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    INTRODUCTION

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    ABOUT THE INDUSTRY

    The insurance industry provides protection against financial losses resulting from avariety of perils. By purchasing insurance policies, individuals and businesses can receive

    reimbursement for losses due to car accidents, theft of property, and fire and stormdamage; medical expenses; and loss of income due to disability or death.

    The insurance industry consists mainly of insurance carriers (or insurers) and insuranceagencies and brokerages. In general, insurance carriers are large companies that provideinsurance and assume the risks covered by the policy. Insurance agencies and brokeragessell insurance policies for the carriers. While some of these establishments are directlyaffiliated with a particular insurer and sell only those carrier policies, many areindependent and are thus free to market the policies of a variety of insurance carriers. Inaddition to supporting these two primary components, the insurance industry includesestablishments that provide other insurance-related services, such as claims adjustment or

    third-party administration of insurance and pension funds.

    Insurance carriers assume the risk associated with annuities and insurance policies andassign premiums to be paid for the policies. In the policy, the carrier states the length andconditions of the agreement, exactly which losses it will provide compensation for, andhow much will be awarded. The premium charged for the policy is based primarily on theamount to be awarded in case of loss, as well as the likelihood that the insurance carrierwill actually have to pay. In order to be able to compensate policyholders for their losses,insurance companies invest the money they receive in premiums, building up a portfolioof financial assets and income-producing real estate which can then be used to pay offany future claims that may be brought. There are two basic types of insurance carriers:

    direct and reinsurance. Direct carriers are responsible for the initial underwriting ofinsurance policies and annuities, while reinsurance carriers assume all or part of the riskassociated with the existing insurance policies originally underwritten by other insurancecarriers.

    Direct insurance carriers offer a variety of insurance policies. Life insurance providesfinancial protection to beneficiaries usually spouses and dependent children upon thedeath of the insured. Disability membership organizations for the benefit of theirmembers. Among the most common policies of this nature insurance supplies a presetincome to an insured person who is unable to work due to injury or illness, and healthinsurance pays the expenses resulting from accidents and illness. An annuity (a contract

    or a group of contracts that furnishes a periodic income at regular intervals for a specifiedperiod) provides a steady income during retirement for the remainder of one life.Property-casualty insurance protects against loss or damage to property resulting fromhazards such as fire, theft, and natural disasters. Liability insurance shields policyholdersfrom financial responsibility for injuries to others or for damage to other people property.Most policies, such as automobile and homeowners insurance, combine both property-casualty and liability coverage. Companies that underwrite this kind of insurance arecalled property-casualty carriers.

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    Some insurance policies cover groups of people, ranging from a few to thousands ofindividuals. These policies usually are issued to employers for the benefit of theiremployees or to unions, professional associations, or other are group life and healthplans. Insurance carriers also underwrite a variety of specialized types of insurance, suchas real-estate title insurance, employee surety and fidelity bonding, and medical

    malpractice insurance.

    A relatively recent act of Congress allows insurance carriers and other financialinstitutions, such as banks and securities firms, to sell one anothers products. As a result,more insurance carriers now sell financial products such as securities, mutual funds, andvarious retirement plans. This approach is most common in life insurance companies thatalready sell annuities; however, property and casualty companies also are increasinglyselling a wider range of financial products. In order to expand into one anothers markets,insurance carriers, banks, and securities firms have engaged in numerous mergers,allowing the merging companies access to each other's client base and geographicalmarkets.

    Insurance carriers have discovered that the Internet can be a powerful tool for reachingpotential and existing customers. Most carriers use the Internet simply to post companyinformation, such as sales brochures and product information, financial statements, and alist of local agents. However, an increasing number of carriers are starting to expand theirwebsites to enable customers to access online account and billing information, and a fewcarriers even allow claims to be submitted online. Some carriers also provide insurancequotes online based on the information submitted by customers on their Internet sites. Inthe future, carriers will allow customers to purchase policies through the Internet withoutever speaking to a live agent.

    In addition to individual carrier-sponsored Internet sites, several lead-generating siteshave emerged. These sites allow potential customers to input information about theirinsurance policy needs. For a fee, the sites forward customer information to a number ofinsurance companies, which review the information and, if they decide to take on thepolicy, contact the customer with an offer. This practice gives consumers the freedom toaccept the best rate.

    The insurance industry also includes a number of independent organizations that providea wide array of insurance-related services to carriers and their clients. One such service isthe processing of claims forms for medical practitioners. Other services include lossprevention and risk management. Also, insurance companies sometimes hire independentclaims adjusters to investigate accidents and claims for property damage and to assign adollar estimate to the claim.

    Other organizations in the industry are formed by groups of insurance companies, toperform functions that would result in a duplication of effort if each company carriedthem out individually. For example, service organizations are supported by insurancecompanies to provide loss statistics, which the companies use to set their rates.

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    BRIEF ABOUT INSURANCE

    What is Insurance?

    "Insurance is a contract between two parties whereby one party called insurer

    undertakes in exchange for a fixed sum called premiums, to pay the other party called

    insured a fixed amount of money on the happening of a certain event."

    Insurance is a protection against financial loss arising on the happening of an

    unexpected event. Insurance companies collect premiums to provide for this

    protection. A loss is paid out of the premiums collected from the insuring public andthe Insurance Companies act as trustees to the amount collected.

    For Example, in a Life Policy, by paying a premium to the Insurer, the family of the

    insured person receives a fixed compensation on the death of the insured.

    Similarly, in a car insurance, in the event of the car meeting with an accident, the

    insured receives the compensation to the extent of damage.

    It is a system by which the losses suffered by a few are spread over many, exposed to

    similar risks.

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    Why should you take Insurance?

    Insurance is desired to safeguard oneself and one's family against possible losses on

    account of risks and perils. It provides financial compensation for the losses suffered

    due to the happening of any unforeseen events.

    By taking life insurance a person can have peace of mind and need not worry about

    the financial consequences in case of any untimely death.

    Certain Insurance contracts are also made compulsory by legislation. For example,

    Motor Vehicles Act 1988, stipulates that a person driving a vehicle in a public place

    should hold a valid insurance policy covering "Act" risks. Another example of

    compulsory insurance pertains to the Environmental Protection Act, wherein a person

    using or carrying hazardous substances (as defined in the Act) must hold a valid

    public liability (Act) policy.

    Who provides Insurance?

    In India, prior to liberalization Insurance protection was made available through

    Public sector Insurance Companies, namely, Life Insurance Corporation of India

    (LIC) and the four subsidiaries of General Insurance Corporation of India (GIC).

    By the passing of the IRDA Bill, the Insurance sector has been opened up for private

    companies to carry on Insurance business. Click on the following link for the list of

    insurance companies operating in India.

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    What is the procedure to obtain insurance?

    The simplest procedure to obtain insurance is:

    1. Approach the Insurance Companies directly or

    through Insurance agents of the concerned companies or

    through Intermediaries.

    2. Complete a proposal form giving full details.

    3. Submit Date of Birth Certificate and other relevant documents.

    Insurance contracts are based on good faith i.e. the details furnished by the proposer

    are accepted in good faith and this will form the basis of the contract.

