SUMMER TRAINING REPORT

ON PROJECT

SUBMITTED TO

PUNJAB TECHNICAL UNIVERSTY

IN PARTIAL FULFILMENT OF REQUIRMENT FOR THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

SUBMITTED TO: SUBMITTED BY:

Mr.BIKRAMJIT SINGH BUTALIA SONPREET KAUR

(Assistant Manager-Alternate Channel) M.B.A III sem.

CT INSTITUTE OF MANAGEMENT & I.T.

JALANDHAR
CERTIFICATE
 ACKNOWLEDGEMENT
Research is like an endless ocean and one requires guidance and support of
several individuals in order to derive out a handful of pearls from its depth.
The successful completion of this project would not have been possible but
with the help & guidance of a number of people. I avail this opportunity to
convey my sincere gratitude to these people.

It was a great privilege and honor to express my deep sense of gratitude and
whole-hatred thanks to Mr.BIKRAMJIT SINGH BUTALIA. For giving
me the opportunity to summer tanning with the esteemed organization and
providing me all sort of guidance needed for the project from time to time,
putting my concepts right & constant encouragement at every stage of the
project.

It gives me immense please to express my sincere and wholehearted senses

of gratitude to department of management, CT INSTITUTE OF MGT &IT,
JALANDHAR for their untiring guidance & supervision throughout my
study.

I owe my sincere thank to Mr.Sharanjeet Singh for his valuable guidance

and constant encouragement to enable me to cover the manifold features of
my project .I also pay my regards to Mr.Subhash Bhutani, as he has been a
constant source of inspiration.

Sonpreet kaur.
 PREFACE
“Theoretical knowledge without practical learning is of little value.”

In order to achieve practical positive and results along with theoretical

concepts, the exposure of real life situation is very much needed. To fulfill
the need the management course has the provision of practical learning.

I took my summer training at kotak mahindra old mutual life insurance

ltd. It was my fortune that I’ve got training in an esteemed organization in
very healthy and cooperative atmosphere. The present project “competition
analysis of equity plans of life INSURANCE” is an output of my research
from real life situation occurring.

In the forthcoming pages, an attempt has been made to present

comprehensive report concerning different aspects of my training.
CONTENTS
1.KOTAK MAHINDRA OLD MUTUAL LIFE
INSURANCE LTD
Introduction
• Company profile
• History of insurance
• Need of life insurance
• Type of insurance
• Life insurance
• IRDA

2.INTRODUCTION OF PROJECT
• Introduction
• Objective of research
• Research methodology

3. ANALYSIS & INTERPRETATION OF DATA

4. SUGGESSIONS
5. LIMITATIONS
6. CONCLUSION
7. BIBLOGRAPHY
KOTAK MAHINDRA OLD MUTUAL
LIFE INSURANCE LTD

INTRODUCTION
HISTORY
The story so far...

Almost 4,500 years ago, in the ancient land of Babylonia, traders used to
bear risk of the caravan trade by giving loans that had to be later repaid with
interest when the goods arrived safely. In 2100 BC, the Code of Hammurabi
granted legal status to the practice.

That, perhaps, was how insurance made its beginning.

Life insurance had its origins in ancient Rome, where citizens formed burial
clubs that would meet the funeral expenses of its members as well as help
survivors by making some payments.

As European civilization progressed, its social institutions and welfare

practices also got more and more refined. With the discovery of new lands,
sea routes and the consequent growth in trade, Medieval guilds took it upon
themselves to protect their member traders from loss on account of fire,
shipwrecks and the like.

Since most of the trade took place by sea, there was also the fear of pirates.
So these guilds even offered ransom for members held captive by pirates.
Burial expenses and support in times of sickness and poverty were other
services offered. Essentially, all these revolved around the concept of
insurance or risk coverage. That's how old these concepts are, really.

In 1347, in Genoa, European maritime nations entered into the earliest

known insurance contract and decided to accept marine insurance as a
practice.
The first step...

Insurance as we know it today owes its existence to 17th century England.

In fact, it began taking shape in 1688 at a rather interesting place called
Lloyd's Coffee House in London, where merchants, ship-owners and
underwriters met to discuss and transact business. By the end of the 18th
century, Lloyd's had brewed enough business to become one of the first
modern insurance companies.

Insurance and Myth...

Back to the 17th century. In 1693, astronomer Edmond Halley constructed

the first mortality table to provide a link between the life insurance premium
and the average life spans based on statistical laws of mortality and
compound interest. In 1756, Joseph Dodson reworked the table, linking
premium rate to age.

Enter companies...

The first stock companies to get into the business of insurance were
chartered in England in 1720. The year 1735 saw the birth of the first
insurance company in the American colonies in Charleston, SC.

In 1759, the Presbyterian Synod of Philadelphia sponsored the first life

insurance corporation in America for the benefit of ministers and their
dependents.

However, it was after 1840 that life insurance really took off in a big way.
The trigger: reducing opposition from religious groups.

The growing years...

The 19th century saw huge developments in the field of insurance, with
newer products being devised to meet the growing needs of urbanization and
industrialization.
In 1835, the infamous New York fire drew people's attention to the need to
provide for sudden and large losses. Two years later, Massachusetts became
the first state to require companies by law to maintain such reserves. The
great Chicago fire of 1871 further emphasized how fires can cause huge
losses in densely populated modern cities. The practice of reinsurance,
wherein the risks are spread among several companies, was devised
specifically for such situations.

There were more offshoots of the process of industrialization. In 1897, the

British government passed the Workmen's Compensation Act, which made it
mandatory for a company to insure its employees against industrial
accidents.

With the advent of the automobile, public liability insurance, which first
made its appearance in the 1880s, gained importance and acceptance.

In the 19th century, many societies were founded to insure the life and
health of their members, while fraternal orders provided low-cost, members-
only insurance.

Even today, such fraternal orders continue to provide insurance coverage to

members as do most labour organizations. Many employers sponsor group
insurance policies for their employees, providing not just life insurance, but
sickness and accident benefits and old-age pensions. Employees contribute a
certain percentage of the premium for these policies.

In India...

Insurance in India can be traced back to the Vedas. For instance,

yogakshema, the name of Life Insurance Corporation of India's corporate
headquarters, is derived from the Rig Veda. The term suggests that a form of
"community insurance" was prevalent around 1000 BC and practised by the
Aryans.
Burial societies of the kind found in ancient Rome were formed in the
Buddhist period to help families build houses, protect widows and children.

Bombay Mutual Assurance Society, the first Indian life assurance society,
was formed in 1870. Other companies like Oriental, Bharat and Empire of
India were also set up in the 1870-90s.

It was during the swadeshi movement in the early 20th century that
insurance witnessed a big boom in India with several more companies being
set up.

As these companies grew, the government began to exercise control on

them. The Insurance Act was passed in 1912, followed by a detailed and
amended Insurance Act of 1938 that looked into investments, expenditure
and management of these companies' funds.

By the mid-1950s, there were around 170 insurance companies and 80

provident fund societies in the country's life insurance scene. However, in
the absence of regulatory systems, scams and irregularities were almost a
way of life at most of these companies.

As a result, the government decided nationalise the life assurance business in

India. The Life Insurance Corporation of India was set up in 1956 to take
over around 250 life companies.

For years thereafter, insurance remained a monopoly of the public sector. It

was only after seven years of deliberation and debate - after the RN
Malhotra Committee report of 1994 became the first serious document
calling for the re-opening up of the insurance sector to private players -- that
the sector was finally opened up to private players in 2001.

The Insurance Regulatory & Development Authority, an autonomous

insurance regulator set up in 2000, has extensive powers to oversee the
insurance business and regulate in a manner that will safeguard the interests
of the insured.
KOTAK MAHINDRA
A Lifetime of Value

Kotak Mahindra one of India's leading financial institutions was born in

1985 as Kotak Capital Management Finance Limited. This company was
promoted by Mr. Uday Kotak , Mr. Sidney A. A. Pinto and Kotak &
Company. Industrialists Mr. Harish Mahindra and Mr. Anand Mahindra took
a stake in 1986, and that's when the company changed its name to Kotak
Mahindra Finance Limited.

In the life insurance market, Kotak Life Insurance, one of the fastest
growing companies in India, demonstrated a first year premium income
growth of 260% in 2004

Kotak Life Insurance, with its coverage in over 30 locations with 42

branches and an employee strength of over 1000 employees, is a company
with a high brand awareness level

Kotak Life Insurance aspires to a spiraling growth with a strong focus on

customer, products, geography-distribution channel mapping and fund
performance.

Special Advantages:

• Market leader in brokerage, car finance & investment banking

• Dedicated to developing unique products with a special focus on
product and service quality
• Among the first to offer group insurance products in the Indian
Market
• Extensive nationwide coverage through a direct sales force, brokers,
spotters and frontline sales managers in more than 40 locations
• Kotak Life Insurance's value proposition is based on strong corporate
relationships, superior products, extensive marketing skills and
quality of service
It's been a steady and confident journey to growth and success.

1986 Kotak Mahindra Finance Limited starts the activity of Bill

Discounting
1987 Kotak Mahindra Finance Limited enters the Lease and Hire
Purchase market
1990 The Auto Finance division is started
1991 The Investment Banking Division is started. Takes over
FICOM, one of India’s largest financial retail marketing
networks
1992 Enters the Funds Syndication sector
1995 Brokerage and Distribution businesses incorporated into a
separate company - Kotak Securities. Investment Banking
division incorporated into a separate company - Kotak
Mahindra Capital Company
1996 The Auto Finance Business is hived off into a separate
company - Kotak Mahindra Primus Limited. Kotak Mahindra
takes a significant stake in Ford Credit Kotak Mahindra
Limited, for financing Ford vehicles. The launch of Matrix
Information Services Limited marks the Group’s entry into
information distribution.
1998 Enters the mutual fund market with the launch of Kotak
Mahindra Asset Management Company.
2000 Kotak Mahindra ties up with Old Mutual plc. for the Life
Insurance business.
Kotak Securities launches kotakstreet.com - its on-line
broking site. Formal commencement of private equity activity
through setting up of Kotak Mahindra Venture Capital Fund.
2001 Matrix sold to Friday Corporation
Launches Insurance Services
2003 Kotak Mahindra Finance Ltd. converts to bank
Kotak Mahindra is one of India's leading financial institutions, offering
complete financial solutions that encompass every sphere of life. From
commercial banking, to stock broking, to mutual funds, to life insurance, to
investment banking, the group caters to the financial needs of individuals
and corporates.

The group has a net worth of around Rs.1,700 crore and employs over 4,000
employees in its various businesses. With a presence in 74 cities in India and
offices in New York, London, Dubai and Mauritius, it services a customer
base of over 5,00,000.

Kotak Mahindra has international partnerships with Goldman Sachs (one of

the world's largest investment banks and brokerage firms), Ford Credit (one
of the world's largest dedicated automobile financiers) and Old Mutual (a
large insurance, banking and asset management conglomerate).

Management
• Mr. Gaurang Shah (Managing Director)
• Mr. G Murlidhar (Chief Financial Officer)
• Mr. Nihar Rao (Chief Technology Officer)
• Mr. Chandrashekar Sathe (Investment Advisor)
• Mr.Nandip Vaidya (Vice President-Tied Agency Sales)
• Mr. Arun Patil (Vice President-Sales & Mgt Dlpmt)
• Mr. Jim Thompson (Appointed Actuary)
• Mr. Eksteen de Waal (Head Sales Training)
OTHER GROUPS:
1) Kotak Mahindra Bank Ltd.
2) Kotak Mahindra Primus Ltd.
3) Kotak Mahindra Capital Company Ltd.
4) Kotak Mahindra Asset Management Company
5) Kotak Mahindra International Ltd
6) Kotak Securities

MERGER
 A marriage within the family is usually eyed with a lot of skepticism and
often disgust. But when it comes to corporate, getting together as one has its
own charm and probably less harm. Take the latest case of kotak mahindra

Kotak Mahindra Old Mutual Life Insurance Ltd. Is established in 2000 as a

joint venture between Kotak Mahindra Bank Ltd.(KMBL)(74%), and Old
Mutual plc.,London(26%). At Kotak Life Insurance, we aim to help
customers take important financial decisions at every stage in life by
offering them a wide range of innovative life insurance products, to make
them financially independent. Jeene Ki Azaadi...

