A

REPORT

On

“Potential of Life insurance Industry in Surat Market”

Under the Guidance of

COMPANY GUIDE
 Mr. Jignesh Madhwani

TABLE OF CONTENTS
Contents Page No.
Acknowledgements 5
List of Tables 6
List of Illustrations/Diagrams 7
Executive Summary 9
Chapter 1: introduction 10
➢ Objective 15
➢ Limitation 17
➢ Research Mythology 19
➢ Data Collection 22
Chapter 2: Life Insurance Industry 23
➢ Industry profile 24
➢ important milestones in the life insurance business 29
➢ Insurance sector reforms 31
➢ IRDA 32
Chapter 3:Contribution of Life Insurance Industry 36
➢ Contribution of Life Insurance in the Economy 36
➢ Flow of Insurance Industry in India 37
➢ Structure of life Insurance Industry 40
➢ Life Insurance industry 41
 ➢ Aggregation of Long Term Savings 42
➢ Spread of financial services in rural Areas 43
➢ Long term funds for infrastructure Development of Capital 44
Markets/Economic Growth
➢ Employment generation 45
➢ Special Features 46
➢ Growth Potential 47
➢ Phase of transition 47
Chapter 4:Company Profile 49
➢ Management 51
➢ Area of Business 56
➢ KMOM progress till date 65
➢ KMOM-the partnership and Lineage 66
➢ Products 69
➢ Hierarchy of KMOM of Surat branch 71
Chapter 5: Survey 72
➢ Data interpretation , editing and coding 73
➢ Graph analysis 73
Chapter 6: Finding and Suggestion 83
Chapter 7: Conclusion 84
Chapter 8: References 85
Chapter 9: Annexure 86

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Acknowledgement

In preparation of this report by me, I feel great pleasure because it

gives me extensive practical knowledge in my career. I get idea about
Indian Life Insurance Industry by this project.

I express my deep sense of gratitude to My Company Guide Mr.

Jignesh Madhavani for his valuable guidance during my project work. I
also like to all staff of Kotak Life Insurance who guide me in project
work.

I am thankful to Mr. Vikas Singh (Faculty Guide) for valuable

inspiration and guidance provided me through out the course of this
project. They have patient and critically gone the subject matter.
 I would like to take opportunity to express my gratitude towards all
of them who have contributed directly or indirectly in my project work.

Chirag Patel
List of Tables

Name of Tables Page no

• Potential of Life Insurance sector 38
• Market share of LIC and all private 38
player
• Individual Market share of 39
Insurance company
• Total asset of Life Insurance 41
companies
• Total premium generated 41
• The future premium income 41
Generated will be
• Untimely death benefit to policy 44
holder in the past
• Age vise classification 73
 • Gender wise classification 74
• Income wise classification 75
• No of member having insurance 76
• How many person having insurance 77
in family
• Different policy bought by 78
customers
• Fully insured and under insured 79
persons
• Market share of different life 80
insurance policy

List of Illustrations/Diagrams

Name of Illustrations/Diagrams Page

No
• Kotak : Area of Business 57
• Age vise classification 73
• Gender wise classification 74
• Income wise classification 75
• No of member having insurance 76
• How many person having insurance in 77
family
• Different policy bought by customers 78
• Fully insured and under insured persons 79
• Market share of different life insurance 80

Chapter 1:
➢ Introduction
 Executive Summary

The service industry is one of the fastest growing sectors in India today.
The upcoming sectors which are really showing the graph towards
upwards are - Telecom, Banking, and Insurance. These sectors really
have a lot of responsibility towards the economy.

Amongst the above-mentioned areas insurance is one sector, which took

a lot of time in positioning itself. The insurance business of non-life
companies was not much in problems but the major problem was with
life insurance. Life Insurance Corporation of India had monopoly for
more than 45 years, but the picture then was completely different.
Previously people felt that “Insurance is only for classes not for
masses” but now the picture is vice-versa.

