icici prudential life insurance
TRANSCRIPT
Project on Life Insurance
An Introduction to insurance
A system under which the insurer, for a consideration usually agreed upon in advance,
promises to reimburse the insured or to render services to the insured in the event that
certain accidental occurrences result in losses during a given period. It thus is a
method of coping with risk. Its primary function is to substitute certainty for
uncertainty as regards the economic cost of loss-producing events.
Insurance relies heavily on the “law of large numbers.” In large homogeneous
populations it is possible to estimate the normal frequency of common events such as
deaths and accidents. Losses can be predicted with reasonable accuracy, and this
accuracy increases as the size of the group expands. From a theoretical standpoint, it is
possible to eliminate all pure risk if an infinitely large group is selected.
From the standpoint of the insurer, an insurable risk must meet the following
requirements:
1. The objects to be insured must be numerous enough and homogeneous enough to
allow a reasonably close calculation of the probable frequency and severity of losses.
2. The insured objects must not be subject to simultaneous destruction. For example, if
all the buildings insured by one insurer are in an area subject to flood, and a flood
occurs, the loss to the insurance underwriter may be catastrophic.
ICICI PRUDENTIAL
Project on Life Insurance
3. The possible loss must be accidental in nature, and beyond the control of the
insured. If the insured could cause the loss, the element of randomness and
predictability would be destroyed.
4. There must be some way to determine whether a loss has occurred and how great
that loss is. This is why insurance contracts specify very definitely what events must
take place, what constitutes loss, and how it is to be measured.
From the viewpoint of the insured person, an insurable risk is one for which the
probability of loss is not so high as to require excessive premiums. What is
“excessive” depends on individual circumstances, including the insured's attitude
toward risk. At the same time, the potential loss must be severe enough to cause
financial hardship if it is not insured against. Insurable risks include losses to property
resulting from fire, explosion, windstorm, etc.; losses of life or health; and the legal
liability arising out of use of automobiles, occupancy of buildings, employment, or
manufacture. Uninsurable risks include losses resulting from price changes and
competitive conditions in the market. Political risks such as war or currency
debasement are usually not insurable by private parties but may be insurable by
governmental institutions. Very often contracts can be drawn in such a way that an
“uninsurable risk” can be turned into an “insurable” one through restrictions on losses,
redefinitions of perils, or other methods.
ICICI PRUDENTIAL
Project on Life Insurance
Life insurance industry
Life insurance may be defined as a plan under which large groups of individuals can
equalize the burden of loss from death by distributing funds to the beneficiaries of
those who die. From the individual standpoint life insurance is a means by which an
estate may be created immediately for one's heirs and dependents. It has achieved its
greatest acceptance in Canada, the United States, Belgium, South Korea, Australia,
Ireland, New Zealand, The Netherlands, and Japan, countries in which the face value
of life insurance policies in force generally exceeds the national income.
In the United States in 1990 nearly $9.4 trillion of life insurance was in force. The
assets of the more than 2,200 U.S. life insurance companies totaled nearly $1.4
trillion, making life insurance one of the largest savings institutions in the United
States. Much the same is true of other wealthy countries, in which life insurance has
become a major channel of saving and investment, with important consequences for
the national economy.
Life insurance is relatively little used in poor countries, although its acceptance has
been increasing.
Types of contracts
The major types of life insurance contracts are term, whole life, and universal life, but
innumerable combinations of these basic types are sold. Term insurance contracts,
issued for specified periods of years, are the simplest. Protection under these contracts
ICICI PRUDENTIAL
Project on Life Insurance
expires at the end of the stated period, with no cash value remaining. Whole life
contracts, on the other hand, run for the whole of the insured's life and gradually
accumulate a cash value. The cash value, which is less than the face value of the
policy, is paid to the policyholder when the contract matures or is surrendered.
Universal life contracts, a relatively new form of coverage introduced in the United
States in 1979, have become a major class of life insurance. They allow the owner to
decide the timing and size of the premium and amount of death benefits of the policy.
In this contract, the insurer makes a charge each month for general expenses and
mortality costs and credits the amount of interest earned to the policyholder. There are
two general types of universal life contracts, type A and type B. In type-A policies the
death benefit is a set amount, while in type-B policies the death benefit is a set amount
plus whatever cash value has been built up in the policy.
Life insurance may also be classified, according to type of customer, as ordinary,
group, industrial, and credit. The ordinary insurance market includes customers of
whole life, term, and universal life contracts and is made up primarily of individual
purchasers of annual-premium insurance. The group insurance market consists mainly
of employers who arrange group contracts to cover their employees. The industrial
insurance market consists of individual contracts sold in small amounts with premiums
collected weekly or monthly at the policyholder's home. Credit life insurance is sold to
individuals, usually as part of an installment purchase contract; under these contracts,
if the insured dies before the installment payments are completed, the seller is
protected for the balance of the unpaid debt.
ICICI PRUDENTIAL
Project on Life Insurance
Insurance may be issued with a premium that remains the same throughout the
premium-paying period, or it may be issued with a premium that increases periodically
according to the age of the insured. Practically all ordinary life insurance policies are
issued on a level-premium basis, which makes it necessary to charge more than the
true cost of the insurance in the earlier years of the contract in order to make up for
much higher costs in the later years; the so-called overcharges in the earlier years are
not really overcharges but are a necessary part of the total insurance plan, reflecting
the fact that mortality rates increase with age. The insured is not overpaying for
protection, because of the claim on the cash values that accumulate in the early years;
the policyholder may borrow on this value or may recapture it completely by lapsing
the policy. The insured does not, however, have a claim on all the earnings that accrue
to the insurance company from investing the funds of its policyholders.
ICICI PRUDENTIAL
Project on Life Insurance
INSURANCE SECTOR IN INDIA
The insurance sector in India has come a full circle from being an open
competitive market to nationalisation and back to a liberalised market
again. Tracing the developments in the Indian insurance sector reveals the
360-degree turn witnessed over a period of almost two centuries.
A brief history of the Insurance sector
The business of life insurance in India in its existing form started in India
in the year 1818 with the establishment of the Oriental Life Insurance
Company in Calcutta.
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
regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government
to collect statistical information about both life and non-life insurance
businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
ICICI PRUDENTIAL
Project on Life Insurance
1956: 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalised. 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 General insurance business in India, on the other hand, can trace its
roots to the Triton Insurance Company Ltd., the first general insurance
company established in the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business in
India are:
1907: The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.
1957: General Insurance Council, a wing of the Insurance Association of India,
frames a code of conduct for ensuring fair conduct and sound business
practices.
1968: The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised
the general insurance business in India with effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies viz. the
National Insurance Company Ltd., the New India Assurance
ICICI PRUDENTIAL
Project on Life Insurance
Company Ltd., the Oriental Insurance Company Ltd. and the
United India Insurance Company Ltd. GIC incorporated as a
company.
Insurance sector reforms:
In 1993, Malhotra Committee headed by former Finance Secretary and
RBI Governor R.N. Malhotra was formed to evaluate the Indian insurance
industry and recommend its future direction.
The Malhotra committee was set up with the objective of complementing
the reforms initiated in the financial sector. The reforms were aimed at
"creating a more efficient and competitive financial system suitable for
the requirements of the economy keeping in mind the structural changes
currently underway and recognizing that insurance is an important part of
the overall financial system where it was necessary to address the need for
similar reforms…"
In 1994, the committee submitted the report and some of the key
recommendations included:
ICICI PRUDENTIAL
Project on Life Insurance
1) Structure
Government stake in the insurance Companies to be brought down to 50%
Government should take over the holdings of GIC and its subsidiaries so
that these subsidiaries can act as independent corporations
All the insurance companies should be given greater freedom to operate
2) Competition
Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the industry
No Company should deal in both Life and General Insurance through a
single entity
Foreign companies may be allowed to enter the industry in collaboration
with the domestic companies
Postal Life Insurance should be allowed to operate in the rural market
Only One State Level Life Insurance Company should be allowed to
operate in each state
ICICI PRUDENTIAL
Project on Life Insurance
3) Regulatory Body
The Insurance Act should be changed
An Insurance Regulatory body should be set up
Controller of Insurance (Currently a part from the Finance Ministry)
should be made independent
4) Investments
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%
GIC and its subsidiaries are not to hold more than 5% in any company
(There current holdings to be brought down to this level over a period of
time)
5) Customer Service
LIC should pay interest on delays in payments beyond 30 days
Insurance companies must be encouraged to set up unit linked pension
plans
Computerisation of operations and updating of technology to be carried
out in the insurance industry The committee emphasized that in order to
improve the customer services and increase the coverage of the insurance
industry should be opened up to competition.
