project report bba 4th sem
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
Overview
With largest number of life insurance policies in force in the world, Insurance
happens to be a mega opportunity in India. It’s a business growing at the rate
of 15-20 per cent annually.
Together with banking services, it adds about 7 percent to the country’s
GDP .In spite of all this growth the statistics of the penetration of the
insurance in the country is very poor. Nearly 80 per cent of Indian population
is without life insurance cover while health insurance and non-life insurance
continues to be below international standards. And this part of the population
is also subject to weak social security and pension systems with hardly any
old age income security. This it-self is an indicator that growth potential for the
insurance sector is immense.
Historical Perspective
The insurance came to India from UK; with the establishment of the Oriental Life
insurance Corporation in 1818.The Indian life insurance company act 1912 was the
first statutory body that started to regulate the life insurance business in India. By
1956 about 154 Indian, 16 foreign and 75 provident firms were been established in
India. Then the central government took over these companies and as a result the
LIC was formed. Since then LIC has worked towards spreading life insurance and
building a wide network across the length and the breath of the country.
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Important milestones in the life insurance business in India:
1912: The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.
1956: 245 Indian and foreign insurers and provident societies were taken over by the
central government and nationalized. LIC formed by an Act of Parliament- LIC Act
1956- with a capital contribution of Rs.5 cr. from the Government of India.
Important milestones in the general insurance business in India
are:
1907: The Indian Mercantile Insurance Ltd. set up- the first company to transact all
classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India,
frames a code of conduct for ensuring fair conduct and sound business practices.
1972: The general insurance business in India nationalized through The General
Insurance Business (Nationalization) Act, 1972 with effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies- the National Insurance
Company Limited, the New India Assurance Company Limited, the Oriental
Insurance Company Ltd. and the United India Insurance Company Ltd. GIC
incorporated as a company.
Insurance Sector Reforms
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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.
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
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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)
Customer Service
LIC should pay interest on delays in payments beyond 30 days. Insurance
companies must be encouraged to set up unit linked pension plans. Computerization
of operations and updating of technology is to be carried out in the insurance
industry.
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.
India takes the 23rd position with US $9.933 billion annual premium
collections and a meager 0.41% share.
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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
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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 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.
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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.
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.
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,
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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.
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.
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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)10
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body
in April 2000 has fastidiously stuck to its schedule of framing regulations and
registering the private sector insurance companies.
The other 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.”
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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
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give more competition to LIC in the near future. LIC market share has decreased
from 95% (2002-03) to 81 %( 2004-05).
LIC has the current market share of 79%.
Among the private players ICICI Prudential has the maximum of approx. 5.60%
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.
The following companies have the rest of the market share of the insurance industry.
COMPANY NAME MARKET SHARE
LIC 79.30
ICICI PRUDENTIAL 5.63
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
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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.
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.
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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 ris
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.
Agents/Brokers:
Insurance agents may work for one insurance company or as independent
agents selling for several companies.
Insurance agents and brokers can find openings in the health insurance
sector, financial planning services, retirement planning counseling or even
provide other services, for e.g. sell mutual funds, annuities etc.
Surveyor/Loss Assessor:
Surveyors are professionals who assess the loss or damage and serve as a
link between the insurer and the insured.
They usually function only in non life business.
Their job is to assess the actual loss and avoid false claims.
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Sales/Marketing:
And who can forget the guys who make and break a brand. They would be
required in a large number in order to promote the number of products that will be
launched by numerous companies in the insurance sector.
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
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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.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After the entry
of the foreign players the industry is seeing a lot of competition and thus
improvement of the customer service in the industry. Computerization of operations
and updating of technology has become imperative in the current scenario. Foreign
players are bringing in international best practices in service through use of latest
technologies. The one time monopoly of the LIC and its agents are now
Going through a through revision and training programs to catch up with the other
private players. Though lot is being done for the increased customer service and
adding technology to it but there is a long way to go and various customer surveys
indicate that the standards are still below customer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which insurance
products are sold. The concept is very well established in the country like India but
still the increasing use of other sources is imperative. It therefore makes sense to
look at well- balanced, alternative channels of distribution.
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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
• Banc assurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents of the company. This is the
main distribution channel due to the complexity of most Insurance products
(Endowment, Whole of Life, Unit Linked). This tends to be the focus of most
companies due to its past success as well as its ability to deliver the right advice.
However, this channel can be expensive and it is a time consuming sales process.
An agent is the public face of an Insurance company. Hence it is important that this
face is always smiling and presentable and the facts and figures at his/ her
command are updated and correct.
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.