The story of insurance is probably as old as the story of mankind. The

same instinct that prompts modern businessmen today to secure
themselves against loss and disaster existed in primitive men also. They
too 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 centuries –
yet its beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the
year 1818. Oriental Life Insurance Company started by Europeans in
Calcutta was the first life insurance company on Indian Soil. All the
insurance companies established during that period were brought up
with the purpose of looking after the needs of European community and
these companies were not insuring Indian natives. However, later with
the efforts of eminent people like Babu Muttylal Seal, the foreign life
insurance companies started insuring Indian lives. But Indian lives were
being treated as sub-standard lives and heavy extra premiums were
being charged on them. Bombay Mutual Life Assurance Society
heralded the birth of first Indian life insurance company in the year
1870, and covered Indian lives at normal rates. Starting as Indian
enterprise with highly patriotic motives, insurance companies came into
existence to carry the message of insurance and social security through
insurance to various sectors of society. Bharat Insurance Company
(1896) was also one of such companies inspired by nationalism. The
Swadeshi movement of 1905-1907 gave rise to more insurance
companies. The United India in Madras, National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were
established in 1906. In 1907, Hindustan Co-operative Insurance
Company took its birth in one of the rooms of the Jorasanko, house of
the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile,
General Assurance and Swadeshi Life (later Bombay Life) were some of
the companies established during the same period. Prior to 1912 India
had no legislation to regulate insurance business. In the year 1912, the
Life Insurance Companies Act, and the Provident Fund Act were passed.
The Life Insurance Companies Act 1912 made it necessary that the
premium rate tables and periodical valuations of companies should be
certified by an actuary. But the Act discriminated between foreign and
Indian companies on many accounts, putting the Indian companies at a
disadvantage.

The formation of IRDA, entrance of private life insurance companies

into India with one foreign partner, compulsory training of Insurance
agents etc. developments started to take place. And this was the time
when these companies started searching for proper channel partners who
can help the organization in expanding its network and business in India.

Channel partners are those who are going to be into direct selling of
company’s products i.e. the insurance policies. They are the link
between the customers and the management or company. These channel
partners are people with different profiles. They are selected on some
grounds like their network of people, their problem handling ability,
convincing power and lot many things.
The main idea behind company’s Questionnaire Survey is to find out and
analyze the proper profile that can be recruited by company as a channel
partner. Company has been focusing on some of the profile that can be
very beneficial for the company. For example Chartered Accountants,
Tax Consultants, Postal agents, Bank’s Daily Collection Agents etc. the
main idea behind targeting the above profile is strong client network
which is really very important for an insurance company.

The project title is “Potential of Life Insurance Industry in

Surat Market”. This shows the scope for private insurance companies
have great opportunities to cover the market and can insure the
customer. With the initiation of the deregulation in the Indian insurance
market, the monopoly of big public sector companies in life insurance
market has been broken. New private players have entered the market
and with their innovative approaches and better use of distribution
channels and technology, they are eating in to the shares of established
public sector companies in Indian Insurance Market. Since the
deregulation has been put in to place, the market share of LIC has come
down to 71.4% in life insurance market while the private players have
captured around 17% market in the general insurance segment. This
report includes the key private players in the insurance market such as
ICICI Prudential, Kotak Life Insurance Bajaj Allianz, Birla Sun life, and
TATA AIG. It also includes the leading competitors in the life insurance
and general insurance segments along with their market shares.
Chapter 2
➢ Objective
➢ Limitation
➢ Methodology
➢ Data collection

1. Objective:
The main of the present study of is accomplish the following
objective.
➢ Proper understanding and analysis of life insurance industry.
➢ To know about brand awareness of Kotak Life Insurance and
customer’s preference about Kotak Life Insurance.
➢ Conduct market survey on a sample selected from the entire
population and derived opinion on that research.
➢ According the market survey come know about how much
potential of insurance market in our city.
➢ And base on analysis of the result thus obtained make a
report on that research.
➢ Training aims at recruiting maximum number of Life
Advisors and to Sell the maximum policies for the company
and bring the business for the company which ever is going
at the particular point of time.
➢ Along with it I will be gaining the thorough knowledge of
insurance sector. This will give me in more confidence in
marketing products given to me.
➢ As the Kotak Life Insurance well reputed company in India
it’s great chance for me to observed different products launch
by other competitor companies like ICICI prudential, Bajaj
alliance ,LIC, Max New York life etc. In all, it is to
understand the overall working of the Life insurance sector.
➢ The objective behind the project is as follows:
➢ To find the right candidate.
➢ To about their family background, occupation, social relation,
Qualification, Age.
➢ Finalize candidates for the IRDA training
5: Limitation:
Some of the difficulties and limitations faced by me during
my training are as follows:
➢ Lack of awareness among the people – This is the biggest
limitation found in this sector. Most of the people are not aware
about the importance and the necessity of the insurance in their
life. They are not aware how useful life insurance can be for their
family members if something happens to them.
➢ Perception of the people towards Insurance sector – People still
consider insurance just as a Tax saving device. So today also there is
always a rush to buy an Insurance Policy only at the end of the
 financial year like January, February and March making the other 9
months dry for this business.
➢ Insurance does not give good returns – Still today people think
that Insurance does not give good returns. They are not aware of the
modern Unit Linked Insurance Plans which are offered by most of the
Private sector players. They are still under the perception that if they
take Insurance they will get only 5-6% returns which is not true
nowadays. Nowadays most of the modern Unit Linked Insurance Plans
gives returns which are many times more than that of bank Fixed
deposits, National saving certificate, Post office deposits and Public
provident fund.
➢ Lack of awareness about the earning opportunity in the
Insurance sector – People still today are not aware about the earning
opportunity that the Insurance sector gives. After the privatization of
the insurance sector many private giants have entered the insurance
sector. These private companies in order to beat the competition and to
increase their Insurance Advisors to increase their reach to the
customers are giving very high commission rates but people are not
aware of that.
➢ Increased competition – Today the competition in the Insurance
sector has became very stiff. Currently there are 14 Life Insurance
companies working in India including the LIC (life insurance
Corporation of India). Today each and every company is trying to
increase their Insurance Advisors so that they can increase their reach
in the market. This situation has created a scenario in which to recruit
 Life insurance Advisors and to sell life Insurance Policy has became
very very difficult.

