A PROJECT REPORT ON

CONSUMER ATTRACTION & MARKETING OF GENERAL INSURANCE PRODUCTS

A CASE STUDY

SUBMITTED BY : PREETI GOEL ENROLLMENT NO : 52102517 COURSE : MBA (MARKETING) SESSION : 2005-2008

INSTITUTE OF MANAGEMENT TECHNOLOGY CENTER OF DISTANCE LEARNING GHAZIABAD

PROFORMA FOR PROJECT REPORT

Name: PREETI GOEL_____________________________________ Enrollment No : 52102517__________________________________ Venue Preferred for Viva-Voce : IMT- CDL GHAZIABAD_____ Mobile No : 9873573530___________________________________ Documents Enclosed:
1. 2. 3. 4.

Photocopy of approved synopsis. Photocopy of Evaluation Sheet form IMT- CDL Photocopy of Identity Card issued by IMT-CDL Acknowledgment letter from Project Guide. UNIT SALES MANAGER______________________

Designation :

Office Address : ICICI LOMBARD, 5TH FLOOR BIRLA TOWER, 25 BARAKHAMBA ROAD, NEW DELHI-110001____

Date of Submission : _________________________________________

ACKNOWLEDGEMENT

The present work is an effort to throw some light on CONSUMER ATTRACTION & MARKETING OF GENERAL INSURANCE PRODUCTS, A CASE STUDY OF ICICI LOMBARD. The work would not have been possible to come to the present shape without the able guidance, supervision and help to me by number of people. With deep sense of gratitude I acknowledge the encouragement and guidance received by my organizational guide Mr. Raheel Zuberi (Sales Manager of ICICI Lombard) and other staff members. I convey my heartfelt affection to all those people who helped and supported me during the course, for completion of my Project Report.

TABLE OF CONTENTS
Chapter1.0 1.1 1.2 1.3 1.4 1.5 1.6 Chapter 2.0 Chapter 3.0 Chapter 4.0 Chapter 5.0 5.1 5.2 5.3 5.4 5.5 5.6 Chapter 6.0 Chapter 7.0 Chapter 8.0 Chapter 9.0 Chapter 10.0 INTRODUCTION Structure Of Indian Insurance Industry Insurance Products Insurance Service at ICICI Lombard Business Model Customer Sales Promotion Competitors Information RESEARCH OBJECTIVE REVIEW OF LITERATURE RESEARCH METHODOLOGY DATA ANALYSIS Questionnaire Analysis Limitation Of Research Data Presentation Indian Non- Life Insurance Market Positioning Industry Product Composition RESEARCH FINDING CONCLUSION & IMPLICATION RECOMMENDATION BIBLIOGRAPHY APPENDIX

INTRODUCTION
Insurance A Definition

: Spreading the risk of loss from the individual to

a group of individuals .Main purpose of insurance is to protect against unforeseen risks. Where General Insurance takes care of a person while he/she is alive. ICICI Lombard General Insurance Company Limited is a 74:26 joint venture between ICICI Bank Limited and the US-based $ 26 billion Fairfax Financial Holdings Limited. ICICI Bank is India's second largest bank, while Fairfax Financial Holdings is a diversified financial corporate engaged in general insurance, reinsurance, insurance claims management and investment management. Lombard Canada Ltd., a group company of Fairfax Financial Holdings Limited, is one of Canada's oldest property and casualty insurers. ICICI Lombard General Insurance Company received regulatory approvals to commence general insurance business in August 2001. The INDIA MOTOR VEHICLES ACT, 1938 passed by the Government of India makes insurance mandatory for any vehicle that is being run on petrol or diesel on Indian roads. However some companies like the United India Insurance Company also insures cars and two-wheelers fitted with a CNG or LPG kit against a payment of an additional premium. India 's number one private general insurance company First general insurance company in India to be ISO 9001:2000 certified Assigned the iAAA rating by ICRA indicating highest claims paying ability. Awarded the NDTV Profit Business Leadership Awards 2007 in the General Insurance category on July 27, 2007. Adjudged at the General Insurance company of the Year at the 11th Asian insurance industry Awards 2007. The Institute of Chartered accountants of India has conferred the Gold Shield award for Excellence in Financial Reporting to ICICI Lombard under the 5

category Banking , Insurance & Financial Institutions based on the annual report and accounts for the year ended March 31,2006. ICICI Lombard has won the Economic Times Awaya Global Connect Customer Responsiveness Awards 2006 for the most Customer responsive Company in the insurance category. The Awards are a measure of excellence in product innovation and service quality in response to the customer needs. In this context they are a reflection of the core values tat drive ICICI Lombard There are quite a few companies in the market which provide you the much needed relief and peace of mind when you start your two-wheeler and leave for your destination. 1. ICICI Lombard General Insurance 2. Oriental Insurance Company Limited 3. United India Insurance Company 4. New India Assurance Company Limited The Indian Motor Vehicles Act makes it mandatory for all vehicles plying in the country to have a valid insurance policy, to bail you out of trouble when you get into an unforeseen incident. Though the exact nature of insurance policies may differ from company to company a general review of the two-wheeler insurance policy is as follows.

Features of ICICI Lombard

First general insurance company in India to be ISO 9001:2000 certified Highest brand recall Simple and fast documentation Lightning fast claims settlement Instant online policy issuance Comprehensive product line Highest security level offered through 128-bit encryption in case of online data exchange.

First

company

to

provide

digitally signed documents through an online interface. Achieved financial breakeven in first full year of operations Achieved underwriting breakeven in second year of operations

PRIVATISATION IN THE INSURANCE INDUSTRY

Causes
Breaking of Monopoly Possibility of Insurance cover taken to the remote rural areas Better service proposition for customers. Possibility of innovation.

Result
Better pricing for the consumer. Better service proposition Innovation (launch of new products)

STRUCTURE OF INDIAN INSURANCE INDUSTRY

Insurance Regulatory and Development Authority General Insurance Public Sector

New India National United Oriental

Private Sector
ICICI Lombard Bajaj Allianz TATA-AIG IFFCO Tokio Cholamandalam Royal Sundaram HDFC- Ergo Reliance

Car Insurance Introduction

ICICI Lombard brings a comprehensive Package Policy for your four-wheelers,

which covers Third Party Liability (TPL) for bodily injury and/or death, Personal Accident cover for owner-driver and loss or damage to the vehicle insured (Own Damage or OD).

Policy Coverage
a) Loss or damage to your vehicle: The policy covers you against any loss or damage caused to the vehicle or its accessories due to the following natural and man made calamities. b) Natural Calamities Fire, explosion, self-ignition or lightning, earthquake, flood, typhoon, hurricane, storm, tempest, inundation, cyclone, hailstorm, frost, landslide, rockslide. c) Man made Calamities Burglary, theft, riot, strike, malicious act, accident by external means, terrorist activity, any damage in transit by road, rail, inland waterway, lift, elevator or air. The rates of the vehicle and its parts are subject to depreciation as per the schedule provided by the Indian Motor Tariff. d) Personal accident cover: The motor insurance provides compulsory personal accident cover for individual owners of the vehicle while driving. You can also opt for a personal accident cover for passengers. e) Third party legal liability: This protects you against legal liability arising due to accidental damages 9

-Any permanent injury/ death of a person -Any damage caused to the property. f) No Claim Bonus: If you do not make a claim during the policy period, a No Claim Bonus (NCB) is offered on renewals. g) Additional discounts: You can also avail of additional discounts if you are a member of a recognized Automobile Association in India. h) ARAI devices: In case you have installed ARAI approved anti theft device in your vehicle, you get a discount of 2.5 % on the OD Premium to a maximum of Rs. 500.

Key Benefits
A digitally signed policy is issued immediately through online facility. You can claim towing charges up to Rs 1,500 through 24*7 call centers. Cashless claim settlement at network garages all across India.

Policy Exclusions
Under this policy, you are not covered against Normal wear, tear and general aging of the vehicle Depreciation or any consequential loss Mechanical/ electrical breakdown Wear and tear of consumables like tyres and tubes Vehicle being used otherwise than in accordance with limitations as to use Damage to/ by a person driving the vehicle without a valid license Damage to/ by a person driving the vehicle under the influence of drugs or liquor / Loss/ damage due to war, mutiny or nuclear risk

10

Travel Insurance Introduction

To ensure Travel exciting and happy , ICICI Lombard offers a comprehensive range of travel insurance plans , catering to specific individual needs , covering any eventually.

