Professional Documents
Culture Documents
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ACKNOWLEDGEMENT
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Emerging Trends in life insurance
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PREFACE
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Contents
Sr. No. Subjects Covered Pages
Project Proposed
Objective of the project
Methodology
Sampling
Limitations
1. Introduction
1.1 Introduction to insurance
1.2 Definition of insurance
1.3 Pre liberalization of insurance
1.4 Post liberalization of insurance
2. Trends in Insurance Sector
2.1 Indian Insurance in 21 Century
2.2 Emerging Trend in Indian Insurance Sector
2.3 Growth of Insurance Sector
2.4 Present Scenario of Insurance Sector in India
2.5 Technology Trend in Insurance Sector
2.6 Globalization of Life Insurance Market
3. Impact of Budget on Insurance Sector
3.1 Impact of Budget 2004
4. Private V/S Public Insurance Sector
4.1 Comparison between private and Public
Insurance sector In India
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37 – 39
Product Offered by LIC & ICICI Prudential
6.
6.1 Product Offered by LIC & ICICI Prudential 40 - 42
6.2 New Products by LIC & ICICI Prudential 43 - 46
47 - 52
Innovation Strategy & IT in LIC & ICICI
7.
Prudential
Conclusion
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Scope of the
Study
Methodology
Used
Design of
the Study
Objective
Of the
Study
Limitation
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Objective
The project was conducted after taking into consideration the
changing face of the life insurance sector. The objective for
conducting this project was
• To understand the life insurance sector in India.
• To learn about LIC & ICICI prudential.
• To know the scope of life insurance in India.
To realize the masses how carrier can be developed generating huge
income from insurance
Scope
The project gives brief description of the following -
• What is insurance?
• Effect of liberalization
• Trends in insurance sector
• Impact of budget on insurance sector
• Product offered by LIC & ICICI Prudential
• Impact of financial crisis on LIC
Limitation
• Life Insurance is a vast subject. It is not possible to provide
information regarding all the different types of policies which
provides different benefits. The project would have been
much better if the comprehensive study of all the different
types of policy provided by different companies is
undertaken.
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sector RESEARCH METHODOLOGY
Information Research
Personal
interview
Literature
Internet
study
Mr ashsish shukla
Insurance agent Books on insurance
(LIC ) agency
Mr parvinder
singh Various
Insurance agent insurance
(ICICI Prudential) magazines
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EXECUTIVE SUMMARY
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Chapter 1
Introduction to
Insurance
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INSURANCE
LIFE GENERAL
INSURANCE INSURANCE
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DEFINITIONS
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Functional definition.
Contractual definition.
Functional definition
Insurance is a co-operative device to spread the loss caused by a
particular risk over a number of persons who are exposed to it and
who agree to insure themselves against the risk.
General Definition
Insurance has been defined to be that in which a sum of money as a
premium is paid in consideration of the insurer’s incurring the risk of
paying a large sum upon a given contingency.
In the words of John Magee, “Insurance is a plan by
themselves which large number of people associate and transfer to
the shoulders of all, risks that attach to individuals.”
Fundamental Definition
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Contractual Definition
In the words of justice Tindall, “Insurance is a contract in which a sum
of money is paid to the assured as consideration of insurer’s incurring
the risk of paying a large sum upon a given contingency.”
Working of Insurance
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Pre-Liberalization Scenario
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This reckless record stoked the pro-nationalization fires. The 1956 life
insurance Nationalization was a top-secret intrigue; for fear that
unscrupulous insurers would siphon funds off if warned. The
government resolved to first take over the management of life
insurance companies by ordinance, then their ownership. The then
finance minister C.D. Deshmukh later wrote: 'Seth Ramakrishna
Dalmia’s extraction of Rs.225 crore (misappropriation by the Bharat
Insurance Company) was a heaven-sent opportunity. We were ready
to nationalize, with every detail worked out." On 19 January 1956, the
news was announced on the radio, though even the director- general
of AIR was not shown the speech. The next morning, at 9 am, while
executives were frantically seeking details over the trunk telephone,
says Deshmukh in his autobiography, our officers walked into the
respective insurance offices, showed their authority and then took
over the business. I believe this will be regarded as one of the best
kept secrets of the Government of India in all times to come." The
ordinance transferred control of 245 insurers to the government. LIC,
established eight months later, took over their ownership. General
Insurance had its turn in 1972, when 107 insurers were amalgamated
into four companies headquartered in the four metros, with GIC as a
holding company. Nationalization brought some benefits. Insurance
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Chapter 2
Trends in Insurance
Sector
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2001: Royal Sundaram Alliance first non life insurer to sell a policy
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Market by 2015, particularly in countries like India and China. The IRDA is
the major body, which is providing better opportunities for the private
player in India. GIC & LIC's monopoly market approach is no more
prevalent in India. The new market scenario for insurance is growing; no
doubt it is a flying bird.