RESEARCH METODOLOGY
Research always starts with a question or a problem. Its purpose is to
question through the application of the scientific method. It is a
systematic and intensive study directed towards a more complete
knowledge of the subject studied. Marketing research is the function
which links the consumer, customer and public to the marketer through
information- information used to identify and define marketing
opportunities and problems generate, refine, and evaluate marketing
actions, monitor marketing actions, monitor marketing performance and
improve understanding of market as a process.

Marketing research specifies the information required to address these

issues, designs, and the method for collecting information, manage and
implemented the data collection process, analyses the results and
communicate the findings and their implication.
I have prepared our project as descriptive type, as the objective of the
study demands the answers of the question related to find the potentiality
of life insurance in Surat: How much potential is there in Surat?

The Marketing Research Process

As marketing research is a systemic and formalized process, it follows a
certain sequence of research action. The marketing process has the
following steps:
➢ Formulating the problems
➢ Developing objectives of the research
➢ Designing an effective research plan
➢ Data collection techniques
➢ Evaluating the data and preparing a research report

There are two types of data collection method use in my project report.
– Primary data
– Secondary data.

For my project, I decided on primary data collection method for

observing working of company and approaching customers directly in
the field, tele-calling, cold calling, campaigning and through references
to know their interest in business with company in my project and also
make questionnaire for creating database of business class people is
Surat city for company.

I decided on Secondary data collection methodwas used by referring

to various websites, books, magazines, journals and daily newspapers
for collecting information regarding project under study.

DATA COLLECTION
 After the research methodology, research problem in marketing has
been identified and selected; the next step is together the requisite data.
There are two types of data collection method – primary data and
secondary data.

In our live project, we decided primary data collection method

because our study nature does not permit to apply observational method.
In survey approach we had selected a questionnaire method for taking a
customer view because it is feasible from the point of view of our
subject & survey purpose. We conducted 200 sample of survey in our
project.

Chapter: 3
➢ Industry profile:
➢ important milestones in the life insurance
business
➢ Insurance sector reforms

➢ The Insurance Regulatory and

Development Authority (IRDA)

