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The Satisfaction Level of Financial Consultants of HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
APROJECT REPORT ON
The Satisfaction Level of Financial Consultants of HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
UNDERTAKEN AT
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The Satisfaction Level of Financial Consultants of HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
INDEX
SL. NO.
CONTENTS PAGE NO
1 EXECUTIVE SUMMARY 1
2 INTRODUCTION 4
3 COMPANY PROFILE 18
4 INTRODUCTION TO TOPIC 44
5 RESEARCH DESIGN 52
6 DATA ANALYSIS 55
7 FINDINGS 73
8 RECOMMENDATIONS 75
9 CONCLUSION 77
10 BIBILOGRAPHY 79
11 ANNEXURE 81
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EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY
Today’s scenario of insurance industry is much concentrating over analyzing the
satisfaction level of the financial consultants, which is very essential for the growth
of the company.
Title of the study: “Satisfaction level of the Financial Consultants”.
At
Objectives of Study:
To study the role of financial consultants in HDFC standard life insurance.
To find out the key motivational factors of the financial consultants.
To measure the satisfaction level of the financial consultants towards the
support of the superiors in achieving their target.
To study about the training and guidance provided to the financial consultants.
To study the satisfaction level of the financial consultants towards company.
Scope of the study: The scope of study is limited to Belgaum city.
Research Methodology:
Data Source:
The data is collected through:
Primary: Through survey method by preparing questionnaire
Secondary: Pamphlets, News Papers, journals, company register.
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Sample size: 100 Samples
Selection of the sampling method: Convenience sampling.
Data Analysis: Data gathered from the questionnaire are analyzed using coding
sheet tabulation and percentages. Data collected is depicted through pie charts.
Findings:
96% are satisfied with the training & guidance provided by the company.
Financial Consultants get support in selling the products with promotional
activities, this act as motivational factor.
Recommendations:
Company should continue to provide attractive incentives to financial
consultants even after one year as they give more importance for incentives.
Company should give extra benefit to its efficient Agents which will motivate
them to get more business and achieve their larger Sales.
LIMITATIONS:
Project is limited to Financial Consultants of HDFC Standard Life
Belgaum city.
The scope of the study is restricted to the time constraint.
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INTRODUCTION
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INTRODUCTION TO INSURANCE
The business of insurance is related to the protection of the economic values of the
assets. Every asset has a value the asset would have been created through the efforts
of the owner. The asset is valuable to the owner because he expects to get some
benefit from it. Insurance is a mechanism that helps to reduce the effect of such
adverse situation.
Purpose and Need of Insurance :
Assets are insured; because they are likely to be destroyed through accidental
occurrences such possible occurrences are called perils. Fire floods breakdowns,
lightning, earthquakes, etc, are perils. If such perils can cause damage to the asset, the
asset is exposed to that risk.
The risk only means that there is a possibility of loss or damage. The damage may or
may not happen. Insurance is done against the contingency that it may happen. There
has to be an uncertainty about the risk. Insurance is relevant only if there are
uncertainties. In the case of a human being, death is certain, but the time of death is
uncertain. In the case of a person who is terminally ill, the time of death is not
uncertain, though not exactly known.
Insurance does not protect the asset. It does not prevent its loss due to the peril. The
peril can sometimes be avoided, through better safety and damage control
management. Insurance only tries to reduce the impact of the risk on the owner of the
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asset and those who depend on that asset. It only compensates the losses- and that too,
not fully. Only economic consequences can be insured. If the loss is not financial,
insurance may not be possible.
The Business of Insurance
The business of insurance is to:
1) Bring together persons with common insurance interests (sharing the same risks),
2) Collect the share or contribution (called premium) from all of them, and
3) Pay out compensations (called claims) to those who suffer.
In India, insurance business is classified primarily as life and non-life or general. Life
insurance includes all risks related to the lives of human beings and general insurance
covers the rest. General insurance has three classifications is; Fire, Marine and
Miscellaneous. Personal accident and sickness insurance, which are related to human
beings, is classified as ‘non-life’ in India, but is classified as ‘life’, in many other
countries.
The business of insurance is nothing but one of sharing. It spreads losses of an
individual over the group of individuals who are exposed to similar risks. People who
suffer loss get relief because their loss is made good. People who do not suffer loss
are relieved because they were spared the loss.
