PREFACE Practical training is an important part of the theoretical studies. It is of an immense importance in the field of management. It offers the student to explore the valuable treasure of experience and an exposure to real work culture followed by the industries and thereby helping the students to bridge gap between in the theories explained in the books and their practical implementations. Research Proect plays an important role in future building of an individual so that he!she can better understand the real world in which they have to work in future. "he theory greatly enhances our knowledge and provides opportunities to blend theoretical with the practical knowledge. I have completed the proect on Globalization of Insuran!" I have tried to cover each and every aspect related to the topic with best of my capability hope that this research would help many.
CONTENTS #.no. Particulars Page No. $. Introduction a% Industry profile b% &ompany profile c% Introduction to the topic '. Obectives of the study (. Importance of the study ). Research *ethodology a% Research + its type b% Research design c% #ources of data d% #ample si,e e% #ample area -. .ata Analysis + Interpretation /. 0indings 1. 2imitations of the study 3. #uggestions 4. &onclusion $5. 6ibliography $$. Annexure IN#USTR$ PROFILE Lif! Insuran! Cor%oration Of In&ia7 'ISION 8"o be the preferred life insurer of the people of 0ii by providing innovative life insurance products and world class service at affordable rates9. MISSION Explore and enhance the quality of life of people through financial security by providing products and services of aspired attributes with competitive returns, and by rendering resources for economic development. OB(ECTI'ES OF LICI) o #pread 2ife Insurance widely and in particular to the rural areas and to the economically backward classes with a view to reaching all insurable people in the country and providing them ade:uate financial cover against death at a reasonable cost o *aximi,e mobili,ation of people;s savings by making insurance linked savings ade:uately attractive o &onduct business with utmost economy and with the full reali,ation that the moneys belong to the policyholders o Promote amongst all agents and employees of the 2I&I a sense of participation< pride and ob satisfaction through the discharge of their duties with dedication towards achievement of the &orporate obectives CURRENT STATUS) Over its existence of around -5 years< life insurance &orporation of India< which commanded a monopoly of soliciting and selling life insurance in India created huge surpluses and contributed around 1= of India>s ?.P in '55/. 2I& is continuously winning the reader>s digest trusted brand award @3%. According to the brand trust report @4% '5$$< 2I& is the 3 th *ost trusted brand of India. *#FC Stan&ar& Lif! Insuran!) A.0& #tandard 2ife Insurance 2td.< is one of the India>s leading private insurance company< which offers a range of individual and group insurance solutions. It is a oint venture between Aousing .evelopment 0inance &orporation 2imited @A.0& 2td.%< India>s leading housing finance Institution and a group company of the #tandard 2ife BC. A.0& as on .ec. ($ st < '551 holds 1'.(3= of e:uity in the oint venture. 'ISION) 8"he most successful + admired 2ife Insurance &ompany which means that we are the most trusted &ompany< the easiest to deal with< offer the best value of money< + set the standards in the industry.9 MISSION) "o be the top new 2ife Insurance &ompany in the market. "his does not ust mean being the largest or the most productive company in the market< rather it is a combination of several things7 D &ustomer service of the highest order D Ealue of money D Bse technology to improve service standards ICICI PRU#ENTIAL LIFE INSURANCE 'ISION) "o be the leading provider of financial services in India and a maor ?lobal bank.
MISSION) Fe will leverage over people technology< speed and financial capital to7 $%.6e the banker of first choice for our customer by delivering high :uality< Forld G class product and services. '%. Hxpand the frontiers of our business globally. Play a proactive role in the full Relation of India>s potential. *aintain a healthy financial profile and diversify our earnings across business and geographic.
*ISTOR$) "he industrial credit and Investment &orporation of India limited @I&I&I% Incorporated at the initiation of the Forld 6ank< the government of India and Representative of Indian industry< with the obective of creating a development. 0inancial institution for providing medium G term and long term proect 0inancing to Indian business. *r. A. Ramaswami mudaliar elected as the first &hairmen of I&I&I limited I&I&I emerges as the maor sources of foreign &urrency loans to Indian industry. 6eside funding from the Forld 6ank and Other multiD lateral agencies I&I&I was also among the first Indian companies "o raise fund from international market. I&I&I Prudential 2ife Insurance &ompany is a oint venture between I&I&I 6ank< a premier financial powerhouse and Prudential plc< a leading international financial services group head:uartered in the Bnited Cingdom. I&I&I Prudential 2ife Insurance &ompany was established in '555 with a commitment to expand and reshape the life insurance industry in India. "he company was amongst the first private sector companies to begin operations after receiving approval from Insurance Regulatory and .evelopment Authority @IR.A% and in the time since< has taken several steps towards reali,ing its goal.
"he company>s wide range of products< distribution strengths and powerful brand has driven its growth across a crossDsection of people and cities. On *arch ($< '55' the company crossed the $<55<555 policies milestone with a premium income of around Rs. $'' crore and a total sum assured of '155 crore to establish itself as the No. $ Private life insurer in the country.