At Kotak Mahindra we offer pragmatic, world-class solutions. Put simply,

solutions with a lot of common sense. Solutions that take care of your four
basic financial needs - Earning, Saving, Investing and Spending. So you live
your life to the fullest, sans worries.

OLD MUTUAL
OLD MUTUAL was established more than 150 years ago and has developed
into an International financial services group whose activities are focused on
asset gathering and asset management. The Old Mutual Group offers a
diverse range of financial services in three principal geographies: South
Africa, the United States and the United Kingdom. The company is listed on
the London Stock Exchange with a market capitalisation of approximately
$6 billion and is a member of the elite FTSE 100 index. In the 2003 rankings
of the World's 500 largest corporations by Fortune magazine, Old Mutual
climbed 87 places to position number 366 and was also listed as the 14th
largest insurance company in the world.

Old Mutual is the largest financial services business in South Africa, through
its life insurance, asset management, banking and general insurance
operations. The company serves 4 million life insurance policyholders and
employs over 13 000 South Africans in its local operations.

In the USA, Old Mutual is one of the top ten fixed annuity businesses
offering an array of specialist asset management skills through its 23 asset
management businesses. The company’s US Life business recorded sales of
$4 billion at the end of 2002.

Operations in the United Kingdom are focused on wealth management,

through Gerrard as one of the leading private client stockbroking businesses
in the UK.

The Old Mutual Group has the ability to cater for a variety of consumer
segments and offers a comprehensive and innovative range of products for
all income groups.

PRODUCTS:

Individual:
1. Kotak Term Plan
2. Kotak Preferred Term Plan
3. Kotak Money Back Plan
4. Kotak Child Advantage Plan
5. Kotak Endowment Plan
6. Kotak Capital Multiplier Plan
7. Kotak Retirement Income Plan
8. Kotak Retirement Income Plan (Unit-linked)
9. Kotak Safe Investment Plan
10.Kotak Safe Investment Plan II
 11.Kotak Flexi Plan
12.Kotak Easy Growth Plan
13.Riders
14.Exclusions Under Riders

Group:
1. Employee Benefits
2. Kotak Term Group plan
3. Kotak Credit-Term Group plan
4. Kotak Complete Cover Group plan
5. Kotak Gratuity Group plan
6. Kotak Superannuation Group plan

Rural :
1. Kotak Gramin Bima Yojana

Unit Values as on 29 Jul 2005

Scheme Name Sell Price Buy Price
Money market fund 11.15 11.15
Floating rate fund 10.36 10.38
Gilt fund 10.93 10.93
Bond fund 10.63 10.64
Balanced fund 15.36 15.44
Growth fund 17.37 17.48
Aggressive Growth Fund 13.16 13.25
FUTURE PLANS
Kotak Life Insurance bullish about future
MD says superior execution and group synergy the key to success

Mr. Gaurang Shah, Managing Director of Kotak Mahindra Old Mutual Life
Insurance Limited, in his first press meet at the Capital announced bullish
future plans for Kotak's Life Insurance joint venture with Old Mutual plc.
On the back of two successive years of about 200%+ growth, Mr. Shah has
all reasons to believe that Kotak Life Insurance has got it right.

"Most successful financial services company around the world offer

products in all sectors ranging from consumer and investment banking,
insurance, asset management, securities, asset financing, etc. Kotak over
the past 20 years has become one of the examples of Indian
Entrepreneurship in the field of Financial Services by extending itself across
various offerings"

Kotak Life Insurance saw its First Year Premium income jump from Rs 126
cr in 2003-04 to 375 cr in 2004-05, a growth of 198%. This follows a 246%
growth in the previous year. "The last two years have seen us grow very fast.
This was largely due to exploiting our existing relationships and building up
our organization. The loss has also reduced from Rs 49 cr in 2003-04 to Rs
45.6 cr in 2004-05. Today the key challenge for us is to strengthen our
organization by building superior execution culture and result orientation.
Our energies will be directed towards delivering superior value to our key
stakeholders in our long term growth and profitability targets - the customer,
the distributor, the shareholder and the employee."

Kotak Life Insurance is likely to maintain its aggressive growth of

infrastructure with Sales Managers numbers planned to grow from 450 in
2004-05 to 850 in current financial. Correspondingly, the Life Advisor base
of 7000 in 2004-05 is planned to move up to 12000 by end of this financial.
Even the Alternate Distribution Channel and the Group Insurance Sales
Teams has been expanded. However all this shall be done with the focus on
getting more out of the current structure. "The important element of current
year strategy is how we sweat the infrastructure that we have put in place
over the last couple of years. It is imperative that we make our money go
longer than the competition to ensure we breakeven faster." Kotak Life
Insurance plans to achieve this Break Even within the next three years.

Kotak Life Insurance shall continue with its pilot project in Kerala of trying
out the All Full Time Advisor model of Old Mutual, the South African
Insurance Major and its JV partner. This coupled with drives to strengthen
presence in high potential states is Kotak Life's key steps in increasing
Geographical presence. "Our belief on segmented approach towards
selecting target markets and segments shall continue and I believe that with
higher penetration in states like Tamil Nadu and Punjab we will be able to
exploit the opportunity that the vibrant economy is offering in even smaller
towns and rural markets."

Kotak Group is building a strong financial services offering under the banner
of "Think Investment. Think Kotak." and Kotak Life Insurance's lead
products, Kotak Safe Investment Plan II and Kotak Flexi Plan have captured
a significant share of the business. Built around the promise of Capital
Guarantee, both these products offer excellent opportunity for their
customers and embody the brand promise perfectly. "Kotak Life builds
around the same innovative streak for which Kotak has been famous in other
segments of the financial services earlier. Our offerings in the market are
rated highly by both the distributors as well as the customers. We are
committed to build stronger and better products in the future too."
Kotak Life Insurance is very bullish about its future. Built around the three
pillars of stronger leverage on group synergies, greater focus on quality
execution and innovative product offerings, Mr. Shah is confident that Kotak
Life will be a key player in the Indian Insurance market. "I believe that our
challenge will lie in channelising our accumulated learning across the group
to our advantage and build a culture which encourages performance linked
growth. Kotak is and shall remain a company that encourages people to take
challenges and build value for all the stakeholders"

About Kotak Mahindra Old Mutual Life Insurance

Kotak Mahindra Old Mutual Life Insurance is a joint venture between Kotak
Mahindra Bank Ltd. and Old Mutual plc. Kotak Mahindra Old Mutual Life
Insurance is one of the fastest growing insurance companies in India and has
shown remarkable growth since its inception in 2001.

Kotak Mahindra believes in offering its customers a lifetime of value. A

commitment that has made it a leading financial services group with net
worth of around Rs. 1700 crore as well as a market leader in the areas of
investment banking and distribution of financial products.

Old Mutual, a company with160 years experience in life insurance, is an

international financial services group listed on the London Stock Exchange
and included in the FTSE 100 list of companies, with assets under
management worth US $270 billion (as on 31 December 2004). For
customers, this joint venture translates into a company that combines
international expertise with the understanding of the local market.
OBJECTIVE
 OF RESEARCH

OBJECTIVE OF STUDY:

THE FOLLOWING ARE THE OBJECTIVE OF THE

PRESENT STUDY.
 To know different type of products offered by kotak life ,HDFC ,
ICICI ,Birla insurance companies.

 To know different types of life insurance policies provided by

private insurance companies.

 To understand unit linked insurance schemes provided by

different insurance companies.

 To compare the unit linked insurance plans of kotak life ,HDFC ,

ICICI ,Birla insurance companies 5. to know the share of various
players in insurance sector

 To know their insurance portfolio.

 To list out advantages and benefits of life insurance

HISTORY OF
INSURANCE
Insurance in India - A historical perspective

Insurance business is not new to India. It finds mention in the writings of

Manu, Rishi Yagnavalkya and others, indicating that it has existed in India
of ancient times. It has evolved over time and has drawn heavily from the
experience of other countries specially England, where insurance companies
have a more than 500 years of history. Bombay Life Assurance Company
was established in Bombay (now Mumbai) on 1st May 1823. Oriental Life
Assurance Company started was in Calcutta by Europeans. The recorded
history of Insurance business in India, however, began in 1914 when the
Government of India started publishing returns of Insurance Companies in
India.

The Insurance Amendment Act of 1950 abolished Principal Agencies.

However, there were a large number of insurance companies and the level of
competition was high. There were also allegations of unfair trade practices.
The Government of India, therefore, decided to nationalize the insurance
business. An Ordinance issued on 19th January, 1956 nationalized the Life
Insurance sector and 'LIFE INSURANCE CORPORATION OF INDIA'
(L.I.C.) came into existence in the same year. The LIC absorbed 154 Indian,
16 non Indian insurers as also 75 provident societies. Since then LIC has
been the only player.

Similarly, before November, 1972, a number of Indian and many foreign

companies did general insurance business in India and this business was
linked with their branches abroad. In addition, this product was also offered
by LIC, some mutual companies and cooperative societies. In fact, on the
eve of nationalizations, 68 Indian (including LIC)and 45 non-Indian entities
carried out insurance business in India. Nationalization saw the business of
all these organizations absorbed by the GENERAL INSURANCE
CORPORATION (GIC) with its four subsidiaries.

Thus Life Insurance Corporation of India in the field of life insurance and
General Insurance Corporation of India in the field of general insurance have
enjoyed absolute monopoly. However, the reforms in financial sector in the
early 90s have since touched Insurance also. The Govt of India set up a
committee with Sh. R.N. Malhotra as the Chairman to recommend suitable
reforms in this sector. As a consequence of the recommendation of the
Malhotra Committee, the Government of India set up an Insurance
Regulatory Authority. On the 2nd December, 1999, Indian Parliament has
passed, Insurance Regulatory and Development Act, throwing open the
Insurance sector to Banks and other private parties. Since then, RBI has
come out with draft guidelines for entry to this sector. This is seen as a
major step in financial sector reforms, which introduce, for the first time
since nationalization of the insurance business, an element of competition in
this sector. This should bring competitively priced insurance for the
customer and improve the service available to him.
INDUSTRY INDIAN INSURANCE:

Insurers
Insurance industry, as on 1.4.2000, comprised mainly two players: the state
insurers:

Life Insurers:

• Life Insurance Corporation of India (LIC)

General Insurers:

• General Insurance Corporation of India (GIC)

GIC had four subsidary companies, namely ( with effect from Dec'2000,
these subsidaries have been de-linked from the parent company and made as
independent insurance companies.
 1. The Oriental Insurance Company Limited
2. The New India Assurance Company Limited,
3. National Insurance Company Limited
4. United India Insurance Company Limited.

