Gouthams Life Insurance Project

8/9/2019 Gouthams Life Insurance Project

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CHAPTER I

INTRODUCTION

Security and constant search for security have been an unending

endeavor of human race since the beginning of the civilization. From the

Rock man to Iron Age man, from the Medieval Conservative to today

Longhair and Techniques, this search has brought out innovative ideas.

'The irony of man's condition is that the deepest need is to be free of

the anxiety of death and annihilation; but it is life itself which awakens it, and

so we must shrink from being fully alive."

-EARNEST DRUCKER

Financial stability of an individual is a vital factor for the successful

running of a family. A family depends on the income of its breadwinner for its

sustenance and for maintaining a chosen standard of living. Every family will

have certain aspirations- to have a decent life, to provide a standard education

to children leading to their worth while employment, to arrange and celebratesuitable marriage for daughter, to own a roof to lie under and to have good

medical facilities to all the family members. All these depends on the

regularity with which the earning members of the family, especially the

breadwinner, bring income to the family and the family's spending and

savings habit.

Though death, natural or otherwise, takes the breadwinner permanently

away from the family, what is inevitable to consider is the Economic Death of

the person.

"Security can be thought of as peace of mind and freedom from

uncertainty. Insecurity implies feelings of doubt, fear and apprehension.

Security is measured by the probability.

Security has been a universal desire, r ight from the earliest


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civilizations. This quest for security has been a major motivating force in the

progress of mankind. Gradually, as lifestyles changed and as man progressed

into a modern industrialized setup, this comprehensive quality of the family

vanished. One had to look for other ways of providing economic security and

somewhere along the line was born the concept of "Insurance". Although the

modern version of insurance was far to seek, there had been several ways of

looking for partial or total relief from potential financial losses, or in a

nutshell, for transfer of risk.

The word 'Insurance' instills a sense of security in the minds of people.

Insurance is a part of financial system that takes care of the financial

consequences of certain specific contingencies both in case of individuals and

corporate bodies. Insurance neither prevents risks non-altars the probability of

its occurrence, but reduces the extant of financial loss by transferring risks

from one individual to a group.

Economic activity and growth are greatly facilitated by the market in

mobilizing the savings and allocating them among competing users. Economic

needs institutions that impartially enforce property rights and contracts.

Economic growth depends on the existence of a well functioning financial

market, it is essential that the financial infrastructure is developed sufficiently

so that the market operations are efficient.


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Need for the Study:

The new liberalized and reformed insurance sector has a great fui Newcompanies have shown a real scope for improvement in the insurance market

in the past few months Visakhapatnam. The city has seen companies entering

into the market . The companies have seen great pott in the unexplored market

and they have brought about intensive penetrate the field. This has brought

about competition for LIC of India which was only player in the life insurance

market.

The study is focused to find out the buying behaviour and the factors

influencing the purchase of Life Insurance policy by an individual. Also the

study is to find out the perception of the individuals of the companies

operating in Visakhapatnam. The study is to elaborate the purchase pattern

competitors strategies adopted but the companies in the city.

Objectives of the project

To analyze the service mix. offered by the different insurance

companies with special reference to ICICI Prudential Life Insurance

services.

To understand the customer requirement, make a need analysis and

offer him a customized solution.

To understand the extent of usage of insurance as a savings and

investment option

To know the response of people regarding private insurance companies

and its products.


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METHODOLOGY

Collection of data:Marketing research depends on two kinds of data i.e.. primary and

secondary. Primary data consists of observing phenomena and subsequently

surveying respondents. The study requires primary data for learning the

customers' perception about private life insurance. The company supplies the

database required for the study.

Primary data collection involves the following steps:

Meeting the clients as per the information provided by the database.

Scheduling the appointments from customers through call convenience.

Trying to know customers perception towards private life insurance.

Convincing them about the benefits of life insurance.

Secondary data marks the beginning of the marketing research

process. Information is gathered from both internal and external sources.

Secondary data is required to gain an insight into the private life insurance

products. Secondary data is gathered through journals, magazines, brochures

and web sites.

Market survey:

The research instruments and techniques used are as follows:

Questionnaire:

A structured questionnaire has been used to conduct the survey,

which consists of a set of questions related to the company and the basic

questions relating to the insurance industry.

Sampling plan:

The next step after the survey is to decide upon the sample size,

sample unit, and procedure.


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Sample unit:

The sampling unit consists of who is to be choosing as a target to

commence the survey. According the survey done all the area covered is to betaken as the sample unit. It is not restricted to one area or a single individual

but also the employees, the business agents all are taken into account.

Sampling procedure:

To get a sample representat ive of the entire population, a

probability sample of the population should be drawn. The sample of the

entire insurance sector has been taken in to consideration in the

Visakhapatnam area. Reporting research findings:

This phase of the survey includes the research findings. The

research findings help in the decision making of the gathered facts. The

marketers give the research findings to speed up the decision making process.

LIMITATIONS

The survey is conducted to know the consumer perception, which

requires large sample and lot of time; hence shortage of time is a big

limitation for this survey.

As the time is short, the geographical limitation is restricted to the city

of Visakhapatnam.

One big factor to consider is the assumption that the Respondents will

be honest while responding to the questionnaire, which may not be true

in all responses.


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CHAPTER-II

INDUSTRY PROFILE

Evolution of Insurance:

Insurance may be defined as a cooperative device to spread the caused

by a particular risk over a number of persons who are exposed to it a who

agree to insure themselves against that risk. This means that insurance

provides a pool to which many people contribute a certain sum of money cal

the premium and out of which the insurer compensates the few who suffer

losses. By insurance the risk is transferred from individual to the insurer w

takes into account the total likely loss in a certain period and then fixes 1

premium to be charged from each person insured.

For example the likely loss of ships on voyage on a particular route

estimated to be ships per year, valued at two crores of rupees and total

number of ships expected to be on voyage per year is calculated to be say

1000 shi] them the premium for each ship may be at 2,00,00,000/ 1000 = Rs.

20,000 Say Rs 2,000 of other expenses and profits i.e., Rs. 22,000. Thus it can

be se that insurance is a device by which an insured person can protect

himself from the heavy loss likely to be caused by an uncertain event in

exchange of money as premium.

It may be noted that insurance cannot prevent loss of property of good

by fire or other perils. It can merely provide financial compensation for t

effects of misfortune. Insurance therefore does not protect the material

property which is the subject matter of insurance, but the pecuniary. interest

of the insured.

Nature of Insurance:

Insurance is a means of spreading risks. It involves pooling of risks,

group of people who are subject to an insurable risk contribute regularly andthe fund so created is utilized to compensate those unfortunate few members


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of the group who actually suffer a lone due to same unexpected calamity. In

this way all members share the loss of a few as an equitable basis. Insurance

is a sock device for pooling and dividing risks among a large number of

persons.

For instance, let us assume that in a city 1000 house - owners decide to

insure their houses against fire. Every house-owner will make same payment

for the insurance cover. Some houses are likely to get fire but the probability

that all will burn is very remote. Suppose the total insurance fund created by

contributions is Rs. 50 lakhs and ten houses suffer a total loans of Rs. 40

lakhs by fire during the period of insurance then the owners of those houses

will be indemnified out of "the fund. Rest of the money will be utilized to

meet the expenses and profits of the insurance company.

Thus, insurance may be defined as a contract in writing under which

one party agrees in referrer for a consideration to indemnify the other party

against the loans or "damage suffered an account of an uncertain future event

or contingency or to pay a specified such on the happening of a specified

event.

Contract of insurance must fulfill all essential requirements of a valid co as

defined in the law of contracts. In other words there must be valid of the

acceptance and free consent the parties must be competent.

Classification of Insurance:

The risks, which can be insured, have increased in number and owing

to the growing complexity of the present day economics Insurance thus

occupies an important place in the modern world. It plays in role in the life of

every citizen and has developed in recent times enormous scales leading to

the evolution of many different types insure Even singers can insure their

voice and dancing girls can get their legs ins so that their singing or dancing

skill declines the insurance company pays the policy amount. Insurance can

be broadly divided into:

Life Insurance

General Insurance

Governance of Insurance Business:

The insurance business in India is governed by the following Acts: -


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The Insurance Act, 1938

The Life Insurance Corporation Act, 1956

The Marine Insurance Act, 1963.

