Potentials & Dynamics of Life Insurance in India - Role of Aegon Religare

Potentials & Dynamics of Life Insurance Market India ² Role of AEGON Religare
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The project aims at comparative analysis of potentials & dynamics of life

insurance market in India ± Role of AEGON Religare in it. Analyse insurance
as an investment option/avenue.
The project has a detailed study of various insurance plans offered by the
major players in the insurance sector. Made a comparative analysis of the of
AEGON Religare life insurance plans with that of other major players. The
project aims to help understand the consumer behaviour towards various
financial services like insurance and mutual funds. The report enhances the
knowledge on how various marketing concepts learned in the classroom are
implemented in a real life environment.
The project entitled me to recommend Life Advisor (LA) who will be a

channel for bringing business to the AEGON Religare Life Insurance Company.
I was given to choose prospective clients who were inclined for a career in
insurance sector. The prospective candidate after dully scrutinised by, on
fulfilling the entire criterion will be made Life Advisor with AEGON Religare,
priority circle Bangalore.
This project also involves Brand image analysis of AEGON Religare Life
Insurance and come up with few recommendations for improvement. The
project required me design a questionnaire and to do a primary survey on
investor perception towards ULIP & mutual Funds available in the market. The
target respondents of the primary survey were managers, executives and
consultant working in various sectors through exhibitions and business meets.
The data gathered from the primary survey was for analysis and to find various
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Acharya Institute of Graduate Studiesc
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factors that affect an investor decisions while choosing an ULIP or Mutual Fund
plan in the market.
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Insurance may be described as a social device to reduce or eliminate risk

of life and property. Under the plan of insurance, a large number of people
associate themselves by sharing risk, attached to individual.
The risk, which can be insured against include fire, the peril of sea,
death, incident & burglary. Any risk contingent upon these may be insured
against at a premium commensurate with the risk involved.
Insurance is actually a contract between 2 parties whereby one party

called insurer undertakes in exchange for a fixed sum called premium to pay the
other party happening of a certain event.
Insurance is a contract whereby, in return for the payment of premium by

the insured, the insurers pay the financial losses suffered by the insured as a
result of the occurrence of unforeseen events.
With the help of Insurance, large number of people exposed to a similar

risk makes contributions to a common fund out of which the losses suffered by
the unfortunate few, due to accidental events, are made good.
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In some sense we can say that insurance appeared simultaneously with

appearance of human society. In earlier economies, we can see insurance in the
form of people helping each other. For example, if a house is burnt, the
members of the community help build a new one. Should the same thing happen
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to one¶s neighbour, the other neighbours must come to help? Otherwise,

neighbours will not receive help in the future.
Insurance in the modern sense, started as a methods of transferring or

distributing risk were practiced by Chinese and Babylonian traders as long ago
as the 3rd and 2nd millennia BC, respectively. Chinese merchants travelling
treacherous river rapids would redistribute their cargo across many vessels to
limit the loss due to any single vessel¶s capsizing. The Babylonians developed a
system which was recorded in the famous Code of Hammurabi, c. 1750 BC, and
practiced by early Mediterranean sailing merchants. If a merchant received a
loan to fund his shipment, he would pay the lender an additional sum in
exchange for the lender¶s guarantee to cancel the loan should the shipment be
stolen.
Greek monarchs were the first to insure their people and made it official
by registering the insuring process in governmental notary offices. They
invented the concept of the µgeneral average¶. Merchants whose goods were
being shipped together would pay a proportionally divided premium which
would be used to reimburse any merchant whose goods were jettisoned during
storm or sinking of the vessel in the sea.
The Greeks and Romans introduced the origins of health and life
insurance c. 600 AD when they organized guilds called ³benevolent societies´
which cared for the families and paid funeral expenses of members upon death.
Guilds in the middle Ages served a similar purpose. Before insurance was
established in the late 17th century, ³friendly societies´ existed in England, in
which people donated amounts of money to a general sum that could be used for
emergencies.
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The first insurance company in the United States underwrote fire

insurance and was formed in Charles Town (modern-day Charleston), South
Carolina, in 1732.
* Source-www.Welipedia.com/insurance history
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In India, insurance has a deep-rooted history. It finds mention in the

writings of Manu ( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya
(Arthasastra ). The writings talk in terms of pooling of resources that could be
re-distributed in times of calamities such as fire, floods, epidemics and famine.
This was probably a pre-cursor to modern day insurance. Ancient Indian history
has preserved the earliest traces of insurance in the form of marine trade loans
and carriers¶ contracts. Insurance in India has evolved over time heavily
drawing from other countries, England in particular.
The insurance sector in India has come a full circle from being an open
competitive market to nationalization and back to a liberalized market again.
Tracing the developments in the Indian insurance sector reveals the 360-
degree turn witnessed over a period of almost 190 years.
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.
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c 1912 - The Indian Life Assurance Companies Act enacted as the first
statute to regulate the life insurance business.
c 1928 - The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
c 1938 - Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
c 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.
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1. Primary Functions
2. Secondary Functions
3. Other Functions
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- The primary function of insurance is to provide
protection against future risk, accidents and uncertainty. Insurance cannot
check the happening of the risk, but can certainly provide for the losses of
risk. Insurance is actually a protection against economic loss, by sharing the
risk with others.
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c c ! - Insurance is a device to share the financial loss
of few among many others. Insurance is a mean by which few losses are
shared among larger number of people. All the insured contribute the
premiums towards a fund and out of which the persons exposed to a particular
risk is paid.

c c ! - Insurance determines the probable volume of risk by
evaluating various factors that give rise to risk. Risk is the basis for
determining the premium rate also.
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- Insurance is a device, which helps to change from
uncertainty to certainty. Insurance is device whereby the uncertain risks may
be made more certain.
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c c " - Insurance cautions individuals and businessmen to
adopt suitable device to prevent unfortunate consequences of risk by
observing safety instructions; installation of automatic sparkler or alarm
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systems etc. Prevention of losses causes lesser payment to the assured by the
insurer and this will encourage for more savings by way of premium.
Reduced rate of premiums stimulate for more business and better protection
to the insured.
c c c c c ! - Insurance relieves the businessmen

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

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- Insurance
provides development opportunity to those larger industries having more risks
in their setting up. Even the financial institutions may be prepared to give
credit to sick industrial units which have insured their assets including plant
and machinery.
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- Insurance serves as savings and
investment, insurance is a compulsory way of savings and it restricts the
unnecessary expenses by the insured's For the purpose of availing income-tax
exemptions also, people invest in insurance.
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- Insurance is an international business.
The country can earn foreign exchange by way of issue of marine insurance
policies and various other ways.
%!c c - Insurance promotes exports insurance, which makes the
foreign trade risk free with the help of different types of policies under marine
insurance cover.
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Life is full of uncertainty. Trials and tribulations abound in each and

every aspect of life. No one can truly predict or even estimate what the future
has in store for him. Life offers no guarantees by itself, except the incidences of
death and taxation.
This lack of security present throughout life can be overcome partially

through insurance. Insurance can never replace or repair a loss. But the
monetary value offered by insurance helps in adjusting to the new
circumstances.
Despite offering innumerable options and immense scope, insurance can

be classified into four main categories.
c Insurance of Person
c Insurance of Property
c Insurance of Interest
c Insurance of Liability

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Under the purview of this class of insurance, the risks associated with
human life in general can be covered up to the limit specified. A person can
insure his or her life and his health against any unplanned contingencies.
In event of his death, his dependants will be reimbursed to the full

amount that he was insured for. Or if the insured person meets with an accident
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or suffers from an illness that cripples him forever, he will be compensated with
the complete sum assured anyway since he may not be able to lead a normal life
again.
In case, the accident is not that severe, he should be able to recover after
medical treatment and rehabilitation. If he has opted for medical cover, then his
medical expenses, treatment and medication will be paid for by his insurance
policy.

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Everyone possesses material value in the form of tangible assets. Assets

can be in the form of a landed estate or a vehicle, share holdings or plain old
paper money.
Since tangible property has a physical shape and consistency, it is subject

to many risks ranging from fire, allied perils to theft and robbery. An
individual's lifetime of hard work can be wiped out in a blink of an eye.
But if a person judiciously invests in insurance for his property prior to

any unexpected contingency then he will be suitably compensated for his loss as
soon as the extent of damage is ascertained.

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Every individual has to discharge certain specific duties. Everyone is

expected to maintain a standard of conduct. But then, it is an intrinsic part of
human nature to err. No one is infallible and no one will ever be.
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Owing to an occasional error or omission committed by us, our clients or

customers might suffer a loss. In turn we might have to pay those damages or
compensation out of our own personal resources.
However, if our chosen profession qualifies for insurance of interest, then

our insurance policy will more than suffice in arranging for the funds and court
formalities that might ensue in the aftermath of legal libel.

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Every person has to regulate his actions and behaviour so as not to cause
injury or damage to other people and their property. Everyone is personally
responsible and liable for his actions.
If due to lack of control over his actions or prejudiced behaviour, a person

incurs any liability then he has to provide compensation out of his personal
resources. Liabilities: legal, civil or criminal can have severe repercussions on
social standing and prestige besides the financial status.
By investing in liability insurance, an individual can ward off any

liabilities he might incur due to his actions and behaviour. Besides, the
premiums payable on liability insurance are fairly minimal when compared to
the damages that have to be compensated in the long run.
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Life Insurance Marketing is one of the most strenuous jobs for those who
are involved in the insurance marketing.. It is because of the everlasting conflict
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between the insurance companies which want to profit the most and the insured
person who wants to get as much compensation as possible from the insurance
company. Commissions for the Life Insurance companies are very high and
they seldom make profits out of the policies. Also the insurance policy needs to
be transparent so that the potential customer understands it totally and should
not feel that they have been treated unfairly by the insurance company.
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The Life insurance companies were paid very little premiums by young
children or healthy people and thus the scope for profit was very small and
those who paid high rates of premium were the older beings that died and the
Life insurance companies compensate for that. However nowadays the Life
insurance premiums are almost the same for a young adult and an old person
who just had a major operation. .
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Companies already deals with this
type of a scenario, what one can do is to change the public perception about the
Life insurance companies. One can connect himself or herself with companies
whose workers need a plan for Life Insurance. One can also go to crowded
places and advertise for the Life insurance Company. .
The Life insurance companies also offer fliers and hanging banners. One
can also offer free Life check in a reputed place to the insured for at least once.
One should always give the existing life insurance policy holdersc a chance to
prefer the marketing techniques that the insurance company is presenting. If the
policy holder does this at a regular basis then the company has a high chance of
succeeding.
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This is making the competition much tougher for the life insurance
companies as most of the companies offer similar types of premiums and
facilities. So it has become very important for the life insurance companies to
concentrate on "c

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and attract as many people as
possible towards there company. .
The Life Insurance Companies prefer to go for Group Life Insurance for a
group of people from a particular company or a family so that they get a group
of customers and even if they compensate for some of them for various reasons
they usually make it up with other's premiums. They also get fewer papers to
control and also they provide better facilities for their clients. So to promote this
type of policy they need to have social and industrial connections. Life
Insurance market helps developing that. Even for other policies like term life
insurance and permanent life insurance one needs to be aware of making people
realize the profits of the policy by various means provided by marketing

agencies. .
So before going for a "c

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one actually needs to
know the market target and the desires of the people who are actually seen as
potential insurance customers. The confusion about the way a "c

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conductor can draw the potential Insurance holder's attention
evaporates fast if he knows his targets and aims clearly. So, it is important to
conduct a sound survey and then attract people. .
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c A very common way to promote a Life insurance company through "c

