PROJECT REPORT ON

INVESTMENT AVENUES AVAILABLE

SUBMITTED BY NISHA JANI MBA Sem-II

ACADEMIC YEAR 2005-2006

SUBMITTED TO AHMEDABAD EDUCATION SOCIETY POST GRADUATE INSTITUTE OF BUSINESS MANAGEMENT (AES PGIBM) AHMEDABAD

AFFILIATED TO GUJARAT UNIVERSITY AHMEDABAD

Insurance is one of the fastest growing sectors these days and bancassurance is one of the major contributors to its success. ICICI Prudential is the leading company amongst the private life insurers. This project highlights the features of ULIP (Unit Linked Insurance Plans) of ICICI Prudential. These plans offer not just insurance to the customers but also serve the investment purpose. ICICI Prudential offers a range of products to meet every customers requirement. From traditional plans to ULIP there is a choice for every need. Since ULIP plans are market linked they offer greater returns. The project deals with the bancassurance channel and the six ULIP plans offered by ICICI Prudential. It highlights the various aspects of these plans as; entry parameters, charges, surrender values and other features which make these plans unique and most opted plans. The success of ICICI Prudential company can be attributed to its unit managers, agents (comprising the Tide channel) and to the employees and managers of ICICI bank (comprising bancassurrance channel).

I, Nisha Jani, am thankful to Mr. Rohit Mehrotra (Financial Services Manager at ICICI Prudential) for being a support and a guide throughout my summer training. I would also like to thank Mr. Pankaj Popat (branch manager at ICICI bank Jai Hind branch, Rajkot) for his guidance and encouraging me at various stages of my training. He had helped me to deal with the customers of ICICI bank. I would like to thank Ms. Falguni Faldu for being a wonderful trainer and for providing me with the resources during my training. Lastly, I would take this opportunity to put a word of thanks for all the faculty members for helping me at various stages of my summer training.

CONTENTS
Sr. No Particulars Page no

1 2

Executive Summary Introduction (a) Company Details (b) Company Overview (c) Industry Details (d) Product Details (e) Competitors Details (f) Regulatory Environment Limitations and Recommendations Conclusions Web sites

5 6 9 12 23 27 55 63 67 68 69

3 4 5

I have taken training in ICICI Prudential Life Insurance Company. It is the leading life insurance company in private sector. I had done my training on the subject Investment Avenues Available with special emphasis on insurance plans. ICICI Prudential is having financial background from the ICICI Bank. The bank gives total support in Life Insurance to ICICI Prudential. Every financial transaction is carried out effectively so that the company does not have to face any problem related to finance. ICICI bank helps by providing business to ICICI Prudential Co. I have undertaken the training in ICICI Prudentials bancassurance channel.

Life Insurance Life insurance is a contract of payment of sum of money assured to the person assured (or falling him/her, to the person entitled to receive the same) on the happening of the event, insured against. Usually the insurance contract provides for the payment of an amount on the date of maturity or at the specified dates at periodic intervals or at unfortunate death if it occurs earlier. Obviously, there is a price to be paid for this benefit. Among other things, the contract also provides for the payment of premiums by the assured. Life Insurance is universally acknowledged as a tool to eliminate risk, substitute certainty and ensure timely aid to the family in the unfortunate event of the death of the breadwinner. In other words, it is civilized worlds partial solution to the problems caused by the death. In a nutshell, life insurance helps in two ways: premature death, which leaves dependent families to fend for itself and old age without visible, means of support.

Benefits of Life Insurance:

Superior To Any Other Saving Plan Unlike any other saving plan, a life insurance policy affords full protection against risk of death. In the event of death of a policy holder, the insurance company makes available the full sum assured to the policy holders near and dear ones. In comparison, any other saving plan would amount to the total savings accumulated till date. If the death occurs prematurely, such savings can be much less than the sum assured. Evidently, the potential financial loss to the family of the non policyholder is sizable. Encourages And Forces Thrift A saving deposit can easily be withdrawn. The payment of life insurance premiums however is considered sacrosanct and is viewed with the same seriousness as the payment of interest on mortgage. Thus a life insurance policy in effect brings about compulsory savings. Easy Settlement and Protection Against Creditors A life insurance policy is the only financial instrument the proceeds of which can be protected against the claims of a creditor of the assured by effecting a valid assignment of the policy. Administering The Legacy for Beneficiaries Speculative or unwise expenses can quickly cause the proceeds to be squandered. Several policies have foreseen this possibility and provide for payments over period of years or in a combination of installments and lumsum amounts.

Ready Marketability and Suitability for Quick Borrowing A life insurance policy can, after a certain time period (generally three years), be surrendered for a cash value. Disability Benefits Death is not only the hazard that is insured; many policies also include disability benefits. Typically, these provide for waiver of future premiums and payments of monthly installments spread over certain time period. Accidental Death Benefits Many policies can also provide for an extra sum to be paid to the beneficiaries (typically equal to the sum assured) if death occurs as a result of an accident. Tax Relief Under the Indian Income Tax Act, tax relief is available under section 80C and 10(10D). When these benefits are factored in, it is found that most policies offer returns that are comparable/ or even better than other saving modes as PPF, NSC (National Saving Certificate) etc. Moreover, the cost of insurance is not too much.

COMPANY DETAILS

ICICI Prudential Life Insurance Company is a joint venture between ICICI a premier financial power house and Prudential Plc a leading international financial group headquartered in the United Kingdom, ICICI prudential was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential equity base at RS 11.85 billion with ICICI Bank and Prudential Plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the company garnered Rs 1584 crore of new business premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies. The company has a network of about 56,000 advisors; as well as 7 bancassurance and 150 corporate agent tie-ups. For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life. ICICI Prudential is also the only private life insurer in India to receive a National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA rating is the highest credit rating, and is a clear assurance of ICICI Prudentials ability to meet its obligations to customers at the time of maturity or claims.

ICICI BANK ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$ 56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year ended March 31, 2006 (Rs. 20.05 bn (US$ 449 mn) for the year ended March 31, 2005). ICICI Bank has a network of about 614 branches and extension counters and over 2,200 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa and Bangladesh. Our UK subsidiary has established a branch in Belgium. ICICI Bank is the most valuable bank in India in terms of market capitalization. ICICI Bank's equity shares are listed in India on the Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). At June 5, 2006, ICICI Bank, with free float market capitalization of about Rs. 480.00 billion (US$ 10.8 billion) ranked third amongst all the companies listed on the Indian stock exchanges. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI 10

Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. PRUDENTIAL PLC Established in London in 1848, Prudential plc, through its businesses in the UK and Europe, the US and Asia, provides retail financial services products and services to more than 16 million customers, policyholder and unit holders worldwide. As of June 30, 2004, the company had over US$300 billion in funds under management. 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 the leading European life insurance company with a vast network of 24 life and mutual fund operations in twelve countries - China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.

