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TABLE OF CONTENTS
Chapter 1: Introduction
Annexure
Bibliography
Chapter – 1
INTRODUCTION
Life Assurance was born in England when the first policy providing
temporary cover for a period of 12 months was issued as easy as 1583 A.D.
The Amicable Society started granting fluctuating sum on death since 1705
and a fix sum since 1757, with the development of mortality tables, the life
Assurance acquired a scientific character.
The Equitable Society founded in 1762 was the first Society established on
scientific basis.
In India, after failure of two British companies, the European and the Albert
in 1870, which attempted writing business on Indian lives, first Indian Life
Assurance Society was formed in the same year called Bombay Mutual
Assurance Society Ltd. It was followed by the Oriental Life Assurance
Company Limited in 1874, Bharat in 1896 and Empire of India in 1897. The
Idea of insurance was born out of a desire of the people to share loss of an
individual by many.
people in the rural area. The Life Insurance Corporation Act (Act XXXI of
1956) was passed by the Parliament in June 1956 which came in force on 1st
July 1956. The Life Insurance Corporation of India came into existence on
1st September 1956.
Structure:
♦Government should take over the holdings of GIC and its subsidiaries so
that these subsidiaries can act as independent-corporations.
♦No Company should deal in both Life and General Insurance through a
single entity.
♦Only one State Level Life Insurance Company should be allowed to operate
in each state.
Regulatory Body
Investments
♦GIC and its subsidiaries are not to hold more than 5% in any company
(There current holdings to be brought down to this level over a period of
time).
Customer Service
Overall, the committee strongly felt that in order to improve the customer
services and increase the coverage of the insurance industry should be
opened up to competition. But at the same time, the committee felt the need
to exercise caution as any failure on the part of new players could ruin the
public confidence in the industry. Hence, it was decided to allow competition
in a limited way by stipulating the minimum capital requirement of Rs.1 bn.
This amount is not very high for foreign firms, as it translates to only about
US$25 million. Further, to date it is unclear whether equity should be
payable in one go or should be brought in as installments. Also, the foreign
equity participation was to be restricted to only 40%.The committee
felt the need to provide greater autonomy to insurance companies in order to
improve their performance and enable them to act as independent companies
with economic motives. For this purpose, it had proposed setting up an
independent regulatory body.
The industry and analysts find that there is lack of clarity in the following
areas:-
♦Though coverage of rural areas was to be made compulsory, it raises the
question as to who would subsidies the rural policies as they would be
difficult to service and hence costs will go up.
♦There is some confusion with respect to investments. Where the funds
should be invested? Currently 70% of the funds with LIC & GIC are
invested in Government securities. Would new entrants be allowed to invest
in GOI securities?
♦The report also does not enumerate exit options available to the new
entrants. In the event of failure, there should be an arrangement made
whereby the other Companies pool in to bail the customers, who in all
probability would be middle class individuals.
Established in 1848, Prudential PLC. of U.K. has grown to be the largest life
insurance and mutual fund company in U.K. Prudential PLC. has had its
presence in Asia for the past 75 years catering to over 1 million customers
across 11 Asian countries.
ICICI and Prudential came together in 1993 to provide mutual fund products
in India and today are the largest private sector mutual fund company in
India.
Their latest venture ICICI Prudential Life plans to take care of the insurance
needs at various stages of life.
ICICI Prudential’s equity base stands at Rs. 4.25 billion with ICICI Bank
and Prudential plc holding 74% and 26% stake respectively. As of March 31,
2003, the company had issued nearly 350,000 policies with a sum assured in
excess of Rs 8,700 crore and total premium income of over Rs. 500 crore.
Today the company is the #1 private life insurers in the country.
Company Vision
To make ICICI Prudential the dominant Life and Pensions player built on
trust by world-class people and service.
Board of Directors
Mr. R Narayanan
Management Team
Savings Solutions:
ICICI Pru Save n Protect is a traditional endowment savings plan that offers
life protection along with adequate returns.
Protection Solutions:
ICICI Pru LifeGuard is a protection plan, which offers life covers at very
low cost. It is available in 3 options - level term assurance, level term
assurance with return of premium and single premium.
Child Solutions:
Market-linked Solutions:
ICICI Pru LifeLink is a single premium Market Linked Insurance Plan
which combines life insurance cover with the opportunity to stay invested in
the stock market.