Features
ICICI Lombard General Insurance has introduced overseas travel cover for senior citizens aged between 71 years and 85 years under its Globetrotter Overseas Travel Insurance umbrella. The policy is aimed to meet the needs of approximately one lakh senior citizens per year, who mainly travel to the US, Europe and West Asia, said a press release. "We are happy to introduce a policy for senior citizens. With life expectancies going up, we are becoming older as a nation. The need for adequate protection through insurance is also on the rise. But senior citizens have limited insurance options available to them," said the release, Head Marketing, ICICI Lombard General Insurance. the "With the increasing number of Indians going abroad for studies and work, number of parents going to visit them is also on the rise. Our research showed that there was a strong felt need to make insurance policies available for senior citizens," Mr. Jain said.

11

This insurance cover is designed to take care of emergencies such as medical expenses incurred for illness or accident, including any extra additional medical costs, if necessary, and prescribed transportation to India, loss of checked-in baggage etc. It also covers reasonable expenses necessarily incurred for emergency purchase of essential items in case of a delay in checked-in baggage for more than 12 hours, loss of passport, accidental body injury, personal liability resulting from death, injury or damage to a third party and hijack.

Plan Options
Single Trip: For a one-time individual traveler. Multi Trip: annual policy for frequent travelers. Family Trip: preferential pricing for a family of 3 or more. Platinum Plan: a comprehensive plan with a SUPER BASKET of benefits. Gold Plan: a value for money cover, covering more than medical risks. Silver Plan: a pure health cover for your basic needs. Bronze Plan: the short trip for neighboring countries plan. Salt & Pepper Plan: applicable for customers aged between 71 to 85 years. Student Travel Insurance: Designed to comply with University norms. Students traveling abroad have to take a compulsory MEDICAL INSURANCE .

What is not covered in this Policy ?

Some Main Exclusions are : Medical expenses arising out of pre- existing conditions (except in case of life threatening situations ), addiction to alcohol *, drugs*, mental disorder*, anxiety , depression , venereal disease, HIV ,radiation , sporting activities* war and war like consequences, expenses arising out of loss of valuables, money ,securities and tickets; loss of passport in public places; employers contractual liability. Sub-limits applicable. 12

*include Insurance

for

Student

Travel

Travel Insurance- Comparative Statement

Benefits 1. E xtensio n fo r a S ec o nd Y ear

ICICI Lom ba rd Ba ja j Allia nz Ta ta AIG

2. M edic al E xpenses fo r ac c ident and sic kness 3. E nhanc ed M edic al benefits that are c om pliant to university no rm s a. Treatment for m ental and nervous disorders, including alcoholism and drug dependency b. In-patient medical expenses related to pregnancy c. M edical expenses for inter-collegiate sports injuries d. Cancer screening and mammographic examinations e. C hildcare benefits 4. S ic kness C o verage fo r 1 full year 5. O utpatient treatm ent fo r sic kness fo r full 365 days 5. Dental T reatm ent 6. Repatriatio n o f Rem ains 7. C hec ked Baggage Lo ss 8. Perso nal A c c ident 9. Perso nal Liability 10. Bail Bo nd 11. S tudy Interruptio n 12. S po nso r Benefit 13. 2 W ay C o m passionate V isit 14. Felo nio us A ssault +

13

Home Insurance-Introduction
Home is where the heart is. There are no truer words than these. However natural calamities & man-made dangers can threaten the security of our home. Painful as it can be we need to secure it and provide for re-creating it, in case of damage due to unforeseen circumstances. So that insurance company has introduced Home insurance to guarantee absolute peace of mind form all uncertainties in our day-today life with this unique policy.

ICICI Lombard Home Insurance Policy has a comprehensive range of covers to

protect your Home and your life.

What Does The Policy Cover?

1. Structure Cover : The compensation under this cover will be paid to repair damages to the structure caused by natural and man-made calamities. 2. Contents cover : This is for the possessions inside the home. If these are damaged or burgled then the insurance covers the loss incur for the same. 3. Personal Accident Cover : Death of Insured person on account of an Accident.

14

Exclusions
Structure and Contents Insurance
Willful destruction of property. Loss, Damages and destruction caused by war, perils, Wear and tear atmospheric conditions etc. Losses if your house has been unoccupied for more than 30 days without any notice to ICICI Lombard. Cash, Bullion, Paintings, works of art antiques, mobiles and laptops. Theft. Losses due to electrical fluctuations. Electrical /Mechanical Breakdown.

Personal Accident Cover

Intentional self injury, suicide or attempted suicide. Whilst under the influence of intoxicating liquor or drugs. Directly or indirectly caused by venereal disease or AIDS. Directly or indirectly caused by contributed to or aggravated or prolonged by children or pregnancy or in consequence thereof. Engagement in dangerous activities. Mounting into dismounting form or traveling in any aircraft other than as a fare paying passengers on a scheduled flight. Mental disorder or psychosomatic dysfunction.

15

Health Insurance-Introduction
Life is full of surprises.some bitter some sweet. For Medical emergencies like surgeries, accidents and sudden illnesses. ICICI Lombard General Insurance Company Limited brings Family Protect, a complete Health insurance Plan that is flexible enough to cover all members of the family.

Product Benefits
Cover medical expenses during hospitalization Cost of bed, medical care, doctors fees, medicines as per the doctors recommendations. Medical expenses for a 30- day period immediately before hospitalization Medical expenses for a 60- day period immediately after hospitalization. Cashless Hospitalization at 3400+ hospitals pan- India. Modern Day care treatments covered. Plans available : Individual, and Floater: 2Adults, 2 Adults + 1 Kid, 2 Adults + 2 Kids. No Sub-Limits for coverages except for Cataract. Income tax benefit under Section 80 D up to Rs 15,000/

Exclusions
Diseases / injury existing before the inception of health Insurance Policy. 16

Any

disease

contracted

during the first 30 days of inception of Policy. Non- allopathic treatment. Pregnancy & Children related diseases. Intentional self- injury. Diseases such as HIV or AIDS. Diseases existing from the time of birth (Congenital diseases). Cosmetic, aesthetic, obesity related treatment. Abuse of Liquor, intoxicating substances or drugs War, riot, strike, terrorism, nuclear weapons induced hospitalization.

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INSURANCE SERVICES AT ICICI LOMBARD

ICICI LOMBARD is a livelihood promotion institution working in several arid and backward districts spread over seven states. ICICI LOMBARD works towards its mission of livelihood promotion by providing a comprehensive set of services, which include I. Livelihood Financial Services (Credit, Insurance & Savings), II. Agricultural and Business Development Services (Productivity enhancement &Market linkages), III. Institutional Development Services. ICICI LOMBARD is head quartered at Hyderabad. As part of its mission to deliver comprehensive financial services to rural customer, ICICI LOMBARD began its initiatives to deliver insurance services four years ago, coinciding with the opening up of the insurance sector. From the beginning ICICI LOMBARD has actively partnered with multiple insurance companies to design insurance products for rural customers. In the area of life insurance with AVIVA Life Insurance Company. ICICI LOMBARD has worked with Royal 18 ICICI LOMBARD has worked with ICICI Prudential to begin with and is currently working

Sundaram general insurance company for the delivery of Livestock insurance, Health Insurance and Micro-Enterprise cover for rural non-farm enterprises and with ICICI Lombard for the delivery of rainfall insurance. In 2003, ICICI LOMBARD was also given a Corporate Agency license by IRDA to distribute retail life insurance products from AVIVA.

