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MINOR PROJECT REPORT
CHANNEL DEVELPOMRNT AT HDFC STANDARD
LIFE INSURANCE CO. LTD.
PREFACE
Insurance is system by which the losses suffered by a few are spread over many, exposed
to similar risks. Insurance is a protection against financial loss arising on the
happening of an unexpected event. Insurance policy helps in not only mitigating
risks but also provides a financial cushion against adverse financial burdens
suffered. Insurance policies cover the risk of life as well as other assets andvaluables such as home, automobiles, and jewelry.
The functions of Insurance can be bifurcated into two parts:
Primary Function
Secondary Function
Other Function
Primary Function
Provide Protection: The primary function of insurance is to provide protection against
future risk, accidents and uncertainty. Insurance cannot check the happening of
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the risk, but can certainly provide for the losses of risk. Insurance is actually a
protection against economic loss, by sharing the risk with others.
Collective Bearing of Risk: Insurance is a device to share the financial loss of few among
many others. Insurance is a mean by which few losses are shared among larger
number of people. All the insured contribute the premiums towards a fund and out
of which the persons exposed to a particular risk is paid.
Assessment of Risk: Insurance determines the probable volume of risk by evaluating
various factors that give rise to risk. Risk is the basis for determining the premium
rate also
Provide Certainty: Insurance is a device, which helps to change from uncertainty to
certainty. Insurance is device whereby the uncertain risks may be made more
certain.
Secondary Function
Prevention of Losses: Insurance cautions individuals and businessmen to adopt suitable
device to prevent unfortunate consequences of risk by observing safety
instructions; installation of automatic sparkler or alarm systems, etc. Prevention of
losses causes lesser payment to the assured by the insurer and this will encourage
for more savings by way of premium. Reduced rate of premiums stimulate formore business and better protection to the insured.
Small Capital to cover Larger Risks: Insurance relieves the businessmen from security
investments, by paying small amount of premium against larger risks and
uncertainty.
Contributes towards the Development of Larger Industries: Insurance provides
development opportunity to those larger industries having more risks in their
setting up. Even the financial institutions may be prepared to give credit to sick
industrial units which have insured their assets including plant and machinery
Other Function
Means of Savings and Investment: Insurance serves as savings and investment,
insurance is a compulsory way of savings and it restricts the unnecessary
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expenses by the insured's For the purpose of availing income-tax exemptions also,
people invest in insurance.
Source of Earning Foreign Exchange: Insurance is an international business. The
country can earn foreign exchange by way of issue of marine insurance policies
and various other ways.
Risk Free Trade: Insurance promotes exports insurance, which makes the foreign trade
risk free with the help of different types of policies under marine insurance cover.
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TABLE OF CONTENTS
CONTENTS
CHAPTER 1 Introduction
1.1. Overview of Industry
1.2. Introduction
1.3 Objectives and Research Methodology
1.3. Problems of the organization
1.4. Competition information
1.5. S.W.O.T Analysis of the organization
CHAPTER 2 Problems of the Organisation
2.1. Significance 33
2.2. Managerial usefulness of the study 34
2.3. Objectives 35
2.4. Scope of study 36
2.5. Methodology 37
CHAPTER 3 Conceptual Discussion 38
CHAPTER 4 - Data Analysis 55
CHAPTER 5 Findings & Recommendations 68
ANNEXURE
BIBLIOGRAPHY
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CHAPTER 1
INTRODUCTION
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INTRODUCTION
1.1 OVERVIEW OF THE INDUSTRY
Insurance in India has its history dating back till 1818, when Oriental Life Insurance
Company was started by Europeans in Kolkata to cater to the needs of European
community. Pre-independent era in India saw discrimination among the life of foreigners
and Indians with higher premiums being charged for the latter. It was only in the year
1870, Bombay Mutual Life Assurance Society, the first Indian insurance company
covered Indian lives at normal rates.
At the dawn of the twentieth century, insurance companies started mushrooming up. In
the year 1912, the Life Insurance Companies Act, and the Provident Fund Act were
passed to regulate the insurance business. The Life Insurance Companies Act, 1912 made
it necessary that the premium rate tables and periodical valuations of companies should
be certified by an actuary. However, the disparage still existed as discrimination between
Indian and foreign companies. The oldest existing insurance company in India is National
Insurance Company Ltd, which was founded in 1906 and is doing business even today.
The Insurance industry earlier consisted of only two state insurers: Life Insurers i.e. Life
Insurance Corporation of India (LIC) and General Insurers i.e. General Insurance
Corporation of India (GIC). GIC had four subsidiary companies.
With effect from December 2000, these subsidiaries have been de-linked from parent
company and made as independent insurance companies: Oriental Insurance Company
Limited, New India Assurance Company Limited, National Insurance Company Limited
and United India Insurance Company Limited.
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Related Acts
The insurance sector went through a full circle of phases from being unregulated to
completely regulate and then currently being partly deregulated. It is governed by a
number of acts, with the first one being the Insurance Act, 1938.
The Insurance Act, 1938
The Insurance Act, 1938 was the first legislation governing all forms of insurance to
provide strict state control over insurance business.
Life Insurance Corporation Act, 1956
Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that
life insurance in India was completely nationalized, through a Government ordinance; the
Life Insurance Corporation Act, 1956 effective from 1.9.1956 was enacted in the same
year to, inter-alia, form LIFE INSURANCE CORPORATION after nationalization of the
245 companies into one entity. There were 245 insurance companies of both Indian and
foreign origin in 1956. Nationalization was accomplished by the govt. acquisition of the
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management of the companies. The Life Insurance Corporation of India was created on
1st September, 1956, as a result and has grown to be the largest insurance company in
India as of 2006.
General Insurance Business (Nationalization) Act, 1972
The General Insurance Business (Nationalization) Act, 1972 was enacted to nationalize
the 100 odd general insurance companies and subsequently merging them into four
companies. All the companies were amalgamated into National Insurance, New India
Assurance, Oriental Insurance, and United India Insurance which were headquartered in
each of the four metropolitan cities.
Insurance Regulatory and Development Authority (IRDA) Act, 1999
Till 1999, there were not any private insurance companies in Indian insurance sector. The
Govt. of India then introduced the Insurance Regulatory and Development Authority Act
in 1999, thereby de-regulating the insurance sector and allowing private companies into
the insurance. Further, foreign investment was also allowed and capped at 26% holding
in the Indian insurance companies. In recent years many private players entered in the
Insurance sector of India. Companies with equal strength competing in the Indian
insurance market. Currently, in India only 2 million people (0.2 % of total population of 1
billion), are covered under Mediclaim, whereas in developed nations like USA about
75 % of the total population are covered under some insurance scheme. With more and
more private players in the sector this scenario may change at a rapid pace.
Growth of private insurance companies
SBI Life Insurance is planning to raise the number of branches to 250 branches this
financial year. Further, ICICI Prudential Life Insurance has stated that in the last two
years, the company had expanded the distribution network by increasing the number of
branches to over 2,090 from 177. AEGON Religare Life Insurance, in its first year of
operations is actively scaling up to open 51 branches, of which 48 are already operational
across 39 cities. HDFC SLIC is planning to increase the number of branches to at least
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250 every year going forward. This willexpand HDFC SLICs distribution network from
311 offices in June-end 2008 to almost 900 agency offices and 700 rural offices by FY
2012.
Children's products such as ICICI Prudential Life's 'Smart Kid', Birla Sun Life's
'Children's Dream Plan', or HDFC Standard 'Life's Young Star Plus', are on a consistent
growth path. According to industry estimates, currently, 2030 per cent of business of
many companies comes from children-specific insurance policies alone.
Life Insurance Corporation (LIC) has now entered the health insurance market and has
mobilized premium income of US$ 21.23 million in the last two months of 200708.