Retirement Solutions:
ICICI Pru ReAssure is a retirement product for senior citizens who are on
the verge of retirement or have just retired.
ICICI Pru''s group gratuity plan helps employers fund their statutory gratuity
obligation in a scientific manner. The plan can also be customized to
structure schemes that can provide benefits beyond the statutory obligations.
ICICI Pru''s flexible group term solution helps provide affordable cover to
members of a group. The cover could be uniform or based on
designation/rank or a multiple of salary. The benefit under the policy is paid
to the beneficiary nominated by the member on his/her death.
ICICI Pru Life offers flexible riders, which can be added to the basic policy
at a marginal cost, depending on the specific needs of the customer.
1.Accident & disability benefit: If death occurs as the result of an accident
during the term of the policy, the beneficiary receives an additional amount
equal to the sum assured under the policy. If the death occurs while traveling
in an authorized mass transport vehicle, the beneficiary will be entitled to
twice the sum assured as additional benefit.
2. Accident benefit: This rider option pays the sum assured under the rider
on death due to accident.
3.Critical Illness Benefit: protects the insured against financial loss in the
event of 9 specified critical illnesses. Benefits are payable to the insured for
medical expenses prior to death.
ICICI Bank (NYSE:IBN) is India’s second largest bank with an asset base
of Rs. 106812 crore. ICICI Bank provides a broad spectrum of financial
services to individuals and companies. This includes mortgages, car and
personal loans, credit and debit cards, corporate and agricultural finance. The
Bank services a growing customer base of more than 7 million customer
accounts and 5 million bondholders accounts through a multi-channel access
network. This includes about 450 branches and extension counters, 1675
ATMs, call centres and Internet banking (www.icicibank.com). ICICI Bank
posted a net profit of Rs.1, 206 crore for the year
ended March 31, 2003. ICICI Bank is the only Indian company to be rated
above the country rating by the international rating agency Moody''s and the
only Indian company to be awarded an investment grade international credit
rating. The Bank enjoys the highest AAA (or equivalent) rating from all
leading Indian rating agencies.
Insurance Plans
Savings Plans:
Most endowment policies are a good way of saving for the future. A policy
can be designed to make your savings grow and have them available to you
at the end of a fixed number of years. Or, a policy could provide you with an
income every three or four years.
You can browse through these policies to find one that best suits your needs:
•Plan For Tangibles: buy that fashionable car, that huge refrigerator, etc.
•Plan For A Cosy Nest: by facilitating the purchase of that home you have
always dreamt of.
•Plan For Milestones: ensure a good education for your children, children's
wedding, etc.
•Save on Deferred Taxes: because the interest income and maturity benefits
of the Policy are tax exempt.
•Legacy Creation: buy property; invest in shares, bonds, etc. for your
children or grandchildren.
We all hope to live a full life till a ripe old age... to ensure our children's
sustenance and healthy growth. But what if a sudden disability or illness
strikes? Besides the grief and the pain, such an event also completely
disrupts life for all the people who are financially dependent on us. Our life
insurance policies offer a comprehensive range of protection benefits:
•Riders - Additional benefits that one can add on to the policy. The rider can
be opted for at the time of taking the basic policy. Additional premium is
charged for each rider.
•An insurance policy can be tailor made to provide protection to you and
your loved ones. If something were to happen to you, it can help:
•Safeguard Your Better Half: ensure life's continuity for your loved one.
•Dear and Near Ones: ensure continuity of lifestyle for your dependents.
Retirement Plans
Most of you picture yourselves enjoying the fruits of labor after retirement,
going on your dream vacation, or helping your children's career take wing.
But do you realize that financing all this will most likely depend partly on
your personal savings? Because personal savings and investments represent a
significant source of retirement income for many people, you can never save
too much.
Currently, you are at a stage where you are juggling many roles, as nurturing
parents, dutiful caregivers to elders, supportive life partners, while trying to
maintain a career. It is too easy to get carried away handling and solving the
day-to-day problems to not look into your retirement needs. It may also seem
too far away to be of concern. But a look at the issues below will make the
need for some strategic planning at this stage amply clear.