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After globalization, so many MNCs are the major path maker for
economic growth. The world-class MNCs constantly pursued their
strategy of gaining access to every promising market world over,
which had sound growth potentialities, in order to expand their
network and control over the respective local economies. The
consequence was that some of the markets, particularly in
developing countries like China and India, adopted some sort of self-
protectionist mechanisms by imposing certain deliberate politico-legal
restrictions in order to restrict the entry of capital goods of these
MNCs into their markets.
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Growth of Insurance
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the GDP, of the country, the gross premium collection has been
hardly 2% of the GDP, not withstanding its growth between 15-20%
annually, during the decade preceding the opening up of insurance
market for private and foreign players in the year 2000. As the
insurance premium database of various developed and developing
countries for the year 1999 indicates, the per capita premium of India
was just around $ 8 as against the same having been very high in the
developed countries. In other words, and in terms of percentage of
GDP, it was 14% for Japan, 12% for Korea and 9% for UK as against
the same staggering below 2% for India for the fiscal year 2000-2001.
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Computerization:
Internet:
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Almost all the big organizations today provide the ECS facility
to its customers. A policy holder having an account in any bank which
is a member of the local clearing house can opt for ECS debit to pay
premiums. The advantage here is that once the option is exercised,
the policy holder need not visit a branch for paying the premium or
collecting the receipts. On the day indicated by the policy holder, the
premium amount will be directly debited to the bank account of the
policyholder and the receipt will be issued by the designated branch
office.
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Almost all the insurance companies have their own call centres
which cater to the phone based queries of the policyholders. This
service is 24x7 and they have the Interactive Voice Response (IVR)
systems at all the branches
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Significant channel for
household savings into capital
formation
GDP penetration 2nd largest
of 4.1% financial service
in India after
Life Insurance banking
Statutory
requirements to Total number of
provide reach lives insured and
to rural areas on books as on
Total Assets Under Management March 31, 2008
of Life Insurance Cos. as on
March 31, 2008 Rs. 8,50,000
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Chapter 3
Impact of Budget
on Insurance Sector
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banking The Finance Bill has some brilliant promises to offer and yet
there are adverse to the financial service sector.
The best performer in the sector have also expanded their capital to
about Rs. 700 to 800 crore. A look at the non performers suggests
that they do not have adequate capital to grow. Hence the increase in
the FDI limit would help. More importantly, this will give greater
control to the foreign partners in areas of management control and
governance. They will now be more willing to bring in their expertise
in product development, technology, and implement best practices.
The striking future of the Finance Bill is that the government has
accepted defined contribution as the way forward for pension
reforms, particularly for new government employees.
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Chapter 4
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"India will become the biggest market for us in the next three to
four years," predicts Dan Bardin, Prudential Corporation Asia
managing director south Asia and greater China.
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AMP Sanmar, another private player, has tied up with various chit
funds and transport finance companies in the country, where it is
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selling life policies on the back of fixed deposits and bonds. A senior
company official cites the example of Vijaywada where a significant
portion of the income is derived from farming activities.
And that's making the private sector optimistic about its future in the
Indian insurance market. "We [private insurers] are becoming an
alternative to LIC. If a customer has already bought an LIC plan, his
second policy is likely to be bought by the private insurance sector on
account of various reasons--more specifically flexibility and
transparency," says OM Kotak Mahindra Life CEO Shivaji Dam.
Perhaps this partly explains why the LIC has increased its advertising
spend multifold since the insurance sector was privatized. Its ad
spend more than doubled to Rs 81 crore (Rs 810 million) in fiscal
2003, against Rs 37 crore (Rs 370 million) in 1999-2000, prior to the
industry being privatized.
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But it's not the increased spend on advertising alone that has helped
private players in grabbing market share. One of the key differential
factors responsible for their growing market is the 150,000-odd life
insurance advisors of the private insurance companies.
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OM Kotak has gone a step further and tied up with Swiss Life
International so that it can capitalize on the latter's relationship with
300 multinational subsidiaries and affiliates.
But it's not as if LIC has lost out on group insurance. The insurance
major's group business reached new heights in fiscal 2004, recording
a 119 per cent growth in new premium income and 50 per cent
increase in the number of lives covered.
Still, new business income for private companies has grown at 146
per cent in fiscal 2004, compared to the 18 per cent average industry
growth in new premium income for the same period.
And even though the LIC was late (January 2004) in pushing its unit-
linked product "Bima Plus", it managed to mop up a premium income
of Rs 373 crore (Rs billion) with the sale of just under 1.7-lakh unit-
linked policies, the highest sales figure in the industry.