COMPAN$ PROFILE Ma+ Lif! Insuran! Co,%an- Eenture between max India ltd and *itsui #umitomo insurance co. ltd. *ax India is a leading Indian multiDbusiness corporate< while *itsui #umitomo insurance is a member of *# + A. insurance group< which is currently amongst the top $5 general insurers in the world. *ax life insurance offers comprehensive life insurance and retirement solutions for long terms savings and protection. A financially stable company with sound investment expertise< *ax life insurance has a strong customerDcentric approach focused on advice based sales and :ualifies services. *ax life insurance has positioned itself on the :uality platform. In line with its vision to be the most admired life insurance company in India< it has developed a strong corporate governance model based on the core values of excellence< honesty< knowledge< caring< integrity and teamwork. It is incorporated in '555 by Analit #ingh< max life started commercial operation in '55$and today is one of the India>s leading private life insurance companies. the company offers individual and group life insurance products and is present across the country through a wide distribution network of multi channel distribution. *ax life has '( individual life and health insurance products and 4 riders that can be customi,ed. 6esides this< the company offers a products and 1riers in group insurance business. "he company>s paid up capital as on ($ st march< '5$$ was rs $41/ crore. 'ision "o become the most admired life insurance company in India for all stakeholders. Mission Amongst top - private life insurance companies by profitable new 6usiness sales National player 6rand of choice Hmployer of choice Principle of choice for distribution + suppliers 'alu!s "his vision is to become India>s most admired life insurance paradigm by focusing on customers first. "he service process is responsive< personali,ed< humane and empathetic. Hvery individual who represents the company is for us our brand. *on!st-).Aonesty is the heart of the life insurance business. It is all about trust. "ransparence< integrity and dependability form the cornerstone of the max life insurance experience. "he company ensures that everyone who represents the brand carries a promise7 we careD in word as well as deed. E+!ll!n!).Hxcellence at max life insurance implies the ability to perform at a consistently high level. 0ocused on the values of a continue improvement in people< processes and the organi,ation< the company strives for the highest standards of :uality in every aspects of its business. /no0l!&1!7DCnowledge leads to expertise and our expertise is in helping people protect themselves. Perfectly combining global expertise with local knowledge< we are India>s life insurance specialist. *ax life insurance believes that for knowledge to be of value it must be focused< current< tested and shared.. T!a,0or27D"eamwork implies ability to share exchange and provide information and support team members which is at the core of any successful venture. #elflessly putting the team interest above personal agenda enables the company to perform better in every aspect. (ourn!- of Ma+ Lif! insuran! *ax 2ife Insurance< the largest nonDbank private life insurer< is a oint venture between *ax India 2td. and *itsui #umitomo Insurance &o. 2td. *ax India is a leading Indian multiDbusiness corporate< while *itsui #umitomo Insurance is a member of *#+A. Insurance ?roup< which is currently amongst the top $5 general insurers in the world. *ax 2ife Insurance offers comprehensive life insurance and retirement solutions for longDterm savings and protection. A financially stable company with sound investment expertise< *ax 2ife Insurance has a strong customerDcentric approach focused on advice based sales and :uality service. *ax 2ife Insurance has positioned itself on the :uality platform. In line with its vision to be the most admired life insurance company in India< it has developed a strong corporate governance model based on the core values of excellence< honesty< knowledge< caring< integrity and teamwork. *ax 2ife Insurance offers comprehensive life insurance and retirement solutions for longDterm savings and protection to over thirty lakh customers. It has a countryDwide diversified distribution model including the country;s leading agent advisors< exclusive arrangement with Axis 6ank and several other partners. *ax 2ife Insurance is a :uality business focused on delivering excellence to customers through advice based sale process< customer centric approach to business< financial stability + investment expertise and strong human capital. In the financial year '5$$D$' *ax 2ife Insurance ranked fourth among private life insurers with a market share of 3./=. "he &ompany has been one of the fastest growing life insurance companies with total revenue of Rs. /<(4$ crore and enterprise profit of Rs. 1(( crore for the 0inancial Iear '5$$D$'. "he &ompany;s share capital of Rs. '<$'1 crore with a solvency margin of -()= and solvency surplus of Rs. $<-5/ crore is indicative of its financial strength and stability. As on ($st *arch '5$'< *ax 2ife Insurance had assets under management of Rs. $1<'$- crore. *ax 2ife Insurance has a diversified distribution network spread across more than $<555 cities. "he distribution is based on three pillars G agency distribution< banc assurance and partnership distribution. Agency distribution forms its core distribution channels with advice based sales process through its well trained and knowledgeable agent advisors. "hese agent advisors are e:uipped to engage with prospective customers and offer customi,ed solutions for their life stage needs. In banc assurance< the &ompany has a strong relationship with Axis 6ank which in a short span of two years becomes the largest nonDcaptive banc assurance relationship in India with its network of over $<)55 branches providing life insurance solutions to its customers. Partnership .istribution< the third pillar of *ax 2ife Insurance;s distribution model is e:ually important and successful with long standing relationship with large distributors of financial products such as Amsure and Peerless. "hese three key distribution channels are complemented by ?roup Insurance and &ustomer Advocacy teams. *ax 2ife Insurance offers a comprehensive suite of 2ong "erm #avings and Protection oriented products. It currently has ') products covering and 4 riders that can be customi,ed to suit every life stage need of the customer. 