Brief History of the Insurance Sector in India

The business of life insurance in India in its existing form started in
India in the year 1818 with the establishment of the Oriental Life
Insurance Company in Calcutta.
The story of insurance is probably as old as the story of mankind. The
same instinct that prompts modern businessmen today to secure
themselves against loss and disaster existed in primitive men also. They
too 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 centuries –
yet its beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the
year 1818. Oriental Life Insurance Company started by Europeans in
Calcutta was the first life insurance company on Indian Soil. All the
insurance companies established during that period were brought up
with the purpose of looking after the needs of European community and
these companies were not insuring Indian natives. However, later with
the efforts of eminent people like Babu Muttylal Seal, the foreign life
insurance companies started insuring Indian lives. But Indian lives were
being treated as sub-standard lives and heavy extra premiums were
being charged on them. Bombay Mutual Life Assurance Society
heralded the birth of first Indian life insurance company in the year
1870, and covered Indian lives at normal rates. Starting as Indian
enterprise with highly patriotic motives, insurance companies came into
existence to carry the message of insurance and social security through
insurance to various sectors of society. Bharat Insurance Company
(1896) was also one of such companies inspired by nationalism. The
Swadeshi movement of 1905-1907 gave rise to more insurance
companies. The United India in Madras, National Indian and National
Insurance in Calcutta and the Co-operative Assurance at Lahore were
established in 1906. In 1907, Hindustan Co-operative Insurance
Company took its birth in one of the rooms of the Jorasanko, house of
the great poet Rabindranath Tagore, in Calcutta. The Indian Mercantile,
General Assurance and Swadeshi Life (later Bombay Life) were some of
the companies established during the same period. Prior to 1912 India
had no legislation to regulate insurance business. In the year 1912, the
Life Insurance Companies Act, and the Provident Fund Act were passed.
The Life Insurance Companies Act 1912 made it necessary that the
premium rate tables and periodical valuations of companies should be
certified by an actuary. But the Act discriminated between foreign and
Indian companies on many accounts, putting the Indian companies at a
disadvantage.

The first two decades of the twentieth century saw lot of growth in
insurance business. From 44 companies with total business-in-force as
Rs.22.44 crore, it rose to 176 companies with total business-in-force as
Rs.298 crore in 1938. During the mushrooming of insurance companies
many financially unsound concerns were also floated which failed
miserably. The Insurance Act 1938 was the first legislation governing
not only life insurance but also non-life insurance to provide strict state
control over insurance business. The demand for nationalization of life
insurance industry was made repeatedly in the past but it gathered
momentum in 1944 when a bill to amend the Life Insurance Act 1938
was introduced in the Legislative Assembly. However, it was much later
on the 19th of January 1956 that life insurance in India was nationalized.
About 154 Indian insurance companies, 16 non-Indian companies and
75 provident were operating in India at the time of nationalization.
Nationalization was accomplished in two stages; initially the
management of the companies was taken over by means of an
Ordinance, and later, the ownership too by means of a comprehensive
bill. The Parliament of India passed the Life Insurance Corporation Act
on the 19th of June 1956, and the Life Insurance Corporation of India
was created on 1st September, 1956, with the objective of spreading life
insurance much more widely and in particular to the rural areas with a
view to reach all insurable persons in the country, providing them
adequate financial cover at a reasonable cost.
LIC had 5 zonal offices, 33 divisional offices and 212 branch offices,
apart from its corporate office in the year 1956. Since life insurance
contracts are long-term contracts and during the currency of the policy it
requires a variety of services need was felt in the later years to expand
the operations and place a branch office at each district headquarter. Re-
organization of LIC took place and large numbers of new branch offices
were opened. As a result of re-organization servicing functions were
transferred to the branches, and branches were made accounting units. It
worked wonders with the performance of the corporation. It may be seen
that from about 200.00 Crores of New Business in 1957 the corporation
crossed 1000.00 Crores only in the year 1969-70, and it took another 10
years for LIC to cross 2000.00 crore mark of new business. But with re-
organization happening in the early eighties, by 1985-86 LIC had
already crossed 7000.00 crore Sum Assured on new policies.
Today LIC functions with 2048 fully computerized branch offices, 100
divisional offices, 7 zonal offices and the corporate office. LIC’s Wide
Area Network covers 100 divisional offices and connects all the
branches through a Metro Area Network. LIC has tied up with some
Banks and Service providers to offer on-line premium collection facility
in selected cities. LIC’s ECS and ATM premium payment facility is an
addition to customer convenience. Apart from on-line Kiosks and IVRS,
Info Centers have been commissioned at Mumbai, Ahmedabad,
Bangalore, Chennai, Hyderabad, Kolkata, New Delhi, Pune and many
other cities. With a vision of providing easy access to its policyholders,
LIC has launched its SATELLITE SAMPARK offices. The satellite
offices are smaller, leaner and closer to the customer. The digitalized
records of the satellite offices will facilitate anywhere servicing and
many other conveniences in the future.
From then to now, LIC has crossed many milestones and has set
unprecedented performance records in various aspects of life insurance
business. The same motives which inspired our forefathers to bring
insurance into existence in this country inspire us at LIC to take this
message of protection to light the lamps of security in as many homes as
possible and to help the people in providing security to their families.

