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    THE INDIAN INSTITUTE OF PLANNING AND MANAGEMENT

    NEW DELHI

    PROJECT ON

    ICICI PRUDENTIAL LIFE INSURANCE LTD.

    SUBMITTED BY:

    VISHAL JAIN

    SEC:- SG1

    BATCH:SS/10-12

    PHONE NO.7838507330

    EMAIL ID.

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    ACKNOWLEDGEMENT

    It is well-established fact that behind every achievement lays an unfathomable

    sea of gratitude to those who have extended their support and without whom the

    project would never have come into existence.

    I express my gratitude to IIPM, New Delhi for providing me an opportunity to work

    on this the as a part of the curriculum

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    EXECUTIVE SUMMARY

    This project throws light on the awareness, perception, attitude & expectation of

    people towards purchasing a Life Insurance products offered by Public & Private

    players in the Industry.

    Given the latest scenario of the potential population to be insured & thus the sizable

    insurance market, lessons need to be learnt from all the past policies before offering

    different solutions for specific needs & requirements of the potential customers.

    Also a specific policy seems improbable given the countrys vastness & diversity

    regarding the per capita income, the rural-urban ratio, the varying cultural & social

    expectations from all the different sectors of the economy.

    People are taking Life Insurance policies to save tax. The real benefit of Life cover

    & future security benefits for the family need to be focused while marketing a Life

    Insurance product to a potential customer.

    TABLE OF CONTENTS

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    S NO. Contents Page No.

    1. ACKNOWLEDGEMENT 1

    2. EXECUTIVE SUMMARY 2

    3. HISTORY OF INDIAN INSURANCE INDUSTRY 4

    4. MARKETING OF INSURANCE PRODUCTS 18

    5. COMPANY PROFILE 23

    6. RESEARCH METHODOLOGY 34

    7. ANALYSIS 36

    8. CONCLUSION 45

    9. SUGGESTIONS 46

    10. LIMITATIONS 47

    11. APPENDICS 48

    HISTORY OF INDIAN INSURANCE INDUSTRY

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    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 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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    Liberalisation 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 liberalisation 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 such as stock market

    indices. Therefore, returns are lower than those on other savings instruments.

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    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.

    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.

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    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 consultant which can

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    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

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

    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

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    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 cent. Closer home, we

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    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

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

    Conclusion

    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

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    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 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

    resulting in market driven companies.

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    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

    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

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    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.

    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

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

    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

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    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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    COMPANY PROFILE

    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. 11.85 billion with ICICI Bank and Prudential

    plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005,

    the company garnered Rs 1584 crore of new business premium for a total sum assured of

    Rs 13,780 crore and wrote nearly 615,000 policies. The company has a network of about

    56,000 advisors; as well as 7 bancassurance and 150 corporate agent tie-ups. For the past

    four 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.

    Our vision:

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

    class people and service.

    This we hope to achieve by:

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    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 ouremployees

    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, Boundaryless, Ownership and Passion. Each of the

    values describe 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.

    Board of Directors

    The ICICI Prudential Life Insurance Company Limited Board comprises reputed people

    from the finance industry both from India and abroad.

    Mr. K.V. Kamath, Chairman

    Mr. Mark Norbom

    Mrs. Lalita D. Gupte

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    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. V. Rajagopalan, Chief - Actuary

    Mr. Sandeep Batra, Chief Financial Officer & Company Secretary

    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).

    ICICI Prudentials equity base stands at Rs. 1185 crore with ICICI Bank and Prudential plc

    holding 74% and 26% stake respectively. For the period April- December, 2005, the

    company garnered Rs 1,430 crore of new business premium for a total sum assured of Rs

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    15,170 crore and wrote 497,765 policies. For the past four 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 8 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 290 corporate agents and brokers. It has also tied up

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

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

    underprivileged sections of society.

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    ICICI Prudential has recruited and trained more than 65,000 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 5

    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.

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    Child Plans

    SmartKid 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.

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

    targeted at the economically underprivileged sections of the society.

    Health Solution

    Health Assure: Is a regular premium plan which provides l ong 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

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

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    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

    SmarKid, SecurePlus and CashPlus

    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.