6esides this< the company offers ) products and 1 riders in group insurance business. At *ax 2ife Insurance< providing a superior customer experience is central to its vision and the &ompany is committed to provide superior service experience to the customer. As a proactive step towards service excellence< *ax 2ife Insurance has launched the J"reating &ustomer 0airlyJ @"&0% policy. "he "&0 policy aims to raise standards in the way the &ompany interacts with customers at every touch point right from the preDsales engagement to the payment of benefits. *ax 2ife Insurance follows a prudent investment philosophy to optimi,e risk management in its bid to provide maximi,e returns to policyholders. Investments are in instruments which are safe and provide good returns in the long run. "he company values human capital and considers it to be its competitive advantage. *ax 2ife Insurance believes that people are its biggest organi,ational assets and hence lays a strong emphasis on employee friendly practices leading to high levels of employee engagement and motivation. "his is reflected in the recognition that the company received from the ?reat Places "o Fork Institute< India< as one of the best workplaces in the industry. *ax 2ife insurance works closely with *ax India 0oundation< an independent social service organi,ation of the *ax India ?roup for all its &#R activities. "he company has taken up immuni,ation programme as a societal agenda to ensure protection against maor ailments for the next generation of the country. "he programme covers vaccines like 6&?< Aepatitis 6 vaccine< Polio drops< .P"< . "ap< *easles vaccine< **R< "yphoid< d" and "". Along with *ax India 0oundation and *anav #ewa #anidhi *ax 2ife Insurance also organi,e artificial limbs and polio caliper camps. In each such camp more than (-5 beneficiaries are provided artificial limbs. A0ar&s an& Aola&!s *ax 2ife Insurance has always believed in setting new benchmarks in :uality of service and product offerings to its stakeholders and its efforts have been duly recogni,ed over the years. #ome of the awards and accolades won by *ax 2ife Insurance are as follows7 6" *ercerD"N# #urvey Ranked *ax 2ife Insurance No.1 in the J6est companies to Fork 0orJ and J"he Ranked -th in ;India;s *ost Respected &ompanies; by 6usiness world G '55) and '55/ best life insurance company to work for in IndiaJ D '553 &IO $55 award for I" excellence G '553 D '5$$ B2IPs funds recogni,ed as top :uartile in performance by Outlook *oney G '553< '554< '5$$ Received Asia Insurance Industry Award for Innovation D '554 Amongst the top '- companies in ;?allup ?reat Fork Place; Award D '554 Awarded the &IIDHxim 6ank &ommendation &ertificate for 6usiness Hxcellence G '553< '554< '5$5 A,on1 t3! to% 45 o,%ani!s to 0or2 for in In&ia< according to 6usiness world '55( ;?reat Forkplaces of India; Received ;B!st Si+ Si1,a Pro6!t; award at #akal #ix #igma Hxcellence Awards G '55/ In&o.A,!rian Cor%orat! E+!ll!n! A0ar& for 6est IndoDB# company in 0inancial #ervices &ategory in '55/ Among top ( in Asia 2ife Insurance &ompany of the Iear Award '551 instituted by Asia Insurance Review Gol&!n P!ao2 A0ar& for Hxcellence in Product Innovation for *ax Eiay &IO $55 "echnology Award '553 D '5$$ CII National Si+ Si1,a r!o1nition for 6est #ix #igma Proect D '554 Outlook *oney survey D recogni,ed as the only company to have funds amongst the top :uartile in all funds category 7CI #L S3a3 Awards for 6est #ix #igma Proect on economics of Kuality G '5$' So,! of t3! in&ustr- firsts 0irst company to provide 0ree look period of $- days to the customer. "his was later made mandatory by the regulator 0irst company to start toll free line for agent service 0irst and the only life insurance company in India to implement 2ean methodology of service excellence in service industry 0irst life insurance company in India to provide various services to the agents and customers over phone 0irst Indian life insurance company to start service center at the regional level 0irst life insurance &ompany in India to be awarded I#O 455$7'553 certifications. COMPAN$8S #IFFERENTIATORS 9: Finanial str!n1t3) *ax 2ife insurance is a strong< profitable< and successful institution built on strong foundations with a customer base of over (5 lakh customers. In the financial year '5$$D$'< the &ompany has become the largest non bank private life insurer< with total revenue of Rs. /<(4$ crore and enterprise profit of Rs. 1(( crore. Our financial strength and stability is evident in the solvency ratio of -()= which is (.- times the mandatory re:uirement. As on ($ st *arch '5$'< we had Assets under *anagement of Rs. $1<'$- crore. 4: 7ualit- of A&;i!7 *ax 2ife Insurance firmly believes in its consultative sales model. Our agency distribution is industry benchmark with well trained and knowledgeable agent advisors who are completely e:uipped to engage with you and offer customi,ed solutions for life stage needs. <: #i;!rsifi!& &istribution ,o&!l) *ax 2ife Insurance has one of the most balanced diversified distribution model based on three pillars G agency distribution< bancassurance and partnership distribution. In addition to the fact that *ax 2ife Insurance agents advisors are one of the most productive in the market< the company also has the largest non captive bancassurance relationship with Axis 6ank and a strong Partnership .istribution with financial services distributors like Peerless and Amsure. "his ensures our presence in more than $$55 cities of India. =: Co,%r!3!nsi;! %ro&ut %ortfolio) *ax 2ife Insurance offers a comprehensive suite of life insurance and retirement solutions for long term savings and protection needs consisting of a healthy mix of both traditional and B2IPs. It now has ') individual life and health insurance products and 4 riders that can be customi,ed to suite every need of the customer. 6esides this< the company offers ) products and 1 riders in group insurance business. 5: Custo,!r !ntriit-7 Providing superior customer experience is central to *ax 2ife Insurances vision of becoming the most admired life insurance company in India. "he company has always focused on upgrading its service offering to customers and distributors< thus creating competitive differentiation in the market. >: O%!n an& !t3ial ultur!7 *ax 2ife Insurance has always believed that human capital is the key to the success of any organi,ation. "he company has processes that are effective and transparent and engender employee trust and commitment. *ax 2ife Insurance;s employee value proposition differentiates the company from others. Our ethical and value driven corporate culture ensures greater commitment to the company;s principle of customer centricity.
