icici life insurance - copy
TRANSCRIPT
EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes and growth in
the years ahead. Delivering service, building trust and being innovative are key areas
in which any company will have to excel in order to do well in the long road ahead.
Different companies will take different approaches and it would be myriad of
solutions that will be found to delight the Indian customer.
During the first part, I was given complete classroom training about the various unit
linked as well as the traditional plans and solutions which the company offers.
Later, Market Research was done through various activities and tele-calling which are
discussed further in the report. Activities led to practical exposure and taught me the
aspects of customer dealing.
Finally, interesting conclusions were drawn out of the data collected regarding the
Awareness of Financial Planning among the people in today’s environment.
It was great experience because selling an insurance product demands a great deal of
confidence and product knowledge.
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INDUSTRY PROFILE
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.
The story of insurance is probably as old as the story of mankind. The same instinct
that prompts modern businessmen today to secure themselves against loss and disaster
existed in primitive men also. They too sought to avert the evil consequences of fire
and flood and loss of life and were willing to make some sort of sacrifice in order to
achieve security. Though the concept of insurance is largely a development of the
recent past, particularly after the industrial era – past few centuries – yet its
beginnings date back almost 6000 years.
Life Insurance in its modern form came to India from England in the year 1818.
Oriental Life Insurance Company started by Europeans in Calcutta was the first life
insurance company on Indian Soil. All the insurance companies established during
that period were brought up with the purpose of looking after the needs of European
community and these companies were not insuring Indian natives.
Bombay Mutual Life Assurance Society heralded the birth of first Indian life
insurance company in the year 1870, and covered Indian lives at normal rates.
Bharat Insurance Company (1896) was also one of such companies inspired
by nationalism. The Swadeshi movement of 1905-1907 gave rise to more
insurance companies.
The United India in Madras, National Indian and National Insurance in
Calcutta and the Co-operative Assurance at Lahore were established in 1906.
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In 1907, Hindustan Co-operative Insurance Company took its birth in one of
the rooms of the Jorasanko, house of the great poet Rabindranath Tagore, in
Calcutta.
The Indian Mercantile, General Assurance and Swadeshi Life (later Bombay
Life) were some of the companies established during the same period.
The Parliament of India passed the Life Insurance Corporation Act on the 19th of
June 1956, and the Life Insurance Corporation of India was created on 1st September,
1956, with the objective of spreading life insurance much more widely and in
particular to the rural areas with a view to reach all insurable persons in the country,
providing them adequate financial cover at a reasonable cost.
Some of the important milestones in the life insurance business in India are:
1850: Non life insurance debuts with triton insurance company.
1870: Bombay mutual life assurance society is the first Indian owned life insurer.
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
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Act, 1956, with a capital contribution of Rs. 5 Crore from the Government of India.
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 recognizing that insurance is an important part of the
overall financial system where it was necessary to address the need for similar
reforms…”.
The Insurance Regulatory and Development Authority (IRDA)
The Insurance Act, 1938 had provided for setting up of the Controller of Insurance to
act as a strong and powerful supervisory and regulatory authority for insurance. Post
nationalization, the role of Controller of Insurance diminished considerably in
significance since the Government owned the insurance companies.
But the scenario changed with the private and foreign companies foraying in to the
insurance sector. This necessitated the need for a strong, independent and autonomous
Insurance Regulatory Authority was felt. As the enacting of legislation would have
taken time, the then Government constituted through a Government resolution an
Interim Insurance Regulatory Authority pending the enactment of a comprehensive
legislation.
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The Insurance Regulatory and Development Authority Act, 1999 is an act to provide
for the establishment of an Authority to protect the interests of holders of insurance
policies, to regulate, promote and ensure orderly growth of the insurance industry and
for matters connected therewith or incidental thereto and further to amend the
Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General
insurance Business (Nationalization) Act, 1972 to end the monopoly of the Life
Insurance Corporation of India (for life insurance business) and General Insurance
Corporation and its subsidiaries (for general insurance business).
Insurance Sector Reforms
Prior to liberalization of Insurance industry, Life insurance was monopoly of LIC.
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 recognizing 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:
Structure
Government 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.
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Competition
Private Companies with a minimum paid up capital of Rs.1 billion should be allowed
to enter the sector. 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.
Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set
up. Controller of Insurance- a part of the Finance Ministry- should be made
independent
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)
STATISTICS (INDIAN & GLOBAL)
This section gives the users important and detailed statistics of the Indian as well as
the Global insurance industry. These statistics would give important insights of where
the respective markets are headed for.
The global life insurance market stands at $1,521.2 billion while the non-life
insurance market is placed at $922.4 billion.
The United States itself accounts for about one-third of the $2443.6 billion
global insurance market and Japan stands next with a 20.62% share.
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India takes the 23rd position with US $9.933 billion annual premium
collections and a meager 0.41% share.
Out of one billion people in India, only 35 million people are covered by
insurance.
India's life insurance premium as a percentage of GDP is just 1.77 per cent.
The income derived by GIC and its subsidiary companies through investment
was Rs.2491.76 crore and the investable fund generated was Rs.2843 crore in
1999-2000.
Indian insurance market is set to touch $25 billion by 2010, on the assumption
of a 7 per cent real annual growth in GDP.
NATURE OF INDUSTRY
The insurance industry provides protection against financial losses resulting from a
variety of perils. By purchasing insurance policies, individuals and businesses can
receive reimbursement for losses due to car accidents, theft of property, and fire and
storm damage; medical expenses; and loss of income due to disability or death.
The insurance industry consists mainly of insurance carriers (or insurers) and
insurance agencies and brokerages. In general, insurance carriers are large companies
that provide insurance and assume the risks covered by the policy. Insurance agencies
and brokerages sell insurance policies for the carriers.
Insurance companies assume the risk associated with annuities and insurance policies
and assign premiums to be paid for the policies. In the policy, the companies states
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the length and conditions of the agreement, exactly which losses it will provide
compensation for, and how much will be awarded.
The premium charged for the policy is based primarily on the amount to be awarded
in case of loss, as well as the likelihood that the insurance carrier will actually have to
pay. In order to be able to compensate policyholders for their losses, insurance
companies invest the money they receive in premiums, building up a portfolio of
financial assets and income-producing real estate which can then be used to pay off
any future claims that may be brought.
There are two basic types of insurance carriers: Direct and Reinsurance.
Direct carriers are responsible for the initial underwriting of insurance policies and
annuities, while Reinsurance carriers assume all or part of the risk associated with the
existing insurance policies originally underwritten by other insurance carriers.
Direct insurance carriers offer a variety of insurance policies.
Life insurance provides financial protection to beneficiaries—usually spouses and
dependent children—upon the death of the insured.
Disability insurance supplies a preset income to an insured person who is unable to
work due to injury or illness
Health insurance pays the expenses resulting from accidents and illness.
An Annuity (a contract or a group of contracts that furnishes a periodic income at
regular intervals for a specified period) provides a steady income during retirement
for the remainder of one’s life.
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Property-casualty insurance protects against loss or damage to property resulting from
hazards such as fire, theft, and natural disasters.
Liability insurance shields policyholders from financial responsibility for injuries to
others or for damage to other people’s property. Most policies, such as automobile
and homeowner’s insurance, combine both property-casualty and liability coverage.
Companies that underwrite this kind of insurance are called property-casualty carriers.
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What is Life Insurance?
Human life is subject to risks of death and disability due to natural and accidental
causes. When human life is lost or a person is disabled permanently or temporarily,
there is a loss of income to the household. The family is put to hardship. Risks are
unpredictable. Death/disability may occur when one least expects it. There are a
number of life insurance products which offer protection and also coupled with
savings.
