestigious MDRT 09, in terms of number of

Million Dollar Round Table (MDRT) members. First life insurer to receive CRISILs highest financial rating AAA/Stable.ICRA too has assigned iAAA rating indicating highest claims payingability to SBI Life Insurance.

Retains ISO 9001-2000 certificate for superior claim settlement process

Operational workflow of insurance agency

(SBI Life)

Every industry has an operational department which supports the market

division.

Front office partners (independent agents)

Develop insurance products

Distribute product

Plan and manage company

BUSINESS PARTNERS

CUSTOMERS


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Back office partners (Company agents)

Fulfill and service product

Claims

Regulatory Back up

In the reference to the SBI Life insurance, development of insurance

products, distribution, planning services products and claims are taken care

by the head office. Back office providers are those persons who take care of

the operational part of the organization and front office providers are the

people who brings sell to the organization. Back office has its own hierarchy

which is connected to head office, and every policy has to be processed to

head office. Unit for the operations is known as processing centre, and

processing centre within the city is known as mini processing centre.

Proposal forms come through front office and the verification of the

proposal is done by manually which is known as scrutiny. After scrutiny the

operational staff enters it in SBI Life website, which is done online. the entryof a proposal is done in a sequential order starting with scrutiny, inwards,

proposal wise inwards, cashier entry, cashier entry approval, data entry and

finally outwards. After finishing all these operations policy issues from the

head office of the state.

Distribution channels of SBI Life Insurance


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Products of SBI Life insurance

(1)Unit Linked products

Horizon 11

Unit Pus 11

Unit plus child Plan

Unit Plan Elite

(2)Pension Products

Horizon 11 Pension

(1) Group Employee Benefit Products

Retirement Solutions Cap Assure Gratuity

Group Immediate Annuity

SBI Life Golden Gratuity

Protection Plan

Sampoorn Suraksha

SBI Life Group Term Life Scheme

SBI Life

Banc assurance Agency CreditLife

Insurance Agents Corporate

Agents

Brokers

Corporate

Group


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Unit Plus 11 Pension

Lifelong Pension

(3)Pure Protection Products

Swadhan

Shield

keyman

(4)Money back scheme

products

Money Back

Sanjeevan Supreme

In Lieu of EDLI

(2)Group Loan Protection ProductsDhanaraksha Plus

Dhanaraksha Plus SP

Dhanaraksha Plus LPPT

Dhanaraksha Plus RP

(3) Group Savings Protection Plan

Nidhi Raksha RP

(4) Group Micro Insurance

COMPETITORS OF SBI LIFE INSURANCE

ICICI prudential- ICICI prudential insurance is a joint venture of ICICI

bank and prudential plc a leading financial service group in the UK. Total

capital stands for Rs. 37.72 billion, with ICICI Bank holding a stake of 74%

and Prudential plc holding 26%. ICICI begin their operations in December

2000 after receiving approval from IRDA. Now ICICI prudential is having

over 1000 offices, over 270000 advisors and 21bancassurance partners.

ICICI Prudential was the first life insurer in India to receive a National

Insurer Financial Strength rating of AAA from Fitch ratings.

Key features-

Understanding the needs of customers and offering them superior

products and service.


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Leveraging technology to service customers quickly, efficiently

and conveniently.

Developing and implementing superior risk management and

investment strategies to offer sustainable and stable returns to

policyholders.

Providing an enabling environment to foster growth and learning

for employees.

HDFC standard life insurance- HDFC Standard Life Insurance Company

Ltd. is one of India's leading private insurance companies. It is a joint

venture of Housing Development Finance Corporation Limited, India's

leading housing finance institution and a Group Company of the Standard

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

venture. Gross premium income of the HDFC for the year ending March 31,

2007 was Rs. 2, 856 crores and new business premium income was Rs.

1,624 crores. The company has covered over 8, 77,000 lives year ending

March 31, 2007. HDFC standard is having 1000 advisors in 11 towns.

Key features-

Creating corporate agents through HDFC bank in India.

Creating agents to provide total financial consultancy.