Yr: 2000-2001 : Insurance Industry in the year 2000-2001 had 16 new

entrants, namely:
Life Insurers:

S.No Registratio Date of Name of the Company

. n Reg.
Number
1 101 23.10.200 HDFC Standard Life Insurance Company Ltd.
0
2 104 15.11.200 Max New York Life Insurance Co. Ltd.
0
3 105 24.11.200 ICICI Prudential Life Insurance Company Ltd.
0
4 107 10.01.200 Kotak Mahindra Old Mutual Life Insurance
1 Limited
5 109 31.01.200 Birla Sun Life Insurance Company Ltd.
 1
6 110 12.02.200 Tata AIG Life Insurance Company Ltd.
1
7 111 30.03.200 SBI Life Insurance Company Limited .
1
8 114 02.08.200 ING Vysya Life Insurance Company Private
1 Limited
9 116 03.08.200 Bajaj Allianz Life Insurance Company Limited
1
10 117 06.08.200 Metlife India Insurance Company Pvt. Ltd.
1

General Insurers :

S.No. Registration Date of Name of the Company

Number Registration
1 102 23.10.2000 Royal Sundaram
Alliance Insurance
Company Limited
2 103 23.10.2000 Reliance General
Insurance Company
Limited.
3 106 04.12.2000 IFFCO Tokio General
Insurance Co. Ltd
4 108 22.01.2001 TATA AIG General
Insurance Company
Ltd.
5 113 02.05.2001 Bajaj Allianz General
Insurance Company
Limited
6 115 03.08.2001 ICICI Lombard General
Insurance Company
Limited.

Yr: 2001-2002 : ( From 1st Jan 2001 to Dec. 2002)

Insurance Industry in this year, so far has 5new entrants; namel

Life Insurers:

S.No Registratio Date of Name of the Company

. n Reg.
Number
1 121 03.01.200 AMP Sanmar Life Insurance Company
2 Limited.

2 122 14.05.200 Aviva Life Insurance Co. India Pvt. Ltd.

 2

General Insurers :

S.No. Registration Date of Name of the Company

Number Registration
1 123 15.07.2002 Cholamandalam
General Insurance
Company Ltd.
2. 124 27.08.2002 Export Credit
Guarantee Corporation
Ltd.
3. 125 27.08.2002 HDFC-Chubb General
Insurance Co. Ltd.

Yr: 2003-2004 :

( From 1st Jan 2003 till Date)

Insurance Industry in this year, so far has 1new entrants; namely

Life Insurers:

S.No. Registration Date of Name of the Company

Number Reg.
1 127 06.02.2004 Sahara India Insurance Company Ltd.
INSURANCE BUSINESS:

Insurance business is divided into four classes :

1) Life Insurance

2) Fire Insurance

3) Marine Insurance

4) Miscellaneous Insurance.

Life Insurers transact life insurance business; General Insurers transact the
rest.

No composites are permitted as per law.

LEGISLATION (as on 1.4.2000):

Insurance is a federal subject in India. The primary legislation that deals
with insurance business in India is:

Insurance Act, 1938, and Insurance Regulatory & Development Authority

Act, 1999.

INSURANCE PRODUCTS (as on 1.4.2000) (for latest information get in

touch with the current insurers – website information of insurers is provided
at the web page for insurers ):

Life Insurance:

Popular Products: Endowment Assurance (Participating), and Money Back

(Participating). More than 80% of the life insurance business is from these
products.

General Insurance:
Fire and Miscellaneous insurance businesses are predominant. Motor
Vehicle insurance is compulsory.

Tariff Advisory Committee (TAC) lays down tariff rates for some of the
general insurance products (please visit website of GIC for details )

2001

New products have been launched by life insurers. These include linked-
products. For details, please visit the websites of life insurers.

INFORMATION

About the insurance industry, the following documents may be helpful:

Malhotra Committee Report (The Report of the Committee on Reforms in

the Insurance Sector);

IRDA's First Annual Report - 2001

TYPE OF INSURANCE

Business Insurance Types

There are a number of different types of business insurance which you may
or may not need for your company. To get a quote for a complete business
insurance package for your company click here. The following is a list of the
types of business insurance we can provide:

 Employer's Liability Insurance: This cover is set in force to protect

you in the event that someone suffers a loss as a direct result of an
action by you or an employee.
 Public Liability Insurance: If any members of the public are ever on
your premises or interact with your company in some physical form
and there is an accident or loss as a result of perceived negligence on
your part then this type of insurance can cover you.
 Van Insurance: You may be a tradesman who uses their van for
business purposes or you may want to insure a fleet of vans.
 Lorry Insurance: You could be a small business with one lorry up to
a large logistical organisation or construction company with a whole
fleet - you'll still need lorry insurance.
  Office insurance: whether you have a small office or just have an
office you work from at home, we are able to provide you with
comprehensive cover at great rates.
 Key Man Insurance: If there are key individuals within your
company which your company would be at a financial loss due to
their death or disability then you can insure them.
 Landlord Insurance: If you are a landlord (commercial or
residential…perhaps buy to let) then you will need insurance for your
property regardless of the type of insurance your tenant will have
taken out.
 Life Insurance: If you are a small business owner and you are
worried about what may happen your family or your business if you
die then a life insurance policy may give you peace of mind.

cover your business.

 Product Liability: If you manufacture a product and there might be

the chance that someone takes you to court as a result of the failure of
the product then this type of policy can cover you

 Product/Sales/Servicing Indemnity: The key type of insurance here

is usually product indemnity as discussed above but if you sell
products or service goods then the other two types of insurance will be
of interest to you.

 Public House Insurance: a public house requires a lot of work to run,

and equally as important it takes a comprehensive insurance policy to
fully
LIFE INSURANCE
DEFINITIONS:

INSURANCE:
 Insurance is a system to alleviate financial losses by transferring risk
of loss from one entity to another.
 Insurance means promise of reimbursement in the case of loss; paid to
people or companies so concerned about hazards that they have made
prepayments to an insurance company.

 A contract in which one party agrees to pay for another party's

financial loss resulting from a specified event (for example, a
collision, theft, or storm damage). Lease agreements generally require
that you maintain vehicle collision and comprehensive insurance as
well as liability insurance for bodily injury and property damage.

Life insurance:
  A policy that will pay a specified sum to beneficiaries upon the death
of the insured.

 Insurance in which the risk insured against is the death of a particular

person, the insured, upon whose death while the policy is in force, the
insurance company agrees to pay a stated sum or income to the
beneficiary

 If the donor makes the Foundation the owner of the policy, the value
of the gift will be approximately the policy's cash surrender value as
provided by the insurance policy. If the gift is not paid at the time of
the donation, you may make additional contributions each year of the
premiums and the WVU Foundation will handle the payment to keep
the policy in force. If the donor makes the Foundation the beneficiary
of the policy, the estate will receive a charitable deduction for the
policy's proceeds.

 With its origins in the provision of funeral expenses by the

prepayment of regular amounts, life insurance has historically
received favourable tax treatment and has grown into a sophisticated
and multi-faceted industry concerned as much with the mitigation of
tax and the provision of savings as the pure protection product it was
originally designed to be.

 Life insurance policies, including pensions and life annuity policies,

provide payments depending on the life or the death of a particular
person or persons.

WHY DO I NEED LIFE INSURANCE?

Unforeseen accidents and tragic events happen to everyday people like you
and me. We'd like to think that it doesn't happen to us, but how many times
have you seen cars turned upside down on the freeway while driving or
television reporters naming off the latest death victims? Tragedy happens--
and you need to be prepared to safeguard the futures of your loved ones if
it happens to you. That's the simple reason most people get life insurance--
they care enough about their loved ones to protect them from hardship or
economic loss in the event of death or tragedy. In this section, you'll be
able to find information on life insurance, research the different types of
life insurance available, take a closer look at life insurance companies,
compare important features when you choose low cost life insurance,
obtain life insurance rates, request instant life insurance quotes and much
more. You will have a better understanding of the different types of
policies available and choose one appropriate for your needs.

You know that life insurance companies administer benefits when you die,
but were you aware of the benefits you receive while you're alive? One
benefit you'll have, is better sleep at night, because your loved ones are
protected from unforeseen tragedies. Additionally, permanent life
insurance allows you to build accessible cash value that pays you
competitive interest rates that grows tax free. You'll have the freedom to do
other things with your money and investments because you have an asset
your family can count on. Insuring the future happiness of your loved ones
is the most precious gift you can give.

What types of life insurance are available?

There are two main types: Term vs. Whole Life Insurance:

 Permanent life insurance is designed to last for your whole life.

Thereare two main categories: Whole life and Universal life .
 Another type of life insurance is Term Life which varies by length of
time and is kept 1 year to 30 years. There is also a new type of term
life policy that refunds you all premiums paid if you keep the policy
for the term period. Learn more about return of premium term life
insurance for your own term life insurance comparison.

How much coverage should I have?

The easy answer is you should have enough coverage to

replace the income that you would have earned had you been alive to earn
it. How do you calculate that amount? There's a section on this site that
shows you how to figure that out. Find out how much life insurance you
should have. There is also the very simple method of taking a multiple of
your income such as a life insurance amount that is 10 times to 15 times
your annual gross income.
How do I choose the right company?

Buying life insurance is a little more complex than

purchasing a car or a television. When you purchase a policy you are
buying a promise, a contract to pay something in the future vs. buying a
commodity or something tangible. It's very important for you to examine
the company that's backing your policy as well as considering the cost of
the policy. One of the important items to consider when looking at life
insurance companies are the financial strength ratings. Insurance
company financial ratings are described further on this site.

How do I know if I'm getting the best rates?

You can find out if you're getting the best life insurance
rates here online at lifeinsure.com.& many more sites we s quickly to find
you a customized rate and policy. Search for instant term life insurance
quotes and instant quotes on return of premium term life policies. For
whole life or universal life policies, we'll need to gather some basic
information from you to deliver an accurate quote. It's to your advantage to
have lifeinsure.com working for you because we're not affiliated with the
companies we provide for you, therefore, we can look after your best
interest without conflicts of interest. That's where we stand.

What are the steps that I would go through?

First, choose the coverage amount you desire and then get a
quote. If it's term or return of premium term life coverage you’ll get a
market survey right here on the lifeinsure.com site. Then choose the policy
that suits your needs and move to the next step.

The next steps are application, a short medical exam at one of the life
insurance companies you choose, review of your information by the life
insurance company, then approval and premium paid and you’re on your
way. Learn more about the process to obtain competitive life insurance.

Should I get insurance to pay off my mortgage if I die?

Getting life insurance to pay off major obligations in case of death is one of
the most responsible and generous acts of love you can provide. Feel free
to quote inexpensive term life or return of premium life insurance for the
amount of your mortgage but also strongly consider getting coverage for
the entire amount that is appropriate for you and your loved ones--not just
enough to pay off your mortgage.

What other type of insurance is important?

Of course, one should have the appropriate amount of car

insurance and homeowners insurance but here’s a type of insurance that’s
often forgotten: disability insurance to protect your income. It’s a statistical
fact that it’s more likely that one has a long term disability before age 65
than dying. You can learn about disability insurance, the best types of
disability insurance .

What if I smoke cigarettes or use tobacco, does that effect my

insurance rates?
The answer is yes it will but you still can get competitive rates.
Some companies charge less for tobacco use than others. If you smoke
cigars occasionally or occasionally chew tobacco, a few companies will
still give preferred rates. Contact us at 866 691 0100 so we can get the
lowest possible rates that match your situation or email us. Also, if you get
a life insurance policy that includes a rate for tobacco use it’s possible to
lower it in future years if you quit tobacco for a number of years and
remain healthy. We just go back and work with the insurance company to
try to lower your rate and in most cases we can do that for you.
Does my weight effect my life insurance rate?