Birla Sun Life on January 7, 2008 also announced its plans to enter into the US$ 40.75
billion health insurance business with the launch of two plans nationally. ICICI
Prudential Life on January 5, 2008 launched Health Saver, to help consumers meet their
current healthcare expenses and also invest for future healthcare expenses.
Banc assurance segment
The banc assurance segment has been growing consistently pace and is competing with
the traditional sale of insurance by agents owing to the keenness of banks to augment
other income (fee-based income). Global insurance consulting firm, Watson Wyatt
Worldwide in 'India Banc assurance Benchmarking Study 2006-07', had said that both
life and general insurers were bullish about prospects of insurance penetration in the rural
markets. According to the study, about 30 per cent of the life insurers have indicated that
by the year 2010, rural insurance business will constitute between 16-20 per cent of their
total bancassurance new business premium. The growth in the banc assurance for
insurance companies wholly depends on the number of bank branches that actively
dispense these products. According to industry sources, private and foreign banks arebiggest mobilizes of insurance premium despite public sector banks having a wider reach.
In August 2008, banc assurance accounted for 35 per cent of the premium collected by
private players. In 200607, that figure was about 17 per cent
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Rural insurance
The Indian rural market offers tremendous growth opportunities for insurance companies.
According to a survey 'India Invest Incomes and Savings Survey 2007' by IIMS Dataworks (a Noida-based retail finance research firm), 58 per cent of India's 105.4 million
insured people were from the rural areas. Yet, urban India was ahead in terms of
penetration (47 per cent), or the number of policyholders compared with the total
population. This meant that almost one out of every two paid workers in urban India was
insured, while it was only 27 per cent in rural areas. According to international
consultancy firm Celent's report'Selling Life Insurance in Rural IndiaIndia's rural
market revenues are expected to grow as much as four times to reach US$ 2.9 billion by
2015. Over 70 crore people reside in the rural areas of the country with insurance
penetration rate as low as three per cent providing a huge opportunity for life insurance
firms.
The Road Ahead
In its report 'Insurance Sector Futuristic Growth'ASSOCHAM has stated that India's
insurance sector is likely to reach US$ 46.25 billion by 2010. The report said, "The total
insurance business will reach a level of US$ 46.25 billion in the next two years from the
current level of US$ 1.15 billion." Private insurance business is likely to see a 140 per
cent growth rate due to the aggressive marketing techniques used by them. Conversely,
state-owned insurance companies would see a 3540 per cent growth rate.
Major Life Insurance Companies
Aviva Life Insurance
Bajaj Allianz
Birla Sun Life Insurance
HDFC Standard Life Insurance
ICICI Prudential
ING Vysya
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Kotak Mahindra
LIC
Max New York Life Insurance
MetLife India Insurance
Reliance Life Insurance
SBI Life Insurance
Shriram Life Insurance
Tata AIG Life Insurance
Some of the important milestones in the life insurance business in India are:
1912 - The Indian Life Assurance Companies Act enacted as the first statute to regulatethe life insurance business.
1928 - The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938 - Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.
1956 - 245 Indian and foreign insurers and provident societies taken over by the central
government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956,
with a capital contribution of Rs. 5 crore from the Government of India.
The business of insurance is related to the protection of the economic values of assets.
Every asset would have been created through the efforts of the owner the asset is valuable
to the owner, because he expects to get some benefits from it. The benefit maybe an
income or something else. It is a benefit because it meets some of his needs. In case of a
factory or a cow, the product generated by is sold and income generated. In the case of a
motor car, it provides comfort and convenience in transportation. There is no direct
income.
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Every asset is expected to last for a certain period of time during which it will perform.
After that, the benefit may not be available. There is a lifetime for a machine in a factory
or a cow or a motorcar. None of them will last forever. The owner is aware of this and he
can so manage his affairs that the end of that period or lifetime makes a substitute made
available. Thus, he makes sure the value or income is not lost. However, the asset may
get lost earlier. An accident or some other unfortunate event may destroy it or make it
non-functional. In that case, the owner and the others deriving benefits there from would
be deprived of the benefit and the planned substitute would not have been ready. There is
an adverse or unpleasant situation. Insurance is a mechanism that helps to reduce the
effect of such adverse situations.
Risks are the consequential losses or damages. The risk only means that there is apossibility of loss or damage. The damage may or may not happen. Insurance is done
against the contingency that it may happen. There has to be an uncertainty about the risk.
Insurance is relevant only if there are uncertainties. If there is no uncertainty about the
occurrence of an event , it cannot be insured against. In case of a human being,
death is certain, but the time of death is uncertain. In the case of a person who is
terminally ill, the time of death is not uncertain, though not exactly known. He
cannot be insured.
UTILITY OF INSURANCE FOR THE SOCIETY
The United Nations Declaration of Human Rights 1948 provides that Everyone has
a right to a standard of living adequate for the health and well being of himself
and his family, including food, clothing, housing and medical care and necessary
social services and the right to security in the event of unemployment, sickness ,
disability, widowhood or other lack of livelihood in circumstances beyond his
control.
Under a socialist system the responsibility of the full security would be placed upon
the State to find resources for providing social security. In the capitalistic society,
provisions of security is largely left to the individuals. The society provides
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instruments, which can be used in securing this aim. Insurance is one of them. In a
capitalistic society too, there is a tendency to provide some social security by the
State under some schemes, where members are required to contribute e.g. Social
Security Scheme in UK .In India, social security finds a place in our constitution.
Article 41 requires the State , within the limits of its economic capacity and
development, to make effective provision for securing the right to work, to
education and to provide public assistance incase of unemployment , old age ,
sickness and disablement and in other cases of undeserved want. Part of the
States obligations to the poorer sections are met through the mechanism of life
insurance.
INSURANCE AS A GROWTH ENGINE FOR THE SOCIETY
For economic development, investments are necessary. Investments are made out of
savings. A life insurance company is an important instrument for the mobilization of
savings of people, particularly from the middle and lower income groups. These
savings are channeled into investments for economic growth.
A Life insurance company will have large funds. These amounts are collected by way of
premium. Every premium represents a risk that is covered by that premium. In effect, therefore,these vast amounts represent pooling of risks. The funds are collected and held in trust for the
benefit of the policyholders. The management of the life insurance companies are required to
keep this aspect in mind and make all its decisions in ways that benefit the community.
This applies also to its investments. That is why successful insurance companies would not
be found investing in speculative ventures. Their investment benefits the society at large.Apart
from investments, business and trade benefit through insurance. Without insurance, trade and
commerce will find it difficult to face the impact of major perils like fire , earthquake,
floods etc. Financiers, like banks, would collapse if the factory, financed by it, is reduced to
ashes by a terrible fire. Insurers cover also the loss to financiers, if their debtors default.
Insurance Regulatory and Development Authority (IRDA) Act, 1999
Prior to 1999 there were only two players in the market
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Life Insurance Corporation Of India (LIC)
General Insurance Corporation (GIC)
Then to protect the interests of the policyholders and to ensure growth of the insurance
industry, IRDA was set up. After this the private players started entering the market.
Constitution of IRDA
The insurance regulatory and development authority consist of the following members.
1. Chairperson
2. Less than 5 whole time members
3. Less than 4 part time members.
Members should be person of ability, integrity & standing.
They should have experience in the field of:
1. Life Insurance
2. General Insurance
3. Actuarial science
4. Finance
5. Economics
6. Law
7. Accountancy
8. Administration
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Chairperson, members, officers and other employees of authority shall be public servants.
Mission Statement of IRDA
To protect the interest of and secure fair treatment to policyholders;
To bring about speedy and orderly growth of the insurance industry (including annuity
and superannuating payments), for the benefit of the common man, and to provide long
term funds for accelerating growth of the economy;
To set, promote, monitor and enforce high standards of integrity, financial soundness, fair
dealing and competence of those it regulates;
To ensure that insurance customers receive precise, clear and correct information about
products and services and make them aware of their responsibilities and duties in this
regard;
To ensure speedy settlement of genuine claims, to prevent insurance frauds and
other malpractices and put in place effective grievance redressal machinery;
To promote fairness, transparency and orderly conduct in financial markets dealing with
insurance and build a reliable management information system to enforce high standards
of financial soundness amongst market players;
To take action where such standards are inadequate or ineffectively enforced;
To bring about optimum amount of self-regulation in day to day working of the industry
consistent with the requirements of prudential regulation.