The General Insurance Business (Nationalization) Act, 1972.

HISTORY OF LIFE INSURANCE:

In early times men who engaged in trade by sea attempted to minimize

the largest which resulted from the perils of the sea by spread in the largest

amongst a large number of persons who are similarly engaged. Naturally

many ships arrived safely in port and it was only a few that suffered loss. The

many who did not suffer loss contributed to mitigate the sufferings of the few

who did. So much good following from this arrangement that the trades

adopted the idea in many lands and gradually there come into existence

groups of men who specialized in managing the funds and studied the rates of

loss which occurred in the different types of marine ventures. This was the

beginning of insurance and is called as 'Marine Insurance'.

Evidence is available about crude forms of maritime contracts made by

the baby larians, Rhodesians and Greeks about the middle of third millennium

B.C., however the early history of insurance is hidden the mists of antiquity.

The earliest available reference to some form of insurance is found in the

codes of Hammurabi and Manu. The term YOGAKSHEMA is used in the

Rigveda suggestion that same form of community insurance as participated by

the Aryans in India over 3000 years ago.

The early development of insurance was spasmodic and was restricted

mostly to the fields other than life, scientific life assurance is a heritage from

England the 'American Society' granted fluctuating sum on death. The

development of morality tables was a land mark in the history of life

assurance with this development life assurance acquired a scientific character.

The equitable society found in 1762 was the first to be founded on a

scientific basis with premiums computed according to age and period of

insurance on the lives of the humans.


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MEANING OF LIFE INSURANCE:

Life Insurance is a contract under which the insurer in consideration of

a premium paid either in lump sum or by monthly, quarterly, half-yearly or

yearly installments undertakes to pay a fixed sum of money on the death of

the insured or on the expiry of a specified period of time whichever is earlier.

The contract also provides for the payment of premium periodically to

the corporation by the assured life insurance universally acknowledged to be

an institution, which eliminates 'risk', substituting certainly for uncertainty.

The subject matter of insurance is human life. It is a contingent and not a

contract of indemnity.

A family is generally dependent on the income brought in at regular

intervals by the breadwinner of the family for its food, clothing and shelter.

As long as the income is received steadily that family is secure, but should

death suddenly intervene the family may be left in very difficult situation and

some times in stake poverty Uncertainly of death is inherent in human life.

Life Insurance in short is concerned with two hazards that stand across

the life path of every person, that of dying prematurely leaving a dependent

family to fend for itself and that living to old age without visible means of

support.

Person has an unlimited insurable interest in his own life

A husband/wife has an insurable interest in the life of his

wife/husband

A father has an interest on his son/daughter on whom he

is dependent.

A creditor has on his debtor and a further has interest on

his copartner.


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ADVANTAGES OF LIFE INSURANCE:

Protection against premature death: .

Life Insurance provides protection to the dependents of th assured in case

of his untimely death. The dependents get a large sum in case c the death oftheir breadwinner.

Provision for old age:

Through life insurance, a person can make provisions for hi old age. After

is substantially reduced. He cannot maintain his standard o living without

substantial livings.

Promotion of Thrift:

Life insurance encourages people to save money compulsorily Once a life

policy is taken, the assured has to pay premiums regularly to keep the policy

in force and he cannot get back the premium.

Funds for investment:

It mobilizes the public savings and channelises th productive investment for the economic

development of the country. I important institution

for the mobilization and investment of small saving

Commercial Value:

Life insurance policy can be used as a

collateral seci raise loans. It improves thecontinuity, and credit worthiness of business.

Social Utility:

Life Insurance has significance for the society

aiso. In workers and other poor people can save

through life insurance. It en person to provide for

education and marriage of children and for constru*


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house.

Superior to an Ordinary Savings Plan:

Unlike other savings, it affords full protection

against death. In case of death the full sum assured

is made available under assurance policy.


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Ready Marketability:

After an initials period, if the policyholder finds

himself to continue payment of premiums he can

surrender the policy for ca Alternatively, he can

tide over a temporary difficulty by taking a loan on

the sole security.

|jclisttabTax Relief:

Income tax act allows deduction from tax payable, a certain percentage of portion of the

taxable income, which is diverted to payment of

premiums.

General Insurance:

It is known as non-life insurable. We can

classify general insurance three branches.

It is the contract under which on party in

return Iconsideration agrees to indemnify the other

party for the financial loans, v the latter may suffer

due to damage to the property insured by fire

during specific period of time and up to an agreed

amount.

Marine Insurance:

It is an agreement under which the

insurer undertakt indemnify the insured, in the

manner and to the extent thereby agreed, a


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marine losses or loses incidental to marine

adventure.

Miscellaneous Insurance:

Some of the other types are:

Personal accident insurance

Burglary insurance

Credit insurance

Workmen's compensation insurance


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COMPARISON OF LIFE INSURANCE AND OTHER FORMS:

Subject matter: Life insurance is related to

human life and others ; related to property.

Nature of Contract: Life insurance is a

contingent contract and others contracts of

indemnify.

Periods of Contract: Life insurance is a

continuing contract while others are short-

term contracts.

Surrender Value: Life Insurance has surrender

value i.e. value before maturity in other

forms of insurance, the question of

surrender value d not arise.

Purpose: The basic aim of life insurance is toprovide protection against premature death

and the purposes of other forms is to protect

property against loans or damage.

Insurable Interest: In life insurance, it must be

present at the time of taking the policy. In

other forms, it must present at the time theloans occurs.

HISTORY AND EVOLUTION OF LIC INDIA:

There has been life insurance business in India

since 1818 till 195( insurance business was mixed

and decentralized. There were a large numb


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companies of different ages, sizes and pattern of

organization, which conducted only life insurance

business and there were some companies whose r

business was general insurance but they did life

insurance also.

In 1956, the life insurance business of all

companies was national: and a single monopolistic

organization, the Life Insurance Corporation (LIC

India was set up. This has been established by an

act or parliament which received the assert of the

president and corporation begin to function on

September 1956. Since that day the corporation is

having the exclusive privilege of carrying on Life

Insurance business in India.

The early history of modern insurance in Indiais some what obscure. 1 earliest references are

traceable to the days of the East India Company.

So: British officers issued the lives of its officers.

The first organized effort establish a life insurance

office in India was made in 1870 with the formation

the Bombay Mutual Assurance Society Ltd.

A few years later the Bharat (1896) and the

Empire of India (1897) were established. The

swadeshi movement of 1905 provided impetus to

the formulation of general companies such as the

Hindustan Co-Operative the United India the

Bombay Life and the India mercantile.


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The Government began to exercise a certain

measure of control ( Insurance Business with the

passing of the first Insurance act in 1921 with view

to establishing closer supervision and control,

government enacted tl insurance act, 1938. This act

was amended in 1950.

In the year 1955, approximately 170 insurance

offices and 80 provide! societies had beenregistered for transacting Life Insurance business

in Indi, The government of India took the first step

towards nationalization of Lil Insurance Business in

India on the 19lh January 1956.

REASONS FOR NATIONALIZATION:

In the year 1955, approximately 170 insurance

offices and 80 provider societies had been

registered for transacting Life Insurance business

in India, tfew of these were foreign companies with

their head offices outside India. Ii addition to these

insurers, a large number of other insurers who hadregistered themselves for transaction of Life

Assurance Business had either gone into liquidation

or had been taken over by the existing insures.

From a study conduct, it was found that the

concept of trusteeship which should be the

cornerstone of life insurance seemed entirely


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lacking and most management's had no

appreciation of the clear and vital distinction that

exists belonged to joint stock companies owned by

the shareholders. Therefore it was felt necessary to

nationalize insurance business in India with a view

to:

1. Providing for cent percent security to Policy

holder.

2. Saving the dividends paid to shareholders to

insurance.