There are different rate classes for life insurance. When calculating the
exact rate for you, the company does take your weight into consideration.
There is a height weight chart on this site that can give you an idea how
weight affects the way insurance companies might judge your rating class.
IRDA
 MISSION
To protect the interests of the policyholders, to
regulate, promote and ensure orderly growth of
the insurance industry and for matters connected
therewith or incidental there to

Composition of Authority under IRDA Act, 1999

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and
Development Authority (IRDA, which was constituted by an act of
parliament) specify the composition of Authority

The Authority is a ten member team consisting of

(a) a Chairman;
(b) five whole-time members;
(c) four part-time members,

(all appointed by the Government of India)

 Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of
IRDA..(1) Subject to the provisions of this Act and any other law for the
time being in force, the Authority shall have the duty to regulate, promote
and ensure orderly growth of the insurance business and re-insurance
business.

(2) Without prejudice to the generality of the provisions contained in sub-

section (1), the powers and functions of the Authority shall include, -

(a) issue to the applicant a certificate of registration, renew, modify,

withdraw, suspend or cancel such registration;

(b) protection of the interests of the policy holders in matters concerning

assigning of policy, nomination by policy holders, insurable
interest, settlement of insurance claim, surrender value of policy
and other terms and conditions of contracts of insurance;

(c) specifying requisite qualifications, code of conduct and practical

training for intermediary or insurance intermediaries and agents;

(d) specifying the code of conduct for surveyors and loss assessors;

(e) promoting efficiency in the conduct of insurance business;

(f) promoting and regulating professional organizations connected with

the insurance and re-insurance business;
 (g) levying fees and other charges for carrying out the purposes of this
Act;

(h) calling for information from, undertaking inspection of, conducting

enquiries and investigations including audit of the insurers,
intermediaries, insurance intermediaries and other organisations
connected with the insurance business;

(i) control and regulation of the rates, advantages, terms and conditions
that may be offered by insurers in respect of general insurance
business not so controlled and regulated by the Tariff Advisory
Committee under section 64U of the Insurance Act, 1938 (4 of
1938);

(j) specifying the form and manner in which books of account shall be
maintained and statement of accounts shall be rendered by insurers
and other insurance intermediaries;

(k) regulating investment of funds by insurance companies;

(l) regulating maintenance of margin of solvency;

(m) adjudication of disputes between insurers and intermediaries or

insurance intermediaries;

(n) supervising the functioning of the Tariff Advisory Committee;

(o) specifying the percentage of premium income of the insurer to finance

schemes for promoting and regulating professional organizations
referred to in clause (f);
 (p) specifying the percentage of life insurance business and general
insurance business to be undertaken by the insurer in the rural or
social sector; and

(q) exercising such other powers as may be prescribed

AUDIT REPORT ON THE ACCOUNTS OF INSURANCE

REGULATORY & DEVELOPMENT AUTHORITY FOR 2001-2002
a) INTRODUCTION

The Insurance Regulatory and Development Authority was

established on 19th April, 2000 under Insurance Regulatory and
Development Authority Act, 1999 with its headquarter at New Delhi.
The Authority has changed its headquarters to Hyderabad in
December 2001. The Audit of the accounts of the Authority has been
entrusted under Section 19 (2) of the Comptroller & Auditor
General" (Duties, Power & Conditions of Service) Act, 1971. The
Authority was to consist of a Chairman, five full time Members and
four Part-time Members. As on date the Authority has one chairman,
two full time and four part time members. There is an Insurance
Advisory Committee,
which helps the Authority in making its Rules and Regulations for
proper discharge of its activities.

The main powers and functions of the Authority are as under:

b) Protect the interest of and secure fair treatment to policyholders;

c) Bring about speedy and orderly growth of the insurance industry
(including annuity and superannuation payments), for the benefit of
the common man, and to provide long term funds for accelerating
growth of the economy;
d) Set, promote, monitor and enforce high standards of integrity,
financial soundness, fair dealing and competence of those it
regulates;
e) Ensure that insurance customers receive precise, clear and correct
information about products and services and make them aware of
their responsibilities and duties in this regard;
f) Ensure speedy settlement of genuine claims, to prevent insurance
frauds and other malpractices and put in place effective grievance
redressal machinery;
 g) Promote fairness, transparency and orderly conduct in financial
markets dealing with insurance and build a reliable management
information system to enforce high standards of financial soundness
amongst market players;
h) Take action where such 'standards are inadequate or ineffectively
enforced;
i) Bring about optimum amount of self-regulations in day to day
working of the industry consistent with the requirements of
prudential regulation.

2. Sources of Receipts

During 2001-02, the Authority's receipts were Rs.42.17 crores as against its
expenditure of Rs.5.89 crores. The receipts mainly consisted of fees received
from various Insurance companies operating in India on account of their
Registration and Renewal charges.
1. Funds

The funds of the authority are being retained by itself despite

directions of the Ministry to house the funds in Public Account of
India as non-interest bearing funds. As on 31st March 2002, the
Authority continues to house its funds amounting to Rs. 57.42
crore in interest bearing deposits of banks and other financial
institutions.

5. Comments on Accounts

4.1 Under statement of Current Assets, Loan and Advances

Current Assets, Loan and Advances: Rs. 20,031,959.

This does not include a sum of Rs. 20,00,000/- which was paid as
advances to M/s Andhra Pradesh Industrial Development Corporation
Ltd. (APIDC) vide cheque no. 308126 dt. 08/03/2002 (HDFC A/c
-New 435). The amount was given for the renovation work at IRDA
office at Hyderabad. Since this amount represented advance in the
nature of amount recoverable in cash or kind, the same was required
to be shown in the Balance Sheet. The Authority has charged this
amount to Income and Expenditure Account by showing it as
Establishment Expenses - Repair and Maintenance of Buildings and
Premises. Thus both Income arid Current Assets of the Authority have
been understated by Rs. 20,00,000/-. The Authority in its reply stated
 that the sum of Rs. 20 Lakhs was, released as running payments
against the renovation work, which is construed as an advance
payment. Authority's reply is not acceptable as all notes and
correspondence of the authority clearly stipulate the payment as
advance. (Reference to the completion certificate showed that is has
been issued by APIDC without recording measurement of the works).

4.2 Under statement of Current Liabilities & Provisions

Current liabilities and provisions: Rs. 12,92,305.

(I) This does not include provisions for salary amounting to Rs. 23.6 lakhs
which was demanded by the Life Insurance Corporation vide its letters dt.
12/02/2002, 13/09/2002, 23/09/2002 & 5/11/2002 for payment to LIC staff
working for IRDA on working arrangement basis. Apparently the amount
pertains to the period 2001-2002 for which no provision has been made in
the accounts of the Authority. Hence, both
Expenditure as well as Liabilities remained understated to that extent.

The Authority in its reply stated that it would make provisions for payment
of salary and other benefits from the date of joining if their previous
employer make a demand for the period they were with the Authority on
working arrangement. .
(2) No provision was made in the accounts for the value of 'PCs amounting
to Rs. 2.93 lakhs purchased by LIC on behalf of IRDA, the payment for
which was released to LIC on 25th July 2002. Hence Current Liabilities and
provisions remained understated to that extent.

4.3 Incorrect depiction of investment to the tune of Rs. 37.40 lakhs and
excess accounting of interest of Rs. 2.25 lakhs on investments.

As on 31st March, 2001, an investment of Rs. 5742.28 Lakhs has been made
as fixed deposit with the Indian Overseas Bank and HDFC Bank by
Insurance Regulatory and Development Authority. Scrutiny of Certificate of
Fixed Deposit and consolidated statement of Investment revealed that the
maturity amount of Investment has been taken as Rs. 6644.99 lakhs instead
of Rs. 6607.59 lakhs resulting in a difference of Rs. 37.40 lakhs between the
two. Similarly interest accrued has been taken into account as Rs. 191.00
1akhs instead of Rs. 188.75Iakhs. Thus, an excess interest of Rs. 2.25 1akhs
was depicted in the Balance Sheet resulting in overstatement of income to
the extent of Rs. 2.25 lakhs. The details of Investment and Interest is
enclosed as' Annexure I'
The authority accepted the audit observation and stated that necessary
rectification would be carried in the accounts of 2002-2003. Interest
accrued/actual on investment may be reconciled arid necessary
rectification/adjustment be made into account under intimation to audit.

4.4 Difference between Assets Register and Balance Sheet

Scrutiny of Assets Register and Balance Sheet as on 31st March, 2002
revealed that there was a difference of Rs. 1.48 lakhs between the two which
was not reconciled.
The Authority in its reply stated that it was presumed that consumable and
the perishable items had been taken into account in the dead stock register.
The details of such items with regard to their cost will be extracted from the
records of the previous years and these items will be removed from the dead
stock register to correct the difference.

4.5 Non- verification of Assets.

The Authority had fixed assets valued at Rs. 28,33,511.06 as per Balance
Sheet as on 31st March, 2002 details of which were shown in Annexure-I. In
this connection, the following comments are offered:
1. The progressive totals of value of all assets entered in the Fixed Assets
Register were not carried out in accordance with the rule 151 (4)(a) of
General Financial Rule.
2. Consumables like buckets, boxes purchased for shifting records, wall
clocks, crockery, gas stove etc. were also included in the assets register. The
Authority did not maintain inventories of such articles in the prescribed
form.
Assets register may be recast in the light of the above observation under
intimation to audit.

Sd/-
Director General of Audit
Central Revenues

Place: New Delhi

Date: 18-07-
 WHAT`S NEW IN IRDA
All Insurance Companies/Reinsure

Re : Appointment of Statutory Auditors by Insurance Companies

As you are aware, section 12 of Insurance Act 1938 prescribes that all
insurance companies must be Audited annually by the Auditors. Regulation
3(4) of IRDA (Preparation of Financial Statements and Auditors Report of
Insurance Companies) Regulations 2002 provides that “The Authority may,
from time to time, issue separate directions/guidelines in the matter of
appointment, continuance or removal of auditors of an insurer or reinsurer,
as the case may be, and such directions/guidelines may include prescriptions
regarding qualifications and experience of auditors, their rotation, period of
appointment, etc., as may be deemed necessary by the Authority”.

The Authority has also been maintaining a panel of auditors based on the
applications received consequent to the circular issued by the Authority in
February 2001 on the qualification, rotation etc., and advised insurers to
appoint auditors from the above list available in the website.

The procedure for maintaining a panel of auditors has been reviewed in the
light of (1) the constraints in verifying and processing the applications
received from Chartered Accountant firms for inclusion of their names in the
panel and (ii) the need to provide more opportunities to the eligible audit
firms. The revised guidelines are accordingly issued herewith in
supersession of earlier circular issued in February 2001 and the main
features of the proposals are as under :-

(I) It has been decided that the Authority would not maintain
henceforth a panel of auditors and instead prescribe the
requirements to be satisfied by the Chartered Accountant
Firms for appointment of Statutory Auditors. The
qualifications and other requirements of the intending
auditors are detailed in the enclosure.
 (II) Consequent to (I) above, the insurance companies would
be responsible for selection of audit firms that satisfy the
eligibility criteria set by the Authority. The audit firms
selected by the company should submit the information to
the Insurance company in the prescribed form along with
certificates from ICAI/ by way of self declaration
confirming (a) constitution of the firm and (b) absence of
any pending disciplinary cases against them.

(III) Insurance companies should verify to their satisfaction the

eligibility criteria before considering/approving their appointment.

(IV) Any change in the constitution of the firm/information

submitted/certifications submitted should be duly informed by the
Audit firm to the Insurance Company within one week of such
change.

(V) Insurance Companies are required to intimate to the Authority,

the name and address of the audit firms, for information within one
week of their appointment. If it comes to the notice of the
Authority that the appointment is not in line with the
prescriptions/information furnished by the Audit firm, the
appointment is liable for cancellation and it is open for the
Authority to consider such further action as may be deemed
necessary in this context.