DEVELOPMENT OF INSURANCE SECTOR IN PRE-
INDEPENDENT INDIA
The story of insurance is probably as old as the story of mankind. The same instinct that
prompts modern businessmen today to secure themselves against loss and disaster existed
in primitive men also. They too sought to avert the evil consequences of fire and flood
and loss of life and were willing to make some sort of sacrifice in order to achieve
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over insurance business. The demand for nationalization of life insurance industry was
made repeatedly in the past but it gathered momentum in 1944 when a bill to amend the
Life Insurance Act 1938 was introduced in the Legislative Assembly. However, it was
much later on the 19th of January, 1956, that life insurance in India was nationalized.
About 154 Indian insurance companies, 16 non-Indian companies and 75 provident were
operating in India at the time of nationalization. Nationalization was accomplished in two
stages; initially the management of the companies was taken over by means of an
Ordinance, and later, the ownership too by means of a comprehensive bill. The
Parliament of India passed the Life Insurance Corporation Act on the 19 th of June 1956,
and the Life Insurance Corporation of India was created on 1 st September, 1956, with the
objective of spreading life insurance much more widely and in particular to the rural
areas with a view to reach all insurable persons in the country, providing them adequate
financial cover at a reasonable cost. Pre-independent era in India saw discrimination
among the life of foreigners and Indians with higher premiums being charged for the
latter. It was only in the year 1870, Bombay Mutual Life Assurance Society, the first
Indian insurance company covered Indian lives at normal rates. The Life Insurance
Companies Act, 1912 made it necessary that the premium rate tables and periodical
valuations of companies should be certified by an actuary. However, the disparage still
existed as discrimination between Indian and foreign companies.
Life and general insurance in India is still a nascent sector with huge potential for various
global players with the life insurance premiums accounting to 2.5% of the countrys GDP
while general insurance premiums to 0.65% of Indias GDP. The Insurance sector in
India has gone through a number of phases and changes, particularly in the recent years
when the Govt. of India in 1999 opened up the insurance sector by allowing private
companies to solicit insurance and also allowing FDI upto 26%. Ever since, the Indian
insurance sector is considered as a booming market with every other global insurance
company wanting to have a lions share. Currently, the largest life insurance company in
India is still owned by the government.
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INTERNATIONAL SCENARIO IN INSURANCE SECTOR
Industrialized countries which generated most of the world Insurance Premium in 2004
crowd the insurance industry and account for over 88% of the global life premium and
90% of the world non-life premium in 2004 (Sigma 2/2005) with a terrestrial average
penetration of 7.8% of the Gross Domestic Product (GDP). Switzerland, with per capita
premium of US$ over 3275 are the highest savers through the instrumentality of life
insurance and also with US$ over 2441 per capita are the leading spenders on non-life
insurance premium. The edifice of insurance business in the mature economies has been
built on the pillars of sustained high economic growth. In the US and Western Europe
private pension provisions along with index-linked policies piggy backing on the stock
market rallies, up to mid 2000 enabled expansion of the life insurance business. Thesubstantial upswing is also allocable to the dramatic rise in the single premium business
since the year1995. However, the unpredictability of the single premium business
introduced capriciousness in the otherwise steadily growing life insurance industry. In
the 90s non-life insurers have reported higher growth rates as compared to Life Insurers.
However in 2004, global growth in life as well as in non-life was same at 2.3%. While
in life insurance sector ,industrialized countries achieved 1.7% growth rate, it was 7.4%
at emerging economies. But stronger growth rate in non-life was noted in emerging
economies (7.7%) as against industrialized countries(1.7%). The escalators were a robust
economy growth and resurgence following the financial meltdown of Far Eastern and
Latin American economies. Significantly higher nominal growth rate (in local
currency) was achieved by China (7%), Taiwan (20%),Vietnam (45%), Hong Kong
(30%) in life premium ,while in non-life growth was a bit lower - China(22%),
Taiwan (5.4%), Vietnam (21%), etc. Compared to these countries Indian growth rate in
life and non-life premium was 15% and 14% respectively. The premium upsurge in
Asian markets outpaced their respective GDP growth rates. However, in spite of good
growth and fewer reported major losses, the prosperity of the industry remained listless.
The share of Asian Countries in the World Market in 2004 was30% life insurance (21%
being of Japan) and 13% in non-life (8% from Japan) with a steady increase supported
by a sustained higher growth rate over the years.
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THE BENEFITS OF LIFE INSURANCE
Risk cover: -Life Insurance contracts allow an individual to have a risk cover
against any unfortunate event of the future.
Tax Deduction: - Under section 80C of the Income Tax Act of 1961 one can get
tax deduction on premiums up to one lakh rupees. Life Insurance policies thus decrease
the total taxable income of an individual.
Loans: - An individual can easily access loans from different financial
institutions by pledging his insurance policies.
Retirement Planning: - What had provided protection against the financial
consequences of premature death may now be used to help them enjoy their retirement
years. Moreover the cash value can be used as an additional income in the old age.
Educational Needs: - Similar to retirement planning the cash values that flow
from ones life insurance schemes can be utilized for educational needs of the insurer or
his children.
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Tax Benefits
INCOME TAX
SECTION
GROSS
ANNUAL
SALARY
HOW MUCH TAX CAN YOU
SAVE?
HDFC STANDARD LIFE
PLANS
Sec. 80CAcross All
income Slabs.
Upto Rs. 33,990 saved on
investment of Rs. 1, 00,000.All the life insurance plans.
Sec. 80 CCCAcross all
income slabs.
Upto Rs. 33,990 saved on
Investment of Rs.1, 00,000.All the pension plans.
Sec. 80 D*Across all
income slabs.
Upto Rs.10, 197 saved on
Investment of Rs. 30,000
(inclusive of Rs.15,000 towardshealth insurance of parents.)
All the health insurance riders
available with the
conventional plans. All
Health insurance plans.
Upto Rs.11,897 on investment of
Rs.35,000 (inclusive of Rs.
20,000 towards health insurance
of parents who are senior citizen)
TOTAL
SAVINGS
POSSIBLE **
Rs.44,187
Rs.33,990 under Sec. 80c and under Sec. 80 CCC, Rs.10,197 /
Rs. 11,897 under Sec. 80 D, calculated for a male with gross annual income
exceeding Rs.10,00,000.
Sec. 10 (10)DUnder Sec. 10(10D), the benefits you receive are completely tax-free, subject to
the conditions laid down therein.
* Applicable to premiums paid for Health plans, Critical Illness Benefit, Accelerated Sum
Assured and Waiver of Premium Benefit.
** These calculations are illustrative and based on our understanding of current tax
legislations, which are subject to change..
ROLE OF LIFE INSURANCE IN THE GROWTH OF THE ECONOMY
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The Life Insurance Industry has an enviable track record among public sector
units. It has a Consistent profit and dividend paying record accompanied by a steady
growth in its financial resources. Through investments in the Government sector and
socially- oriented sectors the Industry has contributed immensely to the nation's
development. The industry is recognized as one of the largest financial Institutions in the
country. The ventures initiated by the industry in the areas of Mutual Fund, Housing
Finance has done exceedingly well in recent years. To protect the country's foreign
exchange reserves, the reinsurance arrangement are so organized that maximum retention
is made possible within the country while at the same time protecting interests of the
policy holders.
INDIA AGAINST THE GLOBAL MARKETS
India is an under-insured market Indias insurance market is still at an early stage
of development. This is reflected in low penetration rates and low premiums per capita.