    What are the other alternatives to Insurance?

    One alternative to Insurance is to provide self-Insurance i.e. the individual has to

    create a fund to meet risk exigencies.

    Specified trusts have also tried to provide insurance by a scheme of self-insurance.

    However, these are not very popular.

    The postal department provides Insurance coverage to all working people.

    There are many financial instruments, which advocate savings and provide future

    returns at specific intervals such as the provident fund and pension plans. However,

    none of these provide for life coverage.

    Life Insurance

    Life insurance is a critical part of your long term financial planning. Every person with

    dependents should have life insurance.

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    Life Insurance is particularly important if you are the sole breadwinner for your family.

    The loss of you and your income could devastate your family. Life insurance will ensure

    that if anything happens to you, your loved ones will be able to manage financially.

    But don't ignore life insurance if you are the 'stay-at-home' spouse. Your value to the

    family will include child care and many other functions which will potentially become

    'paid' functions if you are gone.

    While called "life insurance," what you are being insured against is your death. The

    benefit (in most life insurance policies) will only be paid out if you die. Some life

    insurance policies accumulate a cash value - and this would be the only exception in

    which you could receive a 'benefit' from a life insurance policy without dying. However,

    the cash value is many times less than the death benefit, and life insurance is (in fact) a

    savings plan and insurance rolled into one.

    Many life insurance policies carry restrictions around the circumstances of your death.

    Usually if you commit suicide your loved ones will not receive any death benefits (This

    is one area where "cashing in your chips" won't leave you with a big bank roll).

    Why Do I Need Life Insurance?

    You need life insurance in order to ensure that your loved ones can cope financially with

    your loss. That's the bottom line.

    The reasoning behind life insurance is most evident when you consider sole

    breadwinners, but applies to everyone who has dependents, even stay-at-home spouses. If

    you (as the stay-at-home spouse) were to suddenly die, your family would have to find

    other ways to: ensure care of children; get the family home cleaned; handle dry

    cleaning and laundry; do grocery shopping; and many other tasks which you currently

    handle. While your services appear to be 'low cost' because no one is paying you directly,

    if your family has to replace you with paid help you will quickly see your 'value'.

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    In addition, funerals are expensive. An average funeral can set you back between $8,000

    and $10,000 considering the funeral home services, casket, burial plot and headstone.

    This is part of what you want to insure yourself against. You can bundle in these costs

    when you consider a life insurance policy's total benefit amount that you insure yourself

    for.

    While you can buy life insurance policies which are a small amount suitable only to

    cover funeral costs, you will generally need much more life insurance than that. Many of

    these life insurance policies look good because of low prices, but you have to look

    closely. For the dollar amount of coverage you get, it is generally a more expensive life

    insurance policy.

    Some people who are single or have no dependents might want to consider 'funeral

    coverage' only. For the rest of us, we should be looking at more substantial life insurance.

    Life Insurance - How do I decide what I need?

    This is a big question. In general, most financial planners will say that you should have

    life insurance equal to at least 5 times your annual salary. Some folks with more

    dependents (older parents, children and spouse) may need more life insurance.

    Other financial planners say that you should look at the total amount of income that

    you want to replace between now and retirement. While the numbers

    can be big and scary if you are young, your actual life insurance needs

    will decrease over time.

    Let's look at an example. If I'm 25 and make $35,000 a year and I want to replace the

    income I'd make between now and retirement age, I'd be looking at life insurance for

    $848,000. Whew! Well, there are a number of concerns with that:

    1. First and foremost, can I afford the premium?

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    2. At this age, you may be able to. The risk to a life insurance company is low.

    3. Does my spouse work?

    4. If my spouse does work I may not have to replace my total salary.

    5. If I have a stay-at-home spouse, would they consider going back to work after a

    certain period?

    If you think your spouse may want to retrain for another career you may actually need

    to consider more money. Or perhaps, if the total amount of the life insurance policy

    paid out the mortgage and put some money in the bank, your spouse could return to

    the workforce on a part-time basis.

    6. Am I trying to leave my family 'set for life' or am I trying to get them over a tough

    time?

    7. This is entirely up to you. Balance it out against the amount of the life insurance

    premium.

    These are questions which must be considered. At a minimum, your life insurance

    coverage should:

    Fully pay out your mortgage

    Fully pay for funeral costs

    Allow for supplementary childcare for at least 2 years (if you have children)

    Fully pay out any other debts, like car loans, outstanding bills from credit cards or

    utilities, etc

    Leave a little something in the bank for emergencies

    Does 5 times your salary meet these requirements? Great. If not, you might have to

    consider up to 8 times your salary. Then consider all the factors which might affect your

    spouse's ability to handle the situation - perhaps you've died in an accident in which they

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    were hurt too, or perhaps you have a family of 9 children and your spouse couldn't return

    to work - and add additional money as required.

    HISTORY OF INDIAN INSURANCE INDUSTRY

    The insurance sector in India has come a full circle from being an open competitive

    market to nationalization and back to a liberalized market again. Tracing the

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    developments in the Indian insurance sector reveals the 360-degree turn witnessed over a

    period of almost two centuries.

    Insurance industries in India have a long history. Life Insurance in existing form came in

    India from UK in 1818 with Oriental Life Insurance Company. The Indian Life

    Assurance companies Act, 1912 was the first measure to regulate Life Insurance

    business. Later in 1928 the Indian Insurance Companies act was enacted, which was

    amended in 1938. Finally Government of India in 1950 again amended this act. Life

    Insurance Corporation of India was formed in September 1956 by passing LIC Act, 1956

    in Indian parliament.

    The first general insurance company- Sun Insurance Office Ltd. was established in

    Calcutta in the year 1710. General Insurance business in India was nationalized with

    effect from 1.1.73 by the General Insurance Business Act. from 1973, The General

    Insurance Company (GIC) as a holding company divided in four subsidiaries as:

    - National Insurance Company Ltd.,

    - The New India Assurance Company Ltd.

    - The Oriental Insurance Company Ltd.

    - The United India Insurance Company Ltd.

    DEVELOPMENTS IN THE INDIAN INSURANCE SECTOR

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    Liberalization and reforms have the potential to change the complexion of an industry.

    The Indian insurance sector is no exception. Until recently, India continued to be one of

    the few remaining countries of the world to remain insulated from the foreign direct

    investment in its insurance sector. In a bid to make this sector more competitive the

    government constituted an eight-member committee chaired by Mr. R N Malhotra in

    1993. The committee took a year to submit its report. The main thrust of its

    recommendations was:

    Open up the insurance sector

    Improve the service standards of Indian insurance majors

    Extend insurance coverage to a larger section of the Indian population.

