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Competition Analysis of Canara HSBC
Oriental Bank of Commerce
Life Insurance Company
By
Rohit Mehta
09P164
Management Development Institute
Gurgaon 122 001
12th April – 11th June, 2010
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Competition Analysis of Canara HSBC
Oriental Bank of Commerce
Life Insurance Company
By
Rohit Mehta
Under the guidance of
Mr. Kanwar Vir Singh Sraon
ARSM (Assistance Regional Sales Manager)
Canara HSBC Oriental Bank of Commerce Life
Insurance Company
Management Development Institute
Gurgaon 122 001
12th April – 11th June, 2010
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Certificate of Approval
The following Summer Internship Report titled Competition Analysis of Canara HSBC
OBC Life Insurance Company is hereby approved as a certified study in management
carried out and presented in a manner satisfactory to warrant its acceptance as a prerequisite
for the award of Post-Graduate Diploma in Business Management for which it has been
submitted. It is understood that by this approval the undersigned do not necessarily endorse or
approve any statement made, opinion expressed or conclusion drawn therein but approve the
Summer Internship Report only for the purpose it is submitted.
Summer Internship Report Examination Committee for evaluation of Summer Internship
Report
Organizational Guide
Signature…………………………………….
Name: Mr. Kanwar Vir Singh Sraon
Designation: ARSM
Address: CANARA HSBC OBC LIFE INSURANCE CO. LTD.
First Floor, Tower – B, First India Place,
Vatika Towers, Sushant Lok, Phase - 1
M.G. Road, Gurgaon – 122002
Tel No: +919871441900
Email: [email protected]
Rohit
Mehta
09P164
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Acknowledgements
I would like to take this opportunity to thank my mentors Mr. Kanwar Vir Singh Sraon
and Mr. Pranav Kothari for their continuous motivation and guidance throughout the
duration of this project. Without their expert advice this would not have been possible.
I am also indebted to my college and Professors for their guidance in my studies, which
has enabled me to bring this project to completion.
I would also like to acknowledge the following experts for their time and support:
Mukul Parikh, Yogender (HSBC)
Rupesh Bapna (Citibank)
Siddharth Jain, Dheeraj (HDFC)
Anubhav, Rahul Sharma (ICICI)
Madan Yadav, Amit Sharma, Anurag Bhati, Pawan Maheswari (Stan C)
N.K. Gupta, R.S. Gupta, S.R. Meena (SBI)
Rohit Mehta
09P164
Management Development Institute,
Gurgaon
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Executive Summary
Canara HSBC Oriental Bank of Commerce Life Insurance Company commenced
business on 16th
June 2008. The Joint venture has access to 4400 branches across India.
The share holding pattern is Canara Bank with 51% equity, HSBC Insurance (Asia
Pacific) Holdings Ltd 26% and Oriental Bank of Commerce 23%.
Stay Smart and Saral Beema Plus are two of the ULIP based individual life insurance
plans offered by Canara HSBC Oriental Bank of Commerce Life Insurance Company. A
ULIP based insurance product is the one with components of both insurance and
investment. Unit Linked Insurance Plan (ULIP) provides for life insurance where the
policy value at any time varies according to the value of the underlying assets at the time.
The investment is denoted as units and is represented by the value that it has attained
called as Net Asset Value (NAV).
ULIP Plans have been divided into 4 categories:
1. Pension ULIP Plans
2. Whole Life ULIP Plans
3. Endowment ULIP Plans
4. Money Back ULIP Plans
The following objectives were laid down in the project:
- To analyse the competitor products relevant to Stay Smart and Saral Beema Plus
policies provided by Canara HSBC Life with respect to product features and returns
to customers.
- To understand how the competitors are making their sales, their selling strategies and
other relevant marketing parameters and to find out areas of improvement for Canara
HSBC Life.
- To try to identify the customer expectations and ways to fulfilling them.
Five competitors have been identified for the purpose of study. These are:
1. ICICI Prudential Life Insurance Company
2. SBI Life
3. Citibank
4. Standard Charted
5. HDFC Standard Life
The major form of selling of insurance products adapted by Canara HSBC Oriental Bank
of Commerce Life Insurance Company is that of Bancassurance. The project was divided
into sub-topics for approach. Initially, the concept of Bancassurance was studied and how
it works. After the study, main areas related to the project were identified. These included
the study of 7P’s of marketing. However, not all 7P’s were relevant to the project and
some could not be studied. In addition to the 7P’s, a SWOT analysis of Canara HSBC
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Oriental Bank of Commerce Life Insurance Company was done. Also, strengths and
weaknesses of competitors were identified and mentioned.
Finally, the project was concluded with an exploratory research on consumer preferences.
Various factors had been identified in the insurance policies which were important to
consumers by previously done research. These factors were compared on a weighted
scale of 1-5 to identify the degree of importance of these factors. Also, various banks
were compared by consumers on a rating scale. The sampling method being used was
convenience sampling. An online survey was made using Google spreadsheet and the link
was forwarded for response.
There were various limitations to the project and survey. Primary limitation was of time.
Also, certain competitors were hesitant in giving information. Hence, the limitation of not
being able to interview many employees is also present. Finally, the response to the
survey is predominantly from students pursuing post-graduation and from people of the
age group 20-25 years. Hence the conclusions derived would be based on this future
customer base.
The following conclusions and suggestions are being drawn from the project:
a. Changes in the website of Canara HSBC Oriental Bank of Commerce Life Insurance
Company were suggested based on the observations of competitor’s websites.
b. Certain suggestions were made for additions to the workplace i.e. HSBC branch in
Jaipur.
c. Relationship between the target market segment and organization structure was
observed
d. Comparisons were made of the product and prices under study
e. SWOT analysis enabled in finding scope of improvements
f. No. of products and company advertisements had little or no effect on peoples
decision to buy insurance policy
g. People reference and brand name are important factors in selling insurance
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TABLE OF CONTENT
1. Introduction .................................................................................................................11
a. Company profile.....................................................................................................11
b. Products..................................................................................................................12
c. Fund options...........................................................................................................13
d. Problem at Hand.....................................................................................................15
e. Methodology..........................................................................................................16
2. Literature Review.........................................................................................................17
a. Financial System....................................................................................................17
b. Why Bancassurance...............................................................................................19
c. Advantages of Bancassurance................................................................................20
d. Why Bancassurance with Life Insurance...............................................................22
e. Bancassurance models............................................................................................23
f. Bancassurance working..........................................................................................24
g. Indian Scenario.......................................................................................................26
h. Relevance of Bancassurance in Indian Financial Sector........................................29
i. SWOT analysis.......................................................................................................31
j. Issues in Bancassurance.........................................................................................32
3. Product Analysis..........................................................................................................33
4. Price Analysis...............................................................................................................37
5. Promotion.....................................................................................................................44
a. Advertisements.......................................................................................................45
b. Website...................................................................................................................46
c. Branch Marketing...................................................................................................47
6. Hierarchy......................................................................................................................51
7. Customer Segmentation...............................................................................................56
8. SWOT Analysis............................................................................................................61
9. Exploratory Research...................................................................................................64
10. Conclusions and Recommendations.............................................................................66
11. References....................................................................................................................67
12. Appendix......................................................................................................................68
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LIST OF FIGURES
1. Product categorization by Canara HSBC Oriental Bank of Commerce Life.........12
2. Financial System....................................................................................................17
3. Insurance distribution channels in India.................................................................18
4. Process of Bancassurance Working.......................................................................24
5. Table of CAGR for both life and non-life policies................................................27
6. Growth of life and non-life insurance in India.......................................................27
7. Insurance penetration an international comparison................................................28
8. Ratio of premium to total population.....................................................................28
9. Insurance distribution channels..............................................................................30
10. Hierarchy of ICICI bank.........................................................................................51
11. Hierarchy of SBI bank, small branches..................................................................52
12. Hierarchy of SBI bank, large branches..................................................................52
13. Hierarchy of Citibank.............................................................................................53
14. Hierarchy of Standard Charted...............................................................................54
15. Hierarchy of HDFC bank.......................................................................................55
16. Customer segmentation of Canara HSBC Oriental Life Insurance........................56
17. Customer segmentation of ICICI bank...................................................................57
18. Customer segmentation of Citibank.......................................................................58
19. Customer segmentation of Standard Charted.........................................................59
20. Customer segmentation of HDFC Bank.................................................................60
21. Product categorization of ICICI bank....................................................................69
22. Product categorization of Birla sun life.................................................................71
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LIST OF TABLES
1. Table of product comparison for Saral Beema Plus.....................................................34 2. Table of product comparison for Stay Smart Plan.......................................................35 3. Policy term of SBI Unit Plus III...................................................................................36 4. Price comparison for Saral Beema Plus.......................................................................38 5. Surrender charges for Saral Beema Plus......................................................................40 6. Mortality charges for Saral Beema Plus.......................................................................40 7. Mortality charges for ICICI Ace..................................................................................40 8. Fund management charges for unit plus III pension....................................................41
9. Surrender charges for unit plus III pension..................................................................41
10. Premium allocation charges for unit plus III................................................................41
11. Fund management charges for Titanium Plus Plan......................................................42
12. Mortality charges for Titanium Plus Plan....................................................................42 13. Premium allocation charges for Unit Gain Protection Plus.........................................43
14. Fund management charges for Unit Gain Protection Plus...........................................43
15. Mortality charges for Unit Gain Protection Plus..........................................................43 16. SWOT of Canara HSBC Oriental Life.........................................................................61
17. SW of ICICI.................................................................................................................62
18. SW of SBI....................................................................................................................62
19. SW of Citibank.............................................................................................................63
20. SW of Standard Charted...............................................................................................63
21. SW of HDFC................................................................................................................63
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LIST OF APPENDICES
APPENDIX 1 – LIST OF PRODUCTS........................................................68
APPENDIX 2 – SURVEY QUESTIONNAIRE...........................................77
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INTRODUCTION
1. Company Profile
Canara HSBC Oriental Bank of Commerce Life Insurance Company commenced
business on 16th
June 2008. The Joint venture has access to 4400 branches across India.
The share holding pattern is Canara Bank with 51% equity, HSBC Insurance (Asia
Pacific) Holdings Ltd 26% and Oriental Bank of Commerce 23%.
Canara HSBC Oriental Bank of Commerce Life Insurance Company has joined the big
league of life insurance players by breaking through Rs 100 crore of new business in a
month.
The company garnered Rs 171.1 crore in March, closing fiscal 2009-10 with Rs 861.3
crore in gross written premiums, recording a growth of 189 per cent over FY 2008-09.
The company’s business has stood at Rs 1,160 crore since launch in June 2008. The
company has underwritten 1, 35,585 policies since inception.
It is indeed encouraging to see the company on a strong growth trajectory in such a short
span. Their achievement is the result of the commitment of their shareholders and
employees in positioning the company as a strong private life insurance player in a
tumultuous yet competitive 2009.
Operating a pure bank assurance model, Canara HSBC Oriental Bank of Commerce
Life Insurance Company has exclusive access to the customer bases of both the public
sector banks, Canara Bank and Oriental Bank of Commerce, and of HSBC in the country.
This comprises more than 48 million customers and a pan-India network of over 4,400
branches. Currently, the company's products are available through around 900 branches
of the three banks.
This further testifies the scale of untapped potential among the large customer base of
Canara Bank, Oriental Bank of Commerce and HSBC. They are confident that their
strong distribution model, research-based products and customer centric initiatives will
enable them to achieve their goal of taking life insurance to a large section of the society
and help them evolve as one of the top insurance players in the market.”
The bank assurance model has enabled the company in reaching out to customers from
the rural areas and even exceeded the regulatory minimum required level of sales for
FY 2009-10.
Canara HSBC Oriental Bank of Commerce Life Insurance Company's assets under
management stood at Rs 1,170 crore as on March 31, 2010. In FY 2009-10, the
company through its prudent investment strategy demonstrated consistent fund
performance, exceeding benchmarks across all funds.
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Products
Canara HSBC Oriental Bank of Commerce Life Insurance Company has product
offerings in individual segment as well as group segment.
Total number of products on offer: 6
Brief Introduction to Some Products
Key Features/ Benefits of the Stay Smart Plan
Whole of Life Protection: Life cover till age 99 years
Pick a Premium Payment Term: to suite your earning capacity
Loyalty Additions at periodic intervals: To boost the value of your Investment
Liquidity: To meet your unplanned contingencies through Partial Withdrawals
Tax benefits: Enjoy tax benefits under Section 80C and Section 10(10D), as per
the Income Tax Act, 19
Key Features/ Benefits of the Retire Smart Plan
It gives a person a feel of financial safety after retirement.