Insurable population only 10% of Indias population have life insurance
According to ING only 10% of the population is insured, which represents around 30%
of the insurable population. This suggests more than 300m people, with the potential to
buy insurance, remain uninsured
Global perspective India ranks 19th on the global stage
India represents only around 0.66% market share (ranked 19th) of global insurance premiums. As
of 2004 the largest markets in size are the US (50x bigger than India), Japan and the UK. Out of
the Asian countries (ex Japan), South Korea is the largest insurance market, Comprising 2.12% of
global premiums, followed by China with 1.61%.
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1.2 PROFILE OF THE ORGANIZATION
HDFC i.e. HOUSING DEVELOPMENT AND HOUSING CORPORATION.
HDFC Standard Life is a joint venture between HDFC of India and Standard Life of UK.
The new company, HDFC Standard Life, was one of the first to be awarded a license in
the recently deregulated Indian market and one of the first to open its doors for business
and issue policies.
Founded in 1977, HDFC id Indias market leader in housing finance, providing finance
for more than 1.5mn homes. They have 83 offices in India, one international office in
Dubai and three service associates in Kuwait, Qatar and the Sultanate of Oman.
Like Standard Life, HDFC is strongly committed to providing quality products and
excellent customer service and has won a number of important awards : in Jan 2001
Asiamoney named them as second Best managed company in India.
HDFC is also financially very strong and for the last six years has enjoyed the highest
financial strength ratings from Indias two leading rating agencies.
The HDFC group includes:
1 HDFC Bank
2 HDFC Asset Management
3 HDFC Realty Ltd.
4 HDFC Securities Limited
Over the period of operations, HDFC group has been felicitated with various rewards.
Some of them are as follows:
1 United Nations Scroll of Honor 1991
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2 Indias best managed company by Asiamoney magazine 1995 and 1996
3 Most competitive Indian company by Euromoney 1997
4 One of the 5 best Indian Boards by Business Today 1997
5 Rated as one of the best companies in India for strategy & management and
investor relations by Asiamoney 1998.
6 Excellence in service industry by the Indian Institute of Marketing Management
& Top Management Club (Pune) 1998
7 Shield for the best presented accounts for banks and financial institutions over11 times (last 8 years in a row)
8 1999 IMC Ramakrishna Bajaj National Quality Award in the service category.
9 CII-Exim Bank Commendation Certificate for commitment to Total Quality
Management 2000.
HISTORY OF THE JOINT VENTURE
Discussions commenced -- January 1995
Joint Venture agreement signed October 1995
Joint venture agreement renewed October 1998
Life insurance project team established January 2000 (Mumbai)
Company officially incorporated 14th August 2000
First Private Sector Life Insurance company to be granted a certificate of registration
23rd October 2000
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MISSION STATEMENT OF HDFCSLIC :
1 We aim to be the top new life insurance company in the market.
2 This does not just mean being the largest or the most productive company in themarket, rather it is 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.
VISION STATEMENT
The most succesful and admired life insurance company, which means that we are the
most trusted company, the easiest to deal with , offer the best value for money, and set
the standards in the industry. In short, the most obvious choice for all.
VALUES THAT WILL BE OBSERVED IN HDFCSL :
1 Integrity
2 Innovation
3 Customer Centric
4 People Care
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5 Team Work One for all & all for one
6 Joy & Simplicity
Integrated Financial Services
HDFC
realty.com
HDFC HOME
LOANS
HDFC
DEPOSITS
HDFC
SLIC
CENTRE
FOR
HOUSING
FINANCE
HDFC
MUTUAL
FUNDS
SECURITISATION
INTELNET
HDFC CHUBB
GENERAL
INSURANCE CO.
LTD
HDFC
FUTURE ACTIVITIES
CIBIL i.e CREDIT
INFORMATION
BUREAU LTD
HDFC
BANK
HDFCSECURITIES
DISTRIBUTION
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Sale Growth
Fiscal Year No. of policies sold in FY New Business in FY
2001-2002 21,376 7 Cr.
2002-2003 1,15,965 69 Cr.
2003-2004 1,86,443 180 Cr.
2004-2005 2,88,189 857 Cr.
2005-2006 7,81,685 2717 Cr.
2006-2007 20,79,217 4270 Cr.
ORGANIZATION STRUCTURE
DIRECTOR
VICE PRESIDENT
SR. BRANCH MANAGER
BRANCH MANAGER
ASSISTANT BRANCH MANAGER
SR. SALES MANAGER
SALES MANAGER
ASSISTNAT MANAGER
MANAGEMENT TRAINEE
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AN INSURANCE COMPANY
In the insurance industry the sales team following the typical organization structure:
HIERARCHY IN INSURANCE COMPANY
SALES
MANAGER
AREA SALES
MANAGER
AREA SALES
MANAGER
AREA SALES
MANAGER
UNIT
MANAGER
UNIT
MANAGER
UNIT
MANAGER
ADVISORS ADVISORS ADVISORS
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FUTURE PLAN OF THE ORGANISATION
HDFC SLIC promises to provide higher returns in higher investments. The plans
smart assure will help the customer in wealth creation and is aimed at providing
efficiency affordability and flexibility to customer needs. The product offer the customer
a choice of allocating up to 100% of premium paid beyond specified premium bracket.
As the premium goes up, the allocation charges keep on decreasing with no allocation
charges levied on premium upward rupees 3lakhs.
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1.3 PROBLEMS OF THE ORGANIZATION
Negative Environment
Top management takes large amount of time to approve high value loan
borrowers.
Since HDFC SLIC is a private player in the insurance industry, it has not yet
reached break-even. Hence, it has high cost due to which its premiums are high as
compared to LIC.
It has to create credibility in the public.
It has to compete with the wide range of products that its competitors offer.
It has to focus towards rural segment also which has a great scope of growth.
It has to decide on the strategies to be adopted which will help to counter
competition.
It has to increase its no. of branches and also enhance its network of agents so that
it can compete with LIC.
It has to focus on providing effective training to its agents so that the customer
base can be increased and moreover customer satisfaction can be ensured.
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1.4 COMPETITION INFORMATION
MAJOR MARKET PLAYERS
Presently there are 15 Life insurance companies in the country. There is only one
public sector company LIC and the rest 14 are private sector. Although LIC has been
dominating the Life Insurance business since past few years the private players have now
started to take the momentum.
Major Market Players
Birla Sun Life Insurance Company
Birla Sun Life Insurance Company is a 74:26 joint venture between Birla group and Sun
Life Financial. It is a private sector company. The company was registered on 31/1/2001.
The market share for first the eight months of FY 2005-06 is 1.84%.
ICICI Prudential Life Insurance
ICICI Prudential Life is a 74:26 joint venture between ICICI and Prudential. It is a
private sector company. The company was registered on 24/11/2000. The market share
for the first eight months of FY 2005-06 is 7.11%.
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Life Insurance Corporation of India (LIC)
Life Insurance Corporation of India is a 100% government held Public Sector Company.
Being the first to be established LIC is the forerunner in the Life Insurance sector. The
market share for the first eight months of FY 2005-06 is 73.91%.
OM Kotak Mahindra old Mutual
OM Kotak Mahindra is a 74:26 joint venture between Kotak Mahindra bank and Old
Mutual. It is a private sector company. The company was registered on 10/1/2001. The
market share for the first eight months of FY 2005-06 is 0.71%.
Royal Sundaram
Royal Sundaram marks the coming together of Sundaram Finance, one
of Indias most respected and trusted finance companies, and Royal and Sun Alliance,
one of the largest insurance groups in the world.
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Aviva Life Insurance India
Aviva Life insurance is a 74:26 joint venture between Aviva and Dabur. It is a private
sector company. The company was registered on 14/5/2002. The market share for the
first eight months of FY 2005-06 is 1.12%.