11

Name of the company : - ICICI PRUDENTIAL LIFE INSURANCE CO. LTD Registered Office : - ICICI PRUDENTIAL LIFE INSURANCE CO. LTD 1089 Appasaheb Marathe Marg, Prabha Devi, MUMBAI 400025

The ICICI Prudential Life Insurance Co. Ltd board comprises reputed people from the finance industry both from India and abroad. Mr. K.V.Kamath, Chairman Mrs. Lalita D.Gupte Mrs. Chanda Kocchar Mr. M.P.Modi Ms. Sikha Sharma, Managing Director Mr. N.S. Kannan, Executive Director Mr. Mark Norbom Mrs. Kalpana Morparia Mr. Keki Dadiseth Mr. R Narayanan Mr. HT Phong

Ms. Shikha Sharma, Managing Director & CEO Ms. Anita Pai, Chief Operations and Underwriting Mr. Sandeep Batra, Chief Financial Officer and Company Secretary Mr. Shubhro J. Mitra, Chief Human Resource Mr V Rajgopalan, Appointed Actuary Mr. N.S. Kannan, Executive Director Mr. V. Rajagopalan, Chief - Actuary Mr. Puneet Nanda, Chief Investments

12

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 brought together two of the strongest financial services brands in Asia, known for their professionalism, excellent quality of service and long term commitment to people. 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%. ICICI Prudential Life Insurance Company, Indias leading private life insurer, has increased its capital base by Rs 50 crore, taking its total paid up equity capital to Rs 675 crore. This is the ninth equity hike since the company was incorporated in December 2000. The two partners ICICI Bank and Prudential Plc, contributed capital in their existing proportions, 74:26 respectively. The authorized capital of the company stands at Rs 1200 crore. The additional capital will be used to meet capital adequacy norms as stipulated by the regulator, to fund the high up front expenses typical to a life insurance business and expansion such as opening new branches. In the life insurance business, a number of expenses are incurred up front but the revenue in the form of premium flows over a 10-15 year time frame. Because of this a life insurer must regularly infuse capital during the first 5-7 years in order to support growth in the business. Typically, the more business a company writes, the greater the capital requirements. ICICI Prudential has grown exponentially over the past 3 years, making its mark in a number of segments such as retirement solutions, child plans and market linked plans. The success of the business has reaffirmed the commitment of both the partners- ICICI Bank and Prudential plc towards achieving the companys 13

vision of being a leader in life insurance business in India said Ms Shikha Sharma, Managing Director, ICICI Prudential Life Insurance Company.

14

To make ICICI Prudential the dominant player on trust by world class services. The company hopes to achieve: 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 risk management and investment strategies to offer sustainable and stable returns to policy holders. Providing an enabling environment to foster growth and learning for employees. And above all, building transparency in all dealings.

The success of the company will be founded in its unflinching commitment to 5 core values i.e. Integrity, Customer first, Boundary less, Ownership Passion Each of the values describes what the company stands for, the qualities of our people and the way they work. The companies do believe that they are on the threshold of an exciting new opportunity, where it plays a significant role in redefining and reshaping the sector. Given the quality of the parentage and commitment of the team, there are no limits to their growth.

15

Introduction Bancassurance in its simplest form is the distribution of insurance products through a banks distribution channels. In concrete terms bancassurance which is also known as Allfinanz- describes a package of financial services that can fulfill both banking and insurance needs at the same time. It takes various forms in various countries depending upon the demography and economic and legislative climate of that country. Demographic profile of the country decides the kind of products bancassurance shall be dealing in with. Economic situation will determine the trend of turn over, market share etc. whereas legislative climate will decide the periphery within the bancassurance has to operate. For bank it is a means of product diversification and a source of additional fee income. Insurance companies see bancassurance as a tool for increasing their market penetration and premium turnover. The customer looks bancassurance as a bonanza in terms of reduced price, high quality product and delivery at door steps. Actually everybody is a winner here. Which distribution model to use is a tactical decision, secondary to more basic strategic concerns? Bancassurance strategies should be driven by market and channels encompass a broad range of tactics and practices and leverage the 16

competencies of the bank and the insurer. They should identify and build upon a discrete set of value drivers; these factors of such fundamental importance; to ignore anyone of them could be fatal to the success of the project. Brand equity: The strategy should leverage the banks brand equity with consumers. Consumers throughout the world rate bankers higher than insurance agents in terms of such criteria as credibility of advice and product knowledge. A rationalized bancassurance strategy will build on the superior brand equity of banks by integrating insurance into the banks product portfolio and distribution infrastructure. Distribution: The distribution model should accomplish the following objectives 1) It should cater to all segments of the banks customer. 2) It should work as a single shop for all financial requirements for the banks customer. 3) It should effectively utilize the existing branch banking platform 4) It should take advantage of the multiple sales opportunities afforded by the banks other distribution channels. Technology Bancassurance should plan a technological infrastructure that will exploit customer information, found in the banks database to uncover sales opportunities and produce transactional simplicity for insurance customers. Bancassurance should use technology to simplify the insurance purchase as much as possible thereby making the purchase easier, more pleasant experience and further differentiating themselves in the process. Thus bancassurance can be enriched by using proper technology particularly in insurance policy; the buying experience itself is a key part of the purchase.

17

Culture: An effective Bancassurance strategy acknowledges the fundamental cultural conflict between the bank and the insurance company by aligning the banks with those of the insurance company. In any given situation one of the four value drivers may greatly outweigh the importance of the others. In some cases solving the cultural problem may loom especially large, while in others building technology platforms may be paramount, all four have to be taken in to consideration in case of successful banc assurance

18

In their natural and traditional roles and with their current skills neither banks nor insurance companies could effectively mount a bancassurance start up alone. Collaboration is the key to making this new channel work. Bank brings a variety of capabilities to table. Most obviously, they own proprietary database that can be tapped for middle market warm leads. In addition they can leverage their name recognition and reputation at both local and regional levels. Strong players also excel at managing multiple distribution channels, cross selling banking products and using direct mail. However most bank lack experience in several areas critical to successful bancassurance in particular developing insurance product selling through face to face push, channels underwriting and managing long term insurance products Where banks usually fall short strong insurers excel well, most have substantial product and underwriting experience, strong push channel capabilities and investment management expertise. On the other hand they tend to lack experience or ability in the areas where banks prevail. They have little or no background in managing low cost distribution channel they often lack local and regional name recognition and reputation and they seldom possess access to or experience with the middle market. Why should banks enter insurance? There are several reasons why banks should seriously consider bancassurance, the most important of which is increased in return on assets. One of the best ways to increase ROA, assuming a constant asset base, is through fee income. Banks that build fee income can cover more of their operating expenses.

19

Sale of personal life insurance products through banks meets an important set of consumer needs. Most large retail banks enjoy a great deal of trust in broad segments of consumers, which they can leverage in selling them personal life insurance products. In addition, banks branch network allows the face to face contact that is so important in the sale of personal insurance. Another advantage banks have over traditional insurance distributors is the lower cost per sales lead, which is possible by their sizable, loyal customer base. Banks also enjoy significant brand awareness within their geographic regions again providing for a lower per lead cost when advertising through print, radio and or television. Bank that makes the most of these advantages are able to penetrate their customers base and markets for above average market share. Other, banks strengths are their marketing and processing capabilities. Banks have extensive experience in marketing. They also have access to multiple communications channels such as statements, direct mail, ATMS, telemarketing etc. Banks proficiency in using technology has resulted in improvements in transactions processing and customer service. Benefits to insurer Insurers have much to gain from marketing through banks. Personal lines carriers have found it difficult to grow using traditional agency systems because price competition has driven down margins and increased the compensation demands of successful agents. Over the last decade life agents have sold fewer and large policies to a more upscale client base. Middle income consumers who comprise the bulk of bank customers get little attention from most life agents. By capitalizing on bank relationships, insurers will recapture much of this underserved market. Most insurers that have tried to penetrate middle income markets through alternative channels such as direct mail have not done well. Clearly a change in approach is necessary. As with any initiative, success requires a clear 20

understanding of what must be done, how it will be done and by whom. The place to begin is to segment the strengths that the bank and insurer brings to the business opportunity.