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BANCASSURANCE
Banc assurance 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, Banc
assurance, tries to exploit synergies between both the insurance companies and
banks.
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 19
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.
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.
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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
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
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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
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
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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.
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.
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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.
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.
POLICYHOLDERS GRIEVANCES
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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 reprisal system to address the
complaints of policyholders. The IRDA has a Grievance Reprisal 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. HDFC SLIC could not able to match LIC in remote areas services.
2. Misleading facts given by life advisors about the returns of ULIPs.
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3. Hidden charges taken by the companies.
4. Less Promotional Campaigns.
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.
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COMPANY’S PROFILE
INTRODUCTION
Helping Indians experience the joy of home ownership.
Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since emerged
as the largest residential mortgage finance institution in the country. The corporation
has had a series of share issues raising its capital to Rs. 119 crores. HDFC operates
through 75 locations throughout the country with its Corporate Headquarters in
Mumbai, India.
OBJECTIVES AND BACKGROUND
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Background
HDFC was incorporated in 1977 with the primary objective of meeting a social need
– that of promoting home ownership by providing long-term finance to households for
their housing needs. HDFC was promoted with an initial share capital of Rs. 100
million.
Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country
through the provision of housing finance in a systematic and professional manner,
and to promote home ownership. Another objective
Is to increase the flow of resources to the housing sector by integrating the housing
finance sector with the overall domestic financial markets..
ORGANIZATION AND MANAGEMENT
HDFC is a professionally
managed organization with
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a board of directors
consisting of eminent
persons who represent
various fields including
finance, taxation,
construction and urban
policy & development. The
board primarily focuses on
strategy formulation, policy
and control, designed to
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deliver increasing value to
shareholders.
FOUNDER – Mr. Hasmukhbhai Parekh
Brief profile of the Board of Directors
Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive
Chairman of Housing Development Finance Corporation Limited (HDFC Limited).
He joined HDFC Limited in a senior management position in 1978. He was
inducted as a whole-time director of HDFC Limited in 1985 and was appointed as
its Executive Chairman in 1993. He is the Chief Executive Officer of HDFC
Limited. Mr. Parekh is a Fellow of the Institute of Chartered Accountants (England
& Wales).
Mr. Keki M Mistry joined the Board of Directors of the Company in December,
2000. He is currently the Managing Director of HDFC Limited. He joined HDFC
Limited in 1981 and became an Executive Director in 1993. He was appointed as
its Managing Director in November, 2000. Mr. Mistry is a Fellow of the Institute of
Chartered
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Accountants of India and a member of the Michigan Association of Certified Public
Accountants.
Mr. Alexander M Crombie joined the Board of Directors of the Company in April,
2002. He has been with the Standard Life Group for 34 years holding various
senior management positions. He was appointed as the Group Chief Executive of
the Standard Life Group in March 2004. Mr. Crombie is a fellow of the Faculty of
Actuaries in Scotland.
Ms. Marcia D Campbell is currently the Group Operations Director in the Standard
Life group and is responsible for Group Operations, Asia Pacific Development,
Strategy & Planning, Corporate Responsibility and Shared Services Centre. Ms.
Campbell joined the Board of Directors in November 2005.
Mr. Keith N Skeoch is currently the Chief Executive in Standard Life Investments
Limited and is responsible for overseeing Investment Process & Chief Executive
Officer Function. Prior to this, Mr. Skeoch was working with M/s. James Capel &
Co. holding the positions of UK Economist, Chief Economist, Executive Director,
Director of Controls and Strategy HSBS Securities and Managing Director
International Equities. He was also responsible for Economic and Investment
Strategy research produced on a worldwide basis. Mr. Skeoch joined the Board of
Directors in November 2005.
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Mr.
Mr. Gautam R Divan is a practicing Chartered Accountant and is a Fellow he
Institute of Chartered Accountants of India. Mr. Divan was the Former Chairman
and Managing Committee Member of Midsnell Group International, an
International Association of Independent Accounting Firms and has authored
several papers of professional interest. Mr. Divan has wide experience in auditing
accounts of large public limited companies and nationalized banks, financial and
taxation planning of individuals and limited companies and also has substantial
experience in structuring overseas investments to and from India.
Mr. Ranjan Pant is a global Management Consultant advising
CEO/Boards on Strategy and Change Management. Mr. Pant, until 2002 was a
Partner & Vice-President at Bain & Company, Inc., Boston, where he led the
worldwide Utility Practice. He was also Director, Corporate Business Development
at General Electric headquarters in Fairfield, USA. Mr. Pant has an MBA from The
Wharton School and BE (Honors) from Birla Institute of Technology and Sciences.
Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange of
India Limited. Mr. Ravi Narain was a member of the core team to set-up the
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Securities & Exchange Board of India (SEBI) and is also associated with various
committees of SEBI and the Reserve Bank of India (RBI).
Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company
since November, 2000. Prior to this, he was the Managing Director of HDFC
Limited since 1993. Mr. Satwalekar obtained a Bachelors Degree in Technology
from the Indian Institute of Technology, Bombay and a Masters Degree in
Business Administration from The American University, Washington DC.
Ms. Renu S. Karnad is the Executive director of HDFC Limited, is a graduate in
law and holds a Master’s degree in economics from Delhi University. She has
been employed with HDFC Limited since 1978 and was appointed as the
Executive Director in 2000. She is responsible for overseeing all aspects of
lending operations of HDFC Limited.
HDFC has a staff strength of 1029, which includes professionals from the fields of
finance, law, accountancy, engineering and marketing.
SUBSIDIARY & ASSOCIATE COMPANIES
33
HDFC Bank
HDFC Mutual Fund
HDFC Standard Life ++
Intel net Global Services Ltd.
HDFC Chubb General Insurance Company Ltd.
HDFC Reality
Other Companies Co-Promoted by HDFC
HDFC Trustee Company Ltd.
34
HDFC Developers Ltd.
HDFC Venture Capital Ltd.
HDFC Ventures Trustee Company Ltd.
HDFC Investments Ltd.
HDFC Holdings Ltd.
Home Loan Services India Pvt. Ltd.
Credit Information Bureau (India) Ltd
HDFC STANDARD LIFE INSURANCE
35
INTRODUCTION:
HDFC Standard Life Insurance Company Limited was one of the first companies to
be granted license by the IRDA to operate in life insurance sector. Each of the JV
player is highly rated and been conferred with many awards. HDFC is rated 'AAA' by
both CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and
Standard and Poors. These reflect the efficiency with which HDFC and Standard Life
manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.
HDFC is the majority stakeholder in the insurance JV with 81.4 % stake and
Standard Life has a stake of 18.6%. Mr. Deepak Satwalekar is the MD and CEO of
the venture.
THE PARTNERSHIP:
36
HDFC and Standard Life first came together for a possible joint venture, to enter the
Life Insurance market, in January 1995. It was clear from the outset that both
companies shared similar values and beliefs and a strong relationship quickly
formed. In October 1995 the companies signed a 3 year joint venture agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further strengthening
the relationship.
In October 1998, the joint venture agreement was renewed and additional resource
made available. Around this time Standard Life purchased 2% of Infrastructure
Development Finance Company Ltd. (IDFC). Standard Life also started to use the
services of the HDFC Treasury department to advise them upon their investments in
India.
Towards the end of 1999, the opening of the market looked very promising and both
companies agreed the time was right to move the operation to the next level.
Therefore, in January 2000 an expert team from the UK joined a hand picked team
from HDFC to form the core project team, based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC and a 5%
stake in HDFC Bank.
COMPANY’S MISSION:
To be the top life insurance company in the market.
37
This not only means being the largest or the most productive company in the market,
but a combination of several things like-
Customer service of the highest order
Value for money for customers
Professionalism in carrying out business
Innovative products to cater to different needs of different customers
Use of technology to improve service standards
Increasing market share
COMPANY’S VALUES:
SECURITY: Providing long term financial security to our policy holders will be
our constant endeavor. This is done by offering life insurance and pension
products.
TRUST: Company appreciates the trust placed by our policy holders in us.
Hence, company will aim to manage their investments very carefully and live
up to this trust.
INNOVATION: Recognizing the different needs of our customers, company
will be offering a range of innovative products to meet these needs.
Company’s mission is to be the best new life insurance company in India and these
are the values that will guide us in this.
KEY MANAGEMENT PERSONNEL
Chairman
38
Mr. Deepak S. Parekh
Board of Directors
Mr. K. M. Mistry
Ms. Renu S. Karnad
Mr. A. M. Crombie
Ms. Marcia D. Campbell
Mr. Norman Keith Skeoch
Mr. G. R. Divan
Mr. G. N. Bajpai
Mr. Ranjan Pant
Mr. Ravi Narain
Managing Director & CEO
Mr. D. M. Satwalekar
AUDIT COMMITTEE
Haribhakti & Company
Chartered Accountants
B.K. Khare & Co.
Chartered Accountants
Bankers
HDFC Bank Ltd.
39
Union Bank of India
Indian Bank
The Saraswat Co-operative Bank Ltd.