ING Vysya Life insurance
ING Vysya Life Insurance is joint venture between Exide (50%), Gujarat Cements
(14.87%), Enam (9.13%) and ING (26 %). It is a private sector company. The company
was registered on 2/8/2001. The market share for the first eight months of FY 2005-06 is
0.63%.
Met Life India
Met Life India is a 74:26 joint venture between 74:26 JV between J & Bank, Pallonji &
Co and MetLife. It is a private sector company. The company was registered on 6/8/2001.
The market share for the first eight months of FY 2005-06 is 0.40%.
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Allianz Bajaj Life Insurance Co.
Allianz Bajaj Life Insurance Company is a 74: 26 Joint venture between Bajaj Auto
limited and Allianz AIG. The company was registered on 3/8/2001.The market share for
the first eight months of FY 2005-06 is 6.12%.
SBI Life Insurance Company Ltd:
SBI Life Insurance Company is a 74: 26 Joint venture between SBI and Cardiff S.A. The
company was registered on 31/3/2001.It is a private sector company. The market sharefor the first eight months of FY 2005-06 is 1.52%.
The TATA AIG Group
TATA AIG group is a 74:26 JV between Tata Group and AIG. It belongs to the private
sector. The company was registered on 12/2/2001. The market share for the first eight
months of FY 2005-06 is 1.78%.
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Sahara India Life Insurance Company Ltd.
First Wholly Indian Owned Private Life Insurance Company. The Company commenced
operations from 30th October 2004.
Shriram life insurance company Ltd
Shriram Life is a recent entrant into the life insurance sector It is a 74:26 joint venture
between the Shriram group through its Shriram Financial
Holdings and Sanlam Life Insurance Limited, South Africa. The company expects to start
operations soon.
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1.5 SWOT Analysis
STRENGTHS
Premiums are increasing and so are commissions.
The variety of products is increasing.
Transparency in working is followed.
Fund charges are less i.e. 0.8%
Stronger financial base.
Employee centric organization.
WEAKNESSES
Strong competitors like LIC, ICICI Pru, Birla Sun Life etc.
Premium is priced high as compared top the market leader.
Infrastructure cost is high.
Less expenditure on promotion.
Products not customized for lower segment.
OPPORTUNITIES
The ability to cross sell financial services barely being tapped.
Technology is improving to the point that paperless transactions are available.
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The client's increasing need for an "insurance consultant" can open new ways to
service the client and generate income.
THREATS
Government regulations on issues like health care, mold and terrorism can quickly
change the direction of insurance.
The increasing expenses and lower profit margins. Intense competition from LIC.
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2.1 SIGNIFICANCE
The main objective of my project is to know the channel distribution of HDFC SLIC in
Delhi and to recruit quality agent advisors for the company for providing life Insurance
solutions to the customers. Agent advisors play a vital role in the growth of company
with respect of companys earnings as well as they create value for the organization after
achieving some milestones. Agent advisors are an integral part of the team and sales
manager assigned to them help them to groom in terms of personality development,
selling skills and handling objections of customers.
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2.2 MANAGERIAL USEFULNESS OF THE STUDY
The study is useful to know the channel distribution of HDFC SLIC and to recruit quality
agent advisors for the company for providing life Insurance solutions to the customers.
To gain an insight on the functioning of the distribution of policy and contribution by
agents, Corporate Direct Selling Associates (DSA) and other channels of HDFC SLIC
that will aid the competitors in this sectors to devise an effective distribution strategy.
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2.3 RESEARCH OBJECTIVE
(1) Definition of problem
Identification of distribution channel of HDFC SLIC in Delhi
(2) Research objective-
Objective of my research is following-
1) To find out various channel of HDFC SLIC operating in
2) To find out contribution in distribution of Agents and Other channel.
3) To find out contribution of new distribution channel as: -
Corporate Direct Sales Associate (DSA)
Banc assurance
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2.4 SCOPE OF THE STUDY
To understand the potential for life insurance and number of peoples needs to be
insured moreover to know tremendous life insurance opportunities for people to workand be a part of organization.
Study the various distribution channels, the existing ones and the new areas.
evaluating the new areas their limitation and extent.
Corporate Agency tie ups through which the untapped market segments can be
targeted
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2.5 RESEARCH METHODOLOGY
(1)Data Collection
It consists of primary data and secondary data. Primary data was collected by holding
semi- structured and focused individual interviews of sales Agent, executive,
Consultant and Personnel associated with Corporate Direct sales associate.
For the primary data Interviewed 35 insurance personnel, out these 15 were
Executives including Consultants, Executive (Managerial), and associated Executive
from other tied organization.
Where as secondary data was obtained by different records, magazines, newspapers,
inter nets and various pamphlets of HDFC SLIC.
(2) Type of Research
The type of research used for our study was an exploratory research, as the objective
of the research was to have in depth understanding of the sales agents.
Since the research was qualitative, the need for formal and rigid questionnaire was
not felt. However I covered a specific list of topics and sub areas. This was done in
the form of Open-ended question, where the timing, exact wordings and timeallocated to each question area was left at the interviewers discretion open structure
ensured that inspected facts or attitudes could perused easily.
(3) Sample size
I have selected sample on the basis of performance of the premium collected by agent
at least 25 policies per year. Other has been taken from the branch Manager and
Consultant, branch Executives. All are taken randomly.
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CONCEPTUAL DISCUSSION
CHANNEL DISTRIBUTION
A channel of distribution or trade channel is the path or route along which goods move
from producers to ultimate consumers or industrial users. In other words, it is the
distribution network through which a producer puts his product in the hands of actual
users. The channel of distribution includes the original producer, the final buyer and any
middlemen-either wholesaler or retailer. The term middleman refers to any institution or
individual in the channel which either acquires title to the goods or negotiates or sells in
the capacity of an agent or broker. But facilitating agencies that perform or assist in
marketing function are not included as middlemen in the channel of distribution. This is
because they neither acquire title to the goods nor negotiate purchase or sale. Such
facilitating agencies include banks, railways, roadways, warehouses, insurance
companies, advertising agencies, etc. The following diagram (chart) is illustrative of the
channel of distribution which may exist in a market.
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The above chart indicates that the number of middlemen may vary. If there is direct sale
by the produce to the consumers then there is no middleman. But that is very rare. As the
chart shows the producer may sell goods to retailer who may then sell the same to
consumers. The producer may sell goods to wholesalers who may in turn sell to retailers
and the retailer may sell to consumers. The fourth alternative channel of distribution is
when any agent/dealer intervenes between the producer and retailers and acts as a
middlemen. The agent is appointed by the producer for the sale of goods to the retailers.
Another alternative channel is there when producers agent sells goods to wholesalers
who sell to retailers. Agent/dealer is an independent person/firm buying goods and selling
them to retailers. Agent/dealer may also sell to wholesalers who may then sell to retailers
and goods are thus made available to consumers. In the channel of distribution there may
be more than one agent/dealer and wholesaler.
Channel decisions determine how the firm will reach its target markets. The choice and
performance of the channel are major determinants of an organizations success. Channel
of distribution decisions are of vital importance to all types of firms, including producers,
wholesalers, and retailers. A key factor in selecting a channel is economic performance-
estimated revenue and cost flows over the planning horizon. Qualitative factors are also
important in selecting channels of distribution. Given two channel alternatives that are
similar in their estimated economic performance, selection may rest on the extent of
management control that the firm could exercise in the two channels.
CHANNEL DISTRIBUTION OF INSURANCE INDUSTRY IN INDIA
The insurers must refine and exploit the market segment product distribution system
linkage.
This will lead to distribution system pluralism; many different distribution systems will
be implemented across companies rather than across the industry.
Distribution channels:-
Why it is needed.
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1 Distribution - the key differentiator
It has been two years since the Indian insurance market has opened up, and the new
entrants into the market have set up shop in every major city. The public sector
companies have already established themselves in the market. But there are multiplechallenges faced by these insurance companies, of which two are critical:
Designing of products suiting the market
Using the right distribution channel to reach the customer
While the companies have been quite successful in dealing with the first of these
challenges using the existing product features and leveraging the technical know-how of
their partners, most are still grappling with the right channel mix for reaching potential
customers.