Insurance business is divided into four classes:
1) Life Insurance Business.
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2) Fire Insurance Business.
3) Marine Insurance Business.
4) Miscellaneous Insurance Business.
Meaning of Life Insurance Business:
Life insurance, originally conceived to protect a man's family when his death left
them without income, has developed into a variety of policy plans.
Meaning of Fire Insurance Business:
Fire insurance usually includes damage from lightning; other insurance against the
elements includes hail, tornado, flood, and drought.
Meaning of Marine Insurance Business:
Marine insurance protects shipping companies against the loss of a ship or its cargo,
as well as many other items, and so-called inland marine insurance covers a vast
miscellany of items, including tourist baggage, express and parcel-post packages,
truck cargoes, goods in transit, and even bridges and tunnels.
Meaning of Miscellaneous Insurance Business:
Special casualty forms are issued to cover the hazards of sudden explosions from
equipment such as steam boilers, compressors, electric motors, flywheels, air tanks,
furnaces, and engines. Boiler and machinery insurance has several distinctive
features. A substantial portion of the premium collected is used for inspection services
rather than loss protection.
The business of insurance started with marine business. Traders, who used to gather
in the Lloyd’s Coffee house in London, agreed to share the losses to their goods while
being carried by ships. The losses used to occur because of pirates who robbed on the
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high seas or because of bad weather spoiling the goods or sinking the ship. The first
insurance policy was issued in 1583 in England. In India, insurance began in 1870.
The business of insurance is the protection of economic values of assets. Every asset
is expected to last for a certain period of time during which it will perform.
Insurance is a mechanism that helps to reduce the effect of such adverse situation.
Insurance is relevant only if there are uncertainties.
Insurance is a mechanism that helps to reduce the effect of such adverse situation.
Insurance is relevant only if there are uncertainties.Life Insurers transact life
insurance business; the rest is transacted by General Insurers. No composites are
permitted as per law.
The business of Insurance essentially means defraying risks attached to any activity
over time (including life) and sharing the risks between various entities, both persons
and organizations. Insurance companies are important players in financial markets as
they collect and invest large amounts of premium.
Insurance products are multi purpose and offer the following benefits:
1. Protection to the investors
2. Accumulate savings
3. Channelise savings into sectors needing huge long-term investments.
INSURANCE COMPANIES receives, without much default, a steady cash
stream of premium or contributions to pension plans. Various actuary studies and
models enable them to predict, relatively accurately, their expected cash outflows.
Liabilities of ICs being long-term or contingent in nature, liquidity is excellent and
their investments are also long-term in nature. Since they offer more than the return
on savings in the shape of life-cover to the investors, the rate of return guaranteed in
their insurance policies is relatively low. Consequently, the need to seek high rates of
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returns on their investments is also low. The risk-return trade off is heavily tilted in
favor of risk. As a combined result of all this, investments of insurance companies
have been largely in bonds floated by GOI, PSUs.,state governments, local bodies,
corporate bodies and mortgages of long term nature. The last place where Insurance
companies are expected to be over-active is bourses.
Lately ICs have ventured into pension schemes and mutual funds also. However, life
insurance constitutes the major share of insurance business. Life Insurance depends
upon the laws of mortality and there lies the difference between life and general
insurance businesses. Life has to extinguish sooner or later and the claim in respect of
life is certain. In case of general insurance, however, there may never be a claim and
the amount can be ascertained in advance. Hence, Life Insurance includes, besides
covering the risk of early happening of an event, an element of savings also for the
beneficiaries.
Pension business also derives from life insurance in as much as the pension outgo
again depends upon the laws of mortality .The forays made by insurance companies in
this area are, therefore ,natural corollary of their business.
Role of Insurance in Economic Development:
For economic development, investments are necessary. Investments are made out of
savings. A life insurance company is a major instrument for the mobilization of
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savings of people, particularly from the middle and lower income groups. These
savings are channeled into investments foe economic growth.
All good life insurance companies have huge funds, accumulated through the
payments of small amount of premium of individuals. These funds are invested in
ways that contribute substantially for the economic development of the countries in
which they do business.