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cis to make the name of the company familiar to others
by means of television commercials, handling out pamphlets, hanging banners
in populated areas and by providing exciting offers.
c Telephone marketing is another way of Life Insurance Marketing. One can

see the telephone companies send messages about various offers and they
even make phone calls. Web Insurance Marketing is another good strategy to
promote insurance policies. The pop ups that one sees while using Internet are
actually a very effective way of sending messages across the potential
insurance customers.
c One should listen to the existing Life Insurance Policy Holders as well as the
potential Life insurance policy holders and listen to what people who actually
matters have to say. One common problem that the insured persons face is
that the insurance companies do not inform its clients about the hike in the
premium rates. These things should be kept in mind. Not only that, a client
should be informed about everything related to his policy and the Life
insurance company should keep the transparency as much as possible.
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is another different way to get
promotion and a high recognition for the Life insurance Company. Eminent
workers join local community institutions, such as Chamber of Commerce,
and by signing up there one can help out various projects that take place.
These kinds of activities and social works on behalf of the Life insurance
company helps the company to get free publicity as their names are published
in news paper and in media also. Doing charity works also helps the Life
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insurance companies to come across various people who act as volunteers

and can act as their potential Life insurance clients. People also like to deal
with likeminded people and companies and this is how many deals are made.
c A Life Insurance Company should not charge different Life insurance client
different charges for the same policy. This kind of policy gives the Life
insurance policy holders the feeling that they are being treated unfairly and
also that the Life insurance companies are only looking for profits and not the
betterment of customer welfare.
c When a Life insurance claim is filed, especially for a very big hefty amount,
the Life insurance Company should help out the policy holder in processing
out the paperwork. One should not let bureaucracy enter and make it so
difficult for the one making the claim so that he gives his claim .This has
always been a common tactic on the insurance company's part to avoid paying
claims claimed by the policy holder. This though makes a short term profit for
the company but it hurts in the long run as the reputation of the company is
hampered severely.
c People in this Life insurance industry should always try to keep in constant
contact with the existing customers as well. The competition in the insurance
market is so fierce today that no company wants to lose out on a customer to
another company. Clients who are not contacted for a longer period of time
normally fail to remain loyal to the insurance company and look for a
different Life insurance company. The company can keep the records of the
client's birthday and days like anniversary and sent him or her small tokens of
love or loyalty at a regular basis. If the company can afford a little more it can
send dinner coupons to the Life insurance policy holder. These things play a
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major role and can be considered as an effective "c

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strategy.
c May be the most crucial thing in insurance marketing is to always speak about
unity and honesty while dealing with a business. A Life Insurance Holder can
find so many frauds in various life insurance companies today, that life
insurance customers are going for products and services which are
trustworthy to them. Feeling safe is about insurances and other things are
most important as far as the insurance holder is concerned. So, if a company
remains loyal to its customers it will itself do Life Insurance Marketing for
itself. So, only by remaining loyal to its customers the company can do a
world of good to its reputation and this would in itself bring more potential
Life Insurance Holders to the company, because the customers prefer safety
more than anything else these days.
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Study the concept of insurance, industry and its regulations from books,
Internet and literature survey. This will give us in-depth knowledge about the
insurance sector as a whole.
To perform Pest analysis & Porters 5 forces model of insurance sector to

come up with the ideal marketing strategies to be followed for increasing the
market share of the company.
Data collection regarding the market share, products & services offered
by different life insurance company through internet. This will help in
identifying the Unique Selling Proposition (USP) of different players in the
market.
Collection of brochures and pamphlets of different products offered by

AEGON Religare study them in order to compare and contrast the different
insurance products across industry.
Sample selection (Random Sampling Technique) and designing of a

questionnaire to collect primary data so as to map the investor perception
regarding ULIP and Mutual funds available in the market. Code the data
collected & identity the important factor that affect customer decision in
choosing an insurance plan.
Sample selection (Random Sampling Technique) and designing of a

questionnaire to collect primary data to do a brand image survey of AEGON
Religare Life Insurance Company. The data collected is used to do descriptive
analysis (Pie charts and histogram) for mapping the brand image assessment of
AEGON Religare.
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Define the marketing problem
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Enumerate the controllable and uncontrollable decision factors
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Collect relevant information
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Identify the best alternative
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Develop and implement a marketing plan
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Evaluate the decision and the decision process
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The above title is self explanatory. The study deals mainly with studying
the potentials and ever changing dynamics in the life insurance industry with a
special focus on AEGON Religare Life Insurance. The various segments of the
market are divided in terms of insurance needs, age groups, satisfaction levels
etc.will also be studied.
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A big boom has been witnessed in Insurance Industry in recent time. A
large number of new players have entered the market and are vying to gain
market share in this rapidly improving market. The study deals with AEGON
Religare Life in the focus and the various segments that it caters to. The study
then goes on to evaluate and analyse the findings so as to present a clear picture
of trends in the insurance sector.
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>c To map the marketing & distribution strategy of AEGON Religare Life
insurance Company limited and to compare various strategies used by various
players in Life insurance sector.
>c To do detailed analysis of the entire range of life insurance products/schemes

offered by AEGON Religare life insurance company Ltd. It will help in making
a detailed analysis of the spectrum of life insurance products available in the
market across the industry.
>c To collect data through primary survey, using a comprehensively designed

questionnaire and analysing the same for mapping the brand image of AEGON
Religare Life insurance company and investor perception about the ULIP and
mutual funds available in the market, and to identify the major factor that
influence investor for choosing an life insurance plan.
>c To come up with an innovative market and branding strategies for life insurance
products.
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>c Create a value chain between the customers and the company through network
building.
>c Try and sketch out a rough customer to customer approach for AEGON
Religare.
>c To know the hicks and kicks of marketing financial (life insurance) products in
such a hostile and ever changing volatile market....
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3.4(a) Significance to the industry- This is a limited study which takes into
consideration the responses of 100 people. This data can be analysed for trends
across the industry. The significance for the industry lies in studying these
trends that emerge from the study. It is rapidly changing and evolving sector.
People are only beginning to wake up to its vast possibilities. A study like this
can attempt to guide the future of the industry based on current trends.
3.4(b) Significance for the researcher- To facilitate and provide all the useful
information of the study to the company, the insurance industry and also
provide marketing ways, methods of AEGON Religare Life.
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c Non-Probability
c Exploratory & Descriptive Experimental Research
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The research is primarily both exploratory as well as descriptive in nature.

The sources of information are both primary & secondary.
A well-structures questionnaire was prepared and personal interviews were
conducted to collect the customer¶s perception and buying behaviour, through
this questionnaire.
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3.6(a) Sampling technique- Initially, a rough draft was prepared keeping in
mind the objective of the research. A pilot study was done in order to know
accuracy of the questionnaire. The final questionnaire was arrived only after
certain important changes were done. Thus my sampling came out to be
judgemental & convenient.
3.6(b) Sampling unit- The respondents who were asked to fill out the
questionnaire are the sampling units. These comprise of the industry people then
the employees of MNCs, Govt employees, Self employed etc..
3.6(c) Sampling size- The sample size was restricted to only 125, which
comprised of people from different regions of Bangalore due to time
constraints.
3.6(d) Sampling Area- The area of research was Bangalore, Karnataka, INDIA.
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i.c The research is confined to a certain parts of Bangalore and does not
necessarily shows a pattern applicable to all of country.
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ii.c Some respondents were reluctant to divulge personal information which

can affect the validity of all responses.
iii.cIn a rapidly changing industry, analysis on one day or in one segment can
change very quickly. The environmental changes are vital to be
considered in order to assimilate the findings.
iv. cThe period of the project conducted is of a very short span and is
subjected to have a different criterion when it is of a long term.
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Life insurance or life assurance is a contract between the policy owner

and the insurer, where the insurer agrees to pay a sum of money upon the
occurrence of the insured individual's or individuals' death or other event, such
as terminal illness or critical illness. In return, the policy owner agrees to pay a
stipulated amount called a premium at regular intervals or in lump sums. There
may be designs in some countries where bills and death expenses plus catering
for after funeral expenses should be included in Policy Premium. In the United
States, the predominant form simply specifies a lump sum to be paid on the
insured's demise.
As with most insurance policies, life insurance is a contract between the

insurer and the policy owner whereby a benefit is paid to the designated
beneficiaries if an insured event occurs which is covered by the policy.
The value for the policyholder is derived, not from an actual claim event,
rather it is the value derived from the 'peace of mind' experienced by the
policyholder, due to the negating of adverse financial consequences caused by
the death of the Life Assured.
To be a life policy the insured event must be based upon the lives of the people
named in the policy.
Insured events that may be covered include:
Xc Serious illness
Life policies are legal contracts and the terms of the contract describe the
limitations of the insured events. Specific exclusions are often written into the
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contract to limit the liability of the insurer; for example claims relating to
suicide, fraud, war, riot and civil commotion.
Life-based contracts tend to fall into two major categories:
Xc Protection policies - designed to provide a benefit in the event of specified

event, typically a lump sum payment. A common form of this design is term
insurance.
Xc Investment policies - where the main objective is to facilitate the growth of
capital by regular or single premiums. c
As a whole there are different Life insurance plans satisfying different

criterions some provide life cover some for a certain number of years, some are
investment plans & some term plans based on these there are Insurance policies
which are mentioned below...
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Term insurance covers you for a term of one or more years. It pays a
death benefit only if the policy holder dies during the period the insurance is in
force. Term insurance generally offers the cheapest form of life insurance. You
can renew most term insurance policies for one or more terms even if your
health condition has changed.c
However, each time you renew the policy for a new term, premiums may
climb higher, just like a rent agreement every time you renew the lease. This
policy is particularly useful to cover any outstanding debt in the form of a
mortgage, home loan, etc.
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For example if you have taken a loan of Rs10 lakh, you will have an option of
taking an insurance to protect the loan in case of passing away before the debt is
repaid.
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Whole life insurance covers you for as long as you live if your premiums
are paid. You generally pay the same premium amount throughout your
lifetime.
Some whole life policies let you pay premiums for a shorter period such
as 15, 20 or 25 years. Premiums for these policies are higher since the premium
payments are made during a shorter period. There are options in the market to
have a return of premium option in a whole life policy. That means after a
certain age of paying premiums, the life insurance company will pay back the
premium to the life assured but the coverage will continue.
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The money back plan not only covers your life, it also assures you the
return of a certain per cent of the sum assured as cash payment at regular
intervals. It is a savings plan with the added advantage of life cover and regular
cash inflow. This plan is ideal for planning special moments like a wedding,
your child's education or purchase of an asset, etc. Money back plan have
"participating" and "non participating" versions in the market.
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Endowment insurance is a level premium plan with a savings feature. At

maturity, a lump sum is paid out equal to the sum assured (plus dividends in a
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par policy). If death occurs during the term of the policy then the total amount
of insurance and any dividends (par policy) are paid out.
There are a number of products in the market that offer flexibility in

choosing the term of the policy namely you can choose the term from five to 30
years. There are products in the market that offer non participating (no profits)
version, the premiums for which are cheaper
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cccccccccThis is a flexible life insurance policy and is also market sensitive. You
decide on the several investment options on how your net premium are to be
invested. While the money invested has the potential for significant growth,
such funds are subject to market risks including the loss of the principal.
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Market-linked plans or unit-linked insurance plans (ULIP) are similar to

traditional insurance policies with the exception that your premium amount is
invested by the insurance company in the stock market.
Market-linked insurance plans (MLP) mimic mutual funds and invest in a

basket of securities, allowing you to choose between investment options
predominantly in equity, debt or a mix of both (called balanced option).
The major advantage market-linked plans offer is that they leave the asset
allocation decision in the hands of investors themselves. You are in control of
how you want to distribute your money among the broad class of instruments
and when you want to do it or pull out. Any of the products mentioned above
except term products could be unit-linked.
w | P a g e
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Riders are additional add-on benefits that you could opt to include in your
policy over and above what the policy may provide. However, these additions
come at an extra premium charge depending of the rider you opt for. These
riders cannot be bought separately and independently. The extra premium,
nature and characteristics of the riders are based on the base policy that is
offered.c
Some riders available in the market are:
c Accident Death Benefit: Provides an additional amount in case death

occurs as a result of an accident.
c Term Rider: It allows the payment of an additional amount should death
of the insured happens.
c Waiver of Premium: In case of total and permanent disability of life
insured due to accident or any other means this rider allows premiums on
base policy or riders to be waived.
c Critical Illness: It provides payment of an additional amount on the
diagnosis of some critical illness.
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Life Insurance is a matter of solicitation. However, the rules of this

solicitation game are changing rapidly and fierce competition is becoming a
way of life. At last count, there were 22 life insurers operating in the country
and a handful of others were waiting in the wings. The industry is getting into a
frenzy players are pushing hard to partake a share of this market. The onset of
| P a g e
c
competition also means that the role of the ubiquitous life insurance agent is
evolving, expanding and in some cases, witnessing a complete turnaround.
Increased competition and proliferation of products are compelling agents to
innovate and spend greater amount of time understanding competing products.
Today life insurance policies are turning to be an alternate for unsecured

market investments in the form of Unit Linked Insurance Products (ULIP¶s)
which has turned the game on for the Insurer¶s with better market opportunities
and increased capital.
Day by day the market for financial products is becoming customer

frenzy with a wide range of investment options and reduced risks with added
riders & add-ons.
Life insurance portfolio¶s moving towards securitization could prove to

be a dynamic move & a valuable source of financing for acquisitions and other
strategic investments by releasing the embedded value from blocks of business.
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Life Insurance is the fastest growing sector in India since 2000 as