Single or Regular Premium Payment options depending on your investment
preference
Loyalty Additions at periodic intervals: To boost the value of your Investment
through your Policy Term
Maturity Switch Option: As your Plan nears your Retirement Age, change your
investment philosophy automatically, by moving from a more market influenced
Fund to a risk averse Fund.
Tax Benefits: Enjoy tax benefits under Section 80CCC, as per the Income Tax
Act, 1961.
Canara HSBC
Life
Individual Products
Stay Smart Plan
Retire smart Plan
Saral Beema Plus
Pure Term Plan
Group Products
Group Loan Protection
Plan
Group Term Plan
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Key Features/ Benefits of the Saral Beema Plus
This Plan will give you loyalty additions to help your money grow fast.
No Medical Tests: Gain express insurance by certifying the ’Declaration of Good
Health’ without any medical questions or tests
Simple Structure: Fixed benefits and options to maintain ease of understanding
and purchase of this Life Insurance cum Investment policy.
Increasing Cover: Enhanced death benefit to your family by way of Sum Assured
plus Fund Value
Limited Premium Payment: Pay premiums for only 7 years while you enjoy life
cover up to 15 years.
Key Features/ Benefits of Pure Term Plan
This plan protects the person from financial uncertainties and secures their future.
Flexible Premium Paying Options – The plan provides you Regular and Single
Premium Paying options
Rebate on premium rates for female lives
Save tax while investing under section 80C and get tax-free benefits under section
10 (10 D) under the Income Tax Act, 1961
Fund Options Available in the Plans
There are 5 fund options available in the plans. These are:
a. Equity II Fund:
- Structure: 60-100% in Equities, 0% in Debt Securities and 0-40% in Money Market
Instruments.
- Fund Philosophy: To generate long-term capital appreciation from active management
of a portfolio invested in diversified equities. The diversified Equity Fund is a long term
growth fund. The Fund's primary objective is to have high capital appreciation through
investment in Equities. To maintain liquidity the Fund will invest in cash and money
market instruments.
- Risks: Market Risks; suited for investors with a long-term investment horizon with the
appetite for risk to capital over short-term periods.
- Fund Management Charge: 1.35% per annum.
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b. Growth II Fund:
- Structure: 50-90% in Equities, 10-50% in Debt Securities and 0-40% in Money Market
Instruments.
- Fund Philosophy: To achieve capital appreciation by investing predominantly in
equities, with limited investment in Fixed Income securities. This Fund will invest in
listed equities and high quality fixed income and money market securities. The fund
intends to adopt a relatively aggressive approach towards bonds and equities with the
objective of achieving capital appreciation.
- Risks: These funds are subject to risks of debt as well as equity instruments to the
extent of allocation to the respective asset categories.
- Fund Management Charge: 1.20% per annum.
c. Balance II Fund:
- Structure: 30-70% in Equities, 30-70% in Debt Securities and 0-40% in Money Market
Instruments.
- Fund Philosophy: To generate capital appreciation and current income, through a
judicious mix of investments in equities and fixed income securities. This Fund will
invest in listed equities and high quality fixed income securities, and money market
instruments. The fund intends to adopt a relatively balanced approach towards bonds and
equities exposure with the objective of achieving capital appreciation with minimal short-
term performance volatility.
- Risks: These funds are subject to risks of debt as well as equity instruments to the
extent of allocation to the respective asset categories.
- Fund Management Charge: 1.10% per annum.
d. Debt Fund:
- Structure: 0% in Equities, 60-100% in Debt Securities and 0-40% in Money Market
Instruments.
- Fund Philosophy: To earn regular income by investing in high quality Debt securities.
This Fund will primarily invest in a portfolio of high quality bonds and other fixed and
floating rate securities issued by the Government, Government agencies and corporate
issuers. To maintain liquidity the fund will invest in cash and money market instruments.
- Risks: Price Risk or Interest Rate Risk, Liquidity or Marketability risk, Credit Risk or
Default risk, Reinvestment Risk.
- Fund Management Charge: 1.00% per annum.
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e. Liquidity fund:
- Structure: 0% in Equities, 0-60% in Debt Securities and 40-100% in Money Market
Instruments.
- Fund Philosophy: To generate reasonable returns commensurate with low risk and a
high degree of liquidity. This Fund will primarily invest in portfolio constituted of money
market and high quality debt securities.
- Risks: Risk of Debt, price risk is low on account of shorter maturity of the underlying
debt investments.
- Fund Management Charge: 0.80% per annum.
2. Problem at hand
Stay Smart and Saral Beema Plus are the most sold insurance policies from Canara
HSBC Oriental Bank of Commerce Life Insurance Company. Being a proactive
company, it wishes to learn from its competitors the strategies adapted by them in selling
insurance policies. Canara HSBC Oriental Bank of Commerce Life Insurance Company
relies on Bancassurance channel in making its sales. Thus in identifying its competitors,
sales of insurance policies by Bancassurance channel is being considered. The identified
competitors are:
1. ICICI Prudential Life Insurance Company
2. SBI Life
3. Citibank
4. Standard Charted
5. HDFC Standard Life
Problem Formulation
Initially, a study of the concept of Bancassurance was done. This was done primarily
from online sources like reports, govt. Websites, company websites etc. On the basis of
this background work, future targets were set for analysis. The following were the targets
for study:
a. To identify and analyse the products of competitors for study
b. To compare these products on the basis of costs to customers
c. To identify how marketing of insurance products is done in bank branches
d. To compare the company websites for benchmarking
e. To analyse the company advertisements
f. To observe the employees at branch offices and compare them
g. To understand the branch hierarchy and how work is divided
h. To understand the customer segmentation of the competitors
i. To do a SWOT analysis of all the companies
j. To identify the customer preferences regarding insurance policies
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Methodology
The project was carried out in a number of steps. Initially, a research was done on the
number of products being offered by the competitors. This was done primarily through
the company websites. Also, insurance comparison sites were referred for identifying the
suitable products for comparison. The identified products were then compared.
Comparison was done by listing the policy features in a table and comparing the
differences in the policies.
The price component of policies was compared similarly. Various expenses charged in
the policies were listed in a table and compared for their features.
The promotion aspect of the project was subdivided into components. Promotion was
divided into promotion at branch offices, online promotion, and promotion via mass
media like television advertisements. For promotion at branches, field trips were
conducted and observations were made regarding the layout in the branches, how
marketing of products is being done at the branches etc.
For online promotion, various competitor strategies were observed in comparing the
products online. These strategies were evaluated and suggestions were made.
Websites of all the competitors were evaluated with Canara HSBC Oriental Bank of
Commerce Life Insurance Company’s website. Features in the websites were listed and
comparisons were made. Relevant additions to the website are suggested.
Television Advertisements of all the concerned companies were observed to determine
the differentiation factors.
Field visits were made and interviews (both structured and unstructured) were conducted
with company employees of the competitors. Through these interviews, Organization
Structure (hierarchy) and Customer Segmentation were determined.
SWOT analysis was done on Canara HSBC Oriental Bank of Commerce Life Insurance
Company and strengths and weaknesses of the competitors were noted down.
An exploratory survey was conducted to determine the customer preferences related to
life insurance policies. This survey was carried on previously done research on insurance
preferences. The sampling method used was convenient sampling. Most of the
respondents were students and predominantly male of the age group 20-25. Also, attempt
was made to judge the effectiveness of various ad campaigns by the companies.
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LITERATURE REVIEW
Banking as a business around the globe has evolved due to integration of global financial
markets, development of new technologies, universalization of banking operations and
diversification in non-banking activities. As the result, the boundaries that have kept
various financial services separate from each other have vanished. This coming together
of different financial services has led to synergies in operations and development of new
concepts. One of these is Bancassurance. Bancassurance simply means selling of
insurance policies by banks.
Bancassurance as a concept was pioneered in France, where it has become the
predominant source of insurance business today, with banks selling more than 90% of
insurance products. However, in some countries Bancassurance is still largely prohibited,
but it was recently legalized in countries such as the United States.
Bancassurance originated in India in the year 2000. Following the recommendations by
First Narasimham committee, the contemporary financial landscape has been reshaped.
Thus, present-day banks have become far more diversified than before. Therefore, banks
entering insurance business are a natural corollary and fully justified as ‘insurance’
is another financial product required by bank customers.
FINANCIAL SYSTEM
The financial system consists of variety of institutions, markets and instruments that are
related in the manner shown in the figure above, it provides the principal means by which
savings are transformed into investment. Given its role in the allocation of resources, the
efficient functioning of the financial system is of critical importance to a modern
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economy. Financial manager negotiate loans from financial institutions, raises resources
in financial marked and invests surplus funds in financial market. In very significant way
he manages the interface between the form and its financial environment.
The Insurance Distribution Channels in India Can Be Listed As follows:-
Simply put, in case of Bancassurance, the corporate agent is the bank and business is
sought through the existing bank customers.
Distribution Channels
Personal Distribution Direct response distribution
Individual
Agents
Corporate Agents
Brokers
Bancassurance
Internet
Direct Mail
Call
Centre
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WHY BANCASSURANCE
The main reasons why banks have decided to enter the insurance industry area are the
following:
Intense competition between banks, against a background of shrinking interest
margins, has led to an increase in the administrative and marketing costs and limited the
profit margins of the traditional banking products. New products could substantially
enhance the profitability and increase productivity.
Financial benefits to a bank performance can flow in a number of ways, as briefly
outlined below:
- Increased income generated, in the form of commissions and/or profits from the
business (depending upon the relationship)
- Reduction of the effect of the bank fixed costs, as they are now also spread over the
life insurance relationship.
- Opportunity to increase the productivity of staff, as they now have the chance to
offer a wider range of services to clients
Customer preferences regarding investments are changing. For medium-term and
long-term investments there is a trend away from deposits and toward insurance products
and mutual funds where the return is usually higher than the return on traditional deposit
accounts. This shift in investment preferences has led to a reduction in the share of
personal savings held as deposits, traditionally the core element of profitability for a
bank which manages clients money. Banks have sought to offset some of the losses by
entering life insurance business. Life insurance is also frequently supported by favourable
tax treatment to encourage private provision for protection or retirement planning. This
preferential treatment makes insurance products more attractive to customers and banks
see an opportunity for profitable sales of such products.
Analysis of available information on the customer financial and social situation
can be of great help in discovering customer needs and promoting or manufacturing
new products or services. Banks believe that the quality of their client information gives
them an advantage in distributing products profitably, compared with other distributors
(e.g. insurance companies).
The realization that joint bank and insurance products can be better for the customer
as they provide more complete solutions than traditional standalone banking or
insurance products.
Banks are experiencing the increased mobility of their customers, who to a great
extent tend to have accounts with more than one bank. Therefore there is a strong need
for customer loyalty to an organization to be enhanced.
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Client relationship management has become a key strategy. To build and maintain
client relationships, banks and insurers are forming partnerships to provide their clients
with a wide range of bank and insurance products from one source.
It is believed that as the number of products that a customer purchases from an
organization increases the chance of losing that specific customer to a competitor
decreases.
ADVANTAGES OF BANCASSURANCE:
Everybody is a winner in Bancassurance. For banks it mainly acts as a means of product
diversification and additional fee income; for insurance company it acts as a tool for
increasing their market penetration and premium turnover and for customer it acts as a
bonanza in terms of reduced price, high quality products and delivery to doorsteps. Hence
it is a win-win solution for everyone who involved.
To the Bankers:
In a situation of constant asset base the bank can increases Return on Assets (ROA)
by increasing their income, by selling insurance products through their own channels.
It can cover operating expenses and make operating expenses profitable by leveraging
their distribution and processing capabilities.
Can leverage on face-to-face contacts and awareness about the financial
conditions of customers to sell insurance products.
By acting as a one stop shop for all financial services, they can improve
overall customer satisfaction resulting in higher customer retention levels
Banks enjoy significant brand awareness within their geographical region providing
for a lower per lead cost when advertising through print, radio and television. The
advantage of a bank over traditional distributors is the lower cost per sales lead made
possible by their sizeable loyal customer base.