Introducing low cost group schemes for companies and NGOs.

Reliance life insurance- Reliance Life Insurance Company Limited is a part

of Reliance Capital Ltd. of the Reliance - Anil Dhirubhai Ambani Group.

Reliance Capital is one of Indias leading private sector financial services

companies, and ranks among the top 3 private sector financial services and


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banking companies, in terms of net worth. Reliance Capital has interests in

asset management and mutual funds, stock broking, life and general

insurance, proprietary investments, private equity and other activities in

financial services. Reliance Capital Limited (RCL) is a Non-Banking

Financial Company (NBFC) registered with the Reserve Bank of India under

section 45-IA of the Reserve Bank of India Act, 1934.

Aviva life insurance- Aviva is UKs largest and the worlds fifth largest

insurance Group. It is one of the leading providers of life and pensions

products to Europe and has substantial businesses elsewhere around the

world. Aviva has a joint venture with Dabur, one of India's oldest, and

largest Group of companies. And country's leading producer of traditional

healthcare products. In accordance with the government regulations Aviva

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

balance 74 per cent share. Aviva has 193 Branches in India (including rural

branches) supporting its distribution network.

Key features-

Through the Financial Health Check (FHC) Avivas sales force has

been able to establish its credibility in the market. The FHC is a free

service administered by the FPAs for a need-based analysis of the

customers long-term savings and insurance needs. Depending on the

life stage and earnings of the customer, the FHC assesses andrecommends the right insurance product for them.

Introduced the concept of Banc assurance in India.

Products to provide customers flexibility, transparency and value for

money.


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Differentiation in fund management operations.

MetLife Insurance- MetLife India Insurance Company Limited is an

affiliate of MetLife, Inc. and was incorporated as a joint venture between

MetLife International Holdings, Inc. and The Jammu and Kashmir Bank, M.

Pallonji and Co. Private Limited and other private investors. MetLife is one

of the fastest growing life insurance companies in the country. It offers a

range of innovative products to individuals and group customers at more

than 600 locations through its bank partners and company-owned offices.

MetLife has more than 32,000 Financial Advisors. It has approximately 70

million customers all over world.

Max New York life insurance- Max New York Life Insurance Company

Ltd. is a joint venture between New York Life, a Fortune 100 company and

Max India Limited, one of India's leading multi-business corporations The

Company's paid up capital is Rs. 907.4 crore.

Bharti Axa life insurance- Bharti Axa life insurance is a joint venture

between Bharti, one of Indias leading business groups with interests in

telecom, agri business and retail, and Axa world leader in financial

protection and wealth management. The joint venture company has a 74%

stake from Bharti and 26% stake of Axa.

Key features-

Using multi-distribution, multi product platform techniques.

Adapting AXA's best practices as a sound platform for profitable

growth.


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Leveraging Bharti's local knowledge, infrastructure and customer

base.

Delivering high levels of shareholder return.

Building long term value with business partners by enhancing the

proposition to their customers.

Tata AIG life insurance- Tata AIG Life Insurance Company Limited (Tata

AIG Life) is a joint venture company of the Tata Group and American

International Group, Inc. (AIG). The Tata Group holds 74 per cent stake in

the insurance venture with AIG holding the balance 26 percent. Tata AIG

Life provides insurance solutions to individuals and corporate. Tata AIG

Life Insurance Company started to operate its business in India on April 1,

2001.

Key features-

Establishing direct mailers; call-centers in 60 centers.

Creating awareness workshops in housing societies.

15-day trial period with refund, premium payment through credit card.

Bajaj Allianz life insurance- Bajaj Allianz life insurance company ltd. Is a

joint venture of Allianz AG, one of the worlds largest insurance companies

and Bajaj auto, one of the biggest two and three wheeler manufacturing

companies in the world. Company is having over 440000 satisfied customers

in India.

Key features-


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Tying up with seven regional rural banks sponsored by Syndicate

Bank to tap the rural market.

Introducing micro-insurance products and coming out with a new

capital guarantee product.

Expanding its agency force from 1.60 lakh to 2 lakh and the branch

network will also be increased from 900 to 1400.