All good life insurance companies have huge funds, accumulated through the
payments of small amount of premium of individuals. These funds are invested in
ways that contribute substantially for the economic development of the countries in
which they do business.
The private insurers in India are new and had not built up funds in 2002. But, in
course of time, they also would be directly and indirectly contributing to the country’s
economic development.
A life insurance company will have large funds. These amounts are collected by way
of premiums. Every premium represents a risk that is covered by that premium. In
effect, therefore, these vast amounts represent pooling of risks. The funds are
collected and held in trust for the benefit of the policyholders. The management of life
insurance companies are required to keep this aspect in mind and make all its
decisions in ways that benefit the community. This applies also to its investments.
That is why successful insurance companies would not be found investing in
speculative ventures.
Apart from investments, business and trade benefit through insurance. Without
insurance, trade and commerce will find it difficult to face the impact of major perils
like fire, earthquake, floods, etc. Financiers, like banks, would collapse if the factory,
financed by it, is reduced to ashes by a terrible fire. Insurers cover also the loss to
financiers, if their debtors default.
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INSURANCE INDUSTRY OVERVIEW
Insurance Sector in India
India with about 200 million middle class household shows a huge untapped potential
for players in the insurance industry. Saturation of markets in many developed
economies has made the Indian market even more attractive for global insurance
majors. The insurance sector in India has come to a position of very high potential and
competitiveness in the market.
The insurance industry in India can be broadly classified in two parts. They are:
Life Insurance
Non-life (General) Insurance
Brief History of Insurance
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The business of life insurance in India in its existing form started in India in the
year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.
Some of the important milestones in the life insurance business in India are:
1818:-The British Introduce to India. With the establishment of the Oriental
Life Insurance Company in Calcutta.
1850:- Non life insurance debuts, with Triton Insurance company.
1870:- Bombay mutual Life Assurance Society is the first India –owned life
insurer.
1907:-Indian Mercantile Insurance is the first Indian non life insurer.
1912: The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government
to collect statistical information about both life and non-life insurance
businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies taken over by
the central government and nationalized. LIC formed by an Act of Parliament,
viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the
Government of India.
1972: The General Insurance Business (Nationalization) Act, 1972
nationalized the general insurance business in India with effect from 1st
January 1973.
1993:-Malhotra Committee, headed by former BBI governor R.N.Malhotra,
set up to draw up a blue print for insurance sector reforms.
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1994:-Malhotra Committee recommends re-entry for private players,
autonomy to PSU insurers.
1997:-Insurance regulator IRDA (Insurance Regulatory and Development
Authority) set up.
2000:- IRDA starts giving licenses to private insurers, HDFC Standard Life
and ICICI Prudential first private insurers to sell a policy.
2002:- Banks were allowed to sell insurance plans , as TPAs enter the scene,
insurers start selling non-life claims in the cashless mode
.
Insurance Sector Reforms:
In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor
R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend
its future direction. The Malhotra committee was set up with the objective of
complementing the reforms initiated in the financial sector. The reforms were aimed
at "creating a more efficient and competitive financial system suitable for the
requirements of the economy keeping in mind the structural changes currently
underway and recognizing that insurance is an important part of the overall financial
system where it was necessary to address the need for similar reforms". In 1994, the
committee submitted the report and some of the key recommendations included:
1) Structure:
Government stake in the insurance Companies to be brought down to 50%.
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Government should take over the holdings of GIC and its subsidiaries so that
these subsidiaries can act as independent corporations.
All the insurance companies should be given greater freedom to operate.
2) Competition:
Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the industry.
No Company should deal in both Life and General Insurance through a single
entity.
Foreign companies may be allowed to enter the industry in collaboration with
the domestic companies.
Postal Life Insurance should be allowed to operate in the rural market.
Only One State Level Life Insurance Company should be allowed to operate
in each state.
3) Regulatory Body:
The Insurance Act should be changed.
An Insurance Regulatory body should be set up.
Controller of Insurance (Currently a part from the Finance Ministry) should be
made independent.