These revised guidelines will be applicable commencing from

the financial year 1st April 2006.

(C.R.
Muralidharan)
Member
Insurance Regulatory and Development Authority

Head Office:

3rd Floor, Parisrama Bhavanam

Basheerbagh
Hyderabad 500 004.

Phone +91-040-55820964
+91-040-55789768
Fax +91-040-55823334

Surveyor Department:

Gate No. 3
Jeevan Tara Building,
First Floor,
Sansad Marg,
New Delhi-110001,

Phone +91 11-23743345 to 48

 INSURANCE IN INDIA
The insurance sector in India has come a full circle from being an open
competitive market to nationalisation and back to a liberalised market
again. Tracing the developments in the Indian insurance sector reveals the
360 degree turn witnessed over a period of almost two centuries.

A brief history of the Insurance sector

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.
Some of the important milestones in the life insurance business in
India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute
to regulate the life insurance business.

1928: The Indian Insurance Companies Act enacted to enable the

government to collect statistical information about both life and non-
life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act

with the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by
the central government and nationalized. LIC formed by an Act of
Parliament, viz. LIC Act,
1956, with a capital contribution of Rs. 5 core from the Government of
India. The General insurance business in India, on the other hand, can
trace its roots to the Triton Insurance Company Ltd., the first
general insurance company established in the year

1850 In Calcutta by the British. Some of the important milestones in the

general insurance business in India are:

1907: The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.

1957: General Insurance Council, a wing of the Insurance Association of

India, frames a code of conduct for ensuring fair conduct and sound
business practices.

1968: The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act,

1972 nationalized the general insurance business in India with effect from
1st January 1973 .107 insurers amalgamated and grouped into four
companies viz. the National Insurance Company Ltd., the New India
Assurance Company Ltd., the Oriental Insurance Company Ltd. and
the United India Insurance Company Ltd. GIC incorporated as a
company.
Insurance sector reforms
In 1993, Malhotra Committee, headed by former Finance Secretary and RBI
Governor R.N. Malhotra, was formed to evaluate the Indian insurance
industry and recommend its future direction. The Malhotra committee was
set up with the objective of complementing the reforms initiated in the
financial sector. The reforms were aimed at “creating a more efficient and
competitive financial system suitable for the requirements of the economy
keeping in mind the structural changes currently underway and recognising
that insurance is an important part of the overall financial system where it
was necessary to address the need for similar reforms…” In 1994, the
committee submitted the report and some of the key recommendations
included:

i) Structure
  G overnment stake in the insurance Companies to be brought down to 50%
Government should take over the holdings of GIC and its subsidiaries so
that these subsidiaries can act as independent corporations
All the insurance companies should be given greater freedom to operate

ii) Competition
Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the industry
No Company should deal in both Life and General Insurance through a
single entity
Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies
Postal Life Insurance should be allowed to operate in the rural market
Only one State Level Life Insurance Company should be allowed to
operate in each state

iii) Regulatory Body

The Insurance Act should be changed
An Insurance Regulatory body should be set up
Controller of Insurance (Currently a part from the Finance Ministry)
should be made independent

iv) Investments
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%
GIC and its subsidiaries are not to hold more than 5% in any company
(There current holdings to be brought down to this level over a
period of time)

v) Customer Service
LIC should pay interest on delays in payments beyond 30 days
Insurance companies must be encouraged to set up unit linked pension
plans
Computerisation of operations and updating of technology to be carried
out in the insurance industry The committee emphasised that in order to
improve the customer services and increase the coverage of the insurance
industry should be opened up to competition. But at thesame time, the
committee felt the need to exercise caution as any failure on the part of
new players could ruin the public confidence in the industry.Hence, it
was decided to allow competition in a limited way by stipulating the
minimum capital requirement of Rs.100 crores. The committee felt the
need to provide greater autonomy to insurance companies in order to
improve their performance and enable them to act as independent
companies with economic motives. For this purpose, it had
proposed setting up an independent regulatory body.

The Insurance Regulatory and Development Authority

Reforms in the Insurance sector were initiated with the passage of the IRDA
Bill in Parliament in December 1999. The IRDA since its incorporation as a
statutory body in April 2000 has fastidiously stuck to its schedule of
framing regulations and registering the private sector insurance companies.
The other decisions taken simultaneously to provide the supporting systems
to the insurance sector and in particular the life insurance companies was
the launch of the IRDA’s online service for issue and renewal of licenses to
agents. The approval of institutions for imparting training to agents has also
ensured that the insurance companies would have a trained workforce of
insurance agents in place to sell their products, which are expected to be
introduced by early next year.Since being set up as an independent statutory
body the IRDA has put in a framework of globally compatible regulations.
In the private sector 12 life insurance and 6 general insurance companies
have been registered.
INTRODUCTION OF
PROJECT
COMPETITION ANALYSIS:
“competition analysis is only a means to an end.”

COMPETITION:

The act of seeking, or endeavoring to gain, what another is endeavoring

to gain at the same time; common strife for the same objects; strife
for superiority; emulous contest; rivalry, as for approbation, for a
prize, or as where two or more persons are engaged in the same
business and each seeking patronage; -- followed by for before the
object sought, and with before the person or thing competed with.

ANALYSIS:
 An investigation of the component parts of a whole and their relations
in making up the whole.
 The process of systematically applying statistical and/or logical
techniques to describe and illustrate, condense and recap, and evaluate
data
 Analysis refers to the ability to break down material into its
component parts so that its organizational structure may be
understood. This may include the identification of the parts, analysis
of the relationships between parts, and recognition of the
organizational principles involved. Learning outcomes here represent
a higher intellectual level than comprehension and application because
they require an understanding of both the content and the structural
form of the material
Unit linked insurance policy
Unit Linked Insurance Plans (ULIPs) were always seen as a 'wonder
product' that simultaneously fulfilled an individual's needs for investment
and insurance.

However, the recent downswings in the markets have forced investors to do

a rethink. Very often it was poor selection that was responsible for the
investors' woes. Here is a 5-step strategy for investing in ULIPs.

 Understand the concept of ULIPs

Try to do as much homework as possible before investing in an ULIP. This

way you will know what you are getting into and won't be faced with
unpleasant surprises at a later stage.

Our experience suggests that many a time people do not realise what they
are getting into (in fact we have been approached by several people who
wanted to cancel the ULIPs they had been coerced into taking by
unscrupulous agents). Gather information on ULIPs, the various options
available and understand their working.

Read the literature available on ULIPs on the Web sites and brochures
circulated by insurance companies.

Focus on your requirement and risk profile

Identify a plan that is best suited for you (in terms of allocation of money
between equity and debt instruments). Your risk appetite should play an
important role in the plan you choose.

So if you have a high-risk appetite, go in for a more aggressive investment

option and vice-a-versa. Opting for a plan that is lop-sided in favour of
equities when you are a risk-averse individual might spell disaster for you
(this is true in most cases currently).
Unit-Linked Insurance Plans

Unit-linked insurance plans, ULIPs, are distinct from the more familiar ‘with
profits’ policies sold for decades by the Life Insurance Corporation.

‘With profits’ policies are called so because investment gains (profits) are
distributed to policyholders in the form of a bonus announced every year.

ULIPs also serve the same function of providing insurance protection

against death and provision of long-term savings, but they are structured
differently.

In ‘with profits’ policies, the insurance company credits the premium to a

common pool called the ‘life fund,’ after setting aside funds for the risk
premium on life insurance and management expenses.

Every year, the insurer calculates how much has to be paid to settle death
and maturity claims. The surplus in the life fund left after meeting these
liabilities is credited to policyholders’ accounts in the form of a bonus.

In a ULIP too, the insurer deducts charges towards life insurance (mortality
charges), administration charges and fund management charges.

The rest of the premium is used to invest in a fund that invests money in
stocks or bonds.

The number of units represents the policyholder’s share in the fund.

The value of the unit is determined by the total value of all the investments
made by the fund divided by the number of units.

If the insurance company offers a range of funds, the insured can direct the
company to invest in the fund of his choice. Insurers usually offer three
choices — an equity (growth) fund, balanced fund and a fund, which invests
in bonds.

In both ‘with profits’ policies as well as unit-linked policies, a large part of

the first year premium goes towards paying the agents’ commissions.
  Better unit-linked or ‘with profits’

The two strong arguments in favour of unit-linked plans are that — the
investor knows exactly what is happening to his money and two; it allows
the investor to choose the assets into which he wants his funds invested.

A traditional ‘with profits,’ on the other hand, is a black box and a

policyholder has little knowledge of what is happening. An investor in a
ULIP knows how much he is paying towards mortality, management and
administration charges. He also knows where the insurance company has
invested the money. The investor gets exactly the same returns that the fund
earns, but he also bears the investment risk.

The transparency makes the product more competitive. So if you are willing
to bear the investment risks in order to generate a higher return on your
retirement funds, ULIPs are for you. Traditional ‘with profits’ policies too
invest in the market and generate the same returns prevailing in the market.
But here the insurance company evens out returns to ensure that
policyholders do not lose money in a bad year. In that sense they are safer.

ULIPs also offer flexibility. For instance, a policyholder can ask the
insurance company to liquidate units in his account to meet the mortality
charges if he is unable to pay any premium installment.

This eats into his savings, but ensures that the policy will continue to cover
his life.

 ULIPs AND MUTUAL FUNDS

In structure, yes; in objective, no. Because of the high first-year

charges, mutual funds are a better option if you have a five-year
horizon. But if you have a horizon of 10 years or more, then ULIPs
have an edge. To explain this further a ULIP has high first-year
charges towards acquisition (including agents’ commissions).

As a result, they find it difficult to outperform mutual funds in the first

five years. But in the long-term, ULIP managers have several
advantages over mutual fund managers. Since policyholder premiums
come at regular intervals, investments can be planned out more
evenly.
  Insurers prefer ULIPs

required if they sold traditional policies.

Insurers love ULIPs for several reasons. Most important of all, insurers can
sell these policies with less capital of their own than what would be
In traditional ‘with profits’ policies, the insurance company bears the
investment risk to the extent of the assured amount. In ULIPs, the
policyholder bears most of the investment risk.

Since ULIPs are devised to mobilize savings, they give insurance companies
an opportunity to get a large chunk of the asset management business, which
has been traditionally dominated by mutual funds.

 Compare ULIPs of different insurance companies

 Compare products of the leading insurance companies. Enquire
about the premium payments as ULIPs work on minimum
premium basis as opposed to sum assured in the case of
conventional insurance policies.
 Check the fund's performance over the past six months. Find
out how the debt and equity schemes are performing and how
steady the performance has been.

 Enquire about the charges you will have to pay. In ULIPs the
costs involved are a big deciding factor.

 Ask about the top-up facility offered by ULIPs i.e. additional

lump sum investments you can make to increase the savings
portion of your policy.
 The companies give you the option to increase the premium
amounts, thereby providing you with the opportunity to
gainfully utilize surplus funds at your disposal.

 Enquire about the number of times you can make free switches
(i.e. change the asset allocation of the money in your ULIP
account) from one investment plan to another.
 Some insurance companies offer you free switch for a 2-year
period while others do so only for 1 year.
Go for an experienced insurance advisor

Select an advisor who is not only professional and informed, but also
independent and unbiased. Also enquire whether he has serviced clients like
you.

Company asks him a few product-related questions to test him and also ask
him why the other products should not be considered. Insurance advice at all
times must be unbiased and independent and your agent must be willing to
inform you about the pros and cons of buying a particular plan.

Unit linked insurance plans (Ulip)

Unit linked insurance plans (Ulip) are the flavor of the season. These plans
are now contributing over 50 per cent of the private life insurance companies
since their inception in 2004. In an era of booming stock market, these
schemes are giving investors a higher return as well as life protection.