8000
7000
6000
5000 Inflation rate at
4000 10%
3000 Inflation rate at
5%
2000
1000
0
5yr 10yr 20yr 30yr
Therefore, the message is simple - no matter whether you are 30 or 50, you
should start planning early to have a healthy retirement kitty. (See graph
below for an illustration)
As can be seen the cost of delaying is high. Situation A is when you are
saving Rs 10000 annually from the age of 25 to 34 years and Situation B is
when you save the same annual amount from the age of 35 to 59 years. As
can be seen in the example, even after investing your money for a 2.5 times
longer duration, the maturity value in the second case is much lesser (the
figures are based on a hypothetical interest rate of 10%). The longer your
money is allowed to grow at a compounded rate, the more dramatic will the
difference be eventually.
Therefore, the message is simple - Put Time on Your Side and Start Early.
LifeTime Pension - A plan which gives you the twin benefit of market-
linked annuity and life insurance cover.
ReAssure - A plan that helps you invest your money prudently and
safely and offers you the benefit of a regular income while providing you life
insurance protection.
Get your retirement monies to earn you the benefit of a regular income
while providing life insurance protection. So now you can really enjoy even
your post-retirement days.
If you are married, it is preferable that your retirement plan includes your
spouse. The "Joint Life Last Survivor" annuity option in ICICI ForeverLife
pays benefits as long as either one of you is living.
Investment Plans:
Often you may have some investible funds lying idle - a bonus or maybe a
windfall. You can either secure your family through insurance or invest it for
growth. The need for insurance is crucial but you also want to see your
money grow through market investments. But in volatile market conditions
how do you secure both?
Relax, because now you can hedge your investments with safer investment
vehicles that provide you with a diversified portfolio.
This follows from our understanding that life has many facets and they are
manifested through its various needs. Therefore our philosophy is to provide
you with comprehensive insurance solutions that cater to your dual needs of
earning potentially high returns as well as stay insured for life. Thus we offer
you a unique package of Investment Solutions that combine the best of
insurance and investment.
•Plan for Tangibles: buy that fashionable car, that huge refrigerator, etc.
•Save on Deferred Taxes: because the interest income and maturity benefits
of the Policy are tax exempt.
•Lifestyle Planning: maintain your lifestyle - even if your income was to
reduce in the future.
•Legacy Creation: buy property; invest in shares, bonds, etc. for your
children or grandchildren
Employees are a company’s human capital. Not only do companies care for
them, but also provide an environment that fosters a deep and lasting sense
of belonging. Employees determine the present and decide the future of a
company.
•Personalized financial planning for your employee that takes care of his/her
changing financial needs at every stage of life.
Contact Information
Multiple players in the life insurance so, ICICI Prudential faces very tough
competition from other leaders in the industry. The ICICI Prudential needs to
work hard in order to stay competitive insurance market. Further, the ICICI
Prudential should appoint professional agent who should be able to provide
customer with a comparison of multiple schemes and also explain them in
simple terms, so that customer able to make an informed decision.
Strengths
Money power, which makes them ignorant about the gestation period.
Weaknesses
High targets for financial advisors and for the sales departments.
Many competitors in the market offer same product by the little difference
in the premium and offerings.
Opportunity
ICICI Prudential should give the insurance coverage both to the parent and
child so that their life could be covered in both cases. The customer doesn’t
mind paying some extra premium for that.
Threats
Players like Bajaj and Birla Sun life with low premium for the similar
plans.
Entry of many other private companies with equally strong experience and
financial strength of foreign partners making the competition difficult and
saturating the urban markets.
Current Govt. policies do not encourage gross domestic savings. If the tax
liability of the service class rises, the customer will have little money to
invest.
LIC has woken up from sleep and is following competitive strategies. Its
huge surplus in Life Fund gives a capability to lodge Price war.
•Birla Sun Life Insurance: The Aditya Birla Group contributes its
knowledge of the Indian market while Sun Life Financial contributes global
expertise in the areas of protection and wealth management.
•HDFC Standard Life Insurance: HDFC and Standard Life have a long
and close relationship built upon shared values and trust. Providing long term
financial security to policy holders will be the constant endeavor.
•ING Vysya Life Insurance: ING, the world’s second largest life insurance
company together with Vysya Bank, one of India’s leading private sector
banks, forms ING Vysya Life Insurance.