3. Ensuring the use of life insurance funds for

nation building activities.

4. Avoiding wasteful efforts wasteful efforts in

completion companies.

5. Spreading the gospel of insurance beyond the

more advanced urban areas well into the

higher to neglected rural areas.

6. Avoidance of certain undesirable practices

adopted by some of the Insurance Companies

Management.

Evolution of

Insurance MarketLets have a brief look into the evolution of the


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insurance market, which has come a long way

starting 1818.

The business of life insurance in India in its

existing form started in India in the year 1818 with

the establishment of the Oriental Life Insurance

Company in Kolkata. Some of the important

milestones in the life insurance business in India

are:

1912: The Indian Life Assurance Companies Act

enacted as the first statute to regulate the life

insurance business.

1928: The Indian Insurance Companies Act enabled

the government to collect statistical information

about both life and non-life insurance businesses.

1938: Earlier legislation was consolidated and

amended by the Insurance Ac with the objective of

protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and

provident societies taken over by the Central

Government were nationalized. LIC formed by an

Act of Parliament viz., LIC Act, 1956,. with a capital

contribution of Rs. 5 cr from the Government of

India. (Source: www.ciionline.org)

Prior to 1956, a large number of organizations

were managing lift insurance and general insurance

businesses. But then in 1956, the life insurant

business was nationalized & monopoly vested with

Life Insurance Corporation (LIC). Similarly in 1972,
http://www.ciionline.org/http://www.ciionline.org/


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the general insurance business was nationalized &

started to be managed by General Insurance

Corporation (GIC) and its four subsidiaries namely

National Insurance Company Limited, New India

Assurance Company Limited, Oriental Fire &

General Insurance Company Limited & United India

Company Limited.

The first sign of government concern

about the state of the insurance industry was

revealed in the early nineties, when an expert

committee was set up under the chairmanship of

late R. N. Malhotra. Amongst the various

recommendations put in by the Malhotra

Committee, the most important was recommending

that the insurance industry be .opened up to

private firm subject to the conditions that a private

insurer should have a minimum paid u capital of Rs.

100 crore, and that the promoter's stake in the

otherwise widel; held company should not be less

than 26 per cent and not more than 40 per cent.

Subsequent to the submission of its report by

the Malhotra Committee there were several

abortive attempts to introduce the Insurance

Regulator Authority (IRA) Bill in the Parliament.

In November 1998, the Central Cabinet

approved the Bill, which envisaged a ceiling of 40

per cent for non-Indian stakeholders: 26 per cent

for foreign collaborators of Indian promoters, and


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14 per cent for nonresident Indians (NRIs),

overseas corporate bodies (OCBs) and foreign

institutional investors (FIIs). However, in view of

the widespread resentment about the 4( per cent

ceiling among political parties, the Bill was referred

to he standing committee on finance. The

committee has since recommended that each

private company be allowed to enter only one of

the three areas of business-lift for foreign

stakeholders in these companies be reduced to 26

per cent from the proposed 40 per cent.

The committee has also recommended that the

minimum paid up share capital of the new

insurance companies be raised to Rs. 200 crore,

double the amount proposed by the Malhotra

Committee. Today, due to these developments, the

Indian Insurance market stands wide open and has

attracted a host of global players.

SHIFT OF

INSURANCE FROM

PUBLIC TO


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PRIVATE SECTOR:

Malhotra

CommitteeReforms in the Insurance sector were taken up

in 1993 when Malhotra Committee, headed by

former Finance Secretary and RBI Governor R.N.

Malhotra, was formed to evaluate the Indian

insurance industry and recommend its future

direction. The Malhotra Committee was set up with

the objective of complementing the Teforms

initiated in the financial sector. The reforms were

aimed at "creating a more efficient and competitive

financial system suitable for the requirements of

the economy keeping in mind the structural

changes currently underway and recognizing that

insurance is an important part of the overall

.financial system where it was necessary to address

the need for similar reforms.

The Malhotra


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Committee's

Report suggested:

-a. Structure Government stake in the insurance

Companies to brought down to 50%.

b. Government should take over the

holdings of GIC and subsidiaries so that

these subsidiaries can act as independent

corporations.

c. All the insurance companies should be given

greater freedom

operate Competition Private Companies with a

minimum paid up capital

of Rs.l bn should be allowed to enter the

industry

d. No Company should deal in both Life and

General Insurance through single entity.

e. Foreign companies may be allowed to enter the

industry in collaboratic with the domestic

companies

i. An Insurance Regulatory body should be set up

j. Controller of Insurance (Currently a part from


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the Finance Ministry) should be made

independent

k. Investments: Mandatory Investments of LIC Life

Fund in government securities to be reduced

from 75% to 50%

I R D A :

The Malhotra committee felt the need to

provide greater autonomy to insurance companies

in order to improve their performance and enable

them to act as independent companies with

economic motives. For this purpose, it had

proposed setting up an independent regulatory

body. The Insurance Regulatory and Development

Authority Reforms in the Insurance sector were

initiated with the passage of the IRDA Bill inParliament in December 1999. The IRDA since its

incorporation as a statutory body in April 2000 has

fastidiously stuck to its schedule of framing

regulations and registering the private sector

insurance companies. The other decisions taken

simultaneously to provide the supporting systemsto the insurance sector and in particular the life

insurance companies was the launch of the IRDA's

online service for issue and renewal of licenses to

agents.

The approval of institutions for imparting

training to agents has ensured that the insurancecompanies would have a trained workforce


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insurance agents in place to sell their products,

which are expected I introduced by early next year.

Since being set up as an independent stat body the

IRDA has put in a framework of globally compatible

regulation the private sector 12 life insurance and 6

general insurance companies been registered.

Insurance Regulatory And Development Authority(IRDA)Act,

1999.

GOVERNMENTPOLICY:

IRDA:

It's a statutory Autonomous board created to

perform the role c effective watchdog and regulator

for the insurance sector in India. It is v with the

power to make regulations consistent with the act

to carry out the purpose of the act.

IRDA is constituted with one chairperson,5

whole time members a part-time members, all

with tenure of five years.

There will be an advisory committee consisting

of 25 members to ac IRDA in its day-to-day

activities representing commerce, industry

agriculture, consumers, employee's etc.

Objectives: -To provide for the establishment of an


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authority to protect the interests o f holders of

insurance policies, to regulate, promote and ensure

orderly growth i the insurance industry.

Important changes brought through IRDA

act:

1.Insurance business is opened up to private sector

thus ending the monopoly of LIC/GIC.

2.Participation of foreign companies in collaboration

with Indian Insurance companies is allowed;

subject to the condition that the foreign

Company's share capital shall not exceed 26%

of the paid-up capital c the Indian Insured.

3.Controller of insurance ceases to exist and all his

function are vested wit IRDA.

4.Appointment of chief agents and special agents is

revived.

5.The concept of insurance brokers is introduced.

Duties, powers and

functions of IRDA:1.Issue certificate of registration, renew, modify,

withdraw, suspend c cancel such registration.

2.Protect the interest of policyholders in all matters

concerning the term and conditions of

contracts of insurance including settlement of


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insuranc claims, surrender value of policy etc.

3.Specify requisite qualifications, code of conduct

and practical training fo insurance

intermediaries and agents.

4.Promote efficiency in the conduct of insurance

business.

5.Promoting and regulating professional

organizations connected with insurance and

reinsurance business and specify percentage

of Premium income to be spent by insured for

this purpose.

6.Undertaking inspections and conducting audit of

insured, insurance intermediaries and other

organizations connected with insurance

business.

7.Specify the form and manner in which books of

accounts shall be maintained and statement of

accounts be rendered by Insured.

8.Regulate investment of funds by insured.

9. Adjudicate dispute between Insurers and

intermediaries or insurance intermediaries

advisory committee.

11. Specify the percentage of insurance business

to be undertaken by Insured in the rural and

social sector.

The Huge Potential


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of the Indian

Insurance Market

is u for the Taking: The fifth largest insurance market in Asia.

The third largest emerging market in the world

today.

Insurance sector accounting for 3% of GDP and

we have a population more than one billion.

