sonam final

8/12/2019 Sonam Final

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INDUSTRY PROFILE


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INDUSTRY PROFILE

Origin of Life Insurance

Almost 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk

of the caravan trade by giving loans that had to be later repaid with interest when

the goods arrived safely. In 2100 BC, the Code of Hammurabi granted legal status

to the practice.

That, perhaps, was how insurance made its beginning. Life insurance had its

origins in ancient Rome, where citizens formed burial clubs that would meet the

funeral expenses of its members as well as help survivors by making some

payments.

As European civilization progressed, its social institutions and welfare

practices also got more and more refined. With the discovery of new lands, sea

routes and the consequent growth in trade, Medieval guilds took it uponthemselves to protect their member traders from loss on account of fire,

shipwrecks and the like.

Since most of the trade took place by sea, there was also the fear of pirates. So

these guilds even offered ransom for members held captive by pirates. Burial

expenses and support in times of sickness and poverty were other servicesoffered. Essentially, all these revolved around the concept of insurance

or risk coverage. That's how old these concepts are, really.

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


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

The first step.

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

it began taking shape in 1688 at a rather interesting place called Lloyd's Coffee

House in London, where merchants, ship-owners and underwriters met to discuss

and transact business. By the end of the 18th century, Lloyd's had brewed enough

business to become one of the first modern insurance companies.

Insurance and Myth...

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

mortality table to provide a link between the life insurance premium and the

average life spans based on statistical laws of mortality and compound interest.

In 1756, Joseph Dodson reworked the table, linking premium rate to age.

Companies Entering...

The first stock companies to get into the business of insurance were chartered in

England in 1720. The year 1735 saw the birth of the first insurance company in

the American colonies in Charleston, SC.

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

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

However, it was after 1840 that life insurance really took off in a big way. The

trigger: reducing opposition from religious groups.


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The growing years...

The 19th century saw huge developments in the field of insurance, with newer

products being devised to meet the growing needs of urbanization and

industrialization. In 1835, the infamous New York fire drew people's attention to

the need to provide for sudden and large losses. Two years later, Massachusetts

became the first state to require companies by law to maintain such reserves. The

great Chicago fire of 1871 further emphasized how fires can cause huge losses in

densely populated modern cities. The practice of reinsurance, wherein the risks

are spread among several companies, was devised specifically for such situations.

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

government passed the Workmen's Compensation Act, which made it mandatory

for a company to insure its employees against industrial accidents.

With the advent of the automobile, public liability insurance, this first made its

appearance in the 1880s, gained importance and acceptance.

In the 19th century, many societies were founded to insure the life and health of

their members, while fraternal orders provided low-cost, members-only insurance.

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

members as do most labour organizations. Many employers sponsor group

insurance policies for their employees, providing not just life insurance, but

sickness and accident benefits and old-age pensions. Employees contribute a

certain percentage of the premium for these policies.


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In India...

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

name of Life Insurance Corporation of India's corporate headquarters, is derived

from the Rig Veda. The term suggests that a form of "community insurance" was

prevalent around 1000 BC and practiced by the Aryans.

Burial societies of the kind found in ancient Rome were formed in the Buddhist

period to help families build houses, protect widows and children.

Life Insurance in its present form came to India from United Kingdom (UK) with

the establishment of the British firm, ORIENTAL LIFE INSURANCE CO. in

Calcutta in 1818, followed by Bombay Life Insurance Co. in 1823; Madras

Equitable Life Insurance Society in 1829 & Oriental Government Security Life

Insurance Co. in 1874. Prior to 1871, Indian lives were treated substandard &

charged an extra premium of 15 - 20%. Bombay Mutual Life assurance Society, an

Indian insurer, which came into existence in 1871, was the first one to cover

Indian lives at standard rates.

Bombay Mutual Assurance Society, the first Indian life assurance society, was

formed in 1870. Other companies like Oriental, Bharat and Empire of India were

also set up in the 1870-90s.

It was during the swadeshi movement in the early 20th century that insurance

witnessed a big boom in India with several more companies being set up.


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

Insurance Act was passed in 1912, followed by a detailed and amended Insurance

Act of 1938 that looked into investments, expenditure and management of thesecompanies' funds.

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

fund societies in the country's life insurance scene. However, in the absence of

regulatory systems, scams and irregularities were almost a way of life at most of

these companies.

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

India. The Life Insurance Corporation of India was set up in 1956 to take over

around 250 life companies.

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

only after seven years of deliberation and debate - after the RN Malhotra

Committee report of 1994 became the first serious document calling for the re-

opening up of the insurance sector to private players -- that the sector was finally

opened up to private players in 2001.

The Insurance Regulatory & Development Authority (IRDA), an autonomous

insurance regulator set up in 2000, has extensive powers to oversee the insurance

business and regulate in a manner that will safeguard the interests of the insured.


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THE STRUCTURE OF THE INSURANCE

MARKET IN INDIA

The LIC for life assurance business & GIC and its subsidiaries for general

insurance business are the main providers of insurance in India. As for the life

insurance, the Postal Life Insurance Scheme provides for life insurance coverage

to government & public sector employees & also the general public in

rural areas. Various state governments have life & general insurance funds

established to provide life insurance cover to their own employees as alsogeneral insurance cover for their departments / corporations.

ABOUT IRDA

Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions ofIRDA..

Subject to the provisions of this Act and any other law for the time being in force,

the Authority shall have the duty to regulate, promote and ensure orderly growth of

the insurance business and re-insurance business.