Can establish sales oriented culture among the employees
Increase in shareholders’ value
Better utilization of manpower and branch network
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To the customers:
Comprehensive financial advisory services under one roof. i.e., insurance services
along with other financial services such as banking, mutual funds, personal loans etc.
Enhanced convenience on the part of the insured.
Easy access for claims, as banks is a regular go.
Innovative and better product ranges.
Hassel-free post sales services.
Lower cost of insurance.
To the insurers:
Insurers can exploit the banks' wide network of branches for distribution of
products. The penetration of banks' branches into the rural areas can be utilized to sell
products in those areas.
Customer database like customers' financial standing, spending habits, investment
and purchase capability can be used to customize products and sell accordingly.
Since banks have already established relationship with customers, conversion ratio of
leads to sales is likely to be high. Further service aspect can also be tackled easily.
Lower cost to customer acquisition leading to increased profitability.
Improved brand equity.
Lower cost of customer acquisition.
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WHY BANCASSURANCE WITH LIFE INSURANCE PRODUCTS
Traditionally, much fewer non-life insurance products are distributed through
Bancassurance than life insurance products. There are several reasons for this:
The main reason may be the complementary nature of life insurance and
banking products: bank employees are already familiar with financial products
and quickly adapt to selling insurance-based savings or pension products.
On the other hand, the non-life market requires special management and selling
skills, which are not necessarily prevalent in Bancassurance. In addition, such
competencies require significant investment in training and motivation, and
therefore additional costs.
Life insurance products are generally long-term products, which require
customers to have complete confidence in the institution that invests their money.
And we now know that, in many countries, banks have a better image and are
more trusted than insurance companies.
Bank advisers can use their knowledge of their customers’ finances to target
their advice towards specific needs. This is a major advantage in life insurance
and less important in personal injury insurance.
Some professionals also refer to the claims management aspect of personal
injury insurance, which could have a negative impact on brand image. This would
seem to explain why for a long time Bancassurance operators hesitated to offer
these types of product.
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BANCASSURANCE MODELS
Globally, we have 3 kinds of Bancassurance business models:
Strategic Alliance: Under a strategic alliance, there is a tie-up between a bank and an
insurance company. The bank only markets the products of the insurance company.
Except for marketing the products, no other insurance functions are carried out by the
bank.
Full Integration: This arrangement entails a full integration of banking and insurance
services. The bank sells the insurance products under its brand acting as a provider of
financial solutions matching customer needs. Bank controls sales and insurer service
levels including approach to claims. Under such an arrangement the Bank has an
additional core activity almost similar to that of an insurance company.
Mixed Models: Under this approach, the marketing is done by the insurer's staff and the
bank is responsible for generating leads only. In other words, the database of the bank is
sold to the insurance company. The approach requires very little technical investment.
The early Bancassurance distribution arrangements in India are taking off under two
categories:
a. Distribution alliances by way corporate agency and insurance broking relationships.
b. Referral arrangements.
Most of the Bancassurance operations in India fall into the first model, which in a way is
quite a prudent decision. In terms of the present regulatory framework, one bank can tie-
up with only one life and one non-life insurer, while insurers have the choice to tie-up
with any number of banks.
BIM differs from 'Classic' or Traditional Insurance Model (TIM) in that TIM
insurance companies tend to have larger insurance sales teams and generally work with
brokers and third party agents.
An additional approach, the Hybrid Insurance Model (HIM), is a mix between BIM and
TIM. HIM insurance companies may have a sales force, may use brokers and agents and
may have a partnership with a bank.
BIM is extremely popular in European countries such as Spain, France and Austria.
The usage of the term picked up as banks and insurance companies merged and banks
sought to provide insurance, especially in markets that have been liberalised recently. It is
a controversial idea, and many feel it gives banks too great a control over the financial
industry or creates too much competition with existing insurers.
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Privatbancassurance is a wealth management process pioneered by Lombard
International Assurance and now used globally. The concept combines private banking
and investment management services with the sophisticated use of life assurance as a
financial planning structure to achieve fiscal advantages and security for wealthy
investors and their families.
PROCESS OF BANCASSURANCE WORKING
Executive officer
Regional manager
Territory
Manager
Corporate sales
manager
Corporate agent
manager
Insurance advisory
Marketing
Officer
Banks branch managers
Assistant general
manager
General Manager
Executive assistant
Insurance company
Banks
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WORKING OF BANCASSURANCE
Insurance Company
Insurance advisor – they are people who have to get customers from the bank and also
look to the marketing officers whether they perform their duty well and then report it to
CAM.
CAM – there are three IA’s under him. He has to say IA about his work and also guide
him how to do work. He has to look to his problem and achieve certain targets from him.
CSM – there are two CAM under him. He has to solve the problem faced by CAM he
also sees that targets are achieved by him. He is basically intermediary between agents
and company.
TM – there are various CSM under him. He keeps the group discussion to share each
other personal review. He also sets targets for them.
RM - he has to collect all the record from the TM. Check the performance and pass it to
CEO.
CEO – CEO then comes to know the position of the company and the level of working
condition of company.
Banks
M.O. – he is appointed by the insurance company to sell the policies to the banks
customers. He has to shape the bank manager to which customer to select and what policy
to sell them. He has five branch managers under him. He has to solve their problems if
required.
Branch manager – branch manager has to look after the details of the customer and
select the customer and approach them to buy the policy and then report it to AGM.
AGM – AGM solves the problem of branch manager and sends the report to GM.
GM – there are various AGM who gives report to GM. He has to do the records
systematically and pass it to EA.
EA – EA maintain and keep all the records for future.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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INDIAN SCENARIO
Banking is fully governed by RBI & Insurance sector is by IRDA
With effect from October 29, 2002, banks have also been allowed to undertake referral
business through their network of branches. However, before entering into insurance
business, banks are required to obtain prior approval of the Insurance Regulatory and
Development Authority (IRDA) and Reserve Bank of India.
It has now been decided that banks need not obtain prior approval of the RBI for
engaging in insurance agency business or referral arrangement without any risk
participation, subject to the following conditions:
a. The bank should comply with the IRDA regulations for acting as ‘composite
corporate agent’ or referral arrangement with insurance companies.
b. The bank should not adopt any restrictive practice of forcing its customers to go
in only for a particular insurance company in respect of assets financed by the bank.
The customers should be allowed to exercise their own choice.
c. The bank desirous of entering into referral arrangement, besides complying with
IRDA regulations, should also enter into an agreement with the insurance company
concerned for allowing use of its premises and making use of the existing
infrastructure of the bank. The agreement should be for a period not exceeding
three years at the first instance and the bank should have the discretion to
renegotiate the terms depending on its satisfaction with the service or replace it by
another agreement after the initial period. Thereafter, the bank will be free to sign a
longer term contract with the approval of its Board in the case of a private sector bank
and with the approval of Government of India in respect of a public sector bank.
d. As the participation by a bank’s customer in insurance products is purely on a
voluntary basis, it should be stated in all publicity material distributed by the bank in
a prominent way. There should be no linkage either direct or indirect between the
provision of banking services offered by the bank to its customers and use of the
insurance products.
e. The risks, if any, involved in insurance agency/referral arrangement should not get
transferred to the business of the bank.
Coming to India, Bancassurance is a new buzzword in India. It originated in India in the
year 2000 when the Government issued notification under Banking Regulation Act which
allowed Indian Banks to do insurance distribution. It started picking up after Insurance
Regulatory and Development Authority (IRDA) passed a notification in October 2002 on
'Corporate Agency' regulations. As per the concept of Corporate Agency, banks can act
as an agent of one life and one non-life insurer. Currently Bancassurance accounts for a
share of almost 25-30% of the premium income amongst the private players in India.
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The data below is for the time period from 2003-2008. It shows the compounded annual
growth rate of premiums as well as insurance policies for both life and non-life policies.
The above data shows that in case of non-life insurance policies, sales have been more
but the premium paid has not increased proportionately.
In case of life-insurance, sales have increased and also the premium paid has increased
more than proportionately. This implies that life-insurance policies with greater
premiums are being bought more often.
The above chart is an illustration of the table presented above showing growth of life and
non-life insurance policies in India. This implies that the growth in life-insurance
policies has been tremendous since insurance sector was liberalized.
The table below shows the Penetration of insurance sector in various countries over a
4year period. Insurance penetration is measured as the ratio of Premium to GDP in USD.
From the table we can see that insurance penetration in India increased by more than 1/3rd
in 2005-06, but has since then decreased at a very slow pace. This level is still higher
compared to other developing countries. However, it is comparatively less with
developed countries; indication India has a lot of scope for insurance penetration, with
effective marketing and distribution channels.
0
500000
1000000
1500000
2000000
2500000
2003 2004 2005 2006 2007 2008
Growth of Life and Non-life Inssurance in India
Life insurance
Non-Life Inssurance
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From the table of insurance density, we can see that the total insurance density in India
has almost doubled in 2008 from what it had been in 2005. Insurance density is measured
as ratio of premium (in USD) to total population. This growth though great is still
significantly less when compared to the value of insurance density in developed countries
like UK and Australia.
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RELEVANCE OF BANCASSURANCE IN THE INDIAN FINANCIAL SECTOR
The following factors have been identified to support the concept of Bancassurance in
Indian context:-
a. Integration of the financial service industry in terms of banking, securities business
and insurance is a growing worldwide phenomenon. The Universal Banking concept
is evolving on these lines in India.
b. Banks are the key pillars of India’s financial system. Public have immense faith in
banks.
c. Share of bank deposits in the total financial assets of households has been steadily
rising.
d. Indian Banks have immense reach to households. There are 65700 branches of
commercial banks, each branch serving an average of 15,000 people.
e. Banks enjoy considerable goodwill and access in the rural regions. There are 32600
branches in rural India (about 50% of total), and 14400 semi-urban branches, where
insurance growth has been most buoyant.196 exclusive Regional Rural Banks in deep
hinterland.
f. Banks have enormous retail customer base. Share of ‘individuals’ as a category in
bank accounts is steadily increasing. Rural and semi urban bank accounts constituted
close to 60% in terms of number of accounts, indicating the number of potential
lives that could be covered by insurance with the upfront involvement of banks.
g. Banks world over have realized that offering value-added services such as
insurance, helps in meeting client expectations. Competition in the Personal
Financial Services area is getting tough in India. That Banks can retain customer
loyalty by offering them a vastly expanded and more sophisticated range of products,
is a popular notion. Insurance distribution can also help the bank to increase the fee-
based earnings to a large extent.
h. Fee-based selling helps to enhance the levels of staff productivity in banks.
This is vitally important to bring higher motivation levels in banks in India.
i. Banks can put their energies into the small-commission customers’ that insurance
agents would tend to avoid. Banks’ entry in distribution can help to enlarge the
insurance customer base rapidly. This helps to popularize insurance as an
important financial protection product.
j. Bancassurance helps to lower the distribution costs of insurers. Acquisition cost of
insurance customer through bank is low. Selling insurance to existing mass market
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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banking customers is far less expensive than selling to a group of unknown
customers. Experience in Europe has shown that Bancassurance firms have a lower
expense ratio. This benefit could go to the insured public by way of lower premiums.
k. Banks have an important role to play in the pension sector when deregulated. Low
cost of collecting pension contributions is the key element in the success of
developing the pension sector. Money transfer costs in Indian banking are low by
international standards. Portability of pension accounts is a vital requirement which
banks can fulfil, in a credible framework.
Insurance distribution channel
The above table is computed for 3 years, showing the percentage of contribution towards
the sales of insurance policies by various distribution channels. The two sectors – private
and public have been shown separately. From the above table, LIC is predominantly
based on individual agents for selling.
Private life insurance providers are also relying a lot on individual agents, but the
proportion of agents utilized is considerably less. They are also significantly relying on
corporate agents including banks and their contribution is increasing over time.
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SWOT ANALYSIS
Strengths:
Vast untapped market: In a country of 1 billion people there is a huge potential
market for life insurance products. In India, the penetration of the insurance sector
in the rural and semi-urban areas is low. There is a market of 900 million for life
insurance and 200 million for householder’s insurance policy. In addition to this
the affluent section can be tapped for Overseas Mediclaim and Travel Insurance
policies.
Huge pool of skilled professionals: Whether it is banks or insurance companies
there is no dearth of skilled professionals in India to carry out a successful
Bancassurance venture.