A Term insurance product provides a fixed amount of money on death during the
period of contract.
A Whole Life insurance product provides a fixed amount of money on death.
An Endowment Assurance product provided a fixed amount of money either on death
during the period of contract or at the expiry of contract if life assured is alive.
A Money Back Assurance product provides not only fixed amounts which are payable
on specified dates during the period of contract, but also the full amount of money
assured on death during the period of contract.
An Annuity product provides a series of monthly payments on stipulated dates
provided that the life assured is alive on the stipulated dates.
A Linked product provides not only a fixed amount of money on death but also sums
of money which are linked with the underlying value of assets on the desired dates.
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There are a variety of life insurance products to suit to the needs of various categories
of people—children, youth, women, middle-aged persons, old people; and also rural
people, film actors and unorganized laborers.
Life insurance products could be purchased from registered life insurers notified by
the IRDA. Insurers appoint insurance agents to sell their products.
As per regulations, insurers have to give the various features of the products at the
point of sale. The insured should also go through the various terms and conditions of
the products and understand what they have bought and met their insurance needs.
They ought to understand the claim procedures so that they know what to do in the
event of a loss.
INDIAN INSURANCE SECTOR
REGULATORY BODY
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.
The Insurance Regulatory and Development
Authority (IRDA)
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.
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The other decision 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. Since being set up
as an independent statutory body the IRDA has put in a framework of globally
compatible regulations.
MISSION-IRDA
“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
thereto.”
IMPACT OF LIBERALISATION
The introduction of private players in the industry has added to the colors in the dull
industry. The initiatives taken by the private players are very competitive and have
given immense competition to the on time monopoly of the market LIC. Since the
advent of the private players in the market the industry has seen new and innovative
steps taken by the players in this sector.
The new players have improved the service quality of the insurance. As a result LIC
down the years have seen the declining phase in its career. The market share was
distributed among the private players. Though LIC still holds the 79% of the
insurance sector but the upcoming natures of these private players are enough to give
more competition to LIC in the near future. LIC market share has decreased from
95% (2002-03) to 81 %( 2004-05).
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LIC has the current market share of 79%.
Among the private players ICICI Prudential has the maximum of appx. 5.60%
Bharti Axa has the current market share of 5%.
Followed by Bajaj Allianz (3.27 %) and HDFC Standard Life of about 3.11%.
Below is the table that shows the market share of various players of the industry.
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The following companies have the rest of the market share of the insurance industry.
COMPANY NAME MARKET SHARE
LIC 79.30
ICICI PRUDENTIAL
BHARTI AXA
5.63
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BAJAJ ALLIANZ 3.27
HDFC STANDARD LIFE 3.11
BIRLA SUNLIFE 2.32
TATA AIG 1.45
SBI LIFE 1.24
MAX NEWYORK 0.90
AVIVA LIFE 0.82
ING VYSYA 0.66
OM KOTAK LIFE 0.54
AMP SANMAR 0.38
METLIFE 0.33
RELIANCE LIFE 0.05
The liberalization of the Indian insurance sector has opened new doors to private
competition and the new and improved insurance sector today promises several new
job opportunities. With private players now in the field, there will be innovative
products, better packaging, improved customer service, and, most importantly, greater
employment opportunities.
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There are a number of options to choose from for a career in Insurance. Ideally an
insurance company will have openings in the following fields:
Actuaries
Underwriter
Surveyor
Investment
Marketing & Distribution
Actuaries
Evaluates the risk for companies to be used for strategic management
decisions.
Actuaries use their analytical skills to predict the risk of writing insurance
policies through the use of mathematical, statistical and economic models.
An actuary not only fixes the premium rates for new products, but also revises
both products and prices. They calculate costs to assume risk
Underwriters
Insurance underwriters review insurance applications and decide whether they
should be accepted or rejected based on the degree of risks involved in
insuring the people or objects of concern.
In the life insurance business, an underwriter is expected to filter the "bad or
substandard lives". Whereas, in the general insurance segment, he takes care
of risk management.
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CURRENT SCENARIO OF THE INDUSTRY
INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge untapped potential
for players in the insurance industry. Saturation of markets in many developed
economies has made the Indian market even more attractive for global insurance
majors. The insurance sector in India has come to a position of very high potential and
competitiveness in the market.
Innovative products and aggressive distribution have become the say of the day.
Indians, have always seen life insurance as a tax saving device, are now suddenly
turning to the private sector that are providing them new products and variety for their
choice. Life insurance industry is waiting for a big growth as many Indian and foreign
companies are waiting in the line for the green signal to start their operations. The
Indian consumer should be ready now because the market is going to give them an
array of products, different in price, features and benefits. How the customer is going
to make his choice will determine the future of the industry.
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DISTRIBUTION CHANNELS
LIC has already well established and have an extensive distribution channel and
presence. New players may find it expensive and time consuming to bring up a
distribution network to such standards. Therefore they are looking to the diverse areas
of distribution channel to have an advantage. At present the distribution channels that
are available in the market are:
• Direct selling/Retail
• Corporate agents
• Group selling
• Brokers and cooperative societies
• Bancassurance
An agent should be a pleasing personality with complete knowledge about the various
plans and solutions which the company has to offer and must also understand the
customer’s psychology well to deal in an efficient manner.
BANCASSURANCE
Bancassurance is the distribution of insurance products through the bank's distribution
channel. It is a phenomenon wherein insurance products are offered through the
distribution channels of the banking services along with a complete range of banking
and investment products and services. To put it simply, Bancassurance, tries to exploit
synergies between both the insurance companies and banks.
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Advantages to banks
Productivity of the employees increases.
By providing customers with both the services under one roof, they
can Improve overall customer satisfaction resulting in higher customer retention
Levels.
Increase in return on assets by building fee income through the sale of
Insurance products.
Can leverage on face-to-face contacts and awareness about the
financial Conditions of customers to sell insurance products.
Banks can cross sell insurance products e.g.: Term insurance products with loans.
Advantages to insurers
Insurers can exploit the banks' wide network of branches for distribution of
products. The penetration of banks' branches into the rural areas can be
utilized to sell products in those areas.
Customer database like customers' financial standing, spending habits,
investment and purchase capability can be used to customize products and sell
accordingly.
Since banks have already established relationship with customers, conversion
ratio of leads to sales is likely to be high. Further service aspect can also be
tackled easily.
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Advantages to consumers
Comprehensive financial advisory services under one roof. i.e., insurance
services along with other financial services such as banking, mutual funds,
personal loans etc.
Enhanced convenience on the part of the insured
Easy accesses for claims, as banks are a regular go.
Innovative and better product ranges
WHAT DOES LIFE INSURANCE HAVE TO OFFER?
Life insurance is many different things to many different people. For some, it is a
premium to be paid on time. For others it offers liquidity since cash can be borrowed
when needed. For the investment-minded, it denotes a constantly growing capital
account and numerous other benefits.
The contractual guarantee is the promise to pay, backed by one of the oldest and most
stably regulated financial industry operating in the Indian sub-continent today.
1) Insurance Buys Time and Money
People like to refer to life insurance as time insurance, the reason being that life
insurance proceeds are paid to the insured's beneficiaries in case of death. The money
proffered by life insurance helps buy time to adjust to the change of circumstances.
Insurance provides large amounts of cash that will keep the lifestyle for the survivors
the way it was before the insured's death.
