Bajaj Allianz General Insurance Company Limited

BAJAJ ALLIANZ LIFE INSURANCE & BHARTI AXA LIFE INSURANCE COMPANY

INSURANCE SECTOR

9/12/2010

KAUSTUBH RANE

Brief history of insurance sector

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The insurance sector in India has completed all the facets of competition –from being an open competitive market to being nationalized and then getting back to the form of a liberalized market once again. The history of the insurance sector in India reveals that it has witnessed complete dynamism for the past two centuries approximately.

With the establishment of the Oriental Life Insurance Company in Kolkata, the business of Indian life insurance started in the year 1818.

Important milestones in the Indian life insurance business

1912: The Indian Life Assurance Companies Act came into force for regulating the life insurance business.

1928: The Indian Insurance Companies Act was enacted for enabling the government to collect statistical information on both life and non-life insurance businesses.

1938: The earlier legislation consolidated the Insurance Act with the aim of safeguarding the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies were taken over by the central government and they got nationalized. LIC was formed by an Act of Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that too from the Government of India.

The history of general insurance business in India can be traced back to Triton Insurance Company Ltd. (the first general insurance company) which was formed in the year 1850 in Kolkata by the British.

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Important milestones in the Indian general insurance business

1907: The Indian Mercantile Insurance Ltd. was set up which was the first company of its type to transact all general insurance business.

1957: General Insurance Council, an arm of the Insurance Association of India, framed a code of conduct for guaranteeing fair conduct and sound business patterns.

1968: The Insurance Act improved for regulating investments and set minimal solvency levels and the Tariff Advisory Committee was set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India. It was with effect from 1st January 1973.

107 insurers integrated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC was incorporated as a company.

Insurance companies in India

IRDA has till now provided registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are considered then there are presently 13 insurance companies in the life side and 13 companies functioning in general insurance business. General Insurance Corporation has been sanctioned as the "Indian reinsurer" for underwriting only reinsurance business.

List of Insurance companies in India

LIFE INSURERS Websites

Public Sector

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Life Insurance Corporation of India www.licindia.com

Private Sector

Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in

Birla Sun-Life Insurance Company Limited www.birlasunlife.com

HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com

ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com

ING Vysya Life Insurance Company Limited www.ingvysayalife.com

Max New York Life Insurance Co. Limited www.maxnewyorklife.com

MetLife Insurance Company Limited www.metlife.com

Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com

SBI Life Insurance Company Limited www.sbilife.co.in

TATA AIG Life Insurance Company Limited www.tata-aig.com

AMP Sanmar Assurance Company Limited www.ampsanmar.com

Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com

GENERAL INSURERS

Public Sector

National Insurance Company Limited www.nationalinsuranceindia.com

New India Assurance Company Limited www.niacl.com

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Oriental Insurance Company Limited www.orientalinsurance.nic.in

United India Insurance Company Limited www.uiic.co.in

Private Sector

Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in

ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com

IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in

Reliance General Insurance Co. Limited www.ril.com

Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com

TATA AIG General Insurance Co. Limited www.tata-aig.com

Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com

Export Credit Guarantee Corporation www.ecgcindia.com

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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%.

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.

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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).

5) Customer Service

LIC should pay interest on delays in payments beyond 30 days.

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Insurance companies must be encouraged to set up unit linked pension plans.

Computerisation of operations and updating of technology to be carried out in the insurance industry The committee emphasized that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition.

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.

MAJOR POLICY CHANGES

Insurance sector has been opened up for competition from Indian private insurance companies with the enactment of Insurance Regulatory and Development Authority Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory and Development Authority (IRDA) was established on 19th April 2000 to protect the interests of holder of insurance policy and to regulate, promote and ensure orderly growth of the insurance industry. IRDA Act 1999 paved the way for the entry of private players into the insurance market which was hitherto the exclusive privilege of public sector insurance companies/ corporations. Under the new dispensation Indian insurance companies in private sector were permitted to operate in India with the following conditions:

Company is formed and registered under the Companies Act, 1956;

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The aggregate holdings of equity shares by a foreign company, either by itself or through its subsidiary companies or its nominees, do not exceed 26%, paid up equity capital of such Indian insurance company;

The company's sole purpose is to carry on life insurance business or general insurance business or reinsurance business.