Without prejudice to the generality of the provisions contained in sub- section (1),

the powers and functions of the Authority shall include:

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

suspend or cancel such registration;


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(b) Protection of the interests of the policy holders in matters concerning assigning

of policy, nomination by policy holders, insurable interest, settlement of insurance

claim, surrender value of policy and other terms and conditions of contracts of

insurance;(c) Specifying requisite qualifications, code of conduct and practical training for

intermediary or insurance intermediaries and agents;

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

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

(f) Promoting and regulating professional organizations connected with the

insurance and re-insurance business;

(g) Levying fees and other charges for carrying out the purposes of this Act;

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

enquiries and investigations including audit of the insurers, intermediaries,

insurance intermediaries and other organisations connected with the

insurance business;

(i) Control and regulation of the rates, advantages, terms and conditions that may

be offered by insurers in respect of general insurance business not so controlledand regulated by the Tariff Advisory Committee under section 64U of the

Insurance Act, 1938 (4 of 1938);

(j) Specifying the form and manner in which books of account shall be


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maintained and statement of accounts shall be rendered by insurers and other

insurance intermediaries;

(k) Regulating investment of funds by insurance companies;

(l) Regulating maintenance of margin of solvency;

(m) Adjudication of disputes between insurers and intermediaries or

insurance intermediaries;

6. Supervising the functioning of the Tariff Advisory Committee

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

schemes for promoting and regulating professional organisations referred to in

clause (f);

(p) Specifying the percentage of life insurance business and general

insurance business to be undertaken by the insurer in the rural or social sector; and

(q) Exercising such other powers as may be prescribed


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INDIAN INSURANCE INDUSTRY

Insurers

Insurance industry, as on 1.4.2000, comprised mainly two players: the stateinsurers:

Life Insurers:

Life Insurance Corporation of India (LIC)

General Insurers:

General Insurance Corporation of India (GIC) (with effect from Dec'2000, a

National Rein surer)

GIC had four subsidiary companies, namely (with effect from Dec'2000, these

subsidiaries have been de-linked from the parent company and made as

independent insurance companies.

1. The Oriental Insurance Company Limited2. The New India Assurance Company Limited,

3. National Insurance Company Limited

4. United India Insurance Company Limited.

5. Royal Sundaram Alliance Insurance Company Limited.

6. Reliance General Insurance Company Limited.

7. IFFCO Tokio General Insurance Company Limited.

8. TATA AIG General Insurance Company Limited.

9. Bajaj Allianz General Insurance Company Limited

10.ICICI Lombard General Insurance Company Limited.


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NATURE OF INSURANCE BUSINESS

An insurer sells promise of future payment of insurance policy benefits in return

for the premiums received now. The happening of the event insured against isuncertain - it may or may not happen & if it does happen, the timing of its

happening cannot be predicted in advance. The promise is good & hence the policy

is worth something only to the extent that the insurer will be able to pay when the

time comes to pay the claim. There is considerable time gap between the

payments of the premium & the settlement of the claim. It is therefore the

continued financial ability of the insurer to fu1fill its side of the bargain that

generates the-value of insurance, In the view of large funds that necessarily get

accumulated in the natural course of insurance business, the need for regulation

gained support from the policy holders as well as practitioners of insurance.

Regulation of insurance is regarded as an essential requirement for the sound

development of the insurance activities & the insurance activities properly

regulated, play an important role in the process of national economic development.

THE NEED FOR LIFE INSURANCE

Risks and uncertainties are part of life's great adventure -- accident, illness, theft,

natural disaster - they're all built into the working of the Universe, waiting to

happen. Insurance then is man's answer to the vagaries of life. If you cannot beat

man-made and natural calamities, well, at least be prepared for them and their

aftermath.

Insurance is a contract between two parties - the insurer (the insurance company)

and the insured (the person or entity seeking the cover) - wherein the insurer agrees


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to pay the insured for financial losses arising out of any unforeseen events in return

for a regular payment of "premium". These unforeseen events are defined as "risk"

and that is why insurance is called a risk cover. Hence, insurance is essentially the

means to financially compensate for losses that life throws at people - corporate

and otherwise.Thus , the need can be classified as :

Protection of the interest of the faculty of the loss of income due to death of the

bread winner.

Provision for the education & marriage of children.

Post retirement income for self & dependents.

Special needs like loss of income due to disabilities, accidents, treatment ofdiseases, sickness etc.

To protect against future inflation.

ROLE OF LIFE INSURANCE

Role 1: L if e insur ance as " I nvestment"

Insurance is an attractive option for investment. While most people

recognize the risk hedging and tax saving potential of insurance, many are not

aware of its advantages as an investment option as well. Insurance

products yield more compared to regular investment options, and this is

besides the added incentives (read bonuses) offered by insurers.

You cannot compare an insurance product with other investment schemes for thesimple reason that it offers financial protection from risks, something that is

missing in non-insurance products. In fact, the premium you pay for an insurance

policy is an investment against risk. Thus, before comparing with other schemes,

you must accept that a part of the total amount invested in life insurance goes


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towards providing for the risk cover, while the rest is used for savings. In life

insurance, unlike non-life products, you get maturity benefits on survival at the end of

the term. In other words, if you take a life insurance policy for 20 years and survive the

term, the amount invested as premium in the policy will come back to you with added

returns. In the unfortunate event of death within the tenure of the policy, the family of thedeceased will receive the sum assured. Now, let us compare insurance as an

investment options. If you invest Rs 10,000 in PPF, your money grows to Rs 10,950

at 9.5 per cent interest over a year. But in this case, the access to your funds will be

limited. One can withdraw 50 per cent of the initial deposit only after 4 years. The

same amount of Rs 10,000 can give you an insurance cover of up to approximately Rs 5-

12 lakh (depending upon the plan, age and medical condition of the life insured, etc)

and this amount can become immediately available to the nominee of the policyholder

on death.

Thus insurance is a unique investment avenue that delivers sound returns in addition to

protection.

Role 2: L if e insur ance as " Risk cover"

First and foremost, insurance is about risk cover and protection - financial

protection, to be more precise - to help outlast life's unpredictable losses. Designed

to safeguard against losses suffered on account of any unforeseen event, insurance

provides you with that unique sense of security that no other form of investment

provides. By buying life insurance, you buy peace of mind and are prepared to face

any financial demand that would hit the family in case of an untimely demise.