VISION
All poor households, especially those served by ICICI LOMBARD, will have access to risk-management services covering their lives and livelihoods, and insurance companies will provide these services willingly on a financially sustainable basis. Some Examples are-

1. Public Awareness Campaign in Assam

ICICI Lombard along with the government of Assam has introduced Mukhyomantrir Jibon Jyoti Bima Achoni- a group PA (Personal Accident) policy Assamese residents who feature on the voters list. While this is a scheme specially sensitive to the treatment worries of the common man, one of the local media alleged the government of not settling claims of the common man. This called for ICICI Lombard to take tactful steps to ensure the companys image remains untarnished in the unprecedented media controversy. In order to increase awareness of this socially oriented scheme .ICICI Lombard released full page & double spread ads across all the major 40 local language & English dailies providing the complete and updated list of the names of the thousands of people whose claims had already been processed and cheques waiting to be picked up. This in effect refuted the false allegation made by the stray local media. Thereafter in a bid to consolidate the awareness and goodwill, front page solus ads were released highlighting specific instances in which claims had been settled. The awareness communication was also carried across 125 bus panels and 500 banners across the state. 19

2. Weavers Health Insurance Scheme

Product Weavers Health Insurance Scheme, in a tie-up with the Development Commissioner Handlooms, Ministry of Textiles, Govt. Of India, was launched by Mr. Shanker Singh Waghela on 7th Nov 2005. It was launched with the objective of ensuring adequate healthcare facilities for the less fortunate weavers community ( handloom). The primary marketing objective is to generate more and more enrolments. This could be achieved by educating the existing weavers on the health care benefits and facilities provided by ICICI Lombard on behalf of Development Commissioner Handlooms, Ministry of Textiles , Govt. of India. Marketing initiatives has been undertaken for states across the country- Tamil Nadu, Rajasthan, etc. A host of posters and banners in regional languages for display in the local hospitals across the country are being developed and rolled out in phases. Also, health check are being organized in UP. Over 3 lacs weaver have already been enrolled for during the course of this nation wide awareness drive. the Weavers Policy

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Business Model Of ICICI LOMBARD

Area: Rainfall Insurance
ICICI Lombard General Insurance Company Limited. (ICICI Lombard) is a 74:26 venture between ICICI Bank, India's largest private sector bank and Lombard, one of the oldest property and casualty insurance companies in Canada. The company received regulatory approvals to commence general insurance business in August 2001.

21

ICICI

LOMBARD

and

ICICI

Lombard along with the Commodity Risk Management Group, World Bank, have done pioneering work in piloting rainfall insurance in India, starting with the first time introduction of the product in the year 2003. In 2005, the product has been rolled out in all six states where ICICI LOMBARD has an operational presence. In the three product cycles that have been completed so far, significant progress has been achieved in terms of the product design and delivery mechanism. a. Products ICICI LOMBARD has today the experience of delivering a wide range of products in both Life and Asset Insurance. Most of these products have been designed with active participation between ICICI LOMBARD and the insurance companies to bring out products that are tailor made to the rural customers that we serve. The current product portfolio that ICICI LOMBARD is delivering to its customers is given below:

Asset Insurance
Livestock Insurance: A group policy insuring cattle, sheep and goat. Micro Enterprise cover: Insuring rural non-farm enterprises Rainfall Insurance: insuring agricultural activities against deviation in rainfall.

Health Insurance
ICICI LOMBARD has launched on in May-05 a health insurance product for its credit customers which covers risks related to permanent total disability, critical illnesses and hospitalization expenses to a certain limit. In Mar-06 ICICI LOMBARD has also launched this product for covering SHG members.

b. Outreach
Geographic presence: ICICI LOMBARD is today delivering and servicing insurance products across all the 8 states where it has operations, with a direct presence in 22

over 10,000 villages. By the end of Mar 06 ICICI LOMBARD has delivered insurance services, both life health and asset insurance to over 200,000 rural households. Has settled claims to more than 1800 rural households.

c. IT and Process developments

To enable smooth processing of insurance policies across various product categories and across various geographic locations, processing and claims servicing. ICICI LOMBARD has also developed clear financial and operational procedures for administering the various insurance products, which have supported our insurance operations for the past three years. ICICI LOMBARD has developed robust IT applications. These applications provide support to policy

d. Service Levels
Today ICICI LOMBARD is delivering insurance services at the doorstep of our customers, which has resulted in 1.increased awareness levels among household members on features and benefits of various products and 2. providing the entire life and livelihood protections services through a single channel. ICICI LOMBARD has also worked with insurance companies to achieve quick turn around time for claim settlements. Today through ICICI LOMBARD channel, claims are being settled within within 30 days from the day of submission of claim documents to insurance companies. ICICI LOMBARD is further working with the insurance companies to better this performance. In case of rainfall insurance, the claims have been settled to eligible farmers even before the harvesting season has been completed.

e. Training

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ICICI LOMBARD has conducted extensive classroom and field level training on Insurance to over 900 staff over the past two years. 120 executives in the company have undergone the IRDA prescribed online insurance training and qualified in the course.

f. ICICI Bank
As per the referral agreement between ICICI Lombard and ICICI Bank , the lead is generated by the ICICI Bank representatives and if the customer shows interest, the customer is referred to the ICICI Lombard representative present in the branch for explanation of the product features and completion of the sales fulfillment process. ICICI Bank is a referral agent of ICICI Lombard.

CUSTOMER SALES PROMOTION

In a study conducted by IMRB, an internationally acclaimed research agency, ICICI Lombard has scored the highest Total Brand Awareness, with 90% of General Insurance Holders and 87% of Non- Holders across India being aware of ICICI 24

Lombard. These awareness levels include and aided recall. We also delivered the highest Top of Mind Recall( first unaided mention of a general Insurance Company). Not only this but also ICICI Lombard has a progressive and a dynamic human resource (HR) philosophy. The company believes in transforming its human capital into a key source of competitive advantage. There is a strong value system in place, which is driven by result orientation, adaptability to change, humility and respect for subordinates and peers. The company believes that investment in human capital is critical for achieving and sustaining growth. The companys constant Endeavour is to create a performance driven work culture with focus on employee satisfaction and retention.

Challenges and growth

Indian consumers will not buy a car online. However, s/he is most willing to get empowered before entering into a buying & selling decision. Even today, Car buying is not a pleasant experience. With all the hassles, haggle and time spent, people often face frictions and come of the experience not feeling so good about it. There are opportunities to improve Car buying and ownership experience by delivering information and tools which help consumer spend his/her money on the right car at right price and at right place. Today, With car valuation / car recommendation services, today, some 80% consumers report that we have helped them in their car buying/selling experience (And Im talking at least a few lacs here). Besides, user generated content / reviews etc are a high hit, consumers refer to them a lot.

And our figures says that around 35% of buyers who came online were genuine who finally entered into a transaction. On the dealer side, used car market is also fragmented and dominated by a large number of small brokers/ dealers (Mumbai will have around 4000 25

dealers/brokers and Delhi have at least 1000 mid size dealerships). Web actually helps them reduce their cost of acquiring customer and reach beyond their geography. Of course, this was not so obvious to them. Over time, we generated multiple thousands of car purchase inquiries and distributed those free to dealers. And for which their reaction was not encouraging enough. However, today dealers are willing to experiment more with us and are actually paying us to get them consumers through web. We also see more encouraging figures. Google ad spent of automotive companies this year is around Rs. 10 million (IAMAI & Pinstorm report). I know at least of one company who successfully delivered lead aggregator model in US, have actually started working in India on similar lines. We see more of Maruti/ Tata/ Toyota ads online than ever before. ICICI Lombard have aggressively focused to acquire consumers online.

Some Examples are

a)

No Parking Gate Boards- In keeping with focus on effective media

solution, ICICI Lombard pioneered the NON- PARKING SIGNBOARDS as a marketing initiative. This activity combining a relevant message and brand awareness across the country.

b)

Traffic Barricade Campaign- The traffic barricade campaign has

been one of the most intensive activities undertaken with a large number of barricades planted across Mumbai alone. The barricades with a relevant road

26

safety message reflect

ICICI

Lombards commitment as a socially responsible corporate. Furthermore, these public utilities have simultaneously provided us with unique branding opportunity to make the presence felt in a clutter breaking manner.

c)

Outdoor Campaign For Overseas Travel A month long

sustained awareness cum lead generation drive was undertaken in Delhi for Overseas Travel Insurance. The creative was developed to communicate the benefits of the product and a call to action upfront. In a city with limited outdoor opportunity, 3 mobile vans carrying the communication constantly moved around the city in mapped ot routes to get maximum mileage and leads from the activity.

d)

Rural- Sumo Campaign- Sumo Campaign gains its name from

Sumos moving around with the Weather Insurance Communication. This activity 27

meant to mark the launch of I Lombard- weather Insurance product for soyabean in Kota & Jhalawar (Rajasthan). Aside from the visual branding these sumos also generated considerable interest by announcing the product launch and the features on speaker phones. The creative was a simple and reliable one for the rural audience, highlighting the key benefits in language script. 7500 farmers enrolled as a result of this communication drive.