1) Most Trusted Private Life insurer: The Economic Times- A c Nielsen Survey of Most trusted Brands- 2004 2) Prudence Customer Centricity Award: Prudential Corporation Asia 3) Best life insurer 2003: Outlook Money Awards 2003-04 4) IMM Awards for Excellence: Institute of Marketing and Management 5) Organization with Innovative HR Practices: India Group of Institutes. 6) Super brand 2003-04 7) Organization with Innovative HR Practices; Asia Pacific H R Congress Awards for HR Excellence. 8) Silver Effie for Effectiveness of the Retire from Work not Life advertising campaign Effies 2003 9) Most Trusted Private Life Insurer; The Economic Times AC Nielsen survey of Most Trusted Brands -2003 10) Best New Insurer: Outlook Money Awards 2003 11) Rajkot branch has achieved 9th rank in its business and in the last year. Rs100 lakh business in the year 2003-04 21

HIERARCHY

TIED AGENCY VICE PRESIDENT REGIONAL MANAGER BRANCH SALES MANAGER

ALTERNATE DISTRIBUTION COURNTRY HEAD

RELATIONSHIP MANAGER

SALES MANAGER SALES MANAGER ASSI SALES MANGER BANCASSURNCE UNIT MANAGER CORPORATE AGENCY

FINANCIAL SERVICE

TEAM LEADER

TRAINEES

CUSTOMER SERVICE REPRESENT

22

INDUSTRY DETAIL: There is no end to the challenges that confront an insurer in this increasingly uncertain world. A lot depends on how the prudent insurer looks at the uncertainty as a threat or an opportunity? While some insurers and reinsures have been consolidating their basic strengths, profitability and so on, others have not been so fortunate. Some sporadic acts of terrorism here; a military conflict there and an environment-related problem elsewhere have all tested the resilience of the insurance industry. Thankfully, insurance has been the winner in the end and rightly so, because the success of insurance is essential for the overall success of the economies, across the globe. Coming to the Indian scenario, the benefits of liberalization and a competitive environment are at last hitting the market. While the leaders in the market are leading by a wide margin, the boundaries are being redrawn. The style of delivering services are taking new look and adopting a refreshing way to satisfy the customer it gives more awareness to the people. There is also a serious need to look at the need base selling and also the type of personnel needed to do the job. Besides, there is also a serious need to impart the right kind of training to the personnel if the tempo is to be sustained. One particular aspect very hot now a days is, government is giving due attention towards the industry which is also felt by budget-related changes. With the FDI cap slated its pumping lots of money into the industry as a whole. The size of the industry is very big and due to increase in FDI limit there is immense opportunity for the players in the market. The population of India is 2 nd largest in the world which clearly indicates that there is a lack of awareness about the insurance among the people so, there is vast opportunity out there.

23

There are about fourteen players in the industry of life and about ten players in the non life segment. GROWTH IN THE INDUSTRY: The Indian insurance industry is going full steam now, in its new, rejuvenated form. There are several players in each of the classes competing with each other to grab the best share and create a niche for themselves. While the going has been good on the whole, there are some areas that need immediate attention of the forces involved. In a competitive regime, some of these trends are, perhaps, inevitable. The best thing that has happened is the overall freshness that is perceptible as regards the insurance business as also the other things attached to it, like the distribution channels, new styles of service delivery; the genesis of new products on the horizon; and above all, a whole new set of opportunities for employment in the insurance sector. Last year as per the IRDA report there is an increase in the industry by 49% annually. The industry growing rapidly after government opened door for the private players and the permission of FDI up to the limit of 49%, which is very welcome step by the government to support the industry as a whole. There is immense opportunity for the players in the industry to capture the larger market share as the awareness among the people is increases and the importance of insurance concept is gaining favor. There is also an increase in the number of policy sold and the premium income is growing like anything. The market share of the public sector giant has been progressively showing a declining trend due to the private players entry into the industry.

24

CURRENT SCENARIO AND PROBLEMS: The five years that we have had of a liberalized insurance domain, present contrasting pictures of growth and consolidation on the other hand, and insufficient understanding and lopsided priorities on the other. Unless the players realign themselves positively, the real purpose for which the industry has been opened up would be hard to realize. While the performance in some areas has been exceptionally good, others need to be addressed by all the players to ensure an overall growth. The market share of the public sector giant has been progressively showing a declining trend and is likely to get stabilized at a certain level, sooner or later. One thing that is very conspicuous in the Indian industry is the strengths that the public sector companies command. This puts the new players in that slightly more disadvantageous position as they have to fight giants. One class that has been making ripples in the industry is health insurance. it is good to see that health insurance, which is just seventeen years old in the Indian domain, has grabbed the third place as regards the total gross domestic premium income. It has overtaken the age-old marine and engineering classes to post an 8% market share. It has grown a healthy 26% during the year 2003-04, while the overall industry grew only by 13%. This should not however be taken as a great leap forward as the class is itself beset with a lot of misgivings on the part of the customer as well as the provider.

25

PROBLEMS: Need identification of the customer took a back seat and this, in turn, is largely responsible for the high lapsation ratio. The tendency not to Share information or datas to other insurers in one company as data plays major role in the insurance business. The lack of understanding of concept of insurance, the insurers would do well to spread the message of insurance in its right earnest so that these adventurous tendencies among the policyholders are arrested. Insurance is a mechanism to provide protection against the uncertain eventualities and not a means to make a profit out of. In this regard, there is a great responsibility on the part of the insurers themselves; regulators; the academicians; and all those involved either directly or indirectly with the insurance industry; including the policy holders themselves. Unless this is achieved, we cannot look forward to a healthy and vibrant insurance market. Future Scenario Considering past and present we can say that the insurance industry is in the boom period. Still there are 70% uncovered people who might be potentials for the insurance. It has also provided good employment, as well as has boosted the economy as a whole. Technology has also been updated keeping in pace due to insurance industry. So we can say that the future of insurance industry is quite bright and challenging also. Future of ICICI PRU LIFE INSURANCE CO Ltd is also bright and is going to be appreciated more; it has already acquired the tag of no. 1 private insurance Co. from IRDA. Financially as well a managerially the company is performing well. It has excellent vision and bright future.

26

The following are the main products of ICICI PRUDENTIAL LIFE INSURNANCE Insurance Solutions for Individuals: ICICI Prudential Life Insurance offers a range of innovative, customer centric products that meet the needs of customers at every life stage. Its products can be enhanced with riders to create customized solution for each policy holder. 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 to twice the sum assured as additional benefit. 2) Accident Benefit : This rider option pays the sum assured under the rider on death due to accident. 3) Critical Illness Benefit : Protects the insured against financial loss in the event of 9 specified critical illnesses. Benefits are payable to the insured for medical expenses prior to death. 4) Major Surgical Assistance Benefit : Provides financial support in the event of medical emergencies ensuring that benefits are payable to the life assured for medical expenses incurred for surgical procedures.