To provide such protection, insurance firms collect contributions from many people who face the same risk. A loss claim is paid out of the total premium

collected by the insurance companies, who act as trustees to the monies. Insurance

also provides a safeguard in the case of accidents or a drop in income after

retirement. An accident or disability- can be devastating, and an insurance policy


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can lend timely support to the family in such times. It also comes as a great help

when you retire, in case no untoward incident happens during the term of the

policy.

With the entry of private sector players in insurance, you have a wide range of products and services to choose from. Further, many of these can be further

customized to fit individual/group specific needs. Considering the amount you

have to pay now, it's worth buying some extra sleep.

Role 3: L if e insurance as " Tax plannin g"

Insurance serves as an excellent tax saving mechanism too. The Government ofIndia has offered tax incentives to life insurance products in order to facilitate

the flow of funds into productive assets. Under Section 88 of Income

Tax Act 196 I, an individual is entitled to a rebate of 20 per cent on the annual

premium payable on his/her life and life of his/her children or adult children. The

rebate is deductible from tax payable by the individual or a Hindu Undivided

Family. This rebate is can be availed up to a maximum of Rs 12,000 on payment of

yearly premium of Rs 60,000. By paying Rs 60,000 a year, you can buy anything

upwards of Rs 10 lakhs of sum assured. (depending upon the age of the insured

and term of the policy). This means that you get a tax benefit of Rs. 12000. The

rebate is deductible from the tax liability of an individual or a Hindu Undivided

Family.


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BENEFITS OF LIFE INSURANCE:

1. SUPERIOR TO ANY OTHER SAVINGS PLAN

Unlike any other savings plan, a life insurance policy gives full protection against

the risk of death. In the event of death of the policyholder, the insurance company

makes available the full sum assured to the policyholder's nominees. In

comparison, payment in any other savings plan would amount to the total savings

accumulated till date. If the death occurs premature, such savings can be much less

than the sum assured. Evidently, the potential financial loss to the family of the

policyholder would be sizable.

2. ENCOURAGES & FORCES THRIFT

A savings deposit can easily be withdrawn. The payment of life insurance

premiums, however, is considered sacrosanct & is viewed with the same

seriousness as the payment of interest on a mortgage. Thus, a life insurance policy

in effect brings about compulsory savings.

3. EASY SETTLEMENT & PROTECTION AGAINST CREDITORS

A life insurance policy is the only financial instrument, the proceeds of which can

be protected against the claims of a creditor of the assured by effecting a valid

assignment of the policy.

4. ACCIDENTAL DEATH BENEFITS

Many policies can also provide for an extra sum to be paid (typically equal to the

sum assured), if death occurs as a result of accident.

5. ADMINISTERING THE LEGACY FOR BENEFICIARIES


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Speculative & unwise expenses can quickly cause the proceeds to be

squandered. Several policies have foreseen this possibility and provide for

payments over a period of years or in a combination of installments & lump sum

amounts.

6. READY MARKETABILITY AND SUITABILITY FOR QUICK

BORROWING

A life insurance policy can, after a certain time period (generally 3 yrs.), be

surrendered for a cash value. The policy is also acceptable as a security for a

commercial-loan, for example, a student loan. It is particularly advisable forhousing loans when an acceptable LIC policy may also cause the lending

institution to give loan at lower rates.

7. DISABILITY BENEFITS

Death is not the only hazard that is insured; many policies also include

disability benefits. Typically, these provides for waiver of future premium & payment of monthly installments spread over a period of time.

8. TAX RELIEF

Under the Indian Income Tax Act, the following tax relieves are available in

relation to a life insurance policy:

The premiums paid under the plans qualify for rebate under section 88.

The returns qualify for full tax exemption under section 10(10 D).


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When these benefits are factored in, it is found that most policies offer returns that are

comparable or even better than other modes of saving such as PPF , NSC etc.

Moreover, the cost of insurance is very negligible.

TYPES OF LIFE INSURANCETerm insurance policy

Whole life policy

Endowment policy

Money back policy

Annuities and pension

Most of the products offered by Indian life insurers are developed and structured aroundthese "basic" policies and are usually an extension or a combination of these policies. So,

what are these policies and how do they differ from each Other?

TERM I NSURANCE POLI CY

A term insurance policy is a pure risk cover for a specified period of time. What this

means is that the sum assured is payable only if the policyholder dies within the policy

term. For instance, if a person buys Rs 2 lakh policy for 15-years, his family is

entitled to the money if he dies within that IS-year period.

What if he survives the 15-year period? Well, then he is not entitled to any payment; the

insurance company keeps the entire premium paid during the 15-year period. So, there is

no element of savings or investment in such a policy. It is a 100 per cent risk cover. It

simply means that a person pays a certain premium to protect his family against his

sudden death. He forfeits the amount if he outlives the period of the policy. This explains'

why the Term Insurance Policy comes at the lowest cost.


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WHOLE LI FE POLI CY

As the name suggests, a Whole Life Policy is an insurance cover against death,

irrespective of when it happens.

Under this plan, the policyholder pays regular premiums until his death, following

which the money is handed over to his family.

This policy, however, fails to address the additional needs of the insured during his post

retirement years. It doesn't take into account a person's increasing needs either. While

the insured buys the policy at a young age, his requirements increase over time. By the

time he dies, the value of the sum assured is too low to meet his family's needs. As a

result of these drawbacks, insurance firms now offer either a modified Whole Life Policy

or combine.

ENDOWM ENT POLI CIES

Combining risk cover with financial savings, endowment policies are the most popular

policies in the world of life insurance.

In an Endowment Policy, the sum assured is payable even if the insured survives

the policy term If the insured dies during the tenure of the policy, the insurance firm has

to pay the sum assured just as any other pure risk cover.