Weakness:
Lack of networking among bank branches: In spite of growing emphasis on
total branch mechanization (TBM) and full computerization of bank branches, the
rural and semi-urban banks have still to see information technology as an enabler.
Complete integration of branch network involves huge investments for creating IT
and communication infrastructure.
Low savings rate: Though we have a huge market for insurance policies, the
middle class who constitutes the bulk of this market is today burdened under
inflationary pressures. The secret lies in inculcating savings habit but considering
the amount of surplus funds available with the middle class for investing in future
security, the ability to save is very nominal
Opportunities:
Data mining: Banks have a huge customer database which has to be properly
leveraged. Target segments should be identified and tapped.
Wide distribution networks established by banks provide a great opportunity to
sell insurance products through banks.
Another potential area of growth of Bancassurance is exploiting the corporate
customers and tying up for insurance of the employees of corporate clients
Threats:
Human Resource Challenges: Success in Bancassurance venture requires a
change in mindset. Though we have a large talent pool, the inability to sell
complex insurance products on the part of bank professionals and their reluctance
to learn can be severe setback. There has to be a change in the thinking, approach
and work culture.
Non-response from the target groups can also pose a challenge as it happened
in the USA in 1980s.
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ISSUES IN BANCASSURANCE
Issues related to Banks
Bank must go for life and general insurance simultaneously in order to obtain
scale economies as well as synergy.
Initially, a joint approach (banker and insurer) to sales and after sales services
could be adopted.
A review of the tie-up arrangements with insurance companies from time to
time is essential.
The trained manpower should be used exclusively for Bancassurance.
Due considerations be given in performance appraisal for specified persons.
Issues related to Insurance Companies
Insurers must realize that 'putting Bancassurance into operation' is a complex
process as insurance selling is indeed a distinctive skill.
The top management of insurance companies, in particular public sector insurers
must take Bancassurance more seriously and evolve comprehensive strategies to
forge alliances with banks.
Issues with Banks and Insurance Companies
There seems to be lack of clarity between insurer and banks in regard to several
operational activities including for instance, marketing.
Under Bancassurance channel, though banks are distribution agents, the need for
evolving a distinct ‘business model’ needs no emphasis in Indian context.
Another area of concern is that of customer service and satisfaction.
Issues with Regulators
Current regulations do not allow banks to sell insurance products of more than
one insurance company (one insurance company for life and another for non-life).
The insurance regulator has constituted a committee to re-look into the regulatory
framework for Bancassurance intermediation model and also examine the issues
in permitting banks to have multiple tie-ups.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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PRODUCT ANALYSIS
Two products from Canara HSBC Life have been analysed in this project. These are
among the best selling products from the bank. The corresponding products from the
competitors have been identified based on the analysis of their features. Also, online
policy comparison sites have been used to identify the relevant products for comparison.
The corresponding products identified from the competitors for analysis are:
a. Saral Beema Plus
- ICICI Pru Life Ace
- SBI Life – Unit Plus III Pension
- Birla Sunlife – Titanium Plus Plan
- Bajaj Allianz – New Unit Gain Protection plus II
- HDFC – SL Endowment Champion Suvidha
b. Stay Smart Plan
- ICICI Pru Life - Assure Wealth
- SBI Life – Unit Plus III SP (Whole Life)
- Birla Sunlife – Dream Retirement Plan
- Bajaj Allianz Life – Wealth Gain
- HDFC – Protection Plan
Endowment Based ULIP
Endowment plans provide life insurance cover for a specified period. The important
aspect is that on maturity i.e. if the insured survives the term of the insurance, he/she
receives the sum assured at the end of the term.
A variation of the Endowment plan is the Endowment plan with Profit or Unit Linked
Endowment plan with Profit.
In such plans, in the event of death of the insured during the term of the policy, the
nominee receives the sum assured plus the bonus/participating profit/guaranteed
additions, if any. The bonus or profit is paid for the number of years that the insured
survives in the policy term. In case of unit-linked plans, the nominee receives the value of
the investments or the sum assured, whichever is higher.
If the insured survives the term of the policy, she/he receives the sum assured plus
bonus/participating profit/guaranteed additions, if any, for the entire term of the policy or
the value of the investments.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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Product Features
Canara HSbC - Saral Beema Plus
ICICI Pru Life – ACE
SBI Life – Unit Plus III Pension
Birla Sunlife – Titanium Plus Plan
Bajaj Allianz Life – New Unit Gain Protection Plus II
HDFC - SL Endowment Champion Suvidha
Premium Terms
Min: Rs6000 annually
Max: Rs100000 Annually
Min: Rs18000 per annum
Min: Rs24000 p.a. (regular); Rs60000 p.a. (single)
Max: no limit
Min: Rs25000 p.a. if annually OR Rs30000 p.a. otherwise
Min: 15 years policy- Rs15000 annual, Rs7500 half-yearly, Rs4000 quarterly, Rs1500 monthly
20,25 years policy-Rs12500 annual, Rs6500 half-yearly, Rs 3500 Quarterly, Rs 1200 monthly
Max: no Limit
Min: Rs15000 annual, Rs8000 Half-yearly
Max: Rs2,00,000
Premium paying term
7 years 10 years
Policy Term 15 years 10 to 30 years
Min: 8years (regular), 5years (single) Max: 50years
10 years 15 years, 20 years and 25 years
Min: 10 years
Max: 20 years
10 years, 15-20 years
Modes of premium payment
Annual, Semi-annual, Quarterly, Monthly
Yearly, half-yearly, monthly
Annual, Semi-annual, Quarterly, Monthly, Single
Annual, Semi-annual, Quarterly, Monthly
Annual, Semi-annual, Quarterly, Monthly
Annual, Half-yearly
Minimum/ Maximum sum assured
Fixed: 5 times of annual premium
5*annual Premium with a minimum Premium of Rs100K
Min: RS25,000 Max: Rs20,00,000
5*annual policy Premium
5*annual policy Premium
5*annual policy Premium OR Rs10,00,000
Min/Max entry age
18-45 years 0/65 years
Min:18 years
Max: 67(regular Premium); 70(single Premium)
8 to 70 years 0-60 years; 18-50 years in case of Additional Rider Benefits
18 to 50 years
Min/Max maturity age
Max: 60 years
18/75 years
40/75 Years 18/75 years 65 in case of Additional Rider Benefits
Max: 65
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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Whole Life ULIP
Product Features
Canara HSbC - Stay Smart Plan
ICICI Pru Life – Assure Wealth
SBI Life – Unit Plus III SP (whole life)
Birla Sunlife – Dream Retirement Plan
Bajaj Allianz Life – Wealth Gain
HDFC - Protection Plan
Premium Terms
Rs25000 p.a. onwards
Rs12000 p.a. Regular: Rs24000p.a. Single: Rs60000p.a.
Min: Rs5,000 0-60 years: Rs25000; 61-65years: Rs50,000
Depends on life cover and optional benefits
Premium paying term
10 years to 99-age at entry
Single pay, short pay-5,10,15,20 years, guaranteed savings date
Regular: 10-30 yrs Single: 5-15 yrs
Policy Term Till 99 years of age
Whole life Min: single premium >= 5 years limited terms – (term varies) Max: limited term – 30 years whole life – (90-entry age)
Whole life Whole life 10-30 years; 5-30years (Additional Benefit Options)
Modes of premium payment
Annual, Semi-annual, Quarterly, Monthly
Annual, Semi-annual, Monthly
Annual, Semi-annual, Quarterly, Monthly, single
Annual, Semi-annual, Quarterly, Monthly, single
Annual, Semi-annual, Quarterly, Monthly, single
Annual, Semi-annual, Quarterly, Monthly, single
Minimum/ Maximum sum assured
Min: 5*annual policy Premium Max: based on underwriting limits
Min: 5*annual policy Premium; to a min. of Rs1,00,000 Max: as per Maximum Sum Assured Multiples
Min: RP – 5*AP SP – 1.25*SP Max: SP – 1.25*AP RP - Age <=45 20*AP; Age 46-65 5*AP
Min: Rs2,00,000 for a premium of 8,000
Min: 1.1*Single Premium Max: 5*single Premium
Depends on the policy document
Min/Max entry age
31days to 65 years
0 to 55 years 0 to 65 years 18 to 60 years
0-65years (18-50 in case of Additional Rider Benefits)
18-55 years
Min/Max maturity age
Max: 99 years
- Limited term: 70 yrs whole life: 90 yrs
- Whole life, life cover ceases at 75 years
65 years
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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Policy term of SBI Unit Plus III
Premium size (in Rs) Policy term (in years)
24,000 – 99,900 10/15/20/25/30
100,000 – 499,900 >=7
500,000 and above >=5
Observations:
Saral Beema
- Premium paying term is competitive in case of Saral Beema plus. Hence, a large
customer base can be tapped on this basis.
- Policy term is fixed and not variable compared to competitors.
- Maximum maturity age may be increased to 65 years
- Maximum sum assured is low compared to competitors.
Stay Smart Plan
- The policy document is found to be competitive to the compared documents.
- If needed, the minimum premium options may be reduced.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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PRICE ANALYSIS
Insurance being a financial product as such has its value in the returns it provides to the
customer. As such, it is an agreement between an individual and the insurance company
whereby the individual agrees to pay a specific premium for some negotiated return.
Hence, in case of insurance packing is what the insurance product is. Packing in case of
insurance then becomes a part of its Price and other Product features covered in the
mentioned two categories.
In the price component of insurance, the selected policies will be evaluated on the basis
of the investment made after the deduction of charges by the insurance companies. Also
the various charges by the companies will be mentioned for a policy of 1 lakh.
The tables below have listed various charges in the policy as mentioned in the policy
brochures. These tables help in comparison of policy charges.
Expenses Charged in a ULIP
Premium Allocation Charge - A percentage of the premium is appropriated towards
charges initial and renewal expenses apart from commission expenses before allocating
the units under the policy.
Mortality Charges - These are charges for the cost of insurance coverage and depend on
number of factors such as age, amount of coverage, state of health etc.
Fund Management Fees - Fees levied for management of the fund and is deducted
before arriving at the NAV.
Administration Charges - This is the charge for administration of the plan and is levied
by cancellation of units.
Surrender Charges - Deducted for premature partial or full encashment of units.
Fund Switching Charge - Usually a limited number of fund switches are allowed each
year without charge, with subsequent switches, subject to a charge.
Service Tax Deductions - Service tax is deducted from the risk portion of the premium.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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Product
Price
Canara HSbC - Saral Beema Plus
ICICI Pru Life – ACE
SBI Life – Unit Plus III Pension
Birla Sunlife – Titanium Plus Plan
Bajaj Allianz Life – New Unit Gain Protection Plus II
HDFC - SL Endowment Champion Suvidha
Premium
allocation
charges
35%-1st yr,
1%- 2nd
to
5th
year and
nil after that
Will be
deducted
upfront on
premium.
Regular:
no
premium
allocation
charge
Top up
premium
charge of
1%
Regular: 10%
- 1st yr, 5% -
2nd
to 5th
year
and nil after
that
Single
premium –
2.25% of
premium
amount
Top-up
premium –
2% of top-up
amount
10% 1st yr,
5%
thereafter,
2% top up
premium
Mentioned
below
10%-1st
year,
1% - 2nd
year
onwards
Top up:
2.5% 1&2
years,
2% - 3 year
Policy
administrat
ion charges
Rs18/month
for 2009-10,
will
increase by
5%p.a.
Rs
60/month
Regular:
Rs60/month
Single:
Rs50/month
deducted
from units.
0.24%p.m.
on first
Rs25,000 of
annual
policy
premium in
all policy
years +
0.4%p.m. of
annual
policy
premium in
first 3
policy years
1-5 years:
8%p.a. of
annualized
premium;
6 and
above
4.6%p.a.
inflation at
the rate of
5%p.a.
0.95 % of
original
annualized
premium/
month in
the first 5
years
Fund
Manageme
nt Charges
Mentioned
below
Mentioned
below
Mentioned
below
Mentioned
below
1.25% p.a.
charged
daily
Surrender
Charges
Mentioned
below
Mentioned
below
Mentioned
Below
Partial
withdrawal
charges
Rs 250 from
the fifth and
subsequent
withdrawal
amounts in
the same
policy year.