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COMPETITORS INFORMATION
A. NEW INDIA INSURANCE
New India Insurance was Incorporated on July 23rd, 1919 Founded by the House of Tata Founder member- Sir Dorab, Nationalised in 1973 with merger of Indian Companies. Gross Premium (in India) of Rs.5017.20crores in the year 2008-2007 as against Rs4791.49crores as on 31st March 2007. Network of Offices26 Regional Offices, 393 Divisional Offices, 314 Branches and 34 Direct Agent Branches. Overseas presence in countries like Japan, U.K, Middle East, Fiji and Australia.

B. ORIENTAL INSURANCE
The Oriental Insurance Company Ltd was incorporated at Mumbai on 12 th September 1947. The Company was a wholly owned subsidiary of the Oriental Government Security Life Assurance Company Ltd and was formed to carry out the General Insurance Business. The Company was a subsidiary of Life Insurance Corporation of India from 1956 to 1973 (till the General Insurance Business was nationalized in the country). In 2003 all shares of the company held by the General Insurance Corporation of India has been transferred to Central Government. The company is a pioneer in laying down systems for smooth and orderly conduct of the business. The companys Gross Direct premium Income in India during the year 2007-08 (Audited) was Rs3808.13crores and the Premium Income outside India was Rs92.07crores. The Gross Direct Premium in India & abroad showed a growth of

29

3.00%. The Net Premium Income (Domestic and Foreign), on the other hand grew by -0.04% from Rs2879.74crores in 2006-07 to Rs2878.67crores in 200708.

C. NATIONAL INSURANCE
National Insurance Company Limited was incorporated in 1906 with its Registered office in Kolkata. Consequent to passing of the General Insurance Business Nationalization Act in 1972, 21 Foreign and 11 Indian Companies were amalgamated with it and National became a subsidiary of General Insurance corporation of India (GIC) which is fully owned by the Government of India. After the notification of the General Insurance Business (Nationalization) Amendment Act, on 7th August 2002.National has been de-linked from its holding company GIC and presently operating as a Government of India undertaking. National has Headquarters in Kolkata , network of about 1000 offices, manned by more than 16000 skilled personnel . NICs foreign operations are carried out from its branch offices in Nepal and Hong Kong. The paid-up share capital of National is Rs100crores . Starting of with a premium base of 500 million rupees (50crores rupees) in 1974. NICs gross direct premium income has steadily grown to 35236.7 million rupees (3523.67crores rupees) in the financial year 205-2006.

D. BAJAJ ALLIANZ
Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Finserv Limited (recently remerged from Bajaj Auto Limited) and Allianz SE. Both enjoy a reputation of expertise, stability and strength. Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration on 2nd May,2001 to conduct General Insurance business (including Health Insurance business ) in India. The Company has an 30

authorized and paid up capital of Rs.110 crores , Bajaj Finserv Limited holds 74% and the remaining 26% is held by Allainz, SE. As on 31st March 2008, Bajaj Allianz General Insurance maintained its premier position in the industry by garnering a premium income of Rs2578crore, achieving a growth of 43% over the last year. Bajaj Allianz has made a profit before taxes of Rs167crore and is the first company to cross the Rs100crores mark in profit after tax by generating Rs105crores. In the first quarter of 20082009, the company garnered a gross premium of Rs733.53crores against Rs573.73crore last year for the same period registering a growth of 28%.

E. RELIANCE GENERAL INSURANCE CO LTD

Reliance General Insurance is one of Indias leading private general Insurance companies with over 94 customized insurance products catering to the corporate, SME and individual customers. The Company has launched innovative products like Indias first Over-The Counter health & home insurance policies. Reliance General Insurance has extended network of over 200 offices spread across 173 cities in 22 states, a wide distribution channel network, 24x7 customer service assistance and a full fledged website. It is also Indias first insurance company to be awarded the ISO 9001:2000 certification across all functions , processes, products and locations pan-India.

F. ROYAL SUNDARAM
Royal Sundaram Allianz Insurance Company Limited has been at the forefront of providing innovative insurance solutions for people , their families and business. The company got license post privatization in 2001. Royal Sundaram brings the reliability of Sundaram Finance (AAA), one of the most respected nonbanking financial institution in India, and RSA, one of the oldest and the second largest general insurer in the UK. 31

G. TATA AIG
Tata AIG General Insurance Company Limited (Tata AIG General ) is a joint venture company, formed by the Tata Group and American International Group, Inc(AIG). Tata AIG General combines the Tata Groups pre-eminent leadership position in India and AIGs global presence as the worlds leading international insurance and financial organization. The Tata Group holds 74% stake in the insurance venture with AIG holding the balance 26%. Tata AIG General Insurance Company ,which started its operations in India on January 22,2001. The Tata Group has generated the revenue of $28.8billion (Rs129,994crore) in 2006-07 ,the equivalent of about 3.2% of the countrys GDP and a market capitalization of $72.8 billion as on January 10,2008. The groups 27 publicly listed enterprises-among them stand out names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea- have a combined market capitalization and a shareholder base of over 2.9 million.

H. POLICY BAZZAR
Policy Bazaar is Indias leading online life and non-life insurance aggregator. It helps in comparing the insurance products from leading insurance companies, basis their quality and price, and offer the customer the power to choose the best suited insurance plan. Make the Right Choice tagline builds the expertise in Insurance and e-commerce. It empower the customer through providing accurate and complete information on Insurance products combined with the SolutionFocused Customer Service. In short Policy Bazaar provides comparison of general and life insurance products (including quotes)with the facility to purchase the insurance online.

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RESEARCH OBJECTIVE
1. 2. 3. 4. To study the trends, status and potential of general Insurance Industry in India To analyze the consumer behavior towards ICICI Lombard products To critically appraise the marketing strategies of ICICI Lombard To determine that what factors should the company focus on to attract greater Market share

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RESEARCH DESIGN /METHODOLOGY

1. Target Population: Target population for this research will be the existing customers of ICICI Lombard and the officials of ICICI Lombard in the area of the Delhi and NCR.

2. Sampling Technique: Judgmental and convenience sampling will be used to conduct the survey of the research.

3. Sample Size: As the research will be conducted on the existing customers of ICICI Lombard and its officials, it will include some judgmental questions about the company so many of them will be skeptical that whether the information provided by them would be kept confidential or not. A medium sample size of 50 customers and 10 ICICI Lombard officials will be chosen who are willing to share information and want to be a part of the survey. 4. Research Tool and Questionnaire: For this research, personal contacts, personal observation and market survey tools will be used. I will personally contact the customers of ICICI Lombard, and officicials of the company after getting the data from the company and get the questionnaires filled. The questionnaire will be designed after conducting a pilot survey in the company.

34

5. Action Plan for Data Collection: In the first stage Secondary data will be collected from different websites and books to know more about general insurance and study the work already done in this field on this topic. After that primary data will be collected by using questionnaire and getting them filled personally from the customers and officials of ICICI Lombard. The customers and officials of ICICI Lombard will be chosen from the different parts of the Delhi and NCR which will include East Delhi, West Delhi, North Delhi, South Delhi, Central Delhi, NOIDA, Ghaziabad, Gurgaon and Faridabad.

35

LITERATURE REVIEW
Mapping for risk management
ICICI Lombards use of a GIS solution for risk management was the first project of its kind in the Indian insurance industry. Risk management is defined as the process of planning, organizing, leading and controlling the activities of an organisation in order to minimize the effects of risk on the said organizations capital and earnings. Enterprise risk management expands this process to include not just the risks associated with accidental losses, but also financial, strategic, operational, and other risks as well. ICICI Lombard used a Risk Management System (RMS) that helped it zoom into spatial level risk data representing real-world entities including both georeferenced and quantitative attributes attached to it at a national scale. It also used GIS solutions to use tools, maps, and latest census demographic data. This helped the company get a clearer picture of the levels of risks associated not just with financial information, but also with natural risk-prone geographies. It allowed the company to understand its customers better and make strategies according to the more accurate levels of perception offered by the solution.

A Unique Deployment
The use of a GIS-based RMS was essentially to identify areas on a map with high population density, a large concentration of rental properties, or other demographic characteristics that affect whether to underwrite a property for fire or burglary insurance. Further he reckons that it can determine if a home is in a flood plain, near a fault area, or is susceptible to wild fires and other hazards to make informed decisions on whether to underwrite a property for hazard insurance or find the driving distance to the nearest fire station or police station. 36

For an insurance organisation like us it makes sense to have such systems as it helps in determining the correct details of a property. It is interesting to note that the project began in February 2004 and was completed in seven months (September 2004) flat. The Web part of the project took about ten months (began in November 2004 and ended in September 2005). All together it cost Rs 35 lakh.