A pure endowment policy is also a form of financial saving, whereby if the person

covered remains alive beyond the tenure of the policy; he gets back the sum assured withsome other investment benefits. In addition to the basic policy, insurers offer various

benefits such as double endowment and marriage/ education endowment plans. The cost

of such a policy is slightly higher but worth its value.


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M ONEY BACK POLI CI ES

These policies are structured to provide sums required as anticipated expenses

(marriage, education, etc) over a stipulated period of time. With inflation becoming a big

issue, companies have realized that sometimes the money value of the policy is eroded.

That is why with-profit policies are also being introduced to offset some of the lossesincurred on account of inflation.

A portion of the sum assured is payable at regular intervals. On survival the remainder

of the sum assured is payable.

In case of death, the full sum assured is payable to the insured.

ANNUI TI ES AND PENSI ON

The premium is in an annuity, the insurer agrees to pay the insured a stipulated

sum of money periodically. The purpose of an annuity is to protect against risk as

well as provide money in the form of pension at regular intervals.

Over the years, insurers have added various features to basic insurance policies in

order to address specific needs of a cross section of people.


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COMPANY PROFILE

Kotak Mahindra Life Insurance

kotak Group and Mahindra Group had their partnership 1985 between UdayKotak and Mr.Mahindra. Kotak Mahindra is in business since 1985, and insurance part of their

business came into existence in the year 2001.

As stated above Kotak Mahindra Life Insurance has Joint venture with

Old Mutual plc. Old Mutual Plc is the 12th largest Insurance Company in the world. It has its

base of over 4 million life assurance policyholders. It has one of the best Payouts

among i nsurers in the world. It has one of the best Solvency Ratios among

insurers in the world. A FTSE 100 financial services group and ranks as a

Fortune Global 500 company. The Old Mutual group manages in excess of 239

billion pounds in funds (Dec06). The c ompany is 160 years old and has prominent

presence in the United States and the United Kingdom.The company covers over 4

million lives and is one of the fastest growing insurance companies in India.


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The Kotak Mahindra Group

About Kotak Mahindra Old Mutual Life Insurance Ltd

Kotak Mahindra Old Mutual Life Insurance Ltd is a 74:26 joint venture between

Kotak Mahindra Bank Ltd., its affiliates and Old Mutual plc. The company started

operations in 2001, and strives to offer its customers outstanding value through

high customer empathy, consistent and benchmarked service and a suite of

products that leverage the combined prowess of protection and long term savings.

The company covers over 4 million lives and is one of the fastest growing

insurance companies in India.

About Kotak Mahindra Group

Established in 1985, the Kotak Mahindra group is one of India's leading financial

services conglomerates. In February 2003, Kotak Mahindra Finance Ltd. (KMFL),

received a banking license from the Reserve Bank of India (RBI). With this,

KMFL became the first non-banking finance company in india to become a bank

Kotak Mahindra Bank Limited.The consolidated balance sheet of Kotak Mahindra

group is over Rs.1.15 lakh crores and the consolidated net worth of the Group


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stands at Rs.15,250as on March 31, 2013. The Group offers a wide range of

financial services that encompass every sphere of life. From commercial banking,

to stock broking, mutual funds, life insurance and investment banking, the Group

caters to the diverse financial needs of individuals and the corporate sector. The

Group has a wide distribution network through branches and franchisees acrossIndia, and international offices in London, New York, Dubai, Abu Dhabi,

Mauritius and Singapore.

Old Mutual

Old Mutual provides life assurance, asset management, banking and general

insurance to more than 14 million customers in Africa, the Americas, Asia andEurope. Originating in South Africa in 1845, Old Mutual has been listed on the

London and Johannesburg Stock Exchanges, among others, since 1999.In the year

ended 31 December 2012, the Group reported adjusted operating profit before tax

of 1.6 billion (on an IFRS basis) and had 262 billion of funds under management

from co- operations.

Fact of Kotak Mahindra Old Mutual Life Insurance

Old Mutual plc. Is a world class international financial services company,

with the operations in life insurance, asset management and banking? It is

one of the big players in the U.S., U.K. and the African Continent.

Over 150 Years of experience in Life Insurance. One of the best returns amongst insurers worldwide. Base of over 3.8 million Life assurance policyholders. A FTSE 100 Financial services group, and ranks as Fortune Global

500Company.


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3rd largest insurer listed on London Stock Exchange

The Old Mutual group manages in excess of $235 billion in funds i.e., a

total asset base of more than Rs. 11 Lakh core.

South Africas largest life insurance, banking & mutual funds company

AUM : US $ 306 billion

Kotak Groups Companies

KOTAK MAHINDRA BANK LTD KOTAK MAHINDRA CAPITAL COMPANY LTD KOTAK'S INTERNATIONAL BUSINESS KOTAK MAHINDRA PRIME LTD KOTAK SECURITIES LTD KOTAK MAHINDRA ASSET MANAGEMENT COMPANY

If we look at the status of Kotak Life Insurances market share in comparison of other private

company in comparison of premium earned:-


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TOP 5 LIFE INSURANCE COMPANIES IN INDIA

1.LIC (Life Insurance Corporation of India)still remains the largest life

insurance company accounting for 64% market share. Its share, however, has

dropped f rom 74% a year before , main ly owing to en t ry o f p r iva te players with innovative products and better sales force.

2.I C I C I P r u d e n t i a l L i f e I n s u r a n c e C o L t d i s t h e b i g g e s t p r i v

a t e l i f e insurance company in India. It experienced growth of 58% in new

business premium, accounting for increase in market share to 8.93% in 2007-08

from6.97% in 2006-07.

3. Bajaj Allianz Life Insurance Co Ltdhas reported a growth of 52% and its

market share went up to 6.98% in 2007-08 form 5.66% in 2006-07. The

company ranked second (after LIC) in number of policies sold in 2007-08,with total


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market share of 7.36%.

4. SBI Life Insurance Co Ltdin terms of new number of policies sold, the

company ranked 6th in 2007-08. New premium collection for the company was Rs

4,792.66 crore in 2007-08, an increase of 87% over last year.