ING Vysya life insurance- ING Vysya Life Insurance Company Limited a

part of the ING group the worlds largest financial services provider entered

in the private life insurance industry in India in September 2001.ING Vysya

Life is currently present in 246 cities and has a network of over 300

branches, staffed by 7,000 employees and over 51,000 advisors, serving over

5.5 lakh customers. ING Vysya Life has a diversified distribution channels,.

While Tied Agency remains the strongest channel, the Alternate Channels

business within ING Vysya Life is one of the fastest growing distribution

channels.

Birla sun life insurance- Birla Sun Life Insurance Company Limited

(BSLI) is a joint venture between the Aditya Birla Group and the Sun Life

Financial Services of Canada. It started operations in March 2001 after

receiving its registration license from IRDA in January 2001. Company is

having more than 45 branches across India.

Key features-

Focus on unit linked insurance products supported with protection

products to maintain leadership in product innovation.


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Use of multi distribution channels- Direct Sales Force, Alternate

Channels and offering convenient channels of purchase to customers.

Web-enabled IT systems for superior customer services and issuing

policies on the internet.

High degree of transparency in all business practices and procedures.

Working on operational Business Continuity Plan.


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research Methodology

RESEARCH

The word research is derived from the Latin word meaning to know. It is a systematic

and a replicable process, which identifies and defines problems, within specified

boundaries. It employs well-designed method to collect the data and analyses the

results. It disseminates the findings to contribute to generalize able knowledge. For

the proper analysis of data simple statistical techniques such as percentage were use.

It helps in making more generalization from the data available. The data, which was

collected from a sample of population, was assumed to be representing entire

population was interest. Demographic factors like age, income and educational

background was used for the classification purpose.

RESEARCH METHODOLOGY

Research methodology refers to the analysis of principles of methods, rules and

techniques. It involves the systematic study of methods which are applied to analyze a

specific projector study. In order to make the research organized and to increase its

reliability different methodologies are adopted. Research methodology involves thecollection of theories, concepts or ideas, comparative studies to different approaches

and individual methods which are conduced when a research work is performed.

RESEARCH DESIGN

Research Design is the arrangement of conditions for collection and analysis of data in amanner that aims to combine relevance to the research purpose with economy inprocedure.

TYPES OF RESEARCH DESIGN

1. Exploratory Research: To gain familiarity with the phenomenon or to achieve

new insights into it is known as exploratory research.

2. Descriptive Research: To portray accurately the characteristics of a particular

individual, situation or a group.
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3. Diagnostic Research: To determine the frequency with which something occurs

or with which it is associated with something else.

4. Hypothesis-testing Research: To test a hypothesis of casual relationship

between variables.

The research design used in this project report is Descriptive research design

METHOD OF DATA COLLECTION

In dealing with any problem it is often found that data at hand are inadequate, and hence,it becomes necessary to collect data that are appropriate. The data for this project iscollected from primary and secondary source.

1. Primary data: These data are raw material. They are the measurement observed

and recorded as a part of original study. They are original in character. The

investigator or researcher directly collects this data. The basic form of obtaining

this data is by observing and questioning.

2. Secondary data: the researcher as fresh data does not originally draw them.

These are collected by some other person for this purpose and published. These

types of data can be collected through various sources.

For this study the secondary data has been used from various company journals,

websites and Annual Reports.

COMPARATIVE ANALYSIS ONDIFFERENT INSURANCECOMPANIES


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1). STRATEGIES2). FINANCIAL ANALYSIS OFPRODUCTS

1) Market share of different insurance companies:

Excluding LIC, India which commands the Approx: 48% share of Indianinsurance industry.

Company Name Market Share (in %)

LIC 48.10%

ICICI Prudential 13.70%

Bajaj Allianz 10.30%

SBI Life 6.20%

HDFC Standard 4.10%

Birla Sunlife 3.40%

Reliance Life 3.40%


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Max New York 2.40%

OM Kotak 1.90%

AVIVA 1.80%

Tata AIG 1.50%

MetLife 1.40%ING Vysya 1.20%

Shriram Life 0.30%

Bharti Axa Life 0.20%

Data Source -www.irdaindia.org

2) Growth in premiums of different insurance

companies

Companies Premium(Rs.Mn.)