    The benefits of liberalization of Indian insurance sector were deemed to be that reforms

    would lead to:

    A competitive environment

    World-class sophisticated technology

    Better & wider range of products with more reasonable & affordable pricing

    Price war, leading to competitive pricing of the products

    Efficient & effective service

    Efficiency in the conduct of insurance business

    Global expertise & practices of insurance

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    New entrants with a professional approach & state of art technology to revolutionize

    the market

    Services of intermediaries like corporate agents, brokers etc

    Malhotra Committee, in its report stated that only 22% of the Indian population is

    insured. The poor reach of insurance in the country and the sheer numbers make India a

    market with tremendous potential. The following facts show how under-developed the

    Indian insurance business is due to state monopoly and lack of aggressive marketing of

    insurance policies:

    Per capita insurance premium in India is a mere US$ 6, one of the lowest in the

    world. In South Korea, the corresponding figure is US$1,338, in USA it is $ 2250

    and in UK it is $1589.

    Insurance premium in India accounts for a mere 2 per cent of GDP compared to

    the world average of 7.8 per cent and G-7 average of 9.2 per cent.

    Insurance premium as a percentage of savings is barely 5.95 per cent in India

    compared to 52.5 per cent in the UK.

    Nationalized insurance companies have not been able to target niche markets that are

    currently served poorly or not at all. Life insurance products provide a good example.

    They compete with investment and savings options like mutual funds. It is imperative

    that they should offer comparable returns and flexibility. For instance, pure protection

    products like term assurance account for up to 20 per cent of policies sold in developed

    countries. In India, the figure is less than one percent because policies are inflexible.

    Besides, no Indian life assurance product is linked to non-traditional investment avenues

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    such as stock market indices. Therefore, returns are lower than those on other savings

    instruments.

    Retail segment or personal lines insurance, especially in general insurance is another area

    unexplored. Currently personal insurance, including health, householders, shopkeepers,

    personal accident, travel insurance and professional indemnity covers, constitute only 12

    per cent of Indian general insurance premium. This poor figure is largely due to the lack

    of adequate distribution channels rather than a lack of products. By tapping such under-

    served niches, new entrants can expand the market substantially. Since service and speed

    will be valued, a price premium is also possible.

    Keeping in mind the problems that ensnared LIC & GIC, the Malhotra Committee Report

    recommended the end of monopoly market in insurance.

    This recommendation was implemented with the passage of Insurance Regulatory

    Development Act (IRDA) through Indian Parliament in late 1999.

    Due to this Act the private players were allowed to enter the market from 1999. Several

    Indian private companies have entered into the insurance market, and some companies

    have joined with foreign partners. After the passage of this Act, with effect from

    December 2000, all the four subsidiaries of GIC have been de-linked from the parent

    company and have been made independent insurance companies. GIC now functions as a

    National Reinsurer.

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    IRDA, for the time being, prohibits 100% foreign equity in insurance. It requires the

    Indian promoter to invest either wholly in an insurance venture or team up with a foreign

    insurer, with a cap of 26% of equity for a foreign partner.

    Since the opening up of Insurance Sector, 12 private players have entered the Life

    Insurance sector & 9 private players have entered the general insurance sector.

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    THE REGULATORS

    Insurance Regulatory & Development Authority

    Under the Insurance Regulatory Development Act, Insurance Regulatory & Development

    Authority (IRDA) was formed which acts as the regulatory authority in the insurance

    sector. The main aim of the Act is to activate an insurance regulatory apparatus essential

    for proper monitoring and control of the Insurance industry. TAC is a Statutory Body

    under Insurance Act 1938. Tariff Advisory Committee controls and regulates the rates,

    advantages, terms and conditions that may be offered by insurers in respect of General

    Insurance Business relating to Fire, Marine (Hull), Motor, Engineering and Workmen

    Compensation.

    Liberalization Scenario in India

    Recent economic liberalization started few years ago have started bringing in new

    investments from global giants and the government was hard pressed to facilitate global

    integration by lowering trade barriers for the free flow of technology, intellectual and

    financial capital. Additionally, reforms are essential if the Indian economy is to achieve

    and sustain a growth rate of 7 to 8 per cent per annum. Reaching a faster growth path also

    implies attracting foreign direct investment inflows of $ 10 Billion every year, up from

    the current level of $ 3 to $ 3.5 Billion. Thus liberalization of insurance creates an

    environment for the generation of long-term contractual funds for infrastructural

    investments.

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    Nationalized Sectors Performance

    In 1995-96, LIC had a total income from premium and investments of $ 5 Billion while

    GIC recorded a net premium of $ 1.3 Billion. During the last 15 years, LIC's income

    grew at a healthy average of 10 per cent as against the industry's 6.7 per cent growth in

    the rest of Asia (3.4 per cent in Europe, 1.4 per cent in the US).

    LIC has even provided insurance cover to five million people living below the poverty

    line, with 50 per cent subsidy in the premium rates. LIC's claims settlement ratio at 95

    per cent and GIC's at 74 per cent are higher than that of global average of 40 per cent.

    Compounded annual growth rate for Life insurance business has been 19.22 per cent per

    annum and for General insurance business it has been 17 per cent per annum.

    However, there is other side of the coin too. Their large scale of operations, public sector

    bureaucracies and cumbersome procedures hampers nationalized insurers. The field staff

    and the agents of the GIC and its four wholly owned subsidiary companies have seldom

    bothered to venture out into the rural hinterland to sell crop or any other personal line

    insurance. The domestic insurance companies, despite meeting their social objectives of

    going into the deepest interiors of the country, have lagged behind in meeting customer

    expectations in products and services.

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    Private Players in Insurance Sector

    Potential private entrants expect to score in the areas of customer service, speed and

    flexibility. It is expected that their entry will mean better products and choice for the

    consumer. Critics counter that the benefit will be slim, because new players will

    concentrate on affluent, urban customers as foreign banks did until recently.

    This might seem a logical strategy from the point of view of new players. Start-up costs-

    such as those of setting up a conventional distribution network-are large and high-end

    niches offer better returns. However, in the long run 'middle-market' offers the greatest

    potential as in terms of it is the second largest market in the world. This may still be an

    urban market but goes beyond the affluent segment.

    Insurance, even more than banking, is a volume game. A very exclusive approach is

    unlikely to provide meaningful numbers. Therefore, private insurers would be best served

    by a middle-market approach, targeting customer segments that are currently untapped.

    Repositioning of Public Sector Companies

    Floodgates of competition opened up by the privatization of insurance industry did throw

    a challenge to the well-protected nationalized sector and it seems they have picked up the

    gauntlet. LIC and GIC, both are trying to reposition themselves by having re-engineering

    done on the structure and operations of their respective organizations.

    Life Insurance Corporation is at present going through presentations from top

    management consultants. These consultants have been asked to narrate their experiences

    in countries where the insurance sector has been opened up for private competition so

    that the public sector player can draw lessons. Based on these, LIC will appoint a

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    consultant which can provide them broad terms of reference on what changes are

    required to tackle the impending competition.

    GIC has already identified the areas that need to be activated and given a shape through

    the four subsidiary companies. Foremost is the area of providing health insurance

    services. A change in the GIC Act will enable the corporation to float a joint venture

    company for health insurance. Other areas that the GIC is looking at are savings-linked

    insurance products and use of alternate distribution channels including bancassurance.

    Also in progress is the co-ordination of all foreign operations of the group.