27

5) Income Benefit : This rider pays the 10% of the sum assured to the nominee every year, till maturity in the event of the death of the life assured. It is available on Smart kid, Secure Plus and Cash Plus. 6) Wavier of Premium : In case of total and permanent disability due to an accident or death the premiums are waived till maturity. This rider is available with Smart Kid Secure Plus and Cash Plus.

28

PRODUCT PROFILE
(1) LIFE TIME SUPER (2) SMART KID (3) LIFE TIME PENSION (4) LIFE TIME PLUS (5) PREMIER LIFE (6) CASH PLUS

FEW COMMON FEATURES Maturity Benefit

Maturity Benefit Fund Value Alternatively, Settlement options can be opted for.

Investment Options
Choice of Investment Funds o Maximiser (Equity Fund) o Balancer (Balanced Fund) o Protector (Debt Fund) o Preserver (Money Market Fund) * Pension Maximiser, Balancer, Protector & Preserver for Pension Plan Switches 4 switches in a policy year free Subsequent switches in that year are charged Rs. 100 per switch 29

Automatic Transfer Plan (ATP)

Customer can choose this option at any time during the policy. No additional charge for this option. Funds would be automatically transferred from *Protector II to *Maximiser II (Only this option available currently) Customer can choose either amount or percentage of Fund to be transferred every month. ATP would cease once funds are exhausted in Protector. Min switch amount Rs. 2000 Normal switches available apart from ATP option

* In Pension Plan Pension Protector II to Pension Maximiser II

Cover Continuance Option

Available after 3 years premium payment Ensures that the life cover & rider cover continues, if policy holder stops paying premiums Policyholder has to opt for the option, before end of reinstatement period Alternately, policyholder can choose the option at inception. If opted for, life cover is available throughout the policy term. If not opted for, life cover continues for a period of 2 yrs from the date unpaid premium, post which will be foreclosed & surrender value paid.

30

In both situations, if the Fund Value reaches 110% of one years premium, the policy will be foreclosed and surrender value paid out.

Other Conditions
Increase/Decrease in Term NOT ALLOWED Increase/Decrease in Annual Premium - NOT ALLOWED Increase in Sum Assured ALLOWED subject to underwriting * Decrease in Sum Assured NOT ALLOWED Loans NOT AVAILABLE

* Smart Kid & Pension Plan: Increase in Sum Assured Not Allowed

Settlement Period Options

Available on maturity of the plan Settlement option can be exercised for a period of 1/2/3/4/5 years from maturity Structured payout of units depending on the period & payment mode selected Payment Modes available Yearly, Half-yearly, Quarterly or Monthly (through ECS - Electronic Clearing Service) allowed Customer can withdraw entire Fund Value at any time (Part-withdrawals not allowed) Life Cover not available during Settlement Period

31

Surrender Values Post payment of 3 years premiums

No of completed years of policy SV as a % of Fund Value

Life Time Super 98% 99% 100% -

Smart Kid

Life Time Pension

Life Time Plus 92% 94% 96% 98% 100%

Premier Gold

3 years 4 years 5 years 6 years 7 years and above

96% 98% 100% -

96% 98% 100% -

96% 98% 100% -

Before 3 years premiums are paid

Premiums paid Surrender Value if not reinstated

<1 yr 1yr to <2 yr 2yrs to <3 yrs

Nil 25% 40%

This surrender value will be paid out after completion of 3 policy years or end of reinstatement period, whichever is later.

Partial Withdrawals
32

LIFE FEATURES TIME SUPER

5 policy years

SMART KID

LIFE TIME PLUS

PREMIER GOLD

CASH PLUS

Allowed after completion of

to provide for 3 policy years expenses at key educational milestones 3 policy years

3 policy years & payment of 3 full years premiums

5 policy years & payment of 5 full years premiums

No. of withdrawals allowed Amount of withdrawal allowed

No restrictions on number

Max. One per policy year

4th 10th policy year: Max. One per year

4th 10th year, Max. One per year

6th year onwards, Max. One per year

No restrictions on amount

Max. of 25% of Fund Value per withdrawal Total of 5

Max. of 20% of Fund Value

Max. of 20% of Fund Value

Max. of 10% of Fund Value

No restrictions on the number/amount of withdrawals

No restrictions on the number/ amount of withdrawals

Unused Partial Withdrawal cannot be carried forward

11th year onwards

withdrawals allowed during policy term

Min age of Life Assured Min amount

18 years

18 years

18 years

18 years

18 years

Rs. 2,000

Rs.2,000

Rs.2,000 First withdrawal Free. Subsequent

Rs.2,000

Rs. 2,000 The partial withdrawals will reduce the Guaranteed Value of the fund.

Salient points

withdrawals charged Rs.100 per partial withdrawal.

Add-0n Riders
33

LIFE TIME SUPER

SMART KID

LIFE TIME PENSION

LIFE TIME PLUS

PREMIER GOLD

CASH PLUS

Accidental Death & Disability Rider Critical Illness Benefit Rider Waiver of Premium Rider (Permanent Disability) Income Benefit Rider

Fund Management Charges for Smart Kid, Life Time Pension,

Life Time Plus, Premier Gold
Fund Asset Mix Potential RiskReward Fund Mgmt Charge

Pension Maximiser Pension Balancer Pension Protector Pension Preserver

Equity & Related Securities Debt, Money Market & Cash Equity & Related Securities Debt, Money Market & Cash Debt Instruments, Money Market & Cash Debt Instruments Money & Cash

Max. 100% High Max. 25% Max. 40% Medium Min. 60% Max. 100% Low Min. 100% Max. 50% Very Low Min. 50%

1.5% 1% 0.75% 0,75%

Entry Parameters
LIFE SMART LIFE TIME

* Age and Term in years.

LIFE PREMIER CASH

34

TIME SUPER Age at Entry 0 65

KID

PENSION

TIME PLUS 0 65

GOLD

PLUS

18 65

0-65 or 69

0-60

Age at Entry (PARENT) Age at Entry (CHILD) Age at Maturity (PARENT) Age at Maturity (CHILD) Maximum Age at Policy Maturity Minimum Term Maximum Term Min Premium (p.a.) Max Premium

20 60

0 15

75 18 - 25

75

22-25 (childs) 10 25

75

75

75

75

10 75 Rs. 18,000

10 57 Rs.10,000

10 30 Rs. 20,000 Rs.

6 or 10 30 Rs. 60000 or 100000

10 30 Rs. 8400

Rs.10,000

3,00,000 p.a

Minimum Policy Term Maximum Policy Term

N.A.

10

10

75

22-25

57

75

75

30

SALIENT FEATURES
(1) LIFE TIME SUPER

35

Entry into the plan will be based on the Unit Value applicable on the date of policy issue. The amount of premium towards death benefit decreases with the increase in the value of the units.

Death Benefit
Nominee receives Higher of Sum Assured (less partial withdrawals) or Fund Value in case of death of the Life Assured.

Additional Allocation of Units

Additional Allocation at the rate of 4 % of annual premium every 4 years starting from the end of the 4th policy year Allocation would be made only if due premiums are paid upto the date of allocation

Effect of Partial Withdrawals on Sum Assured

Before or at the age of 60 years, Sum Assured payable on death is reduced to the extent of partial withdrawals made in the preceding two years After the age of 60 years, Sum Assured payable on death is reduced to the extent of all partial withdrawals made from age 58 years onwards.