The minimum paid up equity capital for life or general insurance business is Rs.100 crores.

The minimum paid up equity capital for carrying on reinsurance business has been prescribed as Rs.200 crores.

The Authority has notified 27 Regulations on various issues which include Registration of Insurers, Regulation on insurance agents, Solvency Margin, Re-insurance, Obligation of Insurers to Rural and Social sector, Investment and Accounting Procedure, Protection of policy holders' interest etc. Applications were invited by the Authority with effect from 15th August, 2000 for issue of the Certificate of Registration to both life and non-life insurers. The Authority has its Head Quarter at Hyderabad.

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Bajaj Allianz General Insurance Company Limited

INTRODUCTION

Bajaj Allianz General Insurance Company Limited is a joint venture between Bajaj Finserv Limited (recently demerged from Bajaj Auto Limited) and Allianz SE. Both enjoy a reputation of expertise, stability and strength.

Bajaj Allianz General Insurance received the Insurance Regulatory and Development Authority (IRDA) certificate of Registration on 2nd May, 2001 to conduct General Insurance business (including Health Insurance business) in India. The Company has an authorized and paid up capital of Rs 110 crores. Bajaj Finserv Limited holds 74% and the remaining 26% is held by Allianz, SE.

As on 31st March 2009, Bajaj Allianz General Insurance maintained its premier position in the industry by achieving growth as well as profitability. The company garnered a premium income of Rs. 2866 crore, achieving a growth of 11 % over the last year. Bajaj Allianz has made a profit before tax of Rs. 149.8 crore and has become the only private insurer to cross the Rs.100 crore mark in profit before tax in the last three years. The profit after tax was Rs.95 crores, which is also the highest by any private insurer.

Bajaj Allianz today has a countrywide network connected through the latest technology for quick communication and response in over 200 towns spread across the length and breadth of the country. From Surat to Siliguri and Jammu to Thiruvananthapuram, all the offices are interconnected with the Head Office at Pune.

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Vision:

To be the first choice insurer for customers

To be the preferred employer for staff in the insurance industry.

To be the number one insurer for creating shareholder value

Mission:

As a responsible, customer focused market leader, we will strive to understand the insurance needs of the consumers and translate it into affordable products that deliver value for money.Bajaj Allianz General Insurance offers technical excellence in all areas of General and Health Insurance as well as Risk Management. This partnership successfully combines Bajaj Finserv’s in-depth understanding of the local market and extensive distribution network with the global experience and technical expertise of the Allianz Group. As a registered Indian Insurance Company and a capital base of Rs. 110 crores, the company is fully licensed to underwrite all lines of general insurance business including health insurance.

Achievements:Bajaj Allianz has received “iAAA rating, from ICRA Limited, an associate of Moody’s Investors Services, for Claims Paying Ability.This rating indicates highest claims paying ability and a fundamentally strong position.

Bajaj Allianz General Insurance has received the prestigious “Business Leader in General Insurance”, awarded by NDTV Profit Business Leadership Awards 2008. The company was one of the top three finalists for the year 2007 and 2008

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in the General Insurance Companyof the Year award by Asia Insurance Review.

7 P’s of marketing of   Bajaj Allianz :

1. Products and Services:

Bajaj Allianz General Insurance Company Ltd. offers a range of insurance products to its clients. The following insurances are offered by the company:

Motor Insurance

Asset Insurance

Home Insurance

Shop / Showroom: Protection against all risks

Health Insurance

Health Guard

Personal Guard

Hospital Cash

Critical Illness

Silver Health

E-Opinion

Star Package

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Health Ensure

Insta Insure

Sankat Mochan

Family Floater HG

Tax Gain

Travel Insurance

Travel Companion

Student Companion

Pravasi Bharati Bima Yojana

Travel Asia

Travel Elite

Travel Assist

Swades Yatra

Corporate Insurance

Specialty Lines

Aviation

Marine Hull Insurance

Project Insurance

Sports & Entertainment Insurance

Your Employees

Group Personal Accident

Group Health Guard

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Group Critical Illness

Workmen’s Compensation

Group Travel

Office

Office Package

Burglary

Plate Glass

Public Liability

Fire

Money

D & O Liability

Fidelity Guarantee

Manufacturing Unit

Fire

Business Interruption

Industrial All Risk

Workmen’s Compensation

Engineering

Public Liability

Product Liability

Composite Public & Product Liability

Fidelity Guarantee

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Marine Insurance

Credit Insurance

2. Price:

The price structure is based on the type of policies. The price variation has to be kept due to intense competition among private players. Pricing element is very important for Bajaj Allianz as they want to increase market share. The price of Bajaj Allianz policies are made as per keeping the customer in mind.

3. Place:

3rd Floor, 349 Business Point,

Western Express Highway Road,

Andheri(E).

The locations of every corporate offices of Bajaj Allianz is magnificent. They locate themselves in a very professional manner. This indicates their corporate approach towards their work. Work culture is also conducive to such environment.

4. Promotion:

Huge advertisements on Television and radios.

Tele-marketing

Promotion in front of corporate offices

Internet Marketing

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Hoardings and brochures

5. People:

People are the main assets of financial organization because of service factor attached to it. Here in this case of insurance business, talented and experienced personnel are required. Bajaj Allianz recruits highly intellectual persons with good market knowledge. They also provide training to brief them up about Bajaj Allianz to its new staff members. This is the reason they are No.1 position in General Insurance among private players. They create an emotional commitment and strong two-way relationship between the employees and the Company.

To have clear performance expectations and a clear return from the Company (working environment, development, reward, career opportunities etc), which helps employees to make a connection between their contribution and the progress made by the Company.

To inspire and empower people to achieve their best and reward them competitively for their contribution and provide attractive career opportunities.To build a learning culture which fosters personal development and professional mobility and upholds values of professionalism,innovation, pragmatism, team spirit, integrity.To respect and value individuals, their diversity and support them in their need to balance professional and personal lives.

6. Process:

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The prestigious awards itself speaks the smooth functioning of the insurance activities. They have the highest claims paying ability and a fundamentally strong position. They want to be the first choice for insurers in the country. So, they understand the insurance needs of the customers and translate it into affordable products that deliver value for money. Below case study is a clear evidence of proof:

7. Physical Evidence:

Physical evidence is the material part of a service. Strictly speaking there are no physical attributes to a service, so a consumer tends to rely on material cues. There are many examples of physical evidence, including some of the following:

a) Business cards

b) Internet / Websites

c) Furnishings

d) Bajaj Allianz Building in Pune

e) Internal Infrastructure

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Bharti AXA General Insurance

Bharti AXA General Insurance is a joint venture between Bharti, one of India’s leading business groups with interests in Telecom, Agri Business and Retail; and AXA, world leader in Financial Protection and Wealth Management. Bharti Group holds 74% of equity and AXA holds 26% of the equity.With a vision to become the leader and preferred company for financial protection in India, Bharti AXA General Insurance offers its customers – individuals and businesses- a wide range of products and services that meet their insurance needs. The values upon which its business practices are based are availability, attentiveness and reliability. The company leverages the Bharti Group’s large customer pool, and has developed a strong multi-channel distributionnetwork in both urban and rural markets.The company was incorporated on 13th July 2007. Headquartered in Bangalore, the company currently has 40 branches across India.The Management team at Bharti AXA General Insurance consists of experienced leaders who are passionate about their company’s

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vision and goals and are committed to the development of Bharti AXA General Insurance as the preferred company for Financial Protection in India.Bharti AXA presents an array of protective plans to suit clients personal and business requirements. Bharti AXA system of values are as follows:

a) Reliable   – prompt settlements, customer service and professionalism.

b)   Attentive   – to customer needs as they change with time, and activelylistening to our customers.

c)   Available  – easy customer access to money and to our company, and    plans that have built-in flexibility and convenience.