    The PSU companies have offered VRS to their employees in an effort to reduce the

    manpower cost & to make their operations more effective.

    Changes in Distribution Channel

    Substantial shift in the distribution of insurance in India is likely to take place. Many of

    these changes will echo international trends. Worldwide, insurance products move along

    a continuum from pure service products to pure commodity products. Initially, insurance

    is seen as a complex product with a high advice and service component. Buyers prefer a

    face-to-face interaction and place a high premium on brand names and reliability.

    As products become simpler and awareness increases, they become off-the-shelf,

    commodity products. Sellers move to remote channels such as the telephone or direct

    mail. Various intermediaries, not necessarily insurance companies, sell insurance. In the

    UK for example, retailer Marks & Spencer now sells insurance products. In some

    countries like Netherlands and Japan, insurance is marketed using post office's

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    distribution channels. At this point, buyers look for low price. Brand loyalty could shift

    from the insurer to the seller.

    In other markets, notably Europe, this has resulted in bancassurance: banks entering the

    insurance business. The Netherlands led with financial services firms providing an entire

    range of products including bank accounts, motor, home and life insurance, and pensions.

    Other European markets have followed suit. In France over half of all life insurance sales

    are made through banks. In the UK, almost 95% of banks and building societies are

    distributing insurance products today.

    In India too, banks hope to maximize expensive existing networks by selling a range of

    products. Various seminars and conferences on bancassurance are taking place and many

    bankers have clearly shown their inclination to enter insurance market by leveraging their

    strengths in the areas of brand image, distribution network, face to face contact with the

    clients and telemarketing coupled with advanced information technology systems.

    Problems

    Consumer awareness level is still off the mark. According to the recently conducted

    FICCI survey on the Present State of Indian insurance industry, a copy of which is

    available with all of you, the awareness levels regarding Insurance are still in the realm of

    medium to low. This clearly indicates the onerous task that companies have in creating

    awareness about "need to Insure" and also tremendous potential they have in expanding

    the markets by getting more customers in their fold by increasing awareness levels.

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    Insurers in India should also explore distribution through non-financial organizations. For

    example, insurance for consumer items such as refrigerators can be offered at the point of

    sale. This piggybacks on an existing distribution channel and increases the likelihood of

    insurance sales. Alliances with manufacturers or retailers of consumer goods will be

    possible. With increasing competition, they are wooing customers with various

    incentives, of which insurance can be one.

    Another potential channel that reduces the need for an owned distribution network is

    worksite marketing. Insurers will be able to market pensions, health insurance and even

    other general covers through employers to their employees. These products may be

    purchased by the employer or simply marketed at the workplace with the employers co-

    operation.

    Finally, some potential Indian entrants into insurance hope to ride their existing

    distribution networks and customer bases. For example, financial organizations like

    ICICI, HDFC or Kotak Mahindra intend to tap the thousands of customers who already

    buy their deposits, consumer loans or housing finance. Other hopeful entrants anticipate

    specific alliances such as with hospitals to provide health cover.

    International Experience

    Cross-country experience shows that nowhere in the world has the entry of foreign firms

    threatened the position of domestic companies. Whether it is Malaysia, where the

    insurance sector has been open for more than 50 years and foreign companies account for

    about 10 per cent of market penetration or it is Indonesia, Thailand, China or the

    Philippines, where the market has been opened more recently, the total market share of

    foreign companies is less than 10 per cent except in Indonesia where it is about 20 per

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    cent. Closer home, we have the experience of the banking sector where despite the

    presence of 42 foreign banks, their share in total banking assets is less than 10 per cent.

    Today hardly 20 per cent of the population in India is insured and insurance premium

    (life as well as non-life) account for just 2 per cent of GDP as against the G-7 average of

    9.2 per cent. Consequently, the fear that new companies will displace public companies is

    misplaced. There is room for more for not only the existing companies but also for any

    number of competitors.

    Future Possibilities for the Next 5-10 Years

    Job opportunities are likely to increase manifold in the insurance sector. The number of

    people working in the insurance sector in India is roughly the same as in the UK with a

    population that is 1/7 India's; the US with a population 1/4 the size of India has nearly 4

    times the number. In the emerging markets, the picture is no less encouraging. In S

    Korea, the number of full time employees has more than doubled over a ten year period.

    Thailand added 50 per cent more jobs in four years.

    The liberalization of the insurance sector promises several new jobs opportunities for

    those employed in the finance sector who are equipped with degrees in finance. Finance

    professionals who had witnessed a slump in the job market would be much in demand

    with the opening up of insurance sector.

    The type of jobs that will be created once the private players are established in the

    country won't be far different from the traditional streams in any other industry. There

    will be demand for marketing specialists, finance experts, human resource professionals,

    engineers from diverse streams like the petrochemical and power sectors, systems

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    Professionals, statisticians and even medical professionals. Apart from this, there will be

    high demand for professionals in the streams like Underwriting and claims management

    and actuarial sciences.

    The structure of an insurance company, generally, comprises the Operating Department,

    Administrative Department and the Finance Department. The Operating Department

    generally performs the basic functions pertaining to the designing of products, marketing

    thereof, servicing the insured, management of portfolio, etc. The Administrative

    Department looks after the day to day affairs of the company. The Finance Department

    backs the operations and administration of the company by accounting for the

    transactions, streamlining the flow of funds, materializing the management decisions, etc.

    The Administration Department as well as the Finance Department, usually, functions

    through in-house setup. The Finance Department functions in the areas of accounting,

    financial and management reporting, budgeting and controlling, etc. and thus renders

    enormous scope for professionals.

    Over the past three years, around 40 companies have expressed interest in entering the

    sector and many foreign and Indian companies have arranged anticipatory alliances. The

    threat of new players taking over the market has been overplayed. As is witnessed in

    other countries where liberalization took place in recent years we can safely conclude that

    nationalized players will continue to hold strong market share positions, but there will be

    enough business for new entrants to be profitable.

    Opening up the sector will certainly mean new products, better packaging and improved

    customer service. Both new and existing players will have to explore new distribution

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    and marketing channels. Potential buyers for most of this insurance lie in the middle

    class. New insurers must segment the market carefully to arrive at appropriate products

    and pricing. Recognizing the potential, in the past three years, the nationalized insurers

    have already begun to target niches like pensions, women or children.

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    Marketing of Insurance products

    Marketing as we know deals with all those processes required to put the products in the

    hands of the ultimate consumer. Philip Kotler, considered by many as the Marketing

    Guru of our times gives a pithy definition on marketing thus:' Marketing is the delivery of

    customer satisfaction at a profit.' Thus one of the essential parameters that judge the

    effectiveness of marketing exercise is the effect it has on the organization's bottom line.

    The steps involved in marketing processes are brought out by the study of four critical

    parameters, which are the famous 4P's. i.e. Price, Place, Product and Promotion.

    A Company or an organization coming with a product offer, has to design an appropriate

    mix of these four parameter consistent within its standing in the market. Typically the

    importance of each of these parameter vary in importance depending on the nature of the

    product, nature of the market and the size of the company.