How Does The Policy Work?

Choose the Premium amount, Term and Sum Assured 36

Your Min Sum Assured = Annual Premium * (Term/2) subject to a minimum of Rs. 1 lakh. You can choose a higher Sum Assured subject to Sustainability Matrix. You can opt for add-on riders available. All applicable charges will be deducted from the units available in your fund.

In case of death, the Death Benefit will be paid out. In case of survival, the Fund value will be paid out to the policyholder at maturity. Or you can opt for settlement options.

Charges
Premium Allocation Charge Premium (Rs.) 18,000-49,999 >=50,000 Year 1 20% 18% Year 2 7.5% 7.5% Year 3 onwards 4% 4%

Fund Management Charges

Fund Asset Mix Potential RiskReward Fund Mgmt Charge

Maximiser Balancer Protector Preserver

Equity & Related Securities Debt, Money Market & Cash Equity & Related Securities Debt, Money Market & Cash Debt Instruments, Money Market & Cash Debt Instruments Money & Cash

Max. 100% High Max. 25% Max. 40% Medium Min. 60% Max. 100% Low Min. 100% Max. 50% Very Low Min. 50%

2.25% 2.25% 1.50% 0,75%

Sustainability Matrix
Maximum SA multiples for given annual premium

37

Age at Entry Upto 17 18-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65

Base Plan only 140 120 90 60 40 25 15 15 10 10

Base Plan + ADBR 75 65 45 35 20 15 15 -

Base Plan + CIBR 55 40 25 20 20 15 15 -

Base Plan + ADBR + CIBR 75 30 25 20 20 15 15 -

(2) ICICI SMART KID PLAN

Death Benefit
38

Added Protection Child (Beneficiary) receives Sum Assured in case of death of parent (life assured) PLUS the policy benefits also continue.

In case of death of parent, Premiums waived off & Company pays future premiums into the plan (Payer Waiver Benefit).

If Income Benefit Rider is chosen, then 10% of Rider SA is paid to the child till maturity of the policy, in case of death of the parent.

How does the policy work?

Choose the premium amount and Sum Assured Choose maturity age of the child between 18 and 25 years of age. The term of the policy = Maturity age less Current age of the child. Your Min Sum Assured = Annual Premium X (Term/2) subject to a minimum of Rs.1 lakh. You can choose a higher Sum Assured subject to Sustainability Matrix. You can opt for add-on riders available. All applicable charges will be deducted from the units available in your fund. In case of death of the parent (life assured), the Death Benefit will be paid out. In case of survival, the Fund value will be paid out to the policyholder at maturity. Or you can opt for settlement options.

Charges
Premium Allocation Charge

39

Premium (Rs.)

Year 1

Year 2-5

6th-10th year

11th year onwards

10,000 -19,999 20,000 - 49,999 >= 50,000

20% 19% 18%

5% 5% 5%

2% 2% 2%

1% 1% 1%

Policy Administration Charges Rs. 60 per month. Additional Policy Administration Charges Rs. 60 per month if premiums are not paid before grace period in the first 5 policy yrs. (Additional Policy Admin Charge would stop after completion of 5 years)

Sustainability Matrix
Maximum SA multiples for given annual premium

Age Band (Parent) 20-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60

Base Case 50 50 50 45 30 15 15 10

ADBR 50 50 50 40 25 15 15 N.A.

IBR 50 45 35 25 20 15 15 N.A.

ADBR+IBR 45 40 30 20 20 15 15 N.A.

What is Smart Kid?

As parents, the biggest concern is that of securing the future of child. In today's world, with ever increasing competition, escalating cost of education and uncertain financial markets, it is very important to plan for the child's future. It is a plan that provides guaranteed benefits to the child along with life insurance 40

cover. Smart Kid is so designed that it provides money at all the critical milestones in his/her life, whatever be the uncertainties. STRUCTURE 1
Imagine that the age of parents is 32 years old and their child is 5 years old and they want the product to mature when he/she is 22 years old. They have option to choose between two structures of payout of benefits. Term : 22-5 = 17 yrs At the End Of Child's Age % of Sum Assured 10th yr of policy (Term-7) 15 years 20% of SA* Extra tuition, preparation for professional courses, change of school or college. 12th yr of policy (Term-5) 17 years 25% of SA* Join a professional college or graduation college. 14th yr of policy (Term-3) 16th yr of policy (Term-1) 21 years 35% of SA* + Guaranteed Additions 17th yr of policy (Term) 22 years 40% of SA Further education in India or abroad. Alternatively, used for marriage or career establishment. 19 years 30% of SA* Higher studies or post graduation Further education in India and abroad. Needs Met

STRUCTURE 2
At the End Of 13th yr of policy (Term-4) Child's Age 18 years % of Sum Assured 20% of SA* Needs Met Extra tuition, preparation for professional courses, change of school or college. 14th yr of policy (Term-3) 15th yr of policy 20 years 30% of SA* 19 years 25% of SA* Join a professional college or graduation college. Graduation

41

(Term-2) 16th yr of policy (Term-1) 17th yr of policy (Term) 22 years 40% of SA* + Guaranteed Additions Further education in India and abroad. Alternatively, used for marriage or career establishment. 21 years 35% of SA* Graduation

Why should one buy Smart Kid?

Because Smart Kid ensures that one has total peace of mind as far as their child's future is concerned. In the event of death of the Life Assured: Sum Assured of the plan is paid immediately - assists the family in meeting the unforeseen expenses incurred because of the unfortunate loss. Waiver of Premium - no future premium are payable, thereby ensuring that your family is not burdened financially. Educational benefits, guaranteed - which means that the future of the child remains secure. Thus, there will be no financial obstacle in realizing the dream which the parent or child had. (3) LIFE TIME PENSION PLAN

The policys Super touch Choice of flexible life cover Increased age at entry Maximum cover age increased Pension through Annuity card Attractive allocation charge 42

Increased Commission Structure Cover continuance option after 3 years

Death benefit
In case of death before vesting age: Higher of the sum assured or the Fund Value will be paid as the death benefit to the nominee. However, if spouse is nominee, Fund Value or Sum Assured can be taken as annuity.

How does the policy work?

Choose an amt that you wish to invest annually subject to a minimum of Rs. 10,000. Choose a term between 10 & 57 yrs, subject to vesting (retirement age) between 45(minimum vesting age) and 75 years(maximum vesting age). You have an option either to choose Zero sum assured or choose any sum assured between 1 lakh and annual premium * policy term. You can opt for add-on riders available under the policy for a nominal extra amount. During the term of the policy, you pay regular premiums and accumulate savings for your retirement.

Charges
Premium Allocation Charge Premium (Rs.) Year 1 Year 2 3-10th year 11th year onwards 10,000-19,999 20,000-49,999 >=50,000 20% 17% 14% 9% 9% 9% 1% 1% 1% 0% 0% 0%

43

Plan Details
The Life Time Pension plan provides regular income for life from a date that can be chosen by the insured. The amount one receives will depend upon the premiums paid, the market value of the investment and the option of the annuity chosen.

Annuity Benefit
On the date of vesting (retirement), the insured begins to receive a regular income for life. This amount would depend upon the annuity option chosen and the value of units as on the vesting date. The annuity would also depend upon the annuity rates offered by the company as on that date and are not guaranteed.