ICICI PRUDENTIAL
Project on Life Insurance
LIFE INSURANCE SECTOR IN INDIA
Many may not be aware that the life insurance industry of India is as old
as it is in any other part of the world. The first Indian life insurance
company was the Oriental Life Insurance Company, which was started in
India in 1818 at Kolkata1. A number of players (over 250 in life and
about 100 in non-life) mainly with regional focus flourished all across the
country. However, the Government of India, concerned by the unethical
standards adopted by some players against the consumers, nationalised
the industry in two phases in 1956 (life) and in 1972 (non-life). The
insurance business of the country was then brought under two public
sector companies, Life Insurance Corporation of India (LIC) and General
Insurance Corporation of India (GIC).
In line with the economic reforms that were ushered in India in early
nineties, the Government set up a Committee on Reforms (popularly
called the Malhotra Committee) in April 1993 to suggest reforms in the
insurance sector. The Committee recommended throwing open the sector
to private players to usher in competition and bring more choice to the
consumer. The objective was to improve the penetration of insurance as a
percentage of GDP, which remains low in India even compared to some
developing countries in Asia.
ICICI PRUDENTIAL
Project on Life Insurance
Reforms were initiated with the passage of Insurance Regulatory and
Development Authority (IRDA) Bill in 1999. IRDA was set up as an
independent regulatory authority, which has put in place regulations in
line with global norms. So far in the private sector, 12 life insurance
companies and 9 general insurance companies have been registered.
INSURANCE MARKET IN INDIA
By any yardstick, India, with about 200 million middle class households,
presents a huge untapped potential for players in the insurance industry.
Saturation of markets in many developed economies has made the Indian
market even more attractive for global insurance majors. Table 1 reflects
the low percentage and per capita penetration of insurance in India
compared to other developed and developing countries2.
ICICI PRUDENTIAL
Project on Life Insurance
With the per capita income in India expected to grow at over 6% for the
next 10 years and with improvement in awareness levels, the demand for
insurance is expected to grow at an attractive rate in India. An
independent consulting company, The Monitor Group has estimated that
the life insurance market will grow from Rs.218 billion in 1998 to
Rs.1003 billion by 2008 (a compounded annual growth of 16.5%)3.
WINDS OF CHANGE
Reforms have marked the entry of many of the global insurance majors
into the Indian market in the form of joint ventures with Indian
companies. Some of the key names are AIG, New York Life, Allianz,
Prudential, Standard Life, Sun Life Canada and Old Mutual. The entry of
new players has rejuvenated the erstwhile monopoly player LIC, which
has responded to the competition in an admirable fashion by launching
new products and improving service standards.
The following are the key winds of change brought about by privatisation.
ICICI PRUDENTIAL
Project on Life Insurance
Market Expansion: There has been an overall expansion in the market.
This has been possible due to improved awareness levels thanks to the
large number of advertising campaigns launched by all the players. The
scope for expansion is still unlimited as virtually all the players are
concentrating on large cities and towns - except by LIC to an extent there
was no significant attempt to tap the rural markets.
New Product Offerings: There has been a plethora of new and
innovative products offered by the new players, mainly from the stable of
their international partners. Customers have tremendous choice from a
large variety of products from pure term (risk) insurance to unit-linked
investment products. Customers are offered unbundled products with a
variety of benefits as riders from which they can choose. More customers
are buying products and services based on their true needs and not just
traditional money-back policies, which is not considered very appropriate
for long-term protection and savings. However, there are still some key
new products yet to be introduced - e.g. health products.
ICICI PRUDENTIAL
Project on Life Insurance
Customer Service: Not unexpectedly, this was one area that witnessed
the most significant change with the entry of new players. There is an
attempt to bring in international best practices in service and operational
efficiency through use of latest technologies. Advice and need based
selling is emerging through much better trained sales force and advisors.
There is improvement in response and turnaround times in specific areas
such as delivery of first policy receipt, policy document, premium notice,
final maturity payment, settlement of claims etc. However, there is a long
way to go and various customer surveys indicate that the standards are
still below customer expectation levels.
Channels of Distribution: Till two years back, the only mode of
distribution of life insurance products was through Agents. While agents
continue to be the predominant distribution channel, today a number of
innovative alternative channels are being offered to consumers. Some of
them are bancassurance, brokers, the internet and direct marketing.
Though it is too early to predict, the wide spread of bank branch network
in India could lead to bancassurance emerging as a significant distribution
ICICI PRUDENTIAL
Project on Life Insurance
Table 2 below gives a snapshot of the performance for 2003-04 (up to
October) of the 13 life insurance payers in India based on the first year
premium figure 4.
Insurance is in a manner of speaking the last frontier in the financial sector to
open. It is also a sector which will lead to benefits across the full spectrum, from
the individual who will now have wider choices, to the economy which will see
increased savings, to the infrastructure sector which can look forward to long
term funding being available. In an under-insured economy, newer channels of
distribution will have to be utilized to intensify the reach of insurance both in
urban and rural markets. This will create huge employment opportunities not
only within insurance companies but also as agents and consultants of insurance
companies.
ICICI PRUDENTIAL
Project on Life Insurance
SUMMARY
Overall, the life insurance and pension sector is set for rapid changes and
growth in the years ahead. Delivering service, building trust and being
innovative are key areas in which any company will have to excel in order
to do well in the long road ahead. Different companies will take different
approaches and it would be myriad of solutions that will be found to
delight the Indian customer.
For instance, investors in Prudential-ICICI Liquid Plan can
withdraw any amount over and above Rs 15,000, provided they have
an account with ICICI Bank.
Technology can play a crucial role in delivering the highest standards
set by the company and it will be imperative for any serious player to
excel in all these.
ICICI PRUDENTIAL
Project on Life Insurance
PROBLEMS AND OBJECTIVES
THE PROBLEM
There are too many companies/players in the market who are
offering a number of policies to the customers. As a result individual is
confused about the brand and the policy he/she should take and from
which insurer for fulfillment of his/her life needs.
Objectives of the Project
Primary objectives-
Study will be conducted on Brand Image of ICICI Prudential
Life Insurance.
An attempt will also be made to study the viewpoint of policyholders and
further to suggest the modalities to improve the efficiency of ICICI
PRUDENTIAL.
Secondary objectives-
To find out the advantages of the policies offered by ICICI PRUDENTIAL
over various companies.
An attempt will also be made to study the differentiating strategies adopted by
ICICI PRUDENTIAL to win the customers.
ICICI PRUDENTIAL
Project on Life Insurance
Research Methodology
Data is collected from both primary & secondary sources. As a primary source
a survey of policyholders & company officials has been conducted.
Articles, , newspapers, magazines, referral books and Internet services have
been used as secondary source of data.
Different tools like ratio analysis, correlation and regression have
been used to analyse the collected data.
ICICI PRUDENTIAL LIFE INSURANCE COMPANY
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse and prudential plc, a leading international financial
services group headquartered in the United Kingdom. ICICI Prudential was amongst
the first private sector insurance companies to begin operations in December 2006
after receiving approval from Insurance Regulatory Development Authority (IRDA).
ICICI Prudential's equity base stands at Rs. 6.75 billion with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. In the year ended March 31,
2008, the company had issued over 430,000 policies, for a total sum assured of over
Rs 8,000 crore and premium income in excess of Rs. 980 crore. The company has a
network of about 30,000 advisors; as well as 12 bancassurance tie-ups. Today the
company is the #1 private life insurer in the country.
ICICI PRUDENTIAL
Project on Life Insurance
Particulars for the period ended March 31, 2008
2008 2007
Premium Income 4176.00 1163.00
Other Income 120.60 220.71
Total Income 4424.00 1193.71
Expenditure 8.63 11.07
Net Profit/(Loss) (1471.82) (1050.98)
Share Capital 4250.00 1900.00
ICICI PRUDENTIAL
Project on Life Insurance
Partners
ICICI and Prudential came together in 1993 to form Prudential ICICI Asset
Management Company, which has today emerged as one of the leading mutual funds
in India. The two companies bring together two of the strongest financial service
brands in Asia, known for their professionalism, excellent quality of service and long
term commitment to YOU. Riding on the success of this relationship, the two
companies joined hands once more in 2000, to form ICICI Prudential Life Insurance,
with a commitment to provide leading-edge life insurance solutions.