•Tata AIG Insurance: Life insurance & general insurance for individuals &
corporates by Tata AIG. This site will guide you on how to capitalize on
opportunities and protect against uncertainties.
Chapter 2
A study of the products and services of the ICICI Prudential Life Insurance
will help me understand the difference between its products and that of
competitors. Also I will get to know the consumer perception about the
various life insurance products available in India
ICICI Prudential Life Insurance has a place in the Insurance sector. The
study of its marketing strategies and consumer perception of life insurance
product will give me a crucial idea behind the success of the company and
the facets of marketing that made the success possible.
The study is for the products of ICICI Prudential Life Insurance and
Consumer Perception of life insurance product will be limited to the New
Delhi and NCR only. The information will be based on the company’s
website, literature provided by the company and questionnaire analysis.
2.5 METHODOLOGY
Primary Sources:
Secondary Sources:
•Internet websites of IRDA and various Life Insurance companies & various
websites.
The primary study will be targeted towards the marketers. The study will
also include semi-structured interview with marketing managers of various
Insurance companies who are successfully selling Life Insurance Policies to
Indian Consumers.
CONCEPTUAL DISCUSSION
Create Awareness
Marketing
Pre-production
Production Induce Trial
World of Mouth
Communication
Post-production Demonstrate Benifits
Marketing
Build Brand
Consumption Preference
Although both services marketing and goods marketing start with the critical
need identification and product design functions, goods generally are
produced before it is sold and services generally are sold before it is
produced. Moreover, services marketing has more limited influence an
customers before the purchase than goods marketing. Figure given below
shows the nature and roles of marketing for services.
MEANING OF INSURANCE
The business of insurance is related to the protection of the economic value
of assets. Every asset has a value. The 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.
In the case of a motorcar, it provides comfort and convenience in
transportation. There is no direct income. There is a normally expected
lifetime for the asset during which time, it is expected to perform. The
owner, aware of this, can so manage his affairs that by the end of that life
time, a substitute is made available to ensure that the value or income is not
lost. However, if the asset gets 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 consequences.
Life Assurance
1.Fire Insurance
2.Marine Insurance
a)Insurance of Person
b)Insurance of Property
c)Insurance of Interest
d)Insurance of Liability
WHY INSURANCE?
However there is a normally expected life cycle for every asset during which
time it is expected to perform its assigned role. So, a prudent individual can
manage his affairs so that by the end of that life cycle, a substitute is in place
to ensure continued benefit/comfort. However, if due to an accident or other
unfortunate event, the asset gets destroyed or made non- functional, the
person deriving benefits there, from suffer. Insurance is the mechanism that
helps to soften the impact of such adverse consequences by providing for
some monetary substitution to face such unforeseen circumstances.
A business man always keeps some reserve to meet the future unexpected
loss. In our day to day life we also plan for secured future. Similarly to face
and to overcome the unexpected risk of life one must have to insure his/her
life.
The insurer acts as a trustee for managing the common fund for and on
behalf of the community. He has to ensure that nobody is allowed to take
undue advantage of the arrangement. In other words the management of the
business requires care to prevent entry into the group of people whose risks
are not of the same kind, as well as not paying claims on losses which are not
accidental. The decision to allow entry is the process of underwriting of risk.
Both underwriting and claim settlement have to done with great care.
•Spread Life Insurance much more widely and in particular to the rural
areas and to the socially and economically backward classes with a view to
reach all insurable persons in the country and providing them adequate
financial cover against death at a reasonable cost.
•Conduct business with utmost economy and with the full realization that
the moneys belong to the policyholders.
In India, Article 41 of our Constitution requires the State, within the limits of
its economic capacity and development, to make effective provision for
securing the right to work, to education and to provide public assistance in
case of unemployment, old age, sickness and disablement and in other cases
of undeserved want. Part of the State's obligations to the poorer sections, are
met through the mechanism of life insurance.
Life Insurance business in India was nationalised with effect from 1st
September 1956. From this date, the life insurance business transacted by
154 Indian life insurers, the Indian business of 16 foreign insurers and 75
provident societies was taken over by Government of India. Earlier, LIC of
India Act had been passed by the Parliament on 18th June 1956 which came
into effect from 1st. July 1956. Some of the important provisions of this Act
(as amended by IRDA Act 1999) are stated hereafter.