2) Insurance Offers Peace of Mind
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For the person who buys an insurance policy, it offers absolute and complete peace of
mind. He or she knows that the decision made by him will provide sound benefits in
the future, whether or not the individual may live to see it.
3) Multiple Applications
The future is uncertain for each and every one. No one knows how long he or she will
live. The investment benefit is paid to the insured's beneficiaries after his death or it
can be used during the life as well. Life insurance policy owners can turn to the cash
value of the policy in case of a financial emergency when all avenues are either
blocked or denied.
4) Enduring Elasticity
Since life insurance is flexible enough to serve several needs, the insured can keep
several long-term goals in mind once he or she invests in the insurance plan. The cash
value of the policy can be allocated towards augmenting the monthly income during
the retirement years. Leisure years should be turned into pleasure years. Permanent
life insurance is designed on the concepts of long-term flexibility.
5) Financial Security
The insurance policy offers contractual guarantees to people looking for peace of
mind when they buy life insurance. Life insurance offers complete financial security.
The purchase of life insurance demonstrates concern for a family's future financial
well being.
6) Regard for Family
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The purchase of life insurance clearly displays care and concern for the people the
policy owner loves.
7) Insurance is Safer
No financial institution can do what life insurance does. No industry can back its
products with reserves and surplus as sound as those of the insurance industry.
The proof of strength and safety that insurance companies have ensured even under
the most adverse of conditions is a matter of pride for the entire insurance industry.
For generation after generation, life insurance has been acclaimed as the very
benchmark of security against which the other industries are measured.
OPPORTUNITIES FOR INSURANCE COMPANIES
In the now open sector on insurance, the following is what I feel will determine the
success of the company in particular and the industry in general:
A change in the attitude of the population
Indians have always been wary of employing their hard-earned money in a venture
that will pay them on their death. Insurance has always been used as a Tax saving
tool. No more, no less. It is upon the insurers to educate the people to secure/insure
their future against any unknown calamity and make a shield around their families
and businesses.
An open and transparent environment created under the IRDA.
The reason for this being on the top of our understanding is that when ever we have
seen any sector open up in India there are always grey areas and unsure policies.
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These are not exactly what any player, be it Indian or foreign, looks for. It creates an
air of uncertainty in all the decision making process. Insurance as a sector requires
players who are strong financially and are willing to wait for returns. Their confidence
can be bolstered only if there is an open and a transparent policy guidelines. This will
also help the consumers feel safe that the regulatory is an active one and cares to do
everything possible to keep things under control and help the insurance environment
grow maturely.
A well-established distribution network.
To cater to the largest democracy in the world is by no means a cakewalk. Insurance
profits are directly related to number of insured and this is in turn related to the reach.
Trained professionals to build and sell the product.
It is said that the insurance agent is the best salesman in the world. He makes you pay,
regularly, an amount promising to pay back only on your death. Thus the players will
require an excellent sales team to sell their products in the now competitive
environment.
Encouragement of new and better products and letting the hackneyed ones die out.
This will itself ensure the market grows. And that every class/society gets a product
that best suits them.
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SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies
Under Section 10(10D), any sum received under a Life Insurance policy (not
being a Key Man policy) is also exempt from taxation. But it is wise to remember
that Pensions received from Annuity plans are not exempted from Income Tax.
Section 80C provides a deduction up to Rs.1,00,000/- to an individual assesses
for any amount paid as a premium.
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POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of their policies
or their claims. As per Regulations for Protection of policyholders’ interests, 2002,
every insurer should have in place, a grievance redressal system to address the
complaints of policyholders. The IRDA has a Grievance Redressal Cell which plays a
facilitative role by taking up complaints against insurers with the respective
companies for speedy resolution. The IRDA however does not adjudicate on
complaints.
SWOT ANALYSIS OF INSURANCE INDUSTRY
STRENGTH
1. Best returns with the added advantage of 100% life insurance coverage.
2. Good option for new investors into the market as all the money is invested by best
fund managers so with less knowledge also they can earn good Returns.
3. Best commission charges paid to the agents which vary from 12% to 35% which is
much higher as compared to mutual funds i.e. , only 2-2.5%.
WEAKNESS
1. BHARTI AXA could not able to match LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs.
3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
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OPPORTUNITY
1. 80 percent of Indian population is still under insured. So there is a big opportunity
for insurance companies.
2. As the stock market can be under the mark any time so it can bring loss to the
investors but as in ULIPs there is proper mixture of debt securities and equity so
the loss is incurred during dark trading days also.
3. Unit-linked products are exempted from tax and they provide life insurance.
4. Increasing consumer awareness about Insurance and its use.
THREAT
1. Cannibalism within the industry by providing misleading figures to the investors.
2. Govt.’s instability has a long term repercussions affecting company’s policies
and its growth.
To protect your family financially
You love your family and feel responsible towards them in every way. A life
insurance plan covers your life at nominal costs so that you can fulfill your
responsibility with ease and your family never has to face financial constraints.
Why do I need to secure my family when I'm there for them?
A life insurance plan will take care of your family in case you are not around for
them.
You need to protect your family against unforeseen events. A life insurance plan helps
you do so very easily.
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Protect your loved ones against financial contingencies at nominal costs
You love your family and feel responsible towards them in every way. But life can be
uncertain and unforeseen contingencies can meet you anytime. At such times, life
insurance comes to your rescue. As someone who wants only the best for their family,
we understand your need to safeguard your family against any crisis. Our protection
plans offer you high life cover at nominal costs so that you can fulfill your
responsibility with ease and your family never has to face financial constraints.
To maximise your savings
Life insurance plans not only ensure your family's security but are also a healthy
investment option. These investments ensure your money works hard for you by
giving you good returns along with peace of mind, as your family is protected. So
whether it is your own home, the best education for your child or even a comfortable
lifestyle, life insurance plans are the best solutions.
How does a Life Insurance plan maximise my savings?
There are variants of Life Insurance plans available today that can maximise your
savings.
The traditional plans give you definite amount as assured money back. ULIPs or
market-linked plans invest your money in the markets to help you reap high returns
along with life insurance benefits.
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Fund managers are the experts that take care of your investment plans to ensure you
maximise your savings.
Do I need to worry about the safety of my investments?
There are different plans that you can invest in, depending on how much risk you are
ready to take. The plans can be summed up into - Traditional Plans, ULIPs and
Guarantee Plans
Traditional Plans
Traditional Plans give you guaranteed returns on the invested money. The returns you
earn through these plans are pre-decided and communicated to you at the time of
issuance of policy.
ULIPs
Unlike Traditional Plans, Unit Linked Insurance Plans (ULIPs) invest a part of your
premium amount into the financial markets. The returns under these policies depend
on market performance. Market upswings can ensure you earn high returns. There are
various fund options available under these plans. Basis your risk appetite, you can opt
for the appropriate fund option.
Guarantee Plans
Guarantee Plans are Unit Linked Plans, with an in-built 'guarantee' feature. These
plans safeguard the money invested against any market downturns. When the market
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is up, you can enjoy high returns and in case of market downswings, there is a
minimum guaranteed amount paid to you that ensures you do not lose your hard
earned money.
Ensure your family's security as you maximise your savings
You can make your money work harder with our Wealth Creation with Protection
plans. These plans come with the double advantage of:
Complete peace of mind as your family is financially protected and
Good investment option that ensures long-term financial goals are met
Whether it is a bigger home, a dream vacation or even a comfortable future, these life
insurance plans are the best solutions along with the surety of financial protection.
Our life insurance coverage plans include 'traditional' plans that give guaranteed
money on maturity. While, we also offer market-linked plans that give you the benefit
of good market performance to maximise your savings.