ICICI Bank has 74% stake in the company, and Prudential plc has 26%.
ICICI Bank
ICICI Bank (NYSE:IBN) is India''s second largest bank with an asset base of Rs.
106812 crore. ICICI Bank provides a broad spectrum of financial services to
individuals and companies. This includes mortgages, car and personal loans, credit
and debit cards, corporate and agricultural finance. The Bank services a growing
customer base of more than 7 million customer accounts and 5 million bondholders
accounts through a multi-channel access network. This includes about 450 branches
and extension counters, 1675 ATMs, call centres and Internet banking
(www.icicibank.com). ICICI Bank posted a net profit of Rs.1,206 crore for the year
ended March 31, 2003. ICICI Bank is the only Indian company to be rated above the
country rating by the international rating agency Moody''s and the only Indian
company to be awarded an investment grade international credit rating. The Bank
enjoys the highest AAA (or equivalent) rating from all leading Indian rating agencies.
ICICI PRUDENTIAL
Project on Life Insurance
PRUDENTIAL PLC
Established in 1848, Prudential plc is a leading international financial services
company in the UK, with around US$250 billion funds under management, and more
than 16 million customers worldwide. Prudential has brought to market an integrated
range of financial services products that now includes life assurance, pensions, mutual
funds, banking, investment management and general insurance. In Asia, Prudential is
UK''s largest life insurance company with a vast network of 22 life and mutual fund
operations in twelve countries - China, Hong Kong, India, Indonesia, Japan, Korea,
Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam. Since 1923,
Prudential has championed customer-centric products and services, supported by over
60,000 staff and agents across the region.
Life Insurance Corporation Of India
Their aim is to spread Life Insurance widely and in particular to the rural areas and to
the socially and economically backward classes with a view to reaching all insurable
persons in the country and providing them adequate financial cover against death at a
reasonable cost.
Maximize mobilization of people's savings by making insurance-linked savings
adequately attractive.
Bear in mind, in the investment of funds, the primary obligation to its policyholders,
whose money it holds in trust, without losing sight of the interest of the community as
a whole; the funds to be deployed to the best advantage of the investors as well as the
ICICI PRUDENTIAL
Project on Life Insurance
community as a whole, keeping in view national priorities and obligations of attractive
return.
Conduct business with utmost economy and with the full realization that the moneys
belong to the policyholders.
Act as trustees of the insured public in their individual and collective capacities.
Meet the various life insurance needs of the community that would arise in the
changing social and economic environment.
Involve all people working in the Corporation to the best of their capability in
furthering the interests of the insured public by providing efficient service with
courtesy.
Promote amongst all agents and employees of the Corporation a sense of participation,
pride and job satisfaction through discharge of their duties with dedication towards
achievement of Corporate Objective
VISION
"A trans-nationally competitive financial conglomerate of significance to societies and
Pride of India"
MISSION
"Explore and enhance the quality of life of people through financial security by
providing products and services of aspired attributes with competitive returns, and by
rendering resources for economic development."
ICICI PRUDENTIAL
Project on Life Insurance
INDIVIDUAL ASSURANCES
The Corporation sold 2.39 crore policies for a Sum Assured of Rs.1,76,088 crore with
a First Premium Income of Rs.6,351.89 crore. Despite a slow-down due to the Iraq
war, reduced sale of single premium and short term premium paying policies as a
result of adverse market sentiments and withdrawal of some high yield guaranteed
return plans like “Jeevan Shree”, “Bima Nivesh” and “Jeevan Suraksha”, the
Corporation was still able to increase its total sales by 9.54% during the year. During
the year five new unique plans viz. “Anmol Jeevan”, “Komal Jeevan”, “Jeevan
Samriddhi”, “Jeevan Rekha” and “Jeevan Bharati” were introduced to bring vitality
and innovativeness to its product range. Value addition was also made in some of the
existing plans.
PENSION AND GROUP SCHEMES BUSINESS
Despite competition from new insurance companies, the Corporation did
excellent business in the area of Pension and Group Schemes. The new business
premium of Rs.1,645.75 crore has been brought in registering a steep growth of
65.49% over the last year, thanks to the Corporate customers, providing insurance
benefits to their employees through Group Insurance Schemes. The number of new
lives covered was 18.48 lakh, showing a growth of 26.45%. The growth on both these
counts has been the highest in the decade. Under the Social Security Schemes –
“Janashree Bima Yojana” and “Krishi Shramik Samajik Suraksha Yojana”, 7.46 lakh
lives have been covered under 6,071 schemes with a premium income of Rs.837.68
lakh, during the year 2002-03.
ICICI PRUDENTIAL
Project on Life Insurance
GROWTH IN AGENCY ORGANISATION
The growth in the number of Agents from 7.92 lakh to over 9.60
lakh as at the end of the current year coupled with appointment of over
110 Corporate Agencies has contributed to the growth in the number of
policies.
BEST EVER CLAIM PERFORMANCE
The settlement of claims is the best yardstick to judge the
performance of any insurance company. LIC has shown best results in
this area by settling 94.55 lakh claims in 2002-2003. The claims
performance has been improving year after year. In the year 2001-02, the
outstanding claims ratio was 0.66% in terms of number of claims, the
same has touched the lowest ebb at 0.23% during 2002-03 and this
matches with the performance of any such insurance company in the
world.
ICICI PRUDENTIAL
Project on Life Insurance
LIC’S USE OF INFORMATION TECHNOLOGY: A SOURCE OF
COMPETITIVE ADVANTAGE
LIC has been one of the pioneering organizations in India who introduced
the leverage of Information Technology in servicing and in their business.
Data pertaining to almost 10 crore policies is being held on computers in
LIC
1964 saw the introduction of computers in LIC. Unit Record Machines
introduced in late 1950’s were phased out in 1980’s and replaced by
Microprocessors based computers in Branch and Divisional Offices for
Back Office Computerization. Standardization of Hardware and Software
commenced in 1990’s. Standard Computer Packages were developed and
implemented for Ordinary and Salary Savings Scheme (SSS) Policies.
FRONT END OPERATIONS
With a view to enhancing customer responsiveness and services , in July
1995, LIC started a drive of On Line Service to Policyholders and Agents
through Computer. This on line service enabled policyholders to receive
immediate policy status report , prompt acceptance of their premium and
get Revival Quotation, Loan Quotation on demand. Incorporating change
of address can be done on line. Quicker completion of proposals and
ICICI PRUDENTIAL
Project on Life Insurance
dispatch of policy documents have become a reality. All 100 divisional
offices have achieved the distinction of 100% branch computerisation.
New payment related Modules pertaining to both ordinary & SSS policies
have been added to the Front End Package catering to Loan, Claims and
Development Officers’ Appraisal. All these modules help to reduce time-
lag and ensure accuracy.
METRO AREA NETWORK
A Metropolitan Area Network, connecting 74 branches in Mumbai was
commissioned in November, 1997, enabling policyholders in Mumbai to
pay their Premium or get their Status Report, Surrender Value Quotation,
Loan Quotation etc. from ANY Branch in the city. The System has been
working successfully. More than 10,000 transactions are carried out over
this Network on any given working day. Such Networks have been
implemented in other cities also.
WIDE AREA NETWORK
All 7 Zonal Offices and all the MAN centres are connected through a
Wide Area Network (WAN). This will enable a customer to view his
policy data and pay premium from any branch of any MAN city. As at
ICICI PRUDENTIAL
Project on Life Insurance
May 2002, LIC has 91 centers in India with more than 1320 branches
networked under WAN.
INTERACTIVE VOICE RESPONSE SYSTEMS (IVRS)
IVRS has already been made functional in 59 centers all over the country.
This would enable customers to ring up LIC and receive information (e.g.
next premium due, Status, Loan Amount, Maturity payment due,
Accumulated Bonus etc.) about their policies on the telephone. This
information could also be faxed on demand to the customer.