Government allowed Private players and FDI up to 26%. Life Insurance in India
was nationalised by incorporating Life Insurance Corporation (LIC) in 1956.
All private life insurance companies at that time were taken over by LIC.
In 1993 the Government of Republic of India appointed R.N Malhotra

Committee to lay down a road map for privatisation of the life insurance sector.
| P a g e
c
While the committee submitted its report in 1994, it took another six
years before the enabling legislation was passed in the year 2000, legislation
amending the Insurance Act of 1938 and legislating the Insurance Regulatory
and Development Authority Act of 2000. The same year that the newly
appointed insurance regulator Insurance Regulatory and Development Authority
(IRDA) started issuing licenses to private life insurers.
All life insurance companies in India have to comply with the strict
regulations laid out by Insurance Regulatory and Development Authority of
India (IRDA). Therefore there is no risk in going in for private insurance
players.
Life Insurance Corporation of India (LIC), the state owned behemoth,

remains by far the largest player in the market. Among the private sector
players, ICICI Prudential Life Insurance(JV between ICICI Bank and Prudential
PLC) is the largest followed by Bajaj Allianz Life Insurance Company Limited
(JV between Bajaj Group and Allianz).
The private companies are coming out with better products which are
more beneficial to the customer. Among such products are the ULIPs or the
Unit Linked Investment Plans which offer both life cover as well as scope for
savings or investment options as the customer desires.
Further, these types of plans are subject to a minimum lock-in period of

three years to prevent misuse of the significant tax benefits offered to such plans
under the Income Tax Act. Hence, comparison of such products with mutual
funds would be erroneous.
· | P a g e
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As per the current (Mar 06) FDI norms, foreign participation in an Indian
insurance company is restricted to 26.0% of its equity / ordinary share capital.
The Union Budget for fiscal 2005 had recommended that the ceiling on foreign
holding be increased to 49.0%.
The government approved the much-awaited comprehensive Insurance

Bill that seeks to raise foreign direct investment (FDI) cap in private sector to
49 per cent from 26 per cent.
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1. Bajaj Allianz Life Insurance Company Limited
2. Birla Sun Life Insurance Co. Ltd
3. HDFC Standard Life Insurance Co. Ltd
4. ICICI Prudential Life Insurance Co. Ltd.
5. ING Vysya Life Insurance Company Ltd.
6. Life Insurance Corporation of India
7. Max New York Life Insurance Co. Ltd
8. Met Life India Insurance Company Ltd.
9. Kotak Mahindra Old Mutual Life Insurance Limited
10. SBI Life Insurance Co. Ltd
11. Tata AIG Life Insurance Company Limited
12. Reliance Life Insurance Company Limited.
13. Aviva Life Insurance Co. India Pvt. Ltd.
14. Sahara India Life Insurance Co. Ltd.
15. Shriram Life Insurance Co. Ltd.
1 | P a g e
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16. Bharti AXA Life Insurance Company Ltd.
17. Future Generali Life Insurance Company Ltd.
18. IDBI Fortis Life Insurance Company Ltd.
19. Canara HSBC Oriental Bank of Commerce Life Insurance Co. Ltd
20. AEGON Religare Life Insurance Company Limited.
21. DLF Pramerica Life Insurance Co. Ltd.
22. Star Union Dai-ichi Life Insurance Comp. Ltd.
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Life Insurance Sector in India has a promising potential. With ever

changing money markets of mutual funds, debentures and shares life insurance
sector has again emerged victorious as the most secured solution for assuring
human life against unexpected risks as well as an ideal solution for wealth
creation and management.
After independence Indian economy started to rise in early sixties with

yet it is lagging with a time gap of 40-50 years compared to economic
development of countries like USA. Life Insurance sector in India didn¶t receive
any importance from common Indian masses 20 years ago except senior citizens
and those working on secure government jobs.
Since 1990 Indian government started making tie ups with foreign
investors and commercial organizations to move India on the path of economic
| P a g e
c
progress. As a result new wave of private corporate sector developed in India

enabling rise of new corporate industries under Industrial regulations from
Indian government. Private corporate sector in India in recent years has created
new job options enabling citizens of India to plan their life in an optimized way
with life insurance as an important personal aspect.
In India life insurance solutions has to be tapped at far more depth as

people have not yet understood its real importance. Life Insurance can really
serve well in the long run for assuring against risks that threaten Indian life
expectancy as well as contribute to safe accumulation of capital funds to
enhance India¶s GDP and financial progress.
Utility achieved from life insurance products in India is 8% of GDP all

we can say that a lot is to be achieved in the long run. With reduction of human
life expectancy due to wear and tear style of current day life, tensions arising
from issues to achieve materialistic progress money investors of India in age
groups from 25-50 have turned towards life insurance products as safe and
sensible money investments for securing lives of their families as well as
themselves.
Estimated figures of life insurance investment portfolios in India are quite

astonishing. In respect to large Indian population it has been declared that life
insurance market in India has a worth of more than 2000 crores comprising total
value of 300 billion all over the world. As concerning career prospects today
demand of recruiting insurance professionals has increased due to rising need of
availing life insurance services.
| P a g e
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Keeping this fact in view life insurance industry in India will continue
recruiting service professionals in large numbers in forth coming months as
insurance sector achieved significant growth rate even during recent global
recession.
c Largely untapped market with 17% of the world¶s population
c Nearly 80% of the Indian population is without Life, Health and Non-life
insurance
c Life Insurance penetration is low at 4.1% in 2006-07
c Non-life penetration is even lower at 0.6% in 2006-07
c The per capita spend on Life and Non-Life Insurance is US$33.2 and
US$5.2 (2006-07), respectively compared to a world average of US$330
and US$224
c Strong economic growth with increase in affluence and rising risk

awareness leading to rapid growth in the insurance sector
c Innovative products such as Unit Linked Insurance Policies are likely to

drive future industry growth
c Investment opportunities exist in both life and non-life segments
c Total estimated investment opportunity of US$14-15 billion

ü | P a g e
c
c The Indian Insurance market is expected to be around US$52 billion

by 2010
c Expected CAGR of over 30% p.a.
c
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6 | P a g e
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c Patents c Insurance companies are
c c Insurance having often slow to respond to
currently good market changing needs
c
c Premium rates are c Buying insurance policy is
c increasing so are a cumbersome process
commissions c Products or services
c c The variety of products similar to competitors
are increasing
c
c IT bringing new
c dimensions to insurance
sector
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c c Technology is improving, c Weather cycles
paperless transactions are c New substitute product
c
available emerging
c c Busy life, customers need c Increasing expenses and
flexible and customizable lower profit margin will
c policies hit hard on the smaller
c c Like mobile banking, agencies & insurance
mobile insurance can be companies
c hit c Government regulations
c c New innovations in on the issues like health
technology ± Measuring care and terrorism can
c
weather variables quickly change the
c direction of insurance
w | P a g e
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c Prohibition for Investment c Adequacy of capital

c Manner and conditions of investment c Increased Economic Activity
c Insurance business in rural / social sector c Interest Rates
c Capital requirement c Inflation Rates
c Renewal of registration c Market related factors
c Requirements as to Capital c Customer Satisfaction
c Investment of funds outside India
c Insurance business in Rural Sector c
c Power to investigation or inspection
c Role of the government c
c Government¶s objectives for liberalization c
of insurance
c Bodies that regulate the sector
c Business Requirement
c Investment of Assets
c Consequences of non-compliance
c Tax policy and Insurance sector
c Investment decisions mandated by
government
c Pattern of investment specified for life
insurance
c
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c Population c Maintaining the database
c Life style c E-business insurance in India
c Educational level c Impact on distribution channels
c Level of earning
c Societal benefitsc c
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Within India political ambitions and rise of communalism, fissiparous
tendencies are on the rise and may well continue for quite some time to time.
Therefore, it expected that the insurance companies might consider offering
political risk coverage also. The only area where Indian insurers consider
giving cover is with regard to customs duty change under certain conditions.
Certain type of political risk at the international level has serious
implications for exporters. The term µpolitical risk¶ has a wider connotation than
commonly understood or assumed. It covers events raising not just from
politics, but risks in the course of international transactions.
In this connection, it may be noted that export credit insurance has evolved
out of uncertainties relating to international trade, particularly due to problems
arising out of foreign legal jurisdiction, political changes and currency exchange
difficulties faced by many developing countries.

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c
The funds of policyholders are prohibited from being directly / indirectly
invested outside India as per section 27 ± C.
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c
Subject to the above provisions contained in Section 27 -/ 27- A / 27 B,
the IRDA may,
c In the interest of the policyholders, specify the time, manner and other
conditions of investment by insurer.
| P a g e
c
c Give specific directions applicable to all insurers for the time, manner and
other conditions subject to which the policyholder¶s funds should be
invested in the infrastructure and social sectors.
c After taking into account the nature of business and to protect the interest
of the policyholders, issue directions to insurers relating to time, manner
and other conditions of the investments provided the latter are given a
reasonable opportunity of being heard.
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c All insurers are required to undertake such percentage of their insurance
business, including insurance for crops, in the rural social sector as
specified by the IRDA.
c They should discharge their obligations to providing life insurance
policies to persons residing in the rural sector, workers in the unorganized
sector or to economically vulnerable classes of society and other
categories of persons as specified by the IRDA.
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The paid up equity of an insurance company applying for registration to
carry on life insurance business should be Rs 100 Crores.
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c An insurer, who has been granted a certificate of registration, should have
the registration renewed annually with each year ending on March 31
after the commencement of the IRDA Act.
c The application for renewal should be accompanied by a fee as
determined by IRDA regulations, not exceeding one forth of one percent
· | P a g e
c
of the total gross premium income in India in the preceding year or Rs 5

Crore or whichever is less, but not less than Rs 50000 for each class of
business as per Section 3-A.
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The minimum paid up equity capital, excluding required deposits with the
RBI and any preliminary expenses in the formation of the country, requirement
of an insurer would be Rs 100 crore to carry on life insurance business and
Rs.200 crore to exclusively do reinsurance business as per Section 6.

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c
Insurers outside India as per Section 27-C cannot invest the funds of
policyholders.
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After the commencement of the IRDA Act, 1999, every insurer would
have to undertake such percentage of life insurance business in the rural sector
as may be specified by the IRDA in this behalf. It is mandatory for the new
companies to meet the obligations relating to the rural and unorganized sector as
per section 32-B.
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The IRDA may, at any time, order in writing a person as investigating

authority to investigate the affairs of any insurer and report to it. Government
has power to change the tax policy against life insurance industry.
ÈcHealth insurance rebate
ÈcPension saving rebate
ü0 | P a g e
c
ÈcMede claim premium rebate

ÈcP.P.F., E.P.F., NSC all are tax exempted saving
ÈcAll life insurance policy are tax exempted saving
ÈcAgricultural income is tax exempted
ÈcHouse rent allowances
ÈcPost office saving
ÈcExpenses on dreaded diseases are tax exempted
ÈcRecently there is issue to increase FDI level from 26% to 49%
%ccc

As insurance is an important service sector, hence it is highly regulated
by government. Since 1956 insurance sector was highly regulated by
government of India. On March 16, 1999, the Indian cabinet approved on
Insurance Regulatory Authority Bills that was designed to liberalize the
insurance sector.
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The main objective of opening of insurance sector to the private insurers
is as under:
1. To provide better coverage to the Indian citizens.
2. To augment the flow of long-term financial resources to finance the growth
of infrastructure.
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For better regulation purpose of the insurance sector the government has
established following bodies;
ü1 | P a g e
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1. IRA: Insurance Regulatory Authority.