Encouraged by the response, many players are launching different savings

and endowment plans in the unit-linked format.

According to the IRDA, a company offering unit linked plans must give the
investor an option to choose among debt, balanced and equity funds. This
policy is suitable for young people who can take risk. These give flexibility
of insurance and mutual funds.

Insurance coverage is essential for every individual. In a country of over one

billion population, almost 70 per cent people are still uninsured. So they
should be aware of all the available insurance policies. How much and what
type of insurance one needs differs from person to person. So it is better to
fix your targets and consult an insurance agent to avail the best policy.
ULIP: Investment & Insurance
A Unit Link Insurance Policy (ULIP) is one in which the customer is
provided with a life insurance cover and the premium paid is invested in
either debt or equity products or a combination of the two. In other words, it
enables the buyer to secure some protection for his family in the event of his
untimely death and at the same time provides him an opportunity to earn a
return on his premium paid.

In the event of the insured person's untimely death, his nominees would
normally receive an amount that is the higher of the sum assured or the value
of the units (investments). To put it simply, ULIP attempts to fulfill
investment needs of an investor with protection/insurance needs of an
insurance seeker. It saves the investor/insurance-seeker the hassles of
managing and tracking a portfolio or products.

ULIP - Key Features

 Premiums paid can be single, regular or variable. The payment period
too can be regular or variable. The risk cover can be increased or
decreased.
 As in all insurance policies, the risk charge (mortality rate) varies with
age.
 The maturity benefit is not typically a fixed amount and the maturity
period can be advanced or extended.
 Investments can be made in gilt funds, balanced funds, money market
funds, growth funds or bonds.
 The policyholder can switch between schemes, for instance, balanced
to debt or gilt to equity, etc.
 The maturity benefit is the net asset value of the units.
 The costs in ULIP are higher because there is a life insurance
component in it as well, in addition to the investment component.
 Insurance companies have the discretion to decide on their investment
portfolios.
 Provides capital appreciation.
 Being transparent the policyholder gets the entire episode on the
performance of his fund.
CONCLUSION
The returns generated. Unit Linked products are finally products of choice.
If you feel equipped to manage your investments on your own or are not
comfortable with long lock-ins or you can't make the most of these tax
breaks, you may be better off investing elsewhere after securing your life
insurance needs.

 There is a great need to disclose the risk involved in the schemes

properly to the investor/insurance seeker by the insurance/investment
companies.

 The Insurance Regulatory and Development Authority has to issue set

of guidelines on ULIP policies offered in the market.

 The charges in the initial years should be brought down.

 The high returns (above 20 per cent) are definitely not sustainable
over a long term, as they have been generated during the biggest Bull
Run in recent stock market.

 Investors/Insurance seeker has to take switching charges into

consideration as they have a long-term implication on
 RESEARCH
METHODOLOGY
METHODOLOGY REPORT

The research problem call for an appropriate methodology. The study of the
project is based on LIFE INSURANCE . The information gives in this
project is factual in nature and has been collected from various sources since
the study is based on both historical and present design both, primary and
secondary secondary source of material is being utilized .The secondary
source of data has been mainly obtained from Om kotak mahindra life
insurance ltd.The primary data was collected to know the role of various
life insurance company’s.

To analyze the data appropriately statistical

method ware used and the result have been presented in the from of tables
and graphs. The descriptive data was analyzed and correlated with the
statistical data and compiled to give the present form.

The research process followed consists of following

steps :
A: Defining a problem and research objectives:
The defining of problem includes study of competition analysis of unit
linked plans of various insurance companies.

B: Developing a research plan:

The second stage of research calls for developing the efficient plan for
gathering the needed information . Designing a research plan calls for the
data sources , research approach ,research instruments ,sampling plan and
contacts, methods.

C: Data sources:
Two types of data sources were taken into consideration i.e. primary and
secondary data .major emphasis was laid on gathering the needed
information .major emphasis was laid on gathering the primary has been
used to give a clear view of things.
Primary data-direct collection of data from the information, techniques
include personal interview and survey etc.

Secondary data- direct collection of data from sources containing past or

recent information like annual report, books, news papers, magazines etc.

D: Research approach:
Survey are best suited for descriptive research survey are undertaken to learn
about peoples knowledge, beliefs, attitudes, values, preferences, satisfaction,
and so on and to measure these magnitudes in general public, I have done
this survey for the descriptive research process.

E: Sampling plan:
The sampling plan call for three decisions :

1. Sampling unit : who is to be surveyed?

The target population must be defined that has to be sampled .It is necessary
so as to develop a sampling frame so that every one in the target population
has an equal chance of being sampled. The sampling unit of this project was
Jalandhar district.

2. Sampling size : number of people surveyed .generally large samples give

more reliable results than small samples. The sample consist of people
dealing in different line of business.

Sampling procedures:

• How the respondents were chosen?

The respondents were chosen from various insurance companies offices.

• Collecting the information

Once the sampling plan has been determined the question is how the subject
should be contained. telephone ,mail or personal interviews.
In this survey the respondents were contacted through personal interviews.
After this I have collected the information from respondent with the help of
questionnaire
 • Analyze the information:
The next step is to extract the pertinent findings from the collection data .I
have tabulated the information on some specific terms.

• Presentation of findings:
This is the last and important step in the research process . the findings are
presented in the form of graphs ,pie charts , conclusions, suggestions and
recommendations after data analysis.
ANALYSIS OF DATA &
INTERPRETATION
COMPARISON OF UNIT LINKED PLANS OF
VARIOUS INSURANCE COMPANIES

 NAME OF THE COMPANIES:

 Kotak life insurance
 ICICI prudential life insurance
 HDCF standard life insurance
 Birla sun life insurance Company.

 NAMES OF UNIT LINKED PLANS:

 Kotak life insurance

 Kotak safe investment plan ||

 ICICI prudential life insurance

 Invest shield cash
 Invest shield gold
 Life time || investment plan

 HDCF standard life insurance

 Unit linked endowment plan

 Birla sun life insurance Company.

 Classic life premier
  TABLE OF COMPARISION OF VARIOUS
UNIT LINKED PLANS:

KOTAK
LIFE ICICI HDFC BIRLA
KOTAK INVEST INVEST LIFE TIME UNIT CLASSIC
SAFE SHIELD SHIELD || LINKED LIFE
INVEST CASH GOLD INVESTM ENDOW PREMIER
MENT ENT PLAN MENT
PLAN || PLAN
MATURITY sum assured guarantee guarantee guarantee on guarantee on no guarantee on
GUARANTEE is is only on is only on market value market value sum assured or
guaranteed. premiums premiums of funds. of funds. on returns.
net of net of
charges charges
and not on and not on
sum sum
assured. assured.
Also, there Also, there
is no equity is only a
exposure in 30% equity
this plan. exposure in
this plan.
INVESTMENT 5 funds- unit fund unit fund 4 funds- maxi 5 funds- 5 funds-
PORTFOLIO growth/balan (debt & (fixed miser/balanc liquid/secure/ protector,
ced/bond/floa money debt :equity er/ protector/ defensive/bal builder,
ting market ratio - preserver. ance enhancer,
rate/gilt.max -100%) no 70:30) 100% equity managed/gro creator, &
equity option of only 30% exposure in wth. magnifier.
exposure different equity maxi miser. 100% equity Max equity
limit is 80% in funds. exposures. exposure in exposure limit is
growth. 0% equity growth. 90% in
Higher equity exposures. magnifier.
could Reduces
generate the
better returns potential of
in the long higher
run. returns.
DEATH sum assured sum sum sum assured sum assured face amount(life
BENEFIT or market assured+ assured+ or market or market cover) will be to
value of unit higher of higher of value of unit value of unit 10 times the
whichever is unit fund or unit fund or whichever is whichever is premium. Upto
higher. guaranteed guaranteed higher. higher. the age of 72,
value of value of higher of the
unit funds. unit funds. policy fund or
To combat To combat the face amount
this, a term this, a term less all
rider may rider may withdrawals
be be made in the 24
attached attached months
along with along with preceding the
KSIP ||. KSIP ||. death.
 Beyond that, the
face amount will
be reduced by
all withdrawal
made after the
age of 70.
MATURITY sum assured higher of higher of market value market value market value of
BENEFIT or market unit fund or unit fund or of fund. of the fund.& units.
value of unit guaranteed guaranteed policy will
whichever is value of value of terminate.
higher. unit fund. unit fund.
PARTIAL allowed after after 6 after 6 can make any time allowed after
WITH year 1 (from years,10% years,10% partial provided: year 3. two
DRAWAL supplementar of unit of unit withdrawal # Min withdrawals in
y account). fund, once fund, once after 3 yrs at Withdrawal every policy
After yr 3, in a year. in a year. no penalty. amt is year will be free
from main limited limited Minimum amt Rs.10,000 of charge and
account with liquidity liquidity of withdrawal # after other 2 addition
a 2.5 % due to due to is Rs 2000. withdrawal, withdrawals will
charge till the restrictions restrictions the fund be subject to a
10th yr. on the on the exceeds charge of 0.5%
withdrawals amount & amount & Rs.15k of the amount
can be made number of number of # surrender withdrawn.
subject to withdrawal withdrawal charges r minimum
leaving s. s. forced. withdrawal
behind a amount Rs.
balance of Rs 25000. subject
10,000 giving to a minimum
flexibility to policy fund
choose the balance of
amount. Rs.25,000.
COMPLETE after year 3. after year after year after 3 yrs. if paid 3 yrs NA
SURRENDER 1,high 1,high of regular
surrender surrender premium then
charge. A charge. A no charges
5% charge 5% charge otherwise
continues continues high charges.
even after even after
the 10th the 10th
police yr. police yr.
LPP OPTION Available- Not Fixed NA NA if plan duration
3,5,7,10,15. allowed. premium is up to age 75 -
paying 3,5years of
term. LPP. Up to age
100 - 10,15,20
years or
throughout.
RIDERS ADB,PDB, ADB, CI, ADB, CI. ADR, CI, AD. Term , CI,
CI,TERM, WOP. Term rider WOP,CI, CI plus, ADB,
WOP. Term rider not MSAB. Term dismemberment
not allowed. rider not , CI for women.
allowed. allowed.
OTHER automatic loyalty loyalty loyalty NA flexibility to
FEATURES cover addition -at addition -at addition -at increase
maintenance the end of regular 4th,8th,12th decrease sum
every 5th intervals. policy year. assured.
yr, Flexibility Flexibility to Loyalty addition
5%,10%,15 to increase on 10th
%... increase /decrease anniversary and
Flexibility /decrease premium. on every 5th
to premium. anniversary
increase thereafter.
/decrease Addition will be
 premium. 2% of the
average policy
fund in last 60
months.
ALLOCATION year 1- 86%. yr 1- yr 1- contribution yr 1 & 2- year 1 - 87%
RATE Year 2 premium<1 premium<5 1styr 2nd- premium up year 2 - 96%
onwards- 5k-70%. 0k-81%. 6th- to 2l - 73 % year 3 onwards
96.5%. 15k to 50k to <5l - 11th yr from 2l to 5l -98%
<25k-72%. 85%. range - 80%
25k to < 5l & above 5th yr 10th from 5l to 10l
50k-75%. -88%. yr - 85%
50k & Yr 2 onwards above 10l
above -premium< up to 35,999 -90%
-77%. 50k - 81% 96% yr 3 onwards
Yr 2 92.5%,50k 98% - 99%.
-premium< to <5i - 99%
15k - 95%. 36k-99,999
90%,15k&a Yr 3 83% 96%
bove - premium 98%
92%. <50k - 99%
Yr 3 92.5%,50k 1l-4,99,999
onwards- to <5l-95%. 85% 96%
97%. yr 4,5 98%
-97%. 99%
yr 6 -10th -
99%.
ADMINISTRAT year 1- for Rs.50 per Rs.50 per Rs. 60 per Rs.15 per charge of Rs.
ION CHARGE premium less month. month. month. month. 60 per month.
than 20k - Sum assured
7%. For (face amount)
portions over related charges
20k-2%. in the first 3
Year 2- for years & varying
premium less with annual
than 20k-4%. premium.
For portions Charges per
over 20k-2%. Rs.1000 of sum
assured are as
follows:
for premiums
between Rs.25k
to Rs 50k - Rs
2, premiums Rs
50k to 1 lac-
Rs.1.25,
premiums Rs 1
lac to 4 lac -
Rs.0.40,
premiums
above 4 lac -
Rs.0.30.
OTHER underwriting NA NA NA RISK NA
CHARGES charge-only BENEFIT
in the first CHARGES:
year. Depends on
Depends on age. charge
age. charge decreases at
decreases at higher sum
higher sum assured.
assured.
FUND money unit fund- unit fund - maxi miser 0.80% per creator,
MANAGE market - 1.25% . 1.25% 2.25% annum of the magnifier -
MENT 0.60%, gilt - balance fund value. 1.25%. Other
CHARGES 1.00%, bond 2.25% funds -1%
- 1.20%, protector
floating rate - 1.50%
1.2%, preserve
balanced 0.75%
1.30%,
growth
-1.50%.
BUY SELL Money Switching Switching 4 free NA(do not 2 free switches
SPREAD market - not not switches charge in a year. After
0.01%, gilt - allowed. allowed. allowed every currently.) that a charge of
0.10%, bond policy year, Rs 100
- 0.22%, other with be
floating rate - charged at
0.22%, Rs.100 per
balanced - switch.
0.5%, growth
-0.58%.
SWITCHING any number Switching Switching any number 4 switches r year 1 - 25%
of times at not not of times at available in a year 2 - 15%
just the buy allowed. allowed. just the buy policy year. year 3 - 10%
sell spread. sell spread. year 4 - 7%
year 5 - 5%
year 6 - 3%
year 7onwards -
no charge.
LUMP SUM 2.50% 1% 1% 1% 1% 2%
CHARGE
SURRENDER Surrender Surrender Surrender Before 1 yr's Surrender of NA
TERMS after year 3 charge charge contribution policy before
at 2.5% exit year - 1 year - 7 is paid 3 yr will
load. no no nil charge 25%
No exit load surrender surrender after 1st yr's of
after year 10. year -2 year -8 contribution outstanding
90% 40% is paid premium.
year -3 year -9 25%
80% 30% after 2nd yr's
year -4 year -10 contributions
70% 20% r paid
year -5 year -11& 40%
60% 10% after 3rd yr's
year -6 above contributions
50% 5% r paid
60%
after 4th yr's
contributions
r paid
100%