5. Kotak Mahindra Old Mutual Life Insurance Ltdthe fiscal 2007-08, the

company reported growth of 80%, moving from the 11th position to 9th. It

cap tured a marke t share o f 1 .19% in 2007-

08. Last year the companydoubled its branch network to 150 from 74.

STRUCTURE OF KOTAK LIFE INSURANCE

MANAGING DIRECTOR: - MR. GAURANG SHAH CFO; - G. MURALIDHAR VICE PRESIDENT TRAINING AND MANAGEMENT DEVELOPMENT:- MR.

ARUN PATIL VICE PRESIDENT HR: - MR. SUGATA DUTTA VICE PRESIDENTS DISTRIBUTION DEVELOPMENT

ANDPLANNING: - MR. KAMLESH VORA APPOINTED ACTUARY: - JOHN BRYCE


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Management

Management Overview

Mr.Gaurang Shah (Managing Director)

Mr. Gaurang Shah is the Managing Director of Kotak Mahindra Old Mutual LifeInsurance Limited.

Mr. Gaurang Shah is a Chartered Accountant and a Cost and Works Accountant.

He has also done his Company Secretary ship from the Institute of Company

Secretaries of India. MrGaurang Shah has been with the Kotak Group for the past

eight years where he has held different positions of great responsibility and juggled

multiple tasks effectively. His cumulative experience, primarily in financial

services, stands at over 21 years, several of those in building the retail finance

business. At Kotak Life Insurance, Mr Shah will focus on developing new lines of

businesses and leveraging the company's existing competencies and network to

steer Kotak Life Insurance on its ongoing growth path with even greater thrust. Mr.


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Shah has a commendable expertise in managing a large number of employees.

Mr.Shah has been previously associated with Kotak Mahindra Primus since its

inception and has contributed towards its growth to become a Rs.2000 Cr plus

business. Before coming to Kotak Life Insurance, Gaurang Shah was Group Head

of Retail Assets for Kotak Mahindra Bank. The Retail Assets include commercialvehicles, personal loans, structured products, car loans and loans against shares.

Mr. G Murlidhar (Chief Financial Officer)

Mr. Murlidhar is a Chief Financial Officer and Company Secretary of Kotak LifeInsurance. Mr. Murlidhar is an associate member of the Institute of Chartered

Accountants of India, an associate member of the Institute Of Company Secretaries

of India, and graduate member of the Institute of Cost & Works Accountants of

India. Mr. Murlidhar possesses over 20-year work experience and has earlier

worked with National Dairy Development Board (NDDB), MDS Switchgear

Limited and Nicholas Piramal India Limited and Ion Exchange Ltd. Prior to KotakLife Insurance, he held the position of VPFinance at Gujarat Glass Ltd.

As Chief Financial Officer at Kotak Life Insurance, he oversees all aspects of

Finance including Operations, Regulatory, Internal Control, Finance, Accounts and

Treasury.

Mr. ArunPatil (Vice President - Sales & Management Development)

Mr. ArunPatil is the Vice President - Sales & Management Development with

Kotak Life Insurance. A post- graduate with Law qualifications, he has over 25


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years' experience in life insurance industry. He joined as a Direct Recruit Officer in

L.I.C. and worked in various departments such as Sales, Marketing, I.T., Publicity,

Housing& Branch Administration all across the country. On foreign deputation to

Fiji Islands for 5 years, Mr. Patil substantially increased the market-share of LIC in

competitive environment. After heading LIC's premier Mumbai Division, he joinedthe then ICICI Ltd. as a member of the insurance venture team and later worked

for Tata AIG Insurance Company as Head of Sales Development. Widely traveled

all over the country & the world several times for insurance related work, Mr. Patil

presently has responsibilities to enhance the skills, knowledge, productivity, and

professionalism of the sales-force, with special emphasis on developing all

Managers to enhance their competencies, capabilities & managerial effectiveness.

MR. SUGATA DUTTA (VICE PRESIDENT HR)

Executive Vice President and Head, Human Resources Mr. SugataDutta heads the

Human Resources and Administration function and is responsible for Recruitment.


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Its hierarchy in Kotak Life Insurance is like this :-

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak

Mahindra Bank Ltd.(KMBL), and Old Mutual plc. Kotak Mahindra is one of

India's leading financial institutions and offers a range of financial services such as

commercial banking, mutual funds, life insurance. Kotak Mahindra Old Mutual

Life Insurance Ltd. started its operations in India on 10th January, 2000.

Old Mutual, a company with 160 years experience in life insurance was established

more than 150 years ago and offers a diverse range of financial services in South

Africa, the United States and the United Kingdom.Kotak Mahindra Old Mutual

Life Insurance is a 74:26 joint venture between Kotak Mahindra Bank Ltd. and OldMutual plc. Kotak Mahindra Old Mutual 85 Life Insurance is one of the fastest

growing insurance companies in India and has shown remarkable growth since its

inception in 2001.

APPOINTEDACTUARY

MANAGINGDIRECTOR

TRAINING

HEAD

CFO

CIOSALESHEAD MARKETINGHEAD HR &ADMINIST

ATION


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ORGANISATION STRUCTURE KOTAK LIFE INSURANCE

The organization of Kotak Life Insurance is divided into 5 categories:-

Finance Sales Marketing Operations Human Resource Corporate Structure

The Chairman of Kotak Group is Mr. Uday Kotak and Kotak Insurance is managed

by Mr. Gaurang Shah Managing Director.

MANAGINGDIRECTOR

CFO&

VP-Sales &

APPOINTED

ACTUARYCIO HR

&MARKETING

HEAD SALES

HEAD


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FINANCE

The Finance section is operated centrally by Head Office which is Bombay headed

by CFO - Mr. G. Murlidharan and further sub-divided into categories like Vice

Presidents of different departments. These departments are: -

CPC & Group Ops, Internal Control, MIS, Accounts & Compliance, Underwriting,

Branch Operations.