2. IRDA: Insurance Regulatory and Development Authority.
3. TAC: Tariff Advisory Committee.
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A company will not be issued a license unless the IRDA is satisfied with
the sound financial condition, the general character of management, the volume
of business, the capital structure, earning prospects for the insurers and that the
interests of the general public will be served if registration is granted to the
insurer.
Foreign insurance companies have been allowed to have a maximum 26%
share holding. No life insurance company can be registered under the Act unless
they have a paid up capital of Rs. 100 crores. Every life insurer shall deposit
with the reserve bank of India one percent of the total gross premium written in
India in any financial year, not exceeding Rs. 10 crores.
This amount would not be susceptible to any assignment or charge nor
would it be available for the discharge of any liabilities other than liabilities
arising out of policies issued, so long as any such liabilities remain
undercharged.

ccc
Every insurer is required to invest, and keep invested, assets equivalent to
not less than the net liabilities as follows:
(a) 25 % in government securities.
(b) A least 25% of the said sum in government securities or other approved
securities.
ü | P a g e
c
(c) The balance in any approved investment rated as ³very strong´ or more by
reputed rating agencies, which include various debt instruments on which
dividend on its ordinary shared for the five years immediately preceding or for
at least five out of the six or seven years immediately preceding have been paid
and which have priority in payment over ordinary shares of the company in
winding up.
The IRDA may in the interest of the policyholder¶s directions relation the
time, manner and other conditions and investments of assets to be held by an
insurer. The IRDA may also direct the insurer to realize the investment, if it
sees the investments to be unsuitable or undesirable. The Act prohibits an
insurer from directly or indirectly investing policyholder funds outside India.
Further, every insurer has to always maintain an excess of the value of his
assets over the amount of his liabilities of not less than Rs. 50 crores in the case
of an insurer carrying of life insurance business. If at any time an insurer does
not maintain the required solvency margin, he is required to submit a financial
plan, as per directions issued by the IRDA, indicating a plan of action to correct
the deficiency within three months.
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c A company failing to comply with the act shall be liable for panel action.
Further, IRDA is empowered to investigate into the affairs of the
company. Failure to comply with the directions may lead to cancellation
of the license for the company.
ü | P a g e
c
c Also, if the IRDA has reason to believe that a company is doing business
in a manner likely to be prejudicial to the interest of policyholders, it is
required to report to the central government.
c The central government may base on the report, appoint an administrator
to manage the affairs of the company. This would act as a further
assurance to the consumers, as their interests would at all times be a
priority and that in the event that the company acts in the manner
prejudicial to their interests, than an administrator would be appointed to
serve their needs.
c The court may also wind up the company if it fails to deposit or keep
deposits as per the requirements of the act or if the continuance of the
company is prejudicial to the interest of the policyholders or public
interest.
The four amendments, made in the life insurance Bill by the Lok Sabha, are as
under:
1. The Insurance Regulatory and Development Authority should give priority to

health insurance.
2. Policyholder¶s fund will be invested in the social sector and infrastructure.

The percent may be specified by the IRDA and such regulations will apply to all
insurers operating in the country.
3. Insurers will be expected to undertake a certain percent of business in rural

areas, and cover workers in the unorganized and informal sectors and
economically backward classes.
üü | P a g e
c
4. In the event of insurers failing to fulfil the social sector obligations, a fine of
Rs. 25 lakh would be imposed the first time. Subsequent failures would result in
cancellation of licenses.
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Another factor, which affects the insurance sector, is the tax policy. The
tax reforms in India are such that it encourages the citizens to invest in the
insurance sector.
The tax policy of the government is particular relevant for life insurance
which is a long-term contract and inculcates among the policyholders the habit
of saving. Taxation of returns on investment influences, investment decisions
and high rates of taxation will discourage the desire to save. Already in India
there are complaints that the rates of return on life policies are not what they
could be. Therefore tax incentives play a vital role in determining the
attractiveness of such policies.
Such tax breaks are available in many countries and have helped in the
development of their life sector. In western countries the gain from the proceeds
of a life insurance policy is paid free of tax. Provided the policy satisfies certain
qualifying conditions. Non-qualifying policies get basic rate tax relief, though
higher rate taxpayers may still have to pay tax on the gain, although at a reduced
rate. The insurance companies can use such tax concessions rate. The insurance
companies can use such tax concessions to design products for different
categories of taxpayers.
The other factors, which affect the insurance sector, are the employment
law, and government stability. These are the factors, which affect the insurance
industry.
ü6 | P a g e
c

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Insurers are required to fulfil certain social commitments as well. As
many of the social welfare measures companies are not just regulated, but have
been mandated to hand over a portion of their funds to the state for investment
in infrastructure and for social development through government bonds and
securities. In India, the pattern was, accordingly, prescribed in great detail by
the government. This was not in the form of guidelines, but as a legal obligation
under the insurance Act, 1938.
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(1) Government Securities 25%
(2) Government Securities or other Not less than 50%
approved securities
(3) Approved Investments
c Infrastructure & social sector Not less than 15%
c Other govern by exposure
norms Not exceeding 35%
üw | P a g e
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Interest rate at bank and interest rate of P.F variation very much affect to
life insurance industry, because people always attract by higher return.
Therefore, they do not prefer lower return policy. Unemployment also affects
insurance industry, because the unemployment people will not have earning, so
saving also affect to life insurance sector Life insurance industry will directly
affected by Earthquake, Monsoon, and Natural calamity. Because of these
events turns into lots of death, so the life insurance companies have to pay claim
against policy. Infant mortality rate and maternity mortality rate are also
affecting to life insurance. Typical Indian want luxurious product against low
income, so that they prefer instalment or annuity (EMI), so that they may not
have extra saving to invest in life insurance.
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Capital adequacy is a matter of attention in view of the nature of the life
insurance business, where in the case a contingency arises, the insurers should
be in a position to meet its long-term contractual obligations and pay up the
dues or claims. In that sense, life insurance is a capital-intensive business and
must be backed by an adequate capital base on the part of the owners and the
companies should not be running their business purely on other people¶s money.
So minimum start up amounts and long running capital adequacy norms are
absolutely essential, in consideration of this, the Malhotra committee suggested
and subsequently the IRDA stipulated a minimum capital base of Rs 1 bn for
any entity wanting to enter the life insurance business.
ü | P a g e
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Although economic activity has slowed down since 1996, sooner or later
there will be an upswing. The increase in the growth rate in various sectors
accompanied by the growth in trade in the context of fulfilling of commitments
to the WTO will signal a growth in the demand for insurance covers of new
types.
For example, aviation insurance cover will be on an increasing scale in
view of the need for more frequent air travel for men and for transporting
materials. This would necessitate substantial property, liability and personal
insurance.
As far as cover against business interruption is concerned, the pace of
business and of change today is so fast that even the most careful assessment of
exposure time, and the most liberal coverage cannot protect the insured
adequate in the event of a loss be on the increase and insurance companies
cannot afford to ignore the vast potential in this business.

c%c
During the last years the government has rationalized interest rate creates
better business opportunities for the life insurance sector because the substitute
products are graded lower by the customers. On the other hand the value of the
holdings of the insurance companies will increase.
Rationalization of the interest rates is still expected, and it is an
opportunity for the company. Low interested rates mean low investment return
for reinsures causing negative impact on their overall net profitability as pricing
is to a certain extent sensitive to interest rate fluctuations. The negative impact
therefore, lead to higher pricing level for reinsures in order to sustain their
profitability.
ü | P a g e
c
But, in reinsurance market, which is characterized by over capitalization

is also resulting intense competition. The opportunity for such rate increases
practically remains very slim and even non-existent. As a result, reinsures are
under tremendous pressure to cut their operational cost to safeguard
profitability.
Furthermore, low interest rates discourage and even prevent any outflow
of capital from reinsurance business to capital markets, causing current over
capitalization in reinsurance market to continue. A positive outcome is that low
inflation rates, if sustained for a considerable period, usually bring some relief
to reinsures from the resulting lower than forecast claims payment. Also, this
can lead stability to reinsures administrative cost.
As interest rates fall, bond value rise, and insurers feel richer. On the
liability side, reserves are not explicitly discounted so lower interest rates do not
increase reserves, lower inflation means lower expected future claims payments
which lowers required reserves. This in turn increases surplus again allowing
insurers to feel richer.
Therefore, low interest rates and low inflation result in higher assets,
lower liabilities, hence greater surplus and greater risk capacity resulting in less
demand for, and greater surplus of reinsurance.
Low interest rates and low inflation reduce the ability of reinsures to
offset technical losses by using financial products and should, as a
consequences, force market competition downloads.
However, this will also serve to weaken the balance sheets of insurers
and create an increase in the demand for balance sheet protections. Lastly, these
conditions move risk from the liability side of the balance sheet to the asset side
while actually generating new needs for cover.
ü· | P a g e
c
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Inflation can also be one of the causes to change the scenario of the
insurance sector. High inflation for instance, would tend to reduce the insurance
business, particularly life, because the real value of the money paid back to the
policyholder on maturity of the policy would go down and would, therefore,
lose its attraction for the investor. At the most, the insuring public may prefer
pure risk plans (terms insurance), which have a low premium outlay.
The response to an inflationary situation will depend on what benefit the
insured is looking for. In a situation of high inflation, clients would prefer
policies where the savings portion is periodically returned while the risk portion
is maintain for the duration of the contract.
Those who prefer risk protection are likely to opt for long term policies,
which may also be preferred because they are likely to be low premium policies.
A flexible system, under which the sum insured, is increased from time to time
so that the real value of the cover is maintained, and could give a boost to the
market under conditions of high inflation.
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Growth in the population is a major factor pushing up the demand. It is
also going to exert a special influence on the life insurance market in other
ways. Apart from exerting pressure on demand for goods and services, and
through that, ill effects of uncontrolled growth of population also could spur the
growth of demand.
60 | P a g e
c
For example, overcrowding in public places of entertainment, public

support, or too many vehicles on the road can result in hazards like stampedes
and pollution, which require covers and still are not sold on a large scale today.
Thus the positive as well as the negative aspects of population growth are going
to spur demand.
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The peculiar lifestyle of a country or an age also influences the insurance
business. Change therein produces different demands for life insurance.
For e.g. All over the world, family size is shrinking and the fact that in
decades to come, both presents are more frequently likely to work outside the
home will mean that there could be a greater possibility of property loss.
Similarly, a larger number of vehicles on the roads for people commuting to
their jobs or business would mean larger incidence of accidents. This will
increase the demand for life insurance products.
However, consumers¶ behaviour cannot be adequately and accurately
predicted. The younger generation is overwhelmingly influenced by
consumerism. If this trend continues or increases with increasing income, there
will be fewer propensities to save or insure, as a result of which the increasing
purchasing poser may not be reflected in the life insurance market.
Crumbling social values, the deteriorating law and order situation, the growing
incidence of crime, extortion, abduction, etc., are posing a new category of risks
which need to be covered through suitably designed policies.
Thus these are how changing life style of the citizens is affecting the life
insurance industry.
61 | P a g e
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India is one of the developing countries: the level of education is very
low here. The literacy rate is very poor. More than 50% of the population is still
uneducated or more or less not educated. Thus the people are not able to
understand the concept of the life insurance.
Among the educated people the quality of the education is still a big
question mark. Thus the awareness is not created and it has become a big
challenge for the industry.
Thus one of the factors, which affect the life insurance sector, is low level
of education.
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c
Another factor, which affects the life insurance sector, is the level of
earning. In India the rule of 80-20 is working. The 80% of the total population
is having the 20% of the wealth and the 20% of the total population is having
80% of total wealth. Thus the richer are richer and poorer are poorer. Due to
this the life insurance sector is affected very much.
c
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c
In view of the fact that large sections of India have inadequate life
insurance cover, an important social responsibility of the government relates to
spreading it far and wide. In addition, the government attempts to extent life
insurance with certain social obligations in view in both urban and the rural
areas through such means special schemes for the weaker sections, and by
tilting of the life insurance companies¶ investments in favour of social
developments.
6 | P a g e
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The social changes emerging in the country provide opportunities for