Increase/Decrease Death Benefit:

There is an option of opting for a zero death benefit so as to make this a pure accumulation product.

Annuity Options
Five different annuity options available are: 1. Life Annuity: Annuity for Life. 2. Life Annuity with Return of Purchase Price 3. Life Annuity for the annuitant with the return of the purchase price to the beneficiary.

44

4. Life Annuity Guaranteed for 5, 10, 15 years: Guaranteed Annuity is paid for the chosen term (5/10/15) and after that the annuity continues if at that time annuitant is alive. 5. Joint Life, Last Survivor with Return of Purchase Price:

In this case the annuity is first paid to the annuitant, after the death of the annuitant the spouse starts getting a pension which is equal in amount of the annuity paid to the annuitant. After the death of the last survivor the purchase price is returned back to the beneficiary.

Open Market Option

This option gives you the flexibility to buy a pension from any other insurer of your choice, at the time of vesting. So you have the freedom to take the best from the market.

The Unit Value is calculated bi-weekly on a forward pricing basis.

Market/Fair value of the Plan's investments +Current Assets-Current Liabilities Unit Value = Number of Units outstanding under the relevant Plan (3) LIFE TIME PLUS

Death Benefit
PLUS Protection Nominee receives Sum Assured PLUS Fund Value in case of death of the Life Assured. Additional Allocation of Units At the end of Allocation Rate (as a % of first year premium) 8th policy year 5% 45

12th policy year 16th policy year 20th policy year 24th policy year 28th policy year

5% 5% 5% 5% 5%

How does the policy work?

Choose the Premium amount, Term and Sum Assured Your Min Sum Assured = Annual Premium X (Term/2) You can choose a higher Sum Assured subject to Sustainability Matrix. You can opt for add-on riders available. All applicable charges will be deducted from the units available in your fund. In case of death of the life assured, the Death Benefit will be paid out. In case of survival, the Fund value will be paid out to the policyholder at maturity. Or you can opt for settlement options.

Charges
Premium Allocation Charge Premium Amount (Rs) 20,000 3,00,000 Year 5 onwards 1%

Year 1 25%

Year 2 25%

Year 3 3%

Year 4 3%

Policy Administration Charges Rs. 60 per month. Additional Policy Administration Charges 46

Rs. 60 per month if premiums are not paid before grace period in the first 5 policy yrs. (Additional Policy Admin Charge would stop after completion of 5 years)

Sustainability Matrix
Age at entry Upto 17 18-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 Base case 75 50 35 25 20 20 15 15 10 10 Base + ADBR 35 30 20 15 15 15 15 Base + CIBR 20 15 15 15 15 15 15 Base + ADBR + CIBR 15 15 15 15 15 15 15 -

(5) PREMIER LIFE GOLD

Death Benefit
Nominee receives Higher of Sum Assured (less partial withdrawals) AND Fund Value in case of death of the Life Assured.

Effect of Partial Withdrawals on Sum Assured

Before or at the age of 60 years, Sum Assured payable on death is reduced to the extent of partial withdrawals made in the preceding two years After the age of 60 years, Sum Assured payable on death is reduced to the extent of all partial withdrawals made from age 58 years onwards. 47

How does the policy work?

Select a Premium Payment Term (PPT) and the premium amount. Select the Policy Term as per your requirement. Policy term once chosen cannot be changed. Select a Sum Assured according to your life stage and requirement. Opt for add-on Riders available under the policy After deducting premium allocation and other charges, the balance amount will be invested in the investment fund(s) of your choice On maturity you will receive the Fund Value, which you can withdraw immediately or over a period of 5 years from maturity (through the Settlement Option) In the unfortunate event of death, the nominee receives the higher of Sum Assured and Fund Value.

Charges
Premium Allocation Charge Premium Payment Term 3 years 5 years Year 1 12% 12% Year 2 & 3 4% 4% Year 4 & 5 2%

Entry Parameters

48

Minimum Entry Age Maximum Age at Policy Maturity Premium Payment Terms Minimum Premium Minimum Coverage Term Maximum Coverage Term Maximum Entry Age Minimum Sum Assured 3 years Rs. 100000 6 years 30 years 69 years

0 years 75 years 5 years Rs. 60000 10 years 30 years 65 years

Higher of (5 * Annual Premium AND Policy Term/2*Annual Premium)

Increase/ Decrease of Premiums

Will be treated as Policy Alteration Customer needs to submit an addendum

Premium DECREASE Request can be given either at inception or later Customer has the option to keep the SA at the original level or decrease it proportionately Premium INCREASE Request can only be submitted on Policy Anniversary. Will lead to proportional increase of SA. Customer to bear the cost of medical tests (if any), required to increase 49

Maximum SA multiples for given annual premium

Age Upto 17 18-25 26-30 31-35 36-40 41-45 46-50 51-55 56-60 61-65 66-69 Base 25 25 25 25 20 15 15 15 10 10 5 ADBR 25 25 20 15 15 15 15 CI 20 15 15 15 15 15 15 ADBR + CI 15 15 15 15 15 15 15 -

(6) CASH PLUS

Terms to know
Regular Premium: Payment of Premium at fixed, regular intervals. Sum Assured: The guaranteed amount that is payable on death of the life assured. Fund Value: This is the product of the total number of units under this policy and the Net Asset Value (NAV) per unit as on that date Guaranteed Value: This is the sum of all allocated premiums (net of mortality and policy administration charges and partial withdrawals) and accrued bonus interest credits. Bonus Interest Credits: Interest that is declared on the Guaranteed Value at the end of every financial year Partial Withdrawal: Any part of the fund that is withdrawn by the policyholder during the policy term. 50

Surrender: Surrender means terminating the contract once and for all. On surrender, a surrender value is payable that is usually expressed as Fund Value less the surrender charge.

How does Cash Plus provide you with protection?

Cash Plus offers you three levels of cover (in the form of sum assured) for the same annual contribution. You can choose from Basic, Standard and Enhanced levels of cover. The cover depends upon the term and premium chosen by you, as follows:

Type of Cover

Basic

Standard

Enhanced (Term+5) x Premium

Amount of Cover (Term-5) x Premium (Term) x Premium

Increase in SA
There is availability of an opportunity to increase the cover by shifting from Basic to Standard / Enhanced level Or Standard to Enhanced level of cover

For each level of sum assured, applicable mortality charges would be deducted from the premium.

Death Benefit
51

Nominee receives the Sum Assured ALONG WITH the higher of Fund Value and Guaranteed Value

Investment Option
Indicative Portfolio Allocation:

Debt, Money market & Cash

Maximum 100%

Potential Risk- Return profile of the fund: Low

How does your policy value accumulate?

At the end of every year, the company will declare bonus interest credits on the Guaranteed Value at that point in time. This bonus interest will have a compounding effect on the value of your policy. The differential between the bonus interest credited and the income earned on investments would not be more than 1%.

How does the policy work?

Select the Premium amount and the Type of cover. Select the Policy Term as per your requirement. Policy term once chosen cannot be changed. After deducting premium allocation and other charges, the balance amount will be invested in the investment fund(s) of your choice 52

On maturity you will receive the higher of Fund Value and Guaranteed Value

In the unfortunate event of death, the nominee receives the Sum Assured along with higher of Fund Value and Guaranteed Value.