LIC ON THE INTERNET
LICs Internet site is an information. It displays information about LIC &
its subsidiaries-LIC (International) E.C. ,LIC(Nepal)Ltd, LIC Mutual
Fund, LIC Housing Finance and their products. Efforts are on to upgrade
the web site to make it dynamic and interactive.The addresses/e-mail Ids
of Zonal Offices, Zonal Training Centers, Management Development
Center, Overseas Branches, Divisional Offices and also all Branch Offices
with a view to speed up the communication process.
ICICI PRUDENTIAL
Project on Life Insurance
PAYMENT OF PREMIUM AND POLICY STATUS ON
INTERNET
LIC has given its policyholders a unique facility to pay premiums through
Internet absolutely free and also view their policy details on Internet
premium payments.There are 11 service providers with whom L I C has
signed the agreement to provide this service.
INFORMATION KIOSKS
LIC has set up 150 Interactive Touch screen based Multimedia KIOSKS
in prime locations in metros and some major cities for dissemination
information to general public on our products and services. These
KIOSKS are enable to provide policy details and accept premium
payments.
INFO CENTRES
LIC has also set up 8 call centres, manned by skilled employees to
provide you with information about our Products, Policy Services,
Branch addresses and other organizational information.
ICICI PRUDENTIAL
Project on Life Insurance
Vision
Vision is a short, succinct statement of what the organization intends to
become and to achieve at some point in the future, often stated in
competitive terms. Vision refers to the category of intentions that are
broad, all-intrusive and forward-thinking. It is the image that a business
must have of its goals before it sets out to reach them. It describes
aspirations for the future, without specifying the means that will be used
to achieve those desired ends.
Warren Bennis, a noted writer on leadership, says: "To choose a direction,
an executive must have developed a mental image of the possible and
desirable future state of the organization. This image, which we call a
vision, may be as vague as a dream or as precise as a goal or a mission
statement."
ICICI PRUDENTIAL
Project on Life Insurance
Mission Statement
A mission statement is an organization's vision translated into written
form. It makes concrete the leader's view of the direction and purpose of
the organization. For many corporate leaders it is a vital element in any
attempt to motivate employees and to give them a sense of priorities.
A mission statement should be a short and concise statement of goals and
priorities. In turn, goals are specific objectives that relate to specific time
periods and are stated in terms of facts. The primary goal of any business
is to increase stakeholder value.
ICICI PRUDENTIAL
Project on Life Insurance
MISSION
“To make ICICI Prudential the dominant Life and Pensions player
built on trust by world-class people and service.”
This, the company hopes to achieve by:
Understanding the needs of customers and offering them superior products
and service.
Leveraging technology to service customers quickly, efficiently and
conveniently .
Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to the policyholders .
Providing an enabling environment to foster growth and learning for our
employees .
And above all, building transparency in all dealings.
The success of the company will be founded in its unflinching commitment to 5 core
values –
Integrity
Customer First
Boundaryless
Ownership
Passion
ICICI PRUDENTIAL
Project on Life Insurance
Strategic Intent
A strategic intent is a company's vision of what it wants to achieve in the
long term. It must convey a significant stretch for your company, a sense
of direction, discovery and opportunity that can conveyed as worthwhile
to all employees. It should not focus so much on today's problems,
which are normally dealt with by company visions and missions, but
rather on tomorrow's opportunities.
"To achieve great things, you need ambitious visions. And it does not
matter that vision cannot be laid out in details. It is the direction that
counts."
ICICI PRUDENTIAL
Project on Life Insurance
Strategic Intent versus Traditional Missions and Visions
Traditional company visions and missions, developed in one-day
strategy session, often lack discovery, opportunity and purpose, the
critical elements of strategic intent
Strategic intent cannot be planned all in advance. It must evolve on
the basis of experience during its implementation. Separating
strategy creation from strategy implementation by using corporate
planners or consultants for the former activity is thus a hindrance
to the evolution of a successful strategy. Linking creation and
implementation supports the overall process, and thus a strategy
emerges and evolves.
Discovery and detection of opportunity serve as platforms for
developing strategic intent. It is based on a vision of how the future
will look in 10-15 years. A strategic intent creates a picture of the
customer daily life and describes discontinuities and anticipated
changes from the world of today. It describes future customer's
needs and the success factors required for meeting these needs.
ICICI PRUDENTIAL
Project on Life Insurance
DIFFERENTIATION STRATEGIES OF ICICI PRUDENTIAL
LIFE INSURANCE COMPANY.
If one analyses the history of growth of the insurance industry since
reforms, it is marked by all-round growth of all players. More or less all
players (including the market leader LIC) have aggressively recruited and
trained advisors, appointed agents, launched new products, improved
customer service standards and revamped/expanded their distribution
networks. If at all there was any major difference between players it was
only in time lag in launching of services. Every player would like the
customers to believe that its service standards are the best or that its
agents are the most informed and ethical, but is debatable whether there
are any significant differences. In other words, each company is trying to
be ‘everything to everybody’.
The argument is that the strategy of being everything to everybody is
risky. Some players justify the above strategy on the basis that the Indian
market is huge and it can accommodate everybody. Still, in a market
where it is difficult to distinguish oneself sufficiently on service or any
other parameter to be able to charge a premium, it will lead to unmitigated
price competition to the detriment of all players.
ICICI PRUDENTIAL
Project on Life Insurance
Strategy of ICICI Prudential
The essence of strategy is choosing to perform activities differently than rivals do. It
means deliberately choosing a different set of activities to deliver a unique mix of
values. Corporate strategy is the overall managerial game plan for a diversified
company’s business. It consists of moves made to establish business positions in
different industries & approaches used to manage company’s group of business.
At ICICI Pru the positioning is done based on Need-based positioning.
It’s policies are targeted towards 4 types of life stages,
1. Young professionals
2. Newly married
3. Married with kids
4. Nearing retirement
Clearly the company has a First-order fit among its activities, because they are
aligned with its overall strategy. There is a hint of Second-order fit as well, because
some activities are reinforcing one another.
Communication strategy
To give the consumer a rational and tangible reason to buy - first of all insurance and
secondly from ICICI Prudential Life, was achieved through product-specific
advertising, such as for ICICI Pru Smart Kid, retirement solutions or Lifetime.
ICICI PRUDENTIAL
Project on Life Insurance
Distribution strategy
It uses a multi-channel distribution strategy - leveraging bancassurance, corporate
agents and direct marketing - in addition to advisors and financial service consultants.
All channels sell all the products. Some of their bancassurance partners are ICICI
Bank, Citibank, Federal Bank, South Indian Bank, Allahabad Bank, Bank of India and
Punjab & Maharashtra Cooperative Bank.
Investment strategy
ICICI Prudential Life invests policyholder’s funds in order to earn sustainable,
consistent returns over the long term. Policyholders investing its market-linked
products can select from three fund options - each with a varying degree of risk and
return. The policies are structured to be as transparent as possible and policyholders
can check the NAV of the policy on a biweekly basis in leading newspapers.
Bonus strategy
For their endowment products - CashBak, Save ’n’ Protect and SmartKid - there are
guaranteed additions for four years, after which bonuses are declared on a yearly basis.
Market-linked products such as LifeTime, LifeLink, LifeTime Pension and LifeLink
Pension are valued on a NAV [net asset value] basis.
There are two products with guaranteed returns - ReAssure and AssureInvest. It
believes that there is a place for assured return products in its product portfolio. It
follows a proactive strategy of reviewing these on a regular basis in order to provide
sustainable, consistent returns in the long term
ICICI PRUDENTIAL
Project on Life Insurance
Its promoters have infused Rs 100 crore into the company taking its capital base to
Rs625 crore — the highest in the industry. The capital infusion is a clear indication
that the promoters are willing and able to commit the necessary resources upfront to
ensure the success of the venture.
Its focus was to expand reach, and in line with this, the company has nearly doubled
the number of locations in which it operates, from 24 as of March 31, ‘03 to 46 today.
ICICI Prudential Life Insurance (ICICI PruLife) has gone live with PeopleSoft Human
Capital Management (HCM) Solution, a leader in enterprise management solutions.
The solution has enabled the company to achieve real time, collaborative and efficient
management of its human capital. More than two thousand employees of ICICI
Prudential will be empowered by this online, easily accessible, personalized tool that
works in real-time, enhances convenience as well as drives cost efficiency.