insurers to sell financial services products such as family health care
programmed, retirement plans disability insurance, long-term care for senior
citizens and different employee benefit plans.
It is not the total population but the insurable population which is material
for the conclusion of potential. Apart from the usual demographic and other
well known factors such as age group, income level, sex-wise distribution, and
literacy level, a realistic assessment of this potential has to be based on several
other relevant factors.
Many invisible factors like religious faiths and social values too need to
be considered. As such, there is considerable difficulty in accurately estimating
the potential and crude estimates can be misleading. The estimate will also vary
according to the criteria used to measure if.
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Internet as an intermediary in the current Indian market customer is not
aware about the intrinsic value of insurance. He thinks of insurance only in the
month of March as a tax saving measure. The security provide by an insurance
cover is rarely thought about. In such a scenario Internet can be an effective
medium for educating the consumers about insurance. It serves as a single
window for disseminating product, process and procedural information to the
consumers.
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The most important factor that is affecting the insurance industry is the
marinating the database of the customers. The insurance industry having a huge
list of the customers.
In order to maintain it in manual format it is really the work of stupidity.
With the change in time the computers has taken the work of this things. Thus
with the development of the technology it has becoming possible to maintain
such huge database very easily. A person can switch over to the computer and
get the details of the customer very easily.
Thus maintaining the database has really become easy due to the
development in technology.
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The Internet has played a vital role in transforming the business of the
21st century. Computers are now being used extensively for creating a storing
data, information with the help of complex and sophisticated technological tools
in every kind of business. This change having been widely accepted, the
advantages are numerous such as fast processing improved. Efficiency, cost
reduction among several other benefits. However, with every positive change,
there is an evil attached and technology is no exception.
In technical is an evil attached and technology is no exception. In
technical terms, increased sophistications of technology brings with it, an
increased factor of risk involved. The risk can be of various attributes, for
example, the risk of data being lost due to a virus attack, the theft of important
and confidential information and so on, which ultimately results in losses for the
business entity.
6ü | P a g e
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With this change in the business process, insurers have to devise new
methods for assessing, underwriting and servicing claims for the so-called e-
business insurance. Insurers face challenges to ascertain risks, in order to
quantify them because such risks don¶t have any past data, which makes it all
the more difficult for actuaries.
Moreover, what financial impact a particular risk can have is very
difficult to be determined. For example, if some hackers obtain credit card
information of few customers, it¶s a loss for banks, their credibility, customers
and also their brand. Will an insurance policy cover all of this is million dollars
question hence; the difficulty is to design a cover first of all, which really
answers the needs of customers.
But even after designing and pricing such products with difficulty, the
challenge to underwrite and handle claims for such policies remains existent.
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Distribution channels are the most important part of the insurance
industry. The scenario is continuously changing in this industry. In future the
customers are expected to be more technology ± oriented, better informed, more
knowledgeable and more demanding. The insurers will have to offer all types of
channel to customer and it is the customer who will have the right to choose the
channel suiting him/ her. Dual income families with young children, singles
with long working days and flexi-timers all demand high level of sophistication
and ease when it comes to service.
Hence the companies have to be very careful and cautious in catering to
the needs of these customers who provides a good amount of business to the
insurers.
66 | P a g e
c
Thanks to the technological advancement and increased de regulation and

sophistication, the carriers and producers can now reach the customers in
different ways as has been proved in the US market and other developed nations
the web is extensively used for the access of information but when it comes to
the purchase of policy, the offline mode is preferred.
The private players in India seem to have identified this and have put
substantial information on their websites regarding policies, quotes and contact
information among other routine stuff.
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The LIFE insurance industry has witnessed limited competition till now.
But with the entry of private sector insurance companies the scene will change
and competition among various insurance companies will become the name of
the game.
Insurance companies have to face and deal with competition not only in
terms of investments performance but also customer service.
Hence an aggressive competitive strategy is the need of the day for the
insurance companies in order to gain a competitive niche, survive and
proliferate in the insurance industry. To be successful in one¶s area of business
in the presence of competitive forces the following model may adopt to fulfil
the purpose.
6w | P a g e
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Michael porter, an authority on competitive strategy and competitive
advantage, argues that competitive advantage grows fundamentally out of the
value; a firm is able to create for its buyer that exceeds the cost of creating it.
According to him, ³competitive advantage stems from many discrete
activities can contribute to a firm¶s relative cost position and creates a basis for
differentiation. A systematic way is necessary for analyzing the source of
competitive advantages.
The concept developed by Michel porter is µvalue chain¶ which
represents graphically the activities of the firm and their interlink ages. The
value chain reflects the history of the firm, its strategy for the future, approach
to which it belongs. The value chain may be similar across firm in the same
industry, but different among competitors. Differences among competitors are
key source of competitive advantages.
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Value chain of a firm as proposed in general has five generic
categories of primary activities for a firm involved in competition in any
industry. These categories can be represented in the diagram.
Firm Infrastructure
Human Resource Mgt.
Technology Development Margins
Procurements
Inbound Operations Outbound Marketing Services
Logistics logistics & Sales
6 | P a g e
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Life insurance not only plays an important role in national economy but
also in international economy. Marine cargo insurance provides risk coverage
for shippers and the banks, which finance international trades. This role
becomes all the more important in the context of an active government policy to
encourage exports.
Indian life insurer operates in more than 30 countries through agencies,
branches, associates companies. These operations earn foreign exchange. The
insurance business is concerned with North America, Western Europe, Japan
and Oceania.
Together these region¶s accounts for about 91% of the world annual
premium .By region¶s North America and Western Europe are growing
moderately while Oceanic, Latin America, Eastern Europe and Africa display
growth above lone ±term trends to a global context globalization of life
insurance helps companies practices underwriting discipline in one regions
globalization of the insurance industry received a big boost.
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United kingdom 12.71 3028.5
Japan 8.70 3165.1
United States 4.48 1611.4
South Africa 14.04 392.9
Australia 6.04 1193.5
South Korea 9.89 935.6
India 1.77 7.6
China 1.12 9.5
Malaysia 2.13 86.4
Indonesia 0.54 4.0
Brazil 0.36 12.9
6 | P a g e
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Unfortunately, the progress achieved by the life insurance industry in
India, it compares unfavourably not just with the developed countries. But also
even with the developing world. The global market for the life insurance is
estimated to be around $ 1412.3 billion.
6· | P a g e
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AEGON Religare Life Insurance Company Ltd is a joint venture of

AEGON, Religare and Bennett, Coleman & Company. AEGON in one of the
world's leading life insurance and pension groups. Religare is a prominent
player in the field of integrated financial services in India. On the other hand,
Bennett- Coleman & Company is India¶s largest media house. The insurance
company began its operation in July 2008. Within a short span of time, it has
spread across India, by opening over 30 branches in the country.
AEGON Religare Life Insurance offers multitude of benefits to its

customers. It offers policy servicing on the phone via Interactive Voice
Response System (IVR). This is done by issuing the customer a T-Pin for
authentication. It boasts of being the first insurance company in India to include
the customer¶s medical report in the policy kit. Talking about the individual
stake holders, AEGON serves over 40 million customers in as many as 20
markets spread throughout the Americas, Asia and Europe. Headquartered in
The Hague, the Netherlands, AEGON carries out major operations in the United
States, the Netherlands and the United Kingdom.
Religare Enterprises Limited (REL) is a significant player in the field of

Retail, Institutional and Wealth spectrums. It has a diverse and wide base of
clientele. REL holds 44% equity in AEGON Religare Life Insurance Company
Ltd. Talking about Bennett, Coleman & Co. Ltd. (BCCL) it is a mammoth in
the field of media, since it is associated with the Times Group, India's largest
media house. The Joint Venture of the three giants (of their respective fields)
has given rise to AEGON Religare Life Insurance.
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AEGON
c 160 years of experience in the insurance business
c Ranked 5th largest insurance company in the world on revenues*
c Present in 20 countries throughout the America, Europe & Asia
c Track record of finding beneficiaries of policies and settling claims
c Even in the wake of crisis in the financial world, rated AA# by rating
agencies
c AEGON is an international business, providing life insurance, pensions

and other long-term savings and investment products to millions of
customers around the world.
c The company has major operations in the United States, the Netherlands
and the United Kingdom as well as other businesses in Asia, the
Americas and elsewhere in Europe.
c AEGON is listed on the stock exchanges of Amsterdam, London, New

York and Tokyo.
c With just over EUR 330 billion in revenue-generating investments at the

end of 2008, AEGON companies employ just over 31,000 people
worldwide, serving more than 40 million policyholders in over twenty
countries across the globe.
c It holds 26% equity in AEGON Religare.
w1 | P a g e
c
RELIGARE
c A diversified financial services group with a pan-India presence and

presence in multiple international locations, Religare Enterprises Limited
("REL") offers a comprehensive suite of customer-focused financial
products and services targeted at retail investors, high net worth
individuals and corporate and institutional clients.
c REL, along with its joint venture partners, offers a range of products and
services in India, including asset management, life insurance, wealth
management, equity and commodity broking, investment banking,
lending services, private equity and venture capital.
c Religare has also ventured into the alternative investments sphere through
its holistic arts initiative and film fund.
c Has launched India's first wealth management joint venture under the
brand name 'Religare Macquarie Private Wealth'.
c REL, through its subsidiaries, has launched India's first holistic arts
initiative - with a gallery - as well as the first SEBI approved film fund,
which is an initiative towards innovation and spotting new opportunities
for creation and maximization of wealth for investors.
c REL operates from seven domestic regional offices, 43 sub-regional

offices, and has a presence in 498* cities and towns controlling 1,837*
business locations all over India.
c To make a mark in the global arena, REL acquired UK-based Hichens,

Harrison & Co. in 2008 which was subsequently re-named as Religare
Hichens Harrison PLC ("RHH"). Hichens, Harrison & Co. was
w | P a g e
c
incorporated in London in the year 1803 and is believed to be one of the

oldest firms of stockbrokers in the City of London.
c Pursuant to expansion of REL's business, the company has grown from

largely an equity trading company into a diversified financial services
company.
c With the addition of RHH the REL group now operates out of multiple
global locations, other than India, (the UK, the USA, Brazil, South
Africa, Dubai and Singapore).
c It holds 44% equity in AEGON Religare.
Bennett, Coleman & Co. Limited
c Bennett, Coleman & Co. Limited, is the flagship company of The Times
Group, which has a heritage of over 150 years and is one of India's
leading media groups.
c It reaches out to 2468 cities and towns all over India.
c The group owns and manages powerful media brands like The Times of
India, The Economic Times, Maharashtra Times, Navbharat Times,
Femina, Filmfare, Grazia, Top Gear, Radio Mirchi, Zoom, Times Now,
Times Music, Times OOH, Private Treaties and indiatimes.com
c All of its brands are multinational in outlook, traditional at heart and
w | P a g e
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national in spirit.
c From the very first edition on November 3, 1838 the mammoth BCCL
Group has come a long way.
c By way of the innovative venture of Times Private Treaties, the BCCL

Group holds 30% equity in our company.
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c The biggest strength of AEGON Religare - it is cash rich; which make

them ignorant about the gestation period.
c Religare brand image & AEGON business experience has proved to be a
perfect match.
c An already existing channel for marketing the financial products.
c ßuality service is crux of the company mission.
c Investment in IT solutions in the initial stage would help in upgrading
customer service and satisfaction.
c The unique marketing strategy of targeting the people who are already
insured but under insured with the punch line ³KILB´ can prove to be
USP for the company.
c The investment plans are well planned based on the customer preferences
and life requirements when compared to the competitors and the
premium allocation charges are also low; this has made the company
Price competitive.
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c Almost all the competitors in the market offer same bouquet of products
with a title difference, premium and offering.
c New entrant to the Indian life insurance market which has a diversity of
customers with different cultures, attitude & preferences.
c The expenses on marketing & advertisements have failed to build a brand
image in the market; it¶s still an alien in the life insurance market.
ww | P a g e
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c More than 70% people live in rural area but AEGON Religare is more
centric in urban area.
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c Huge market is literally untapped, out of 320 million insurable market

only 25% of the people insured
c Health insurance and pension scheme, an estimated market potential of
approximately $15 billion
c India is fast growing market and 80 to 85% people are below age of 45
c Leverage the customer base of Banc assurance partner
c Building a strong distribution network can prove to be cash cow in the
long run.
c Insurance literacy is increasing in India.
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c Entry of other private company with equal strong experience and

financial strength of partner making the competition difficult and
saturating the urban market.
c Current Govt. policies do not encourage in gross domestic saving, if the
tax liabilities of the service rise the customer will have little money to
invest.
c LIC has woken up from sleep and is following competitive strategies, its
huge surplus in life fund gives a capability to lodge price war.
c Product differentiation is difficult in market (banc assurance).
c Competition is getting keener in couple of years.
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AEGON Religare Life Insurance offers insurance and pension plans
specifically designed to help you plan your life better. Select a plan based on
your need ± protection, saving, child or retirement.