Plans that help your child realise his potential and let him achieve what he
dreams of
As a responsible parent you will never want to make any compromises when it comes
to your child. Wouldn’t it be nice if you have a trusted friend who takes care of all the
finances for your child's growing dreams? Child plans, with a life insurance company
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like ours, have been created to help you provide the best for your child's key stages
and help him secure a bright future.
To fulfill your child's dreams
As a responsible parent, you wouldn’t like to make compromises when it comes to
your child. Child plans help you secure your child's future in a planned and systematic
manner. These plans can help you fulfill your responsibilities towards your child
conveniently.
You can systematically plan for the finances required for your child's future with
these plans. You can select the term of the plan depending on your child's
requirements at their key life stages- his/her education, higher studies or even
marriage. And through periodic withdrawals from the policy, you can provide
financial assistance for the key milestones of your child. By investing in this plan, you
can make your money grow over a period of time, thereby securing your child's
dreams.
Will my child get the benefit from this plan, in case I'm not around?
The unique Waiver of Premium feature takes care of this concern. During the term of
the policy, should anything unfortunate happen to you, the protection cover is paid out
and all future premiums are waived off. This ensures that the policy continues till
maturity and you need not fear of policy lapse because you are not around to pay the
future premiums. Child plans in that sense will take care of your child and his future,
even in your absence.
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Enjoy a golden retirement
Retirement plans are the best way to systematically plan for your golden years. By
investing in these long-term plans, you can earn a regular income even after you've
stopped working. Without worrying about rising costs, you can be self-reliant and
lead a comfortable retired life.
These are long-term plans since they aim to provide a regular income to you post your
retirement. The earlier you start, the better it is, so that when the term of the plan
ends, you can enjoy a good corpus as pension.
By investing in retirement plans today, you can ensure you lead a comfortable life,
even after you've stopped working.
Stay worry-free about your medical expenses
Health problems often hit us suddenly and they bring with them huge medical bills.
To avoid being financially strained, due to health contingencies, you can opt for a
health insurance plan and stay worry-free.
Health problems can arise anytime. With the help of a health plan, you can invest
systematically today, so that in case of any health crisis, your hefty medical bills are
taken care of.
What’s more, health insurance plans also take care of certain critical illnesses and
disabilities to ensure health problems do not impact your family's financial security.
33
NATURE & DEFINITION OF INSURANCE
Insurance is defined as a co-operative device to spread the loss
caused by a particular risk over a number of persons who are
exposed to i t and who agree to ensure themselves against that
risk. Risk is uncertainty of a financial loss. It should not be
confused with the chance of loss, which is the probable number
of losses out of confused with peril, which is defined as the
cause of loss or with hazard, which is a condition, may increase
the chance of loss.
Every risk involves the loss of one or other kind. The function
of insurance is to spread the loss over a large number of persons
who are agreed to co-operate each other at the t ime of loss. The
risk cannot be over rated but loss occurring due to a certain risk
can be distributed amongst the agreed persons. They are agreed
to share the loss because the chance of loss is there.
Everybody’s greatest asset during his/her working years is
his/her abili ty to earn an income. It is important to adequately
safeguard this asset to ensure his/her cash flow will continue in
the event of an unexpected disaster. His/her insurance policies
will help to protect him/her (if any) against any unforeseen odds.
34
There are two kinds of insurance available viz. Life Insurance
and General Insurance.
Provides for dependents in case of death.
Replaces earning power, if disabled.
Protects his/her ability to meet accumulation /
education / marriage goals.
General Insurance
Addresses health care concerns.
Provides for auto, home and personal liabili ty
protection.
Provides for potential long-term care costs.
Plans for business continuation.
GENERAL DEFINITION
The general definit ions are given by the social scientists &
they consider insurance as a device to protection against
risks, or a provision against inevitable contingencies or a
co-operative device of spreading risks. Some of such
definitions are given below:
In the words of John Magee , “Insurance is a plan by
which large number of people associate themselves
& transfer to the shoulder of all, risks that attach to
individuals.”
35
In the words of Sir William Bevridges , “The
collective bearing of risks is insurance.”
In the words of Boone & Kurtz , “Insurance is a
substi tution for a small known loss (the insurance
premium) for a large unknown loss, which may or
may not occur.”
In the words of Thomas , “Insurance is a provision,
which a prudent man makes against for the loss or
inevitable contingencies, loss or misfortune.”
In the words of Allen Z. Mayerson , “Insurance is a
device for the transfer to an insurer of certain risks
of economic loss that would otherwise come by the
insured.”
In the words of Ghosh & Agarwal , “Insurance is a
co-operative form of distributing a certain risk over
a group of persons who are exposed to it.”
FUNDAMENTAL STATEMENT
These are based on economic or business oriented since it
is a device providing financial compensation against risk
or misfortune.
In the words of D. S. Harsell , “Insurance may be
defined as a social device providing financial
compensation for the effects of misfortune, the
payments being made from the accumulated
36
contribution of all parties participating in the
scheme.”
In the words of Robert I. Mehr & Emerson
Cammark , “Insurance is purchased to offset the risk
resulting from hazards, which exposes a person to
loss.”
In the words of Riegel & Miller , “Insurance is a
social device whereby the uncertain risks of
individuals may be combined in a group & thus
made more certain small periodic contributions, by
the individuals providing a fund, out of which, those
who suffer losses may be reimbursed.”
Insurance follows important characterist ics.
Sharing of Risks
Insurance is a co-operative device to share the burden of
risk, which may fall on happening of some unforeseen
events, such as the death of head of the family, or on
happening of marine perils or loss of by fire.
Co-operative Device
Insurance is a co-operative form of distributing a certain
risk over a group of persons who are exposed to it (Ghosh
& Agarwal). A large number of persons share the losses
arising from a particular risk.
37
Evaluation of Risk
For the purpose of ascertaining the insurance premium, the
volume of risk is evaluated, which forms the basis of
insurance contract.
Payment of happening of specified event
On happening of specified event, the insurance company is
bound to make payment to the insured. Happening of the
specified event is certain in life insurance, but in the case
of fire, marine or accidental insurance, it is not necessary.
In such cases, the insurer is not liable for payment of
indemnity.
Amount of payment
The amount of payment in indemnity insurance depends on
the nature of losses occurred, subject to a maximum of the
sum insured. In life insurance, however, a fixed amount is
paid on the happening of some uncertain event or on the
maturity of the policy.
Large number of insured persons
The success of insurance business depends on the large
number of persons insured against similar risk. This will
enable the insurer to spread the losses of risk among large
number of persons, thus keeping the premium rate at the
minimum.
38
Insurance is not a gambling
Insurance is not a gambling. Gambling is il legal, which
gives gain to one party & loss to the other. Insurance is a
valid contract to indemnity against losses. Moreover,
insurable interest is present in insurance contracts & it has
the element of investment also.
Insurance is not charity
Charity pays without consideration but in the case of
insurance, premium is paid by the insured to the insurer in
consideration of future payment.
Protection against risks
Insurance provides protection against risks involved in
life, materials & property. It is a device to avoid or
reduce risks.
Spreading of risk
Insurance is a plan, which spread the risks & losses of few
people among a large number of people. John Magee
writes, “Insurance is a plan by which large number of
people associates themselves & transfer to the shoulders
of all , risks attached to individuals.”
39
Transfer of risk
Insurance is a plan in which the insured transfers his risk
on the insurer. This may be the reason that Mayerson
observes, that insurance is a device to transfer some
economic losses to the insurer, and otherwise such losses
would have been borne by the insured themselves.