    For instance while product issue forms the important deciding factor in the purchase of

    commodities and manufactured goods promotion is of key importance in Fast Moving

    Consumer Goods marketing. The four parameters also take on different intensities

    depending on which stage of the product life cycle the product is in.

    Accordingly the marketing process could take a product centric view, a customer centric

    view or as is happening these days it could be taken on as a organizational philosophy

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    resulting in market driven companies.

    In order to link the marketing process to Insurance products, first it has to be seen in the

    broader context of financial services marketing and also the regulatory environment that

    is in place. Financial services whether its Banking, or Investments, Life Insurance,

    General Insurance, though target separate need base, have the services component

    connecting them.

    Services being intangible the four aspects of the marketing mix discussed above, which

    are developed for product centric markets, do not find the same level of application and

    thus needs a fresh perspective to be developed in relation to services marketing. Theories

    have evolved over time in this direction first by identifying the aspects of services

    marketing and then providing solutions for this line of marketing, which existing

    insurance policies may provide cover?

    Financial Services Marketing:

    Services have some unique features separating itself from traditional product marketing:

    They are intangible, there is nothing physical so consumers do not have any way to

    actually take a test drive or in any way get a feel about the product before its purchase.

    The services are inseparable from the product itself. Here the product is produced and

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    consumed in the same instance and requires the presence of the end customer.

    It is heterogeneous and quality control is difficult where the quality of the service is

    dependent on the quality of the service provider.

    The product differentiation is minimum with in a category of product say in Banking or

    Investment etc; Added to this the customer more often relies on hope of appreciation of

    his investments or safe return of his deposits with the promised yield. The kind of

    trusteeship found in all financial services makes the companies all the more responsible

    in handling the hopes of their consumers. Also the regulatory environment plays a crucial

    role in marketing of financial products. There are restrictions on the content of ad-

    messages so as to ensure that customers are not taken for a ride by unscrupulous

    elements, which unfortunately are not hard to find in this sector.

    How does insurance sector fit in this arena.

    The very nature of the contract puts the insured at a vantage position as to the information

    regarding risk element one is exposed to. Owing to this insurance contracts are sourced

    through an intermediary, an agent in this case who is expected to have better knowledge

    of the person or the risk in question. Insurance companies rely on the report of its agents

    in its decision to acceptance or otherwise and in premium setting for the risk in question.

    A reason why many lines of insurance are not available off the shelf.

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    Even as this is the case, Insurance contracts especially those in life insurance are typically

    sold rather than bought. The reason being that there in no adequate appreciation of the

    concept of insurance, which seeks to indemnify/ compensate the insured for financial loss

    suffered on account of an accidental event. Typically life insurance policies are compared

    with bank fixed deposits or mutual funds, and are shown in poor light for their poor

    returns. One fails to appreciate that the need base differs when one is taking up a life

    insurance policy. Most of the plans while offering decent returns offer life covers that are

    a unique feature compared to other financial products.

    Insurance companies have been countering their poor image by coming out with innovate

    features like unit-linked schemes, which offer more of a saving component and less of a

    risk component. Also there are various tax incentives provided by the government for

    investments into life insurance plans, to encourage the habit of buying insurance.

    Also there is strict regulatory compliances to be compiled with while selling insurance

    products. For instance there is that provision of Section 41 of the Insurance Act, 1938,

    which prohibits offer of rebates in any kind from the premium monies by the

    intermediaries in their efforts to source business for insurance companies. The advertising

    code as prescribed by the regulator, the IRDA, requires to be clearly worded in their ad-

    message.

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    What the future has in store for the segment:

    Typically the entire business in life insurance and a huge proportion of business in non-

    life insurance is sourced through agents of insurance companies. New intermediary

    options are being broached including an option of disintermediation in certain lines of

    business. The new distribution alternatives include the brokers, who act on behalf of the

    customers and advice of best-suited policies and banks.

    The general integration of different classes of financial services has created a large

    opportunity for banks to enter in to the insurance sector. The branch network and the high

    relationships maintained with its clientele is being put to good use while marketing

    insurance products. A new alternative like selling insurance over the net is also catching

    up. Insurance companies are opting for disintermediation in certain lines of business

    aimed at corporates, where highly specialized knowledge on risk analysis is called for.

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    RESEARCH

    METHODOLOG

    Y

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    RESEARCH OBJECTIVES

    1. Familiarization with the insurance concepts and insurance industry in India.

    2. Collection of database from Working Individuals through a questionnaire.

    3. Analysis and interpretation of data.

    4. Reaching at conclusions and suggestions based on analysis.

    RESEARCH DESIGN

    According to Green and Tull:

    A research design is the specification of methods and

    procedures for acquiring the information needed. It is he

    overall operational pattern or framework of the project that

    stipulates which information is to be collected from which

    sources by what procedures.

    SOURCES OF DATA COLLECTION

    For conducting the study, the researcher has adopted both primary as secondary method

    of data collection. personal interview - by means of a questionnaire.

    Secondary Data:It has been collected from various books and Internet sites. Researcherhas adopted this method of data collection, as the researcher liters no access to magazines

    and journal but a plenty of material was available on the Internet sites.

    Sample:Due to time and resource constraints, the sample of the study is taken as one andthe technique of sampling adopted is: convenient sampling.

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    1. Primary Sources

    Questionnaire

    2.Secondary sources

    Internet

    Brochures, Pamphlets

    Sample Size

    200 people in NCR

    Demographic Profile of Sample

    25ysr & above

    Randomly Selected People

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    LIMITATIONS OF THE RESEARCH

    Selected only 200 respondents due to time constraint, which mighthave led to several sample errors.

    Study is restricted to NCR, which might not give the national picture.

    The duration of time for the study was limited & hence acomprehensive & elaborate study could not be undertaken.

    Rural areas could not be touched during the study, which have huge

    potential for life Insurance exists.

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    COMPANYPROFILE

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    Primary Data:For the purpose of collecting primary data, the researcher has adopted themethod of survey. Survey can be telephonic, by mail personal and by the diary. For the

    purpose of collected detailedinformation,researcher has chosen surveys based on

    OVERVIEW

    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 2000 after

    receiving approval from Insurance Regulatory Development Authority (IRDA).

    ICICI Prudential's equity base stands at Rs. 2602 crore with ICICI Bank and Prudential

    plc holding 74% and 26% stake respectively. For the period April 30, 2007 to July 31,

    2007, the company garnered Rs 1415 crore of weighted retail + group new business

    premiums and wrote over 5 million relail policies. The company has a assets held to the

    tune of over Rs 20,000 crore. For the past six years, ICICI Prudential has retained its

    position as the No. 1 private life insurer in the country, with a wide range of flexible

    products that meet the needs of the Indian customer at every step in life.

    The vision of ICICI PRUDENTIAL:

    To make ICICI Prudential the dominant Life and Pensions player built on trust by world-

    class people and service.