ICICI PRUDENTIAL
Project on Life Insurance
SWOT ANALYSIS OF ICICI PRUDENTIAL
LIFE INSURANCE COMPANY
STRENGTHS
Efficiently trained sales force and advisors.
There is improvement in response and turnaround times in specific areas such
as delivery of first policy receipt, policy document, premium notice, final
maturity payment, settlement of claims etc.
Competitive activity, evolution of the distribution channels.
WEAKNESSES
More or less all players (including the market leader LIC) have
aggressively recruited and trained advisors, appointed agents,
launched new products, improved customer service standards
and revamped/expanded their distribution networks. If at all
there was any major difference between players it was only in
time lag in launching of services.
Consumer awareness, though increasing, is still low and the
different types of policies available and the specific benefits of
each often confuse them; thus it's the job of insurance
companies to educate them about these.
ICICI PRUDENTIAL
Project on Life Insurance
Opportunities
There are 17 insurance companies in the market today. More companies
like Reliance and Sahara will soon enter the fray. According to a UN
survey, only 4 to 6 per cent of India's population is insured. Of this, 22 per
cent are under-insured. So the market presents opportunities for the
enterprising.
Only 22 per cent of the insurable population possesses life insurance.
What’s more, in a country of over one billion people, life insurance
premia forms only 1.8 per cent of the GDP, indicating the extent of
underinsurance
ICICI Prudential Life Insurance Company has entered into
a strategic tie-up with the Federal Bank for the distribution
of life insurance products. ICICI PruLife financial service
consultants (FSC's) could now approach Federal Bank
customers, based on referrals from the Bank. This alliance
expands ICICI Prulife's reach to around 2 lakh customers
across 30 bank branches in Kerala and 30 in other cities
including a large number of NRI customers.
ICICI PRUDENTIAL
Project on Life Insurance
ICICI Prudential Life Insurance Company has recruited talent at a lateral level from
various industries, such as FMCG, banking, telecom, etc, for its middle and senior
management teams. Says Shubhro Mitra, Chief, Human Resources, ICICI Prudential
Life, "The candidates must have the requisite qualifications in their functions and
relevant experience, however not necessarily in the field of insurance. In fact, only
two people amongst the senior management team has any experience in insurance —
the head of sales and the chief actuary. Most importantly, the individuals must have a
winning attitude, energy, willingness to learn and be able to bring fresh ideas and
perspectives to the business."
ICICI Prudential Life Insurance has flagged off operations in Chennai, the
fourth office of the company. It has accepted five proposals sponsored by
Madras Cements Ltd and Lucas TVS favouring underprivileged children.
'Salaam zindagi', a social sector policy will cover larger groups amongst
the economically weaker sections of society.
The company targets to cross the one lakh policy mark by the end of the
next fiscal and has already sold 1,500 policies till date. It hopes to break
even in four to six years and for now has no plans to introduce any new
products. The policies currently on offer are ICICI Pru Single Premium
Bond, ICICI Pru Save'n Protect, ICICI Pru Forever Life, ICICI Pru
CashBak and ICICI Pru LifeGuard
ICICI PRUDENTIAL
Project on Life Insurance
ICICI Prulife has very quickly gone on to become India’s largest private
life insurance company. Again the success lay in aggressive marketing,
smart advertising, omnipresence and quick expansion. ICICI also has a
strong presence in the general insurance sector with ICICI Lombard
General Insurance Company Limited
A large part of the success of the new entrants ran be attributed to the government-
appointed Insurance Regulatory and Development Agency (IRDA), which developed
the regulatory framework. The regulations governingthe life and non-life insurers are
pragmatic and forward-looking, ensuring the customer is protected and creating an
environment for thriving private sector participation and a level playing field.
Bancassurance and corporate agents are the two emerging channels that give
companies an opportunity to reach out to a much larger number of individuals who
might be interested in insurance. Moreover, people inherently trust their local bank
with which they have transacted for many years, so an insurance product through that
channel is also regarded with less suspicion. These channels have only just emerged,
but are already making their mark. With time and the appropriate regulations, the
contribution of such channels is bound to drive penet.'at;on.of the category.
ICICI PRUDENTIAL
Project on Life Insurance
THREATS
ICICI Prudential Life Insurance Company Pvt. Ltd. (ICICI PruLife) is a
joint venture company in the life insurance segment in India. It is the
leading private life insurance company India. Expanding at a rapid pace
ICICI PruLife is opening branches across multiple cities and towns in
India.
With multiple branches across the country a need was identified by the
head office to service their internal employees in the same way as they
would service an external customer. The user base was growing with
people being added every day.
ICICI PRUDENTIAL
Project on Life Insurance
The Problem:
ICICI PruLife wanted to service its employees across different functions in the
same way as they would service an external customer while t.
Data flow throughout the organization was via emails – thus all data was stored
in silos – an individual’s mailbox. There was no visibility or count of the issues
being faced in the organization.
Data was hence not centrally available to gather information and convert the
same into knowledge base.
Employees often spent considerable time in finding out from whom to seek
information. This in turn had an overall enterprise efficiency impact.
With multiple branches all across the country, the need existed to be able to
centrally provide a pool of experts as it was not possible to have experts for
every function at every branch level.
This in turn would mean that a user would have to know the expert, location of
the expert and his availability and correspond with him over email or long
distance phone calls. This was not feasible, as it was not possible to educate all
the users of the different experts and with possible transfer of experts the
problem was greater than it seemed.
ICICI PRUDENTIAL
Project on Life Insurance
The Challenge:
Need of a solution that would be...
o Easy to Use – without any training, as it was not possible to train an
employee force of 1500+ spread across 40+ locations.
o Centralized administration of the system.
o Updating of user information on a daily basis – because of addition of
employees almost on a daily basis
Ensuring the solution becomes the only conduit for employee service.
Drive usage through out the enterprise.
Low on band width consumption as it had to be on the WAN
Consumer awareness, though increasing, is still low and the different types of policies
available and the specific benefits of each often confuse them. And it's the job of
insurance companies to educate them about these.
Objective
Some insurers, such as ICICI PruLife, have fulfilled their mission to be a scale
player in the mass market by intro-ducing a range of 13 products to meet the
needs of each customer. Others have taken a more focused approach, introducing
select products that they believe hold potential and fill market gaps.
ICICI PRUDENTIAL
Project on Life Insurance
STRATEGIC ALTERNATIVES
If one analyses the history of growth of the insurance industry since
reforms, it is marked by all-round growth of all players. More or less all
players (including the market leader LIC) have aggressively recruited and
trained advisors, appointed agents, launched new products, improved
customer service standards and revamped/expanded their distribution
networks. If at all there was any major difference between players it was
only in time lag in launching of services. Every player would like the
customers to believe that its service standards are the best or that its
agents are the most informed and ethical, but is debatable whether there
are any significant differences. In other words, each company is trying to
be ‘everything to everybody’.
Our argument is that the strategy of being everything to everybody is
risky. Some players justify the above strategy on the basis that the Indian
market is huge and it can accommodate everybody. Still, in a market
where it is difficult to distinguish oneself sufficiently on service or any
other parameter to be able to charge a premium, it will lead to unmitigated
price competition to the detriment of all players. One may achieve sales
ICICI PRUDENTIAL
Project on Life Insurance
turnover, but margins and profitability will suffer severely. In the
insurance industry where large amounts of capital are required, this is
risky.
While there is room for a few scale players with a finger in every pie, it is
profitable for other players to focus on different segments to survive and
thrive in a multi-firm open environment. While each company has to
choose its own unique positioning based on its unique strengths, the
below-mentioned generic positioning alternatives5 appear worth
considering. Needless to say the positioning choices discussed here are
not mutually exclusive and can be overlapping.
CHOOSING THE RIGHT STRATEGY
The right strategic choice is not a matter of positioning choice alone. It
involves the very way a company organises itself to do business. It is the
configuration of the entire value chain of the company through a
different set of activities to deliver unique value to consumers. The set of
activities cover all upstream and downstream activities, from the selection
of the product mix, the way the products are priced, promoted, the type of
distribution mechanism used, the way customers are serviced and so on.
ICICI PRUDENTIAL
Project on Life Insurance
Some life insurance companies focusing on rural markets have adopted
innovative means of distribution. Instead of appointing agents as is done
typically, they have used gramsevaks in different villages across the
country to promote life insurance and act as their sales arm.