INTRO#UCTION TO T*E TOPIC Intro&ution to insuran! "he word J0earJ has only four alphabets like love but both of them have very different meaning. Fhatever man @male or female% does for the love of their families always starts with the background of fear. ?enerally so many times we have been asking our selves that< what will happen if we were not there< but we keep on asking rather then doing something for it. "ime is precious< it never stops for any one and we are living in the world of uncertaintyL the uncertainty of ob< the uncertainty of money< the uncertainty of property and like this the story goes continuous for the whole life of a man. A thriving insurance sector is of vital importance to every modern economy. 0irstly< because it encourages the habit of saving< secondly because it provides a safety net to rural and urban enterprises and productive individuals. And perhaps most importantly it generates longD term invisible funds for infrastructure building. "he nature of the insurance business is such that the cash inflow of insurance companies is constant while the payout is deferred and contingency related. "his characteristic feature of their business makes insurance companies the biggest investors in longDgestation infrastructure development proects in all developed and aspiring nations. "his is the most compelling reason why private sector @and foreign% companies< which will spread the insurance habit in the societal and consumer interest are urgently re:uired in this vital sector of the economy. Opening up of insurance to private sector including foreign participation has resulted into various opportunities and challenges in India. "he business of insurance is related to the protection of the economic value of assets. Hvery asset has a value. "he asset would have been created through the efforts of the owner< in the expectation that< either through the income generated there from or some other output< some of his needs would be met. "here is normally expected lifetime for the asset during which time it is expected to perform. "he owner< aware of this can< manages his affair that by the end of that life time< a substitute is made available to ensure that the value or income is not lost. Aowever< f the assets get lost earlier< being destroyed or made non functional< through an accident or other unfortunate event< the owner and those deriving benefits there from suffer. Insurance is a mechanism that helps to reduce such adverse conse:uences. Assets are incurred< because they are likely to be destroyed or made nonD functional< through an accidental occurrence. #uch possible occurrences are called perils. Fe can define insurance as follows7D Insurance is a contract between the insurance company @insurer% and the policy holder @insured%. In return of a consideration @the premium%< the insurance company promises to pay a specified amount to the insured on the happening of a specific event. Globalization an& insuran! in&ustr- .ue to tremendous losses connected to the current global financial crisis< insurance giants< such as AI? and 0ortis< are being rescued by their governments and are being nationali,ed in the process. "hese insurance companies face losses because they too had invested their funds in mortgage securities and credit default swaps and were highly leveraged. If these companies failed< the fallout would have been felt worldwide< with defaults on all types of insurances and loans that were underwritten. Already AI?>s credit problems are still reverberating< as it has already spent most of the bailout funds. "he purpose of insurance is to spread risk over time. "he risk of an event where insurance money is paid out is assessed based on the probability of its occurrence. Insurance companies charge a premium based on the risks and the potential loss associated with that risk. Insurance companies also defer risk through reinsurance< in which a reinsurance company insures the risk of insurance companies< thus allowing the insurance companies to offer higher levels of protection to the policyholder< since they do not have to worry about covering the full losses. #ometimes events are deemed too risky for private insurance and the loss associated with that event is either paid outDofDpocket or by government intervention @by helping defer costs after the event has taken place or by offering an alternative insurance option%. 0or example< in the B.#. many private insurance companies do not offer flood insurance< hence federal government offers National 0lood Insurance Program @N0IP% to insure property for flood damage and the 0ederal &rop Insurance &orporation @0&I&% to protect crops for flood and drought damage. "he insurance sector is deeply tied to trends in globali,ation. "he outcomes of trade agreements< environmental problems< global health pandemics< volatility in financial market< terrorists attacks and security problems< and basically any worldwide trend< will impact individuals< companies< and governments< all of whom own insurance policies. G!n!ral Tr!n&s for t3! Global Insuran! In&ustr- #ince the $445>s< the following trend have been broadly experienced by the global insurance industry7 1. Con!ntration an& !ntralization %ro!ss!s7 formation of strategic alliances between insurance and reinsurance companiesL fusion of banks< insurance companies< and credit companies to form transnational financial groupsL mergers between small and medium insurance companies to form large international insurance companies. 