4) Investments:
Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%
GIC and its subsidiaries are not to hold more than 5% in any company (There
current holdings to be brought down to this level over a period of time)
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5) Customer Service:
LIC should pay interest on delays in payments beyond 30 days. Computerization
of operations and updating of technology to be carried out in the insurance
industry The committee emphasized that in order to improve the customer
services and increase the coverage of the insurance industry should be opened up
to competition. But at the same time, the committee felt the need to exercise
caution as any failure on the part of new players could ruin the public confidence
in the industry. Hence, it was decided to allow competition in a limited way by
stipulating the minimum capital requirement of Rs.100 crores. The committee felt
the need to provide greater autonomy to insurance companies in order to improve
their performance and enable them to act as independent companies with
economic motives. For this purpose, it had proposed setting up an independent
regulatory body.
Bank and Insurance:
Banc assurance symbolizes the convergence of banking and insurance. The term has
its origins in France and involves distribution of insurance products through a bank's
branch network. While banc assurance has developed into a tremendous success story
in Europe, it is a relatively new concept in Australia and Asia.
Most new insurers have entered into memoranda of understanding with banks to use
their branches as outlets for marketing standard products. State Bank of India, Vysya
Bank and J&K Bank already has joint ventures in life insurance. Vijaya Bank and
Punjab National Bank are in the midst of finalizing life and non-life ventures.
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The Insurance Act allows only those companies registered under the Companies Act
to become corporate agents. This gives the new generation and old private sector
banks a head start over Public sector banks, which are technically not eligible to sell
risk products.
IRDA, IBA & RBI are in discussions to iron out the various issues, as public sector
banks will play a key role in the distribution of products.
March 2003 Review:
The Insurance Regulatory and Development Authority has said that a bank cannot
enter into a referral arrangement with more than one life insurance company or more
than one general insurance company. Insurance companies can enter into referral
arrangements displaying the insurer’s publicity material in the branch premises.
According to the IRDA, the participation of the bank’s customers in any insurance
scheme shall be purely on a voluntary basis and this fact should appear prominently in
all publicity materials distributed by the bank and the insurer.
According to latest IRDA circular, the total payout under the referral fee has been
capped as a percentage of the circular, the total payout under the referral fee has been
capped as a percentage of the total premium, which varies from 5.5% to 55%
depending on the extent of the business the company generates through the referral
arrangement. IRDA has barred insurers from paying any referral fee for any
promotional campaign. Besides, insurers cannot pay any commission or other
remuneration along with the referral fees.
March 2004 Review:
IRDA has announced new guidelines pertaining to payment of brokerage to insurance
brokers carrying on direct insurance business in the country. As per the new
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guidelines on general insurance contracts, insurance brokers cannot charge brokerage
or commission on the business of Government and public sector undertakings
(PSU’s). Business from these classes of customers will be placed directly with the
insurance companies, wherein they will continue to enjoy a five per cent discount on
the basic tariff applicable.
The notification will come into effect from April 1, 2003, and applies to all general
insurance contracts. These guidelines will not apply to reinsurance broking contracts.
Brokerage/commission includes any royalty, license fees, administration charges or
any compensation, which any agreement between the parties provide for
intermediation. IRDA has so far issued broking licenses to 32 entities in the country.
IRDA has laid out stringent norms including cap on exposure in MF investment as
well as investment in stocks and shares for both public and private insurance
companies detailing the guidelines for investments in mutual funds (MFs). According
to this circular, the investment in MFs at any point of time shall not exceed 50% of
investment falling under the ‘other than approved investments’ (OTAI) category for
both life and general insurance companies. IRDA has also stipulated that the MFs in
which the insurers invest should be registered with the SEBI. Besides, the insurer
should always ensure that the investments in MF are diversified among the products
of different companies.
THE ISURANCE REGULATORY AND DEVELOPMENT AUTHORITY
Reforms in the insurance sector were initiated with the passage of the IRDA bill in
Parliament in December 1999. The insurance Regulatory And Development Authority
(IRDA) since its incorpation as a statutory body in April 2000 has fastidiously tuck to
its schedule of framing regulations and registering the private sector insurance
companies. The other decisions taken simultaneously to provide the supporting
systems to the insurance sector and in particular the life insurance companies were the
launch of the IRDA’s online service for issue and renewal of licenses to agents.