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    This we hope to achieve by:

    Understanding the needs ofcustomers and offering them superior products and

    service

    Leveraging technology to service customers quickly, efficiently and conveniently

    Developing and implementing superiorrisk management and investment

    strategies to offer sustainable and stable returns to our policyholders

    Providing an enabling environment to foster growth and learning for our

    employees

    And above all, building transparency in all our dealings.

    The success of the company will be founded in its unflinching commitment to 5 core

    values -- Integrity, Customer First, Boundary less, Ownership and Passion. Each of the

    values describes what the company stands for, the qualities of our people and the way we

    work.

    We do believe that we are on the threshold of an exciting new opportunity, where we can

    play a significant role in redefining and reshaping the sector. Given the quality of our

    parentage and the commitment of our team, there are no limits to our growth.

    MANAGEMENT

    Board of Director

    The ICICI Prudential Life Insurance Company Limited Board comprises reputed people

    from the finance industry both from India and abroad.

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    Mr. K.V. Kamath, Chairman

    Mr. Barry stowe

    Mrs. Keki Dadiseth

    Mrs. Kalpana Morparia

    Mrs. Chanda Kochhar

    Mr. HT Phong

    Mr. M.P. Modi

    Mr. R Narayanan

    Ms. Shikha Sharma, Managing Director

    Mr. N.S. Kannan, Executive Director

    Management Team

    Ms. Shikha Sharma, Managing Director & CEO

    Mr. N.S. Kannan, Executive Director

    Mr. Azim Mithani, Chief - Actuary

    Mr. Bhargav Dasgupta, Executive Director

    Ms. Anita Pai, Chief - Customer Service and Operations

    Mr. Puneet Nanda, Chief Investments

    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 2000 after

    receiving approval from Insurance Regulatory Development Authority (IRDA).

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    ICICI Prudentials equity base stands at Rs. 2602 crore with ICICI Bank and Prudential

    plc holding 74% and 26% stake respectively. For the period April 30 to July 31, 2007, the

    company garnered Rs 1415 crore of weighted retail + group new business premiums and

    wrote over 5 million retail policies. For the past six years, ICICI Prudential has retained

    its position as the No. 1 private life insurer in the country, with a wide range of flexible

    products that meet the needs of the Indian customer at every step in life. To know more

    about the company, please visit www.iciciprulife.com.

    ICICI Prudential is also the only private life insurer in India to receive a National Insurer

    Financial Strength rating of AAA ( Ind ) from Fitch ratings. The AAA rating is the

    highest credit rating, and is a clear assurance of ICICI Prudentials ability to meet its

    obligations to customers at the time of maturity or claims.

    DISTRIBUTION

    ICICI Prudential has one of the largest distribution networks amongst private life insurers

    in India, having commenced operations in over 116 cities and towns in India, stretching

    from Bhuj in the west to Guwahati in the east, and Amritsar in the north to Trivandrum in

    the south.

    The company has 23 bancassurance tie-ups, having agreements with ICICI Bank, Bank of

    India, Federal Bank, South Indian Bank, Ernakulam Bank, Lord Krishna Bank and some

    co-operative banks, as well as about 680 corporate agents and brokers. It has also tied up

    with NGOs, MFIs and corporates for the distribution of rural policies and organisations

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    like Dhan for distribution of Salaam Zindagi, a policy for the socially and economically

    underprivileged sections of society.

    ICICI Prudential has recruited and trained more than 235,000 insurance advisors to

    interface with and advise customers. Further, it leverages its state-of-the-art IT

    infrastructure to provide superior quality of service to customers.

    PRODUCTS

    Insurance Solutions for Individuals

    ICICI Prudential Life Insurance offers a range of innovative, customer-centric products

    that meet the needs of customers at every life stage. Its products can be enhanced with up

    to 7 riders, to create a customized solution for each policyholder.

    Savings Solutions

    SecurePlus is a transparent and feature-packed savings plan that offers 3 levels of

    protection.

    CashPlus is a transparent, feature-packed savings plan that offers 3 levels of

    protection as well as liquidity options.

    SavenProtect is a traditional endowment savings plan that offers life protection

    along with adequate returns.

    CashBakis an anticipated endowment policy ideal for meeting milestone

    expenses like a childs marriage, expenses for a childs higher education or

    purchase of an asset.

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    LifeTime & LifeTimeII offer customers the flexibility and control to customize

    the policy to meet the changing needs at different life stages. Each offer 4 fund

    options ? Preserver, Protector, Balancer and Maximiser.

    LifeLink II is a single premium Market Linked Insurance Plan which combines

    life insurance cover with the opportunity to stay invested in the stock market.

    Premier Life is a limited premium paying plan that offers customers life

    insurance cover till the age of 75.

    InvestShield Life is a Market Linked plan that provides capital guarantee on the

    invested premiums and declared bonus interest.

    InvestShield Cash is a Market Linked plan that provides capital guarantee on the

    invested premiums and declared bonus interest along with flexible liquidity

    options.

    InvestShield Gold is a Market Linked plan that provides capital guarantee on the

    invested premiums and declared bonus interest along with limited premium

    payment terms.

    Protection Solutions

    LifeGuard is a protection plan, which offers life cover at very low cost. It is

    available in 3 options ? level term assurance, level term assurance with return of

    premium and single premium.

    HomeAssure is a mortgage reducing term assurance plan designed specifically to

    help customers cover their home loans in a simple and cost-effective manner.

    Child Plans

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    Smart Kid education plans provide guaranteed educational benefits to a child

    along with life insurance cover for the parent who purchases the policy. The

    policy is designed to provide money at important milestones in the childs life.

    SmartKid plans are also available in unit-linked form ? both single premium and

    regular premium.

    Retirement Solutions

    ForeverLife is a retirement product targeted at individuals in their thirties.

    SecurePlus Pension is a flexible pension plan that allows one to select between 3

    levels of cover.

    Market-linked retirement products

    LifeTime Pension IIis a regular premium market-linked pension plan

    LifeLink Pension II is a single premium market-linked pension plan.

    InvestShield Pension is a regular premium pension plan with a capital guarantee

    on the investible premium and declared bonuses.

    Golden Years: is a limited premium paying retirement solution that offers tax

    benefits up to Rs 100,000 u/s 80C, with flexibility in both the accumulation and

    payout stages.

    ICICI Prudential also launched Salaam Zindagi, a social sector group insurance policy

    targeted at the economically underprivileged sections of the society.

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    Health Solution

    Health Assure: Is a regular premium plan which provides l long term cover

    against 6 critical illnesses by providing policyholder with financial assistance,

    irrespective of the actual medical expenses.

    Health Assure Plus: Is a regular premium plan which provides long term cover

    against 6 critical illnesses by providing financial assistance, irrespective of actual

    medical expenses, as well as an equivalent life insurance cover

    Group Insurance Solutions

    ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance

    benefits to their employees.

    ICICI Pru Group Gratuity Plan: ICICI Prus group gratuity plan helps

    employers fund their statutory gratuity obligation in a scientific manner. The plan

    can also be customized to structure schemes that can provide benefits beyond the

    statutory obligations.

    ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined

    contribution superannuation scheme to provide a retirement kitty for each member

    of the group. Employees have the option of choosing from various annuity

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    options or opting for a partial commutation of the annuity at the time of

    retirement.