CFO

&

COO

Internalcontrol

Accountsand

complianc

Under writing BranchoperationMIS

MANAGERS MANAGERSMANAGERSMANAGERS MANAGERS

EXEC.FINANCE

EXEC.FINANCE

EXEC.FINANCE

EXEC.FINANCE

EXEC.FINANCE


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SALES

The Sales Department is divided on the basis of region. Each region is thereafter

divided into categories like Alternate Channel, Tied Channel and Group Business.

The Sales dept is headed by Mr. Pankaj Desai, Alternate Channel Head Mr.

Suresh Agarwal, Tied Channel Head MR. Subbaiah K P, Group Business Head

Group Business Head Mr. Sandeep Srikhande.

Subdivided into categories like Regional Managers, Area Managers and others.

SALES HEAD

GROUP

BUSINESS HEADTIED CHANNEL

RMALTERNATE

CHANNEL HEAD

AREAMANAGER

REGIONALMANAGER

REGIONAL HEAD

CUSTOMERRELATIONSHIP

MANAGER

AREA

MANAGERS

AGENCYTEAM

MANAGER &BM


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MARKETING

The Marketing Department is headed by Mr. Rahul Sinha from Head Office.

MARKETINGHEAD

CHANNELDEVELOPMENT

HEAD

PRODUCT &BRAND

HEAD

HOCHANNEL

DEV. TEAM

REGIONALMARKETING MANAGER

BRAND &PR

MANAGERS

PRODUCTMANAGER

S

TradeMarketingManagers

Asst.TradeMarketingManagers


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35

INTRODUCTION TO

TOPIC


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PERCEPTION OF PEOPLE TOWARDS INSURANCE - THEN

AND NOW .

THEN

Prior to liberalization, people perceived that insurance was not necessary as it was

their myth that they will not get any benefits out of it in future. The level of income

being low they resisted to invest in insurance policy. It was their perception that

the bank deposits were enough for them for meeting their future requirements.

Also the insurance companies were not very transparent in their activities since

there was no regulatory authority like IRDA, as a result of which people felt that

their funds were misused. They were not sure about whether their family will get

the sum assured after their death. Another reason for resistance was that there werelimited schemes and the entry for private sector was restricted.

NOW

The awareness among the people about the insurance has grown. They now feel

the need for insuring their as well as their familys lives. There are many choices

available to the people now for selecting among the various insurance schemes

launched by public sector as well as private sector insurance companies. After

IRDA came into being, the safety and guarantee of peoples money with insurance

companies is assured. Due to inflation the income of the people has increased and

they can now afford to pay insurance premium by investing in more than one

insurance scheme. Entry of private sector insurance companies has given more

choice to the people for selecting the insurance schemes required by them.

Reasons for changing perception of customers

1. Increased awareness : Now a days people are aware about the need for

covering their lives and also making investments through various insurance

schemes.


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2. IRDA regulation : People are aware about IRDA regulations governing

insurance Companies, both in the public sector as well as private sector.

People know that their investment in insurance schemes is now safe.

3. Tax benefits: Most of the people employed in service, professionals and

self-employed are now a days drawing salaries in higher income bracket. In

order to avail benefits u/s 80 C of the Income Tax Act and save Income tax

to the maximum extent, these people invest in various insurance policies.

4.

Other benefits : Now a days, people can take insurance cover for meetingthe higher education needs and marriages of their children. Hence, they opt

for endowment insurance policies.

5. Measure of security : Most of the people are now aware that it is advisable

to opt for insurance policies at a younger age with minimal insurance

premium to make their future secured and be independent.


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38

NEED OF INSURANCE FOR A CUSTOMER

Today, there is no shortage of investment options for a person to choose from.

Modern day investments include gold, property, fixed income instruments, mutual

funds and of course, life insurance. Given the plethora of choices, it becomes

imperative to make the right choice when investing your hard-earned money. Life

insurance is a unique investment that helps you to meet your dual needs - saving

for life's important goals, and protecting your assets.

Asset Protection

From an investor's point of view, an investment can play two roles - asset

appreciation or asset protection. While most financial instruments have the

underlying benefit of asset appreciation, life insurance is unique in that it gives the

customer the reassurance of asset protection, along with a strong element of asset

appreciation.

The core benefit of life insurance is that the financial interests of ones family

remain protected from circumstances such as loss of income due to critical illness

or death of the policyholder. Simultaneously, insurance products also have a strong

inbuilt wealth creation proposition. The customer therefore benefits on two counts

and life insurance occupies a unique space in the landscape of investment options

available to a customer.

Goal based savings

Each of us has some goals in life for which we need to save. For a young, newly

married couple, it could be buying a house. Once, they decide to start a family, the

goal changes to planning for the education or marriage of their children. As one

grows older, planning for one's retirement will begin to take precedence.


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Clearly, as your life stage and therefore your financial goals change, the instrument

in which you invest should offer corresponding benefits pertinent to the new life

stage.

Life insurance is the only investment option that offers specific products

tailormade for different life stages. It thus ensures that the benefits offered to the

customer reflect the needs of the customer at that particular life stage, and hence

ensures that the financial goals of that life stage are met.

MYTHS ABOUT LIFE INSURANCE IN MINDS OF INDIAN

CUSTOMERSLife insurance is not a simple product. Even term life policies have many elements

that must be considered carefully in order to arrive at the proper type and amount

of coverage. But the technical aspects of life insurance are far less difficult for

most people to deal with than trying to get a handle on how much coverage they

need and why. This article will briefly examine the top 10 misconceptions

surrounding life insurance and the realities that they distort.

Myth No.1: I'm single and don't have any dependents, therefore I don't need

any coverage.

Even single persons need at least enough life insurance to cover the costs of

personal debts, medical and funeral bills. If you are uninsured, you may leave a

legacy of unpaid expenses for your family or executor to deal with. Plus, this can

be a good way for low-income singles to leave a legacy to a favorite charity or

other cause.