Federal Bank
KNOWLEDGE MANAGEMENT
When Should One Go For Insurance?
Your insurance need will change as your life does, from starting to work to enjoying
your golden years and all the stages in between. Each one of these stages may
pose a different insurance need/cover for you. In this section, we have drawn up the
basic life stages and help you analyze various insurance needs accordingly.
Stage 1: Young and Single
40
This is an important stage where one lays down the foundation of a successful life
ahead. Take advantage of the time and power of compounding to ensure that you
build up your dreams, so start saving early.
Your needs:
oSave for a home and wedding
oTax Planning
oSave for Golden years
Stage 2 - Just Married
Marriage brings about a significant change. New dreams and new opportunities also
bring in additional responsibilities. While both of you look forward to a happy and
secure life, it is equally important to ensure that eventualities don’t come in the way
of shaping your dreams.
Your needs:
o Planning for home / securing your home loan
Liability
o Save for vacation
o Save for your first child
Stage 3 - Proud Parents
41
Once you have children, your need for life insurance is even more. You need to
protect your family from an untoward incident. Ensure your protection umbrella takes
into account the future cost of securing your child’s dream. You will want life to go on
for your loved ones, and having enough life insurance is a way to help ensure that.
Your needs:
o Provide for children’s education
o Safeguarding family against loan liabilities
o Savings for post-retirement
Stage 4 - Planning for Retirement
While you are busy climbing the ladder of success today, it is important for you to
take time and plan for your life after retirement. Having an early start for retirement
planning can make a significant difference to your savings. Think about your golden
years even before you have reached them. The key is to think ahead and plan well
using your time and money.
Your needs:
o Provide for regular income post retirement
o Immediate Tax benefits
o Lead a secure, independent and comfortable
Life style after retirement
PRODUCT MIX42
At HDFC Standard Life, there is a bouquet of insurance solutions to meet every
need. They cater to both, individuals as well as to companies looking to provide
benefits to their employees.
For individuals, they have a range of protection, investment, pension and savings
plans that assist and nurture dreams apart from providing protection. One can
choose from a range of products to suit one’s life-stage and needs.
For organizations they have customized solutions that range from Group Term
Insurance, Gratuity, Leave Encashment and Superannuation Products.
PRODUCTS FOR INDIVIDUALS
PROTECTION - You can protect your family against the loss of your income or the
burden of a loan in the event of your unfortunate demise, disability or sickness.
These plans offer valuable peace of mind at a small price.
Plans: Term Assurance Plan
Loan Cover Term Assurance Plan.
INVESTMENT - This includes a plan that is well suited to meet your long term
investment needs. We provide you with attractive long term returns through regular
bonuses.
Plan: Single Premium Whole of Life
43
PENSION - Our Pension Plans help you secure your financial independence even
after retirement and live a relaxed retired life.
Plans: Personal Pension Plan
Unit Linked Pension
Unit Linked Pension Plus
SAVING - Our Savings Plans offer you flexible options to build savings for your
future needs such as buying a dream home or fulfilling your children’s immediate and
future needs.
Plans: Endowment Assurance Plan,
Unit Linked Endowment,
Unit Linked Endowment Plus,
Money Back Plan,
Children’s Plan,
Unit Linked Young star,
Unit Linked Young star Plus.
GROUP PLANS
44
HDFC Standard Life has the most comprehensive list of products for progressive
employers who wish to provide the best and most innovative employee benefit
solutions to their employees. They offer different products for different needs of
employers ranging from term insurance plans for pure protection to voluntary plans
such as superannuation and leave encashment.
Plans: Group Term Insurance with Riders
Group Term Insurance with Profit-Share
Group Unit-Linked Plan
For Gratuity
For Defined Benefit Superannuation
For Defined Contribution Superannuation
Group Leave Encashment Plan
RURAL CUSTOMER - According to research findings, there is keenness among
rural customers to invest in savings cum protection plan with a term of five years,
especially, if the premium amount is low and affordable. Keeping this in view, HDFC
STD> LIFE has plans like:
Plans: Bima Bachat Yojana.
Super Bachat Yojana
DISTRIBUTION OFFICES
45
In addition to the corporate office at Mumbai, your Company had 169 offices in over
135 cities/towns in the country. It has a widespread network of Financial
Consultants, Corporate Agents and Brokers servicing customers in these cities and
towns.
FINANCIAL CONSULTANTS
The number of licensed Financial Consultants appointed by your Company
increased from over 23,000 in the previous year to over 33,000 in the current year.