ICICI PRUDENTIAL
Project on Life Insurance
MARKETING STRATEGY OF
ICICI PRUDENTIAL LIFE INSURANCE COMPANY
ICICI Prudential is a case study in the role of marketing in reshaping an
industry. It highlights how an industry where “sell” and “push” were oft
used words and consumer was nothing more than a file no., has changed
to one where “consumer preference” and “consumer pull” rules the
roost. Here’s a look at how ICICI Pru changed the rules of the game and
emerged a leader in the process.
Background:
When the insurance sector was liberalized in 2000, the private players had
to contend with a few issues. Ratio of premium to GDP was low: 1.3% of
GDP was invested in insurance. Insurance penetration was at an abysmal
22% of the insurable population. Besides the above the private players
were faced with: Attitudinal Barriers, Perception of insurance as a tax
saving tool and lack of a consumer centric approach in service and
product offerings.
ICICI PRUDENTIAL
Project on Life Insurance
Differentiation Strategy
A) Reposition the category in the consumer's mind. Influence the
consumer to view it as a protection instrument and not a tax saving
product alone.
B) In the process, create differentiation for the ICICI Pru brand as a
provider of social security and family protection.
C) Achieve leadership status in saliency, image & product parameters.
D) Build credibility and trust.
The Target Audience: Representing an ideal mix of medium to high net
worth individuals: The consumers most disposed towards buying life
insurance. Middle-aged professionals, primarily male, salaried and self
employed, age group: 28 - 45 years, household income: Rs.20, 000 and
above.
Creative Strategy:
The essence of the creative strategy: To get the consumer to re look at
Insurance as a means to lead a worry free life and not as a necessary evil.
To this effect the core brand insight highlighted was "As head of the
family it's my responsibility to take care of my loved ones and protect
them from the uncertainties of life", summed up in the advertising idea:
ICICI PRUDENTIAL
Project on Life Insurance
‘We cover you at every step in life (Suraksha… Zindagi ke har kadam
par, as interpreted in Hindi ).
ICICI Pru was positioned as an enabler of protection relevant to the needs
of the life stage that you are in. At the core of the communications
strategy was appropriating the generic category benefit (protection)
through its greatest metaphor – Sindoor.
The Creative execution:
TVC: Building image and creating a differential in the most creative and
compelling manner. The creative execution heightened the emotional
connect with the ICICI Pru brand - Indian; satisfaction of knowing that
one’s loved ones are protected. Symbolic representation of the protector
of the family through situations showcasing various life stages and
creating endearing imagery of protection and familial bonding.
Press: Gave the consumer a rational and tangible reason to buy insurance
first and secondly from ICICI Prudential. The product specific advertising
focused on changing the prevalent perception about insurance and
breaking a few myths: non- affordability, insurance not being good
investment option and the myth that insurance was good only for tax
saving.
ICICI PRUDENTIAL
Project on Life Insurance
Other Communications:
Other programs included direct mail, PR of communications campaign in
press & TV, website marketing; and database generation through
Bancassurance channels.
Media Strategy:
In a market likely to be cluttered, they used multiple touch points to reach
the consumer. The role for each medium was envisaged. The TV medium
was used to enhance the emotional link with the brand. Strategic use of 15
sec. edits facilitated high frequency levels. In print, cost per response
rather than cost per thousand as responses were measured in form of call-
ins. Radio FM, Cinema, Internet were used to create a media multiplier
effect. For e.g- Building an emotional connect with the audiences is their
constant endeavour and one of the biggest challenges. Its these same
audiences who closely follow and aspire to be like the characters that they
see in films and on TV everyday. In a unique move, Jassi, one of TV's
most popular personas, will be buying a life insurance policy from none
other than ICICI Pru! So check out Jassi Jaisi Koi Nahi, to see how this
biz-whiz protects her family!
ICICI PRUDENTIAL
Project on Life Insurance
Sum up:
In just over a year ICICI Pru has emerged as India’s no.: 1 Private Life
Insurance Company with almost 50% market share of the private players.
Has sold highest no. of policies both in volume and value. Major
Milestone - Over 100000 policies on Mar 31, 2002.
MARKET SEGMENTS
The life insurance and pension business has two distinct customers
segments - individuals and corporates. In case of the retail business for
individuals, the 4 sub-segments are - protection, investment, savings and
pension. Apart from the existing leader LIC, new companies such as
HDFC Standard Life, TATA AIG, ICICI Prudential and more will seek to
be present across all the segments of the market.
Among the retail products for individuals, pure risk protection products
have been introduced by some of the new life insurance companies in the
market. As these products have no savings component to it, the premiums
are very low compared to other products. Investment products provide
long term investment growth and insurance cover. This segment is
growing rapidly. Savings products like Endowments and Money-Backs
provide a combination of protection and investment benefits. The last
ICICI PRUDENTIAL
Project on Life Insurance
segment of pension includes products that are aimed at offering customers
an income during their retirement years.
In case of the group business, there are three sub-segments - protection,
statutory savings and pension. Group insurance products are taken to
provide low cost life insurance cover to a group of people. Group
insurance can be taken to provide low cost life insurance cover as part of
employee benefit packages to motivate employees or to cover the housing
or vehicle loan given by employer to employee. It can also be used as a
substitute for the statutory EDLI subject to approval by the Regional
Provident Fund Commissioner. The statutory savings segment essentially
comprises of the gratuity products for companies. The pension segment
will include products like group superannuation, which will enable a
company to benefit from the actuarial, investment and operational
expertise of a specialist company to manage its superannuation funds.
Source: CII Insurance Committee Report 1999
ICICI PRUDENTIAL
Project on Life Insurance
MARKETING MIX POLICIES
Different companies can choose to position themselves differently and
hence the marketing mix would be different. However, there are certain
common characteristics that one can cull out from the possible strategies
that companies can adopt.
Product: The development of flexible products to suit individual
requirements is what will differentiate the winners from the also-rans. The
key to success is in providing insurance solutions, not standardised
insurance products. The concept of riders/optional benefits has already
been a huge innovation brought about by the new players, which has led
to customisation of products for individual needs. However, companies
may differentiate themselves on the basis of product segments that they
choose to focus on and excel in.
Distribution: Different companies may however choose different
channels and different geographies to focus on. The channel options are -
tied agency force, corporate agents and brokers and this is an area where
different companies will make different choices. Many companies like
HDFC Standard Life are focussing on all channels whereas companies
like Max New York Life are focussing on the tied agency force only.
Customer interface will be a key challenge for life insurance companies
ICICI PRUDENTIAL
Project on Life Insurance
and includes every that interaction that the customer has with the
company, such as sales, new business underwriting, policy servicing,
premium payments, claim processing and so on. Technology can play a
crucial role in delivering the highest standards of service set by the
company and it will be imperative for any serious player to excel in all of
these.
Price: Price is a relevant differentiator only in two segments - pure term
insurance and in pure annuities. Here too, service delivery and financial
strength will need to be present at a minimum acceptable level for price to
be a relevant differentiator. In case of savings oriented products, long
term returns generated will be more relevant than just the price of the
product. A focus on generating good investment performance and keeping
a tight control on costs will help in generating good long-term maturity
value for customers. Norms have been laid down on all of these by IRDA
and adhering to these while delivering good returns will be a challenge.
ICICI PRUDENTIAL
Project on Life Insurance
Advertising and promotion: The level of demand is latent and will have
to be activated considerably. The market needs to be developed. Greater
awareness of insurance and the need to have it as a protection tool rather
than as a tax planning measure needs to be appreciated by the Indian
people. Various communication tools including advertising, direct
marketing and road shows will contribute to all this and different
companies will take different approaches on these.
ICICI PRUDENTIAL
Project on Life Insurance
ROLE OF INSURANCE IN INDIA’S FUTURE
Insurance would assist businesses to operate with less volatility and
risk of failure and provide for greater financial and societal stability
from the growth pangs of an estimated growth rate over 8 % in
GDP
Government has arranged for disaster management and for funds.
NGOs and public institutions assist with fund raising and relief
assistance. Besides government provides for social security
programs. There is considerable impact upon government in these
respects. Insurance substantially steps in to provide these services.
The effect would be to reduce the strain on the tax payer and assist
in efficient allocation of societal resources
Facilitates trade, business and commerce by flexible adaptation to
changing risk needs particularly of the burgeoning Services sector.