Surrender Values
You can surrender your policy anytime after 3 policy years and after payments of 3 full years premiums. Surrender values are available to you after deducting surrender charges and would depend on the number of premiums paid and the policy term.

Charges
Policy Year Premium Allocation Charge (Percentage of Premium) 57% 15% 15% 5% Year 1 Year 2 Year 3 Year 4 onwards

Fund Management Charges

An FMC of 1.25% will be adjusted from the NAV on a daily basis.

53

At present there are total 14 players in Indian life insurance sector. There is only one player in the government sector and it is the Life Insurance Corporation of India. Rest of the players is in the private. Players and their market share

No. 1 2 3 4 5 6 7 8 9 10

Name of the Company Life Insurance Corporation (PSU) ICICI Prudential Life Insurance Company Birla Sunlife Insurance Company Bajaj Allianz Life Insurance Company SBI Life Insurance Company HDFC Standard Life Insurance Company Tata AIG Max New York Life Insurance Company Aviva Kotak Mahindra Life Insurance Company

Market Share in % 78.07 6.35 2.45 3.39 1.91 1.92 1.18 0.89 0.76 1.48 54

11 12 13 14

ING Vysya AMP Sanmar Met Life Insurance Company Guardian Life Insurance Co Ltd.

0.76 0.36 0.22 0.00

55

Graph No.2 MARKET SHARE OF PRIVATE LIFE INSURANCE COMPANIES

MARKET SHARE OF PRIVATE LIFE INSU. COM.

2% 3% 9% 0% 5% 7%

11%

4% 29% 5%

9% 1% 15%

TATA AIG BIRLA SUNLIFE ING VYSYA

KOTAK MAHINDRA OLD MUTUAL MAX NEW YORK HDFC STANDARD

56

MARKET SHARE OF PRIVATE LIFE INSU. COM.

2% 3% 9% 0% 5% 7%

11%

4% 29% 5%

9% 1% 15%

TATA AIG BIRLA SUNLIFE ING VYSYA MET LIFE ICICI PRUDENTIAL AVIVA SAHARA LIFE

KOTAK MAHINDRA OLD MUTUAL MAX NEW YORK HDFC STANDARD BAJAJ ALLIANZ SBI AMP SANMAR

Insurers in India
57

Company Allianz Bajaj life AMP Sanmar Birla sun life

Foreign shareholder Allianz AMP Sun life of Canada

Major local shareholder Bajaj Auto Sanmar Birla global finance Dabur

Business of local shareholder Auto manufacturer Diversified conglomerate Diversified conglomerate Medical & consumer products Investment & finance Investment & finance Bank & other investors Diversified conglomerate Bank & diversified conglomerate Investment & finance Bank Diversified cong.

Dabur CGU HDFC standard life ICICI Prudential life ING Vysya life Max New York Life MetLife India OM Kotak Mahindra SBI Life TATA-AIG Life

CGNU

Standard life Prudential(UK) ING New York Life

HDFC ICICI Vysya bank Max India Jammu & Kashmir

MetLife

bank: Pallonji group

Old Mutual Cardiff AIG

Kotak Mahindra SBI TATA

LIFE INSURANCE CORPORATION The Life Insurance Corporation (LIC) was established about 44 years ago with a view to provide an insurance cover against various risks in life. A monolith then, the corporation, enjoyed a monopoly status and became synonymous with life insurance. Its main asset is its staff strength of 1.24 lakh employees and 2,048 branches and over six-lakh agency force.

58

LIC has hundred divisional offices and has established extensive training facilities at all levels. At the apex, are the Management Development Institute, seven Zonal Training Centers and 35 Sales Training Centers. At the industry level, along with the Government and the GIC, it has helped establish the National Insurance Academy. It presently transacts individual life insurance businesses, group insurance businesses, social security schemes and pensions, grants housing loans through its subsidiary; and markets savings and investment products through its mutual fund. It pays off about Rs 6,000 crore annually to 5.6 million policyholders. BIRLA SUN LIFE INSURANCE Birla Sun Life Insurance Company Limited, a joint venture between Sun Life Assurance Company of Canada and Aditya Birla Management Corporation Limited, recently completed a successful first year of operations. The company emerged as a strong private sector insurance player in the newly opened insurance market in India with its pioneering efforts in the area of Unit Linked insurance plans. The company sold over 20,000 policies covering more than 33,000 lives in its first year of operations. It achieved an annualized premium income of Rs.350 million with a total sum assured of Rs.16,000 million. The company has more than 2,700 insurance advisors who sell company products across the country. The company offers an array of products in the individual and group life segments. The company established a strong presence in India with 22 branches and two development centers across 17 cities.

ICICI Prudential Life Insurance Company 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 headquartered in the United Kingdom. ICICI Prudential was amongst the first private sector insurance companies to begin operations in

59

December

2000

after

receiving

approval

from

Insurance

Regulatory

Development Authority (IRDA). ICICI Prudential equity base stands at Rs. 1185 crore with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the company garnered Rs 1584 crore of new business premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies. The company has a network of about 56,000 advisors; as well as 7 bancassurance and 150 corporate agent tie-ups. For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life. Bajaj Allianz Life Insurance Company Bajaj Allianz General Insurance a joint venture non-life company promoted jointly by Bajaj Auto and the German insurer- Allianz. Indian auto major holds 74% while Allainz holds 26% in the Joint Venture, and has an authorized and paid up capital of Rs. 110 crores. Mr. Graham Norris is the CEO of the company. Bajaj Allianz General Insurance will leverage the customer base and expertise of Bajaj Auto Ltd and Allianz AG. Incorporated in September 2000, Bajaj Allianz General Insurance received the certificate of registration from Insurance Regulatory and Development Authority in May 2001.

SBI Life Insurance Company SBI Life Insurance Co. Ltd. is a registered Life Insurance Company which has been licensed by Insurance Regulatory and Development Authority of India. It belongs to State Bank of India (SBI) group. 60

State Bank of India has joined hands with Cardiff of France to form a Life Insurance Company: SBI - The Largest bank in India Cardiff - A wholly owned subsidiary of BNP PARIBAS (one of the top 10 banks in the world), is a leading Insurance Company in France operating in 27 countries all over the world. Tata AIG Tata AIG Life Insurance Company Ltd. and Tata AIG General Insurance Company Ltd. (collectively "Tata AIG") are joint venture companies, formed from the Tata Group and American International Group, Inc. (AIG). Tata AIG combines the strength and integrity of the Tata Group with AIG's international expertise and financial strength. The Tata Group holds 74 per cent stake in the two insurance ventures while AIG holds the balance 26 per cent stake Tata AIG Life Insurance Company Ltd. provides insurance solutions to individuals and corporate. Tata AIG Life Insurance Company was licensed to operate in India on February 12, 2001 and started operations on April 1, 2001. Tata AIG Life offers a broad array of life insurance coverage to both individuals and groups, with various types of add-ons and options available on basic life products to give consumers flexibility and choice. The non-life insurance arm, Tata AIG General Insurance Company, which started its operations in India on January 22, 2001 offers the complete range of insurance for automobile, home, personal accident, travel, energy, marine, property and casualty, as well as several specialized financial lines. ING Vysya ING Vysya (a group terminology) has 3 businesses in India, ING Vysya Life Insurance, ING Vysya Bank and ING Vysya Mutual Fund. ING Vysya Bank is a premier private sector bank with a 70-year heritage and 1.5 million satisfied 61