Mission : “To be the preferred company for general insurance in India”

Strategy : Quality Policy – To provide fast, fair and friendly service to customers & partnersTo achieve a leadership position in India through a multi-distribution, multi-product platformTo adapt AXA’s best practice blueprints as a sound platform for profitablegrowthTo leverage Bharti’s local knowledge, infrastructure and customer base

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To deliver high levels of shareholder returnTo build long term value with our business partners by enhancing the proposition to their customersTo be the employer of choice to attract and retain the best talent in IndiaStrong distribution network & customer base of Bharti – provides access to customer base of more than 60 million

Strategic differentiators:

Multi channel execution capabilityAXA’s current Asia product range which is a strong match to products sold to the masses Global scale of AXA providing cost effective and speedy re-use of systems, products and business capability.

7 P’s of Marketing of Bharti AXA General Insurance:

1. Products and Services:

A)Retail Insurance:a. Motorb. Healthc. Personal Accidentd. Homee. ShopB)Commercial:a. Fireb. Engineeringc. Marine

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d. Property Crimee. Liabilityf. PackageC)Rural:a. Agricultural Pumpsetb. Cattle Insurance Policy

2. Price:

Pricing factor is decided on the basis of the type of products which the customer buys. But in true sense, pricing is very competitive as there are lots of competitors all over the country. Bharti AXA is a strong player in private companies and its price structure is highly competitive and reliable.

Example of Bharti AXA General Insurance:

Policy of Two Wheeler Insurance:This policy provides the following covers1.Accidental damage to the vehicle due to: Fire, lightning, self-ignition, external explosion, burglary,

housebreaking or theft, malicious act. Riot and strike; terrorism; earthquake; flood, cyclone and

inundation Whilst in transit by rail, road, air, elevator, lift.

2.Liability cover for: Third party injury or death Third party property damage caused to their property.

3. Place:

Bharti AXA General Insurance Co. Ltd.

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Plot No. 844/4, Mazzanine Floor, Fun Republic,Shah Industrial Estate, New Link Road, Andheri(W)Mumbai:400053Bharti AXA has selected good location in Mumbai. They are Fort and New Link Road of Andheri(W).

4. Promotion:

The following are the tools through which Bharti AXA promotes its general insurance business: Tele-marketing Internet Hoardings Personal Selling Advertisement through newspapers, business magazines and

FM radio

5. People:

Bharti AXA has a vision to ascend to the “preferred company” status by 2012 – to be preferred by customers, shareholders and employees. The Company believes that by being available, attentive and reliable, it will become the preferred company for its customers. And its people are Human Capital who have a key role in this process, and it is committed to create an emotional commitment with its employees.The company also have synergy of the Global best practices of AXA Group, the Country specific proven best practices of Bharti Group and supplement it with its own set of initiatives towards creating a culture that can attract best of the talents, nourish and retain them to achieve the long term Corporate Vision.

6. Process:

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From the minute customers claim intimation is received, the Claims Team becomes active and acts efficiently and swiftly towards its settlement. This is part of their endeavour to make the Bharti AXA General Insurance customer experience always a positive one.Bharti AXA CLAIMS MISSION is “Fast, fair and friendly services, delivered in a proactive, cost efficient manner through technology platforms.Alongwith the claim procedure being so smooth, the general insurance customer is very much satisfied while taking policy. The customer is given every minute details about a particular policy which he wants.

7. Physical Evidence: Stationery

Separate departments for smooth functioning of work like Public Relation Department

Brochures Internet / Web Pages Business cards

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CONCLUSION

There is a probability of a spurt in employment opportunities. A number of web-sites are coming up on insurance, a few financial magazines exclusively devoted to insurance and also a few training institutes being set up hurriedly. Many of the universities and management institutes have already started or are contemplating new courses in insurance. Life insurance has today become a mainstay of any market economy since it offers plenty of scope for garnering large sums of money for long periods of time. A well-regulated life insurance industry which moves with the times by offering its customers tailor-made products to satisfy their

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financial needs is, therefore, essential if we desire to progress towards a worry-free future.

WEBLOGRAPHYWWW.BAJAJALLIANZ.CO.IN

WWW.BHARTIAXA.CO.IN

WWW.OPPAPER.COM

WWW.INDIANMBA.COM

WWW.ACADJOURNAL.COM