Ascertaining of losses
By taking a l ife insurance policy, one can ascertain his
future losses in terms of money. This is done by the
insurer to determining the rate of premium, which is
calculated on the basis of maximum risks.
A contract
Insurance is a legal contract between the insurer & insured
under which the insurer promises to compensate the
insured financially within the scope of insurance policy, &
the insured promises to pay a fixed rate of premium to the
insurer.
Based upon certain principle
Insurance is a contract based upon certain fundamental
principles of insurance, which includes utmost good faith,
insurable interest , contribution, indemnity, causa proxima,
subrogation, etc., which are the basis for successful
operation of insurance plan.
40
Utmost Good Faith
Insurance is a contract based on good faith between the
parties. Therefore, both the parties are bound to disclose
the important facts affecting to the contract before each
other. Utmost good faith is one of the important
principles of insurance.
To conclude, insurance is a device for the transfer of risks from
the insured to the insurers, who agree to i t for a consideration
(known as premium), & promises that the specified extent of loss
suffered by the insured shall be compensated. It is a legal
contract of a technical nature.
To conclude, insurance is a device for the transfer of risks from the insured to
the insurers, who agree to it for a consideration (known as premium), &
promises that the specified extent of loss suffered by the insured shall be
compensated. It is a legal contract of a technical nature.
41
INTRODUCTION TO INSURANCE COMPANY.
In order to go through the journey of LIC – Path of private sector
insurance companies to nationalize company to again private sector
insurance companies is given as below:
Path
Private Life Insurance Companies
Nationalization
Privatization of Life Insurance Sector
1870 –
1956
Life Insurance concept was
accepted with almost 250 Private
Life Insurance Companies
1956
Merging of almost 250 Private
Sector Life Insurance Companies
in one nationalized
Life Insurance Corporation of
India
1995Proposal to privatize life
insurance business
42
June
2000Registration process was notified
August
2000Application was filed
Octobe
r 2000
1st license was issued with
introduction of IRDA
2002
During the month of January, 11
Life and Non-Life Private
Insurance license were issued
In order to elaborate the above path lets go through the history of Life
Insurance Sector.
On 3rd December 1670, seven earnest men of Bombay with just seven rupees
for initial expenses gave shape to a plan of offering insurance to the public
without the risk of ruin and the Bombay Mutual Life Insurance Society came
into existence.
Right up to the end of the 19th century, foreign insurance companies had an
upper hand in the matter of insurance business and they enjoyed mere
monopoly and the partiality were observed in the form that Indian lives were
insured with 10% extra premium as a common practice, at that time Lala
Harikishan Lal from Lahore was called “The Napoleon of Indian Finance” as
he was then called to launch the Bharat Insurance Company at Lahore (1896)
in Punjab.
43
Prior to 1912, India had no legislation for regulating insurance. The Life
Insurance Companies Act 1912 and the Provident Fund Act 1912 were
passed.
The Insurance Act 1938 was the first comprehensive legislation governing not
only life but also non-life branches of insurance to provide strict state control
over insurance business.
But after the introduction of Insurance Act 1938, the demand for
nationalization of Life Insurance Industry was raised, there were so many
reasons in order to nationalize the insurance sector.
They are:
Policyholders will be provided cent percent security.
Expenses will be reduced due to Absence of duplication,
wasteful competition
Better service due to absence of profit motive.
The funds will be available for nation building activities.
Insurance is servicing sector and so that it should be in the
hands of government only.
Above are few but strong reasons, which have contributed towards
nationalization of insurance sector, and then after in the year 1956, all
insurance companies were merged in to one and Life Insurance Corporation of
India came into existence.
44
Till the year 1999, LIC of India was the only insurance sector in economic
market with ever-increasing growth rate and market share with the capacity to
earn high rate of profit and thus profitability. In spite of all these merits of
LIC, the overall status of insurance sector was not so satisfactory.
Business figure before the introduction of IRDA
Population 1.00 Billion
Insurable Population 0.36 Billion
No. Of insured individuals 0.08 Billion
Potential uninsured
individuals
0.28 Billion
New Business premium 0.66 Billion
Above stated figures clearly shows that from 1 Billion population of India,
almost 0.28 Billion population was uninsured. Again the existing government
unit did not properly meet the emerging segments like retirement, disability.
Moreover, the government wanted 25% p.a. growth rate in new business
premium from insurance sector. All these factors combine forced the
government to take the decision about the privatization of insurance sector.
In order to increase the business activities, the introduction of IRDA was
made by Government. Thus, IRDA (Insurance Regulatory and Development
Authority) witnessed the existence power to co-ordinate regular and control
the insurance business.
45
Private Insurers in Indian Insurance Market
Registration No.
Date of Registration
Name of the Company
101 23.10.2000 HDFC Standard Life
104 15.11.2000 Max New York Life
105 24.11.2000 ICICI Prudential Life
107 10.01.2001 Om Kotak Mahindra Life
109 31.01.2001 Birla Sun Life Insurance
110 12.02.2001 TATA AIG Life Insurance
111 30.03.2001 SBI Life Insurance
46
COMPANY PROFILE
INTRODUCTION TO ICICI GROUP
ICICI BANK
ICICI Bank is India’s second-largest bank with total assets of about
Rs.112.024 crore and a network of about 450 branches and offices and about
1750 ATMs. ICICI Bank offers a wide range of banking products and
financial services to corporate and retail customer through a variety of
delivery channels and through its specialized subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital, asset
management and information technology. ICICI Bank’s equity shares are
listed in India on stock exchanges at
Chennai. Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the
National Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian
financial institution, and was its wholly owned subsidiary. ICICI’s
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed on
the NYSE in fiscal 2000, ICICI Bank’s acquisition of Bank of Mathura
Limited in an all-stock amalgamation in fiscal 2001, and secondary market
sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI
48
was formed in 1955 at the initiative of the World Bank, the Government of
India and representatives of Indian industry. The principal objective was to
create a development financial institution for providing medium term and long
term project financing to Indian businesses. In the 1990s, ICICI transformed
its business from a development financial institution offering only project
finance to a diversified financial services group offering a wide variety of
products and services, both directly and through a number of subsidiaries and
affiliates like ICICI Bank, In 1999, ICICI become the first Indian company
and the first bank or financial institution from non-Japan Asia to be listed on
the NYSE.
After consideration of various corporate structuring alternatives in the context
of the emerging competitive scenario in the Indian banking industry, and the
move towards universal banking, the management of ICICI and ICICI Bank
formed the view that the merger of ICICI with ICICI Bank would be the
optimal strategic alternative for both entities, and would create the optimal
legal structure for the ICICI group’s universal banking strategy. The merger
would enhance value for ICICI shareholders through the merged entity’s
access to low-cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payment system and provide
transaction-banking services. The merger would enhance value for ICICI
Bank shareholders through a large capital base and scale of operations,
seamless access to ICICI’s strong corporate relationships built up over five
decades, entry into new business segments, higher market share in various
business segments, Particularly fee-based services, and access to the vast
49
talent pool of ICICI Bank approved the merger of ICICI and two of its
wholly-owned retail finance subsidiaries, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, With ICICI Bank.
Shareholders of ICICI and ICICI BANK approved the merger in January
2002, by the High Court of Gujarat at Jalandhar in March 2002, and by the
High Court of
Judicature at Mumbai and the Reserve Bank of India in April 2002.