    ICICI Pru Group Term Plan: ICICI Prus flexible group term solution helps

    provide affordable cover to members of a group. The cover could be uniform or

    based on designation/rank or a multiple of salary. The benefit under the policy is

    paid to the beneficiary nominated by the member on his/her death.

    Flexible Rider Options

    ICICI Pru Life offers flexible riders, which can be added to the basic policy at a marginal

    cost, depending on the specific needs of the customer.

    Accident & disability benefit: If death occurs as the result of an accident during

    the term of the policy, the beneficiary receives an additional amount equal to the

    rider sum assured under the policy. If the death occurs while traveling in an

    authorized mass transport vehicle, the beneficiary will be entitled to twice the sum

    assured as additional benefit.

    Accident Benefit: This rider option pays the sum assured under the rider on death

    due to accident.

    Critical Illness Benefit: protects the insured against financial loss in the event of

    9 specified critical illnesses. Benefits are payable to the insured for medical

    expenses prior to death.

    Income Benefit: This rider pays the 10% of the sum assured to the nominee every

    year, till maturity, in the event of the death of the life assured. It is available on

    SmartKid, SecurePlus and CashPlus

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    Waiver of Premium: In case of total and permanent disability due to an accident,

    the premiums are waived till maturity. This rider is available with SecurePlus and

    CashPlus.

    ABOUT THE PROMOTERS

    ICICI Bank(NYSE:IBN) is India''s second largest bank and largest private sector bank

    with assets of Rs 3569.32 billion as on June 30, 2007. 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 18 million customers through a multi-

    channel access network which includes over 850 branches and extension counters, 3469

    ATMs, call centers and Internet banking (www.icicibank.com).

    Established in London in 1848, Prudential plc, through its businesses in the UK and

    Europe, the US and Asia, provides retail financial services products and services to

    more than 20 million customers, policyholder and unit holders worldwide. As of

    June 30, 2007, the company had over US$3256 billion in funds under management.

    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 the leading European life

    insurance company with a vast network of 24 life and mutual fund operations in

    twelve countries - China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the

    Philippines, Singapore, Taiwan, Thailand and Vietnam.

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    The ICICI Prudential Edge - What makes us No. 1

    The ICICI Prudential edge comes from our commitment to our customers, in all that we

    do - be it product development, distribution, the sales process or servicing. Here's a peek

    into what makes us leaders.

    1. Our products have been developed after a clear and thorough understanding of

    customers' needs. It is this research that helps us develop Education plans that offer the

    ideal way to truly guarantee your child's education, Retirement solutions that are a hedge

    against inflation and yet promise a fixed income after you retire, or Health insurance that

    arms you with the funds you might need to recover from a dreaded disease.

    2. Having the right products is the first step, but it's equally important to ensure that our

    customers can access them easily and quickly. To this end, ICICI Prudential has an

    advisor base across the length and breadth of the country, and also partners with leading

    banks, corporate agents and brokers to distribute our products

    3. Robust risk management and underwriting practices form the core of our business.

    With clear guidelines in place, we ensure equitable costing of risks, and thereby ensure a

    smooth and hassle-free claims process.

    4. Entrusted with helping our customers meet their long-term goals, we adopt an

    investment philosophy that aims to achieve risk adjusted returns over the long-term.

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    5. Last but not least, our 10,000+ strong staff is given the opportunity to learn and grow,every day in a multitude of ways. We believe this keeps them engaged and enthusiastic,so that they can deliver on our promise to cover you, at every step in life.

    SWOT ANALYSIS

    SWOT Analysis is a technique for understanding strengths, weakness, opportunities and

    threats of an organization.

    The SWOT Analysis is a technique used for identifying an organizations strengths andweakness and examining the opportunities and threats which the organization is facing.

    Strength weakness

    Opportunities threats

    STRENGTHS

    First private entrant in the market. High brand recognition.

    Large customer base.

    WEAKNESSES

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    New in the market.

    Low trust level.

    Lesser work post.

    OPPUTUNITIES

    Huge potential in the market(only 2% population adequately insured).

    Unexplored areas like rural.

    Liberal laws of Indian govt.

    Rising incomes.

    THREATS

    Around 14 players, new ones are still coming.

    Huge acceptability of LIC.

    Left (CPIM) oppossion to private players.

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    COMPANIES VISITED

    TO

    COLLECT THE DATA

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    COMPANIES VISITED:

    S. No. Company No. of people

    contacted

    Address

    1 Amway India 2 Okhla Phase-II

    2 Beehive Systems 2 Sector-1, Noida

    3 Cidex Trade Fair 3 Sarita Vihar

    4 CSC 9 Sector-59, Noida

    5 Delhi Toyota 5 Mohan Cooperatives

    6 Escotel 3 Mohan Cooperatives

    7 EXL 5 Sector-58, Noida

    8 HCL BPO 10 Sector-58, Noida9 Hollostic India Ltd. 2 Sector-58, Noida

    10 Idea Cellular 5 Mohan Cooperatives

    11 Intersolutions 4 Sector-58, Noida

    12 Microland Systems 4 Sector-58, Noida

    13 NeoMagic Semiconductor 3 Sector-1, Noida

    14 NIIT 13 Mohan Cooperatives

    15 Olive E-Solutions 4 Mohan Cooperatives

    16 Patni Computers 1 Sector-59, Noida

    17 Philips India 12 Mohan Cooperatives

    18 R Systems 8 Sector-59, Noida

    19 Samtech Infonet 2 Mohan Cooperatives20 Schneider Electric 3 Mohan Cooperatives

    21 Singer 3 Mohan Cooperatives

    22 Solution Inc. 7 Mohan Cooperatives

    23 Tele Atlas 6 Sector-1, Noida

    24 V Customers 10 Mohan Cooperatives

    25 Xansa BPO 17 Sector-1, Noida

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    40 other Companies including CA, Self employed etc.

    Places Visited:

    Okhla ( Phase I,II )

    Mohan Cooperatives

    Noida ( Sector- 1,2,58,59 )

    Faridabad (Ansal Plaza )

    Sarita Vihar

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    DATA ANALYSIS

    AND

    INTERPRETATIONS

    Monthly Family Income Level(Rs.):

    < 10000 10000-20000 20000-40000 >4000014 41 76 64

    5 people didnt disclose their family income.

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    0

    20

    40

    60

    80

    40000

    Series1

    INTERPRETATION:After analyzing the data it was found that 14families

    have monthly family income level less than Rs 10000, 41 families have between rs

    10000 and Rs 20000, 76 families have between Rs 20000 and Rs 40000, 64 families

    have above Rs 40000.

    Annual Investment Level(Rs.):

    5000035 59 42 60

    5 people didnt disclose their Investment level.

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    0

    10

    20

    30

    40

    50

    60

    50000

    Series1

    INTERPRETATION: After analyzing the data it was found that 35 people invest less

    than Rs 10000 annually, 59 people invest between Rs 10000 and Rs 25000 annually, 42

    people invest between Rs 25000 and Rs 50000 annually, and 60 people invest more than

    Rs 50000 annually.