2. Mo&ifiation to tra&itional for,s an& t-%!s of insuran! s!r;i!s an& n!0 insuran! %ro&uts7 organi,ing insurance coverage through securiti,ationL insurer participation in pension insurance and reduced participation of governments in providing payment of oldDage and disability pensionsL new insurances against political< military< security< and informational risks. . C3an1! of ,ar2!t !n;iron,!nts7 Internet sales of insurance and reinsurance productsL insurances losses due to urbani,ation< climate change< and private property cost increaseL liberali,ation of state and supraDstate regulations of financial and insurance markets. Globalization of Insuran!) ?lobali,ation has been the basic mantra after $44$. "he liberali,ation< privati,ation and globali,ation have become the basic concepts of succession all accepts of development. ?lobali,ation brings about single< integrated global economy7 Insurance being an integral part of financial service could not claim immunity to the impact of the globali,ation process and opened up to private and global players world over< including India. *any multinational corporations are new entering into the insurance sector which is now a booking sector in India. IR.A Act< $444 marked the opening Act of the insurance sector to private participation and foreign investment. #ince $44( the following trends have been broadly experienced by the global insurance industry. Insurance business in India is now opened to private and foreign players also. At present 2ife Insurance is offered by thirteen companies. NonD2ife insurance @and health% is handled by four public #ector Insurers @?I& companies% and fourteen other companies as at the end of .ec. '55(. @a% Con!ntration an& C!ntralization Pro!ss ) "he concentration and centrali,ation process found in the global insurance industry are 0ormation of strategic alliances between insurance and reinsurance companies< mergers between small and medium insurance companies to form large international insurance companies. @b% Mo&ifiation to tra&itional for,s) Fith the globali,ation of insurance industry< modifications have been made to traditional forms and types of insurance services and new insurance products. @c% C3an1! of ,ar2!t !n;iron,!nt) ?lobali,ation of insurance industry has led to change of market environment. "he environmental changes that took place are internet sales of insurance and reDinsurance products< liberali,ation< regulations of financial and insurance markets. "he globali,ation of insurance industry has been accelerating as mergers and ac:uisitions have continued to cross country borders. "he insurance market is booming in India and taken a new hori,on of marketing. E;olution of insuran! in In&ia In India< insurance has a deepDrooted history. Insurance in various forms has been mentioned in the writings of *anu @*anusmrithi%< Iagnavalkya @.harmashastra% and Cautilya @Arthashastra%. "he fundamental basis of the historical reference to insurance in these ancient Indian texts is the same i.e. pooling of resources that could be reDdistributed in times of calamities such as fire< floods< epidemics and famine. "he early references to Insurance in these texts have reference to marine trade loans and carriers; contracts. Insurance in its current form has its history dating back until $3$3< when Oriental 2ife Insurance &ompany was started by Anita 6asra in Colkata to cater to the needs of Huropean community. "he preDindependence era in India saw discrimination between the lives of foreigners @Hnglish% and Indians with higher premiums being charged for the latter. In $315< 6ombay *utual 2ife Assurance #ociety became the first Indian insurer. At the dawn of the twentieth century< many insurance companies were founded. In the year $4$'< the 2ife Insurance &ompanies Act and the Provident 0und Act were passed to regulate the insurance business. "he 2ife Insurance &ompanies Act< $4$' made it necessary that the premiumDrate tables and periodical valuations of companies should be certified by an actuary. Aowever< the disparity still existed as discrimination between Indian and foreign companies. "he oldest existing insurance company in India is the National Insurance &ompany 2td.< which was founded in $45/. It is in business. "he ?overnment of India issued an Ordinance on $4th Manuary< $4-/ nationali,ing the 2ife Insurance sector and 2ife Insurance &orporation came into existence in the same year. "he 2ife Insurance &orporation @2I&% absorbed $-) Indian< $/ nonDIndian insurers as also 1- provident societiesN ')- Indian and foreign insurers in all. In $41' with the ?eneral Insurance 6usiness @Nationali,ation% Act was passed by the Indian Parliament< and conse:uently< ?eneral Insurance business was nationali,ed with effect from $st Manuary< $41(. $51 insurers were amalgamated and grouped into four companies< namely National Insurance &ompany 2td.< the New India Assurance &ompany 2td.< the Oriental Insurance &ompany 2td and the Bnited India Insurance &ompany 2td. "he ?eneral Insurance &orporation of India was incorporated as a company in $41$ and it commence business on Manuary $st $41(. "he 2I& had monopoly till the late 45s when the Insurance sector was reopened to the private sector. 6efore that< the industry consisted of only two state insurers7 2ife Insurers @2ife Insurance &orporation of India< 2I&% and ?eneral Insurers @?eneral Insurance &orporation of India< ?I&%. ?I& had four subsidiary companies. Fith effect from .ecember '555< these subsidiaries have been deDlinked from the parent company and were set up as independent insurance companies7 Oriental Insurance &ompany 2imited< New India Assurance &ompany 2imited< National Insurance &ompany 2imited and Bnited India Insurance &ompany 2imited. IMPACT OF GLOBALISATION Fhile nationali,ed insurance companies have done a commendable ob in extending the volume of the business< opening up insurance sector to private players was a necessity in the context of globali,ation of financial sector. If traditional infrastructural and semipublic goods industries such as banking< airlines< telecom< power etc.