OBJECTIVES ACCOMPLISHED
In managing insurance policies, getting the correct details is of prime importance. Gulati believes that if the system for analyzing the information related to policy and customer concentration service is available, decisions are much more accurate, efficient and quick. Another reason for deploying such systems was to incorporate regulatory requirements of Nat-Cat (Natural Catastrophic) limits in reinsurance treaties, provide real-time information of potential damages in case of a natural calamity and provide business intelligence requirement at the geographical level to ensure elimination of bad risk. Since the implementation of the new systems, the claims processing takes a shorter turnaround time. Says Gulati, GIS helps claims processors use the customer or claim location address on a map relative to other claims and to boundaries such as flood and storm limits. In case of reinsurance, it helps in better premium count by identifying good and bad risks. Damages are assessed and modeled to help the rein surer predict the results of future events, thus providing more accurate underwriting. A big advantage has been the increase in the number of customers. The GIS software combined with Government of Indias census demographic data packages allows insurers to profile potential and existing customers and perform predictive modeling to find new opportunities.

37

The RMS helps to zoom into spatial level risk data representing real-world

entities including both geo-referenced and quantitative attributes attached to it at a national scale. This application helps to manage risks in a better way, and operate more efficiently by geographically assessing and analyzing information about underwriting, risk management, and customer service. Map Info, a Geographical Information System (GIS) based desktop application is used for deploying the RMS and help assess and analyze information related to policy and customer concentrations. It includes risk information and analysis of different nature, such as estimated impact of frequency and severity of earthquakes or other natural calamities, which ultimately leads to efficient management of risk and correct pricing of policies. Though it is too early for the company to talk on ROI, it has predicted that over a period of three years, it would be able to increase the revenues by Rs. 47.85 crore. The systems have already benefited nearly 50 employees in reinsurance and underwriting. According to Gulati, once the Web-based module is rolled out, it will benefit 800 more employees and around 35,000 customers. ICICI Lombard Insurance Services implements Talisma v6 CRM TalismaTM, a provider of multi-channel CRM solutions, announced that its solution has been deployed by ICICI Lombard, a leading provider of customized insurance solutions. Talisma v6 will provide ICICI Lombard's customers with enhanced customer service through quicker and more accurate claims processing. ICICI Lombard customer service representatives now have a single-screen view that provides a 360-degree perspective and complete audit trail of each customer enquiry. This enquiry includes contact information, customer profiles, appointments, and service queries, regardless of communication method (chat, email, or phone). The improved speed and accuracy of claims powered by Talisma v6, has led to increased customer retention rates for ICICI Lombard. 38

Implementation of Talisma v6 has allowed ICICI Lombard to map its internal claims process, eliminating the need for call centre agents to process and forward each document individually to the company's claims managers. Once information has been added into the system and verified, Talisma v6 records each detail of each claim and assigns the claim to the organizations operations team for payment. This new integration permits agents to manage claim requests quickly and accurately saving time by matching information from a range of back office systems.

"Our CRM strategy spans the entire organisation from front-office to backoffice. It is a commitment that we have made to put customers at the heart of our company. We are focused on using multi-channel and self-service capabilities to help in our business growth. With the success of Talisma v6, we plan to expand the footprint to include our partners through Talisma's Web client, giving them access to relevant functions over the internet," said Sudhir Salian, head IT and retail , ICICI Lombard.

From a marketing perspective, Talisma's v6 enables ICICI Lombard to proactively build customer relationships through outbound-targeted campaigns. Contact databases can now be integrated into the CRM solution, providing staff with campaign management tools. This ensures that each contact receives the correct outbound communication, thereby dramatically increasing customer acquisition levels.

"Improving customer retention and acquisition is vital in today's competitive global insurance market. We have helped ICICI Lombard reduce the complexity and time spent on each claim by eliminating the need to process information from a variety of different back-end systems.Our partnership with ICICI Lombard underlines the value Talisma brings to the insurance services marketplace. "

ICICI

Lombard

Gen

Insurance

expands

southern

operations

Even as the city-based private insurers are finding it tough to crack the market, ICICI Lombard General Insurance Company is going great guns in 39

the southern market. After storming the fire insurance market, the company is now looking at marine hull insurance. The company has got sizeable share of coinsurance from Sanmar Shipping and West Asia Maritime hull insurance policies. "Our share in the Sanmar policy is 25 per cent while it is 35 per cent in the West Asia policy. According to him the southern region will close the first quarter with a premium income of Rs 30 crore as against Rs 40 crore earned last fiscal. The company has got good entry in the Sanmar group, India Cements, Madras Cements, KCP and other leading industrial groups in south. .More than the basic fire insurance policy, we are focusing on selling the Consequential Loss of Profits insurance policy that fetches good premium income. ICICI Lombard is also into liability insurance in a major way. The company has sold unique clinical trial insurance policies to couple of pharma companies based in Hyderabad. The policy covers the drug companies against any claims from persons who are volunteers for human clinical trials. "Sufficient reinsurance cover has been taken by us while selling the clinical trial and marine hull insurance policies," Bharathan says. Meanwhile, ICICI Lombard is expanding its reach in the four southern states by leveraging ICICI Bank's branch network. By paying rent and other charges to its parent, ICICI Bank, the insurance company will operate from the bank premises. According to Bharathan each branch should fetch a premium income of at least Rs 1 crore per annum to be economically viable. With brokers being its major source of corporate business, ICICI Lombard conducts regular training courses to broking officials so that they are well aware of the products, and terms and conditions

40

41

QUESTIONNAIRE ANALYSIS
DATA ANALYSIS & INTERPRETATION
1. Data gives preference of respondents of insurance company

COMPANYS NAME
L.I.C. SBI LIFE INSURANCE ICICI LOMBARD OM KOTAK MAHENDRA HDFC TOTAL

NO.OF RESPONDENT
78 7 10 3 2 100

SHARE (%)
78 7 10 3 2 100

PREFERENCE FOR INSURANCE COMPANY

NUMBER OF RESPONDENT 100 80 60 40 20 0 1 NAME OF POLICY

L.I.C. SBI LIFE INSURANCE ICICI LOMBARD OM KOTAK MAHENDRA HDFC

42

INTERPRETATION
78% of the people have LIC policy and is ranked number one by that percent of respondent. 2. Data gives benefits of insurance cover perceived by respondents. BENEFITS COVER FUTURE UNCERTANITY TAX DEDUCTIONS FUTURE INVESTMENT TOTAL NO.OF RESPONDENTS 55 20 25 100 SHARE (%) 55 20 25 100

BENEFITS OF INSURANCE COVER

C OVER F UT UR E UNC ER TA NITY TA X DEDUC TIONS FUTUR E INVESTM ENT

43

INTERPRETATION
55% of the respondent believe that covering future uncertainty is the biggest benefit of insurance policy 20% & 25% of them believe that other benefit are tax deduction & future investment 3. Data provides features of insurance policy attracted the respondents FEATURE MONEY BACK GUARENTEE LARGER RISK COVERANCE EASY ACCESS TO AGENTS LOW PREMIUM REPUTATION OF COMPANY TOTAL NO.OF RESPONDENTS SHARE (%) 15 37 7 30 11 100 15 37 7 30 11 100

FEATURES OF INSURANCE POLICY

MONEY BACK GUAARENTEE LARGER RISK COVERANCE EASY ACCESS TO AGENTS LOW PREMIUM REPUTATION OF COMPANY

44

INTERPRETATION

Majority of the respondent found larger risk conversance as the most

attracted feature of their policy. 4. Data provides number of insurance policy type respondents POLICY TYPE LIFE POLICY NO. OF RESPONDENTS 75 SHARE (%) 75

NON LIFE POLICY BOTH

25 45

25 45

NATURE OF POLICY

80 NUMBER OF RESPOND ENTS 60 40 20 0 1 POLICY TYPE

LIFE POLICY NON LIFE POLICY BOTH

45

INTERPRETATION

75% of the respondents have a life insurance policy while

45% have both.

5. Do you know that commercial vehicles be insured online at ICICI LOMBAR?

40

60

YES

NO

Currently, only private cars can be insured online. But we are in the process of launching online insurance for commercial vehicles too.

46

6. Do you know , one can take a policy for a vehicle belonging to someone else?

40 60

YES

NO

Yes, The person who buys the policy need not be the owner himself. Anyone can buy

47

the policy acting on behalf of the insured.