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    ABOUT THE PROMOTERS

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

    with assets of Rs. 1892.18 billion as on September 30, 2005. 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 14 million customers through a multi-

    channel access network which includes over 590 branches and extension counters, 2,030

    ATMs, call centres 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 16 million customers, policyholder and unit holders worldwide. As of June 30, 2004,

    the company had over US$300 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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    Research Methodology

    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.

    6. Reaching at conclusions and suggestions based on analysis.

    Sources of Data Collection

    1.Primary Sources

    Questionnaire

    2.Secondary sources

    Internet

    Brochures, Pamphlets

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    ANALYSIS OF SURVEY

    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 Cooperatives6 Escotel 3 Mohan Cooperatives

    7 EXL 5 Sector-58, Noida

    8 HCL BPO 10 Sector-58, Noida

    9 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, Noida17 Philips India 12 Mohan Cooperatives

    18 R Systems 8 Sector-59, Noida

    19 Samtech Infonet 2 Mohan Cooperatives

    20 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

    40 other Companies including CA, Self employed etc.

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    Places Visited:

    Okhla ( Phase I,II )

    Mohan Cooperatives

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

    Faridabad (Ansal Plaza )

    Sarita Vihar

    Monthly Family Income Level(Rs.):

    < 10000 10000-20000 20000-40000 >40000

    14 41 76 64

    5 people didnt disclosed their family income.

    0

    20

    40

    60

    80

    40000

    Series1

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    Annual Investment Level(Rs.):

    50000

    35 59 42 60

    5 people didnt disclosed their Investment level.

    0

    10

    20

    3040

    50

    60

    50000

    Series1

    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 Disclosed

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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

    Influencer:

    S. No. Influencer No. of People

    1 Self/Spouse 118

    2 Parents 49

    3 Intermediateries 17

    4 Friends 15

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    1 Didnt Disclosed

    S. No. Influencer

    1 Self/Spouse

    2 Parents

    3 Intermediateries

    4 Friends

    Analysis of Income Level with Investment Level:

    Investment

    Income

    50000

    < 10000 8 5 1 -

    10000-20000 11 21 4 5

    20000-40000 11 20 24 20

    > 40000 4 13 12 30

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    11 people Didnt Disclose

    05

    101520253035

    8 5 1 -

    50000

    10000-20000

    20000-40000

    > 40000

    Analysis of Time Horizon for Investment with Investment tools:

    Priority

    Years

    Equity PPF/NSC FD Bonds Mutual

    Funds

    Life

    Insurance

    < 1 yrs 4 13 15 3 3 19

    1-3 yrs 17 46 28 17 8 62

    3-10 yrs 6 33 18 17 6 37

    >10 yrs 3 16 7 3 4 26

    020406080

    100120140160

    Equit

    y

    PPF/NS

    C FD

    Bond

    s

    MutualF

    unds

    LifeIn

    suranc

    e

    >10 yrs

    3-10 yrs1-3 yrs

    < 1 yrs

    Years

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    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 disclosed

    No. of People

    1 Tax Savings

    2 Family Security

    3 Unforeseen

    Expense

    4 Saving 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 5-Mar

    3 10-May

    4 > 10

    CONCLUSION

    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.

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    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.

    SUGGESTIONS

    The private companies have to improve their awareness among the people so as to

    build 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.

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    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.

    LIMITATIONS OF THE STUDY

    Selected only 200 respondents due to time constraint, which might have 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 a comprehensive &

    elaborate study could not be undertaken.

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    Rural areas could not to touched during the study, which have huge potential for

    life Insurance exists.

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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

    One time fixed returns

    Regular returns

    Capital gains

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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, NSC or G-sec

    Fixed Deposits

    Life Insurance

    Any other, Specify _________________

    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

    Forced Savings

    Tax Savings & Tax Free Returns

    Peace of mind for Family

    Provision after retirement

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

    Invest in Life Insurance

    Invest in PPF

    Invest in Infrastructure bonds

    Invest in pension plans

    11. Incase you wouldnt have reached home last night, how would have this

    affected your family financially? (Tick the appropriate one)

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    100%

    75%

    50%