(up to MARCH 11)

Premium (Rs.Mn.)

(up to MARCH 10)

Growth%

ICICI

Prudential

31831.8 20808.5 53%
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HDFC Standard 10675.7 6595.7 61.9%

SBI Life 14717.4 8142.4 80.8%

Bajaj Allianz 26498.1 15208.2 74.2%Aviva life

insurance

4586.8 3464.2 32.4%

MetLife

insurance

2756.0 1162.7 137.0%

Reliance life

insurance

8571.2 2803.7 205.7%

Birla sun life

insurance

7595.4 3844.7 97.6%

Max new York

life insurance

6942.0 3720.4 86.6%

Tata AIG 4413.0 3264.8 35.2%

ING Vysya 3047.7 2086.7 46.1%

Kotak Mahindra 3476.6 2172.6 60.0%


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3) Comparison of ULIP products for different

insurance co.SBI Life Insurance

Fund options Equity fund, bond fund, growth fund, balanced fund.

Allocation to equities Up to 100% in equity fund, up to 20% in bond fund,40 - 100% in growth fund, 4060% in balanced fund

Minimum premium Rs. 24,000.

Min/max age at entry 765 years.

Sum assured 550 times the regular premium amount.

Fund management charges 1.5% for equity fund, 1.35% for growth fund, 1.25%for balanced fund, 1% for bond Fund.

Partial withdrawals allowed Above 4 partial withdrawals 100 Rs. per withdrawals.

Switching charges Above 4 switching 100 Rs. Per switching.

ICICI Prudential

Fund options Growth fund, balanced fund, income fund, andpreserver.

Allocation to equities Up to 100% in growth fund, up to 40% in balancedfund, nil in income fund, 50% in preserver.


Min/max age at entry 65 years.

Sum assured annual premium*term/2

Fund management charges 1.5% in growth fund, 1.0% in balanced fund, .75% inincome and preserver fund.


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Switching charges Above 4 switching 100 Rs. Per switching.

Birla Sun Life Insurance

Fund options Enhancer fund, builder fund, protector fund.

Allocation to equities Maximum 35% in enhancer fund, maximum 20% in builderfund, maximum 10% in protector fund


Min/max age at entry 30 days to 60 years.

Sum assured Face amount + policy fund.

Fund management charges 1% for all the fund options.


Switching charges Above 2switching 100 Rs. Per switching.

HDFC Standard Life Insurance

Fund options Growth fund, balanced fund, defensive fund, securefund, liquid fund.

Allocation to equities 100% in growth fund, 30-60% in balanced fund, 15-30% in defensive fund, 0% in secure and liquid fund.


Min/max age at entry 18-65 years.

Sum assured Annual premium*term/2 OR 40 times the regular

premium amount.

Fund management charges 1.5% in growth fund, 1.0% in balanced fund, .75% inincome and preserver fund.

Partial withdrawals allowed Above 6 partial withdrawals 250 rs. per withdrawal.


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Switching charges 24 free switching and then 100 Rs. per switching.

Comparison for different insurance co.4) ON THE BASIS OF MARKET VIEW, PRODUCT FOCUS,

DISTRIBUTION STRATEGY AND OTHER KEY METRICS.

INSURER MARKET

VIEW

PRODUCT

FOCUS

DISTRIBUTION

STRATEGY

OTHERS

SBI LIFEINSURANCE

Market

growth at

60%CAGR

in medium

term, target

to maintain

share at 30%

in privatesegment.

Pension and

health products

likely to grow

given aging

population and

increasing life

expectancy.

Productawareness is

slightly behind

LIC despite a

significant time

disadvantage;

health could

comprise 3

5% of product

mix in 5 years.

Significantly

diversified with 40%

from non agency

force, expanding

reach to non metro

areas.