During the year, the Company continued its
CURRENT SALES- HDFC Standard Life
“HDFC STANDARD LIFE PACING AHEAD”
The Financial Express 15th May 2007
“HDFC Standard Life has recorded a strong year-on-year growth of 112% for
the period April-March 2006-07, in comparison to the same period 2005-06,
with a new business first year premium of Rs. 1,029 crore.
In terms of effective premium income (EPI), which gives a 10% value to a
Single Premium policy and is an internationally-accepted indicator of an
insurance company's performance, the EPI grew by 103% to Rs. 887 crore
from Rs. 436 crore.
46
HDFC Standard Life's growth in new business is a manifestation of the number
of lives insured as well as an increase in the average premium. For the
individual business, volume measured by the number of lives insured
witnessed a 32% growth.
The average premium also grew by 62% to Rs 27,500 in 2006-07 from Rs 17,000
in 2005-06.
During the year the company issued over 3, 97,000 policies and has covered more
than 5, 80,000 lives”
Table Showcasing Financial Results:
Parameters
April-March
2005-06
(Rs. Cr)
April-March
2006-07
(Rs. Cr)
Growth
(%)
Total received premium 668.40 1532.21 129.23
I. New Business 486.15 1028.94 111.65
ii. Renewal 182.25 503.27 176.14
Effective Premium
Income (Total) 436.08 887.30 103.47
Group Business
Premium (EPI) 49.40 135.15 173.58
47
48
Fund Name Offer Prices (Rs) Bid Price (Rs)
Liquid Fund 24.5113 23.2857
Secure Managed Fund 24.7568 23.5190
Defensive Managed Fund 29.6157 28.1349
Balanced Managed Fund 34.1340 32.4273
Fund Name Offer Prices (Rs) Bid Price (Rs)
Liquid Fund 24.5661 24.5661
Secure Managed Fund 22.6666 22.6666
Defensive Managed Fund 27.3346 27.3346
Balanced Managed Fund 36.2603 36.2603
Equity Managed Fund 46.2655 46.2655
Growth Fund 59.0512 59.0512
Unit Prices as on 29/08/2007
FUTURE PLANS
HDFC has always been market-oriented and dynamic with respect to resource
mobilization as well as its lending program. This renders it more than capable to meet
the new challenges that have emerged. Over the years, HDFC has developed a vast
client base of borrowers, depositors, shareholders and agents, and it hopes to capitalize
on this loyal and satisfied client base for future growth. Internal systems have been
developed to be robust and agile, to take into account changes in the volatile external
environment.
HDFC has developed a network of institutions through partnerships with some of the
best institutions in the world, for providing specialized financial services. Each institution
is being fine-tuned for a specific market, while offering the entire HDFC customer base
the highest standards of quality in product design, facilities and service.
INTRODUCTION OF TOPIC49
India is at a relatively nascent stage in the wealth management life cycle,
albeit attractively poised for rapid growth as economic expansion has been
driving wealth creation in India. Observing the way our country has
transformed itself from a slow growing agrarian economy into one of the
world’s most dynamic economies in less than two decades, the recent
Barclay’s Wealth Report forecasts that India will be the world’s top wealth
centre in 2017. Capgemini and Merrill Lynch released the latest World
Wealth Report stating that in 2007, India led the world in HNI’s population
growth, almost 22 per cent up.
To continue, a US based Celent report predicts that by 2012, wealth
management in India would be a $1 trillion market, with approximately 42
million households as compared to 13 million households today. An
important factor which contributes to India’s shining story is the Indian
middle class. According to Celent, the middle class is expected to grow to
600 million by 2012 as consumerism across sectors, including demand for
financial products and services is on the rise.
50
RESEARCH MEHODOLOGY
The study of awareness about Financial Planning among the people and particularly
the insurance sector covers data collection through observation, questionnaire and
interview of consumers.
Type of research :
Exploratory:
Type of research carried out was EXPLORATORY in nature; the objective of such
research is to determine the approximate area where the drawback of the company
lies and also to identify the course of action to solve it. For this purpose the
information proved useful for giving right suggestion to the company.
Data Collection:
Primary data
Secondary data
Data used for the research work was primary in nature.
Sample unit: -
The research process was done by interacting with number of customers during the
activities performed, which included, markets, cold calling, canopies, etc. Sample
Design consists of Random Sampling.
Sample size: - 100 people
51
Method of collection: -
Field procedure for gathering primary data included observation and interview
schedule in which the questionnaires were filed by the interviewer.
Personal interviews through self administered survey was done to collect the data,
market research was undertaken, that was accomplished by performing various
activities designed.
Research Instrument:
Questionnaire
The questionnaire was formulated by keep in mind the following Points: -
Giving the respondents clear comprehension of the question.