Some of the important milestones in the life

insurance business in India are:

1850Non life insurance debuts with triton insurance company. 1870

Bombaymutual life assurance society is the first Indian owned life
insurer
1912 The Indian Life Assurance Companies Act enacted as the first
statute to 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-life
insurance businesses.
1938 Earlier legislation consolidated and amended to by the Insurance
Act with the objective of protecting the interests of the insuring public.

1956 245 Indian and foreign insurers and provident societies taken over
by the central government and nationalized. LIC formed by an Act of
Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 Crore
from the Government of India.

The General insurance business in India, on the other hand, can trace its
roots to the Triton Insurance Company Ltd., the first general insurance
company established in the year 1850 in Calcutta by the British. Some of
the important milestones in the general insurance business in India are:
1907 The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.
1957 General Insurance Council, a wing of the Insurance Association
of India, frames a code of conduct for ensuring fair conduct and sound
business practices.
1968 The Insurance Act amended to regulate investments and set
minimum solvency margins and the Tariff Advisory Committee set up.
1972 The General Insurance Business (Nationalization) Act, 1972
nationalized the general insurance business in India with effect from 1st
January 1973. 107 insurers amalgamated and grouped into four
companies’ viz. the National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd. and the
United India Insurance Company Ltd. GIC incorporated as a company.

Insurance sector reforms

In 1993, Malhotra Committee, headed by former Finance Secretary and

RBI Governor R. N. Malhotra, was formed to evaluate the Indian
insurance industry and recommend its future direction.

The Malhotra committee was set up with the objective of

complementing the reforms initiated in the financial sector. The reforms
were aimed at “creating a more efficient and competitive financial
system suitable for the requirements of the economy keeping in mind the
structural changes currently underway and recognizing that insurance is
an important part of the overall financial system where it was necessary
to address the need for similar reforms…” In 1994, the committee
submitted the report and some of the key recommendations included.

➢ 1997 Insurance regulator IRDA set up

2000 IRDA starts giving licenses to private insurers: Kotak Life
Insurance ICICI prudential and HDFC Standard Life insurance
first private insurers to sell a policy
2001 Royal Sundaram Alliance first non life insurer to sell a
policy 2002 Banks allowed to sell insurance plans.

The Insurance Regulatory and Development

Authority (IRDA)

The Insurance Act, 1938 had provided for setting up of the Controller of
Insurance to act as a strong and powerful supervisory and regulatory
authority for insurance. Post nationalization, the role of Controller of
Insurance diminished considerably in significance since the Government
owned the insurance companies.

But the scenario changed with the private and foreign companies
foraying in to the insurance sector. This necessitated the need for a
strong, independent and autonomous Insurance Regulatory Authority
was felt. As the enacting of legislation would have taken time, the then
Government constituted through a Government resolution an Interim
Insurance Regulatory Authority pending the enactment of a
comprehensive legislation.

The Insurance Regulatory and Development Authority Act, 1999 is an

act to provide for the establishment of an Authority to protect the
interests of holders of insurance policies, to regulate, promote and
ensure orderly growth of the insurance industry and for matters
connected therewith or incidental thereto and further to amend the
Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the
General insurance Business (Nationalization) Act, 1972 to end the
monopoly of the Life Insurance Corporation of India (for life insurance
business) and General Insurance Corporation and its subsidiaries (for
general insurance business).

The act extends to the whole of India and will come into force on such
date as the Central Government may, by notification in the Official
Gazette specify. Different dates may be appointed for different
provisions of this Act.

The Act has defined certain terms; some of the most important ones are
as follows

appointed day means the date on which the Authority is established

under the act. Authority means the established under this Act.
Interim Insurance Regulatory Authority means the Insurance Regulatory
Authority set up by the Central Government through Resolution No.
17(2)/ 94-lns-V dated the 23rd January, 1996.

Words and expressions used and not defined in this Act but defined in
the Insurance Act, 1938 or the Life Insurance Corporation Act, 1956 or
the General Insurance Business (Nationalization) Act, 1972 shall have
the meanings respectively assigned to them in those Acts

A new definition of "Indian Insurance Company" has been

inserted. "Indian insurance company" means any insurer being a
company (a) which is formed and registered under the Companies Act,
1956
(b) in which the aggregate holdings of equity shares by a foreign
company, either by itself or through its subsidiary companies or its
nominees, do not exceed twenty-six per cent. Paid up capital in such
Indian insurance company (c) whose sole purpose is to carry on life
insurance business, general insurance business or re-insurance business.