Significant

capital

requirement for

maintain share

in a high growth

market, both

partners willing

to contribute.

ICICI

PRUDENTIAL

Expect highdouble digitmarketgrowth over

Focus onregularpremiumproducts and

Prefer own officesversus franchisees,higher focus ontraining agents rather

Breakeven notnecessarily innext 18 months,it would require


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next fewyears, steadystate notexpected

higherpersistencylevels, groupfocus givenflexibility in

equityinvestment,competitiveversus mutualfunds for longertenure productsgiven lowerAmc charges

than hard sell, ruralfocus required butobstacles include lackof bankinfrastructure.

capital even ifFDI were raisedto 49%.

INSURER MARKET

VIEW

PRODUCT

FOCUS

DISTRIBUTION

STRATEGY

OTHERS

HDFCSTANDARD

LIFE

Currentindustrygrowthsustainablefor next 710 years,target 10%market sharein next 5years

Most productshomogeneousacross players,not much pricedifferentiation,ULIP salesunlikely to beaffected byrecentregulations, notmuch threat

from mutualfunds.

More focus onsmaller towns,greater emphasis onagency forceexpansion.

Growth andmarket shareorientedstrategy,detarrifingwould hit nonlife segmentadversely.

BAJAJ

ALLIANZ

LIFE

INSURANCE

Target to betop in 5 years

Currently onlyunit linkedproducts soldbut grouplinked productsare focus areafordevelopment.

Agent productivity isan issue given theirpart time nature,target is 130 branchesall over India, alsowill leverage ongroups products

distribution strengths.

It believes somemarginalplayers couldbring boughtout.


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2. FINANCIAL ANALYSIS OF PRODUCTS

1).COMPARISON FOR LIFE INSURANCE (TERM PLANS)Provider

name

KotakMahindraOld MutualLifeInsuranceLtd

MetLife IndiaInsuranceCompanyLtd

SBI LifeInsurance

ICICIPRUDENTIAL

HDFCStandard life

Product name Kotak Term

Plan SinglePremium

Suraksha

SinglePremium

SBI Shield -

SinglePremium

ICICI

PRUDENTIALSingle

Premium

Hdfc

Standard life -Single

Premium

Coverage

amountRs. 50,00,000 Rs. 50,00,000 Rs. 50,00,000 Rs. 50,00,000 Rs. 50,00,000

Premium

(cost of

coverage)Rs. 1,51,600 Rs. 1,80,250 Rs. 62,200 Rs. 62,200 Rs. 96,750

Min entry age

(years)18 18 18 18 18

Max entry age

(years)60 60 60 60 60

Min policyterm (years)

5 5 5 5 5

Max policy

term (years)25 42 30 30 30

Max exit age

(years)70 65 65 70 70

Premium

frequency

options

Single/ One- time Single/ One- time Single/ One- time Single/ One- time Single/ One- time

Riders

Facility

available

1. AccidentalDeath

1. AccidentalDeath

1. AccidentalDeath

1. AccidentalDeath

1. AccidentalDeath

2. Critical Illness 2. PermanentDisability 2. PermanentDisability 2. PermanentDisability

3. CriticalIllness

Feature1. Policy Termstarts from 5years and endsat 30 years

1. Policy Termstarts from 10years and endsat 25 years.

1. Policy terms of5, 10, 15, 20 and25 years.

1. Policy Termstarts from 5years and ends at30 years

1. Policy Termstarts from 5years and endsat 30 years


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2). COMPARISON FOR LIFE INSURANCE (ULIP PLANS)Provider name Kotak

MahindraInsurance Ltd

ICICIPRUDENTIAL

SBI LifeInsurance

HDFC Standardlife

Product name KOTAK FreedomLife Advantage -

Type 1

ICICI Pru LifeStage Wealth II

SBI Life HORIZON11

HDFC StandardClassic Endowment

Sum Assured (Rs.) 7,50,000.00 7,50,000.00 7,50,000.00 7,50,000.00

Net Yield 8.23% 8.15% 8.64% 8.31%

Fund Value (Rs.) 37,80,110.00 37,65,250.00 40,01,530.00 38,08,800.00

Maximum MaturityAge 75 Years 75 years 75 years 75 years

Survival Benefit Fund Value Fund Value Fund Value Fund Value

Partial Withdrawaloption

YES YES YES YES

Fund SwitchingOption

Available; 12 freeswitches in a year

Available; 4 freeswitches in a year;Rs. 100 per switch

thereafter

4 free switches in ayear

Available, but verylimited.