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The approval of institutions for imparting training to agents has ensured that the
insurance companies would have trained workforce of insurance agents in place to
sell their products, which are expected to be introduced by early next year. Since
being set up as an independent statutory body the IRDA has put in a framework of
globally compatible regulations.
S.No Registration No Date of Registration Name of the Company
1 101 23.10.2000 HDFC Standard Life Insurance Co Ltd.
2 104 15.11.2000 Max New York Life Insurance Co Ltd.
3 105 24.11.2000 ICICI Prudential Life Insurance Co Ltd.
4 107 10.01.2001 Om Kotak Mahindra Life Insurance Co Ltd.
5 109 31.01.2001 Birla Sun Life Insurance Co Ltd.
6 110 12.02.2001 TATA AIG Life Insurance Co Ltd.
7 111 30.03.2001 SBI Life Insurance Co Ltd.
8 114 02.08.2001 ING VYSYA Life Insurance Co Pvt. Ltd.
9 116 03.08.2001 Allianz Bajaj Life Insurance Co Pvt. Ltd.
10 117 06.08.2001 Met Life India Insurance Co Pvt. Ltd.
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COMPANY PROFILE
HDFC STANDARD LIFE INSURANCE
Housing Development Financial Corporation Ltd
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Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since emerged
as the largest residential mortgage finance institution in the country. The corporation
has had a series of share issues raising its capital to Rs. 119 crores. The net worth of
the Corporation as on March 31, 2000 stood at Rs. 2,096 crores. HDFC operates
through 75 locations throughout the country with its Corporate Headquarters in
Mumbai, India. HDFC also has an international office in Dubai, U.A.E., with service
associates in Kuwait, Oman and Qatar.
HDFC Standard Life Insurance Company Ltd:
HDFC Standard Life Insurance Company Ltd. is one of India’s private life insurance
company, which offers a range of individual and group insurance solutions. It is a
joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.), India’s leading housing finance institution and The Standard Life Assurance
Company, a leading provider of financial services from the United Kingdom.
Incorporated on 14th August 2000, it was the first life company to be granted a
certificate of registration by the IRDA on the 23rd of October 2000. HDFC Standard
Life is one of the first companies to be granted license by the IRDA to operate in life
insurance sector. It is a joint venture of HDFC Ltd and Standard Life Europe's largest
mutual life assurance company. HDFC is the majority stakeholder in the insurance JV
with 81.4 % stake and Standard Life has a stake of 18.6%. Mr. Deepak Satwalekar is
the MD and CEO of the venture.
HDFC Standard Life Insurance is a new Indian life insurance company that operates
out of 52 locations. It offers clients a range of insurance plans to meet their savings,
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investment and protection needs. In the financial year 2002-03, the company
registered a year-on-year growth of over 260%. It is also the first new life insurance
company to declare its third successive bonus for participating policy holders.
In order to survive in the insurance segment, HDFC had to introduce new
products. They were looking for a robust and integrated solution to support the new
product. HDFC was also facing numerous problems with their current systems in
terms of performance, reliability and scalability.
HDFC Standard Life Insurance sells a range of individual savings, pension
and group life assurance products and has branch offices in 39 locations throughout
India. It was recently rated as the "Best New Insurer - 2003" by Outlook Money
magazine. Both the promoters are well known for their ethical dealings and financial
strength and are thus committed to being a long-term player in the life insurance
industry.
HDFC Standard Life Insurance is one of the leading private life insurance companies.
The company generated premium from new business of Rs. 486 Cr in 2004-05,
registering a year-on-year growth of over 132%. The total premium income (including
renewal premium) grew by 130% to touch a figure of Rs. 687 Crores. The company
also achieved a major milestone during the financial year by crossing a Sum Assured
figure of Rs. 30,000 Cr. The company also declared its fifth bonus for participating
policyholders. HDFC operates through 75 locations throughout the country with its
Corporate Headquarters in Mumbai, India. HDFC also has an international office in
Dubai, U.A.E., with service associates in Kuwait, Oman and Qatar.
Standard Life Group, UK
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Standard Life is Europe's largest mutual life assurance company. Standard Life, which
has been in the life insurance business for the past 175 years, is a modern company
surviving quite a few changes since selling its first policy in 1825. The company
expanded in the 19th century from its original Edinburgh premises, opening offices in
other towns and acquiring other similar businesses.