Consequent to the merger, the ICICI group’s financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
ICICI Bank is the only Indian company to be rated above the country rating
by the international rating agency moody “s and the only Indian company to
be awarded an investment grade international credit rating. The Bank enjoys
the highest AAA (or equivalent) rating from all Leading Indian rating
agencies.
Prudential P.L.C.
Established in 1848, today prudential plc is a leading international financial
services company with some 16 million customers, policyholders and unit
holders and some 20,000 employees worldwide. In the UK Prudential is a
leading life and pensions provider with around seven million customers.
M&G was acquired by Prudential in 1999 and is the Group’s UK and
European fund manager, responsible for managing over of 111 billion of
funds (as at December 2003). Launched by Prudential in 1998, Egg is an
50
innovative financial services company, with over three million customers,
with nearly six per cent of UK credit card balances. In Asia, Prudential is the
leading European life insurer with 23 life and fund management operations in
12 countries serving some five million customers. In the US, Prudential owns
Jackson National Life, a leading life insurance company, and has more than
1.5 millions policies and contracts in force.
Prudential has brought to market an integrated range of financial services
products that now includes life assurance, pensions, mutual funds, banking,
investment management and general insurance. In Asia, Prudential is UK”s
Largest life insurance company with a vast network of 22 life and mutual fund
operations in twelve countries – China, Hong Kong, India, Indonesia, Japan,
Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.
Since 1923, Prudential has championed customer-centric products and
services, supported by over 60,000 staff and agents across the region.
Prudential plc’s strong mix of business around the world positions us well to
benefit form the growth in customer demand for asset accumulation and
income in retirement. Our international reach and diversity of earnings by
geographic region and product will continue to give us significant advantage.
Our commitment to the shareholders who own Prudential is to maximize the
value over time of their investment. We do this by investing for the long term
to develop and bring out the best in our people and our businesses to produce
51
superior products and services, our international peer group in terms of total
shareholder returns.
At Prudential our aim is lasting relationships with our customers and
policyholders, through products and services that offer value for money and
security. We also seek to enhance our Company’s reputation, built over 150
years, for integrity and for acting responsibly within society.
ICICI Prudential Life Insurance:
ICICI Prudential Life Insurance Company is a joint venture between ICICI
Bank, a premier financial powerhouse and Prudential Plc, a leading
international financial services group headquartered in the United Kingdom.
ICICI Prudential was amongst the first private sector insurance companies to
begin operations in December 2000 after receiving approval from insurance
Regulatory Development Authority (IRDA).
ICICI Prudential’ s equity base stands at Rs.6.75 billion with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. In the year ended
March 31,2004 the company had issued over 430,000 policies, for a total sum
assured of over Rs 8,000 crore and premium income in excess of Rs.980
crore. The company has a network of about 30,000 advisors; as well as 12
banc assurance tie-ups. Today the company is the number one private life
insurer in the country.
Management
52
K. V. Kamath
Managing Director and Chief Executive Officer
53
Lalita Gupte
Joint Managing Director Kalpana Morparia
Joint Managing Director
Chanda Kochhar
Deputy Managing Director Nachiket Mor
Deputy Managing Director
Board Committees
Audit Committee Board Governance &
Remuneration Committee
Mr. Sridar Iyengar
Mr. Narendra Murkumbi
Mr. M. K. Sharma
Mr. N. Vaghul
Mr. Anupam Puri
Mr. M. K. Sharma
Mr. P. M. Sinha
Prof. Marti G. Subrahmanyam
Customer Service
Committee Credit Committee
N. Vaghul
Narendra Murkumbi
M.K. Sharma
P.M. Sinha
K. V. Kamath
Mr. N. Vaghul
Mr. Narendra Murkumbi
Mr. M .K. Sharma
Mr. P. M. Sinha
Mr. K. V. Kamath
Fraud Monitoring
CommitteeRisk Committee
Mr. M. K. Sharma
Mr. Narendra Murkumbi
Mr. N. Vaghul
Mr. Sridar Iyengar
Prof. Marti G. Subrahmanyam
54
Mr. K. V. Kamath
Ms. Kalpana Morparia
Ms. Chanda D. Kochhar
Mr. V. Prem Watsa
Mr. K. V. Kamath
Share Transfer &
Shareholders'/
Investors' Grievance
Committee
Asset-Liability Management
Committee
Mr. M. K. Sharma
Mr. Narendra Murkumbi
Ms. Kalpana Morparia
Ms. Chanda D. Kochhar
Ms. Lalita D. Gupte
Ms. Kalpana Morparia
Ms. Chanda D. Kochhar
Dr. Nachiket Mor
Committee of Directors
Mr. K. V. Kamath
Ms. Lalita D. Gupte
Ms. Kalpana Morparia
Ms. Chanda D. Kochhar
Dr. Nachiket Mor
55
PRODUCTS & SERVICES
Insurance solution for individuals…..
ICICI Prudential Life Insurance offers a range of innovative,
customer-centric products that meet the needs of customers at every
life stage. Its 17 products cab is enhanced with up to 6 riders, to create
a customized solution for each policyholder.
Savings Solutions…..
Secure Plus is a transparent and feature-packed savings plan that offers 3
levels of protection. Cash Plus is a transparent, feature-packed savings plan
that offers 3 levels of protection as well as liquidity options. Save n Protect is
a traditional endowment savings plan that offers life protection along with
adequate returns. Cash Back is an anticipated endowment policy ideal for
meeting milestone expenses like a child’s marriage, expenses for a child’s
higher education or purchase of an asset.
57
Protection Solutions…….
LifeGuard is a protection plan, which offers life cover at very low
cost. It is available in 3 coupons – level term assurance, level term
assurance with return or premium and single premium.
Child Solutions…….
Smart kid child plans provide guaranteed educational benefits to a
child along with life insurance cover for the parent who purchases the
policy. The policy is designed to provide money at important
milestones in the child’s life. SmartKid child planed are also available
with in unit-linked form – both single premium and regular premium.
Market-linked Solutions
LifeLink is a single premium Market Linked Insurance Plan, which
combines life insurance cover with the opportunity to stay, invested in
58
the stock market. Life Time offers customers the flexibility and control
to customize the policy to meet the changing needs at different life
stages. It offers 3 investment options –Growth Plan, Income plan and
Balance plan.
Retirement Solutions……
Forever Life is a retirement products targeted at individual in there
thirties. Secure Plus Pension is a flexible pension plan that allows one
to select between 3 levels of cover.
Market-linked retirement products
Life Time Pension is a regular premium market-linked pension plan.
Life Link Pension is a single premium market linked pension plan.
ICICI Prudential also launched “Salaam Zindagi”, a social sector
group insurance policy targeted at the economically underprivileged
sections of the society.
59
Group Insurance Solutions……
ICICI Prudential also offers Group Insurance Solutions for companies
seeking to enhance benefits to their employees.
Group Gratuity Plan……
ICICI Pru”s group gratuity plan helps employers fund their statutory
gratuity obligation in a scientific manner. The plan can also customize
to structure schemes that can provide benefits beyond the statutory
obligations.
Group Superannuation Plan
ICICI Bank offers flexible defined contribution superannuation
scheme to provide a retirement kitty for each member of the group.
Employees have the option of choosing from various annuity options
or opting for partial commutation of the annuity at the time of
retirement.
Group Term Plan
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Group Term Plan……
ICICI Pru”s flexible group term solution helps provides affordable
cover to members of group. The cover could be uniform or based on
designation/rank or a multiple of salary. The benefit under the policy
is paid to the beneficiary nominated by the member on his/her death.