Chapter: 4

➢ Contribution of Life Insurance

Sector in the Economy
➢ FLOW OF Insurance Industry in
India
➢ STRUCTURE OF INSURANCE
INDUSTRY: Snap Shot
➢ Industry
 ➢ Aggregation of Long Term
Savings
➢ Spread of financial services in rural
Areas
➢ Long term funds for infrastructure
Development of Capital Markets/
Economic Growth
➢ Employment generation
➢ Special Futures
➢ Growth Potential
➢ Phase of transition

FLOW OF Insurance Industry in India

• Structure of Insurance Industry: Snap Shot

• Contribution to Indian Economy
• Special Features

STRUCTURE OF INSURANCE
INDUSTRY: Snap Shot

Historical Perspective
(i) Prior to 1956 242 companies operating
(ii) 1956 - 2001 Nationalization – LIC monopoly
player – Government control
(iii) 2001 -- Opened up sector

Industry
Snap Shot - Contd.
• (a) LIC – Fully owned by Government
 (b) Postal Life Insurance
• (ii) Private players -
1. Bajaj Allianz Life Insurance Co. Ltd.
2. Birla Sun Life Insurance Co. Ltd. (BSLI)
3. HDFC Standard Life Insurance Co. Ltd. (HDFC STD
LIFE)
4. ICICI Prudential Life Insurance Co. Ltd. (ICICI
PRU)
5. ING Vysya Life Insurance Co. Ltd. (ING VYSYA)
6. Max New York Life Insurance Co. Ltd. (MNYL)
7. MetLife India Insurance Co. Pvt. Ltd. (METLIFE)
8. Kotak Mahindra Old Mutual Life Insurance Co. Ltd.
9. SBI Life Insurance Co. Ltd. (SBI LIFE)
10. TATA AIG Life Insurance Co. Ltd. (TATA AIG)
11. Reliance Life Insurance
12. Aviva Life Insurance Co. Pvt. Ltd. (AVIVA)
13. Sahara India Life Insurance Co. Ltd. (SAHARA
LIFE)
14. Shriram Sunlam
• (iii) Other likely players – PNB Life Insurance, Axa
Bharti Enterprises
 Potential of the Insurance sector:

Total population 1.1 billion

Total population of 253 millions

Insurable class
Total population 88.5 millions
insured
 Source: Financial Express-Delhi.

Market share:

2001-02 2002-03 2003-04 2004-05 2005-

06
LIC
98% 94% 87% 78% 72%
Private
Players 2% 6% 13% 22% 28%

Industry growth rate at 36% (2004-05) with premium income

From new business.
Source: Financial Express- Delhi

Market Share
Company Indian Foreign Market
Promoter/ Insurance share
based on
Partner premium
Aviva life Dabur Aviva, UK 1.12
Bajaj Bajaj Auto Allianz, 6.12
Allianz Germany
Birla sun Aditya Sun Life, 1.84
life Birla Canada
group
HDFC HDFC Standard 2.96
Standard Life, UK
ICICI ICICI Prudential, 7.11
Prudential Bank UK
ING Vysya ING 0.63
Vysya Bank Insurance,
Netherlands
Kotak Kotak Old Mutual 0.71
Mahindra, Mahindra South
Old Bank Africa
Mutual
Max New Max India New York 1.32
York Life, US
MetLife Jammu & MetLife, 0.40
Kashmir US
Bank
Sahara Sahara None 0.80
Life India
Insurance
SBI Life SBI Cardiff, 1.52
France
Tata AIG Tata AIG, US 1.78
Group
 CONTRIBUTION TO INDIAN
ECONOMY
(i) Life Insurance is the only sector which garners
long term savings
(ii) Spread of financial services in rural areas and
amongst socially less privileged
(iii) Long term funds for infrastructure
(iv) Strong positive correlation between
development of capital markets and insurance/
pension sector
(v) Employment generation
Aggregation of Long Term Savings
(i) Total Assets of Life Insurance Companies

2002-2003 2003-2004 2004-2005

2,80,450Cr 3,52,608Cr 4,23,000 Cr

(ii) Total Premium generated

2002-2003 2003-2004 2004-2005

57,708 Cr 66,278 Cr 79,000 Cr

(iii) Industry is growing @ 19 p.a.

(iv) Atthis growth rate, the future premium

income generated will be
2005-2006 2006-2007 2007-2008
94,000 Cr 1,12000 Cr 1,33,000 Cr

(v) Life Insurance funds account for 15% of

household savings.

(vi)The industry has the potential to increase the

share to 20%.