Global players have set their eyeballs on Indian

market. The Ini market is no doubt one of the

biggest markets in the world. According to experts

of the. industry, Indian Life Insurance Sector of

$7.7 bn will grow to bn by the end of 2007.Though

the sector has been opened for pri participation

just a year ago, it has already witnessed a severe

competi among the players. With the opening of

the insurance sector, there are prese around 12 life

insurance and 10 general insurance companies

operating in Ii with more players expected to come

in.

MAJOR PLAYERS:


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Different

companies

existing in life

insurance sector:

BIRLA SUN LIFE:Birla Sun Life Insurance Company was formed

on 31.01.2001 with the Registration number 109.

Birla Sun Life is joined venture between Aditya Birh

Group and Sun life Financials.

The CEO of Birla Sun Life isMr. Nani Jhavari,

saidabout the company "We believe our adviser are our

Brand Ambassadors". The company has recorded

premium during the year Apr 2002 to Mar 2003 in

Rs. 170 crores number o policies issued 1, 45,000

policies.

Birla Sun Life has focused on unit-linked

Insurance instead of traditional insurance. The unit-


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linked products where the premium is demarcated

between "insurance and investment come with

minimum guaranteed returns. The consumer was

given three investment options, which carry various

levels c risk.

HDFC Standard:HDFC Standard life was formed on 23.10.2000

with Registration number 10 It is a joint venture

between HDFC and Standard Life. The CEO of HDF

Standard Life is Mr. Deepak Satwalekar said, "Insurance is

all about protection and then savings and

investment ".

The company has recorded the premium during

the year Apr 2002 to Mar 20( Rs. 13'2.7 crores and

number of policies issued 142857.

HDFC Standard Life gets the half of its

business from term assurance plans, where the

sum assured is large but premiums are low. The

difference between HDFC Standard Life and other

companies is it concentrated more in whole life and

term plans.

MAX NEWYORK


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LIFE:Max New York Life was formed on 15.11.2000

with Registration number 104.The CEO of Max New

York Life is Mr.Anuroop Singh says, "Whole life policies

offer the right balance between protection and

savings'1. Max New York Life has recorded of

premium in between Apr 2002 to Mar 2003 in

Rupees 76.8 crores and number of policies issued 1,

43,000. Max New York Life has more concentrated

in whole life and term plans.

SBI LIFE:SBI Life was formed on 30.03.2001 with

Registration number 111.

The CEO of SBI Life Mr. R Krishna Murthy says "our

strategy is to weave life under back of bank

products as quick way to penetrate and avoid

adverse selection."

SBI Life is piggybacking on the parent bank to

sell its products it selling insurance products to

SBI's deposits holders at rupees 25 a month for one

lakh cover, and has tapped 3.5 lakhs account


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holders so far, for villages rupees 10 per month for

rupees 25,000 cover. SBI Life has concentrated

more on offering built around banking products.

LIST OF INSURERS IN INDIA

Life Insurance Corporation of India

1CICI Prudential Life Insurance

HDFC Standard Life Insurance

Birla Sun Life Insurance

OM Kotak Mahindra Life Insurance

Allianz Baiai Life Insurance

Max New York Life

TATA AIG Insurance

SBI Life Insurance

ING Vysya Life Insurance

Aviva Life Insurance AMP Sanmar

MetLife India Insurance


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The performance of private Life Insurance

Companies in terms premium and number of

policies Issued.

Premium in crores Company Name No of Policies Issued

364.9 ICICI PRUDENTIAL 246827170 BIRLA SUN LIFE 145000132.7 HDFC STANDARD LIFE 14285776.8 MAX NEW YORD 14300072.8 SBI LIFE 1800059.8 TATA AIG LIFE 9150053.8 ALLIANZ BAJAJ LIFE 6965634 OM KOTAK MAHINDRA 3683617 ING VYSYA 25000

25 AVIVA LIFE 200008.25 AMP SANMAR 16000(Source: IRDA website 2003)


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1 ICICI 37.10%

2 Max New York Life 7.80%

3 HDFC Standard Life 13.50%

4 BSL 15.20%

5 Bajaj Allianz 5.50%

6 CM Kotak 3.10%

7 SBI Life 7.40%

8 ING Vysya 1.80%

9 Met Life 0.60%

10 AMP Sanmar 0.50%

11 Tata AIG 6.10%

12 Aviva Life 1.30%

T HE PR IVAT E LIFE INS UR ANC E CO M PANY

1 2 3 4

5 6 7 8

9 10 11 12


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Add-On Services:All players are trying to give various add-on

services in an attempt to boost their brand image.

Some of these services can be listed down as:

E-service: A number of companies like Tata AIG, ICICI

Prudential Life, Roya Sundaram Alliance & Birla Sun

Life have started call centers with toll-free

numbers. Through this, almost half of the people

out of the total number when have dialed end up

taking a policy. Tata AIG & ICICI Prudential also

have an arrangement with rediff.com by which one can

e-mail a request for a visit by agents. Players have

also been able to respond to changing customer

needs by developing innovative online life

insurance products, like new community offerings

to target customers such as worksite marketing,

affinity groups and SME portals.

Branding :

The companies have started branding their
http://rediff.com/http://rediff.com/


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products in order to sustain in an increased

competitive environment. Branding the products &

serviced have become important to fuel growth.

Max New York Life's brand aims to provide

comprehensive risk protection in a country where a

large population is either un-insured or under-

insured.

Innovative

Products :New companies have introduced a wider range

of products along with more needs-based selling

techniques. Protection plans are being sold

abundance by some companies (for instance, they

represent over 90% of r business for Max New York

Life), and most companies are offering a choice

riders, covering benefits such as accidental death,

critical illness, waiver premium, total and

permanent disability, and guarantees insurability.

Several the new companies have launched unit-

linked products (for instance, Birla-5 Life's portfolio

has unit-linked products which incorporate various

guarantee ICICI-Prudential and Old Mutual Kotak

Mahindra have launched unit-linked and unitized


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with profit products respectively.


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Distribution:Before liberalization, distribution was entirely

via agencies. T objective of many of the new

entrants is to implement multichannel strategies

including a significant bancassurance element,

selling of insurance produce through banks.

Downward pressure on core banking business is

forcing ban to increase non-interest income, and so

to seek fee generation from to provision of other

services such as credit cards, cash management

service distributors of insurance products, with

several seeking also to become holder of equity in

insurance joint ventures.

However, to succeed in future, players need to

integrate their multiple distribution channels. One

of the greatest challenges is to integrate customer

information collected from all channels, to provide

a single view o the customers across all the

channels. Moreover, integration of information

systems with external partners is also a significant

issue.

The Indian Insurance Industry is still at its

nascent stage. With ipopulation of over a billion,

only a very small percentage of it is actually having

insurance cover. Undoubtedly there is a large

untapped market, which attracting a host of foreign


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CHAPTER-III

COMPANY PROFILE

INTRODUCTION:

ICICI PRUDENTIAL LIFE INSURANCE:

ICICI Prudential Life Insurance Company is a joint venture between

ICICI Bank, a premier financial powerhouse and Prudential plc, a leading

international financial services group headquarters in the United Kingdom

ICICI Prudential was amongst the first private sector insurance companies t

begin operations in December 2000 after receiving approval from Insurance

Regulatory Development Authority (IRDA).

ICICI Prudential's equity base stands at Rs. 6.75 billion with ICIC

Bank and Prudential pic holding 74% and 26% stake respectively. In the yea

ended March 31, 2004 , the company had issued over 430,000 policies , for j

total sum assured of over R. 8,000 crore and premium income in excess of Rs

980 crore. The company has a network of about 30,000 advisors ; as well as

11banc assurance tie-ups . Today the company is the # 1 private life insurer

in the country.


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Vision:

To make ICICI Prudential the dominant life and Pensions player built

on trust by world-class people and service.

This we hope to achieve by :

Understanding the needs of customers and offering them superior

products and service.

Leveraging technology to service customers quickly, efficiently and

conveniently.