48

7. Why do we need to insure our vehicle?

For the safety of passengers

25

25
For the safety of fellow drivers

25

25

Because it is Other peoples property Insurance helps cover the costs of potential damages

Your car is probably one of the expensive things you own. Insurance protects this asset and helps you in coping with the expense of accidents, damage or theft. While driving, you are responsible for the safety of: For the safety of passengers

49

For the safety of fellow drivers

Because it is Other peoples property Insurance helps cover the costs of potential damages Insurance helps cover the costs of potential damages or injuries in case of an unforeseen accident or theft. And above all, in India it is mandatory to have motor insurance before you can drive on the roads.

Analysis of data has been done with help of various statistical tools. There are percents simple average and time series analysis of the market report of ICICI Lombard .

50

LIMITATION OF THE RESEARCH

As far as limitations are concerned present research work has been completed in the face of following major constraints. The data used in my research study is both primary and secondary data. Latest data and information about the market report of ICICI Lombard . The data is available of almost a decade.

51

DATA PRESENTATION
Financial Year Figures in nos. No. of policies sold No. of claims settled No. of employees No. of offices Figures in Million Gross Written Premium Net Earned Premium Profit before Tax Profit after Tax Share Capital Net Worth Investments Total asset Ratios in % Claim Ratio Commission Ratio Expense Ratio Combined Ratio 2005-06 1,461,039 243,951 2,283 154 15,920 5,277 545 503 2,450 3,729 9,065 16,391 74% (17%) 41% 97% 2004-05 607,926 84,970 1,249 96 8,852</TD< tr> 2,156 539 484 2,200 2,494 4,641 7,689 70% (28%) 47% 89%

Business Booms for Non-life Companies

The May issue of IRDA Journal carried the premium performance figures of the general insurers for 2002-03. These indicate that the industry, at least revenue-wise, never had it so good. A comparative analysis of the public and private players for the last two years sends out a powerful message that liberalization has worked wonders, as the industrys pie has grown by over 20 per cent in 2002-03 to record a premium level of about Rs. 14,000crores from the previous Rs. 11, 600crores. Both

52

the

sectors

seem

to

have

performed well. The four public players have recorded an impressive growth of 13 per cent to reach Rs. 12,500crores up from Rs. 11,140 crores. It is, however, the private players that have stolen the annual show for the brighter performance. Not only have they pulled up the industrys overall growth rate higher to 20 per cent by their sect oral performance of 180 per cent growth rate but they have also made heavy inroads into the profitable segments of Fire, Marine and Engineering portfolios of the market.

Private players While the private players have garnered a 9.5 per cent share of the market up from 3.5 per cent last year, it is even more remarkable that they have captured 14 per cent (Rs. 3,000crores) market share in the Fire, seven per

Cent (Rs. 1200crores) of the Marine and eight per cent (Rs. 9,700crores) of the miscellaneous portfolios, including 18 per cent (Rs. 720crores) of the Engineering portfolio. (Figures in bracket are the figures for the market as a whole.) The marketing strategies of the private players seem pretty clear and that is to ambush the public players in the most sacred of their profitable 53

portfolios that is the Fire and Engineering portfolios that have a market volume of Rs. 3,700crores.

The most interesting piece of information for analysts is the fact that the Health premium, a late starter in the market, at a volume of over Rs. 1000crores, has outstripped the traditional Engineering business (Rs. 720crores) transacted in the country for over 50 years! Who deserves the motivational credit for the rapid rise in volumes, the insuring public, who desperately want to buy medical insurance or the insurers salesmen who want to penetrate the market? Is medical insurance going on the Motor trail, though it is not mandatory? It seems to be demand driven like the Motor business.

Motor Business Private players have a market share of only seven per cent in Motor, a very wise move, to avoid getting in to too much paper work, litigation and losses

54

55

56

Low
57

Increa involv

Ch
58

Indian non- life insurance market is under- penetrated.

Country India Zimbabwe Malaysia Japan South Korea England USA asset

Premium as per share of GDP 1.2% 2.15% 2.19% 2.45% 3.79% 3.34% 4.64%

Per

capita spend in

India is one of the lowest. GI plays a major share in the insurance spend largely is to industry worldwide.
Corporate

limited

insurance

59

Market Positioning

High

ICICI Lombard Government Companies Bajaj Allianz Iffco Tokio

Niche Players HDFC Ergo Reliance

TATA AIG Royal Sundaram Cholamandalam

Low

PRODUCT $ SERVICES

High

60

Industry Product Composition

Marine Cargo Health Misc Fire Eng Marine Hull Motor Marine Cargo

64% of the portfolio is

Fire Engineering Motor

36% of the Portfolio is

Marine Cargo Health Liabilities Miscellaneous

61

RESEARCH FINDINGS
ICICI Lombard Facilitates Anywhere, Anytime Business with Citrix Technology ICICI Lombard is a joint venture between ICICI Bank the second largest bank in India and Lombard General Insurance Canadas oldest insurance provider. With over 50 products and sales of 3,000 policies per day, the company offers a host of insurance solutions to corporate, small and medium enterprises (SME) and retail customers. ICICI Lombard employs 1,000 workers in 75 locations all over India.

The Challenge: Enable Business Mobility for End-users

The insurance business is information-driven and competitive. In an emerging market where both private and government players vie for a huge customer pie, ICICI Lombard understands the value of fast, efficient and centralized information access.

Not only are ICICI Lombards offices dispersed geographically throughout India, but its employees are also mobile within their respective locations, bringing sales and services to the homes and businesses of their clients. The company needed an efficient technology solution that would enable its employees and agents to administer and present insurance services and products from anywhere and at any time. Moreover, in addition to providing information access, the company needed to be able to support these mobile users cost-effectively, to easily deploy applications to them, and to minimize the cost of bandwidth required for remote connectivity.

Said Mr. Sanjay Motwani, national manager, Technology at ICICI Lombard General Insurance Company Limited, With the diversity of locations at ICICI Lombard and a high volume of products and sales, we had an acute need to centralize applications for faster rollouts. This is where Citrix stepped in and streamlined our processes. 62

Implementing a Citrix Solution for Workforce Mobility

ICICI Lombard partnered with system integrator WIPRO to implement a solution using Citrix Presentation Server running on HP ProLiant 380 and Dell 1750 Servers. Currently, more than 400 users connect to the centralized system to access relevant modules like Premia (an ERP application), Final 7 (insurance accounting system) and an Investment System via Windowsbased thin clients and laptops. Unlike in the past, ICICI Lombards insurance employees and agents are now able to structure all types of the companys available insurance products, independent of time and location. Averred Mr. Motwani, Citrix technology has helped to maintain and consolidate our competitiveness in the marketplace. Our employees enter our system through a WAN, broadband internet, and dial-up and access the advanced end-to-end policy issuance framework, including customer profiling, quotation processing, policy issuance and payment process. The system is designed to generate a policy in less than 10 minutes.

Improved System Administration Generates Cost Savings

Thanks to the Citrix solution, ICICI Lombard has seen a significant reduction in process and administrative costs. These savings come largely from the centralized administration inherent to using Presentation Server, which enables IT staff to deploy, manage and update users systems without needing to be at the location of the end-user. Said Mr. Motwani, Our high travel costs were eating into the bottom line, but now our total reduction in the travel component is 70 percent, which means an annual saving of about Rs. 10 lakhs. Centralized management also allows ICICI Lombard to rapidly scale its system according to changing business needs. Adding or removing 63

applications

or

users

is

simple and can be accomplished from the main location without travel. This makes the entire process hassle-free and fast, saving on manpower and costs. In nutshell, with the effective use of Citrix technology, we have made our operations cost-effective, said Mr. Motwani.

Better Customer Service for Competitive Advantage

Another major benefit of the Citrix solution is improved business efficiency, which translates to faster close-of-sale and higher customer retention. Since employees are able to access the most up-to-date information and applications on-demand from one of the companys multiple offices or on the road they can provide clients with needed information instantly, on the spot. The new infrastructure means customers can be serviced faster, and all policies related issues can be monitored and tracked at any point at any time. For instance, a discrepancy can be tracked and corrected immediately, thereby saving considerable time, and more customers can be efficiently serviced with existing resources. The higher manageability characteristics of Citrix Presentation Server also mean negligible downtimes a key element to maintain business mobility and customer satisfaction.