Rs 250 for
the 7th
and
subsequent
requests in
the same
year
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Switching
Charges
Rs100 per
switch
after 4 free
Rs100 per
switch after 2
switches
Nil Rs 100 after
24 free
switches
Redirection
Charge
Rs 250 per
alteration
Rs100 per
switch after 2
switches
12 free,
subsequent
charged at
Rs 250 per
request
Medical
Expenses on
Revival of
Rider
Total cost of
medical
expenses
incurred, if
any, will be
borne by the
Life Assured
subject to
maximum of
Rs3000/-.
Miscellaneo
us Charges Revival
Charge: Rs
250 for the
revival of
policy
subject to
fulfilment
of all other
requirement
s
Rs100 per
statement for
additional
/duplicate
copy of fund
statement
Rs 100 per
policy
revival
Rs 100 per
reinstatem
ent,
increase or
decrease
in regular
premium,
alteration
of
premium
mode or
issuance
of copy of
policy
document
Revival
Charge: Rs
250may be
charged for
revival.
Premium
for Rider
Benefits
Over and
above
premium for
base plan
Mortality
Charges Mentioned
Below
Mentioned
below
Mentioned
below
Depends on
age
Others Service tax
and
applicable
cess
Service tax, Surcharge and
Educational
Cess are
payable on all
the above
charges at the
applicable
rates
Rs 250 on
any
outstanding
cheque
deposit
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Canara HSBC Life
a. Saral Beema Plus
1. Surrender Charges – no surrender charges for a surrender request received by the
company post completion of at least 5 policy years.
Surrender value is paid after third policy year, even if the policy request is made
before third policy anniversary.
Premiums Paid Surrender Charge as % of fund value
<1 full PY 80%
1-2 full PY 50%
2-3 full PY 30%
Any premium in the 4th
PY has been paid Nil
PY: Policy Year
2. Mortality charges – deduction on 1st business day of ach policy month by way of
cancellation of units.
Annual mortality charge is expressed in Rs per 1000 sum at risk
Age 30 40 50 60
Male 2.05 3.76 9.68 24.03
Female 2.03 2.90 7.05 18.65
Female rates are 3 years lower as compared to male life rates.
ICICI Prudential Life
a. Ace:
1. Fund Management charge - 0.75% Money market fund, 1.25% Return guaranteed
fund, 1.35%p.a. Others.
Mortality Charge – deducted on monthly basis on life cover
Age 10 20 30 40 50 60
Male (Rs) 0.77 1.33 1.46 2.48 5.91 14.21
Female (Rs) 0.72 1.26 1.46 2.12 4.85 11.83
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SBI Life
a. Unit Plus III Pension
1. Fund Management Charges – charged on daily basis before calculating NAV. The
charges for different funds are different.
Fund Name Fund Management Charges
Money Market Pension Fund 0.25% p.a.
Equity Pension Fund 1.35% p.a.
Bond Pension Fund 1.00% p.a.
Growth Pension Fund 1.35% p.a.
Balanced Pension Fund 1.25% p.a.
Index Pension Fund 1.25% p.a.
Top 300 Pension Fund 1.35% p.a.
Equity Optimiser Pension Fund 1.35% p.a.
These charges may be increased within the maximum limit allowed with prior
notice to policy holder after IRDA approval.
2. Surrender Charges – Will be recovered from the fund value as percentage of fund
value.
Policy Year For Regular Premium
Percentage of Fund Value
For Single Premium
Percentage of Fund Value
1 15.0% 5.0%
2 10.0% 5.0%
3 7.5% 5.0%
4-5 5.0% 2.0%
6 onwards Nil Nil
b. Unit Plus III
1. Premium Allocation Charges – For regular premium, this charge is deducted from
the premium at the time of recipient of such premium.
Year/ Annualised
Premium
Rs24,000-Rs99,900 Rs100,000 -
Rs499,900
Rs 500,000 and
above
1st Year 20% 15% 10%
2nd
to 5th
Year 5% 5% 3%
6th
to 10th
Year 2% 2% 2%
11th
year onwards Nil Nil Nil
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2. Surrender charges – no surrender value for regular premium rider benefits. For
single premium riders, the surrender value is given as below:
Single Premium (exclusive of Service Tax) x 75% x Outstanding term to Maturity/
Total Term
In case of decrease in Rider Sum Assured due to change in SAMF a part of Single Premium
is returned as per the following formula:
{(Original Sum Assured – New Sum Assured)/Original Sum Assured}× Single Premium
(exclusive of Service Tax) × 75% × Outstanding term to Maturity / Total Term
Citibank (Birla Sun Life)
a. Titanium Plus Plan
1. Fund Management Charge -
Fund Name Fund Management Charges
Income Advantage, Assure, Protector
and builder
1.00% p.a.
Enhancer and creator 1.25% p.a.
Magnifier, Maximiser, Multiplier
and Super 20
1.35% p.a.
Titanium Fund 1.50% p.a.
2. Mortality charges –
Age 25 35 45 55 65
Male (Rs) 1.284 1.387 2.287 5.340 13.197
Female (Rs) 1.328 1.535 2.882 7.105 17.459
3. Surrender charges -
Policy Year Percentage of policy premium
< 3 years 40.0%
< 4 years 20.0%
< 5 years 10%
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Standard Charted (Bajaj Allianz Life)
a. Unit gain Protection Plus
1. Premium Allocation Charges –
Year/ Annualised
Premium
Rs12,500-Rs99,999 Rs100,000 –
Rs249,999
Rs 250,000 and
above
1st Year 21% 18% 15%
2nd
to 5th
Year 2% 2% 2%
6 and above -2% -2% -2%
2. Fund Management charges –
Fund Name Fund Management Charges
Equity Growth Fund II 1.35% p.a.
Accelerator Mid Cap fund II 1.35% p.a.
Pure Stock Fund 1.35% p.a.
Asset Allocation Fund 1.25% p.a.
Equity Index Fund II 1.25% p.a.
Liquid Fund 0.95% p.a.
Bond Fund 0.95% p.a.
3. Mortality Charges –
Age 20 30 40 50
Rs 1.57 1.74 2.82 6.53
Observations:
- Mortality charges are higher than the competitors.
- Policy administration charges are almost 1/5th
of the competitors.
- Premium allocation charges are higher than competitors for 1st Year.
- Surrender charges are very high for less than 1 year and zero after 4th
year. Competitors
have reasonably low surrender charges initially, but the reduction in charges is also less
compared to Canara HSBC Oriental Bank of Commerce Life Insurance Company.
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PROMOTION
The analysis of promotional activities done by the companies has been divided into three
segments;
Advertisements – This section discusses the television advertisements of the companies
under study. The advertisements have been analysed for all companies in one section and
suggestions are mentioned.
Website – This section consists of the analysis of the company’s website and its
components relative to the competitors. The website designs have not been explained.
Only necessary changes have been mentioned in the target website. Also, online
promotions by the competitors has been analysed in this section.
Branch Marketing – This section consists of marketing done at the branches being
analysed. This also covers the Place and People aspect of the 7Ps of marketing. Most of
the major bank branches are located close to each other with the city head office of some
banks being in walking distance of each other. Apart from these, another very important
aspect of promotion is the Relationship Managers or any other employees in direct
contact to the customers. The impression formed by these employees is a major
component of the impression formed of the company to the customers. As a limitation of
this report, the influence of RMs of various companies on the customers could not be
analysed. The branch marketing of the various banks have been treated bank wise and
suggestions for Canara HSBC Oriental Bank of Commerce Life Insurance Company have
been mentioned thereafter.
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ADVERTISEMENTS
Quotes
- Canara HSBC Oriental Bank of Commerce Life Insurance Company:
Insuring Your Emotions
- ICICI Prudential Life Insurance Company:
Suraksha Jindagi Ke Har Kadam Pe
Jeetey Raho
- SBI Life:
Jindagi Hai Jeeney Ke Liye
Taaki Rishton Ke Beech Kabhi Dooriyan Na Aaye
Taaki Pyaar Ke Beech Paison Ki Kami Na Aaye
- Birla Sun Life:
Aapke Sapney, Hamari Vachan-Badhta
- Bajaj Allianz:
Jiyo Befikar
The Power on your Side
- HDFC Standard Life
Sar Utha Ke Jiyo
Advertisements by Canara HSBC Oriental Bank of Commerce Life Insurance Company,
primarily consists of showing actions which include financial services and linking it to a
feeling using a single word like joy, belief etc. These advertisements also, link the
partner banks to the life insurance company. There is however no catchy phrase or
slogan which may have a retention. Also, the background music is some kind of soothing
orchestra.
In case of competitors, ICICI bank and HDFC Standard Life have been able to have
retention in the masses with their catchy slogans/motto like Sar utha ke Jiyo and Jeetey
Raho.
Similarly, Bajaj Allianz and SBI have attempted at catchy slogans like Jiyo Befikar and
Jindagi Hai Jeeney Ke Liye. What is common among these slogans is that they try to
project the states which are held high by masses like self respect, health, carefree/
freedom etc. and they communicate these feelings in the language of the masses.
Also, most of the popular advertisements have a situation being shown where people
converse and a logic explaining the importance of insurance is being presented. Canara
HSBC Oriental Bank of Commerce Life Insurance Company’s advertisements are
different from other popular advertisements in this sense. These advertisements don’t
have much of a dialogue. Nor do they have a catchy comment in Hindi or other regional
languages. They do try to project valued states/feelings, but are not focussed on just one.
An advertisement may have more than one state being projected and that takes the focus
away from them. However, the process of linking a bank with an insurance company
with a quote - is a proud partner of Canara HSBC Oriental Bank of Commerce Life
Insurance Company is a good practice.
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WEBSITE
Suggestions
These suggestions are formed by observing the websites of various competitors. These
changes are not necessary but they nevertheless add value to the website if there. The
changes and additions are:
- Learning Centre: most of the competitor websites have a section where basic
knowledge of insurance and how it works is being suggested. It includes basic
information of risks and returns, how to analyse investment options, financial need
analysis, risk profiles, portfolio diversification, how to plan your finances, how to choose
your investment etc. a small quiz may be included as well.
- Languages: option to display the webpage in various regional languages may be
included.
- Customer Accounts: among the online services option, the bank provides facilities to
pay premium online. The various suggestions regarding online services are:
a. Fund details: through this link, the total fund of the user, where they are invested, what
are their values etc. can be seen.
b. Customer Information: this link may provide for option to change or update the
customer information like address, telephone no., e-mail id etc. This may help customer
avoid the visit to bank for such purposes and confirmation of change may be done
through telephone.
c. Alternate services: this portal will be used to promote various options available to the
customer and also various services identified for the customer. Also, any schemes
targeted for the customers may be directly advertised to them through this portal.
d. Fund switching option: through this portal, a request for fund switching among the
various options provided by banks may made. The request may be then taken up for
consideration.
- Buy Online: HDFC bank provides an option to buy insurance online. This they have
provided with a discount of 40%. Similar options may be provided to existing customers
for buying insurance for their family members.
- Short term information: news related to insurance (like news of plane crash) etc. and related
facilities may be communicated here. This takes place in ICICI banks website where condolence
is provided to the families of plane crash victims and a simplified claims process link is provided
to the people. This serves two purposes, one it makes an emotional connect to the customers.
Secondly, it also helps to direct the claims traffic in a specific direction.
- Tools and Calculations: this section will provide for various services like calculating the
premium for a given condition, or other financial tools related to insurance, used to evaluate the
polices.
- NRI Services: insurance companies such as SBI and ICICI Prudential life provide for NRI
services as a separate section on their webpage.
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BRANCH MARKETING
Visits were made to the bank branches to observe the layout, methods of marketing of
products at branches, people and any other observations which may enable in improving
the marketing at Canara HSBC Oriental Bank of Commerce Life Insurance Company.
The observations have been listed company wise for reference.
Canara HSBC Oriental Bank of Commerce Life Insurance Company
Place
The theme at the branch office is that of red and white. There are red chairs and grey
tables with grey or white walls. Sofas are also in the theme of red apart from the marble
flooring, there is a red carpet in the help desk area and rooms like meeting room etc. This
carpet looks good but is faded at places. Inside the building, on the ground floor, there are
three helpdesk for any account related issues. There are four tellers with a supervisor.
Also there is separate room for the service manager or line manager. Also there is a
receptionist, conference room and a financial planner. At, the entry of the building, there
is an ATM room, which is bigger and more comfortable than other banks. Survey
cameras are present at the tellers and one is present at the left hand side of the entrance
where the sofas are kept. There is a strange jazz music which plays in the background.