Standard Life currently has assets exceeding over £70 billion under its management
and has the distinction of being accorded "AAA" rating consequently for the past six
years by Standard & Poor.
The Joint Venture
HDFC Standard Life Insurance Company Limited was one of the first companies to
be granted license by the IRDA to operate in life insurance sector. Each of the JV
player is highly rated and been conferred with many awards. HDFC is rated 'AAA' by
both CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and
Standard and Poor’s. These reflect the efficiency with which HDFC and Standard Life
manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
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VISION & MISSION
We aim to be the top new life insurance company in the market. This does not just
mean being the largest or the most productive company in the market, rather it is a
combination of several things like-
Customer service of the highest order
Value for money for customers
Professionalism in carrying out business
Innovative products to cater to different needs of different customers
Use of technology to improve service standards
Increasing market share
Key Values:
• SECURITY: Providing long term financial security to our policy holders will be our
constant Endeavour. We will be doing this by offering life insurance and pension
products.
• TRUST: We appreciate the trust placed by our policy holders in us. Hence, we will
aim to manage their investments very carefully and live up to this trust.
• INNOVATION: Recognizing the different needs of our customers, we will be
offering a range of innovative products to meet these needs. Our mission is to be the
best new life insurance company in India and these are the values that will guide us in
this.
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Board Members
Mr. Deepak S Parikh Chairman of HDFC Limited.
Mr. Keki M Mistry Managing Director of HDFC Limited.
Mr. Alexander M Crombie Group Chief Executive of the Standard Life
Ms. Marcia D Campbell Group Operations Director
Mr. Keith N Skeoch Chief Executive in Standard Life
Mr. Ranjan Pant Global Management Consultant
Ms. Renu S. Karnad Executive director of HDFC Limited
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Key strengths:
Financial Expertise:
As a joint venture of leading financial services groups, Standard Life has the
financial expertise required to manage your long-term investments safely and
efficiently.
Range of Solutions :
We have a range of individual and group solutions, which can be easily customized
to specific needs. Our group solutions have been designed to offer you complete
flexibility combined with a low charging structure.
Track Record so far:
Our gross premium income, for the year ending March 31, 2008 stood at Rs. 4,859
crores and new business premium income stood aRs.2,685crores.The company has
covered over 9,59,000 lives year ending March 31, 2008.We have covered over
11, 00,000 individuals out of which over 3, 40,000 lives have been covered through
our group business tie-ups.
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Highlights of Financial Year 2007-08
New Business Premium Income up by 63% to Rs. 2,685 crores.Total Premium
Income is up by 70% at Rs. 4,859 crores as against Rs. 2,856 crores in
FY2006-07
Alternate Channels including banc assurance has recorded an impressive
growth of over 63% to contribute 41% to the Effective Premium Income (EPI)
Group business funds under management have increased to Rs. 959 crores,
registering a growth of 83% over FY2006-07
The average premium has increased to Rs. 33,000
Company products and services are now available in 726 cities and towns
across the country
Strength of Financial Consultants has increased to 1,45,000
HDFC Standard Life tracks its New Business Premium on the basis of Effective
Premium Income (EPI). EPI is calculated by giving only a 10% value to a Single
Premium policy and is an internationally accepted indicator of an insurance
company’s
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The Satisfaction Level of Financial Consultants of HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
Performance:
HDFC Standard Life Insurance is the First Private Sector Life Insurance Company to
be granted a license. It has increased its market share from 0.76% to 1.12% by
collecting a premium income of 209bn. in the year ending March 2003-04.It has
registered an premium growth rate of 61.88% over previous year.
Insurance sector has grown not only in size but in maturity as well, in the
sense that from very simple products, which were available earlier on to the present.
What has been done is that Insurance Industry placed the customer in centre &
developed products and services around the customer.
In the past what we had was a bundled product so you get 3 or 4 benefits out of which
it may be possible that you may need just 1 or 2 benefits but in the process you end up
paying for all the four. In fact we were among the first to divide the offering into two
-a core product and the benefits or the riders. And then it is up to the customer to
choose and customize his own scheme according to needs and desires and pay for
such scheme.