Premium PaymentTerm 5 Years or same as

Policy Term

Equal to policy termunder regular

premium; 5, 7 and 10years under limited

pay

Equal to policy term

Equal to policy termunder regular

premium; 5,10,15and 20 years under

limited payMaximum Term 30 Years 30 years 25 years 30 years

Death Benefit Life Cover or FundValue whichever is

higher

Sum Assured plusfund value

Higher of SumAssured or Fund

Value

Higher of SumAssured or Fund

Value

Loan Availability N/A YES YES N/A

Maximum Entry Age 60 years 65 years 60 years 65 years

Minimum Term 15 years 10 years 15 years 10 years

Minimum Premium25,000 for PPA

1,00,000 for PPT=5Years

Rs. 25,000 P/A Rs. 25,000 P/A Rs. 25,000 P/A

Minimum MaturityAge

70 years 75 years 65 years 75 years

Maximum Premium No Limit No Limit No Limit No Limit

Mode Of Payment Yearly, Half Yearlyand Monthly

Yearly, Half Yearlyand Monthly



Minimum Entry Age

2 Years (withoutriders) ; 18

years(single lifewith rider or jointlife with or without

riders)

7 years 7 years 1 year

Fund Option Secure, Stable and Opportunities, Multi 1.)Balanced Fund II Income Advantage,


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Accelerator Funds Cap Growth, MultiCap Balanced, Blue-chip, Income, Money

Market, ReturnGuarantee and

Dynamic PE

2.)Bond Fund II3.)Enhancer Fund II4.)Growth Fund II5.)Index Fund II6.)Infrastructure

Fund

Assure, Protector,Builder, Enhancer,Creator, Magnifier,

Maxi miser, Multiplierand Super 20

Data source: Respective company websites

3).COMPARISON FOR (MONEY BACK PLANS)Provider name ICICI PRUDENTIAL SBI Life Insurance HDFC Standard life

Premium Amount (Rs.) 11,558.00 19,735.00 23,540.00Death Benefit Sum Assured Sum Assured Sum Assured

Minimum Entry Age 18 Years 18 Years 18 Years

Maximum Premium N/A N/A N/A

Maximum Term 30 Years 30 Years 20 Years

Maximum Maturity Age 65 Years 75 Years 70 Years

Maximum Sum Assured No Limit No Limit No Limit

Minimum Premium N/A N/A N/A

Minimum Term 10 Years 10 Years 10 Years

Maximum Entry Age 55 Years 65 Years 50 Years(for 20 year termplan);55 Years(for 10 and15 year term plan)

Minimum Sum Assured 2,00,000 5,00,000 2,00,000

Mode Of Payment Yearly, Half Yearly,Quarterly, Monthly

Yearly, HalfYearly,Quarterly,Monthly

Yearly, HalfYearly,Quarterly,Monthly

Riders ICICI Dread DiseaseAccidental Death Benefit,Accidental Death Disability

and Dismemberment

Accidental Death Benefit,Accidental Death Disability

and Dismemberment,Critical Illness, Waiver Of

Premium

Maximum Coverage Age 65 Years 75 Years 70 Years

Survival Benefit Premium Back Premium Back Premium Back



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4).COMPARISON of insurance FOR (Child care PLANS)Institution

NameProduct Name Coverage Amount Premium

PolicyTerm

SBI LifeSBI LIFE CHILD PLAN -Annual Premium Rs. 10,00,000 Rs. 2,454

20Years

Max NewYork Level Term Policy Rs. 10,00,000 Rs. 2,710

20Years

Bharti AXA Secure Confident Rs. 10,00,000 Rs. 2,85020Years

HDFCStandard

Term Assurance RegularPremium Rs. 10,00,000 Rs. 2,920

20Years

MetLifeSuraksha RegularPremium Rs. 10,00,000 Rs. 3,100

20Years

FutureGenerali Future Care Rs. 10,00,000 Rs. 4,110

20Years


Comparing Life Insurance policies of all the leading Insurance Company inIndia. Deals shown above are of Term Insurance plans for a 30 year old malewith coverage amount of Rs 10 Lakhs, and policy tenure of 20 years.