Spread of financial services in rural

areas and amongst socially
underprivileged
• IRDA Regulations provide certain minimum business to be done
(i) In rural areas
(ii) In the socially weaker sections
• Life Insurance offices are spread over nearly
1400 centers.
• Presence of representative in every tensile –
deeper penetration in rural areas.
• Insurance agents numbering over 6.24 lakhs
in rural areas.
• Policies sold in rural areas (2004-05) - No. of
policies - 55 lakhs Sum assured 46,000 cr
• Social security - No. of lives covered 2003-04
17.4 lakhs 2004-05 42.1 lakhs

Long term funds for

infrastructure

• For GDP to grow at 8 to 10%, qualitative improvement in

infrastructure is essential.
• Estimates of funds required for development of infrastructure vary
widely.
• An investment of 6, 19,600 crore is anticipated in the next 5 years
(Source : SSKI India)
• Tenure of funding required for infrastructure
normally ranges from 10 to 20 years.
• Major portion of these funds are routed through debt/private
equity participation

Development of Capital Markets/

Economic Growth

•Industry also contributes in economic development through investments

in capital market. Present level of investments is over Rs. 40,000 crore.
(Mark to Market basis around 80,000 Crores).
•Annual Investment of around 9000 Crores in capital markets.
•Contribution to Five Year Plans9th Plan 2, 30,900 Crores Last Two
Years 1, 70,900 Crores
• Helps inculcate a sense of security by protecting earning of people in
case of untimely death. Benefits to Policy Holders

2002-2003 2003-2004 2004-2005

20,800 Cr 24,200 Cr 28,700 Cr
EMPLOYMENT GENERATION

• Life insurance industry provides increased

employment opportunities.
• Employees in insurance sector as on 31st March,
2005 is around 2 lakhs.
• Many agents depend on insurance for their
Livelihood–No. of agents on 31st March 2004–
15.59 lakhs
•Brokers, corporate agents, training establishments
provide extra employment opportunities.
• Many of these openings are in rural sectors.
 SPECIAL FEATURES
• Tax clubbing of various savings short term and long term into same
bracket have a bias towards short term savings.
• Distinction between the short term savings and long term savings is
critical from investor’s point of view. More prone to inflationary
pressures
• Clearly, long term savings more than 10 years deserve special
consideration under tax regime.
GROWTH POTENTIAL

At present insurance penetration in India is quite low –

2.26% of GDP.

PHASE OF TRANSITION
• Life Insurance industry is under the phase of infancy after 50 years of
monopoly
• Competition from within and other sectors of financial market
• Needs environmental support till it reaches a comfort zone
 Chapter: 5
➢ Company profile
➢ Management
➢ Areas of Business
➢ KMOM- Progress till date
➢ KMOM- the Partnership and
Lineage
➢ Products
➢ Hierarchy of KMOM Life
Insurance Ltd. (Surat Branch)
 COMPANY PROFILE

Stock broking businesses in the UK. Kotak Group was established in

1985.Kotak Mahindra Bank is the parent company of the group. Kotak
Group entered into the life insurance business in 2001. Kotak Mahindra
Old Mutual Life Insurance Ltd. is a joint venture between
KotakMahindra Bank Ltd. (76%) and Old Mutual plc. (24%) Old
Mutual plc.Is a world-Class international financial services company. It
was established in South Africa before 160 years.

OLD MUTUAL is the largest financial services business in South

Africa, through its life insurance, asset management, banking and
general insurance operations. The company serves 4 million life
insurance policyholders and employs over 13 000 South Africans in its
local operations.
In the USA, OLD MUTUAL is one of the top ten fixed annuity
businesses offering an array of specialist asset management skills
through its 23 asset management businesses. The company’s US Life
business recorded sales of $4 billion at the end of 2002.
Operations in the United Kingdom are focused on wealth management,
through Gerrard as one of the leading private client
The OLD MUTUAL Group has the ability to cater for a variety of
consumer segments and offers a comprehensive and innovative range of
products for all income groups.

Mission:
“At KotakLife Insurance, we aim to help customers take important
financial decisions at every stage in life by offering them a wide range
Of innovative life insurance products, to make them financially
independent.”

MANAGEMENT

MR. UDAY KOTAK is the CEO of the company.