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Myth No.2: I only need an amount of life insurance coverage equal to twice

the amount of my annual salary.

You need an amount of life insurance equal to the amount that is actually required.

In addition to medical and funeral bills, you may need to pay off debts such as your

mortgage and provide for your family for several years. A cash flow analysis isusually necessary in order to determine the true amount of insurance that must be

purchased - the days of computing life coverage based only on one's income-

earning ability are long gone.

Myth No.3: My term life insurance coverage at work is sufficient.

Maybe , maybe not. For a single person of modest means, employer-paid or provided term coverage may well be enough. But if you have a spouse or other

dependents, or know that you will need coverage upon your death to pay estate

taxes or create an estate for charity, then additional coverage may be necessary if

the term policy does not meet the needs of the policyholder.

Myth No.4: At least the cost of my premiums will be deductible.

Afraid not , at least in most cases. The cost of personal life insurance is never

deductible unless the policyholder is self-employed and the coverage is used to

insure the business. Then the premiums are deductible on the Schedule C of

the Form 1040.

Myth No.5: I absolutely MUST have life insurance at any cost.

In many cases, this is probably true. However, persons with no debt or dependentsand sizable assets may be better off self-insuring. If you have no debt and medical

and funeral costs are covered, then life insurance coverage may be optional.

Myth No.6: I should ALWAYS buy term and invest the difference.


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Not necessarily. The cost of term life coverage can become prohibitively high in

later years; therefore, those who know for certain that they must be covered at

death should consider permanent coverage. The total premium outlay for a more

expensive permanent policy may be less than the ongoing premiums that could last

for years longer with a less expensive term policy.There is also the risk of non-insurability to consider, which could be disastrous for

those who may have estate tax issues and need life insurance to pay them. But this

risk can be avoided with permanent coverage, which becomes paid up after a

certain amount of premium has been paid and then remains in force until death.

Myth No.7: Variable universal life policies are always superior to straightuniversal life policies over the long run because of their long-term growth

potential.

Many universal policies pay competitive interest rates, and variable universal

life (VUL) policies contain several layers of fees relating to both the insurance and

securities elements present in the policy. Therefore, if the variable subaccounts

within the policy do not perform well, then the variable policyholder may well see

a lower cash value than someone with a straight universal life policy.

Poor market performance can even generate substantial cash calls inside variable

policies that require additional premiums to be paid in order to keep the policy in

force.

Myth No.8: Only breadwinners need life insurance coverage.

Non sense. The cost of replacing the services formerly provided by a deceasedhomemaker can be higher than you think, especially when it comes to cleaning and

day care.


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Myth No.9: I should always purchase the return-of-premium (ROP) rider on

any term policy.

There are usually different levels of ROP riders available for policies that offer this

feature. Many financial planners will tell you that this rider is not cost-effective

and should be avoided. Whether you include this rider will depend on your risktolerance and other possible investment objectives .

A cash flow analysis will reveal whether you could come out ahead by investing

the additional amount of the rider elsewhere versus including it in the policy.

Myth No.10: I'm better off investing my money than buying life insurance of

any kind.Until you reach the breakeven point of asset accumulation, you need life coverage

of some sort (barring the exception discussed in Myth No.5.) Once you amass $1

million of liquid assets, you can consider whether to discontinue (or at least

reduce) your million-dollar policy. But you take a big chance when you depend

solely on your investments in the early years of your life, especially if you have

dependents. If you die without coverage for them, there may be no other means of

provision after the depletion of your current assets.

These are just some of the more prevalent misunderstandings concerning life

insurance that the public faces today. The key concept to understand is that you

shouldn't leave life insurance out of your budget unless you have enough assets to

cover expenses after you're gone. For more information, consult your life insurance

agent or financial advisor.


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RESEARCH METHOLOGY


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RESEARCH METHODOLOGY

A Research Design is the framework or plan for a study which is used as a guide in

collecting and analyzing the data collected. It is the blue print that is followed in

completing the study. The basic objective of research cannot be attained without a

proper research design. It specifies the methods and procedures for acquiring the

information needed to conduct the research effectively. It is the overall operational

pattern of the project that stipulates what information needs to be collected, from

which sources and by what methods.

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary

data is defined as data that is collected from original sources for a specific purpose.

Secondary data is data collected from indirect sources.

PRIMARY SOURCES

These include the survey or questionnaire method, as well as the personal

interview methods of data collection.

SECONDARY SOURCES

These include books, the internet, company brochures, product brochures, the

company website, competitors websites etc, newspaper articles etc.

DATA SOURCE: The sources of collection of secondary data are:


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Questionnaire

Books

Websites

Magazine

Brochure

SAMPLE DESIGN

Sampling refers to the method of selecting a sample from a given universe with a

view to draw conclusions about that universe. A sample is a representative of the

universe selected for study.

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. This non probability

method is often used during preliminary research efforts to get a gross estimate of

the results, without incurring the cost or time required to select a random sample

SAMPLE SIZE

The sample size for the survey conducted was 100 respondents.

SAMPLING TECHNIQUE

Convenience sampling technique was used in the survey conducted.


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STATSTCAL TOOLS

The statistical tools used for analysis are:

Percentage method

Rank analysis

Chi Square (X2)

PERCENTAGE METHOD

Percentage method is used in marketing comprehension between two more series

of data. Percentages are used to compare the relatives terms, the distribution of two

or more series of data and are presently by way of bat diagram and pie diagrams in

order to have a better understanding.

In this method frequency of the various criteria factors are tabulated and the

percentage for each value with respect to the total is found out. They are presented

pictorially by way of graphs in order to have better understanding.

The formula is

% of respondent = (No. of respondent / Total respondent) * 100


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DATA ANALYSIS &

INTERPRETATION


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DATA ANALYSIS & INTERPRETATION

PERCEPTION OF INSURANCE:Perception No. of

respondents

Safety 10

Tax benefits 6

Company profile 3

Both safety and tax benefits 11

Total 30

Interpretation:

It is clear that most of the people perceive insurance as both safety and tax benefit.