64

SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2006

ICICI Lombard General Insurance Company Limited (the Company) was incorporated on October 30, 2000. The Company obtained regulatory approval to undertake General Insurance business on August 3, 2001 from the Insurance Regulatory and Development Authority (IRDA) and has also obtained its certificate of renewal of registration.

Basis of preparation of financial statements

The financial statements have been prepared and presented under the historical cost convention, on the accrual basis of accounting, and comply with the applicable accounting standards issued by the Institute of Chartered Accountants of India (ICAI), and in accordance with the provisions of the Insurance Act, 1938, Insurance Regulatory and Development Authority Act, 1999, the Insurance Regulatory and Development Authority (Preparation of Financial Statements and Auditors Report of Insurance Companies 65

Regulations),

2002

(the

Regulations) and orders / directions prescribed by the IRDA in this behalf , the Companies Act, 1956 to the extent applicable in the manner so required and current practices prevailing within the insurance industry in India. The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the balance sheet date, reported amounts of revenues and expenses for the year and disclosure of contingent liabilities as of the balance sheet date. The estimates and assumptions used in these financial statements are based upon managements evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from those estimates. Any revision to accounting estimates is recognized prospectively in current and future periods. Significant accounting policies

Revenue recognition Premium income Premium is recorded for the policy period at the commencement of risk and for installment cases, it is recorded on installment due dates. Premium earned is recognized as income over the period of risk or the contract period based on 1/365 method, whichever is appropriate on a gross basis net of service tax. Any subsequent revision to premium is recognized over the remaining period of risk or contract period.

Adjustments to premium income arising on cancellation of policies are recognized in the year in which it is cancelled. Income from reinsurance business .

Commission on reinsurance business is recognized as income in the year of ceding the risk.

66

Profit

commission

under

reinsurance treaties, wherever applicable, is recognized as income in the year of final determination of profits and combined with commission on reinsurance ceded.

Income earned on investments.

Interest income on investments is recognized on an accrual basis. Accretion of discount and amortization of premium relating to debt. Securities is recognized over the holding/maturity period on a straight line basis. Dividend income is recognized when the right to receive dividend is established. Realized gain/loss on securities, which is the difference between the sale consideration and the carrying value in the books of the Company is recognized on the trade date.

In determining the realized gain/loss, cost of securities is arrived at on Weighted average cost basis. However, in case of listed equity shares and mutual fund units the profit or loss on sale also includes the accumulated changes in the fair value previously recognized in the fair value change account in respect of the particular security, which is transferred to the profit and loss account on the trade date.

Sale consideration for the purpose of realized gain/loss is net of brokerage and taxes, if any, and excludes interest received on sale. Commences subsequent to the balance sheet date.

Reinsurance premium. Insurance premium on ceding of the risk is recognized in the year in which the risk commences. Any subsequent revision to premium ceded is recognized in the year of such revision. Adjustment to reinsurance premium arising on cancellation of policies is recognized in the year in which it is cancelled.

67

Reserve for unexpired risk

Reserve for unexpired risk is recognized net of reinsurance ceded and represents premium written that is attributable and to be allocated to succeeding accounting periods for risks to be borne by the Company under contractual obligations on a contract period basis or risk period basis, whichever is appropriate. It is calculated on a daily pro-rata basis subject to a minimum of 50% of the premium, written on policies during the twelve months preceding the balance sheet date for fire, marine

Cargo and miscellaneous business and 100% for marine hull business, on all unexpired policies at year end, in accordance with section 64 V(1)(ii)(b) of the Insurance Act, 1938.

Claims
Claims incurred comprise claims paid, estimated liability for outstanding claims made following a loss occurrence reported and estimated liability for claims Incurred But Not Reported (IBNR) and claims Incurred But Not Enough Reported (IBNER). Further, claims incurred also include specific claim settlement costs such as survey/legal fees and other directly attributable costs. Claims (net of amounts receivable from reinsures/coinsurers) are recognized

on the date of intimation based on estimates from surveyors/ insured in the respective revenue accounts. Estimated liability for outstanding claims at balance sheet date is recorded in the respective revenue accounts, net of claims recoverable from/ payable to coinsurers/reinsures and salvage to the extent there is certainty of realization. Estimated liability for outstanding claims is determined by management on the basis of ultimate amounts likely to be paid on each claim based on past experience. These estimates are progressively revalidated on availability of further information.

68

IBNR

represents

that

amount of claims that may have been incurred during the accounting period but have not been reported or claimed. The IBNR provision also includes provision, if any, required for claims. IBNER. IBNR/ER liabilities are based on an actuarial estimate duly certified Appointed Actuary are disclosed in note 5.2.4.

by the Appointed Actuary of the Company. The assumption used by the

Acquisition costs
Acquisition costs are those costs that vary with, and are primarily costs related to the acquisition of new and renewal of insurance contracts viz. commission, policy issue expenses, etc. These costs are expensed in the year in which they are incurred.

Premium Deficiency
Premium deficiency is recognized when the sum of expected claim costs and related expenses exceed the reserve for unexpired risks and is computed at a business segment level.

Investments
Investments are recorded at cost on trade date and include brokerage, transfer charges, stamps etc, if any, and excludes interest accrued up to the date of purchase.

69

Classification
Investments maturing within twelve months from balance sheet date and investments made with the specific intention to dispose off within twelve months are classified as short term investments. Investments other than short term investments are classified as long term investments.

Valuation
In accordance with the Regulations, investments are valued as follows:

Debt securities

70

All

debt

securities

including

government securities are considered as held to maturity and accordingly stated at historical cost subject to

Forming part of the financial statements

Continued amortization of premium or accretion of discount on a straight line basis over the holding/maturity period.

Equity shares
Listed equity shares as at the balance sheet date are stated at fair value, being the lowest of last quoted closing price on the National Stock Exchange or The Stock Exchange, Mumbai.

Mutual fund units

Mutual fund investments are stated at fair value, being the closing net asset value as at balance sheet date. In accordance with the Regulations, unrealized gain / loss arising due to changes in fair value of listed equity shares and mutual fund investments are taken to the fair value change account. This balance in the fair value change account is not available for distribution, pending realization.

Employee Stock Option Scheme (ESOS)

The Company follows the intrinsic method for computing the compensation cost, for options granted under the scheme(s). The difference if any, between the intrinsic value and the grant price, being the compensation cost is amortized over the vesting period of the options. 1. Fixed assets and Intangibles 2. Fixed assets and depreciation 3. Fixed assets are stated at cost less accumulated depreciation. Cost includes the purchase price and any cost directly attributable to bringing the asset to its working condition for its intended use.

71

4. Depreciation

on

assets

purchased/disposed off during the year is provided on pro rata basis with reference to the month of additions / deductions. Depreciation is provided on a straight-line basis, pro-rata for the period of use at the rates prescribed in Schedule XIV to the Companies Act, 1956 except in the case set out below where depreciation is provided at a rate higher than those prescribed under Schedule XIV to the Companies Act, 1956. Depreciation on information technology equipment is provided @ 25 percent.

Intangibles
Intangible assets comprising computer software are stated at cost less amortization. Computer software including improvements are amortized over a period of 5 years, being the managements estimate of the useful life of such intangibles. All assets including intangibles individually costing less than Rs 5,000 are fully depreciated/amortized in the year in which acquired.

Impairment of assets
The Company assesses at each balance sheet date whether there is any indication that any asset may be impaired. If any such indication exists, the carrying value of such assets is reduced to its recoverable amount and the impairment loss is recognized in the profit and loss account. If at the balance sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss is reversed and the asset is restated to that effect. Retirement benefits Provident fund This is a defined contribution scheme and contributions payable to the Regional Provident Fund Authority is provided on the basis of specified percentage of salary and is charged to profit and loss account and revenue account(s).

72

Gratuity
Gratuity, which is a defined benefit scheme is provided on the basis of actuarial valuation at year end and is recognized in the profit and loss account and revenue account(s).

Basis of allocation
Retirement benefit expenses are allocated to profit and loss account and revenue account(s) on the basis as explained in paragraph 5.1.10.

Foreign currency transactions

Transactions denominated in foreign currencies are recorded at the rates prevailing on the date of the transaction. Foreign exchange denominated current assets and liabilities, are translated at the rates prevalent at the date of the balance sheet. The resultant gains/ losses are recognized in the profit and loss account and revenue account(s). Taxation Current tax The Company provides for income tax on the basis of estimated taxable income for the current accounting period in accordance with the provisions of the Income Tax Act, 1961.