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Protection plans are Term Plans which provide only life cover. These plans can
help you get adequately covered and secure your family financially in case of
unfortunate event. These are low cost life insurance plans
c Aegon Religare level term plan

c Aegon Religare Increasing term plan
c Aegon Religare Decreasing term plan
c Aegon Religare Group term plan
c Aegon Religare Rural term plan
c Aegon Religare Group credit life plan
c Aegon Religare I-term planc
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Unit Linked Insurance Plans or ULIPs as they are commonly called are a formc
of Savings Plans that help you save and grow your money. ULIPs are a
category of goal-based financial solutions that combine the safety of life
insurance protection with wealth creation opportunities.c
c Aegon Religare Protect Gain Plan

c Aegon Religare Premium Gain Plan
c Aegon Religare Premium Gain Plus Plan
c Aegon Religare Wealth Protect Plan
c Aegon Religare Invest Maximiser Planc
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AEGON Religare Child Plans are life insurance plans that can help you save
for your child¶s future goals. This plan comes with a Waiver of premium
feature, which guarantees to waive all future premiums in event of your demise,
and ensures that your child receives full sum assured immediately and 100% of
fund value on maturity of policy.
c Aegon Religare Star Child Plan
w· | P a g e
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The rising inflation has put the fear of the unseen in every working
person¶s life. Today, more than ever, it is vital that you save for the golden
years post retirement so that you can maintain your lifestyle as today.c
c Aegon Religare Pension Plan

c Aegon Religare Insta Pension Plan
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This company looks to be trying to explore this little explored Life

Insurance type. AEGON Religare is providing cheapest Term Insurance for
most of the age group.
This also shows the company¶s focus on Term Insurance plans. It would
finally benefit the end consumers, who are till now subject to miss-selling by
insurance agents, always used to buy ULIPs Endowment policies, which pays
more commissions to Insurance Agents, whereas the consumer gets very little
amount of Insurance due to high premium in those policies.
The only issue with this company could be that it has no track record of
previous customer service, which will be known only after a year or so.
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AEGON Religare , the new kid on the Life Insurance Block, has come up
with a refreshing positioning and communication strategy - and one which will
strike a chord with a lot of folks.
To realize the clever positioning and communication, we should look at

the current crop of insurance firms and their strategies. All of them convey the
message that one should have Life insurance for various reasons ±
c Control on Tomorrow's Uncertainties (Kal Par Control - Aviva)

c Financial Independence in the future (Sar Utha Ke Jiyo - HDFC Standard
Life)
c Someone is there for you (Hum Hain Na - ICICI Prudential)
All of the above primarily communicate with the premise that a person
needs insurance. However, AEGON Religare has created an entirely new
positioning and expanded its market - it is aimed both at the person who does
not have insurance (thus competing head-on with the above mentioned firms,
and more importantly, also forces existing insurance holders to relook at their
coverage - thus resulting in possible sales from a lot of people already having
some amount of life insurance coverage. The result - they can target
prospective as well as current insurance holders - effectively increasing the size
of the market. In addition, they can reap the benefits of being the first mover in
the latent segment of existing policy holders.
The use of a simple acronym with some teasers before the full ad
campaign (KILB - Kam Insurance Lene ki Bimari translated: The "disease" of
1 | P a g e
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taking lower than required insurance cover) increases the awareness and creates
an enduring memory aid for the brand.
Apart from being a clever marketing strategy, it also creates a perception

of the company being socially responsible, in that it is urging people to evaluate
their coverage irrespective of the firm with which they hold their insurance.
The choice of brand ambassador is also very optimal. Irfan Khan has a
no-nonsense image, be it his films (even the comedy roles like "Life in a
Metro"), as well as advertisements (most notably, the Hutch ads). This
personality association is bound to be reinforced by the Religare ad, and it
enhances the credibility of the communication.
AEGON Religare has won the prelim round of the marketing salvo!
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c c Geographical factors
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c Brand reputation % c Buyer choice
c Geographical c Number and size of c Buyers
coverage firms size/number
c Product/service c Industry size and c Change
level quality trends cost/frequency
c Relationships c Fixed v variable cost c Product/service
with customers bases importance
c Bidding c Product/service c Volumes, JIT
processes/capabi ranges scheduling
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cccccccccccccc As AEGON Religare is a new entrant to the market has to face intense
competition from the existing players who have made a strong hold in the
market. When we say about competition in this market, competition is very
tough. We can say that market condition is just like same as oligopoly means a
few number of large firm is providing all service partially different along line
of quality, feature or services. Each competitor may seek leadership in one of
that major attribute and changing a price for that attribute.
For example, AEGON Religare is specialist on to attract high net worth or

urban population but LIC has large distribution network so they are specialist in
rural segments.
But when we say about population growth, economic growth or

government policies insurance segment is very attractive because only 25%
insurable person are insured secondly 80% population are under age of 45.
Aggressive market condition is in market. Main competitors of AEGON
Religare are ICICI Prudential, LIC, Bajaj Allianz, HDFC, Birla Sun Life....
they are all the mammoth players in the Indian life insurance market with
major chunk of the market share.
LIC has many resources and it has above 50-year experience in

insurance field but AEGON Religare lacks in this segment. However, due to
AEGON experience and Religare brand value, AEGON Religare Cohas made
good position in market. So there is threat as mainly by LIC & ICICI Prudential
for AEGON Religare. Due to this reason price war, advertisement, and new
product innovation will be expensive in future.
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Due to aggressive competition and high entry exit barrier, this is not
attractive segment for new player. For entering in insurance field, mandatory
capital is 100 crores. Secondly, foreign stake limited with 26%, third Indian
company should have no experience in insurance business.
Exit barrier are also very high because, no company can leave market
after entering due to loss because firstly, 100 crores will be lost secondly, their
compensation (customer or other company) will be very high or more than
deposited money. So in long run, company will try to reduce their business but
they will not leave market. So this is good factor for AEGON Religare because
where entry or exit barrier are high, profit potential are also high.c
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This is not attractive market in view of substitute goods because there

are many substitutes in market but only service style is different. Different
insurance company provide the same product but presentation is different. In
case of lower substitute (means investment purpose) many products in India for
example: share, mutual fund, fixed deposit. Substitute place a limit on price and
on profit.
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In India buyer¶s growing power is increasing because they have been

more concentrated or organized towards market. Government has established
insurance regulator (IRDA) in India for growing buyer¶s barging power. Due to
lowest switching, buyers are very price sensitive and buyers have many sources
6 | P a g e
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for knowing about different company product. Due to education buyer can
analyse which product is good for him. So due to growing buyer¶s power this
segment is not good for new player.
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cccccccccccDue to oligopoly market condition insurance company cannot raise price
but they can increase their profit by increase in sales. In India, the distribution
chain (agent, broker, banc assurance) is growing due to increase in the number
of companies entering the insurance market and this is not good for AEGON
Religare.
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The primary survey was planned in two stages, one to analyze the
consumer behavior towards life insurance products and other was to gauge the
industry potential.
The sample size for consumer behavior was 63 of which 33 male and 30
female respondents of different age groups, profession & income levels.
The sample size for Industry potential was 58 of which 30 male & 28
female insurance professionals.
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Male 27 47%
Female 31 53%
Total 58 100%
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LIC 62%
ICICI Prudential 11%
Bajaj Allianz 5%
Tata AIG 2.1%
HDFC Standard Life 2.4%
SBI Life 3%
Birla Sunlife 2.5%
Aviva 2%
Max Newyork 2.8%
Aegon Religare 0.8%
Others 4.4%
Total 100%
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c AEGON Religare being a new entrant into the market has done a
good job in capturing around 0.8% of the market share and has to weave
strategies to further be the market leader in the long run.
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Cosmos 0 0 0
Metros 0 1 1
Suburbs 12 17 29
Rural 15 6 21
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c This primary survey revealed that the private life insurance players
were mainly urban centric and neglected the rural and suburban population.
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The private life insurance sector has been focusing on the metros
and cosmos and the rural and suburbs are left under treated, here the industry
has high customer base and potential in future.
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¦10% 3 1 4
10% - 30% 11 14 25
30% - 50% 6 9 15
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: This analysis revealed that female respondents had a better
conversion rate from lead generation to closing the sale and this needs to be
improved by better training programs and customer interaction.
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c The conversion rate from lead generation to closing the sale is
averaging 25% and the female respondents from the industry said they had a
better conversion rate than the male respondents.
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YES 12 9 21
NO 9 14 23
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cIt was an interesting fact that around 46% of the respondents believed
that LIC brand image had overshadowed the private insurance sector.

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c Around 58% of the respondents said the LIC brand image has
overshadowed the private life insurance sector. Hence they face a tough
competition from LIC.
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Life Insurance 3 0 3
Mutual Funds 0 2 2
Investment 18 17 35
Tax savings 8 11 19
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cCustomer is more interested in high & constant returns with security
they prefer investment instruments rather than life insurance or mutual funds.
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c The customer is more interested in investment plans than in life
insurance or mutual funds and the business people mostly opted life insurance
for tax savings.
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Disciplined Saving 5 4 9
Security 18 19 37
Dead Investment 1 2 3
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c About 80% of the customer perceived life insurance policy is a tool
for securing life rather than a disciplined saving or a dead investment. The fact
to be noted was very few responded that it was a dead investment.
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c Around 73% of the customer perceives life insurance policy as
security for life against disciplined saving & dead investment.
c
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¦25yrs 43 0 2 2 0
25 ± 35yrs 22 24 15 36 0
35 ± 50yrs 5 23 25 3 29
51yrs¦ 12 5 6 1 1
c

c This survey revealed that most of the life advisors and business
managers recommended ULIP plans to young and enthusiastic investors who
could take high risk for high return, as the life stage progresses one needs to be
more responsible and secure himself & his family hence opt Child plans &
Pension plans for the later stage comes the Term plans & Endowment plans.
MM
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cLife advisors and business managers had suggested different plans
for different stages of life to the customer.
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ü | P a g e
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Business People 5 5 10
Professionals 17 22 39
Govt. Employees 4 2 6
c

: The survey revealed that the respondents believed that the
professionals were the main customer base when compared to the business
people and government employees because they were mainly concerned about
their future and had better product knowledge when compared to the other two.
+M
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c The main customer base was perceived to be the professionals
against business people and government employees.
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6 | P a g e
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Friends & Relation 24 38%
Policy Scheme 10 23%
Past Returns 15 23%
Brand Image 15 16%
Total - 100%
c

cWhen the sales force was asked for what the x factor which drives the
customer to buy an insurance policy almost 38% of them responded it was
friends & relations who influenced then followed the brand image & past
returns at the last stood policy scheme.c
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: The x factor which had a bearing on customer buying an insurance
policy were friends and relations and the next stood past returns, brand image &
policy scheme.
w | P a g e
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cThis analysis showed that customer lacked product knowledge and
the companies needed to work on this field.
c
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Gold 17 19 36
Real Estate 21 14 35
FD¶s 25 21 46
Equities 6 4 10
Mutual Fund 4 2 6
Insurance 20 18 38
c

cInterestingly this primary survey with the customer revealed that they
preferred a secure channel of investment instrument rather going for a high risk
and high return option. And insurance stood at the second place against gold,
real estate, equities & mutual funds.
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: The investment instruments the customer preferred were the more
secure than with high risk and high returns and preferred long term investments.
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·0 | P a g e
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YES 15 12 27
NO 10 14 24
c

c The primary survey revealed that approximately 47% of the
respondents was not insured who formed a potential customer base.