Inducing the respondents to co-operate.
Giving instructions as to what is wanted.
Identifying the needs to be known.
Limititations:
The following were the limitations that were there during the course of the study: 3
1. Limited time period.
2. Less number of respondents.
3. Biasness of the respondents.
PROJECT OBJECTIVES52
To study the awareness of Financial Planning among the people.
To study the importance of Insurance in today’s scenario.
Brand awareness of various private insurance companies.
Preference among different investment tools.
Purpose of buying insurance.
To generate leads for Unit Linked Insurance and the Unit Linked Pension
Plans, by interacting with walking and existing customers of the company.
DATA ANALYSIS & INTERPRETATION
53
AGE DISTRIBUTION
AGE DISTRIBUTION(yrs.)
35%
41%
24%Below 30
31 - 45
Above 45
Highest number of Respondents (41%) from Age group 31 to 45 yrs.
35% respondents are of age below 30 yrs, small percentage of which is
unemployed.
MARITAL STATUS
54
MARITAL STATUS
19
4
16
37 24
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Below 30 31 - 45 Above 45AGE(yrs)
SINGLE MARRIED
Total number of single respondents – 23
Total number of married respondents – 77
INCOME DISTRIBUTION
55
INCOME DISTRIBUTION(Annual in Rs.appx.)
16
13
5
1
7
12
12
10
0
6
12
6
<1.5 lacs
1.5 - 3 lacs
3 - 5 lacs
> 5 lacs
INC
OM
E
Below 30 31 - 45 Above 45
Highest, 16 respondents in income bracket below 1.5 lacs, which mainly
comprises of age group below 30 years.
Respondents of the age group 31-45 yrs, lie in all the income slabs.
Minimum, 6 respondents in income bracket of above 5 lacs, which are in age
group of above 45 years.
ARE YOU AWARE ABOUT FINANCIAL PLANNING ?
56
98%
2%
0
10
20
30
40
50
60
70
80
90
100
NO
OF
PEO
PLE
DO YOU KNOW WHAT IS FINANCIAL PLANNING ?
YES
NO
98% of the respondents were aware about Financial Planning.
BRAND RECALL
57
100 % respondents mentioned first name to be LIC
Among private players, ICICI Prudential has the highest
Brand Recall i.e. 96%
HDFC Standard life has Brand Recall of 92%
INVESTMENT PREFERENCE58
BRAND RECALL
100%
96%
92%
82%86%
72%
64%
75%
71%
60%51%
LIC
ICICI Prudential
HDFC Std Life
TATA AIG
BIRLA SUN LIFE
KOTAK MAHINDRA
SBI LIFE
AVIVA
MAX NEW YORK
METLIFE
INGVYSYA
INVESTMENT PREFERENCE
11%18%
21%
9%
20%
21%
Banks & PostofficeShare Market
Insurance
Bonds
Mutual Funds
Real Estate
21% respondents prefer banks and post office schemes as an investment tool
preference.
Respondents of age group below 30 years prefer Mutual Funds, as they provide
higher returns than banking investment tools.
Insurance ranks 2nd as an investment tool choice, which itself includes various
protection, saving and pension plans.
Govt. Bonds & securities are mostly preferred by people of higher age group rather
than young generation.
Property as an investment option is most lucrative choice. However it is important
to mention that majority of respondents are in age group of above 30 years and
people with high income bracket prefers to invest in Real Estate.
INSURED PERCENTAGE
59
67 % of respondents were insured on own life and on life of their family members.
So we had 33 % of potential customers to approach.
COMPANY PREFERENCE
60
ARE YOU INSURED?
67%
33%
YES
NO
COMPANY PREFERENCE(in %)
55% 30% 15%
0 20 40 60 80 100 120
1
ONLY LIC BOTH ONLY PVT. COs
55% of respondents have insurance cover provided by LIC only
15% of respondents have insurance cover provided by Private Cos. only
Whereas 30% have got insurance from both LIC and Private Companies.
Total number of LIC policies sums up to 85% and total number of Pvt. Companies
policies sold sums up to 45%.
Data provides that though LIC is still got a maximum market share but Private
Companies are making a fast move in the market.
61
TYPE OF PLAN BOUGHT
TYPE OF PLAN
26, 29%
20, 23%
24, 28%
17, 20% MONEY BACK
ENDOWMENT
PENSION PLAN
ULIPs
Money back Policies have been most popular and also the endowment plans.
As people today are more aware about financial planning, so people of the age 30
years have planned for their Retirement now.
ULIPs are fast gaining popularity as they provide investment
Benefit with Insurance.