< have significant private sector presence< continuing a state of monopoly in provision of insurance was indefensible and therefore< the globali,ation of insurance has been done as discussed earlier. Its impact has to be seen in the form of creating various opportunities and challenges. "he introduction of private players in the industry has added colors to the dull industry. "he initiatives taken by the private players are very competitive and have given immense competition to the on time monopoly of the market 2I&. #ince the advent of the private players in the market the industry has seen new and innovative steps taken by the players in the sector. "he new players have improved the service :uality of the insurance. As a result 2I& down the years have seen the declining in its career. "he market share was distributed among the private players. "hough 2I& still holds 1-= of the insurance sector the upcoming nature of these private players are enough to give more competition to 2I& in the near future. 2I& market share has decreased from 4-= @'55'D5(% to 3$= @'55)D5-%. "he following company holds the rest of the market share of the insurance industry "A62H7 #r. no Name of player *arket share $ 2I& 3'.( ' I&I&I PRB.HN"IA2 -./( ( 6IR2A #BN 2I0H '.-/ ) 6AMA A22IANO './( - #6I 2I0H $.35 / A.0& #"AN.AR. $.(/ 1 "A"A AI? $.'4 3 *AP 2I0H 5.45 4 AEIEA 5.14 $5 O* CO"AC *AAIN.RA 5.-$ STATUS AN# GRO?T* OF INSURANCE SECTOR After privati,ation< insurance industry has seen significant growth. .ue to low penetration and huge potential< many foreign and domestic players have entered the sector. *oreover< several reforms and policy measures have provided a favorable environment for insurance companies to flourish in the country. "he insurance sector in India is primarily divided into life and nonDlife< apart from a very small segment comprising reDinsurance. 6oth the life and nonD life insurance segments< which were nationali,ed in the $4-5s and $4/5s< respectively< witnessed an acrossDtheDboard liberali,ation process in '555. After the reforms< the number of players has increased from one in life insurance and four in nonDlife insurance in '555 to '( players in life insurance sector + ') in nonDlife segment till #ept. '5$5 @including one reD insurer in the nonDlife segment% OPPORTUNITIES FOR GRO?T* $. It is estimated from the survey of literature that Qaspirers> will comprise )/= of the population by '5$'< representing a formidable emerging bankable class. Insurance is seen as long term savings instrument by this segment of the society providing higher return at low risk< given the lack of alternative investment options. Cey challenges in this segment are managing profitability due to low ticket si,e + high underwriting risk. '. After the recent financial crisis< insurance companies want to reduce their costs and outsourcing some of the nonDcore processes like claims processing< policy management etc< can help them to reduce their cost and focus on the core processes. (. "he health insurance sector is one of the booming sectors of the insurance industry as people are becoming more aware about the health insurance and their health care so taking advantage of this< private sector insures are more competitive in this segmenst. 2ife insurer companies are likely to primarily target the young population to amorti,e the risk over the policy term. ). According to the Old Age #ocial and Income #ecurity @OA#I# Report< $444%< there will be $$( million Indian>s over /5 years of age by '5$/ and $14 million by '5'/. On the one hand< this is good news as the life expectancy has increased but on the other hand< it has also increased the risk that people will outlive their savings. Indians will have an expected life span of 35 years< i.e. live a full '5 nonDearnings years. Aealth care costs have also increased many folds eroding retiree>s purchasing power. -. #ocial security provided by the ?overnment of India is very limitedL in fact that less than )= of the population is covered under any social security scheme. Only ?overnment employees are entitled to pension benefits after retirement. Opening up of the pension sector and the establishment of a new pension regulator have made this segment highly attractive. Aence< insurance products are being considered as the next best option to secure the future. "o facilitate insurance and social security cover for the economically weaker sections of society< the Pension 0und Regulatory + .evelopment Authority @PHR.A% has launched a pension scheme< since April '5$5< for rickshawDpullers< barbers< daily wage earners etc. /. Fith the entry of private players< it is expected that insurance business roughly )55 billion rupees per year now< more than '5 per cent per year even leaving aside the relatively under developed sectors of health insurance< pen *ore importantly< it will also ensure a great mobili,ation of funds that can be utili,ed for purpose of infrastructure development that was a factor considered for globali,ation of insurance. Rol! of t3! Insuran! R!1ulator- an& #!;!lo%,!nt Aut3orit- @IR#AA "he Insurance Regulatory and .evelopment Authority @IR.A% was constituted to regulate and develop insurance business in India. As a key part of its role< it is responsible to protect the rights of policyholders. In order to create awareness about IR.A< it;s role< duties and responsibilities are stated here under7 IR.A provides a certificate of registration to a life insurance company. IR.A is responsible for the renewal< modification< withdrawal< suspension or cancellation of this certificate of registration. IR.A frames regulations on protection of policyholders; interests. It offers policyholders the right to voice their complaints against insurers or insurance companies. "he IR.A has set up the grievance redressed cell to take up the complaints of the policyholder. It specifies the re:uisite :ualifications< code of conduct and practical training for intermediaries or insurance intermediaries and agents. It specifies the code of conduct for surveyors and loss assessorsL It promotes