Also, a children’s playhouse between tellers and reception desk 4 is being maintained.
At the third helpdesk, there is a stand with four pockets for brochure etc. Also, a
magazine stand is kept next to the sofas. Two televisions are kept, one at the tellers and
another one next to the machine showing the coupon numbers for visitors. Stock news
and other related news is being shown in them. In the basement, there are brochures on
schemes valid from 1st Aug to 31
st Dec 2009. Also, the visitors lounge has books on
Mumbai.
People
People at the branch are hospitable and very participative. They approach you for
assisting, in case you need help. As you enter, there is a receptionist to greet you. There is
mouth freshener being provided to the visitors. The dress code is closed neck formals for
men and salwar kameez for women.
ICICI Prudential Life
Place
Branch marketing by ICICI comprised of making an optimum use of space. From people
to layout, things were in a harmony and spoke of a cultural integrity. The theme of the
office was orange and white. The head office of Jaipur is a building dedicated solely to
ICICI bank. The basement section of the bank is for cash deposits and withdrawal with
the tellers and related staff. On the ground floor, there are 27 counters. The first five are
for the privilege banking. After the first entrance in the building, ATM machines are
placed. After the second entrance, there are 3*5 rows
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on either side for the customers. Privilege banking section is towards the left. Next to it is
the Branch Manager for services. In the front are counters from 6 to 11. Counters 12 to 27
are on the right. These are for the other purposes like visits by foreign clients or financial
planning of customers etc. The theme of the office is that of white and orange. There are
two pillars at the entrance of the office with posters of loans, NRI services etc. next to the
token no. display is an LCD television which always displays advertisements of ICICI
bank in some services or another.
People
Like the office, the dress code of ICICI employees had a theme to it. The men were in
closed neck formals, with dark blue pants, white shirts with thin black stripes and dark
saffron tie. All women were in dark blue kurtis with saffron cuffs and saffron chunnies.
Any ICICI employee could be easily spotted because of the dress code.
SBI Life
Place
Compared to other branch offices, there were no ATM machines at SBI branch office. It
is located at a deserted house. At the entrance, of the office, there is an old chart/poster of
house loan, with an offer scheme which ends on 30th
Sep 2009. Just after entrance, there
is a room with three sofas on the sides and a table to match. This room is filled with
various advertisements of services by SBI. Also there are poster stands with
advertisements present in the room. Though it does not seem deliberate, but the
advertisements in this room grab attention as you move on to the main branch. There are
advertisements of insurance, NRI services and other services too. Inside the main office,
only functions of tellers and clerks is being done. To the left is the tellers section with
provisions for home loans and cards. Right in front is the BM’s office. Next to BM’s
office is the counter for award staff.
Overall, though unintended, the products are effectively marketed in the room where
there is only a place for resting/relaxing.
People
Employees at the branch seemed to be participating in branch activities with enthusiasm.
Their attitude however seemed to be casual and friendly. They did not behave
professionally. The men were dressed in open neck formals with no colour code. They
took the liberty of wearing slippers for shoes. The women did not seem to follow any
dress code. They wore anything from kurta pyjama to jeans and tee-shirt. The power
distance in the office did not seem much important either. Award staff would directly go
to the Branch Managers office for an informal chat. Overall, the atmosphere seemed be to
organic and informal.
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Citibank
Place
From the visit to the branch office, no specific observations of marketing of insurance
products could be made. The branch office is located at a major crossing. An ATM is
located outside the branch. At entrance, there were two guards for checking. To the right
are help desk counters for the personal relationship managers. Directly to the front, after
you enter the branch is the tellers section with two tellers and a supervisor. There is
seating arrangement to the left of the entrance. The branch office has indoor plants and
there is a stand for pamphlets and magazines. The office has been in place for the past ten
years. Next to the four help desk counters is a meeting room which is well furnished.
Besides this, there is a room for BM and in between the tellers and BM office there is a
passage for the offices of RM’s. The overall impression of the branch did not suggest a
well managed office. The branch seemed short of space and cramped. There did not seem
to be much effective marketing of Citibank and related products.
People
Employees were well dressed and well behaved. They were not very elegant in their way
of talking but were nevertheless friendly and helpful. Men were dressed in closed neck
formals and women in salwar kameez. Employees were participative in their work.
Standard Charted
Place
Standard Charted has only one branch office in Jaipur, at MI road. The office is located
near a market place. There are two similar offices located adjacent to each other. They
work as one, have the same layout, only the offices are separated by a stairway to the
upper floor. Standard Charted is in a referral tie-up with Bajaj Allianz. The office is
comfortably big and has a lot of free space. To the extreme left of the branch at the
entrance is the tellers section with four tellers and a supervisor. Next to it is a television
showing news update. There is a stairway leading to first floor where most of the RM’s
with the BM work. Right in the front of the office are two counters for the RM. These are
more furnished and well designed as compared to other branches. Behind these counters
are the offices for four Excel RM. The entrance is at the corner and there is seating
arrangement at the front and to the left of the entrance. The advertisements are put on the
walls in form of boards.
People
Like Citibank, people were well behaved and helpful. They had sufficient information
even about the products they were not involved in. The dress code was closed neck
formals for men and salwar kameez for women. However, casuals were allowed on
Fridays with men wearing jeans and tee-shirts with collars and similar for women. People
at Standard Charted are in the habit of asking visitors for water or tea.
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HDFC Standard Life
Place
Like ICICI bank, HDFC has 27 counters for various activities. However, though well
managed, there is lack of space in the office and seems a bit cluttered. The office seems to
be made in a traditional hotel with folk designs on the wall. There are several counters in
a separate room for services like loans, insurance etc. privilege customers have a separate
section which is separated from general customers. The advertisements were done
through brochure stand at the entrance, near the privilege section and at the waiting
benches. Also, there were service advertisement posters on the wall too.
People
Employees in HDFC would approach the waiting customers and offer to help even
outside the general token system. This was because their roles were diluted to some
extent and employees were multitasking. They were polite and courteous. The dress code
was closed neck formals for men and salwar kameez for women.
Suggestions
The following suggestions are being made after observing the ongoing marketing
practices in the competitive banks:
• Televisions, instead of showing stock news may be used to market financial services
by the bank. This concept is prevalent in ICICI Bank branches.
• Pillars inside the branch office may be endowed with posters of services and schemes
currently being offered by banks.
• Visitors may be offered water, tea or cola. Though it is not expected, but certain
visitors, who come for discussing their financials or for buying insurance policies,
where they are expected to stay for some time with the bank representatives, may be
offered such refreshment. If not a sale, they may lead to referrals.
• Along with mouth freshener, éclairs or some other sweets may be offered. This gives
an impression of variety in the bank to the customer.
• Books on Jaipur instead of Mumbai may be kept in basement lounge.
• Outdated pamphlets should not be kept for long.
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HIERARCHY
ICICI Prudential Life
The hierarchy is divided into two segments: Grade Hierarchy and Designation
Hierarchy. The Grade Hierarchy Varies from Junior to CEO and the Designation
Hierarchy is related to the fields like sales, operations, services etc.
ICICI bank has large no. of employees and hence the degree of formalization is high.
This means that the environment in the bank is very formal and also that the roles are well
defined. Such structures are present in organizations where the processes are well
defined. Hence, roles can be divided to a large extent. It is generally in well established,
large organizations.
Branch Head
Branch Operation Manager
Operations Team-Cash Counter
-Tellers-Background Operations
Services-Service counters-Telecalling Team
Branch Sales Manager
Sales Team-Junior Officers-Sale Executive-Senior Sales
Executive
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SBI Life
SBI life has different types of hierarchies based on the branch size. For small branches
hierarchy is divided based on functional areas like marketing, operations. For large
branches, the segmentation is first on the basis of customer segments and then on the
basis of functional areas.
Hierarchy in small branches
Hierarchy of Large Branches
Branch Manager
Operations Manager
Award staff Award staffs
CRO (customer relationship
officer)
new accounts and marketing
team
AGM
MOD (agri)
Operations
CRO
MOD (HNI)
Operations
CRO
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Citibank
The hierarchy in Citibank branches is a flat one. Every branch has a branch manager and
every other employee reports directly to him. This is an organic structure where the
degree of formalization is low. This means that the various departments interact with each
other to a greater extent on an informal basis. This also enables better sharing of ideas
and uncommon situations can be better solved.
Since the reporting structure is relatively flat, there is less distortion in information flow
for an employee reports directly to the branch manager.
Branch Manager
Acquisitions Team (ASM)
RM's
Investment Councellor
City Business Councellors
Service Team (Service Head;
Service RM)
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Standard Charted
From the branch level, the Branch Manager reports to the Area Director/RSM (Regional
sales Manager). The RSM has to reports to NSM (National Sales Manager) or Director.
NSM in turn is required to report to Head/GM Sales. GM Sales may be based out of
India. CEO is the highest in the hierarchy and above GM Sales.
TSM: Tele Service Manager
CSE: Customer Service Executive
PRM: Priority Relationship Manager
ERM: Excel Relationship Manager
PFM: Personal Financial Manager
SME: Small and Medium Enterprise
BCOT Model: apart from this hierarchy, there is a BCOT Model abbreviated for,
Branch Catchment Optimising Team. This team has a City Head who reports to the
BM. There are various Tele-calling ARMs (Assistance Regional Managers) under the
City Head. The main objective of this team is to identify whether a client identified by the
finance team as a probable insurance buyer is willing to buy the insurance services. This
apart, this team also pitches in for the probable customers in the HNI segment.
BM RSM NSMGM
SalesCEO
BM
TSM
CSE CSE
PRM ERM PFM SME
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HDFC Standard Life
Branch Manager supervises over Branch Operations Manager, Backup Branch Manager
and Relationship Banking Head. A Backup Branch Manager is equivalent of a services
manager in her role as a Personal Banker Authoriser. Relationship Banking Head
similarly is the equivalent of Sales Manager.
BM: Branch Manager
BOM: Branch Operations Manager
RM: Relationship Manager
BBM: Backup Branch Manager
Like ICICI bank, HDFC bank has high degree of formalization. The employee strength
is large. HDFC bank has 27 counters like ICICI bank in its branch office. It is a
workplace with well defined roles.
BM
Relationship Banking Head
RM RM
BOM
operations team
BBM
Personal Banker
Authoriser
Personal Bankers
TellersCurrent Account
Managers
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CUSTOMER SEGMENTATION
Customer segmentation of various banks has been compiled after unstructured interviews
with the bank employees. These interviews were conducted during the field trip to these
branches. Customer segmentation is useful in identifying the target market of the banks.
This is so because if a bank has large no of customer segments in the higher income
group, it is trying to differentiate its customers in that segment. Similarly, a bank with
large segments in lower income group is trying to differentiate in mass markets. The
market in which a bank is trying is differentiate is the target market of that bank.
Canara HSBC Oriental Bank of Commerce Life Insurance Company
Customers are segmented on the basis of the relationships they generate. These are
determined by the net worth of their accounts.
Canara HSBC Oriental Bank of Commerce Life Insurance Company has only three
segments in its customer segmentation. It is not differentiation in either less than 1Lakh
segment or more than 5Lakh. However, it treats its customer from 5-25Lakhs similar to
its customers from 1-5Lakhs. Hence it is differentiating on the upper segment to some
extent.
customers
Mass 25KAdvanced
>1Lakh
Premium Proposition >25Lakhs
segment based on account value checked
quarterly
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ICICI Prudential Life
These customers are given privileges based on the value of the account they hold.
Platinum and HNI accounts come under privilege accounts. These customers have
separate counters and hence don’t have to wait for the tokens etc. Also, the duration of
account, no. of transactions and participation and interest shown by the customers in the
bank activities also determine the customers’ worth. Hence a Platinum customer may be
provided services like an HNI customer if felt necessary.
Among the privilege customers, a Platinum customer is provided with a Wealth
Manager and an HNI customer has a Relationship Manager assigned to him. These are
the direct contact of a customer with the bank.
This segmentation is passed onto the insurance selling team and most of the insurance
sales (almost 99%) are done through relations only with a present client. Other ways of
selling are through references and branch walk-ins.
ICICI bank is primarily focussed on the segment below 5Lakh. This means that its
primary focus is the mass market.