customers. ING Vysya Mutual Fund is a mid sized asset management company with a retail investor focus. Kotak Mahindra Life Insurance Company Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak Mahindra Bank Ltd. (KMBL), and Old Mutual plc. Kotak Life Insurance, aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent. Jeene Ki Azaadi... AMP Sanmar A Joint venture combining AMP's life Insurance expertise and Sanmar's Indian Business Expertise. The Life Insurance joint venture Company between AMP of Australia and the Sanmar Group of Chennai will creates a better future by helping build and manage wealth. AMP Sanmar offers a comprehensive range of life insurance Products that will enhance the savings and provide financial security to people who need the support. AMP is a leading international financial services group with over 150 years with core business in Insurance, Asset Management and Financial Planning. The Sanmar Group is a leading industrial group in South India and one of the top corporations in the country that helped pioneer industrialization in India for over six decades. Both AMP and Sanmar are deeply committed to this Life Insurance joint venture and to create a long-term relationship with the customer. Aviva Life Insurance Company India Pvt. Ltd. In India, Aviva has a joint venture with Dabur, one of India's oldest, and largest Group of companies. A professionally managed company, Dabur is the country's leading producer of traditional healthcare products. Aviva pioneered the concept of Bancassurance in India, and has leveraged its global expertise in Bancassurance successfully in India. Currently, Aviva has Bancassurance tie62

ups with ABN Amro Bank, American Express Bank, Canara Bank, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank. Aviva has 34 Branches (including rural branches) in India supporting its distribution network. Through its Branches and its Bancassurance partner locations, Aviva products are available in 165 towns and cities across India. Aviva has also opened four rural branches in Faridkot, Udaipur, Nasik and Nagpur. Max New York Life Insurance Max New York Life Insurance Company Limited is a joint venture between Max India Limited, a multi-business corporation focusing on life insurance, health care and information technology, and New York Life, a Fortune 100 company with over 150 years of experience in the life insurance business. In 2000, Max New York Life became the first Indo-American insurance joint venture registered and granted a license to conduct business in India. Since that time, Max New York Life has acquired a national presence, establishing a wide distribution network with 35 offices located across 27 cities in India, which are staffed by over 1,500 employees and over 7,700 highly competent life insurance Agent Advisors. In 2003, Max New York Life became the first life insurance company in India to receive the ISO 9001:9002 certification for its commitment to quality. All of Max New York Lifes offices are supported by state-of-the-art technology designed to enhance its goal of providing excellent service to customers. It has also set up a Centre for Operational Excellence at its head office in Gurgaon, Haryana, just outside of New Delhi.

REGULATORY FRAMEWORK (INSURANCE ACT & IRDA) Insurance Act, 1938

63

The Insurance Act was enacted in 1938 with a view to control the insurance market in India. The Insurance Act provides major guidelines to insurance companies to do insurance business. The Insurance Act prescribes rules for Assignment or transfer of policies and nominations, commission and rebates and licensing for agents, amalgamation or transfer of insurance business, setting up of the Tariff Advisory Committee, solvency margins, insurance cooperative societies, reinsurance, registration etc. The Insurance Act, 1938 allows for only Indian Insurance companies registered under the Companies Act, to transact insurance business in India. Amendment in 2001 For smooth functioning of the market, certain amendments were made in the Act. The amendments contain entry of insurance co-operative societies, provisions relating to payment of commission and fee for insurance intermediaries, allowing flexibility in the eligibility qualifications for corporate agents, allowing a more flexible mode of payment of premium through credit cards, smart cards, internet, etc.

Insurance Regulatory and Development Authority (IRDA)

The Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the business of insurance and reinsurance in India. The Authority was constituted on April 19, 2000; vide Government of Indias notification No. 277.

64

The Insurance Regulatory and Development Authority Act, 1999, was enacted by Parliament in the fiftieth year of the Republic of India to provide for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business Act, 1972. IRDA was constituted in terms of the Insurance Regulatory and Development Authority Act, 1999, as the regulator of the Indian Insurance industry. IRDA was setup in 1996 but it was formally constituted as a regulator of the insurance industry in April 2000. The regulator was initially known as the Insurance Regulatory Authority but was subsequently rechristened as Insurance Regulatory and Development Authority as it was provided that it had broader role to perform in the Indian insurance market. It has not only to frame and issue statutory and regulatory stipulations, guidelines, and clarification but it has also to perform a developmental and promotional role. The developmental and promotional role of the regulator include facilitating the growth of the market by attracting large number of players, integrating of the insurance market with the domestic financial services market, and synchronizing the Indian Insurance market with that of global insurance market. Thus, the objectives of IRDA are two fold: policyholder protection and healthy growth of the insurance market. IRDA has till 2001 issued seventeen regulations in the areas of registration of insurers, their conduct of business, solvency margins, conduct of reinsurance business, licensing, and code of conduct intermediaries. It follows the practice of prior consultation and discussion with various interest groups before issuing regulations and guidelines.

65

Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. (1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. (2) Without prejudice to the generality of the provisions contained in sub-section THE POWERS AND FUNCTIONS THE AUTHORITY SHALL INCLUDE, A. Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; B. Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; C. Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; D. Specifying the code of conduct for surveyors and loss assessors; E. Promoting efficiency in the conduct of insurance business; F. Promoting and regulating professional organizations connected with the insurance and re-insurance business; G. Levying fees and other charges for carrying out the purposes of this Act; Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business; 66

H. Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); I. Specifying shall be the form and and manner in which of books accounts of account shall be

maintained

statement

rendered by insurers and other insurance intermediaries; J. Regulating investment of funds by insurance companies; K. Regulating maintenance of margin of solvency;

L. Adjudication of disputes between insurers and intermediaries or insurance intermediaries; M. Supervising N. Specifying insurer to professional the the functioning percentage schemes of the of for referred Tariff Advisory Committee; of (f); the

premium promoting to in

income and clause

finance

regulating

organizations

O. Specifying the percentage of life insurance business, general insurance business to be undertaken by the insurer in the rural or social sector; and P. Exercising such other powers as may be prescribed.

Limitations of the study Customer interaction limited to ICICI banks Jai Hind branch Rajkot only. Detailed study of ICICI Prudentials three main products possible. 67

Recommendations Improve bank employees knowledge of ICICI Prudentials Life Insurance products by providing required training. Use various marketing schemes and tools to attract attention of customers visiting the bank. Use various forms of media to promote the products and highlight the product USP in comparison to competitors product. Bank employees should also have the knowledge of the competitors product to counter the customers arguments. Emphasis should be given to insurance factor while selling the product. Customers should be satisfied with the service provided.

Life insurance policies are usually of a long term nature and therefore the service aspect is very important. Proper service is likely to see that policies do not lapse. 68

Bacassurance channel should be given more attention as it is a source of potential business not just to ICICI bank but to its sister company ICICI Prudential as well. Since the bank has a pool of customer data it can be effectively used to convert good customers of bank to that of ICICI Prudential. This has been a learning experience for me. Interaction with different customers has helped me improve my communication skills and to better understand the customers. It has also improved my knowledge of insurance and banking sector along with its products. Throughout the training I have experienced and gained knowledge about the corporate world which would be of immense help in my future endeavors.

www.icicibank.com

www.iciciprulife.com

69