This paper discusses the distribution channels from the perspective of the socio-cultural
ethos of the market and how these channels fit into it, along with where the various
companies face challenges and bottlenecks. Whenever any debate arises about the
intermediaries and distribution channels, the discussion veers to technology and its
impact on distribution. However, the authors believe that the basic existential problems
being faced by the channels in this market needs to be looked into first, and then the
question of enablers technology, tools, training, learning etc. -- is to be takenup.
2 Challenging Scenario demanding role transformation of intermediaries
Insurance has to be sold the world over, and the Asian Market is no exception. The touch
point with the ultimate customer is the distributor or the producer (as they are known in
certain markets), and the role played by them in insurance markets is critical.
It is the distributor who makes the difference in terms of the quality of advice for choice
of product, servicing of policy post sale and settlement of claims. In the Asian markets,
with their distinct cultural and social ethos, these conditions will play a major role in
shaping the distribution channels and their effectiveness.
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In today's scenario, insurance companies must move from selling insurance to marketing
an essential financial product. The distributors have to become trusted financial advisors
for the clients and trusted business associates for the insurance companies.
This calls for leveraging multiple distribution channels in a cost effective and customer
friendly manner. For example, in the developed markets producers (brokers and agents)
form the major channels of distribution, while the web as a complementary channel is
catching up slowly. According to a Forrester survey, 88% of the Life insurance
executives responding identified agents as the primary channel of distribution.
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The distinction of channels in the developed markets is: personal distribution systems and
direct response systems. Personal distribution systems include all channels like
agencies of different models and brokerages, bancassurance, and work site marketing .
Direct response distribution systems are the method whereby the client purchases the
insurance directly. This segment, which utilizes various media such as the Internet,
telemarketing, direct mail, call centers, etc., is just beginning to grow.
3 What should the companies look at?
Basically companies have to take a look at the intermediaries they are using, whether it is
optimal to use them, and what are the alternatives?
The new companies have attempted appealing only to the middle, upper middle and elite
classes in the major cities. Contrasted with Public sector insurance companies, with their
offices across the country, the new companies have miles to go before they reach
anywhere. They must overcome the mindset of the customer that life insurance is Life
Insurance Corporation of India (LIC) and general insurance is General Insurance
Corporation of India (GIC) if they hope to grow in the market. Meanwhile, the public
sector companies are going to great lengths to revamp their image to look and feel more
contemporary.
In this process all are targeting the same market --the existing pie is being cut up further,
but no attempt is being made to increase the size of the pie. For example, while attempts
are made to complete the quota of rural insurance in percentage terms, the rural market
potential is yet to be tapped, as the new insurers are not able to attract the right kind of
talent into their distribution force to address this. Intelligent segmentation of distribution
channels to match the market segmentation is what will help the companies to move in
this direction.
4 Distribution Scenario in the Indian market
In today's Indian insurance market, the challenge to insurers and intermediaries is two-
pronged:
Building faith about the company in the mind of the client
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Intermediaries being able to build personal credibility with the clients
Traditionally tied agents have been the primary channels for insurance distribution in the
Indian market; the public sector insurance companies have their branches in almost all
parts of the country and have attracted local people to become their agents. The agentsare from various segments in society and collectively cover the entire spectrum of
society. A person who has lived in the locality for many years sells the products of the
insurance company with a local branch nearby. This ensures the last mile touch point
being closer to the customer. Of course, the profile of the people who acted as agents
suggests they may not have been sufficiently knowledgeable about the different products
offered, and may not have sold the best possible product to the client. Nonetheless, the
customer trusted the agent and company. This arrangement worked adequately in the
absence of competition.
In today's scenario agents continue as the prime channel for insurance distribution in
India, as is the case in most markets, supported by call centers to a small extent. Almost
all the new players follow this model primarily because the regulations for other channels
are yet to be put in place.
However there is great excitement in the industry over the impending broker regulations,
and companies are planning possible channels in their enthusiasm to increase volumes.
The belief that all these channels will grow and seamlessly integrate to bring in business
seems a fallacy.
What has emerged is a much more difficult and evolving market scene with existing
players, more new players coming in, and global marketing practices and ideas being
tested. But none of this has changed the fundamental character of the market, which we
believe will take more time than expected
As the insurance market in India is liberalized, the pattern of distribution is likely to
undergo some changes with new channels being introduced
A quantum jump in insurance business in terms of premium, policies, lives
covered, etc would necessitate a corresponding increase in the capacity of
the distribution channels.
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The cost of effectiveness of certain channels would induce insurers to start
using them.
There are sectors of market for whom the agency channel may not be the
most efficient and introduction of new channel will help to increase the
penetration of insurance products.
Creation of awareness and demand as a result of the increasing
distribution channels.
Dissatisfaction with the existing channels.
Key issue in increasing the number of policies sold would be;
The number of agents
Public awareness
Public perception of the need for protection and long term savings.
Favourable tax treatment
Professionalism of financial advisors
Quality and range of products.
Favourable tax treatment
Profetionalism of financial advisors Quality and range of products.
The distribution channels would play an important role in meeting the increased volumes.
Traditionally, the life insurers have been working primarily on the agency distribution
force, while the general insurance business has depended primarily on the development
officer. The private players are bringing with them international experience, new
technology, new channels of distribution and of course, new products. The ground rules
in the insurance business are being redefined. Even the existing public sector players are
gearing up with matching strategies to face competition.
EXAMPLE:
Tied Agent of LIC-
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*Tied agents attached to development officers
* Direct agents/career agents supervised by ABM(S)/BM/Sr.B.M
Branch Manager
Direct Agents
Development officer
Career Agents
(presently not in practice) Agents
Full time
Part time
Changes in distribution pattern of life insurance after IRDA
came into existence.
FROM TIDE AGENTS
TO
MULTIPLE
CHANNELS
BANKSCORPORATES/
INSTITUTIONS
BROKERS
TELEMARKETING/
WORK-SITE MKTG./
DIRECT MKTG. INTERNET
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CHANNEL DEVELOPMENT STRATEGIES AT HDFC SLIC.
Tied agency model
Bank assurance and alliance
Corporate Agency(exclusive for HDFC SLIC) and Brokers(can sell any product)
Tied Agency (Agent Advisors)
Tied Agency is the largest distribution channel of HDFC SLIC, comprising a large
advisor force that targets various customer segments. The strength of tied agency lies in
an aggressive strategy of expanding and procuring quality business. With focus on sales
& people development, tied agency has emerged as a robust, predictable and sustainable
business model.
Banc assurance and Alliances
At its most simple level banc assurance is the business of banks selling insurance. In
concrete terms banc assurance, which is also known as Allfinaz constitutes a package of
financial services that can fulfill both banking and insurance needs at the same time.
Simplest form where bank provides database to the insurance companies and insurance
companies pays certain base charges for each customer and commissions are paid on the
basis of conversions.
Strategic alliance
Sharing of customer data
Branding of insurers products to leverage the banks own brand
Developing specific products exclusive to banks own customer
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Deployment of insurers staff within the bank
Joint marketing strategy with complete risk management and financial services
offers.
Sharing of technical infrastructure.
Banc assurance is the term used to describe the sale of investment products in a bank.
The word is a combination of "banc" and "assurance" signifying that both banking and
insurance is provided by the same corporate entity.
Banc assurance - selling life insurance through bank branches - has also driven life
insurance business over the two years. Heres why. First, banks deposits as a percentage
of total financial assets of the household sector have gone down from about 46% in 1980
to about 30% now. This means that banks have to seek other avenues, beyond just
interest income, to remain profitable. Banks have found that selling life insurance policies
is a great way to make profits.