 GRAPHICAL REPRESENTATION OF

 Fund Performance: Kotak vs. Birla

 Balanced Funds

20
18.6 17.75
18

16

14

12
Returns

kotak balanced fund

10
birla builder
8 6.93
6 5.54
4.52 4.07
4 2.57 3.57
2.39
1.94
2

0
1m 2m 6m 12m 18m

Time Horizon
 Equity funds

30
kotak
24.57
25
22.54
growth fund
birla
20
enhancer
Returns

15.52

15 birla creator
12.17

9.8
10
7.65
4.89 7.12 kotak agg.
5.89
4.44
5.57
4.9 Growth fund
5 3.38 3.08 3.24
3.81 3.96 3.9
2.52
2.17 birla
0 magnifier
1m 2m 6m 12 m 18 m

Time Horizon

 Allocation rate of unit linked plans of various

companies:
 KOTAK LIFE:

kotak safe investment plan ||

96.50% 86%
1st yr
2nd yr
96.50% 3rd yr
96.50%
4th yr
5th yr
96.50% 96.50% 6th yr onwards

As the above graph depicts:

Allocation rate of unit linked plans of kotak safe investment plan || for
year 1- 86%.
Year 2 onwards-96.5%.

 ICICI prudential life insurance:

 Allocation rate of invest shield cash

plan
 invest shield cash

97% 70%
1st yr
2nd yr
90%
3rd yr
97% 4th yr
5th yr
6th yr onwards
97%
97%

As the above graph depicts:

Allocation rate of unit linked plans of invest shield cash plan:
yr1-premium<15k-70%.
15kto<25k-72%.
25k to < 50k-75%.
50k & above -77%.
Yr 2 -premium<15k - 90%,
15k&above - 92%.
Yr 3 onwards-97%.

 Allocation rate of invest shield gold

plan
 invest shield gold

99% 81% 1st yr

2nd yr
92.50% 3rd yr
97% 4th yr
5th yr
97% 92.50% 6th yr onwards

As the above graph depicts:

Allocation rate of unit linked plans of invest shield gold plan:
yr1-premium<50k-81%.
50kto<5l-85%.
5l & above -88%.
Yr 2 -premium<50k - 92.5%
,50k to <5i - 95%.
Yr3premium<50k-92.5%,
50kto<5l-95%.
yr4,5-97%.
yr 6 -10th - 99%.

 Allocation rate of life time||

investment plan
 life time || investment plan

98% 81%
1st yr
2nd yr
96% 3rd yr
96% 4th yr
5th yr
6th yr onwards
96%
96%

As the above graph depicts:

Allocation rate of unit linked plans of life time|| investment plan:

contribution 1styr 2nd- 6th- 11th yr

range 5th yr 10th yr onwards
up to 35,999 81% 96% 98% 99%
36k-99,999 83% 96% 98% 99%
1l-4,99,999 85% 96% 98% 99%
 HDCF STANDARD LIFE INSURANCE

 Allocation rate of unit linked

endowment plan:

unit linked endowment plan

99% 73%
1st yr
73% 2nd yr
3rd yr
99% 4th yr
5th yr
99% 6th yr onwards
99%

As the above graph depicts:

Allocation rate of unit linked plans of unit linked endowment plan:
yr1&2-premium upto 2lacs -73 %
from 2l to 5l - 80%
from 5l to 10l - 85%
above 10l - 90%
yr 3 onwards - 99%.
 BIRLA SUN LIFE INSURANCE
COMPANY.

 Allocation rate of birla classic life

premier:

birla classic life premier

98% 87%
1st yr
2nd yr
96% 3rd yr
98%
4th yr
5th yr
6th yr onwards
98% 98%

As the above graph depicts:

Allocation rate of unit linked plans of birla classic life premier:
year1 - 87%
year2- 96%
year 3 onwards -98%
  ADMINISTRATION CHARGES of unit linked
plans of various companies:

 Kotak life insurance

 ICICI prudential life insurance
 HDCF standard life insurance
 Birla sun life insurance Company

Administration charges
70

60 60
60

50 50
50
charges (in rupees)

40
33
30

20
15
10

0
kotak safe inve stshie ld inve stshie ld life time || unit linke d birla classic life
inve stme nt cash gold investme nt endowme nt premier
plan || plan plan
SWOT ANALYSIS:

Analysis of the strengths , weaknesses, opportunities and threats of

Om kotak mahindra life insurance ltd.

 KOTAK MAHINDRA’S STRENGTHS:

• Fully experienced and qualified staff.

• Adequate infrastructure, qualified manpower, office
space and computer network to support the proposed
activities.
• Strong customer relationship.
• Morally and ethically strong.

 WEAKNESSES:

• Its Advertising network is weak.

• No compromise on documentation formalities.

 OPPORTUNITIES:

• Highly potential market to grow.

• Rural market is still untapped by the other
companies.
• Awareness of insurance needs is increasing among
Indian people.

 THREATS:

• Slowdown in expected demand of some of

its products.
• Being old mutual undertaking its
business may be effected in polices.
• With around 12 private players, it is very difficult to
capture the market share.
 SUGGESTIONS

What should be the future Strategies of ‘Insurance Companies’

to differentiate themselves ?
Post- Liberalization this sector has seen intense competition. As we enter the
second phase of liberalization we are posed for a paradigm shift. The paper
discusses how the following strategies would help insurance companies in
India differentiate themselves.

 Products-Stars of the Future

 Distribution Strategy
 Pricing Strategy
 Customer Service
 IT as an enabler
 PRODUCTS –Stars of the future

The insurance products in India can be broadly classified into Life Insurance
and Non-life insurance.

Life Insurance

Life insurance is a well established product in the country. People view life
insurance policy as a secure, risk-free investment. Instead of product
innovation the need of the hour is to take it to the masses as estimates say
250-300 mn Indians are still insurable.

Non-Life Insurance

Non-life Insurance is the future driver of the insurance sector. Innovations

and re-alignment are suggested in the following products.

 Health Care Insurance

Worth over Rs 86,000 Cr and expected to grow by Rs 8000 Cr each year.

This is what the healthcare and health financing industry was estimated to
be. But it has not taken off. What ails the health care financing dream?

 Structural problems with the product including inflexible coverage

terms
 Un-organised health sector in the country
 No standardized medical rates
 No domain knowledge with the Insurance Industry
 No reliable medical history system in the country

What Next - The Future Strategy

  Recognize health-care as a separate line of business
 Reduce capital requirement from 100 crores to 30-50 crores.
 Introduce capital monitoring and product level norms for private
health insurers
 Universal health coverage can be reached with mandated Insurance
in urban areas and high public subsidies in rural areas
 Health care industry should create and adopt quality standards for
health care delivery
 Develop treatment protocols
 Defining standards for data requirements
 Developing risk sharing models with insurers and making patient
flows efficient by developing Hub & Spoke Models to avoid
overcrowding and over-treatment

 Travel-related health Insurance

About 7 million Indians travel overseas, out of which 2 % need medical

assistance and 0.3% emergency medical treatment. But hardly one million
out-bound travelers go for medical Insurance. Hence this market could be
harnessed. Flexible products for tech consultants and corporate travelers
who travel for even 2-3 days can be introduced.

 Crop Insurance

Crop Insurance enables farmers to insure themselves against income risks

over which they have no control and allows them to invest in new, green
revolution technology. New schemes should be introduced to protect farmers
against price and yield fluctuations which would arise due to changes
suggested by WTO (lifting of farm subsidies)

 Natural Disaster Insurance

It envisages creating a financing mechanism for dealing with losses due to

natural disasters like earthquakes and storms. The policy would look at
disaster profiling, disaster planning and asset allocation in the case of
disasters.The premiums for natural disaster Insurance can be collected as
part of municipal (property) tax, or as a surcharge at the time of transfer of
property.

 Terrorist risk cover

Currently the terrorist risk is covered as a standard peril in fire Insurance

policies. Following the 9/11 incidents in America and the subsequent attack
on Indian parliament, overseas re-insurers are refusing reinsurance of
domestic general insurer’s fire Insurance portfolio. A separate terrorist
attack Insurance with the following features should be launched

 Corpus fund to be created to reduce dependency on foreign re-insurers

 The corpus fund can be created out of the contributions from general
insurers.
 The contribution rate is pegged at around 3-5 % of their total premium
 The contribution may be made eligible for tax- breaks

 Group Insurance and Key Man Insurance

Group Insurance whereby a group of new entrants are insured is an

innovative method that can be used in the IT/ITES sector faced by high
recruitments and also high attrition. Also in the event of a key person, with
whom the performance of the company is linked leaves the firm, key man
Insurance could be the necessary shock absorber.