Deferred tax
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to timing differences between the accounting income as per the Companys financial statements and the taxable income for the year. Deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognized using the tax rates that have been enacted or substantively enacted by the balance sheet date.

73

Deferred

tax

assets

are

recognized only to the extent there is reasonable certainty that the assets can be realized in future, however, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognized only if there is virtual certainty of realization of such assets. Deferred tax assets are reviewed as at each balance sheet date and appropriately adjusted to reflect the amount that is reasonably/virtually certain to be realized.

Fringe benefit tax

Provision for fringe benefit tax is made on the basis of expenses incurred on employees/other expenses as prescribed under the Income Tax Act, 1961. Share issue expenses Share issue expenses are adjusted against share premium account.

Contingencies
Contingent losses arising from claims other than insurance claims, litigation, assessment, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. A disclosure for a contingent liability other than those under policies is made when there is a possible obligation or a present obligation that may, but probably will not require an outflow of resources.

ICICI Lombard to focus on health

74

ICICI Lombard General Insurance the largest private non-life insurer has decided to increase the share of health insurance in its portfolio to close to 18%. The company has decided to have an independent health set up within the organisation.

We have created an independent health vertical and have already employed 10 doctors. It is like having a health insurance company within the company said Sandeep Bakhshi, managing director, ICICI Lombard General Insurance.

Health insurance currently accounts for around 10% of total non-life business in the country. While there is a huge demand for health covers the public sector companies had been reluctant to increase their share because of a claims ratio that is increasingly turning adverse.

Claims for the industry are almost 100% of the premium. However, of late private companies have been showing a renewed interest in the sector because of the huge potential. Bajaj Allianz General Insurance has set up a Health

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Administration Team within the company to manage its health business. The IRDA has also received one proposal from a stand-alone health insurance company Star Health to be promoted by private investors led by former United India Insurance chairman . If group mediclaim were to be taken into account our claim ratio is quite adverse. However, if you look only at individual policies than the claims ratio is around 60%. ICICI Lombard has secured the topslot in the new business collection among the private general insurers of the country in the first-half of the current fiscal. Reliance General Insurance has clocked the highest growth in the period, as per the figures released by the Insurance Regulatory Development Authority (Irda). In absolute terms. ICICI Lombard has generated new business of Rs 702 crore followed by Reliance General Insurance with absolute new business of Rs 302 crore. The Anil-Ambani led general insurance company in this period has witnessed a growth of nearly 397 percent followed by ICICI Lombard which registered a percentage change of 85 percent over the corresponding period of 2005-06, Ida figures state. IFFCO-Tokio, Bajaj Allianz and Tata AIG secured the next three positions with absolute new business collections of Rs 227 crore, Rs 218 crore and Rs 108 crore, respectively.

Amex, ICICI Lombard. HPCL launch credit card

American Express has launched a general insurance credit card in association with ICICI Lombard and Hindustan Petroleum Corporation Ltd (HPCL). The card comes loaded with attractive freebies like American Express RPM (Rewards, Points and More). Cardholders can pay their motor insurance premium over a period of three, six, nine or 12 months as interest-free equated monthly installments (EMIs) and can avail of cashless car insurance claim settlement at 400 select automobile garages in around 70 cities.

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According to ICICI Lombard, the card would best meet the needs of car owners in every aspect service level, first EMI and auto renewal.

The card also offers 5 per cent savings on fuel bills whenever members use the card to purchase fuel at HPCL outlets. While the 2.5 per cent service charge will be waived off, savings will also be accumulated as rewards points. These points can be redeemed into fuel vouchers. To become a member, the customer should have a gross taxable income of at least Rs4 lakh per year. The annual fee is Rs2,000.

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CONCLUSION
The challenges in the insurance industry and the accelerating pace of developments have provided the much-needed impetus to ICICI Lombard to enhance its performance. The company has witnessed a profit after tax of Rs 317.8 million for the year ended March 31, 2004 as against Rs 32.98 million in the corresponding period last year. The company is growing at a steady pace and has carved a niche for itself in the general insurance segment. ICICI Lombard General Insurance has obtained ISO 9001:2000 certification from DET Norske Veritas (DNV) for establishing a quality management system with regard to settlement of motor claims, according to a release. ICICI Lombard has an aggressive future road map. it plans to add various BI related features, such as time-series analysis and trend analysis, which will be available to the sales force. The system would also allow rural data mapping, weather insurance, analysing historical weather information depicting natural catastrophes and allow for corporate database mapping.

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BIBLIOGRAPHY
1. Alessandra Del Conte, Roundtable on Micro insurance Services in the Informal Economy: The Role of Microfinance Institutions, http://www.microinsurancecentre.org/resources/Documents/Roundtable.pdf, July 21,2000. 2 .Warren Brown et al., A Cautionary Note for Microfinance Institutions and Donors Considering Developing Micro insurance Products, http://www.microinsurancecentre.org/resources/Documents/Cautionary_Note.pdf, December 2000. 3 .Ulrich Hess, Innovative Financial Services for Rural India- Monsoon Indexed Lending and Insurance for Smallholders, http://www.itf-commrisk.org/documents/indiafinsvc.pdf, July 2003. 4 .Monique Cohen and Jennifer Sebstad, Reducing Vulnerability: The Demand for Micro insurance, MicroSave-Africa, 2003. 5 .Gilles Davignon, The Poor and Their Risk- How to Alleviate Poverty by Reducing the Impact of Hazard? The Micro insurance Promise, http://www.microfinancegateway.org/files/20620_The_poor_and_their_risk.pdf, June 2004.

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6 .Michael J. McCord and Craig Churchill, Delta Life- CGAP Working Group on Micro insurance Good and Bad Practices, http://www.ilo.org/public/english/employment/finance/download/delta1.pdf, February,2005. 7 .Vijay Mahajan and Sonu Aggarwal, Risks Faced by Rural Poor in India and Risk Mitigation Measures, http://www.isb.edu/tgif/Risk%20Mitigation%20for%20the%20Poor%20_2_.pdf, May 6, 2005. 8 .http://www.rbi.org.in/scripts/BS_SpeechesView.aspx?Id=206 9 http://www.einsuranceprofessional.com/artgeneva.htm 10 .www.basix.com 11 www.icicilombard.com 12 www.irdaindia.org 13.www.microinsurancecentre.org 14. www.yearofmicrocredit.org

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QUESTIONNAIRE
1. ARE YOU EMPLOYED? YES NO

2. DO YOU HAVE ANY INSURANCE POLICY? YES NO

IF ANS. OF Q.2 IS YES, THEN PROCEED ELSE ANSWER Q.8

3. WHICH INSURANCE POLICY DO YOU HAVE? LIFE NON-LIFE`` BOTH

4. WHICH COS INSURANCE POLICY YOU PREFER THE MOST? (RANK THEM) a) LIC b) ICICI LOMBARD c) SBI LIFE INSURANCE d) ING VYSYA LIFE e) OM KOTAK MAHINDRA f) TATA AIG LIFE g) ANY OTHER___________(PLEASESPECIFY) 83

5. FOR HOW MANY YEARS DO YOU HAVE INSURANCE POLICY? (PLEASE TICK)

a) <5YRS SPECIFY)

b) 5-10 YRS

c) 10-15 YRS d) ANY OTHER______ (PLEASE

6. WHAT DO YOU THINK ARE THE BENEFITS OF INSURANCE COMVER? (RANK THEM) a) COVER FUTURE UNCERTAINITY b) TAX DEDUCTIONS c) FUTURE INVESTMENT d) ANY OTHER ____________ (PLEASE SPECIFY)

7. WHICH FEATURE OF YOUR POLICYATTRACTED YOU TO BUY IT? (RANK THEM) a) LOW PREMIUM b) LARGER RISK COVERANCE c) MONEY BACK GUARNTEE d) REPUTATION OF COMPANY e) EASY ACCESS TO AGENTS f) ANY OTHER ____________ (PLEASE SPECIFY)

8. YOUR MONTHLY HOUSEHOLD INCOME? a)<10k b)10k-20k c)20k-30k d)30k-40k e)ANY OTHER_____(PLEASE SPECIFY)

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9. DO YOU REALLY THINK INSURANCE POLICY COVER IN TODAYS SCENARIO IS NOT ESSENTIAL? ________________________________________________________ ________________________________________________________

THANKYOU! NAME:______________________________ ADDRESS:___________________________ ____________________________________ ____________________________________ OCCUPATION:_______________________

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