Developing and implementing superior r isk management and

investment strategies to offer sustainable and stable returns to our

policy holders.

Providing an enabling environment to foster growth and leaning for our

employees.

And above all, building transparency in all our dealings

The success of the company will be founded in its unflinching

commitment to 5 crore values - Integrity , Customers First Boundryless ,

Ownership And Passion. Each of the values describe what the company stands

for , the qualities of our people and the way we work.

We do believe that we are on the there hold of an exciting new

opportunity, where we the sector. Given the quality of our parentage and the

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

PARTNERS:

ICICI and Prudential came together in 1993 to form Prudential ICICI

Asset Management Company, which has today emerged as one of the leading

mutual funds in India. The two companies bring together two of the strongest

financial service brands in Asia, known for their professionalism, excellent

quality of service and long term commitment to YOU. Riding on the success

of this relationship, the two companies joined hands once more in 2000, to

form ICICI Prudential Life Insurance, with a commitment to provide leading-

edge life insurance solutions. ICICI Bank has 74% stake in the company, and

Prudential plc has 26%.


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ICICI Bank:

ICICI Bank (NYSETBN) is India's second largest bank with an asset

base of Rsl06812crore. ICICI Bank provides a broad spectrum of financialservices to individuals and companies. This includes mortgages, car and

personal loans, credit and debit cards, corporate and agricultural finance. The

Bank services a growing customer base of more than 7 million customer

accounts and 5 million bondholders accounts through a multi-channel access

network. This includes about 450 branches and extension counters, 1675

ATMs, call centre's and Internet banking, (www.icicibank.com). ICICI Bank

posted a net profit of Rs.l .206crore for the year ended March 31. 2001. ICICI

international rating agency Moody"s and the only Indian company to be

awarded an investment grade international credit rating. The Bank enjoys the

highest AAA (or equivalent) rating from all leading Indian rating agencies.

PRUDENTIAL PLC:

Established in 1848, Prudential plc is a leading international financial

services company in the UK, with around US$250 billion funds under

management, and more than 16 million customers worldwide. Prudential has

brought to market an integrated range of financial services products that now

includes life assurance, pensions, mutual funds, banking, investment

management and general insurance. In Asia, Prudential is UK"s largest life

insurance company with a vast network of 22 life and mutual fund operations

in twelve countries - China, Hong Kong, India, Indonesia, Japan, Korea,

Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam. Since

1923, Prudential has championed customer-centric products and services,

supported by over 60,000 staff and agents across the region.

MANAGEMENT:

Board of Directors

The ICICI Prudential Life Insurance Company Limited Board

comprises reputed people from the finance industry both from India and

abroad. Mr. K.V. Kamath, Chairman Mr. Mark Norbom Mrs. Lalita D. Gupte
http://www.icicibank.com/http://www.icicibank.com/


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Mrs. Kalpana Morparia Mrs. Chanda Kochhar Mr. Kevin Holmgren Mr. M.P.

Modi Mr. R Narayanan

Ms.*Shikha Sharma, Managing Director Management Team Ms.

Shikha Sharma, Managing Director Mr. Sandeep Batra, Chief Financial

Officer & Company Secretary Mr. Shubhro J. Mitra, Chief - Human

Resources Mr. Puneet Nanda, Head - Investments Ms. Anita Pai, Chief -

Operations & Underwriting Mr. V. Rajagopalan, Appointed Actuary Mr.

Shridhar Sethuram, Chief - Sales & Marketing Mr. Anil Tikoo, Head -

Information Technology

FACT SHEET:

The Company:

ICICI Prudential life insurance company is a joint venture between

ICIC bank, a premier financial powerhouse and prudential plc, a leading

internal financial services group headquartered in the United Kingdom. ICICI

prudential was amongst the first private sector insurance companies to begin

operations ii December 2000 after receiving approval from insurance

regulator} development authority (IRDA).

ICICI Prudential's equity base stands at Rs.675 crore with ICICI bank

and prudential plc holding 74% and 26% stake respectively. In the year ended

March 31, 2004, the company had issued over 430,000 policies, for a total

sure assured of over Rs.8,000 crore and premium income in excess of Rs. 980

crore. Today the company is the #1 private life insurer in the country.

DISTRIBUTION:

ICICI Prudential has one of the largest distribution networks amongst

private life insurers in India, having commenced operations in 54 cites and

town in India. These are: Agra, Ahmedabad, Ajmer, Allahabad, Amritsar,

Aurangabad, Balgalore, Bhatinda, Bhopal, Bhubaneswar, Chandigarh,

Chennai, Coimbatore, Dehradun, Goa, Gutur, Gurgaon, Hyderabad, Hubli,

Indore, Jaipur, Jalndhar, Jamnagar, Jamshedpur, Jodhpur, Kanpur, Karnal,

Kochi, Kolkata, Kota, Kottayam,- Lucknow, Ludhiana, Madurai, Mangalore,

Meerut, Mumbai, Nagpur, Nasik, Noida, New Delhi, Patials, Pune, Rajkot,


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Ranchi. Sujat, Thane, Thrissur, Trichy, Trivandrum, Vadodara, Vashi,

Vijayawada an Visakhapatnam.

The company has twelve bancassurance tie-ups, having agreements wit

ICICI bank. Allahabad Bank, Federal bank, south Indian bank, bank of Indk

Lord Krishna Bank, and Punjab & Maharastra Co-operative Bank, Goa Stat

co-operating Bank, Indoor Paraspar Sahakari Bank, Manipal State Co-operativ

Bank, Sahrma Rao Vithal Co-operative bank and Jalgaon people's Co-operativ

bank, as well as some corporate agents it has also tied up with organization

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

economically under privileged section of society.

ICICI Prudential has recruited and trained over 30,000 insurance

advisor to interface with and advice customers. Further, it leverages its state-

of-art Y infrastructure to provide superior quality of service to customers.

PRODUCTS:

ICICI Pru life guard

ICICI Pru Save'n'protect

ICICI Pru Cash Bak

ICICI Pru forever Life

ICICI Pru Life Time pension

ICICI Pru Re Assure

ICICI Pru Cash plus

ICICI Pru Life Link

ICICI Pru Smart Kid

ICICI Life Insurance

ICICI Pru Secure plus

ICICI Pru Life Time

ICICI Pru Assurelnvest

Insurance Solutions for Individuals

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


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centric products that meet the needs of customers at every life stage. Its 17

products can be enhanced with up to 6 riders, to create a customized solutior

for each policyholder.

Savings Solutions:

Secure Plus is a transparent and feature-packed savings plan that offers

1 levels of protection.Cash Plus is a transparent, feature-packed savings plan

that offers levels of protection as well as liquidity options.

Save n Protect is a traditional endowment savings plan that offers life

protection along with adequate returns.

Cash Bank is an anticipated endowment policy ideal for meeting miles

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

purchase of an asset. Protection Solutions:-Life Guard is a protection plan,

which offers life cove very low cost. It is available in 3 options - level term

assurance, level I assurance with return of premium and single premium.

Child Solutions

Smart Kid child plans provide guaranteed educational benefits to a

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

The policy is designed to provide money at important milestones in the child"s

life. SmartKid child plans are also available with in unit-linked form - both

single premium and regular premium.

Market-linked Solutions:

Life Link is a single premium Market Linked Insurance Plan which

combines life insurance cover with the opportunity to stay invested in the

stock market.

Life Time offers customers the flexibility and control to customize the

policy to meet the changing needs at different life stages. It offers 3

investment options - Growth Plan, Income Plan and Balanced Plan

Retirement Solutions


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Forever Life is a retirement product targeted at individuals in tto

thirties. Secure Plus Pension is a flexible pension plan that allows one to

select between 3 levels of cover.

Market-linked retirement products:

Life Time Pension is a regular premium market-linked pension plan

Life Link Pension is a single premium market-linked pension plan. ICICI

Prudential also launched "Salaam Zindagi", a social sector group insurance

policy targeted at the economically underprivileged sections of the society.

Group Insurance Solutions :

ICICI Prudential also offers Group Insurance Solutions for company

seeking to enhance-benefits to their employees.