I think that is the single largest revolution that has come about. The other
revolution in the Insurance sector is in terms of distribution channels. Earlier we were
having only agents but now we have agents, Banc assurance, corporate brokers and
direct sales people. Retail agents and banc assurance are the 2 biggest insurance
distribution channels.
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The Satisfaction Level of Financial Consultants of HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
The insurance penetration levels have considerably increased from 1.6 % to about
2.75%. Now whether that growth is enough in three year period, we can always
counter that. In the last 3 years private insurance companies have grown at 200-300 %
levels. But if you look at a longer time horizon say at 10 years the insurance
companies would grow at 13-14% rate which would make it one of the fastest
growing sector.
If we want an acronym of our products, we call it PIPS, which stands for
Protection, Investment, Pension, & Safety. These are the basic requirements of any
individual & thus our products satisfy each of these needs.
We have got conventional products, which are in the conventional structure
i.e. available with profits like Endowment, Money back then you have Unit Linked
plans. Which are for those investors who understand the capital markets, debt markets
& equity markets.
In terms of popularity, little fewer than 50% products are savings products whether it
is endowment, unit-linked or money back which are basically savings oriented. About
20% are investments oriented for e.g. single premium income policies where you pay
in a shot and enjoy the protection & investments returns in future. About 20 % are in
pensions. Pure protection is just about 5%. All these are in terms of premium income.
USP is something that the customer will have to find because life insurance is a long-
term process and it is about stability, being conservative. We don't hear about
aggressive life insurance companies who survive for a longer period.
To be in business when we are talking of an insurance policy for say 30 years, your
perspective is different in comparison to when you are taking a short term loan say a
car loan for 3 years.
Therefore different companies have chosen different models. Some of them have
chosen to be in for the long run while some have chosen to be in for the short run. For
in the short run, you need to have a high valuation of company, for high valuation you
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The Satisfaction Level of Financial Consultants of HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
need to have high & rapid sales. Higher the sales higher are the valuation & higher the
valuation higher is the price that you can charge. Insurance sector, you can’t
differentiate on the basis of innovative products. The reason being, if yours is an
excellent product it will not take too much time to be copied by other players. The
thing which they can’t copy is your services and, I think, that would be the
differentiating factor in the insurance arena for eg if you look at the HDFC model.
There are banks that are lending at lower rates but even then HDFC is able to grow at
30% thus if HDFC grows at 30%, it is on that balance sheet, while others might grow
100% but that would be on that small size. Thus it is important that people trust you.
It matters to do the right things even if they are not beneficial in the shorter run. Thus
we know the purpose of our existence in this sector. The main support, which we get
from our foreign partner, is in terms of actuary support. Actuaries are the people who
arrive at the premium rates. It is a monopoly market & there are not too many players
who get into this. There is a shortage of actuaries in India but yes now the people are
pursuing it as a career.
We get a lot of actuarial support from our foreign partner in terms of product
development, valuation processes & it is necessary at each step to know what the
implications are.
PRODUCTS:
HDFC Standard Life offers a bouquet of insurance solutions to meet every need. We
Cater to both, individuals as well as to companies looking to provide benefits to their
employees. This section gives you details of all our products.
o Individual Product
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The Satisfaction Level of Financial Consultants of HDFC STANDARD LIFE INSURANCE COMPANY LIMITED
o Group Product
o Rural Product
Individual Products:
HDFC Standard Life realizes that not everyone has the same kind of needs. Keeping
this in mind, we have a varied range of Products that you can choose from to suit all
your needs. These will help secure your future as well as the future of your family.
Protection Plans
One can protect their family against the loss of your income or the burden of a loan
in the event of your unfortunate demise, disability or sickness. These plans offer
valuable peace of mind at a small price. Protection range includes our Term
Assurance Plan & Loan Cover Term Assurance Plan.
Investment Plans
Single Premium Whole of Life plan is well suited to meet your long term investment
needs. We provide you with attractive long term returns through regular bonuses.
Pension Plans
Pension Plans helps one secure their financial independence even after
retirement. Pension range includes Personal Pension Plan and Unit Linked Pension
Plan.
Savings Plans
Savings Plans offers flexible options to build savings for ones future needs
such as buying a dream home or fulfilling your children’s immediate and future