Company adopted the concept of banc assurance merely few years back and got a good
amount of success through that. Within a short span of time, company has large number
of partners like Yes Bank, India bulls and Amway. B & A has emerged as a vital
component of the companys sales and distribution strategy, contributing to
approximately one third of companys total business.
The business philosophy at B&A is to leverage distribution synergies with our partners
and add value to its customers as well as the partners. Flexibility, adaptation and
experimenting with new ideas are the hallmarks of this channel.
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Corporate Agency(exclusive for HDFC SLIC) and Brokers(can sell any
product)
Corporate agency are those which sells exclusive Services of HDFC SLIC and Where are
a Brokers is a one who can sell and service of and company depending on the rate of
commission
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FUNCTIONS OF AN AGENT AT HDFC SLIC.
An insurance agent would be required to solicit and procure new insurance business, in
manner that is consistent with the interests of the policyholders and of the insurance
company.
For this purpose he would have to do the following
contact prospects for insurance;
study their insurance needs;
persuade them to buy;
complete all formalities for proposal for new insurance, including filling up the
proposal forms;
collecting supporting documents and premium arranging inspection if necessary,
ensure that warranties and special conditions, if any are property explained to the
insured
Assist the insured in filling the proper documents and proofs for making a claim.
An insurance agent would be required to solicit and procure new insurance business, in
manner that is consistent with the interests of the policyholders and of the insurance
company.
For this purpose he would have to do the following
contact prospects for insurance;
study their insurance needs;
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STEPS IN DIRECT MARKETING
Select your customers
Tailor the product
Prepare the operation
Launch the campaign
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CHANNEL DEVELOPMENT PROCESS FOR TIED
AGENCY MODEL
YES
NO
NO
YES
Start
Name Gathering in P200
Short listing
Contacting
Intereste
d?End
Initial Screening
NAT
Career Seminar & P200
Intereste
d?End
Career interview
FCS
Contract with MNYL
IC-33? Reappear
NOT CLEARED
CLEARED
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WAYS OF NAME GATHERING
There are several ways for gathering names in order to follow rule of 31.
Natural Market:
A natural market consist of people to whom you know well from your family,
friend circle, relative can be a good prospect. The most admired way for
recruitment in HDFC SLIC is through natural market. Natural market persons are
easily approachable and most of the successful recruitment in HDFC SLIC is
from natural market.
Personal Observation:
It means identify the right person through observation. For e.g. a person residing
in your locality and very famous in taking initiative in social activities can be a
good prospect.
Nominator Call:
A nominator is a person who is very much influential in the market as well as in
societies. Name gathering and identification is easy in this case, but these people
are highly unapproachable. These people can be very productive in giving
references of the prospect. They are not prospect by default.
Centre of Influence (CoI) Call:
A centre of influence person is people who are influential and you know them
personally. They are approached for giving references of the client.
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DATA ANALYSIS
After the interview of 20- agents and 15- officer I have gathered much Information that
can be classified in the following ways i.e.
1) On the basis of Age.
Age 18-25 26-35 36-45 46 above total
No of Agents 4 8 5 3 20
No. Of Executives
Or Other 2 8 4 1 15
8
9
Analysis of this information make us clear that maximum no of Insurance advisor comes from
age group 25-35. It has inference that Maximum agents are matured enough to deal and live in
the organization. When I the look age group of officers we can find it easily that maximum come
from matured and experienced age range i.e. 26-35. It has implication that company is
administered by well experience young people.
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2) On the basis of Education.
Education level HSC Degree PG Professional total
Degree
No of Agents 3 10 4 3 20
No of Executives 5 5
Consultants 1 1 3 5
No Others 2 3 5
Total 3 13 5 14 35
12
I can have many inferences from the above information as follows on the basis of Education.
50% of Agent comes from degree level, 20% from professional degree and rest from others
80% Executive comprises professional degree.
60% Consultant/ manager has professional degree and other from, Degree, and PG.
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Other executive to whom I met have 60% professional degree.
When I assess total staff (agents with officers) I draw inferences that out of total, approximately
90% staff are graduate and above that. If I exclude Agents then 70% (0ut 0f 15, 10 have
professional degree) is professional. It means company is mostly governed by professionals.
Note Professional qualification means MBA/MCA/ BE/CA etc. Out of 35, a person has not
given their opinion.
3) Geographical area they covered
Area specific not specific whole city total
No of agent 4 2 14 20
12
14
16
Information from above table states that out of total, maximum (50%) covers whole city
of Delhi. 40% covers specific area (means, western, eastern suburban).
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When I combine this information I can have more specific inferences. As HDFC SLIC have most
dynamic& experience professional young people with different geographical area covers and
maximum has to facility to grow business in any area.
Working time
When I analyzed the question on the basis of timing, maximum agents have their flexible
time. But officers and Managers have specific time generally 9am to 8 pm and more than
that. Here we have to consider two types of agent one is part timers and others is full
timers. So full timer gives maximum time and uses the facility of Tele phone in the
Office.
Telephone call per day
No of calls 1-6 7-13 14-20 21- 27 total
Agents 2 5 10 3 20
12
Telephone calls generally made by agents are maximum 14-20 calls / day. And time of calling
depends on policy and person.
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4) Feature of the company
5
When I asked about the features of convenience, 90% has their (Out of the 35 persons)
opinion in favor of Trust and customer friendly.
5) Operational hassles/problems
Hassles travel timing phone availability procedure paper work total
No of Agent 10 1 1 3 5 20
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Executives 10 2 1 2 15
20 3 1 4 7 35
12
Maximum operational hassles comes from traveling and after that paper work involved
but weight age is almost low, Procedure is the third most problem in distribution of the
services. Time and phone availability have very low contribution in operational problem.
6) Facility available for agents and Officers.
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14
When agents are asked about the facilities that are provided by the HDFC SLIC for him
maximum has answered in the support of telephone, and very few have support regarding
stationary. Some have given their view in the support of computer facilities. But they
demanded more support of stationary and traveling allowances.
7) About Appraisal system
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25
When I talked about performance appraisal system in HDFC SLIC they all have similar
view that it has good performance appraisal system. Insurance advisors are judge by their
performance to fulfilling their target weekly, monthly, annually basis. Many other things
also they are considering in the process of performance appraisal. So this system is very
effective to keep motivated of the channel force.
8) Knowledge about product and training.
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25
Company provides comprehensive knowledge about products to Insurance adviser and
dealing staff so as they can do their work without any confusion. Staffs are trained by
extensive training session (100 hours) and required test. They are also assessed time to
time by the Organisation to maintain their knowledge and skills.
Similar things are also available for the officer but in different way. They have to take
care of the organization so they have go with a very hard extensive session of training.
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9) Yearly earning.
16
Insurance advisors average earning falls at the range of 1lakh to 2lakh per years but it
depends on the advisors. There no limitation of their earnings if they have enough contact
and selling skills.
Here consultant has no fixed income only salary is fixed but commission from Agents is not
fixed. Due to commission they are always want to develop their business.
Executive has some more fixed income than above two. Income depends on experience and
position in the company.
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12) Factors make you as a part of HDFC SLIC?
Mainly trust and brand value of HDFC SLIC work here more than the other factors to
remain as a part of this organization. This is fact New York Life as a brand of quality,
economic, and strong believe for perfection and HDFC SLIC has good image and
perception for the people.
They are ranked as following way
Trust>> Brand name>> Performance of the company>> Job satisfaction>> Salary
structure>> security>> others.
13) Factor that can Influence the people in future.
For the most influential factors responsible the people to remain in the Organization can
be arranged in the following way.
Carrier growth Opportunity>pay package>Salary>Others.
So for the future carrier growth has maximum weight age then others (for both of them).
14) Change in the distribution channel
When I think about new change in the area of distribution. They have similar view but
some agents have opinion to remain in Traditional way. They have their own logic, it has
no substitute because insurance is a product of selling not bringing. It requires personal
relation and faith.