Group Gratuity Plan:

ICICI Prudential group gratuity plan helps employers fund their

statutory gratuity obligation in a scientific manner. The plan can also be

customized to structure schemes that can provide benefits beyond the

statutory obligations.


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Group Superannuation Plan:

ICICI Pru offers a flexible defined contribution superannuation such to

provide a retirement kitty for each member of the group. Employees haveoption of choosing from various annuity options or opting for a partial

commutation of the annuity at the time of retirement.

Group Term Plan:

ICICI Pru"s flexible group term solution helps provide affordable co to

members of a group. The cover could be uniform or based designation/rank

or a multiple of salary. The benefit under the policy is paid the beneficiary

nominated by the member on his/her death.

Flexible Rider Options:-

ICICI Pru Life offers flexible riders, which can be added to the basic

policy at a marginal cost, depending on the specific needs of the customer.

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

during the term of the policy, the beneficiary receives an additional

amount equal to the sum assured under the policy. If the death occurs

while traveling in an authorized mass transport vehicle, the beneficiary

will be entitled twice the sum assured as additional benefit.

2.Accident benefit: This rider option pays the sum assured under the rider i

death due to accident.

ICICI Pru tops Premium Income Chart :

Business Standard : April 15, 2004.

Mumbai : ICICI Prudential Life Insurance Company has topped the

premium income chart among private insurance players for her third year in a

row. It logged a premium income of Rs. 989 crore in the financial year 2003-

2004.

This reflects a 135 per cent growth over last year's (2002-03) income of Rs.

420 crore. New business income rose by 106 per cent to Rs. 751 crore and

despite a 15 percent lapse rate in policy renewals, to company's renewal


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premium increased by 325 per cent to Rs. 238 crore.

At present ICICI Prudential Life has around a 40 per cent share among

the private insurance industry in retail sales. The total sum assured since its

inception has risen to Rs. 16,000 crore with Rs. 8, 173 crore added in is 2004.

ICICI Prudential Life Chief Executive Officer and managing direct

Shikha Sharma said that over 80 per cent of the 4.36 lakh policies sold wt unit

- linked plans, with pension plans accounting for just 28 per cent of no

businesses.

'We intend to come out with more pension and annuity products in if

current fiscal (2004-05) as we find this as an undeveloped market, sa:

Sharma.

Not enough products exist in the market today as the industry continue

to await tax reforms. Today policy holders can get total tax exemption up to

Rs 10,000 under Section 10 CCC of the Income Tax act.

As such , without tax reforms it is not conducive for customers to

invesl more under pension plans, . On the group side, ICIC Prudential has not

been as active as it has been a late entrant .

'We started targeting group insurance this year (2003-04) and have

been able to tap around 100 clients. The premium has been minuscule as the

sales cycle is long and varies between six-nine months to close a transaction ,

' said Sharma.

Moreover, with the rate war rampant in group term, ICICI Prudential

has been choosy on the business it under writes.

'Group term is a commodity , and as business is purely rate driven ,

this is not our focus area, ' she added.

ICICI Prudential Life hikes capital to Rs. 675 Cr. :

The Economic Times : March 17, 2004

ICICI Prudential Life has hiked its capital by Rs. 675 crore in view of

booming business.


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Hiking the capital for the ninth time since its inception in December

2000, the 74:26 joint venture between ICICI Bank and Prudential Plc said the

additional capital would be used for meeting capital adequacy norms

stipulated by the Insurance Regulatory and Development Authority.

In the life insurance business, expenses were incurred up from while

the revenue (in the form of premium) stream was staggered, and this

necessitated a life insurance to regularly infuse capital during the first 5-7 yrs

in order to support the growth of business.

With an authorized capital of Rs. 1,200 crore, the second generation

life insurer's premium mop up had crossed crossed Rs. 1,000 crore in

December 2003.

The Insurance company, which expanded to 54 locations across the

country, so far sold over 5.50 lakh policies for a sum assured of over Rs.

13,000 crore.

Prudential Seeks to replicate ICICI Pru success :

The economic times: March 13, 2004:

Mumbai: Prudential UKs largest insurer is looking at replicating ICICI

Prudential innovations in other parts of Asia. The parent company is

impressed with the speed in which the Indian venture has been able to launch

new products and build up a professional agency force.

Speaking to ET Dan Bardin, Managing Director, South Asia and

Greater China, Prudential Asia said, Shikha (Sharma, MD ICICI Prudential

Life) and her team have been able to manage growth and expenses. Her team

has exceeded our expectations.

He added that ICICI Pru was similar to companies that are mature and

is looked up by its peers in the group for its multi channel distribution and for

building up a large professional agency. ICICI Pros agency sales force of

over 26,000 agents are one fourth of the Prudential Corporations network of

1.12 agents in Asia.

Mr. Bardin said that Prudential expected its group companies to

breakeven between seven and twelve years of operations, depending on local

operations. Prudential Corporation Asia is expected to become a net

contributor to the Group's capital position in 2006 as more of its business

become net generators of cash after funding their own development.


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Winner : ICICI Prudential :

In the short span since the insurance sector was opened up, ICICI

Prudential Life Insurance has literally dictated the market's evolution.

Catering to all age and income segments , the company started out with the

traditional insurance policies that were easy to understand . The idea was to

entice customers used to LIC's style of functioning.

Soon , ICICI Prudential began exploring new areas. It introduced

modern products, like the market - linked product where returns are linked to

the market performance of the underlying assets.

ICICI Prudential leads in virtually all parameters: size of agent force,

number of policies sold, total sum assured, premium income and productivity

of agents. It has set exacting standards for its range of products, riders offered

, quality of information in promotional material and even in the insurance

awareness events organized.

What has been in favour of ICICI Prudential is its range of products in

each segment of life insurance - traditional, unit-linked and single - premium

options, be they for retirement plans or child plans. With such as

comprehensive bouquet, it caters to all financial goals of a customer.

ICICI Prudential also has a strong sales network and tie-up with banks

to offer banc assurance products. Its supplementary marketing channels

contribute close to 30 per cent of its premium income. The company is now

reaching out to new and untapped markets. ICICI Prudential works closely

with NGO's and micro - finance institutions to spared awareness about the

concept of insurance in rural areas. This helps meet the social obligations

mandated by IRDA. but the company has gone a step ahead by actively

involving the villagers and working closely with them.

The gap between ICICI Prudential and the second - in - line private

insurer is vast. In fact, this hiatus has led some analysts to wonder if the

company isn't trifle too aggressive. But o thers say this has more to do with the

company's customer centric focus, its pan India presence and superior risk

management and investment strategies. ICICI Prudential is not however,

resting on its laurels. The company will continue to innovate and set the

standards.


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FAQs :

How do I make a maturity claim ? You must send us the

Completed claim form

Policy of Life Assurance

Proof of age , if not submitted earlier To whom is my death claim

amount aid ? The death claim is paid to :

The nominee, as declared by you in the proposal form

The legal heirs, in case you have not specified the nominee.

The appointee named by you, in case where the nominee is a minor at

the time of claim.

How does the nominee / legal heir make a death claim ? The claimant

(Nominee / Legal / Heirs ) must send us :

An intimation of the death of the life assured

Death certificate

Completed claim forms and other forms as required by the company

Policy of life insurance

Identification that the person is entitled to receive the payment

What additional requirements are there for an accident claim ?

Additional to the requirements for a death claim, the claimant should

submit all the reports (police, hospital etc) pertaining to the accident as

required by the company.

You must send us within 6 months of the disability date .

Written notification of your disability arising out of the accident .

Proof of your disability

You will have to undergo one or more medical examinations conducted

by medical practitioner/s appointed by us, if required.

What condition apply to a policy loan?

Loan is given if you have an ICICI Pru Save*'n' Protect Policy.

If your policy has a surrender value, you can apply for a policy

loan upto 80% of the surrender value. This loan will carry an


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interest rate as decided by the company from time to time. The

interest will be charged starting from the date of the loan. You

can repay the interest and the loan at any time.