    Factors of Investment:

    S. No. Ist Priority No. of People Favoring

    1 Tax Benefits 68

    2 Liquidity 15

    3 Safety 52

    4 Returns 59

    6 people Didnt Disclose.

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    No. of People Favoring

    020

    40

    60

    80

    Tax

    Benefits

    Liquidity Safety Returns

    1 2 3 4

    No. of People

    Favoring

    INTERPRETATION: After analyzing the data it was found that while investing 68

    people gave priority to tax benefits,15 people to liquidity,52 people to safety and 59

    people to returns.

    Influencer:

    S. No. Influencer No. of People

    1 Self/Spouse 118

    2 Parents 49

    3 Intermediateries 17

    4 Friends 15

    1 Didnt Disclose.

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    S. No. Influencer

    1 Self/Spouse

    2 Parents

    3 Intermediateries

    4 Friends

    INTERPRETATION: after analyzing the data it was found that 118 people are

    influenced by self/ spouse, 49 by parents, 17 by intermediaries and 15 by friends.

    TIME HORIZON:

    S.NO. NO. OF YEARS NO. OF PEOPLE

    1 10 25

    No. of people

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    0

    10

    20

    30

    40

    50

    60

    70

    80

    10

    No. of people

    INTERPRETATION: After analyzing the data it was found that 63 people invest forless than 1 year, 77 for 1 to 3 years, 35 for 3 to 10 years, 25 for more than 10 years.

    INSTRUMENTS YOU INVEST IN

    S.NO. INSTRUMENTS NO. OF PEOPLE

    1 EQUITY SHARES

    25

    2 PPF

    75

    3 FIXED DEPOSITS

    404 LIFE INSURANCE

    60

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    No. of people

    Equity sharesppf

    fixed deposits

    life insurance

    INTERPRETATION: After analyzing the data it was found that 25 people invest in

    equity shares, 75 people invest in ppf, 40 people in fixed deposits and 60 people

    invest in life insurance.

    Preference for Life Insurance as an Investment:

    S. No. Investment Option No. of People

    1 Tax Savings 76

    2 Family Security 93

    3 Unforeseen Expense 11

    4 Saving for old age 17

    3 people didnt disclose.

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    No. of People

    1 Tax Savings

    2 Family Security

    3 Unforeseen

    Expense

    4 Saving for old

    age

    INTERPRETATION: After analyzing the data it was found that 76 people prefer life

    insurance an investment for saving tax, 93 people for family security, 11 for unforeseen

    expense and 17 for old age.

    Return on investment:

    S. No. No. of Years No. of people

    1 < 3 53

    2 3-5 67

    3 5-10 33

    4 > 10 39

    8 people didnt disclose.

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    No. of people

    1 < 3

    2 05-Mar

    3 10-May

    4 > 10

    INTERPRETATION: After analyzing the data it was found that 53 people want returnon investment before 3 years, 67 people want between 3 years to 5 years, 33 people wantbetween 5 years to 10 years and 39 people want after 10 years.

    Consultancy of any financial intermediary to make investment in Life

    Insurance.

    YES 140

    NO 60

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    0

    20

    40

    60

    80

    100

    120

    140

    yes No

    no. of people

    INTERPRETATION: After analyzing the data it was found that 140 people consultedfinancial intermediary to make investment in life insurance where as 60 people didntconsulted any body.

    How do you save your tax?

    S.NO. OPTIONS NO. OF PEOPLE

    1

    INVEST IN LIFE INSURANCE

    40

    2INVEST IN PPF

    75

    3

    INVEST IN INFRASTRUCTURE BONDS

    30

    4 INVEST IN PENTION PLANS 55

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    No. of people

    invest in life

    insurance

    invest in ppf

    invest in

    infrastructure

    bonds

    invest in

    pension plans

    INTERPRETATION: After analyzing the data it was found that 40 people save tax byinvesting in life insurance, 75 people by investing in ppf, 30 people by investing ininfrastructure bonds, 55 people by investing in pension plans.

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    CONCLUSIONS

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    From the findings of the study it can be said that the scope of Life Insurance

    market in India is full of opportunities & a huge potential lies in rural areas.

    The potential customers want value added products to meet their needs &

    requirements on individual basis.

    From the study it can be inferred that people have started looking towards Life

    Insurance as a future long-term source of investment with life cover.

    Insurance is a source of tax saving among corporates.

    People give priority to family security while investing in any Life Insurance

    policy.

    Private players in the industry need to focus towards marketing strategies to

    capture more of industry share with the growing competition.

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    RECOMMENDATIONS

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    The private companies have to improve their awareness among the people so as tobuild a brand image for them in comparison with LIC.

    The companies have huge potential unexplored market, which is ready to buy the

    product, but only if priced & targeted well.

    The companies can have agents to sell their products & else sell through mailer

    but in future it should also go in for selling through Internet.

    The companies need to market their products in such a way so that it reaches

    each & every potential customer.

    The company should create value added services & brand image so that they can

    ride on them to sell their products & to overcome its competitors.

    Insurance as a future source of long term gains need to be informed while selling

    a Insurance product.

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    ANNEXURE

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    QUESTIONNAIRE

    NAME: ----------------------------------- COMPANY:-----------------------

    AGE:------------------ MOBILE:------------------TEL:-----------------

    MONTHLY FAMILY INCOME (Tick the appropriate one)

    40000

    1. Rank the following factors in order of your preference, which you consider

    while making any investment:

    Liquidity

    Tax Benefits

    Safety

    Returns

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    2. Who influences your investment decisions? (Tick the appropriate one)

    Self/Spouse

    Parents

    Friends

    Intermediaries (Agents, Brokers etc)

    3.what is the time horizon for which you generally invest? (Tick the appropriate

    one)

    10 years

    4. How much money do you invest annually? (Tick the appropriate one)

    Rs. 50000

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    5. What are the instruments you invest in? (Tick your choices)

    Equity Shares

    PPF

    Fixed Deposits

    Life Insurance

    6. What is your order of preference for LIFE INSURANCE as an Investment

    option?

    Tax Savings

    Family Security

    Unforeseen Expenses

    Savings for old age

    7. Haveyou ever consulted any financial intermediary to make investment in

    Life Insurance options?

    Yes

    No

    If No, then how do you make investment

    _________________________________________________________________

    _

    8. You would prefer to get returns within? (Tick the appropriate one)

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    10 years

    9. Give ratings in order of your preference for these advantages of investing in

    Life Insurance options?

    Long Term Savings

    Tax Savings & Tax Free Returns

    Peace of mind for Family

    Provision after retirement

    10.How do you save your Tax?(Tick the appropriate one)

    Invest in Life Insurance

    Invest in PPF

    Invest in Infrastructure bonds

    Invest in pension plans

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    BIBLIOGRAPHY

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    BOOKS

    Marketing Management-PHILIP KOTLER

    Research Methodology C.R. KOTHARI

    BROUCHERS

    Company Brouchers and Journals

    WEBSITES

    www.iciciprulife.com

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