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investment (some like Birla Sun Life even guarantee 3 per cent
assured returns on its unit-linked plans), the interest in unit-linked
plans only increased.
"The stock market has helped to a certain extent and has contributed
to our growth and performance," agrees Birla Sun Life CEO Nani
Javeri.
Dam claims that OM Kotak has sold several policies of Rs 25-50 lakh
(Rs 2.5-5 million) since the "savvy investor thinks it best to invest in
unit-linked products." He adds: "Growth is coming faster in insurance
companies with unit-linked plans."
Chapter 5
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Company Profile of
LIC & ICICI
Prudential
COMPANY PROFILE
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Today LIC functions with 2048 fully computerized branch offices, 100
divisional offices, 7 zonal offices and the Corporate office. LIC’s Wide
Area Network covers 100 divisional offices and connects all the
branches through a Metro Area Network. LIC has tied up with some
Banks and Service providers to offer on-line premium collection
facility in selected cities. LIC’s ECS and ATM premium payment
facility is an addition to customer convenience. Apart from on-line
Kiosks and IVRS, Info Centres have been commissioned at Mumbai,
Ahmedabad, Bangalore, Chennai, Hyderabad, Kolkata, New Delhi,
Pune and many other cities. With a vision of providing easy access to
its policyholders, LIC has launched its SATELLITE SAMPARK offices.
The satellite offices are smaller, leaner and closer to the customer.
The digitalized records of the satellite offices will facilitate anywhere
servicing and many other conveniences in the future.
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From then to now, LIC has crossed many milestones and has set
unprecedented performance records in various aspects of life
insurance business. The same motives which inspired our forefathers
to bring insurance into existence in this country inspire us at LIC to
take this message of protection to light the lamps of security in as
many homes as possible and to help the people in providing security
to their families
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Mission
"Explore and enhance the quality of life of people through financial
security by providing products and services of aspired attributes with
competitive returns, and by rendering resources for economic
development."
Vision
"A trans-nationally competitive financial conglomerate of significance
to societies and Pride of India."
Goals
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ICICI GROUP
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VISION
To be the dominant Life, Health and Pensions player built on trust by
world-class people and service
VALUES
Very member of the ICICI Prudential team is committed to 5 core
values: Integrity, Customer First, Boundaryless, Ownership, and
Passion. These values shine forth in all we do, and have become the
keystones of our success
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(PENINSULAR) (HIMALAYAN)
Sales Head
ZONAL MANA GER ZONAL MANA GER ZONAL MANA GER ZONAL MANA GER ZONAL MANA GER
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Market Share
22%
LIC
ICICI Prudentail
8%
Others
70%
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Chapter 6
Product Offered By
LIC & ICICI
Prudential
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Children plan
Endowment Policy
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Pension Plans are Individual Plans that gaze into your future and
foresee financial stability during your old age. These policies are
most suited for senior citizens and those planning a secure future, so
that you never give up on the best things in life.
Special Plans
LIC’s Special Plans are not plans but opportunities that knock on
your door once in a lifetime. These plans are a perfect blend of
insurance, investment and a lifetime of happiness!
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Term Policy
Unit Plans
Unit plans are investment plans for those who realise the worth of
hard-earned money. These plans help you see your savings yield rich
benefits and help you save tax even if you don't have consistent
income.
• Market plus
• Profit plus
• Fortune plus
• Money plus
• Child fortune plus
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Features
LIC’s Jeevan Aastha is a single premium assurance plan which offers
guaranteed benefits on death and maturity. The Plan is close ended
and would be available for a maximum period of 45 days from the
date of its launch i.e. 08.12.2008
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Premium rates
Specimen Single Premium rates per Rs.1000 Basic Sum Assured for
some of the ages are as under:
Age at Policy Term Policy Term
entry 5 years 10 years
20 174.50 165.00
30 174.70 165.40
40 176.10 167.95
50 180.85 175.90
ICICI Prudential has a wide array of insurance plans that have been
designed with the philosophy that different individuals are bound to
have differing insurance needs.
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The ideal insurance plan is one that addresses the exact insurance
needs of the individual that will depend on the age and life stage of
the individual apart from a host of other factors.