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This clearly shows that Sbi life enjoys the privilege of being low premiumFacilitation Company for the every group of customer.

5).COMPARISON of insurance co. product mix andproducts shareInsurance Plan Term

PlanMoney backPlan

EndowmentPlan

ChildPlan

Unit linkPlan

SBI39% 14% 15% 8% 24%

HDFC STAN29% 24% 19% 5% 23%

ICICI

PRUDENTIAL

23% 18% 21% 6% 32%

BIRLA SUN LIFE 35% 28% 14% 3% 20%

BAJAJ ALLAINZ27% 26% 18% 4% 25%



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FINDINGS

1) SBI LIFE is emerging as a giant of the insurance sector. The basewithin the group company SBI Bank is very huge and the accessibilityto the common man is far much higher as comparable to othercompetitors. This makes Sbi Life as favorite option for customers.

2) Number of branches of private insurance companies is increasing asthe new players are entering in this market. Also the establishedplayers are in expansion phase and hence are expanding their business.

But the Sbi has always been facilitated with the best of theinfrastructure and have much higher number of branches to distributeits product or reach the potential customers.

3) Maximum administrative cost, fund management charges andpremium allocation charges has also reduced money of investors of allinsurance companies other than SBI Life. SBI Life InsuranceCompanys fund managers are very smarter as they are related to SBI-LIFE MUTUAL FUND.

4) SBI Life Insurance has expanded its business in entire India by sellingits life insurance products through banqua channel, agency channel,corporate channel, and broker channel.

5) This is the alone company that is getting maximum business from thevillages due to its well-renamed brand.

6) During the data collected, it has been found that people have greatawareness about SBI Life insurance as the company is supported bythe biggest banking customer base.

7) Another most important trend is that people are looking at insurance asone of best tool for tax exemption and also provides security andinvestment option combined.


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8) The general satisfaction levels among public with regards to policyand agents still requires improvement. Here lies the opportunity for arelatively new comer like SBI Life Insurance. LIC has never beenknown for prompt service or customer oriented methods but SBI LifeInsurance can build its reputation based on these factors.

9) 37% out of 75% people those who are aware about SBI Life Insurancehave investment plans of it.


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RECOMMENDATIONS

SBI Life has some flaws at the advisory levels. It should startrecruiting advisors through placement agencies. By practicing thisSBI Life will get more capable advisors who can work efficiently.Inactive advisors kind of thing would not happen.

SBI Life should also promote the term and endowment insuranceproducts including ULIP products. Because these are basic insuranceproducts. Promote products as life insurance products not an asinvestment products.

Somewhat the brand name of SBI is harming the SBI Life insurance,because most of the people are not happy with the service provide bySBI bank, so it is necessary to change the mentality of the people thatSBI Life insurance is different from SBI bank. SBI Life shouldpromote their product features rather than promoting their brand

name.

To increase awareness in rural market SBI Life should do someactivities in villages and small towns. This can be done by puttingkiosk in fairs and festival melas organizing in villages.

SBI Life can sell their products through charitable institutions.

SBI Life should sell their products through head of the villages or

through panchayat in villages. People in villages believe on the headand panchayat so selling insurance will be easier in villages.

SBI Life can introduce some special policies for the farmers to tap therural market, and pricing for these kinds of products should be less sofarmers can easily afford to take policies.


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As SBI Life is coming in general insurance so it can introducedproducts like cattle insurance and water pump insurance. It willalso help to promote the products of SBI Life insurance.

Questionnaire1. ARE YOU EMPLOYED?