62
PURPOSE OF BUYING INSURANCE
PURPOSE OF BUYING INSURANCE
52%
11%
23%
14%
0 10 20 30 40 50 60
Risk Cover
Investment
Tax Benefit
RetirementPlanning
Risk cover remains the most important purpose for buying insurance followed by
option as Tax saving tools.
Retirement planning in an early period is also gaining the market share.
ULIPs are responsible for increasing popularity of insurance as an investment tool
DISTRIBUTION CHANNEL PREFERENCE
63
CHANNEL PREFERENCE
56 17 14 9 4
0 20 40 60 80 100 120
1
Known/Current Advisor Friends & RelativesGroup Insurance BanccassuranceTelesales/unknown Advisor
According to the data, known/current Advisors remains the 1st choice for buying
Insurance.
In retail also known Advisors are preferred over referrals.
Banc assurance is emerging as a popular option for buying life Insurance.
Group insurance is a channel which customers expect but it is not so popular
because only few employers have taken the initiative.
Buying insurance from a unknown person or getting a phone call is still not
preferred by most of the people
FINDINGS
THE BARRIERS FACED DURING THE PROCESS: 64
The Attitudinal Barriers to Purchasing …..
• Death - a taboo topic for discussion
“It’s quite ashubh talking about death”
• The belief in karma … destiny
“Jo kismet me likha hai wohi hoga, hum kya kar sakte hai”
The Product/ Service Barriers ……
• Liquidity
“What if I need my money urgently for some medical illness?”
• Service quality of the Agent
“He disappears after he takes the first premium”
• Sanctity of the contract
“What if my dependents do not get the money once I die?”
Charges
“Its better to invest in Mutual Funds, the charges there are very less”
The Other Barriers….
Unsure about Pvt. Companies
Low rate of return
“Better to put my money in PPF, at least I get fixed returns”
Money gets tied up
High premium
CONCLUSION
The various conclusions drawn from the project are:
65
There has been a tremendous change in the insurance industry. And with it
there has been continuous growth in this sector both in Indian as well as world
context.
The opening up of the insurance sector has changed the whole look of the
industry. While the LIC, in order to face the competition is coming up with new
strategies. New private players are leading the sector due to their strategic
management and tailored made projects.
From the research, we also conclude that though the awareness and people
opting for LIC plans are more as compared to other private players’ but the
latter are gaining momentum in the market day by day.
The demand for insurance is likely to increase with rising per-capita income,
rising literacy rates, and growth of service sector. In-fact opening up of the
insurance sector is an integral part of the liberalization process being persued
by many developing countries.
Life insurance as a form of protection is the single-most important financial
product any earning member of a family must have. Having said this, a well-
diversified portfolio is one of the first rules of financial planning, and as such
one should consider different instruments as the ability to save increases.
Possible investment options range from bank deposits and government small saving
schemes to mutual funds, stocks and property.
66
Certainly ULIPs successfully combine the first and most important need of protection,
with savings, and hence are an excellent addition to your portfolio.
All financial products have a certain amount of risk and charges, be it a mutual fund,
property, or even a bank deposit. It would be unrealistic to assume that the features
and benefits of a ULIP come at no cost, though the charges are considerably lower
than that of a traditional product.
In fact, the very reason the product is transparent is because the customer knows the
charges and risks.
There is no right or wrong in this. The success of marketing insurance depends on
understanding the social and cultural needs of the target population, and matching the
market segment with the suitable intermediary segment. All intermediaries can’t sell all
lines of business profitably in all markets. There should be clear demarcation in the
marketing strategies of the company from this perspective. Clients should also receive
price differentials for using different channels.
The intermediaries need to be empowered with the right learning, training and sales
tools and technology enablers. Coupled with the right product mix, this will help the
insurers to survive and flourish in this competitive market scenario. So lets conduct
this business with utmost economy with the spirit of trusteeship; thereby making
insurance widely popular.
LIMITATIONS
Limitations:67
The following were the limitations that were there during the course of the study: 4
1. Limited time period.
2. Less number of respondents.
3. Biasness of the respondents.
RECOMMENDATIONS
Lack of Knowledge: Ease of Process, simplifying the product and the
procedure
Need to promote the quality of awareness
68
The benefits: Leverage on Risk Protection or Returns oriented or both
The product: catering to life stages
Need for Branding in Insurance: Branding is more relevant in the Insurance
market which not only faces the problem of securing and retaining customers in
an increasingly competitive marketplace but also experiences the need for
heightened relevance of the brand proposition in a world where brand has been
termed the new religion.