If the total outstanding amount owed to us under you policyexceeds the surrender value, your policy terminated immediately.

The outstanding loan and interest will be deducted from the claim amount at

the time of settlement

How do I surrender my policy?

Premia are paid for at least three consecutive years, the Policy acquires

a Surrender Value. The Policy, which has acquired a surrender value, can be

surrendered for payment in cash. Once the Policy is surrendered the contract

is terminated. In the case of ICICI Pru single premium Bond the policy can be

surrendered after the first year.

How do I revive my policy that has lapsed ?

Your policy has lapsed on account of non-payment of premium within

the specified due date, you can re-apply reinstate it, if:

You apply within 5 years from the date of the first unpaid premium and before

the maturity date.

You pay all the required premiums and interest

You give us satisfactory evidence of health at your own expense.

The reinstatement will take effect only if we accept you application. We will

notify our acceptance to you.

What is nomination of the policy ?

Section 39 of the Indian Insurance Act 1938 provides for nomination

of a person who would receive the benefit of the claim on the death of the life

assured. Nomination establishes a clear title to the policy. This prevents

dispute and also prevents delay in settlement of a death claim. In the case

where nominations has not been given at the time of proposal, nomination can


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be made at any time during the term of the policy. Nomination can also be

changed at any time during the tenure of the policy by intimating us ICICI

Prudential .

Can I change my nomination ?

Yes. You can change your nomination at any time till the maturity

date. All you need to do is to inform us about the change through a specified

form.

How do I notify my change in address?

You can call our customers service center or notify us through a letter about

the change of address. We shall confirm the change to you.

What if I forget to make payment?

We offer you a grace period for non-payment on due date. This grace

period in 30 days from the due date in case premium payments are made on

quarterly, half-yearly or yearly basis. It is 15 days from the due date from the

due date for monthly payments. During this period the policy remains in will

force and no interest is charged. If you fail to pay a premium even during the

grace period, you policy automatically :

Lapses if there is no surrender value

Convert to a paid up policy if there is enough surrender value.

What if I lost my policy ?

You can apply for a duplicate policy document. To get this document ,

you will have to send us a letter stating the circumstances under which the

policy was lost.

Can I assign a policy

The policy can be assigned . To assign the policy you have to notify us

regarding the assignment.


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CHAPTER IV

THEORETICAL

FRAME WORK


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Customer Perception :

The customer in marketing basically deals with two types of function,

which are, one the PSYCHOLOGICAL or iented and the other isPHYSIOLOGICAL oriented.

1) Psychologicaloriented function:

It is concerned with search for and stimulation of consumer demand

that is those aspects which deal with wholesaling, retailing and other

facilitating function.

2)Physiological oriented function:

It is concerned with the physical products flow that is the supply of

products. These activities represents planned movement of products from the

Retailer's to the final consumer in the most efficient manner.

What is perception:

Perception is the process of selecting, organizing and interpreting or

attaching meaning to events happening in the environment.

External and Internal Factors influencing attention: External factors:

1) Intensity & size The big advertisements in news papers ar

magazines

2)position Placement of products

3)Contrast Variation of products

4)Novelty Which is the new innovation idea5)Repetition To create a strong desire for interest in

purchase of the product

6) Movement Billboards & hoardings

Internal factors:

Differentation factor in marketing mix: A few examples in the Indian context are

Product differentiation

Nirma Price


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Titan Place

Dhara&Frooti Packing (Tetra Packs)

Onida & magi Creative Advertisement

1. Selective attention: Inner needs of an individuals; and collects

information

2.Selective exposure: People try to avoid any message that may go

against which are strongly held belief

3. Selective retention: The information received by people will fit into

the existing mind set.

4. Perceptual vigilance or defence: It refers to individual being vigilant and

screening out of those elements which create conflict or may rise threatening

situation.


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SensationAbsolute ThresholdDifferential ThresholdSubliminal Perception

Elements of Perception:

Sensation:

It is the immediate and direct response of the sensory organs to simple

Stimuli (an advertisement, a package, a brand name). Human sensitivity refers

to the experience of sensation. Sensitivity stimuli varies with the quality of an

individual's sensory receptors (e.g., eye sight or hearing ) and the which he

she is exposed .

Absolute Threshold:

The largest level at which an individual can experience a sensation is

Called the Absolute threshold. The point at which a person can detect a

difference between "some thing" and "nothing" is that person's absolute

threshold for that stimulus. In the field of perception, the term adaptation

refers specifically to "getting used to" certain sensations, becoming

accommodated to a certain level of stimulation.

Differential Threshold:

The minimal difference that can be detected between two similar

stimuli is called the Differential Threshold or the Just Noticeable Difference.

The just noticeable difference between two stimuli was not an absolute

amount relative to the intensity of the first stimulus. The greater the

additional intensity needed for the second stimulus to be perceived as

different.


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An additional level of stimulus equivalent to the just noticeable

difference must be a difference between the resulting stimulus and the initial

stimulus.

Subliminal Perception

It falls under the below the level of perception 3 forms of subliminal

perception:

1)a visual stimuli is presented in brief

2)speech given fast in low volume auditory messages

3)print ads or product labels.


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l360|cgrid

CHAPTER V

ANALYSIS AND INFERENCE


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Table : 1

20-30 36 36%30-40 50 50%

40-50 14 14%Total 100 100%

36%

50%

14%

20-30

30-40

40-50

Inference:

The above table shows that According to the customers opinions regarding

the ages are between and distinguished as 20-30, 30-40 and 40-50. 36% of the

customers having 20-30 ages, 50% of the customers having 30-40 aged, 14% of the

customers having 40-50 ages.


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Table : 2

< 1 lakh 22 22%1-1.5 50 50%

1.5-5 16 16%> 5 lakhs 12 12%

Gross Income per Annam of the

Customers

22%

50%

16%

12%

< 1 lakh

1-1.5

1.5-5

> 5 lakhs

Inference:

The above table shows that the gross income per annum of the customers, the

gross income per annum have been categorized into < 1 lakh, 1-1.5, 1.5-5, > 5 lakhs,

22% of the customers are earning < 1 lakh , 50% of the customers are earning 1-1.5,

16% of the customers are earning 1.5-5, 12% of the customers are earning > 5lakhs.


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Table : 3

Good 32 32%Average 60 60%

Bad 0 0% No Idea 8 8%

FIRST IMPRESSION ON INSURANCE

32%

60%

0%

8%

Good

Average

Bad

No Idea

Inference:

The above table shows that there has been a varied range of customer

perceptions towards ICICI Prudential life insurance products, 32% of the customers

had good view, 60% say that it is an average and 8% of the customers are not aware

about the products.


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Table : 4

Yes 36 36%No 44 44%

Not Interested 20 20%

LIFE ASSURED

36%

44%

20%

Yes

No

Not Interested

Inference:

The above table explains regarding the interest of the customers to know about

life insurance. 36% of the customers have shown an interest to understand the various

contents of life insurance, 44% of the customers were totally disinterested and

remaining did not want to give their opinion.


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Table 5

Yes 10 10% No 60 60%

Not Interested 30 30%

NUMBER OF PROSPECTS

10%

60%

30%

Yes

No

Not Interested

Inference:

The above table explains regarding the interest of the customers to know about

life insurance. 10% of the customers have shown an interest to understand the various

contents of life insurance, 60% of the customers were totally disinterested and

remaining did not respond to this point.


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Table 7

High 50 50%Moderate 30 30%

Low 20 20% No Idea 0 0%

PREMIUM COLLECTED

50%

30%

20%0%

High

Moderate

Low

No Idea

Inference:

The above table shows that according to the customers opinions

regarding the premium collected by the private insurance companies have been

distinguished as high, moderate and low. 50% of the customers opted high, 30% of

them have chosen moderate and 20% have declared it to be low.