efficiency in the conduct of insurance businessesL It promotes and regulates activities of professional organi,ations connected with life insuranceL It levies fees and other charges to carry out the purposes of the IR.A ActL It can call for information from< undertake the inspection of< conduct en:uiries and investigations including the auditing of insurers< intermediaries< insurance intermediaries and other organisations connected with the business of life insuranceL It specifies the form and manner in which books of account should be maintained and statements of accounts should be rendered by insurers and other insurance intermediariesL It regulates the investment of funds by insurance companiesL It regulates the maintenance of margins of solvencyL It adudicates disputes between insurers and intermediaries or insurance intermediariesL It specifies the percentage of premium income of the insurer to finance schemes for the promotion and regulation of certain specified professional organisationsL OB(ECTI'ES OF T*E STU#$ "he main obectives of the study are as follows7D "o study the current status of 2ife Insurance market in India "o study the maor issues and challenges that is facing the life insurer in India in the globali,e environment. "o assess the future marketing strategies of insurance industries. "o suggest measures based on the findings of the study. "o study about the weather the people know about the Insurance or not. IMPORTANCE OF T*E STU#$) It helps to know about the changes occurs by the ?lobali,ation. It helps to know about the different issues and challenges related to insurance industry. It helps to choose the better option to the insurance sector. It helps to knowing about the preference given by the people to insurance companies. RESEARC* MET*O#OLOG$ RESEARC* MET*O#OLOG$)
Research may be defined as< A scientific and systematic search for pertinent information on a specific topic. In fact< Research is an art of scientific investigation. According to &lifford woody<9 Research comprises< defining + redefining problems< formulating hypothesis or suggested solutions< collecting< organi,ing + evaluating dataL making deductions and researching conclusionsL and at least carefully testing the conclusions to determine whether they fit the formulating hypothesis9. TITLE) "o determine the changes came in insurance industry in India after globali,ation. RESEARC* #ESIGN7 .escriptive + diagnosi SOURCES OF #ATA Pri,ar- #ata) It is that data which is collected by personal visiting + interviews. I used Kuestionnaire + Interterviews. S!on&ar- #ata) #econdary data is that data which is already in existence. It has been collected mainly from 6ank>s ournals< &atalogues< Newspapers + *aga,ines etc. In this research I have take help from 6ooks and Febsites. SAMPLE SIZE) 9BB SAMPLE AREA) Curukshetra Tools and Technuques of analysis : Average percentage method #ATA ANAL$SIS AN# INTERPRETATION 79:?3at o,!s in -our ,in& 03!n -ou 3!ar about CInsuran!8D R!s%ons! E of R!s%on&!nts 2I& )-= Investment '$= "ax #aver (5= .on>t know )= INTERPRETATION ) 0rom the above table + diagram we interpret that there are )-= people who aware about 2I&< '$= about Investment< (5= "ax #aver< + )= have no knowledge about Insurance. 74: #o -ou 3a;! an- insuran! %oli-D R!s%ons! E of R!s%on&!nts Ies 3- No $- INTERPRETATION ) "here are 3-= persons who has Insurance Policy + only $-= who has no any insurance policy. #o the persons who have insurance policy are more as compare to the who have no policy. 7<: Ar! Insuran! Co,%ani!s no0 %ri;atiz!&D R!s%ons! E of R!s%on&!nts Ies 1-= No '5= &an>t #ay -= INTERPRETATION) "here are 1-= persons which are in opinion that Insurance &o. are now Privati,ed< + who are not are '5= + -= have no opinion. 7=: ?3i3 Insuran! Poli- &o -ou 3a;!D Poli- E of R!s%on&!nts 2ife /-= NonD2ife $1= 6oth 3=
INTERPRETATION) "he persons which have the 2ife insurance policy are /-= + is more than as compare to NonD2ife which is $1= and the persons who have the 6oth are 3=. 75: ?3at o,!s in -our ,in& 03il! ta2in1 Insuran! %oli-D R!s%ons! E of R!s%on&!nts #aving (5= "ax 6enefits '5= #ecure 0uture -5= INTERPRETATION) "here are (5= people who are taking insurance policy for the #aving purpose< and for "ax benefits are '5= + most of the people i.e.< -5= are taking policy for 0uture #ecuring. 7>: ?3i3 Co,%an-8s Insuran! %oli- -ou %r!f!r t3! ,ostD Co,%an- E of R!s%on&!nts 2I& //= I&I&I $5= Reliance 2ife Ins. /= *ax 2ife Ins. /= #6I 2ife Ins. 3= Others -= INTERPRETATION) 0rom the above table we find that there are most of the persons i.e.< //= who prefer 2I&< $5= I&I&I< Reliance 2ife Ins. /=< *ax 2ife Ins. /=< #6I 2ife Ins. 3= + for Others is -=. 7F: ?3i3 f!atur!s of -our %oli- attrat -ou to bu- itD F!atur!s E of R!s%on&!nts 2ow Premium '4= *oney 6ack ?uarantee ((= *ore Risk &overage $1= Reputation of "he &ompany $-= Any Other /= INTERPRETATION) "he 0eatures which attract the persons most is *oney back guarantee i.e.< ((=< then 2ow premium i.e.< '4=< *ore Risk &overage is $1=< Reputation of the co. is $-=< + Any others are /=. 7G: Ar! -ou %lannin1 for n!0 in;!st,!ntsD R!s%ons! E of R!s%on&!nts Planning 3-= Not Planning $5= &an>t #ay -= INTERPRETATION ) "here are 3-= persons who are Planning for investment< $5= Not Planning for investment + only -= who &an>t #ay anything. And we can say that there are more persons @3-=% who are Planning for investment 7H: Ar! -ou satisfi!& 0it3 t3! %oli-D R!s%ons! E of R!s%on&!nts #atisfied 1'= Not #atisfied $1= Not Responding $$= INTERPRETATION ) "he ratio of the persons who are satisfied with their policy i.e.< 1'= is more as compare to others like Not #atisfied are $1= + there are $$= who not give their responses. 