Other Top Management persons are as follows:-

Mr. Gaurang Shah (Managing Director)

Mr. Gaurang Shah is the Managing Director of Kotak Mahindra

Old Mutual Life Insurance Limited.
Mr. Gaurang Shah is a Chartered Accountant and a Cost and Works
Accountant. He has also done his Company Secretary ship from the
Institute of Company Secretaries of India. Mr. Gaurang Shah has
been with the Kotak Group for the past eight years where he has
held different positions of great responsibility and juggled multiple
tasks effectively. His cumulative experience, primarily in financial
services, stands at over 21 years, several of those in building the
retail finance business. At Kotak Life Insurance, Mr. Shah will
focus on developing new lines of businesses and leveraging the
company's existing competencies and network to steer Kotak Life
Insurance on its ongoing growth path with even greater thrust. Mr.
Shah has a commendable expertise in managing a large number of
employees.
Mr. Shah has been previously associated with Kotak Mahindra
Primus since its inception and has contributed towards its growth to
become a Rs.2000 Cr plus business. Before coming to Kotak Life
Insurance, Gaurang Shah was Group Head of Retail Assets for
Kotak Mahindra Bank. The Retail Assets include commercial
vehicles, personal loans, structured products, car loans and loans
against shares.

Mr. G Murlidhar(Chief Financial Officer)

Mr. Murlidhar is a Chief Financial Officer and
Company Secretary of Kotak Life Insurance. Mr.
Murlidhar is an associate member of the Institute of
Chartered Accountants of India, an associate member of
the Institute Of Company Secretaries of India, and
 graduate member of the Institute of Cost & Works
Accountants of India. Mr. Murlidhar possesses over 20-
year work experience and has earlier worked with
National Dairy Development Board (NDDB), MDS
Switchgear Limited and Nicholas Piramal India Limited
and Ion Exchange Ltd. Prior to Kotak Life Insurance; he
held the position of VP-Finance at Gujarat Glass Ltd.
As Chief Financial Officer at Kotak Life Insurance, he oversees all
aspects of Finance including Operations, Regulatory, Internal
Control, Finance, Accounts and Treasury.

Mr. Nandip Vaidya (Vice President - Sales)

Mr. Nandip Vaidya is the Vice President - Sales at Kotak Life Insurance.
Mr. Vaidya holds a B.Tech (Mechanical) degree from IIT Mumbai and
has also completed his Post Graduate Diploma in Business Management
from IIM-Ahmedabad.
He started his career as a Management Consultant at A.F. Fergusson.
After completing 5 years there, he moved onto various positions within
the Kotak Mahindra group starting from Car Financing (Kotak
Mahindra Finance Ltd) to Stock broking & Distribution of investment
products/ Mutual funds (Kotak Securities). Mr. Vaidya set up the private
banking business and private equity fund for the Kotak group.

Mr. Arun Patil (Vice President - Sales & Management

Development)

Mr. Eksteen de Waal is the Sales Training Head of Kotak Life Insurance.
He joined on secondment from Old Mutual South Africa for a period of
two years. Eksteen is a post- graduate in Law and practiced Law as well
as lectured at South African Universities before joining the Life
Insurance Industry. He has over 23 years' experience in the Life
Insurance Industry. He worked for Sanlam Life in South Africa for 3
years before joining Old Mutual more than 20 years ago. Eksteen started
with Old Mutual as a Legal Adviser and after that held various positions.
He sold life assurance for some time, served as Head of Old Mutual's
Training Division, Head of Old Mutual's Trust Company, Project Leader
for implementing a new Sales Process with McKinsey's, Head of
Conventions and Motivation, Head of Agency Marketing and finally
Head of Banc assurance with Old Mutual Bank. In addition he played a
role in the wider Industry. He was Vice-President of the South African
Insurance Institute for two years as well as Vice-President of the
Financial Planning Institute for three years. In this time Eksteen
pioneered the introduction of the CFP qualification into South Africa.
He has traveled widely during his career, working in the USA and
England and also implemented Training Programme in Namibia,
Zimbabwe, Malawi and Kenai. His current role is to substantially
upgrade the level of Training and assist in the implementation of
Performance Management Systems in Kotak Life Insurance.

AREAS OF BUSINESS
Kotak Mahindra one of India's leading financial institutions was born in
1985 as Kotak Capital Management Finance Limited. This company was
promoted by Mr. Uday Kotak, Mr. Sidney A. A. Pinto and Kotak &
Company. Industrialists Mr. Harish Mahindra and Mr. Anand Mahindra
took a stake in 1986, and that's when the company changed its name to
Kotak Mahindra Finance Limited.
It's been a steady and confident journey to growth and success.

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