Flexible Rider Options
ICICI Pru Life offers flexible riders, which can be added to the basic policy at
marginal cost, depending on the specific of the customer.
Accident & disability benefit: If death occurs as the result of an accident
during the term of the policy, the beneficiary receives an additional amount
equal to the sum assured under the policy. If the death occurs while traveling
in an authorized mass transport vehicle, the beneficiary will be entitled to
twice the sum assured as additional benefit.
Accident benefit: This rider option pays the sum assured the rider on death
due to accidents.
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Critical Illness Benefit: protects the insured against financial loss in the
event of 9 specified critical illnesses. Benefits are payable to the insured for
medical prior to death.
Major Surgical Assistance Benefits: provides financial support in the event
of medical emergencies, ensuring that benefits are payable to the life assured
for medical expenses Incurred for surgical procedures. Cove is offered against
43 different surgical procedures.
Income Benefit: This rider pays the 10% of the sum assured to the nominee
every year, till maturity, in the event of the death of the life assured. It is
available on SmartKid, SecurePlus and Cashplus.
Waiver of Premium: In Case of total and permanent due to an accident, the
premiums are waived till maturity. This rider is available with SecurePlus and
CashPlus.
62
INTRODUCTION OF TOPIC
Customer Satisfaction
What is customer satisfaction?
Customer satisfaction refers to how satisfied customers are with the products or
services they receive from a particular agency. The level of satisfaction is determined
not only by the quality and type of customer experience but also by the customer’s
expectations.
A customer may be defined as someone who:
has a direct relationship with, or is directly affected by your agency and
receives or relies on one or more of your agency’s services or products.
Customers in human services are commonly referred to as service users, consumers or
clients. They can be individuals or groups.
An organisation with a strong customer service culture places the customer at the
centre of service design, planning and service delivery. Customer centric
organisations will:
determine the customers expectations when they plan
listen to the customer as they design
focus on the delivery of customer service activities
65
Value customer feedback when they measure performance.
Why is it important?
There are a number of reasons why customer satisfaction is important in Insurance
Sector:
Meeting the needs of the customer is the underlying rationale for the existence
of community service organizations. Customers have a right to quality
services that deliver outcomes.
Organizations that strive beyond minimum standards and exceed the
expectations of their customers are likely to be leaders in their sector.
Customers are recognized as key partners in shaping service development and
assessing quality of service delivery.
The process for measuring customer satisfaction and obtaining feedback on
organizational performance are valuable tools for quality and continuous service
improvement.
66
RESEARCH METHODOLOGY
Statement Of Problem:
The research is carried on in a proper planned and systematic manner.
The research was particularly a telephonic research. We have to sell products
to list of people which include their names and contact numbers given by
ICICI.
During the telephonic we have to sell different products by explaining the
benefits of a particular product, but. The minimum amount for selling a policy
to a customer is equal to or more then Rs. 12000 only.
Age limit for selling a product/policies was 1 month to 60 yrs – this mean that
a policy can be sold to person between the age of 1 month to 60 yrs and not
anything exceeding or below it.
Research Design:
The research design of this project is exploratory. Though each research study has its
own specific purpose but the research design of this project on ICICI is exploratory in
nature as the objective is the development of the hypothesis rather than their testing.
METHODOLOGY
Every project work is based on certain methodology, which is a way to systematically
solve the problem or attain its objectives. It is a very important guideline and lead to
completion of any project work through observation, data collection and data analysis.
68
According to Clifford Woody,
“Research Methodology comprises of defining & redefining problems, collecting,
organizing &evaluating data, making deductions &researching to conclusions.”
Accordingly, the methodology used in the project is as follows: -
Defining the objectives of the study
Framing of questionnaire keeping objectives in mind (considering the objectives)
Feedback from the employees
Analysis of feedback
Conclusion, findings and suggestions.
Sampling Technique Used:
This research has used convenience sampling technique.
1) Convenience sampling technique : Convenience sampling is used in exploratory
research where the researcher is interested in getting an inexpensive approximation of
the truth. As the name implies, the sample is selected because they are convenient
Selection of Sample Size:
For the survey, a sample size of 50 has been taken into consideration.
Sources of Data Collection:
Research will be based on two sources:
1. Primary data
2. Secondary data
69
1) PRIMARY DATA:
Questionnaire: Primary data was collected by preparing questionnaire for customers.
The questionnaire was filled through telephonic research.
2) SECONDARY DATA:
Secondary data will consist of different literatures like books which are published,
articles, internet , the company manuals and websites of company-
www.iciciprulife.com.
In order to reach relevant conclusion, research work needed to be designed in a proper
way.
This research methodology also includes:-
Familiarization with the concept of insurance and its various terms.
Thorough study of the information collected.
Conclusions based on findings.
Statistical Tools Used
The main statistical tools used for the collection and analyses of data in this project
are:
Questionnaire
Pie Charts
Bar Diagrams
70
Limitations of study
Due to the following unavoidable and uncontrollable factors the factors,the result
might not be accurate. Some of the problems faced while conducting the survey are as
follows:-
Time and cost constraints were also there.
Chances of some biasness could not be eliminated.
A Samples size of fifty has been use due to time limitations.
A majority of respondents show lack of cooperation and are biased towards
their own opinions.
72
OBJECTIVE OF THE STUDY
The main objective of this study is to carry on brief study on “Customer satisfaction
survey on insurance products of ICICI PRUDENTIAL” through this I am able to
get the different Life Insurance Policies and their products.
Other objectives of this project are as follows:
To identify the insurance needs of the Indian population with respect to their
emotional, physical and financial conditions.
Comparative study of various insurance players in the market
To study the varied reasons of availing life insurance plans
74
DATA ANALYSIS AND INTERPRETATION
Q1. Are you currently insured?
Particulars No. of Respondents Percentage
Yes 31 62%No 19 38%Total 50 100%
No. of Respondents
31
19
YesNo
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ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 62% of the respondents are already insured.
b) 38% of the respondents are not insured.
Q2. Are you satisfied with your current insurer?
Particulars No. of Respondents Percentage
Yes 41 82%No 9 18%Total 50 100%
No. of Respondents
41
9
YesNo
77
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 82% of the respondents are satisfied.
b) 18% of the respondents are not satisfied.
Q3. Which one is your favored insurance company?
Particulars No. of Respondents Percentage
LIC 24 48%ICICI 7 14%HDFC 5 10%Birla Sun Life 4 8%Bajaj Allianz 4 8%Others 6 12%Total 50 100%
Q4. Are you interested in the products offered by ICICI Prudential ?
78
0
0.1
0.2
0.3
0.4
0.5
0.6
LIC ICICI HDFC Birla Sun BajajAllianz
Others
Insurance companies
Shar
e in
%
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 48% of the respondents likes LIC.
b) 14% of the respondents likes ICICI.
c) 10% of the respondents likes HDFC.
d) 8% of the respondents likes Birla Sun Life.
e) 8% of the respondents likes Bajaj Allianz.
f) 12% of the respondents likes other companies.
Q4. Are you interested in the products offered by ICICI Prudential ?
Particulars No. of Respondents Percentage
Yes 30 60%No 12 24%Can’t Say 8 16%Total 50 100%
No. of Respondents
3012
8
YesNoCan't Say
79
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 60% of the respondents are attracted towards ICICI products.
b) 24% of the respondents are not attracted towards ICICI
products.
c) 16% of the respondents Can’t Say about it.
Q5. What is your main concern while taking an insurance policy ?