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c No of male respondents insured were more when compared to the
female respondents this showed that responsibilities were one of the influential
parameter which drove customer to buy an insurance policy.
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·1 | P a g e
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.
c :,c 9.c
Self employed 2 5
Professional 15 16
Business 9 2
Other 1 2
Total 27 24
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c Self employed people were the one who were less insured when
compared to other category people. Business people were the one 11 of 9 were
insured. So said potential customer the professionals almost 50% of the
respondents were not insured.

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cThe primary data revealed that about 46% of the respondents from
different fields were not insured and they formed a potential customer base.
c
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· | P a g e
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c
Essential 7 12 19
Important 22 14 36
Not required 0 0 0
Can¶t say 5 3 8
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cThe primary survey revealed that the customer knew the importance
of life insurance policy if just given a boost he can be converted into a potential
customer.

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the male respondents said it was important for life & few were confused.
· | P a g e
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Self Employed 1 6 0 4
Professional 16 11 0 4
Business 0 13 0 0
Other 1 2 0 0
Total 18 32 0 8

All the segments had a familiar opinion when it comes to securing
there life they all knew insurance was an essential and the most important one in
securing their future.

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: Primary data revealed that most of the customers had an opinion that
life insurance was an important criterion for their life security.
c
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·ü | P a g e
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Old age Savings 22 18 40
Children 25 24 49
Regular Income 7 8 15
Tax saving 6 8 14
c

c cThe survey sample revealed that the most influential parameter for
an investment decision was for the future of children then the old age savings
followed by regular income & tax savings.
2
M
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The male respondents were equally concerned about the old age
savings and children¶s future but the female respondents gave more importance
to securing children¶s future.
·6 | P a g e
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cc % c $c
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Self 7 10 2 1
Employed
Business 11 12 2 3
Other 2 2 0 1
Total 36 46 15 15

cAlmost 90% of the respondents of various occupations gave the first
priority to their children¶s future then the old age savings when it came to
investment.

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cChildren¶s future played a vital role then the old age savings were
the main influential parameters for buying an insurance policy.c
c
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·w | P a g e
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c #c c c
Investment 14 14 28
Tax saving 12 7 19
Security 26 25 51
Disciplined 6 7 13
Saving
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cCustomer presumes that an insurance policy is a security for life with
other options like investment & tax saving tool following the suite.
*M
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cMale and female respondents had the same response about the life
insurance policy that it was for security and an investment tool.
· | P a g e
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Self employed 5 2 10 3
Business 5 5 11 3
Other 2 1 2 0
Total 28 19 46 11

c 90% of the customer of various segments agreed that life insurance
policy was a tool of life security followed by an investment & tax saving tool.
-M
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cCustomer presumed life insurance policy as a tool for life security
than an investment.
c
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· | P a g e
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/56c cc
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cc
c #c c c
Policy Scheme 17 20 37
Past returns 17 7 24
Service 13 14 27
Brand Image 18 15 33
c

All the criteria mentioned above played a vital role in customer
decision buying an insurance policy but the policy scheme stood at the top most
priority followed by brand image and service.
+M
M

M

M
M
,c &c% & * 2 c
c

Male respondents considered policy scheme, past returns & brand
image with equal importance while selecting an insurance policy but the female
respondents had a slight variation instead of past returns they had voted for a
better service.
·· | P a g e
c
c c c cc 3

cc
.
c cc
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Self employed 7 6 6 7
Business 9 6 7 8
Other 0 2 0 3
Total 35 23 27 32

c In life insurance policy selection process customer mainly looks for
policy scheme and brand image then the other criteria.
-M
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34 * 4
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c The primary survey revealed that the policy scheme had a major
bearing on the customer decision then followed by brand image, service and
past returns respectively.c
c
c
100 | P a g e
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/56c.c%!c2c%
c

c
c #c c c
Aggressive 16 10 26
Moderate 14 19 33
Secure 2 0 2
c

cThe primary survey revealed that the customer showed more interest
in moderate plans that is with moderate risk and moderate returns, few mainly
young respondents with long term saving plans were more interested in
aggressive investment plans with high risk & high returns.
M
M

M
M
&&*
c
c

c A thing to be noticed from the graph was the female respondents
tend to be more moderate when compared to the male respondents and the most
of the male respondents tended to have an aggressive investment plan.c
101 | P a g e
c

c
c cc #cc c
.
c
Self employed 6 5 0
Professional 11 17 2
Business 6 7 0
Other 1 2 0
Total 24 31 2

The customer primary survey revealed that they would rather prefer a
moderate risk moderate return plan than going for a high risk high return
aggressive investment plan. Almost all the categories had the same opinion they
were biased. But the younger population chose an aggressive plan that had a
long term investment objective.
M
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6
&&*c
M
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c

cThe major share of my respondents preferred to be at a moderate
plan with moderate risk and moderate return rather with high risk and high
return. The age of the customer also had a bearing on the decision.
10 | P a g e
c
/56c
cc c
c

cc
7
c #c c c

c
Broker 2 1 3
Agents 26 23 49
Banks 2 13 15
Direct Co. 10 9 19
c

c The customer yet believed the traditional channel of buying an
insurance policy that is through insurance agents when questioned for the
reason they answered they preferred a personal approach with consultation
rather going with improved selling channels for buying an insurance policy.
M
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c ,
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cBoth the male & female respondents tend to choose insurance agents
as a channel for buying an insurance policy, but a noticeable number of female
respondents chose bank as a channel for buying an insurance policy.
10 | P a g e
c

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c 3
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.
cc
Self 0 10 3 3
Employed
Professionals 1 21 10 9
Business 1 12 1 5
Other 0 3 0 1
Total 2 46 14 18

The survey revealed that the professional had a better knowledge
about the upcoming new channels for buying an insurance policy even then the
traditional channel still was popular among the masses.
+M
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BM
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cThe customer still adopted a traditional way of buying life insurance
that is through agents rather through new methods.
10ü | P a g e
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7
c #c c c
c
Term plan 23 22 45
Endowment plan 4 3 7
Child plan 15 15 30
Pension plan 7 5 12
ULIP¶s 10 7 17
c

cThe customer product knowledge was limited to term plans and child
plans they lacked knowledge about the new products in the market hence that
knowledge of the customer needs to be updated by the companies through
various channels and media.c
E
DM

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c 1" c c &c 2
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cBoth the respondents had a similar knowledge about the products as
they mainly preferred life security and child plans.
106 | P a g e
c
Plans Term plan Endowment Child plan Pension ULIP¶s

Occupation plan plan
Self 9 2 8 1 2
employed
Professional 18 2 10 6 8
Business 12 2 6 4 4
Others 2 3 1 1 1
Total 41 9 25 12 15

c Most of the customers had knowledge about the term plans and the
younger populace had knowledge about the ULIP¶s the professionals were well
aware of different plans.
+M
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cMost of the customers lacked knowledge about different plans and
mainly all had a brief knowledge about the term plans.
10w | P a g e
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cccc c
7
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c
c
Single premium 2 0 2
Annually 22 13 35
Half yearly 9 11 20
Monthly 0 7 7
c

cMajority of the respondents preferred long term payment modes that
are annually and half yearly payments against a single payment or monthly
installments.
M
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The survey revealed that the male respondents were a bit hesitant in
short term payments and they preferably were interested in annual premiums
and the female majority was towards the half yearly premiums.
10 | P a g e
c

c
c
c
cc cc #
c
.
cc c
Self Employed 0 6 5 0
Business 2 11 1 0
Others 0 2 1 0
Total 2 32 20 6

The professional respondents were bifurcated with between half
yearly and annual premium payments but the business people mainly preferred
annual premium payments.
6
M
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c Most of the customer¶s preferred half yearly and annual premium
payments rather than on a monthly basis.c
10 | P a g e
c
c
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c2c
c
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c

c
c Wealthier, aging Indians will help transform the country's largely

untapped life insurance market into one of the world's fastest growing
over the next five years, a global consultancy says.
c Life insurance is already the most popular financial product among

Indians because of the tax benefits and income protection it offers in a
country where there is no social security.
c But with household earnings accelerating in the fast-growing economy,

the life insurance income premiums market could double from 40 billion
dollars to 80 billion or even 100 billion dollars by 2012, said McKinsey
Co in a report.
c All factors are in place for the Indian life insurance industry to blossom
into one of the fastest-growing financial services markets in the world.
c At the size of the market we're talking about and potential the only one
with similar potential in China, the next five years will be very exciting.
c Key to insurers' enthusiasm about India is its increasing affluence, aging

population and low penetration of insurance coverage at a time when the
market in industrialised countries is relatively saturated.
10· | P a g e
c
c The potential in the country of 1.1 billion people can be seen from the
fact the ratio of life insurance premiums to GDP -- a common measure
for penetration -- is 4.1 per cent, far lower than developed market levels
of 6-9 per cent.
c This will change as India sees strongly accelerating household income

and a more favourable demographic profile over the next two decades.
c Household disposable income is seen rising by 5.3 per cent annually,

much more than the 3.6 per cent annual growth over the past two
decades.
c With increased GDP growth there will be more income for consumers to
put into life insurance.
c
c Secondary data suggests the life insurance industry could witness a rise in
insurance sector premiums to between 5.1 and 6.2 per cent of GDP in
2012 from 4.1 per cent.
c Demand for pension cover is also seen raising, with 113 million Indians
expected to be over 60 by 2016, a figure seen swelling to 179 million by
2026.
c
c
110 | P a g e
c
c
c "There is an untapped opportunity" in pensions where life insurance
players have no meaningful presence, said the report.
c Just 10 to 11 per cent of India's working population is covered by formal

old-age social security schemes.
c There are currently close to 30 public and private firms in India's

insurance market with state-owned Life Insurance Corp of India (LIC)
still holding a stranglehold of over 70 per cent.
c But private players have moved aggressively, chasing for business after
being allowed to compete with LIC in 2000. And overseas insurers have
raced into the market despite rules limiting foreign direct investment in
domestic insurers to 26 per cent.
c The Congress government has been seeking to raise the FDI cap to 49
percent as part of economic reform but its communist allies fiercely
oppose such a step.
c
c AEGON Religare initial investment in technology for providing a better

customer service and tracking the fund performance has created a era in
the life insurance market in India.
c
c AEGON Religare¶s marketing strategy of educating the people about

insurance and then approach them with ads and media has paid off a good
deal to the company.
111 | P a g e
c
c
c Religare brand name in India and the experience of AEGON has been a
perfect knot to pierce into the life insurance market in India.
c
c AEGON Religare work environment and a flat organisation structure has

been bang on target as the employees feel at home & don¶t hesitate to
share their point of view to their seniors.
c
c AEGON Religare is mainly targeting the urban people precisely the white
collared employees for ex. Sectors like IT, BT, Infrastructure, Govt.....
c
c Gurukul session in AEGON Religare has been of great help to employees

for enhancing the overall performance and updating the product
knowledge and changes in the market.
c
c There are two sales channel in AEGON Religare

K
,c;c &&&c c;c
c*& c;c& c
,c;c&c c;c c;c& cc
c
c Customer has a set mind frame that insurance calls for LIC & new
players entering the life insurance market have to face a tough
competition in this regard.
c When it comes to private players ICICI has been the major player with
about 10% of the market share and has been in the market since 2000.
11 | P a g e
c
c
c Customer knowledge about life insurance is below par in India.