Other factors like company profile and capital growth are secondary.

Safety

Tax benefits

Company profile

Both safety and taxbenefits


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INVESTMENT PREFERRED BY CUSTOMERS :

Investment alternative No. of respondents percentage

Short term 3 10

Long term 9 30

both 18 60

total 30 100

From the above pie diagram we can observe that customers prefer short term

investment over long term investment. But it is also observed that there is not

much difference between the choice of investments. People mostly prefer both

long term and short term investment.

shortterm

long term

both

no. of respondents


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TYPE OF POLICIES PREFERRED BY THE CUSTOMERS

Type of policy No. of respondents Percentage

Life insurance 15 50

Education plan 4 13.33

Retirement plan 3 10

Money growth plan 8 26.66

50%

13%

10%

27%

No. of respondents

Life insurance

Education plan

Retirement plan

Money growth plan


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AWARENESS ABOUT KOTAK MAHINDRA LIFE INSURANCE:

Awareness about

ICICI prudential

Employed Professionals and

self- employed

Others

Yes 9 2 3

No 13 1 2

Interpretation:

Now coming to the point of awareness among the people about Kotak Mahindra

Life Insurance, the response was very disappointing from the point of view of the

company. Out of 30 respondents 16 respondents did not have the knowledge about

Kotak Mahindral Life Insurance.

0

2

4

6

8

10

12

14

Yes No

Awareness about the joint-venture.

Employed

Professionals and self employed

Others


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DO YOU PLAN TO HAVE A LIFE INSURANCE POLICY IN NEAR

FUTURE ?CATEGORY RESPONDENTS

With in 6 months 38

With in 1 year 21

After 1 year 28

Above 1 year 13

INTERPRETATION :

OUT OF 100 PEOPLE WHO PARTICIPATED IN SURVEY IT IS FOUND 38 CUSTOMERS ARE WILLING TO

TAKE THE POLICY WITHIN 6 MONTHS , 21 ARE WILLING WITHIN 1 YEAR , AND 28 ARE WILLING TO

TAKE AFTER 1 ONE YEAR AND 13 ARE WILLING TO TAKE ABOVE 1 YEAR . SO THE MAJORITY OF THE

CUSTOMERS ARE WITHIN 6 MONTHS .

RESPONDENTS

38

21

28

13

0

5

10

15

20

25

30

35

40

With in 6 months With in 1 year After 1 year Above 1 year

RESPONDENTS


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CONCLUSION


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CONCLUSION

Based on the answers to the questionnaire received from people who are in service,

self- employed/ professionals and retired employees, I have arrived to the

following conclusions:

It is also observed that age group has no influence over which insurance policy is

taken by the customer. Life insurance and health plan are popular among all the

age groups.

Educational plan is preferred by customers for their children. Many have taken upthis policy for their children who are either in college or have just started their

education.

Almost all of them have opted for LIC of India insurance policies as they perceive

that it is safe to insure their life by taking policies from a Public sector Company.

Most of the people perceive insurance policy as a measure for safety. It has been

observed that professional, self employed and retired people consider safety and

capital growth as most important factor to opt for life insurance policies. In case of

those who belong to service sector, tax benefit is the most important factor.

Kotak Mahindra Life Insurance has a very good brand image among the customers.

But when asked whether they would like to invest in the Company majority of

them gave a negative response.

Customers were given options like brand image, diversity, growth, potential,

transparency, utmost good faith and were asked about their opinion about which

quality of Kotak Mahindra Life Insurance would make them invest in that

Company. Those who were ready to invest preferred brand image and utmost good

faith.


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BIBLIOGRAPHY


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BIBLIOGRAPHY

www.kotaklifeinsurance.com www.birlasunlife.com

www.iciciprulife.com

www.bimaonline.com

www.bajajallianz.com

www.hdfclifeinsurance.com

www.wikipedia.com www.investopedia.com
http://www.kotaklifeinsurance.com/http://www.kotaklifeinsurance.com/http://www.birlasunlife.com/http://www.birlasunlife.com/http://www.iciciprulife.com/http://www.iciciprulife.com/http://www.bimaonline.com/http://www.bimaonline.com/http://www.bajajallianz.com/http://www.bajajallianz.com/http://www.hdfclifeinsurance.com/http://www.hdfclifeinsurance.com/http://www.wikipedia.com/http://www.wikipedia.com/http://www.investopedia.com/http://www.investopedia.com/http://www.investopedia.com/http://www.wikipedia.com/http://www.hdfclifeinsurance.com/http://www.bajajallianz.com/http://www.bimaonline.com/http://www.iciciprulife.com/http://www.birlasunlife.com/http://www.kotaklifeinsurance.com/


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QUESTIONNAIRE


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QUESTIONNAIRE

1) Age:

2) Occupation:3) Annual income:

4) What percentage of salary do you usually save?

Less than 15%____ 15% - 20% ____

20% - 25% ____ more than 25% ____

5) What kind of investment do you prefer?

Short term ____ long term ____

Both ____

6) How do you perceive insurance?

Safety____ Capital growth ____

Liquidity ____ Return _____

Tax benefit ____

Company profile and brand image ____

7) Do you have an insurance policy?

Yes____ No____


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8) If yes, which insurance companys policy do you have?

9) What scheme of insurance policy have you taken?

Life insurance____ Education plan ____

Retirement plan ____ health plan____

Money growth plan____ others____

10) Are you aware about the joint venture between ICICI bank with

prudential of UK to form the first private sector company to offer insurance

products?

Yes____ No____

11) Would you like to invest in ICICI prudential life insurance?

Yes____ No____

12) If yes, what will make you to invest in ICICI prudential life

insurance?

Brand image ____ Diversity____

Growth____ Potential____

T U d f i h

sonam final

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