icici prudential life insurance

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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. ICICI PRUDENTIAL

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Page 1: Icici Prudential Life Insurance

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.

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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

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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

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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.

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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

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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.

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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

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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:

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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

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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.

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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.

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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.

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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

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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.

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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

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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."

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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.      

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  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.

 

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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

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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

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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.

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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.

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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."

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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.

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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

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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."

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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.

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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.

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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.

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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

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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.

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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

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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.

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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.

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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.

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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:

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‘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.

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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!

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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

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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

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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

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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.

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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.

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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

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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.

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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.

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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.

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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.

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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.

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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.

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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?

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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.

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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

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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

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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.

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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

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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

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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.

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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.

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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

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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.

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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.

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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?

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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

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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

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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

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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