Under Life insurance plans, ICICI Prudential offers plans under the
following
• LifeStage Pension
• LifeTime Super Pension
• LifeLink Super Pension
• ForeverLife
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Under Health Product Suite, ICICI Prudential offers plans under the
following major need categories:
Hospitalisation Plans
• MediAssure
• Hospital Care
• Crisis Cover
Cancer Products
• Cancer Care
Diabetes Products
Retirement Solutions
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• LifeStage Pension
• LifeTime Super Pension
• LifeLink Super Pension
• ForeverLife
• Immediate Annuity
Group Plans
Group Plans
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LIC’s New Jeevan Suraksha I offers cool comfort to serve the young,
the middle aged and the old which has also the security and safety
backing of Government of India. It is an ideal solution for people as it
not only offers retirement benefits but also takes care of our
protection needs (with term rider option). To combat the increase in
longevity, this plan provides regular guaranteed
income at old age and helps in planning to meet requirements for
current and future needs. This plan provides a lot of flexibility in terms
of various pension options for you to choose from. Additionally you
can also opt for an insurance cover during the deferment period by
taking the Term Rider add on. At the end of the deferment period
when the premium ceases, this policy can, at your option, pay you a
lumpsum amountand a suitable pension for your ifetime.
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(ii) The amount you receive depends on the premium you pay till the
Stipulated date and the option you choose.
(v) Health cover till age 65 through add-on benefits, not only while
Paying premium, but also while receiving pension
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Mode of premium Single ,yearly, half yearly, quarterly, monthly , SSS ----
payment
Mode of annuity Yearly, half-yearly, quarterly & monthly Yearly, half-yearly, quarterly &
payment monthly
Tax benefits Tax benefits u/s 80CCC(I) for Same as in case of Jeevan
investment up to Rs. 10,000/- Suraksha –I.
(deducted from taxable income).
Choice of retirement Flexibility option not available. The annuitant has the
date flexibility to postpone the
vesting from originally chosen
vesting date up to a maximum
of 70 years of age.
Open Market Option Flexibility option not available. This option gives annuitant
the flexibility to buy a pension
from any other Company of his
choice.
Chapter 7
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Innovation Strategy
and IT in LIC
&
ICICI Prudential
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It basically means that the Company should keep the promises made
to the Customer before or at the time of service provision i.e. the
Company should fulfill its commitments.
LIC makes sure that none of the Agents provide any kind of wrong
information or false promises to its customers which mislead them.
LIC ask their Agents to give reasonable commitments so that they
could be fulfilled by the Company or the Agent on behalf of the
Company.
• Follow Up:
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executed and the External part would be to get feedback from the
customer whether he is satisfy
• Complaint Handling
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IT in LIC
In today’s world, IT is a must for any industry to keep pace with the
customer’s changing expectations. This is especially relevant in the
service industry. The insurance sector has to ensure that the
technology it chooses does not lag behind where customer
expectations are concerned.
LIC has more than 16 crore policy holders. So it has to induct the
best IT products available and use them to cater to the needs of the
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IT in ICICI Prudential
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Chapter 8
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Emerging Trend
in LIC & ICICI
Prudential
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d. Adequate yield with high risk cover being offered keeping the
Till today, LIC enjoyed a monopoly. It is now that reality exists in the
are of marketing (i.e. sales and after sales service operations). It will
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• Television
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• Gifts
LIC provides diaries, pens, booklets, etc to its customers
• Hoardings
LIC put its hoardings where there is a mass flow of people,
especially outside the railway station or at the backside of the bus.
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The Company recently tied up with the Forbes Six Sigma rated
Dabbawalla organization in Mumbai for a direct marketing exercise.
In a Unique effort to create awareness about a tax saving product,
the company attached a creative of a bitten apple to Mumbai’s
ubiquitous lunchboxes. It worked wonderfully with Mumbai’s office-
goers and one that translated into substantial business for the
company
• Radio:
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Chapter 7
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Impact of
financial Crisis on
LIC
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Also, LIC had some issues with the union of development officers,
which have been more or less sorted out through series of
consultations and discussions. In September, the figures have started
picking up.
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It is not accurate to say that LIC has reached its saturation point in
terms of distribution, as they are expanding their reach and network.
Other insurers are perhaps expanding very fast and the effect is
reflected in their balance sheets. LIC do have constraints of capital
and any growth has to be supported by internal accruals only.
Hence, LIC follow the policy of steady and profitable growth and
distribute 95% of surplus to their “with profit” policyholders. Such a
practice makes our products better. And sure, this will, in the long run,
determine who becomes winner in the life insurance market in India
How do you propose to comply with IRDA’s decision to cap single
company exposure at 10% of a company’s capital?
First of all new regulations are not only about equity exposure, but
encompass several other aspects too. Second, these norms are not
just LIC-centric, but applicable to the whole industry. LIC total assets
of more than Rs 8-lakh crore are their legacy built on the basis of
earlier regulations and norms under the Insurance Act.
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Will the exposure limit force LIC to divest in blue chips and invest in
companies that have a lower credit rating?
CONCLUSION
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Bibliography
• Life-Insurance , by Mc GILL
• Insurance in India
Important Website
• www.iciciprudential.com
• www.licindia.com
• www.scribd.com
• www.google.co.in/indian insurance industry
Newspaper
• Times of India
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• The Economic Times
90