79B: ?oul& -ou 1o for Insuran! if a s!r;i! %ro;i&!r a0a- fro, t3! it- off!rs b!tt!r s!r;i! I %ro&utsD R!s%ons! E of R!s%on&!nts Ies ))= No )(= Bncertain $(= INTERPRETATION ) "here are ))= persons who would go for insurance if a service provider away from the city offers better service + products< )(= says No + $(= have Bncertain about it. FIN#INGS) People think Insurance as a Protection tool. People mostly purchase Insurance for taking 0uture 6enefits + some of others for #aving purpose or "ax benefits. *ost of the people used to prefer 2I& instead of other private co.>s Nearly 35= of the persons have policys in urban areas. Fhile taking the policy people think about the various features like $. 2ow premium '. *oney back guarantee (. *ore risk coverage Htc. *ost of the persons choose insurance because of their safety needs LIMITATIONS OF T*E STU#$) 2imited scope because of restricted availability of time. 2imited number of funds available in study. Not collecting data from the Primary sources. As data is collected by the secondary sources so< there is the possibility of some error. "ime and other factors< which are beyond the human limitation< have also bearing on the study. RECOMMEN#ATION AN# SUGGESTIONS $. 0or the development of the life insurance sector< improvement in the insurance .ensity and insurance penetration is a must. Aence< efforts need to be instituted for such improvement. .evelopment of insurance products including special group policies to cater to different categories should be a priority< especially in rural areas. '. "he life insurers should conduct more extensive market research before introducing insurance products targeted at specific segments of the population so that insurance can become more meaningful and affordable. (. Bnderstanding the customer better will enable insurance companies to design appropriate products< determine price correctly and increase profitability. ). An efficient &R* system< which would eventually create sustainable competitive advantages and build a longDlasting relationship -. Insurers must follow best investment practices and must have a strong asset management company to maximi,e returns . /. Proper steps for the promotion of 6ank assurance. 1. Policy holders should be made aware of their rights and obligations. Policy holders should know the essential aspects of sales talk< insurance policy< claim form< claims process etc. 3. &onsumer awareness campaign should be encouraged to improve financial literacy! insurance literacy levels by conducting workshops< distributing leaflets< distributing literature etc. in both urban and rural areas. 4. 2ife insurance companies should comply with the advertisement code as prescribed by the A#&I @advertisement #tandard &ouncil of India% to ensure that misleading advertisement not issued. CONCLUSION "hus< in the last on basis of above the study< I conclude that need for private sector entry is ustifiable on the basis of enhancing the efficiency of operation< achieving greater density and insurance coverage in the country and for greater mobili,ation of longDterm savings for long gestation infrastructure proects. In the wake of such competition it is essential for the government monopolies @2I& and ?I&% that they :uickly up grade their technology< restructure themselves on more efficient lines and operate as broad run enterprise. ?lobal integration of financial markets resulted from deDregulating measures< technological information explosion and financial innovations. 2iberali,ation and ?lobali,ation have allowed the entry of foreign players in the Insurance sector. Fith the entry of private and foreign players in the Insurance business< people have got a lot of options to choose from. Radical changes are taking place in customer profile due to the changing life style and social perception< resulting in erosion of brand loyalty. "o survive< the focus of the modern insurers shifted to a customerDcentric relationship. "here are lots of opportunities in insurance industry. Opening up the sector will certainly mean new products< better packaging and improved customer service. 6oth new and existing players will have to explore new distribution and marketing channels. Potential buyers for most of this insurance lie in the middle class. New insurers must segment the market carefully to arrive at appropriate products and pricing. BIBLIOGRAP*$ Books: Kothari, C.R. Marketing Research, vishwaprakashan, New Delhi Beri, G.C. Market research, New Delhi Wesites! http!""www.socialmarketing.com http!""www.licindia.in http!""www.estrategicmarketing.com http!""www.asiatradeh#.com http!""www.e$inearticle.com www.google.com http!""en.wikipedia.org"wiki
ANNEJURE 7UESTIONNAIRE) Name7 Age7 Occupation7 Address7 K$.Fhat>s come in your mind when you hear about InsuranceR a% 2I& @ % b% Investment @ % c% "ax #aver @ % d% .on>t Cnow @ %
K'. .o you have any insurance policyR a% Ies @ % b% No @ % K(. Are Insurance &ompanies now privati,edR a% Ies @ % b% No @ % c% .on>t Cnow @ % K). Fhich Insurance Policy do you haveR a% 2ife @ % b% NonD2ife @ % c% 6oth @ %
K-. Fhat comes in your mind while taking Insurance policyR a% #avings @ % b% "ax 6enefits @ % c% #ecure 0uture @ % K/. Fhich &ompany>s Insurance policy you prefer the mostR a% 2I& @ % b% I&I&I @ % c% Reliance 2ife Insurance @ % d% *ax 2ife Insurance @ %
e% #6I 2ife Insurance @ % e% Any Other @ % K1. Fhich features of your policy attract you to buy itR a% 2ow Premium @ % b% *oney back ?uarantee @ % c% *ore Risk &overage @ % d% Reputation of the &o. @ % e% Any Other @ % K3. Are you planning for new investmentsR a% Planning @ % b% Not Planning @ %
c% &an>t #ay @ % K4. Are you satisfied with the policyR a% #atisfied @ % b% Not #atisfied @ % c% Not Responding @ %
K$5. Fould you go for Insurance if a service provider away from the city offers better service + productsR a% Ies @ % b% No @ % c% Bncertain @ %
(Quantitative Perspectives On Behavioral Economics and Finance) James Ming Chen (Auth.) - Finance and The Behavioral Prospect - Risk, Exuberance, and Abnormal Markets-Palgrave Macmillan (2016)