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Table 8

10% 30 30%20% 35 35%

Above 30% 20 20%No Idea 15 15%

RETURNS EXPECTED

30%

35%

20%

15%

10%

20%

Above 30%

No Idea

Inference:

The above table shows that the general perception of the customers, the

returns have been categorized into 10%, 20% and above 30%. 30% of the customers

had a opinion that there should be 10% of returns, 35% of the customers opted 20% ofreturns and 20% of the customers had an opinion that the expected returns should be

above 30%. 15% of the customers do not have any opinion regarding the returns.


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Table 12

Excellent 20 20%Satisfactory 60 60%

Poor 10 10%Dont Know 10 10%

PERCEIVE CUSTOMER SERVICES PROVIDED

BY ICICI PREDENTIAL LIFE INSURANCE

20%

60%

10%

10%

Excellent

Satisfactory

Poor

Dont Know

Inference:

The above table shows that there has been a varied range of perceive customer

services provided by ICICI Prudential, 20% of the customer having Excellent view,

60% are having satisfactory, 10% of customer are having poor and dont know about

the services provided by ICICI Prudential.


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Table 13

Good 34 34%Average 42 42%

Bad 24 24%

BELIEF IN PRIVATE LIFE INSURANCE

34%

42%

24%

Good

Average

Bad

Inference:

The above table shows that there has been a varied range of belief in private

life insurance and their various insurance products. 34% of the customers had good

view, 42% say that it is an average and 24% of the customer are have bad view about

the products.


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CHAPTER VI

FINDINGS & SUGGESTIONS,

SUMMARY & ANNEXURE,

BIBLIOGRAPHY & GLOSARY


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SUMMARY

The current section of the report deals with the essence of the entire

report. The report is on the existence of the insurance sector in the Indian

history and the various reasons, why the insurance plays a vital role in today's

life of the human beings. Before entering into the insurance let us discuss on

the term "life". Life is the most important and unknown to human race. No

Individual can have an idea of what is the life span. But certainly every

individual has the curiosity to know how much but unfortunately it is destined

before hand "What may happen tomorrow no one can judge". But to avoid

something that is unforeseen one must be insured first. Every human being

wants to lead a happy and peaceful life for what security is the most

important.

Security can be provided through insurance. Security and constant

search for security have been an unending endeavor of human race since the

beginning of the civilization. From the Rock man to Iron age man, from the

Medieval Conservative to today Longhair and Techies, this search has brought

out innovative ideas. Without security the word insurance might not have

been aroused. Hence security and insurance go hand-in-hand with each other.

Insurance and the various need for insurance and the reasons for, finer

aspects of life all can be clearly understood in the forthcoming aspects of the

project. The objectives of what to be done and the limitations for the study are

the most important in the report, which are the pillars of the report. The reportalso consists of various policies of the insurance and their uses. The major

leader in the insurance sector being the "Life Insurance Corporation" plays

the most vital role in the insurance scenario. The LIC has achieved the major

monopoly till the private insurers have come into the existence. Achieving the

targets and ranking as number one in the Insurance frame, LIC admits itself as

the leading insurance company.

Today every individual is in a position to get insured some way or the


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other But they are specific about the private life insurance companies whether

to invest in those or not. Thanks to the invent of new frame work of the

insurances companies coming into the scenario as people will have a great

knowledge in these fields also and an understanding of the insurance motto.


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ANNEXURE

Name: Occupation:

Address:

Phone/mobile: e-mail:

Dear Sir,

The following are the set of questions designed to understand your

respectable view points on the Insurance sector in particularly understandingthe roles of private players in the changing times. There is no right or wrong

answers, therefore kindly give your opinion on the same.

1. You are between the age of

a) 20-30 years b) 30-40 yearsc) 40-50 Years

2. your gross income per annum is

a) less than 1 lakh b) 1 -1.5 lakh c) 1.5-5 lakh

3. What is your first impression, when you hear about Life Insurance?

a) Good b) Average c) Bad d) No Idea

4. Is your life insured?

a) YES b) NO

5. Suppose I were to tell you to sit with me for a few minutes and discus

life insurance would you be interested?

a) YES b) NO

6. Please read this article... and now let me know whether you would be

interested in discussing insurance with me?

a) YES b) NO


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7. What do you think about the premiums collected by private life insurance

firms?

a) high b) Moderate c) Low

8. Generally how much do-you expect investment returns when you invest in

private life insurance policies?

a) 10% b) 20% c) More than 30%

9.In your opinion, how do you perceive your ideal Life Insurance policy to

be?

a) Purely as Tax Saver b) Risk point of view

c) Investment oriented d) All the above

10. Are you aware of ICICI Prudential Life Insurance?

a) Highly aware b) Moderately aware

c) Somewhat aware

11.Please indicate the medium through which you are aware?

a) Television commercial b) press advertising

c) Internet d) others (specify)

12. How do you perceive customer services provided by ICICI

Prudential life insurance?

a) Excellent b) satisfactory

c) Poor d) don't know

13. Your belief in private life insurance and their various products?

a) Good b) Average c) Bad

14. Coming to todays business market are you ready to invest for

savings.

a) Yes b) No c) No Idea

Thanking you for your valuable time and input.


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INSURANCE/ INVESTMENTS AND TAX PLANNING

What is insurance? As a layman understands insurance today, it's a tool

used to secure or protect a person's family's financial needs in case of an

unfortunate event like death were to happen to the life assured. But, it's not all

- there is much more to insurance. It's a powerful Financial product, which

can be used as: -

1)a good returns yielding investment

2)a security for life assureds dependents

3)a savings tool

4)a tax savings tool

In this context, we would like to present to you ICICI Prudential life

insurance co. ltd's insurance solutions. An insurance plan helps you answer

the problems faced by a human life (referred to as the 4D's of insurance) i.e.

1 .Death

2.Disease

3.Disability4.Destitution


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Insurance plans can be broadly be classified as:

a ) Pure risk plans (only for security or life cover, and

i. hence are the cheapest)

b)Endowment plans (protection and savings, which gives you a huge sum

called a maturity benefit at the end of the term)

c)Unit linked plans (protection and a great returns yielding investment)

d) Pension plans\ retirement solutions (to take care of your old age and give

you a pension for life)

We have solutions to answer the customized needs of all our

customers. Just take some time and meet our financial services consultant to

further help you plan your finances.


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BIBLIOGRAPHY

References

Web sites: -

www.iciciprulife.com

www.licindia.com

www.hdfcstandardlife.com

www.birlasunlife.com

www.icfaipress.org

Journal:

"Insurance chronicle"

GVP COLLEGE FOR PG COURSES,

Visakhapatnam COLLEGE JOURNAL
http://www.iciciprulife.com/http://www.licindia.com/http://www.hdfcstandardlife.com/http://www.birlasunlife.com/http://www.icfaipress.org/http://www.iciciprulife.com/http://www.licindia.com/http://www.hdfcstandardlife.com/http://www.birlasunlife.com/http://www.icfaipress.org/


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Glossary

Life assured : The person whose life is financially covered by the insurance

company.

Nominee : The person who gets the guaranteed financial amount on the event

of death of the person whose life is covered.

Premium : The annual contribution made by the life assured or by another

person towards a policy in order to cover the death risk (calculated based on

term, age and mortality charges)

Term : The period during which the life assured' life is covered.

Mortality charges : A chart suggesting the number of lives under the threat ofdeath, in a given age group (based on a s tudy of a sample by the life insurance

company)

Sum assured : The guaranteed sum payable to the nominee of the life assured

in the event of death of the latter.

Actuary : is a person who makes a study of population, mortality and

morbidity to decide on the premium to be collected and also plays the prime

role in designing insurance products.

Underwriter : is a person who assesses the risk on covering a life. He decides

whether the proposal has to be accepted or not. and if yes, in what conditions

(medical/non-medical) and at what rates (standard/extra)

Standard life: the actuary defines the risk associated on a normal life at a

particular age, that is with a few expectations, like weight, height etc. i f the

proposal matches these expectations, then it is to be considered a normal life

and proposal accepted at normal rates.

Non-standard life: if a human life is non-standard, that is if weight of a

person according to a person's age and height exceeds normal definition of the

actuary, the proposal is called non-standard and may be accepted at a higher

pre

Gouthams Life Insurance Project

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