Particulars No. of Respondents Percentage
Tax Benefit 20 40%Security 16 32%Investments/Savings 14 28%Total 50 100%
2016 14
0
5
10
15
20
25
Tax B
enefi
t
Security
Investm
ent/S
aving
s
No. o
f Res
pond
ents
Series1
80
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 40% of the respondents are concerned about Tax Benefit.
b) 32% of the respondents are concerned about their Security.
c) 28% of the respondents are concerned about
Investment/Savings.
Q6. Does this policy satisfy your financial needs? (Please rate on the
scale of 1 to 5 with 1 being least satisfied)
Rating No. of Respondents Percentage
1 9 18%2 9 18%3 8 16%4 10 20%5 14 28%Total 50 100%
81
1
2
3
4
512345
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 18% of the respondents are Highly unsatisfied.
b) 18% of the respondents are Unsatisfied.
c) 16% of the respondents are Moderate.
d) 20% of the respondents are Satisfied.
e) 28% of the respondents are Highly satisfied.
Q7. Please express your opinion for the premiums paid for the above policy?
Particulars No. of Respondents Percentage
Very High 14 28%High 11 22%Moderate 13 26%Low 8 16%Very Low 4 8%Total 50 100%
82
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 28% of the respondents think that Premium is Very High.
b) 22% of the respondents think that Premium is High.
c) 23% of the respondents think that Premium is Moderate.
d) 15% of the respondents think that Premium is Low.
e) 12% of the respondents think that Premium is Very Low.
Q8. How do you come to know about this policy?
Particulars No. of Respondents Percentage
Advertisements 10 20%Friends and Relatives 12 24%Direct Selling Agents 21 42%Others 7 14%Total 50 100%
83
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 20% of the respondents know about it from Advertisements.
b) 24% of the respondents know about it from Friends and
Relatives.
c) 42% of the respondents know about it from Direct Selling
Agents.
d) 14% of the respondents know about it from Other Sources.
Q9. Are you satisfied with the incentives (tax benefits or Bonuses)
associated with your policy?
Rating No. of Respondents Percentage
Highly satisfied 9 18%Satisfied 12 24%Moderate 10 20%Unsatisfied 11 22%Highly Unsatisfied 8 16%Total 50 100%
84
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 18% of the respondents are Highly Satisfied.
b) 24% of the respondents are Satisfied.
c) 20% of the respondents are Moderate.
d) 22% of the respondents are Unsatisfied.
e) 16% of the respondents are Highly Unsatisfied.
Q10. According to you, in what areas should the insurance companies work upon?
Particulars No. of Respondents Percentage
Easy Procedures 14 28%Fewer premiums 10 20%More Returns 9 18%Transparency 17 34%Total 50 100%
14
10 9
17
0
2
4
6
8
10
12
14
16
18
Easy Returns Fewerpremiums
More Returns Transperancy
No. o
f Res
pond
ents
Series1
85
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 28% of the respondents want Easy procedures.
b) 20% of the respondents want Fewer premiums.
c) 18% of the respondents want More returns.
d) 34% of the respondents want Transparency.
Q11. Do You think that services have improved after allowing private players in
insurance sector ?
Particulars No. of Respondents Percentage
Yes 40 80%No 10 20%Total 50 100%
86
ANALYSIS:
From the survey it was found that amongst 50 respondents
a) 80% of the respondents think that services have improved.
b)20% of the respondents think that services have not improved.
FINDINGS
According to my survey the noteworthy points are:
Most of the people buy life insurance as just a tax benefit tool or as a life
cover while only a few of the respondent take it as a saving option.The reason
for this is lack of knowledge of insurance benefits among the people.
A Majority of the respondent buy insurance products because of the need
reason while rest of the respondents buy for the brand purpose.
A Majority of the people come to know about the policies from the Direct
Selling Agents.
A Majority of the people are satisfied by the incentives associated with their
policies.
Most of the respondents are satisfied by the services offered by there insurance
company while some says that they are not satisfied by the services.
Most of the respondents want more Transparency from the side of the
company.
88
CONCLUSION
After overhauling the all situation that boosted a number of Pvt. Companies
associated with multinational in the Insurance Sector to give befitting competition to
the established behemoth ICICI in private sector, we come at the conclusion that
There are very tough competition among the private insurance companies on
the level of new trend of advertising to lull a major part of Customers.
ICICI is not left behind in the present race of advertisement.
The entry of more Pvt. players in the Insurance Sector have expanded the
product segment to meet the different level of the requirement of the
customers. It has brought about greater choice to the customers.
ICICI has vast market and very firm grip on its traditional customers and
monopoly of life insurance products..
IRDA, is also playing very comprehensive role by regulating norms mandating to
private players in this sector, that increases the confidence level of the customers to
the private players.
90
LIMITATIONS
It was difficult to collect some information because of some company rules.
Interaction with the employees was limited because of the work schedule.
It was difficult to cover all the types of ratios because of lack of information i.e.
regarding inventories, debtor’s turnover etc…..
92
RECOMMENDATION
The study has provided with the useful data from the respondents. There has a lot to
be recommended. Following are the recommendations:
There is a need for better promotion for the investment products & services.
The bank should advertise its products through television because it will
reach to the masses.
More returns should be provided on Insurance plans.
As the bank provides the Insurance facility to its customers. It should
provide this facility by tie up with the other Insurance organizations as well.
The main reason is that, the entire customers do not want Insurance of only
one company. They should have choice while selecting a suitable Insurance
plans. This will definitely add to the goodwill & profit for the bank.
94
BIBLIOGRAPHY
www.icicibank.com
www.iciciprulife.com
en.wikipedia.org/wiki/Main_Page
www.licindia.com
www.hdfcinsurance.com
www.maxnewyorklife.com
Brochures provided by the ICICI Prudential
Kothari C R, ‘Research and Methodology- Methods & Techniques’, New Age International (P) Ltd., 2004
96
ANNEXURE
Name - _____________
Age - _____________
Occupation - _____________
Q1. Are you currently insured?
- Yes
- No
If yes, please give the details of company, plan, premium etc.
Q2. Are you satisfied with your current insurer ?
- Yes
- No
Q3. Which is your favoured insurance company ?
- LIC
- ICICI
- HDFC
- Birla sun life
- Bajaj Allianz
- Others
98
Q4 Are you interested in the products offered by ICICI Prudential ?
- Yes
- No
- Cant say
Q5. What is your main concern while taking an insurance policy ?
- Tax benefit
- Security
- Investment/Savings
-
Q.6 Does this policy satisfy your financial needs? (Please rate on the scale
of 1 to 10 with 1 being least satisfied)
Q.7 Please express your opinion for the premiums paid for the above policy?
-Very high [ ]
-High [ ]
-Moderate [ ]
-Low [ ]
-Very Low [ ]
99
Q.8 How do you come to know about this policy? (Please tick).
-Advertisements [ ]
-Friends and relatives [ ]
-Direct selling agents [ ].
- Others (please specify) _____________________.
Q.9 Are there any incentives (tax benefits or Bonuses) associated with this
policy? (Please give appropriate details about it).
- ________________________________________________________
________________________________________________________
__________
10. Are you satisfied with the incentives associated with your policy?
-Highly satisfied [ ].
-Satisfied [ ]
-Moderate [ ]
-Unsatisfied [ ]
-Highly Unsatisfied [ ].
Q11. According to you, in what areas should the insurance companies work upon?
- Less complicated procedures
- Fewer premiums
100
- More returns
- Transparency
Q12. Do You think that services have improved after allowing private players in
insurance sector ?
- Yes
- No
Your comments on ICICI Prudential
__________________________________________________________________
__________________________________________________________________
101