c
0cc

cccc
c
c
c c
c The rural and suburban markets are undertreated which has large
customer base to exploit.
c Conversion rate from lead generation to closing the sale is @ an average

of 25% and female insurance employees have better conversion rate when
compared to male employees.
c Around 48% of my sample size agreed that brand image of LIC has
overshadowed other private insurance sector.
c Primary survey revealed that customer prefers investment plans & tax
savings rather than life insurance & mutual funds.
c Customer perception about life insurance policy, he looks at it as his

future security for him & his family then comes discipline saving.
c In the primary survey the industry people suggested some plans what they
would offer their customer for different stages of life, below the younger
the age better is the ULIP plan as the responsibilities keep growing plans
keep adding up Child plans, Term Plans, Endowment Plans, Pension
Plans....
11 | P a g e
c
c Insurance sector has mainly targeted the professionals as their main

customer base next stands the business people and then the govt.
employees.
c When the life advisors and business managers were questions about what
do they is the x factor which has a bearing on the customer decision for
buying an Insurance policy the major chunk went to friend & relations,
second preference was shared by past returns & brand image of the
company equally and the last stood policy scheme.
c When they were asked about, how does the customer they deal with know
about Insurance products, it was rated 38% at an average. That meant
customer lack knowledge about the products.
3c c c

c When customer was surveyed about the investment instruments they
would prefer most of them preferred a more secure one the FD¶s in banks
surprisingly next stood insurance later places where occupies by gold,
real estate, equities & at the last mutual funds. This meant customer
preferred security than high returns.
c Primary survey revealed that 49% of the sample size where not insured
that meant they are still the untouched customer base, it is the same when
we take the whole insurance market.
11ü | P a g e
c
c It also revealed that the business people were better insured when
compared to the professionals and self employed.
c When questioned about the customer perception about insurance around

54% said it was important, 35% said it was essential remaining where yet
to make a decision but interestingly no one said it wasn¶t required.
c There were different influential parameters which had influence to make

an investment decision first preference was children then came the old
age savings then regular income and tax saving.
c When customer was asked about his presumption about an insurance

policy he said it was security for his life then secondly an investment,
third a tax saving instrument and lastly a tool to enhance the habit of
disciplined saving.
c Customer said the main criteria for selecting an insurance policy was
policy scheme then the brand image, service & past returns.
c Most of them opted to have moderate risk and moderate returns, few
opted to be aggressive & very few preferred to be secure.
c Customer still mostly prefer the traditional channel of buying an

insurance policy that is through agents rather than from the company,
banks or brokers..
116 | P a g e
c
c When the customer was questioned about their knowledge about different
life insurance products almost all knew about the term plans then came
the child plan, ULIP¶s, pension plans & endowment plans.
c The customer preferred to make premium payments annually firstly and

the second preference was half yearly payments.
0c
c
In order to succeed in any business it is very essential to make and follow

the strategies. Strategies are very important for any of the business. Following
are the few strategies, which I recommend to the insurance sector.
c One approach is to focus upon product quality, which will instil

confidence in minds of the customers that they would be offered best
product from out of the several available products.
c The other approach, is to focus on the customers need, would involve a

heavy investment in developing relationships with policyholders. Under
this approach, one can expect a range of products and services designed
to give the customer what he desires.
c The third approach is of greater market segmentation under which the

population should be divided into several homogeneous groups, products
and services would be targeted towards such selected markets. The effort
11w | P a g e
c
would be to tag clients to the company- by customized combination of

coverage, easy payment plan, risk management advice, and convenient
quick claim handling.
c
c7
cc
c
One of the expert Michel porters has identified four internally consistent generic
strategies, which can be used singly or in combination:
c Overall cost leadership is clearly under stable.
c In a differentiation strategy, a company seeks to be unique in its industry

along some dimensions that are widely valuable by the customer. May be
the lowest cycle time for settling a claim under say, a med claim policy
could be differentiating factor.
c In a cost focus, a company seeks a cost advantage in its target segment.
c While in differentiation focus; a company seeks a differentiation target.
11 | P a g e
c
c
Bccc c
c
c Marginally Different Product:
Another strategy would be for the companies to design products that will
make Comparison-shopping difficult. They could offer a wide variety of covers
with marginal differences and varying prices, whose terms and conditions are
difficult to compare for consumers who may not have sufficient experience in
purchasing insurance and who would find it difficult to make a clear choice.
If the consumer is offered a unique policy, he will have no alternative
coverage with which can be compared. Given the combination policy, which
11 | P a g e
c
can offer protection against a number of losses, the consumer will find
comparison even more difficult.
c Designing New Strategies:

The existing insurance companies cannot be satisfied with concentrating
on the consolidation of their existing markets, but have to achieve further
growth and penetration. They must, therefore concentrate on strengthening
existing points of service, designing new channel of distribution, direct contact
with their ultimate customers, and front line employee empowerment.
They also need to refresh their marketing set up. The new comers, on the
other hand give priority to tapping the market, left unexploited by the public
sector companies.
c Move towards Rural Market:

It is one of the most important suggestions; data says that rural market is
still untreated by the private insurance sector. We believe that the sector should
move towards rural market. Insurance penetration can be achieved by tapping
the neglected Rural Markets. There is vast potential for insurance growth in the
rural sector.
A recent survey by foundation for research, training and Education in
insurance (FORTE) suggests that insurance can be sold profitably to rural
communities in India. The survey reveals that,
1.c There is distinct hierarchy of needs in rural areas.
2.c Rural people find security in groups.
3.c The saving habit is very strong in rural areas.
11· | P a g e
c
4.c Average saving across the most important socio-economic strata comes to
30-35% of annual income or Rs. 13,500 annually, which is significant.
5.c There is high level of awareness about life insurance and fairly high-level
about 36% already own life insurance.
6.c 51% of these who own life insurance would like to buy more.
7.c Amongst the savers, a significant percentage does not save through
formal financial modes or institutions.
8.c Rural buyers of insurance prefer a half yearly mode of premium payment
to coincide with the time of the harvest.
9.c Thus there are very much chances for any of the companies to work over
this scenario. So we believe and suggest all the players to move towards
the rural areas.
c Motivation of sales force:

A life insurance company should constantly be involved in the process of
motivating the sales force in the turbulent times. The strategies I recommend;
1.c Building relationship is real perk. One should be sure to build in
networking times for agents during the program-in addition to
entertainment and education.
2.c Internet can be frequently used for creating gift ideas.
3.c Hold sales contests in the fourth quarter. It is the best times to motivates
agents who wants to qualify for a trip.
4.c Consider a contrast within the contest µfor- top-tier producers; additional
rewards for additional milestones that are met, such as air and guest room
upgrades.
5.c
10 | P a g e
c
c
c Use of Internet:
1.c The present scenario is such that the products are sold with the help of
Internet. The technological advancement is such that force the companies
to take such steps. Still the full-fledged use of Internet is not done in our
country. As suggestion earlier the Internet based life insurance will help
the companies to reduce the transaction cost and time.
2.c At the time it can improve the quality of service to its customers, which is
the mission of the company.
3.c Company should concentrate on the quality of the premium received this
will help the companies to reduce its underwriting losses.
4.c Appointing of proper and efficient agent as well as effective direct
marketing could do this.
5.c One can downsize the excessive staffs, by this company could reduce
management expense to a large extent.
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
c
11 | P a g e
c
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c
c
c
c
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c
c
1 | P a g e
c
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c Life insurance vol 1 ICFAI PRESS 2009
c Life insurance vol 2 ICFAI PRESS 2009
c Insurance industry Emerging Trends ICFAI PRESS 2009
c Insurance law and regulation vol 1ICFAI PRESS 2009
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Potentials &amp; Dynamics of Life Insurance in India - Role of Aegon Religare

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Potentials & Dynamics of Life Insurance Market India ² Role of AEGON Religare

The project aims at comparative analysis of potentials & dynamics of life

The project entitled me to recommend Life Advisor (LA) who will be a

Insurance may be described as a social device to reduce or eliminate risk

Insurance is actually a contract between 2 parties whereby one party

Insurance is a contract whereby, in return for the payment of premium by

With the help of Insurance, large number of people exposed to a similar

In some sense we can say that insurance appeared simultaneously with

to one¶s neighbour, the other neighbours must come to help? Otherwise,

Insurance in the modern sense, started as a methods of transferring or

The first insurance company in the United States underwrote fire

In India, insurance has a deep-rooted history. It finds mention in the

 c c c  

c c  c  c c ! - Insurance relieves the businessmen

Life is full of uncertainty. Trials and tribulations abound in each and

This lack of security present throughout life can be overcome partially

Despite offering innumerable options and immense scope, insurance can

In event of his death, his dependants will be reimbursed to the full

Everyone possesses material value in the form of tangible assets. Assets

Since tangible property has a physical shape and consistency, it is subject

But if a person judiciously invests in insurance for his property prior to

Every individual has to discharge certain specific duties. Everyone is

Owing to an occasional error or omission committed by us, our clients or

However, if our chosen profession qualifies for insurance of interest, then

If due to lack of control over his actions or prejudiced behaviour, a person

By investing in liability insurance, an individual can ward off any

realize the profits of the policy by various means provided by marketing

So before going for a "c

c Telephone marketing is another way of Life Insurance Marketing. One can

insurance companies to come across various people who act as volunteers

major role and can be considered as an effective "c

To perform Pest analysis & Porters 5 forces model of insurance sector to

Collection of brochures and pamphlets of different products offered by

Sample selection (Random Sampling Technique) and designing of a

Sample selection (Random Sampling Technique) and designing of a

c c cc c

c.-c cc c

>c To do detailed analysis of the entire range of life insurance products/schemes

>c To collect data through primary survey, using a comprehensively designed

The research is primarily both exploratory as well as descriptive in nature.

ii.c Some respondents were reluctant to divulge personal information which

Life insurance or life assurance is a contract between the policy owner

As with most insurance policies, life insurance is a contract between the

Insured events that may be covered include:

Life-based contracts tend to fall into two major categories:

Xc Protection policies - designed to provide a benefit in the event of specified

As a whole there are different Life insurance plans satisfying different

Endowment insurance is a level premium plan with a savings feature. At

There are a number of products in the market that offer flexibility in

Market-linked plans or unit-linked insurance plans (ULIP) are similar to

Market-linked insurance plans (MLP) mimic mutual funds and invest in a

Some riders available in the market are:

c Accident Death Benefit: Provides an additional amount in case death

Life Insurance is a matter of solicitation. However, the rules of this

Today life insurance policies are turning to be an alternate for unsecured

Day by day the market for financial products is becoming customer

Life insurance portfolio¶s moving towards securitization could prove to

Life Insurance is the fastest growing sector in India since 2000 as

In 1993 the Government of Republic of India appointed R.N Malhotra

Life Insurance Corporation of India (LIC), the state owned behemoth,

Further, these types of plans are subject to a minimum lock-in period of

The government approved the much-awaited comprehensive Insurance

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Potentials & Dynamics of Life Insurance in India - Role of Aegon Religare

Potentials & Dynamics of Life Insurance in India - Role of Aegon Religare

c c c

c c c c c ! - Insurance relieves the businessmen

So before going for a "c

c Telephone marketing is another way of Life Insurance Marketing. One can

major role and can be considered as an effective "c

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c Accident Death Benefit: Provides an additional amount in case death

! !,

c Largely untapped market with 17% of the world¶s population

c Life Insurance penetration is low at 4.1% in 2006-07

c Non-life penetration is even lower at 0.6% in 2006-07

c Strong economic growth with increase in affluence and rising risk

c Innovative products such as Unit Linked Insurance Policies are likely to

c Investment opportunities exist in both life and non-life segments

c Total estimated investment opportunity of US$14-15 billion

c The Indian Insurance market is expected to be around US$52 billion

c Expected CAGR of over 30% p.a.

c Prohibition for Investment c Adequacy of capital

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c 160 years of experience in the insurance business

c Ranked 5th largest insurance company in the world on revenues*

c Present in 20 countries throughout the America, Europe & Asia

c Track record of finding beneficiaries of policies and settling claims

c AEGON is an international business, providing life insurance, pensions

c AEGON is listed on the stock exchanges of Amsterdam, London, New

c With just over EUR 330 billion in revenue-generating investments at the

c It holds 26% equity in AEGON Religare.

c A diversified financial services group with a pan-India presence and

c REL operates from seven domestic regional offices, 43 sub-regional

c To make a mark in the global arena, REL acquired UK-based Hichens,

c Pursuant to expansion of REL's business, the company has grown from