YES NO

If YES, only then proceed

2. DO YOU HAVE ANY INSURANCE POLICY?YES NO

3. WHICH INSURANCE POLICY DO YOU HAVE?

LIFE NON-LIFE BOTH

4. WHICH COS INSURANCE POLICY YOU PREFER THE MOST?

(RANK THEM)

a) LIC

b) ICICIPRUDENTIAL

c) SBI LIFE INSURANCE

d) ING VYSYA LIFE

e) RELIANCE LIFE INSURANCE


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f) TATA AIG LIFE

g) ANY OTHER ________( Specify)

5. FOR HOW MANY YEARS DO YOU HAVE INSURANCE POLICY?

(Please Tick)

a)


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d) REPUTATION OF COMPANY

e) EASY ACCESS TO AGENTS

f) ANY OTHER _________ (Specify)

8. YOUR MONTHLY INCOME?

a)


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12. AREYOU SATISFIED WITH THE POLICY?

a) SATISFIED SAVING TOOL

b) NOT SATISFIED

c) NOT RESPONDING

13. ARE YOU SATISFIED WITH THE SERVICE AGENT?

a) SATISFIED SAVING TOOL

b) NOT SATISFIED

c) NOT RESPONDING

14 DO YOU PAY TAXES?

YES NO

15. WHERE HAVE YOU INVESTED FOR TAX SAVING?

(RANK THEM)

a) LIC

b) NSC

c) BONDS

d) PPF


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e) PF

f) EPF

16.WHICH IS THE BEST FORM OF INVESTMENTS?

(RANK THEM)

a) FIXED ASSETS

b) BANK DEPOSITS

c) JEWELLERY

d) SECURITIES, i.e. Bonds, MFs

e) SHARES

f) INSURANCE

17. WHAT DO YOU INTENT TO GAIN FROM INVESTMENTS?

a) SAVING & RETURNS

b) SECURITY

c) TAX BENIFITS

18. WHATS THE RIGHT AGE TO BUY INSURANCE?

a) AFTER 25 Yrs


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b) AFTER 35 Yrs

c) AFTER 45 Yrs

d) ANYTIME

19.HOW WOULD YOU RATE INDIAN INSURANCE COs?

a) RIGID PLANS

b) NON-USER FRIENDLY

c) UNSATISFATORY SREVICES

d) NON-AGGRESSIVE

e) SATISFACTORY

f) GOOD

g) VERY GOOD

20. WHATWOULD YOU LOOK FOR IN AN INSURANCE COs?

(RANK THEM)

a) A TRUSTED NAME

b) FRIENDLY SERVICE & RESPONSIVENESS

c) GOOD PLANS


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d) ACCESSIBILITY

THANK YOU

NAME:_________________________

ADDRESS:____________________________________________________

OCCUPATION:___________________


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BIBLIOGRAPHY

1. BOOKS/MAGAZINES REFFERED:

STUDYGUIDE- Principles & Practices of life / General insurance, by AIMA.

LIFE-INSURANCE, by Mc GILL

INSURANCEWATCH.

MONEY OUTLOOK.

2. WEBSITES REFFERED:

www.cifainsurance.com

www.moneyoutlook.com

www.insurance.ind.com

www.sbilifeinsurance.com

www.amfiindia.com

3. REPORTS/ARTICLES REFFERED:

REPORT: Issues & Challenges facing the Insurance industry. Dec2010.

BRIEF PROFILE OF SBI, INDIADec 2011

REPORT: COPING WITH COMPETITIONJan2011
http://www.cifainsurance.com/http://www.cifainsurance.com/http://www.moneyoutlook.com/http://www.moneyoutlook.com/http://www.insurance.ind.com/http://www.insurance.ind.com/http://www.sbilifeinsurance.com/http://www.sbilifeinsurance.com/http://www.amfiindia.com/http://www.amfiindia.com/http://www.amfiindia.com/http://www.sbilifeinsurance.com/http://www.insurance.ind.com/http://www.moneyoutlook.com/http://www.cifainsurance.com/


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Documents

Naresh Project 2