Executives have their opinions that HDFC SLIC has many distribution
channels(traditional as well as new) but new multiple distribution channel is required due
to maintaining sales growth and reducing the cost of delivery. Change is required becausecombined forces of increasing technological expertise, Transformation in the Industry
and Innovative techniques working in the Indian market, the distribution system seems to
be widening.
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In there view future customers will be multi channel. The insurers will have to offer all
types of channel to the customer and it is the customer who will have the right to choose
the channel suiting him/her. Future demand of high level of sophistication in providing
our services to customer cant be ignore.
So change in distribution channel is required.
They have a corporate agency channel, which handles its corporate agents and have tie-
ups with 38 corporate houses. In their opinion DSA provide a very wide reach in India.
This is a much diversified channel. They are best served using similar approach- such as
direct mail or Telemarketing.
Recently it tied up with India Bulls and some NGOs. The distribution has to happen at
the grass root level, as the average rural Indian finds a greats level of comfort and
security in dealing in groups. The Rural population normally prefers monthly premium in
line with the Micro-finance repayments that they are used to.
15) HDFC SLIC has a tie-up with Yes Bank(Bank assurance).
For total financial solution HDFC SLIC has a tie-up with Yes Bank. It is also looking at
opportunities for tying-up with many more banks in India.
This is multiple channel of distribution. Put simply, the Insurance distribution can be
made during a loan application process. The use of a highly trained advisor with support
from bank is very Important in the banc assurance, this is very promising channel due to
the large coverage banks have in India.
When they were talking with me majority have opinion this is most viable channel for
coming days. It has presently very little bit contribution due to lack of interest and
experience.
channels. Their concept is very clear about selling of insurance product.
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16) Future distribution channel for HDFC SLIC.
They have given their view on the future channel that will be most effective for HDFC
SLIC would be Banc assurance and Direct Marketing.
17) Performance with respect to distribution.(restricted to HDFC SLIC)
When they were asked to give their opinions on the weight age of performance of
Different distribution channel of HDFC SLIC, If hundred (100) points is whole business
then contribution of channel can be show as following way;
100
80
60 Agency (approx 60%)
40 Corporate Agents (33%)
20 Banc assurance (4-5%)
NGOs (1-2%) others (0-2%)
They have given 1st rank to the agents and Insurance Advisors or Traditional channel
(only for HDFC SLIC)
But opportunity of new modern channel cant be denied. After trained Insurance Advisor,
they have given their 2nd rank Corporate Agent and farther as following way;
Agency>Corporate Agents (DSA)> Banc assurance>NGOs>Brokers>Direct Marketing
(20) When asked about the most important feature HDFC SLIC possessed that attracts
the customer I got and anonymous Result Companies Experience in Life Insurance
which is 162 years.
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There are 38.5 million Indians online as of now and this number is set to grow to 100
million by 2007-08. Sky-rocketing at a CAGR of 125%, the online travel industry is
expected to become a $2-billion industry by 2008.
The number of heavy internet users in India, the persons who spend long hours on the
web, has grown to 38 per cent this year, as against barely 16 per cent in 2001.
These heavy users are spending an average 8.2 hours per week on the internet, I-Cube
2006 report said.
Their numbers are increasingly rising over the past few years: from 16 per cent in 2001 to
20 per cent in 2004 and to 38 per cent the total internet users in 2006 - resulting in a jump
of 20 per cent over a 5-year period.
In contrast, the number of 'light' users has dropped from 63 per cent in 2001 to a 28 per
cent in 2006, which shows the older population spend more time on internet as against
the younger lot who are considered to be more net-savvy. While, the school going
children spend an average of 322.3 minutes a week on the internet, the college going
students spend an average of 433.2 minutes per week and the older men spend an average
of 580.5 minutes a week. Working women spend 535.3 minutes per week while women
non-working women spend an average of 334.5 minutes each week. There will be 50
million internet users by March 2007. At present 25% of the internet users in India are
from small towns and this figure is estimated to increase further.
32 per cent active users of the Internet in India use it for sourcing information and
research. Back in 2001, only 20 per cent used the Internet for searching information. E-
mail as a killer application is on the downslide with only 46 per cent of subscribers using
the Internet for e-mail, compared to 64 per cent in 2001
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RECOMMENDATIONS
There are certain flaws existing in this working of the insurance industry there are some
the recommendation I come across while doing this thesis. It will help to make
insurance more important sector in todays economy.
The need of the hour is to devise a comprehensive strategy that will help the firms
face the challenges of the future. The financial service industry, around the world. Over is
undergoing a major transformation. It is very important that trained marketing
professionals who are able to communicate specific features of the policy should sell the
policy.
From the research I could find out that people are not aware about the policies and
features of insurance.
The penetration of insurance in India is around 22%. This indicates that a vast
majority of rural population is not covered. The market player needs to explore this
untapped potential through their marketing and sales network.
The returns of the policies are not properly managed and never given in time. So,
these areas must be looked at.
Pricing of insurance products, as empirically available in India, shows that pricing
is not in consonance with market realities. Life Insurance premium is generally
perceived, as being too high while general insurance (especially motor insurance) is
priced too low.
Some insurance products, which are not available in India should, be introduced
in market. There are area for new product development like Industry all risk policies;large projects risk cover, Risk beyond a floor level, extended public and product liability
cover.
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CONCLUSION
My Experience with HDFC SLIC will always be grateful for me. I learned many things
in HDFC SLIC. The very first thing I learned in HDFC SLIC is to handle objections from
the customers. Different type of scripts of HDFC SLIC helps in this.
Working on deadline for achieving target is most crucial process in this sector and I am
thankful to my Manager who was always behind me to support during initial phases and
helped me to complete my training.
The GO meet to reward successful AA and SM for the month is another example which
clearly emphasizes that HDFC SLIC has strong belief in maintaining a healthy
relationship with their stakeholders.
Overall Channel Distribution of HDFC SLIC at Delhi was a fair attempt from me.
My telephonic conversation with the prospect always gave me a positive direction to
build my confidence and even in bad phase of response I learnt the art of making
calmness.
I shared a lot of activities with my colleagues. All the trainees from different background
also remained a source of energy for my daily activities.
IN FUTURE INSURANCE WILL BE BOUGHT NOT SOLD
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ANNEXURE
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QUESTIONNAIRE
NAME .
QUALIFICATION..
AGE..
(1) Why you select HDFC SLIC as an Agent?
(a) For Monetary benefits (b) flexibility in Hours
(c) Commission (d) easy of entry
(e) Interest in the sector (f) nature of job
(2) What geographical area do you cover?
(3) What is your work timing?
(4) How many calls do you made in a day?
(5) What features / services of the company do you like for your convenience?
(a) Trust in the company(b) Quick settlement of claims
(c) Customize product
(d) Customer friendly
(6) What are the operational hassles/ problems that you face?
(a) Travel (b) timing (c) phone availability
(d) Procedure (e) paper work
(7) What are the facilities you are using or provided by the company?
(a) Traveling allowances (b) telephone (c) computer
(d) Day hour food (e) stationary
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(8) Does Company provide knowledge of entire product range in its portfolio?
(9) Does HDFC SLIC have performance appraisal system?
(10) What is your yearly average Income?
(11) What factors would you consider while selecting the new Life Insurance Company?
Please rank them on the basis of 1-10 point.
FACTORS
Trust
Performance of company
Security
Salary structure
Brand value
Infrastructure support
Perk/ allowances
Flexible work timing
Level of autonomy
(12) What are the reasons / factors for which you remain in this Organization?
Rank them on the basis of 1-10 point.
REASONS RANK1 RANK2
(For HDFC SLIC) (For others)
Monetary factors
Job satisfaction
Autonomy
Easy of entry
Flexible work hours
Status
Job security
Commission base pay
Perks/allowances
Others
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(13) What are the reasons /factors for which you are a part of this HDFC SLIC?
RANK them