Like any other financial institution insurance companies generate
savings from the insurance sector within the economy and make
available the same in well directed areas of the economy deserving
investments ; a sector with potential for business as is the case with
Indian insurance provides incentive to develop it all the more faster
ICICI PRUDENTIAL
Project on Life Insurance
It enables risk to be managed more efficiently through risk pricing
and risk transfers and this is an area which provides unlimited
opportunities in the Indian context for consulting, broking and
education in the post-privatization phase with newer employment
opportunities
The insurance industry of its own accord is interested in loss
minimization. Its expertise in understanding losses assists it to
share the experience across the economy thus enabling better loss
control and preservation of national assets
In its risk pricing and investment decisions the insurance industry sets the
tone for investment by others in the economy. Informed assessment by the
insurance companies thus signals allocation of resources by others
contributing to efficiency in allocation. In India visibility of LIC and GIC
have been dwarfed by governments actions and other high profile
institutions like ICICI, IDBI and UTI. Of late AIG is visible in the media
and its investment announcements are being followed keenly by
institutional investors in India. ING Savings Trust and Zurich are active
in asset management and are being keenly followed by retail investors.
ICICI PRUDENTIAL
Project on Life Insurance
ANALYSIS
Policy Holders
A sample size of 50 people has undertaken. The analysis of the questions has been
done with the help of pie charts. It helps is presenting a clear picture of the responses
of the people. The analysis has been done differently for each question. It is as
follows:
1. Do you own a life insurance policy? Yes No
Analysis:
Only 62 % people own a life insurance policy and rest of the people
don’t own a policy. The reasons may be lack of awareness among
people or people don’t want to invest their money in insurance
policies.
ICICI PRUDENTIAL
Project on Life Insurance
2. Are you aware of various policies offered by ICICI Prudential and
LIC?
Yes No
Analysis:
96% people are aware of LIC whereas only 54% of people are aware
of ICICI Prudential. The reason behind is that LIC is the oldest
insurance player in the market since 1954 and had been enjoying
monopoly for the last 40 years. Where as ICICI Prudential has come
into the market only 3-4 years back.
ICICI PRUDENTIAL
Project on Life Insurance
3. What factors do you consider before purchasing a life insurance
policy?
Risk coverage Tax saving
Saving/Investment All of the above
Analysis:
13 out of 31 people want life insurance as a tax saving option rather than a risk
coverage instrument. Whereas 10 people consider life insurance policy as an
investment option and only 5 people want all the features in their policies. Only 3
people are considering risk factor as the major reason for taking a life insurance
policy, which is not an acceptable norm.
ICICI PRUDENTIAL
Project on Life Insurance
4.Do you think that services have improved after allowing private players in
insurance sector? Yes No
Analysis:
A large number of people are of the view that privatization is the appreciatable step of
Indian government which is directly contributing in the way of growth of insurance
sector in India.
ICICI PRUDENTIAL
Project on Life Insurance
ICICI Prudential & LIC
An interview with the officials of both the companies was conducted and the answers
of the following questions were asked.
1. What do you think are the major problems of Insurance sector in India?
LIC ICICI Prudential
Untapped rural sector
Marketing is Timid
Illiteracy of people
Lack of awareness
Huge untapped market
2. Can you mention some measures, which are required to remove the difficulties
faced by insurance sector in India?
LIC ICICI Prudential
E-Panchayats
Education among people
Improving marketing strategy
Marketing strategy should be
improved
Recruitment of educated and
talented sales force.
ICICI PRUDENTIAL
Project on Life Insurance
3. What are the market prospects for life insurance in India?
Poor Fair Satisfactory Good Excellent
LIC ICICI Prudential
Good Excellent
4. Do you think that financial position of people in India becomes a problem in
the way of taking insurance policy? Yes No
LIC ICICI Prudential
No, because we are offering a range of
policies with low premium which can be
affordable by poor people as well.
No, because we offer policies with
flexible and affordable premium as per
the requirement of people
5. Is health insurance popular in India? Yes No
LIC ICICI Prudential
No No
6. Why people are not very concerned regarding insurance in India?
ICICI PRUDENTIAL
Project on Life Insurance
LIC ICICI Prudential
Because people are unaware of the
benefits what an insurance policy can
provide.
People are more oriented towards
investment and tax saving rather than
risk coverage.
7. India has huge untapped market for insurance. What steps do you take to tap
this market?
LIC ICICI Prudential
Advertising for the awareness
among people
Recruitment of agents
Educating people
Wide spread of our distribution
network
Recruitment of insurance
advisors
More advertisements
8. Do you think that after privatization of Insurance industry in India growth is
better than earlier? Yes No
According to LIC this major step is helping the insurance sector to increase
their market
size.
ICICI PRUDENTIAL
Project on Life Insurance
9. What type of products and services provided by your organization that is better
than LIC/ICICI Prudential?
LIC ICICI Prudential
Premiums are lower
More awareness of our policies
as Compare to other players
Huge distribution network
Pension plans are better
Market returns are better as
compare to LIC and others
Online services, quick settlement
of claims, flexibility
ICICI PRUDENTIAL
Project on Life Insurance
ICICI PRUDENTIAL POLICYHOLDERS
A sample size of 50 people has undertaken. The analysis of the questions has
been done and following advantages of ICICI PRUDENTIAL products came into
picture under the following categories:
UNIT-LINKED PLANS
PENSION PLANS
CHILD PLANS
UNIT LINKED PLANS
ICICI PRUDENTIAL LIFETIME
VS
TATA AIG INVEST ASSURE, LIC BIMA PLUS,MAX NEW YORK
LIFE MAKER ,BIRLA SUNLIFE CLASSIC LIFE
ICICI PRUDENTIAL
Project on Life Insurance
LifeTime does not have any entry age restrictions based on the term chosen.
LifeTime gives you the option to choose your own term based on your
requirements. LifeTime also gives you the flexibility to choose your premium
paying term and still continue the policy as long as you wish to. LifeTime gives
you the flexibility to completely withdraw the units from the 3rd year onwards, in
case of any eventuality. In case of any unforseen eventuality, LifeTime gives you
the option to reduce the premium amount without any change in the policy
benefits. Plus, in case of an increase in the premium paying capacity of the
individual, Lifetime gives you the flexibility to increase the premiums.
Customisation of the funds is possible even in case of LifeTime, by using the
premium allocation benefit wherein the premium can be invested in each fund
based on your requirement. With increasing responsibilities, your need for
protection will also increase. LifeTime gives you the added flexibility to increase /
decrease your protection cover to suit your lifestage requirements. To reward the
customers for the persistency in premium payment, LifeTime offers bonus units at
regular intervals based on the premium amount paid. LifeTime does not have any
restriction on the number of top-ups in a particular year. Also the minimum top-up
allowed in LifeTime is much lower and so are the charges. LifeTime offers partial
withdrawals from the 1st year itself in case one needs to withdraw funds due to
any eventuality. LifeTime does not levy a charge on the premium holiday facility.
This is purely available as an additional benefit. LifeTime levies the charges based
on the premium invested and not on the term chosen or the age of the individual.
ICICI PRUDENTIAL
Project on Life Insurance
PENSION PLANS
ICICI PRUDENTIAL LIFETIME PENSION 2
VS
LIC JEEVAN NIDHI,BIRLA FLEXI SECURELIFE
RETIREMENT,HDFC LINKED PENSION,TATA AIG NIRVANA PLUS
LifeTime Pension II allows you to accmulate till you reach the ripe old age of
75 years giving you the option to maximise your retirement kitty even if you have
begun late. In addition to giving the option of choosing a Sum Assured, LifeTime
Pension also offers a Zero Life Cover option, thereby serving as a pure
accumulation vehicle for your retirement. Lifetime Pension II gives you the
flexibility to increase the savings for your retirement in case of an increase in
savings potential. On the contrary, it also allows you to decrease your contribution
levels in case of any emergencies. LTP II allows you to choose a fund or a
combination of funds as per your risk profile and investment priorities. It also
ICICI PRUDENTIAL
Project on Life Insurance
allows you to switch between funds at any time. This helps the client to maximise
his returns as per his risk appetite. Jeevan Nidhi does not give such choices.