In rural India, the LIC is especially synonymous with insurance. But in the wake
of competition insurance companies have to do a considerable brand building
exercise at least in urban India.
Adequate time, investment and longer-term management of the brand are
essential, not only for success but also survival. All brands need to be built
around well-differentiated and credible positioning that springs from the
organization’s history. The brand must not only be believed but lived by
management and employees.
Focus on different segments to survive and thrive in a competitive
environment. Each company has to choose its own unique positioning based
on its unique strengths. Below-mentioned positioning alternatives can be worth
considering.
VARIETY-BASED POSITIONING
This type of positioning is based on varieties in products and services rather than
customer segments. It is a sensible strategy for those companies who have
distinctive advantages or strengths in offering certain products and services. In the
69
insurance industry too, it is possible to achieve a unique position by focusing on
certain category of products.
NEEDS-BASED POSITIONING
This is the most commonly understood positioning and is based on the differing
needs of different groups of consumers. This can be done successfully if a
company has unique strengths to service a group of customer needs better than
others.
The insurance needs of customers vary significantly for different groups of
customers. The insurance needs of young family with small children will be quite
different from that of a family in which the income-earner is close
To retirement. However, in India most of the life insurance companies have a wide
variety of products tailored for different customer needs and there is no company
focusing on a particular customer need.
ACCESS-BASED POSITIONING
Positioning of customers can also be done by the way they are accessible. That is
different groups of customers may be accessible in different ways even though
they may have similar needs. Access is typically a function of customer geography
or customer scale. There is excellent opportunity in the insurance industry to
employ access-based positioning by targeting the rural insurance sector.
The rural market for life insurance is very different from the urban market in terms
of needs, income levels and distribution (seasonality, for example), penetration of
media and so on. Rural market can be a highly profitable position if one is able to
70
carefully plan and tailor an entire set of low-cost activities of advertising,
distribution, and product design etc. to successfully exploit the potential.
List of Preference
BIBLIOGRAPHY
71
BOOKS
Marketing Management, By Philip kotaler
Marketing of Service By Dr. S.L Gupta and V.V. Ratna
Financial Management By I.M.Panday
Economics Times
Websites
www.rbi.org.in
www.irdaindia.org
www.banknetindia.com
www.hdfcinsurance.com
www.businessworldonline.com
www.google.com (search engine)
Other References:
Brochures of various plans
Questionnaire
Name: ________________________
Age: ______
Gender: M F
Marital Status: Married Single
72
Occupation: ___________________
Contact No: __________________
Annual Income (approx. in Rs.)
Up to 1.50 lacs 1.50 lacs-3 lacs
3 lacs-5 lacs above 5 lacs
Q1) Are you aware about ‘what is financial planning’?
YES NO
Q2) Mention the names of Life insurance companies you have heard of:
1) ________________ 4) ________________
2) ________________ 5) ________________
3) ________________ 6) ________________
Q3) How much do you save approximately of your annual income?
____________________________________________________
Q4) where do you invest/would like to invest your savings?
(Rank in order of preference, 1 being most preferable)
Banks Share Market
73
Insurance Bonds & Securities
Mutual Funds Real Estate/Property
Q5) Have you taken any life insurance policy on your own life or on life of any of your
family member?
YES NO
(If no, switch to Q 9)
Q6) which company(s) policy(s) you have?
LIC ICICI PRUDENTIAL
BIRLA SUNLIFE ING VYSYA
BAJAJ ALLIANZ SBI LIFE
HDFC STD. LIFE TATA AIG
MAX NEW YORK LIFE AVIVA
RELIANCE KOTAK MAHINDRA
MET LIFE OTHER ____________ (specify)
Q7) which type of plan did you buy?
Money Back Plan
74
Endowment Plan
Pension Plan
ULIP
Q8) What was your purpose/will be your likely purpose of taking insurance?
RANK THEM (1 being most ideal)
a) PROTECTION
OF FAMILY
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENT
PLANNING
Q9) Have you ever been approached for Life insurance by any of the following (please
√); also Rank according to your preference from whom you are most likely to buy
insurance?
1) Known/Current Advisor
2) Advisors referred by friends/family
75
3) Telesales and subsequent visit by unknown Advisor
4) Schemes offered by your bank (Banc assurance)
5) Group Insurance Policies offered by your employer
Q10) Do you feel opening up of the sector has created more insurance awareness
among the public?
YES NO
Q11) How many dependents do you have?
<2 2-4 4-6 >6
Q12) Do you really think insurance cover in today’s scenario is not
Essential?
_____________________________________________________
_____________________________________________________
THANKS YOU FOR YOUR CONTRIBUTION
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