DISTRIBUTION STRATEGY
In a country of 1 Billion people, there is a vast untapped potential waiting to
be mined. The key to reaching them is to develop sound distribution
channels.
The traditional distribution model comprises

 Captive/Tied Agents : These are agents who sell policies of only

one Insurance company which employs them.
 Independent Agents : Individual agents who represent several
companies and place Insurance policies for their clients with the
company that offers the best rate and coverage.
 Corporate agents: Firms selling policies of several Insurance
companies.

An amendment in October 2002, to the Act of Corporate Agents, recognized

banks, brokers and other entities like cooperatives, NGOs and panchayats as
intermediaries who can sell Insurance for a commission. While under the old
laws the only corporate agent that was recognized, was a firm where all
directors were Insurance agents, the new law allows virtually any entity to
sell Insurance. The measure will give a big boost to the private insurers in
the country, who have been facing a distribution conundrum.

The various channels that can be used under the purview of the amendments
are:

1. Banks: Bancassurance in its simplest form is the distribution of

Insurance products through a bank's distribution channel. Banks can
straightaway leverage their existing capabilities in terms of database
and face to face contacts to market Insurance products.
2. Rural areas and small towns offer a huge potential to the Insurance
companies. This potential was largely untapped due to inadequate
distribution. The key to market access in these areas can be:
3. Co-operative societies
a. Village Panchayats
b. Post Offices

The Co-operative societies and village panchayats can act as

‘Corporate Agents’ to sell Insurance products most specific to the
community’s needs.

4. NGO-This channel could be used to increase awareness about the

Insurance products. As many NGOs have strong presence and a
positive reputation in rural areas they can prove to be an effective
channel.
5. Group Channels
 a. Worksite Groups: Worksite marketing is the selling of voluntary
(employee-paid) Insurance and financial products at the worksite. The
products may be on either an individual or group platform and are usually
paid through periodic payroll deductions.

b. Affinity groups: Affinity groups are homogenous groups. The

major advantage of selling Insurance to affinity groups is that
there is a greater likelihood of lasting.

6. Personal advisors such as accountants, lawyers, doctors and tax

planners
7. Mutual Funds: Mutual Funds could capitalize on their existing
customer bases to sell policies.
8. Hospitals: A tie up with hospital chains for selling health Insurance
can be an effective channel to reach a wide base of customers.

PRICING STRATEGY
Tariff is a schedule of premium rates, policies and conditions applicable to
risks in a class of business. Historically rates of premium have been
arbitrarily founded and progressively refined as experience was gained.
Statistics on the frequency and intensity of claims were built over long
periods and amorphous rate schedules constructed.

The Tariff market in India has been viewed to have a mixed bag of merits
and demerits.

Pros:
1. Global perception of Indian market as a stable market in terms of rates
terms and conditions.

2. Steady growth of the Insurance business with the tariffs providing

benchmark rates

Cons:

1. Standardization has inhibited innovation and restricted customer

choice.
2. Tariffs have destroyed underwriting skills and have led to the
proliferation of a bureaucratic attitude.
3. Since Tariffs are not based on adequate data, rates are not scientific
and realistic.
4. Tariffs do not respond in a timely manner to changes in rates in
international markets.

Detariffication is bound to happen as we have moved towards free market.

In all probable chances the IRDA is looking at detariffication in a phased
manner. The strategies that the Insurance companies should adopt so as to
proliferate in a detariffed market should be:

• Collation of Data: The biggest problem against detariffication is the

absence of proper data to fix the premium rates. This data can be
easily collated by the nationalized players that monopolized the
industry for long.

• Scientific Pricing models: Historically the rates of premium were

arbitrarily founded and refined over a period of time.What is actually
required is a systematic study of the risk profile of the
individual/industry, economic conditions etc. to arrive at the premium
rates. Various tools used are Stochastic Modeling, Financial Modeling
and Reporting, Actuarial Sciences.
 • etc. This would prevent him from being put in general class but would
help in accurately determining the premiums he needs to pay
depending on the risk calculated.
• Underwriters should be trained in the approach to rating making full
use of statistical data and statistical techniques.
• The marketing staff and frontline staff should be trained to collect
appropriate risk information at the time of rating and acceptance.
• Factors needed to be considered by Insurance companies while
arriving at the premium for a particular product

• Interest that will be earned on the funds

• Risk rates likely to be experienced
• Expenses of Management
• Taxation

CUSTOMER SERVICE
Products and prices in an Insurance industry can be easily duplicated. Thus
service becomes the only differentiator which will provide the competitive
advantage in the long run.

Customer Service through Agents

The Insurance agents are the interface between the customer and the
Insurance company. The agents should be able to accomplish the following
to improve service.

• Assessing and analyzing the client’s risk profile

 • Finding the best product or products available in the market
• Negotiating the best deal available
• Continuity of service throughout the period of Insurance
• Claims advisory service

Premia Collection

The Insurance premia till date are paid by cash or cheques. With the internet
technology revolutionizing the way business is done, a lot of time and
money could be saved by premium payment through this mode.

Customer Management Cell

Insurance companies should have a cell for customer management which

caters to the customer needs and complaints. They would do the following:

• Clear customer’s doubts and educate them about the products

• Provide printed literature about products in English and the regional
languages
• Respond faster to the customer’s complaints like premium collection,
renewal of policy etc.
• Educate the consumers about complaint redressal schemes like the
Ombudsman and the Consumer Courts. Insurance Ombudsman is a
quasi-judicial body established for speedy settlement of disputes in a
fair, impartial and judicial manner.

Building Brand Awareness

Insurance companies can contribute creating awareness by means of:

• Holding seminars and informal corner meetings

• Distributing brochures / handouts giving complete information of their
products
• Laying emphasis on the value of the product rather than on its price
• Advertisements speaking of the utilities of the products instead of
being loaded with slogans

Claims Processing
 • Response time between the claim and the actual payment should be
fast
• Incase of delayed payments ,fine should be paid by the Insurance
company
• In case of conflicting interests case should be referred to the
Ombudsman or Courts as the case may be.

IT-A Strategic Investment

Among all the hoopla, one factor that can, and is bringing sweeping changes
in the industry, in the manner it will work henceforth, is Information
Technology. Companies will need to redefine the way business was
conducted so far. Innovations in technology will help the following areas:

Marketing and Sales

IT supports an Insurance enterprise in

• Measuring effectiveness of distribution channels

• Developing front-end capability for collection of error-free data
• Identifying profitable customers for cross selling
• Tracking and routing leads
• Disseminating information thereby increasing efficiency in sales
• CRM solutions which capture information generated by client
encounters across all sales and service channels to present a single,
unified picture of the customer in all transactions

Channel Management

Agency management systems, call centres, computer telephony interface,

point of sales systems, portals, knowledge management applications, wealth
management, remote access and mobile computing support the distribution
agencies by providing timely information on products, customers and
market.

Internet and e-business

• Web-based applications enable insurers to connect, inform and

communicate with agents, partners, customers and end-users
 • Websites and portals are a low cost distribution channel to provide
information about products and services
• e-business enables and supports business by facilitating online quotes,
online policy issuance, online bill presentment and payment and
claims submission

Knowledge Management

Actuarial and risk assessment applications and rating solutions can be

integrated with the underwriting and claim applications enabling the insurers
to collect, collate, compile, analyze the risk related data and calculate
chances of loss and the average likelihood of an event happening.

Insurance Processing

IT solutions can be used effectively to improve the efficiency of the business

processes and maintaining accuracy, uniformity and consistency
.Technology-based transaction-centric solutions can be used for:

• Work flow and document management

• Electronic bill presentment and payment system
• Content management
• Sales force automation.
• Claims processing
• Fraud detection
 LIMITATIONS

LIMITATIONS:

In an attempt to make this project authentic and reliable every

possible aspect of the topic was kept in mind. Then to I faced many
problems. The main limitations are:
 Due to shortage of time and resources a countrywide survey was
not possible. Hence only Jalandhar City was undertaken for the
project research.

 Limited access to secondary data pertaining to KOTAK LIFE

INSURANCE COMPANY’S performance.

 There is always a difference between what people feel and what

they communicate. Since the project is based on survey this
limitation cannot be avoided.

 Due to very tight schedule of higher officials of insurance

companies they could not spare much time for the researcher.

 Due to the company’s polices they haven’t gave us the real picture
of the company’s performance.
 CONCLUSION

CONCLUSION:

In the light of above for going discussions the survey was carried out in
Jalandhar City to know the competition among the UNIT LINKED
INSURANCE PLANS of following 4 insurance companies:
  Kotak life insurance
 ICICI prudential life insurance
 HDCF standard life insurance
 Birla sun life insurance Company.

 NAMES OF UNIT LINKED PLANS:

 Kotak life insurance

 Kotak safe investment plan ||

 ICICI prudential life insurance

 Invest shield cash
 Invest shield gold
 Life time || investment plan

 HDCF standard life insurance

 Unit linked endowment plan

 Birla sun life insurance Company.

 Classic life premier

After the five decades of independence, the vital insurance industry is

coming into its own. On the one side .the government has recognized the
role that insurance can play in the revival of the national economy and has
accordingly, started taking steps to give a boost to insurance sector, and, on
the other, the industry, dominated nay virtually monopolized – by one
company all these years, is now attracting new players from private sector.
  The ultimate identity and success of insurance will reside as it always
has, in the exceptional quality of our people and their extraordinary
efforts. For the reason, insurance is committed to hiring, developing,
motivating and retaining the best people in the industry.

 Unit-linked life insurance contracts are now very popular in many

markets. They started in North America and the UK, but they have
rapidly spread to other countries, including continental Europe.
Basically, in such contacts, the return obtained by the policyholder on
its savings is linked to some financial index. Various types of
guarantees can then be added to the pure unit-linked contract and the
insurers have been quite inventive in this field: maturity and death
guarantees, premium refunding, rising floors, ratchets.These features
introduce risk in the form of implicit options and this additional risk
has to be managed and priced correctly.

The research is done to compare the unit linked plans of above mentioned
companies :

 On the basis of maturity grounds KOTAK LIFE & ICICI

,HDFC gives the better benefit i.e sum assured as compared
to BIRLA which does not provide any guarantee on sum
assured.

 In case of investment portfolio, the returns of funds provided

by kotak life are outperforming.

 Kotak mahindra life insurance’s allocation rate is maximum

i.e. 86% in the 1st year and 96.5% in the 2nd year onward as
compared to HDFC, ICICI and birla.

 The administration charges and other charges of HDFC

insurance are very low as they charge rs.15 per month but
the kotak life also charges reasonably low charges i.e rs.33
per month as compared to ICICI and birla.
  The lump sum charges are higher in case of kotak life
i.e.2.50% as other charges 1% except birla i.e. 2%

 Facility of switching is also provided schemes of kotak , at

unlimited bases at just little charges.

 The surrender terms are also easy going in case of kotak life
as compared to other companies.

From the research we can conclude that kotak mahindra life insurance is
outperforming and provides better term and conditions as compared to
HDFC, ICICI and BIRLA sun life insurance. At some points kotak lack due
to recent emergence as HDFC, ICICI, and birla are old player in insurance
sector.

Thus, future prospectus of insurance sector is very much bright in the Indian
market.
 BIBLIOGRAPHY

BIBLIOGRAPHY:
 Websites visited:
• www.kotakmahindralifeinsuraceltd.com
• www.irdaonline.com
• www.dinaonline.com

 Newspapers
• Hindustan times
• Economics times

 Magazines
• Insurance plus
• Business world
• Business today

 Visited various Insurance companies

for collecting data

 Information broacher of
• KOTAK life.
• ICICI prudential life insurance.
• HDFC standard life insurance.
• BIRLA sun life insurance.

 Life insurance websites.