SBI Life
SBI Bank has classified customers into two categories, general or mass market and HNI
clients. The tab for HNI clients has been kept at INR 5 Lakhs. This indicates that SBI has
no specific focus of a particular set of customers in either the HNI segment or the mass
market.
customers
Regular 10K
Silver 25K Gold 50KPlatinum
>100KHNI
>5Lakhs
segment based on account value checked quarterly
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Citibank
Citibank primarily caters to HNI Clients. They have segmented the customers into 3
groups based on the bank balances averaged on a quarterly basis.
A G3 select RM caters from 10 to 15 clients. Similarly, the number of clients increases to
anywhere from 40-50 for a City Gold RM. A Personal Banker caters around 100 clients
on an average.
Citibank is more focussed on the HNI customers for its business. Hence, even when it
sells less policies, it still sells them at a large premium.
• account value of 2.5 Crores or more
• G3 select RM is alloted
G3 Relationships
• account values of 30Lakhs to 2.5 Crores
• alloted a City Gold RM
Gold relationships
• accounts with a net worth of <30Lakhs
• Personal bankers are alloted for such relationships
Blue Relationships
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Standard Charted
Standard charted has its focus primarily on priority customers as it garners most of its
business from them.
A personal financial manager is allotted for the GMM (general mass market) segment.
For the Excel segment, an Excel Relationship Manager is allotted and similarly, the
Priority segment has Priority Relationship Managers. Each priority client has a Priority
RM allotted to him.
Like Citibank, Standard Charted is primarily focussed on HNI customers for its
business.
customers
Priority >20Lakhs
Excel >5Lakhs GMM <5Lakhs
segment based on account value checked quarterly
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HDFC Standard Life
Of these four segments, mass/general segment which holds an account of less than 1
Lakhs is only eligible for general services. Imperia customers are the HNI accounts and
hence get the maximum attention.
Personal Bankers are allotted to the Classic customers. This classification is however
not sacrosanct. A Classic customer may be treated as a Preferred customer and a
preferred as an Imperia Customer based on the banking habits of the client, future
expectations etc. A Relationship Manager is allotted to Every Preferred customer.
HDFC bank seems inclined on both mass and HNI customers. It however has defined
mass market as below 1Lakh account value. Hence, it is more focussed on HNI
customers.
Customers
Mass/General <1Lakh
Classic
1-5Lakhs
Preferred >10 Lakhs
Imperia >30Lakhs
segment based on account value checked quarterly
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SWOT
SWOT analysis lists the various strengths and weaknesses for a company. It also, lists
down the opportunities and threats for the company under study. This helps analyse the
competitiveness of the company. The market standing of a company hence identified
enables us to plan future strategies for it.
Canara HSBC Oriental Bank of Commerce Life Insurance Company
Strengths Weakness
- Management adapted from HSBC(World's
largest (based on a composite score, Forbes)
and most profitable banking corporation)
- Security: with two of India’s largest
nationalised banks and HSBC as the partners.
- Customers: Diversified approach in terms of
customer base, with 48 million customers.
- Network: Branch network with 4400 across
India.
- Operations: immediate death claims.
Insurance solutions to rural, 4.6 million
customers.
- Finance: fastest Indian Life Insurance
Company to cross 500Crore and 1000Crore in
weighted premium income till date. It also
has the highest average premium in the
industry for individual business since launch.
- Insufficient marketing: on online
insurance comparison sites, in the
branches.
- Brand Recall: No popular quote
or comment as a brand recall.
- Products: products portfolio is not
very diversified with fewer
products on offer compared to
competitors.
- Accessibility: only one hub in
entire Rajasthan.
- Selling Channel: only sells
products through banc assurance
channel.
- Online brochure: online
brochures are difficult to analyze
and as such inconvenient to
read(see SBI Brochures)
Opportunities Threats
- Economy: Increase in average income of
Indian household
- Attitude: People being more willing towards
insurance
- Technology: Better IT systems to integrate
the branches
- Tie ups with companies for insuring their
employees
- Demographic: major part of Indian
population is going to be in the earning age
group, hence number of clients in future are
expected to increase.
- Market: insurance sector has liberalised
recently and as such is expected to grow.
- Rural: rural sector can provide a lot of
customers
- Alternates: Introduction of some
alternate means of security and
investment, taking away customers
- Govt.: Change in govt. policies
towards insurance
- Competitors: New product
launches by competitors
- Market: may become price
sensitive. Also, economic
slowdown may reduce business.
- Sustainability of the rural market.
- Non-Stability of the alliances.
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ICICI Prudential Life
Strengths Weakness
- Brand: ICICI has earned a strong
brand name in banking in a very short
span of time.
- Market Share: Very wide customer
segment, leading to a lot of
customers.
- Diversified Portfolio: Large no. of
insurance products
- Salary Account: most companies
have their salary account with ICICI
bank. This helps them having a larger
client base to approach for insurance.
- Marketing: effective marketing with
high impact on customers. Their
online advertisement is very
profound.
- Online branding: ICICI has a strong
presence online through presence on
insurance related sites and sites
comparing other financial services.
- Bad sale: Customers have reported
cases of bad sale where the RMs did
not explain the risks and other factors
to them regarding the policies.
- Overexpansion of the workforce.
Sometimes, the processes get
hampered.
- Most of the policies are having high
premiums.
SBI Life
Strengths Weakness
- Image: Govt. Sector banks are being
looked up by customers in general.
These banks are not considered very
aggressive.
- Govt. Backing: govt. Sector banks
are supposed to be more risk free and
stable. Hence people tend to rely
more on them during recessions.
- Ambition: Less business being
catered by these branches( this year’s
annual target is of 50 Lakhs worth
policy for a branch in C-scheme)
- Image: Govt. Sector still is being
considered inefficient in general
- Attitude: People on branch are very
casual in their attitude
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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Citibank
Strengths Weakness
- Global network: its global network
operates in around 100 countries and has
proved to be useful during slumps.
- Backing of Citigroup: Citibank can
approach ventures and business
opportunities with considerably less
trepidation than independent companies.
- Innovative product offering: Citibank
products are developed considering the
markets they are serving.
- Partnerships: the bank has continually
developed partnerships in various
countries to increase its reach to newer
customers.
- Tarnished name: its brand has
been tarnished due to
investigations into its banking
practices, particularly in its
investment banking subsidiary,
Salmon Smith Barney.
- Online operations are geared
towards US clients: Though a
global brand, it has a poor online
presence in most of the countries.
- Branding Problem: in the past
Citi f/i failed due to poor branding.
Standard Charted
Strengths Weakness
- Heritage: strong presence in India,
for more than 150 years.
- Brand: has a word wide presence. Is
a global brand.
- Tie up: Bajaj is a well known brand
name in India and Standard Charted
caters to HNI clients. Hence the
amount of business it generated for
Bajaj Allianz is significant.
- Mass: they do not cater to the mass
market.
- Advertisements: advertising is not
aggressive.
- Branches: their branch network is
poor. There are not many Standard
charted branches.
HDFC Standard Life
Strengths Weakness
- Image: domestic image of HDFC supported
by prudential’s international image is strength
to the company.
- Strong: capital reserve base, network of
intermediaries and sales persons.
- Innovation: the company has innovatively
introduced products to market at times. It also
has a large no. of products on offer.
- Human resource: HDFC claims of having a
large pool of technically skilled manpower
with in-depth knowledge of the market.
- Customer satisfaction: HDFC is known for
a high level of customer satisfaction.
- Costs: heavy management and
administrative costs.
- Low: customer confidence on
private players during
recessions.
- High degree of formalization:
HDFC has a vertical
hierarchical reporting structure
with many designations and
cadres.
- Poor retention percentage of
tied up agents.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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EXPLORATORY RESERCH
Exploratory research provides insights into and comprehension of an issue or situation. It
should draw definitive conclusions only with extreme caution. Exploratory research is a
type of research conducted because a problem has not been clearly defined. Exploratory
research helps determine the best research design, data collection method and selection of
subjects. Given its fundamental nature, exploratory research often concludes that a
perceived problem does not actually exist.
The results of exploratory research are not usually useful for decision-making by
themselves, but they can provide significant insight into a given situation. Although the
results of qualitative research can give some indication as to the "why", "how" and
"when" something occurs, it cannot tell us "how often" or "how many."
Exploratory research is not typically generalizable to the population at large.
This survey had questions on factors influencing buying behavior of consumers. These
factors were obtained from previously done research on insurance. Also, questions
relating to brand recall of the banks under study were included in the survey. A
comparison of various banks was also made by the respondents.
The sampling technique adapted was that of convenient sampling. The survey had a total
of 97 responses. Of these 80 were male, with 58 from Delhi and NCR, 10 from Rajasthan
and remaining from the rest of India. Of the total no. of respondents, only 2 were married
and with kids, 54 were students. 16 people from the survey were above the age group 25.
Hence, the respondents can be assumed to be primarily graduate and post graduate
students.
With the sample and sample size obtained, conclusions about the populations in general
cannot be made. Hence, the results cannot be used to generalize the entire population.
Results may however be used for designing further market research in the field of
insurance.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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Findings of the survey
The followings were the results of the survey conducted:
- Population in general perceives insurance as an important product. However, nearly
half of the sample was uninsured.
- Whole life ULIP is perceived as an important insurance policy
- People buy insurance from banks because of reliability and convenience
- Protection to the family in case of unfortunate events is the most important reason for
buying insurance
- People are not influenced by company advertisements in buying insurance, though a
good brand name and company performance is important
- Market situation is important factor while buying insurance
- No. of products by the company is not very important
- Person selling insurance is not significant in their decision to buy insurance
- People references is slightly significant in deciding the insurance policy
- Jeetey raho by ICICI and Sar utha ke Jiyo by HDFC have a recall in Customers
- Insuring your emotions had some brand recall, but the power on your side by Bajaj
Allianz was also misunderstood as that of Canara HSBC Life to the same extent
- SBI was rated the best bank among these, followed by ICICI and HDFC
- Factors such as min/max sum assured, tax benefits, policy years, expenses charged,
options in case of death are important
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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CONCLUSIONS AND RECOMMENDATIONS
Conclusions
Insurance as a product once bought; continues for years. Hence a customer stays with the
company for years unless he feels cheated. A company’s strength thus lies in persistency
and keeping up with market trends. Following these two will give the company a good
advantage over competitors. This means that if the company is able to provide the
customers with a satisfactory experience, they will be able to retain them after the
insurance gets over. Also, a satisfied customer will get others to join as well through word
of mouth marketing.
Apart from this, a good marketing is needed as insurance is a product which the
customers feel necessary but also are unwilling to get involved in. Hence, a good
retention in customers mind may be the only difference in selling a policy when the
products are similar. In case of insurance, the greater the no. of customers, the lesser the
risks and more the profits.
An insurance policy has many features that customers perceive as important. Also, most
people are not clear about their requirements till they apply for insurance. Hence, selling
of insurance would primarily consist of getting the customer to approach the bank for
insurance. If the product is competitive, sale would happen in most cases.
Recommendations
Additional features may be made available on the company’s website for customer
convenience as suggested in the report.
Suggested changes may be brought in the branch office.
Suggestions for the advertisements as given in the report may be considered.
Policy term for Saral Beema Plus may be made variable.
Premium allocation charges for the first year may be reduced.