Lifetime Pension II maximises the value for the client in case he wishes to use
some other vehicle for accumulation of his retirement kitty. In Lifetime Pension II
the client has the option to make an added payment in the same retirement kitty if
he has a windfall gain. To suit your ever-changing lifestage requirements and risk
appetite, LifeTime Pension II offers you a choice of 4 free switches in a policy
year. The customer knows at every point in time how much he is actually
accumulating, net of the charges in the case of Lifetime Pension II whereas he
does not know the same in case of other companies policies and has to wait for the
declaration of bonuses at the end of each year
ICICI PRUDENTIAL
Project on Life Insurance
CHILD PLANS
ICICI PRUDENTIAL SMART KID CHILD PLAN
VS
LIC JEEVAN ANURAG CHILD PLAN, HDFC CHILD PLAN,BIRLA
SUNLIFE CHILD PLAN
SmartKid gives you the flexibility to choose any one of the structures based on
your needs, whether you require the money at periodic milestones or in the last
few years of the policy. All the future premiums are not waived in case of Jeevan
Anurag. In this case even in the case of the parent's death, the premiums will have
to be paid to continue the policy…which is an extra burden on the family. Option
to avail of an Income Benefit Rider - which will take care of your child's upbringing and all
- round development.
ICICI PRUDENTIAL
Project on Life Insurance
SUMMARY
After analyzing the whole survey I come to know that market prospects of insurance is
at a growing pace. Privatization is playing an important role in the way of growth of
insurance sector in India. Most of the people are aware of the brand LIC as compare to
ICICI Prudential, the reason being that LIC is enjoying monopoly for the last 40 years
and ICICI Prudential is the new player in the market and trying to give a stiff
competition to LIC. People expect some flexibility from LIC and lower premium from
ICICI Prudential. In India policies are sold for tax saving purposes rather than risk
coverage instrument.
As per experts views insurance sector is facing a number of problems like lack of
brand image, awareness of insurance needs, timid marketing, and illiteracy etc. Some
measures were suggested by the experts like improved marketing strategies, huge
distribution network, penetrating the rural sector etc. All the players for a better
market prospect should follow these measures.
ICICI PRUDENTIAL
Project on Life Insurance
CONCLUSION
For the last few years I have seen the development in the insurance sector
after privatization. This step of government of India has resulted in form
of competition in the market & prospects to cover up the huge untapped
market. Before privatization LIC had 100 % market share but after
privatization it has come down to 90 % and 10 % for private players.
Insurance sector is developing at a faster pace as compare to earlier one
but still it has more scope to grow at the fastest pace it ever grows. Private
players are giving a stiff competition to LIC. Though LIC offers a wide
range of products as compare to other private players like ICICI
Prudential , but still they are performing better with features like online
services, transparency, flexibility, quick settlement of claims etc. ICICI
Prudential has become the # 1private player in the market due to its
performance as I can measure by its 3 % holding of market share out of
10 % holding of all the private players in the market.
However, still now there is a huge untapped market for insurance in India. In a survey
it was found that still there is 250million strong middle class population of India,
which is still untapped. On the other hand rural areas and small towns offer a huge
potential to the Insurance companies. This potential was largely untapped due to
inadequate distribution It shows that there is a great scope of insurance business in
India. In India health insurance is also not so popular. The reason behind is that people
ICICI PRUDENTIAL
Project on Life Insurance
are not aware of their insurance needs. In India insurance is sold only as a tax saving
and investment option rather than a risk-cover instrument. In my survey I found a
number of reasons for the inadequate performance of insurance sector in India.
Reasons like brand image, lack of awareness for insurance needs, lack of educated &
talented sales force with insurance companies, Lack of penetration due to inadequate
marketing/delivery system are main problems. Therefore, steps should be taken by
ICICI PRUDENTIAL to overcome these hassles and try to become a leader in the
insurance sector. The following are some recommendations given by me as I analyzed
after getting the placement from IIPM in ICICI PRUDENTIAL and working there
from last 11 months as a UNIT MANAGER.
ICICI PRUDENTIAL
Project on Life Insurance
RECOMMENDATIONS
Opening up the sector certainly means more awareness amongst
customers and higher expectations, which can be satisfied by brand
awareness i.e brand image has to be created, new products, better
packaging and improved customer service. Potential buyers for
most of this Insurance lie in the middle class. ICICI Prudential will
have to explore new distribution and marketing channels to reach
the customers. They should follow proper advertising strategies as
they just started by endorsing Jassi Jaisi Koi Nahin and Launching
ICICI Prudential Zone in Mobile Phones (STEP 1 AND STEP 2,
STEP 3 AND STEP 4, STEP 5).
The vast potential of the 250million strong middle class
population of India, can be unleashed by repositioning Life
Insurance as a risk cover instrument.
The key to tap the rural market can be through Co-operative
societies, Village Panchayats and Post Offices. Where the Co-
operative societies and village Panchayats can act as ‘Corporate
Agents’ to create the brand image of ICICI PRUDENTIAL in
the rural market.
ICICI PRUDENTIAL
Project on Life Insurance
ANNEXURE
Questionnaire 1
(ICICI Prudential)
1 What do you think are the major problems of Insurance sector in India?
2 Can you mention some measures, which are required to remove the difficulties
faced by insurance sector in India?
3 What are the market prospects for life insurance in India?
Poor _ Fair _ Satisfactory _ Good _ Excellent _
4 Do you think that financial position of people in India becomes a problem in
the way of taking insurance policy?
Yes _ No _
5 Is health insurance popular in India?
Yes _ No _
6 Why people are not very concerned regarding insurance in India?
7 India has huge untapped market for insurance. What steps do you take to tap
this market?
8 What type of products and services provided by your organization that is better
than LIC?
ICICI PRUDENTIAL
Project on Life Insurance
Questionnaire 2
(LIC)
1 What do you think are the major problems of Insurance sector in India?
2 Can you mention some measures, which are required to remove the
difficulties faced by insurance sector in India?
3 Do you think that after privatization of Insurance industry in India
growth is better than earlier?
Yes _ No _
4 What are the market prospects for life insurance in India?
Poor _ Fair _ Satisfactory _ Good _
Excellent _
5 Do you think that financial position of people in India becomes a
problem in the way of taking insurance policy?
Yes _ No _
6 Is health insurance popular in India?
Yes _ No _
7 Why people are not very concerned regarding insurance in India?
8 India has huge untapped market for insurance. What steps do you take
to tap this market?
9 What type of products and services provided by your organization that
is better than ICICI Prudential?
ICICI PRUDENTIAL
Project on Life Insurance
Questionnaire 3
(Policy Holders)
1 Do you own a life insurance policy?
` Yes _ No _
2 Are you aware of various policies offered by ICICI Prudential and LIC?
Yes _ No _
3 Do you want any addition current policy?
Yes _ No _
If yes, specify
4 What factors do you consider before purchasing a life insurance policy?
_ Risk coverage _ Tax saving
_ Saving/Investment _ All of the above
5 Do you want to comment on the products & services offered by ICICI
Prudential & LIC?
6 Do you think that services have improved after allowing private players in
insurance sector?
Yes _ No _
ICICI PRUDENTIAL
Project on Life Insurance
Questionnaire 4
(ICICI PRUDENTIAL Policy Holders)
1 Do you own a life insurance policy?
` Yes _ No _
2 Are you aware of various policies offered by ICICI Prudential and LIC?
Yes _ No _
3 Do you want any addition in your current policy?
Yes _ No _
If yes, specify
4 What factors do you consider before purchasing a life insurance policy?
_ Risk coverage _ Tax saving
_ Saving/Investment _ All of the above
5. Which plan you are right now under and why did you bought that?
6. Please comment on the advantages you think ICICI Prudential products have
over the other companies products?
7. Do you think that services of ICICI PRUDENTIAL is much better than
others?
Yes _ No _
ICICI PRUDENTIAL
Project on Life Insurance
BIBLIOGRAPHY
1. Insurance Management – Anand Ganguly (New Age International)
3. Insurance in India – P. S. Palande, Shah & M. L. Lunawat
(Response books)
Brochures / Information Booklets
ICICI Prudential
L.I.C. Annual Report
Product List L.I.C.
Report/Acts
Malhotra Committee Report on Reforms in the Insurance Sector, 1993.
The Insurance Regulatory and Development Authority Bill, 1999.
Newspapers / Magazines
Insurance Post
The Economic Times
The Insurance Times
ICICI PRUDENTIAL