Life Insurance Corporation (LIC) was established w.e.f. 19 May 1956, as a
body corporate having perpetual succession and a common seal with power
to acquire, hold and dispose of property and may by its name sue and be sued
in its name. It consists of not more than 16 members appointed by the
Government, one of whom shall be appointed as its Chairman.
Under Section 30 of the LIC of India Act, from the appointed date i.e. 1 Sept
1956, the corporation shall have the exclusive privilege of carrying on life
insurance business in India and that certificate of registration granted to any
insurer under the Insurance Act, 1938 shall cease to have effect from the said
date. Now the above provisions of Section 30 have been altered by insertion
of Section 30A consequent to the enactment of the IRDA Act, 1999. As a
result, the exclusive privilege given to the LIC has been withdrawn.
Chapter – 4
DATA ANALYSIS
SBI Life
50 Insurance
40 ICICI Prudential
30
OM Kotak
20 Mahindra
10 HDFC
0
Interpretation
78% of the people have LIC policy and is ranked number one by that percent
of respondent.
50
No. Of Respondents
Cover Future
40 Uncertainity
Tax Deduction
30
20 Future Investment
10
Interpretation
55% of the respondents believe that covering future uncertainty is the biggest
benefit of insurance policy20% & 25% of them believe that other benefits
are tax deduction & future investment
20% & 25% of them believe that other benefits are tax deduction & future
investment
Interpretation
Majority of the respondent found larger risk coverage as the most attracted
feature of their policy.
Nature of Policy
80
Interpretation
75% of the respondents have life insurance policy while 45% have both.
Chapter 5
5.1 FINDINGS
5.2 RECOMMENDATIONS
The insurance companies should now try to identify the gap between current
level of customer service and customer expectations. Some of the strategies
being recommended are as follows:
Riders: These are additional offerings along with the main product.
Flexibility: The companies should make their products flexible for the
convenience of their customer.
Hassle Free Service: All bureaucracy in customer interactions should be
eliminated.
QUESTIONNAIRE
Yes [ ]
No [ ]
Yes [ ]
No [ ]
Life [ ]
Non-Life [ ]
Both [ ]
5. For how many years do you have insurance policy? (Please tick)
a)<5YRS
b) 5-10 YRS
c)10-15 YRS
d) Any Other (please specify)_____________________________
6. What do you think are the benefits of insurance cover? (rank them)
a) Cover Future Uncertainty
b) Tax Deductions
c) Future Investment
d) Any Other (please specify)_____________________________
7. Which feature of your policy attracted you to buy it? (Rank Them)
a) Low Premium
b) Larger Risk Coverage
c) Money Back Guarantee
d) Reputation of Company
e) Easy Access to Agents
f) Any Other (please specify)_____________________________
THANKYOU!
NAME: _________________________
ADDRESS:
OCCUPATION:___________________
Prem. 20 20 20 20 20 20 21
Paying
term(yrs)
Yrly. Prem. 6,402 6,144 6,818 6,158 6,564 7,495 9,369
Age 35years Policy Term 20 Years Age 35 years Policy Term 15 Years
PREMIUM PREMIUM
Company SA:1Lac SA:2lac Company SA:1Lac SA:2Lac
1 LIC 6464 12928 1 LIC 8089 16177
2 ICICI PRU 6683 13067 2 ICICI PRU 9160 18019
3 ALLIANZ BAJAJ 6252 12024 3 ALLIANZ BAJAJ 8432 16384
4 TATA-AIG 9219 17938 4 TATA-AIG N.A N.A
5 OM KOTAK 7330 14660 5 OM KOTAK 9010 16700
6 MAX NEWYORK N.A N.A 6 MAX NEWYORK N.A N.A
7 BIRLA SUNLIFE 6000 11700 7 BIRLA SUNLIFE 7668 15036
SA-Sum Assured
GUARANTEES ON INSURANCE & PENSION PRODUCTS
Pls. note that the above provides a range of returns offered by companies
wherever possible. For others returns have been computed for a particular
term, age and Sum Assured of an Endowment product. Most of the returns
pertain to particular products.
BIBLIOGRAPHY
•Insurance Advisor’s Manuals and Study Material of ICICI Prudential.
•Economic Times
•Library of College
•www.google.com
•www.icicipru.com
•www.bimaonline.com
•www.moneycontrol.com
•www.licindia.com