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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REFERENCES
http://en.wikipedia.org/wiki/Unit_Linked_Insurance_Plan
http://www.apnainsurance.com/life-insurance-india/Endowment-insurance-plans.html
http://www.docstoc.com
http://en.wikipedia.org/wiki/Bancassurance
www.wikipedia.com , http://en.wikipedia.org/wiki/Exploratory_research
www.books.iupindia.org
www.indiabschools.com
www.rbi.org.in , www.irdaindia.org
www.ecgc.in
http://www.birlasunlife.com/
http://www.iciciprulife.com/public/About-us/About-Us.htm
http://www.sbilife.co.in/sbilife/content/home
http://www.standardchartered.co.in/personal/insurance-investments/en/insurance-
investment-landing.html
http://canarahsbclife.com/
http://www.online.citibank.co.in/products-services/insurance/life-insurance/life-
insurance-home.htm?eOfferCode=LFTNVINS
http://www.royalsundaram.in/aboutus.aspx
http://www.lifeinscouncil.org/
http://en.wikipedia.org/wiki/ICICI_Prudential
http://www.mouthshut.com/product-reviews/ICICI_Prudential_Life_Insurance-
925036146.html
http://www.iloveindia.com/finance/insurance/life-insurance/unit-linked-insurance-
plans.html
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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APPENDIX 1 – LIST OF PRODUCTS
As part of the project various life insurance policies for the competitors have to be analysed:
Canara HSBC Oriental Bank of Commerce Life Insurance Company:
1. Individual Product
a. Stay Smart Plan
b. Retire smart Plan
c. Saral Beema Plus
d. Pure Term Plan
2. Group Product
a. Group Loan Protection Plan
b. Group Term Plan
Canara HSBC
Life
Individual Products
Stay Smart Plan
Retire smart Plan
Saral Beema Plus
Pure Term Plan
Group Products
Group Loan Protection
Plan
Group Term Plan
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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ICICI prudential life:
1. Life Insurance Plans
a. Education Insurance Plans
i. Smart Kid Assure(ULIP)
ii. Smart Kid Maxima(ULIP)
iii. Smart Kid Regular Premium(Traditional)
b. Wealth Creation Plan(ULIP)
i. Life Stage Plan
ii. ACE
iii. Premier Wealth
iv. Life Time Maxima
v. Pinnacle
c. Protection Plan(Traditional)
i. Pure Protect – Classic/Elite
ii. LifeGuard - Return of Premium (life cover with maturity benefit), and
LifeGuard Single Premium (premium at policy inception, cover till policy
matures)
iii. Save`n’Protect
iv. Cash Back
v. Home Assure
2. Retirement Solutions
a. Life time Pension Maxima(ULIP)
b. Life Stage Pension Advantage(ULIP)
c. Elite Pension II(ULIP)
d. Assure Pension (ULIP)
e. ForeverLife (Traditional)
f. Immediate Annuity (Traditional)
3. Health Solutions
a. Comprehensive Health Coverage
i. Health Saver
b. Hospitalization coverage
i. MediAssure
ii. Hospital Care
c. Critical Illness Coverage
i. Crisis cover – 35 critical illnesses, total and permanent disability and death
4. Group Plans
a. Group Super Annuity Plan
ICICI Bank
Life Insurance Plan
Retirement Solutions
Health Solutions
Group Plans Rural PalnsMicro
InsuranceRiders
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b. Group Gratuity Plan
c. Annuity Solutions
d. Group Term Insurance Plan
e. Group Term Insurance in Lieu of EDLI(Employee Deposit Linked Insurance
scheme)
f. Group Leave Encashment Plan
g. Credit Assure
5. Rural Plans
a. Suraksha
b. Suraksha Kavach
6. Micro Insurance
a. Sarv Jana Suraksha
7. Riders
SBI
1. Individual Products
a. Unit Linked Products
I. Unit Plus III
II. Smart ULIP (Series II)
III. MAHA ANAND II
IV. Horizon III
V. Unit Plus II Child
VI. Unit Plus Elite II
b. Pension Products
I. Unit Plus III Pension
II. Horizon III Pension
III. Immediate Annuity
IV. Life Long Pension Plus
c. Pure Protection Plus
I. Swadhan
II. Shield
d. Protection Cum Saving
I. Scholar II
II. Shubh Nivesh
e. Money Back Scheme
I. Money Back
II. Sanjeevan Supreme
2. Group Products
a. Group Employee Benefit Products
I. Retirement Solution
1. Cap Assure Gratuity
2. Cap Assure Superannuation
3. Cap Assure Leave Encashment
4. Dhanrashi
5. Swarna Jeevan
6. Swarna Ganga
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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7. Kalyan ULIP
8. Cap Assure
II. Group Protection Plans
1. Sampoorn Suraksha
2. Credit Guard
3. Suraksha Plus
III. Specialized Term Insurance
1. SBI Life Shield used as keyman
b. Group Term with RPO – Swadhan(Group)
c. Group Loan Protection Products
I. Dhanraksha Plus SP
II. Dhanraksha Plus LPPT
d. Group Savings Protection Products – Nidhi Raksha RP
e. Group Micro Insurance
I. Grameen shakti
II. Grameen Super Suraksha
3. Health Products – Group Criti 9
Citibank:
Birla Sun Life
Individual
Wealth with Protection
Protection Solution
Health and Wellness
Retirement Solution
Children's Future
Riders
Group
Protection solutions
Retirement solutions
Rural
NRI
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Birla Sun Life for Life insurance:
1. Individual Solutions:
a. Wealth with protection
1. Platinum Premier Plan
2. Dream Endowment Plan
3. Titanium Plus Plan
4. Saral Wealth Plan
5. Money Back Plus plan
6. Guaranteed Bachat Plan
7. Bachat Endowment Plan
b. Protection solutions
1. Term Plan
2. Premium Back Term
3. High Net Worth Term
c. Children’s future solutions
1. Dream Child Plan
2. Saral Children’s Plan
d. Health and wellness solutions
1. Saral Health Plan
2. Health Plan
3. Universal Health Plan
e. Retirement solutions
1. Immediate Income Plan
2. Freedom 58
3. Dream Retirement Plan
4. Secure 58 Plan
f. Riders
2. Group Solutions
a. Protection solutions
b. Retirement solutions
3. Rural Insurance
a. Bima Dhan Sanchay
b. Bima Suraksha Super
c. Bima Kavach Yojana
4. NRI Solutions - these are also, individual solutions for NRI’s
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Canara HSBC Oriental Bank of Commerce Life Insurance Company
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Standard Charted
Bajaj Allianz Life Insurance Company as life insurance provider:
1. Unit Linked
a. Regular premium
I. New Family Gain II
II. New Unit Gain II
III. Family Assure II
IV. Century Plus III
V. Unit Gain Protection Plus II
VI. Smart Investment Plan II
VII. Assured Gain
b. Single Premium
I. Wealth Gain
II. Shield Plus
2. Pension
a. Annuity
I. Pension Guarantee
b. Retirement
I. Future Income Generator
II. Swarna Vishranti
III. Retirement Advantage RP
IV. Retirement Advantage SP
V. Future Secure II
3. Traditional
a. Endowment
I. InvestGain
II. SaveCare Economy SP
III. Life Time Care
IV. Super Saver
V. Investment Plus
b. Money Back
I. Cash Gain
4. Term Plans
a. Protector
b. Term Care
c. New Risk Care
5. Women Insurance
a. House Wives
6. Health
a. Care first
b. Health Care
c. Family Carefirst
7. Children Plan
a. Child Gain
b. Young Care II
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8. Just Launched
a. Group Seva Plan
b. Group Secure Life
c. Invest Plus Premier
9. Group
a. Non Employer Employee
I. Credit Shield
II. Group Term Life
III. Group Suraksha
IV. Sarve Shakti Suraksha
V. Group Loan Protector
VI. Group Income Protection
VII. Group UnitGain
b. Employer Employee
I. Group Term Life
II. New Group Gratuity Care
III. New Group Superannuity Care
IV. Group save Plus
V. Group Term Life in lieu of EDLI
VI. Group Leave Encashment Scheme
VII. Group annuity
VIII. Group Superannuity Gold
IX. Group Gratuity Gold
10. Micro Insurance
a. Alp Nivesh Yojana
b. Jana Vikas Yojana
c. Saral Suraksha Yojana
11. Additional Rider Benefit
a. Unit Linked
I. Additional Rider Benefits
II. UL Waiver of Premium Benefit
III. UL Family Income Benefit
IV. Unit Linked Term Rider
b. Non Unit Linked
I. Additional Rider Benefits
II. UL Accelerated Critical Illness Rider
HDFC Bank:
1. Individual Solutions
a. Protection plans
I. Term Assure Plan
II. Loan cover Term Assure Plan
III. Home Loan Protection Plan
b. Children’s Plan
Conventional Plans Unit Linked Insurance Plans
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HDFC Children's Plan HDFC YoungStar Super
HDFC YoungStar Supreme
HDFC YoungStar Super Suvidha
HDFC YoungStar Supreme Suvidha
HDFC SL YoungStar Champion Suvidha
c. Retirement Plan
Type Conventional Plans Unit Linked Insurance Plans
Regular
Premium HDFC Personal Pension Plan
HDFC Pension Super
HDFC Pension Supreme
HDFC SL Pension Champion
Single
Premium/
Investment
HDFC SL Unit Linked Pension Maximiser
II
d. Types of Savings & Investment Plans
Our range of Savings & Investment Plans includes
Type Conventional Plans Unit Linked
Insurance Plans
Regular Premium HDFC Endowment Assurance Plan
HDFC Money Back Plan
HDFC Assurance Plan#
HDFC Savings Assurance Plan^
HDFC Endowment
Super
HDFC Endowment
Supreme
HDFC SimpliLife
HDFC Endowment
Super Suvidha
HDFC Endowment
Supreme Suvidha
HDFC SL Endowment
Champion Suvidha
Single Premium/
Investment
HDFC Single Premium Whole of
Life Insurance Plan
Limited Premium
Payment
HDFC Wealth Builder
e. Health Plans
I. Critical Care Plan
II. SurgiCare Plan
f. Rural Products
I. HDFC Gramin Bima Kalyan Yojana
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II. HDFC Gramin Bima Mitra Yojana
III. HDFC Bima Bachat Yojana
g. Social Products
I. HDFC Development Insurance Plan
2. Group Term Insurance Plans
a. Group Term Insurance Plan
b. Group Variable Term Insurance Plan
c. Group Gratuity Solutions
d. Group Super Annuity Solution
e. Group Leave Encashment Solution
3. Products Closed for Sale
(Serviced by Customer Service)
HDFC Unit Linked Pension
HDFC Unit Linked Pension Plus
HDFC Unit Linked Endowment
HDFC Unit Linked Endowment Plus
HDFC Unit Linked Endowment Suvidha
HDFC Unit Linked Endowment Suvidha Plus
HDFC Unit Linked Young Star Suvidha
HDFC Unit Linked Young Star Suvidha Plus
HDFC Unit Linked Young Star
HDFC Unit Linked Young Star Plus
HDFC Unit Linked Pension II
HDFC Unit Linked Wealth Maximiser Plus
HDFC Unit Linked Endowment Winner
HDFC Unit Linked Wealth Multiplier
HDFC Unit Linked Endowment II
HDFC Unit Linked Endowment Plus II
HDFC Unit Linked Enhanced Life Protection II
HDFC Unit Linked YoungStar II
HDFC Unit Linked YoungStar Plus II
HDFC Unit Linked YoungStar Champion
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APPENDIX 2 – SURVEY QUESTIONNAIRE
Survey questionnaire on customer preference on insurance
*Means compulsory question
Name*:
Gender*:
Age*:
Contact No.:
State*: Occupation*(salaried, business, retired, others): Marital status*(Single, Married): If married, no of Children: Annual Income(<3Lakhs, 3-5Lakhs, 5-10Lakhs, >10 Lakhs):
Q) Do you have any insurance?(Y/N) A)
Q) Do you think insurance is important?(Y/N) A) Q) Rate the following companies on the basis of your preferences (from 1 to 6) Canara HSBC Life: ICICI Prudential Life: SBI Life: HDFC Life: Bajaj Allianz Life: Birla Sun Life: Q) Rate the following types of Insurance policies?
Whole life plan Retirement plan Health plan Children plan
Rate the following factors on a scale of 1-5 with 1-Strongly disagree, 3-Neutral, 5- Strongly Agree
Advantages for buying insurance policies through banks- Expert Advice: Convenience: Easy Access: Reliability: Better understanding of customer needs:
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Reasons for taking a life insurance policy- Post retirement income: Children’s concern: Protection to family in case of unfortunate event: Tax Benefits: Better returns in terms of investment:
Important factors which influence you while buying insurance- Company related Brand Name: Company advertisement: Company performance: Market Current Market situation: Future market Expectation: Expected interest rate: Policy Premium options: No. of Products: Policy years: Min/Max sum assured: Tax benefits: Options in case of death: Expenses charged: Investment options in policy: Others Person selling insurance: People References:
Brand Recall
Guess the whose advertisements have the following quotes (some companies have more than one quote) [Canara HSBC Life, HDFC Life, Birla sun life, Bajaj Allianz, SBI, ICICI Pru Life]
Sar utha ke jiyo Jindagi hai jeene ke liye Apke sapne hamari vachan badhta Taaki rishton ke beech kabhi dooriyan na aaye Suraksha jindagi ke har kadam pe Jiyo Befikar Jeetey raho The power on your side Insuring your emotions
http://spreadsheets.google.com/viewform?formkey=dG5RLTZYNG1XYklleW0yZXAxMDN3Q3c6MQ