NEED FOR THE STUDY OF THIS PROJECT

The project was conducted after taking into consideration the changing face of the life insurance. The objective for conducting this project was To understand the life insurance 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? Trends in insurance. Comparison of trends, Product offered by LIC & ICICI Prudential.

1|Page

INDEX
SR NO 1. CONTENTS Introduction to insurance 1.1 Definitions 1.2 Pre liberalization scenario 1.3 Post liberalization scenario 2. Trends in insurance sector 2.1 India insurance sector in 21st century 2.2 Emerging trends in Indian insurance 2.3 Globalization Dynamic force 2.4 MNCs new path maker 2.5 New horizons of insurance market 2.6 Marketing after globalization 2.7 New market scenario 3. Technology trends in insurance market 3.1 Computerization 3.2 Internet 3.3 Electronic clearance system 3.4 Call and sms services 4. Public v/s Private insurance sector 4.1 Company profile of LIC & ICICI Prudential 4.2 Innovation strategy of LIC & ICICI Prudential 4.3 Information technology in LIC & ICICI Prudential 4.4 Advertising trends of LIC & ICICI Prudential 5. 6. Conclusion Articles
PAGENO

03 05 06 08 10 10 11 12 13 14 14 14 15 15 15 16 16 17 21 25 28 30 32 33

2|Page

1. INTRODUCTION TO INSURANCE
Insurance = Collective bearing of Risk Insurance is nothing but a system of spreading the risk of one onto the shoulders of many. While it becomes somewhat impossible for a man to bear by himself 100% loss to his own property or interest arising out of an unforeseen contingency, insurance is a method or process which distributes the burden of the loss on a number of persons within the group formed for this particular purpose. Basic Human trait is to be averse to the idea of risk taking. Insurance, whether life or non-life, provides people with a reasonable degree of security and assurance that they will be protected in the event of a calamity or failure. Insurance may be described as a social device to reduce or eliminate risk of loss to life and property. Under the plan of insurance, a large number of people associate themselves by sharing risks attached to individuals. The risks, which can be insured against, include fire, the perils of sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at a premium commensurate with the risk involved. Thus collective bearing of risk is insurance.

3|Page

Insurance Indemnifies Assets & Income Every Asset has a value and generates Income to its Owner. There is a normally expected Life-time for the Asset during which time it is expected to perform. If the Asset gets lost earlier, being destroyed or made Non-functional through an Accident or other unfortunate event the Owner is Prejudiced. Insurance helps to reduce consequences of such Adverse Circumstances which are called Risks. Insurance is the science of spreading of the risk It is the system of spreading the losses of an Individual over a group of Individuals Insurance is a Method of sharing of financial losses of a few from a common fund formed out of Contribution of the many who are equally exposed to the same loss .What is uncertainty for an Individual becomes a certainty for Group. This is the basis of All Insurance Operations. Thus insurance convert uncertainties to certainty.

4|Page

1.1 DEFINITIONS
The definition of insurance can be made from two points: 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 In the words of D.S. Hansell, "Insurance accumulated contributions of all parties participating in the scheme." 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."

5|Page

1.2 PRE LIBERALIZATION SCENARIO

Indian History: Time to turn the clock back-and open up insurance. Fifty years ago, India had a bustling, if somewhat chaotic, entirely private insurance industry. The year after Independence, 209 life Insurance companies were doing business worth Rs712.76 crore (which grew to an amazing Rs 295,758 crore in 1995-96). Foreign insurers had a large market share 40 per cent for general insurance but there were also plenty of Indian companies, many promoted by business houses like the Tatas and Dalmias. The first Indian-owned life insurance company, the Bombay Mutual Life Assurance Society, was set up in 1870 by six friends. It Insured Indian lives at the normal rates instead of charging a premium of 15 to 20 percent as foreign insurers did. Its general insurance counterpart, Indian Mercantile Insurance Company Ltd., opened in Bombay in 1907. A plethora of insufficiently regulated players was a sure recipe for abuse, especially because there was no separation between business houses and the insurance companies they promoted. The Insurance Act, 1938, introduced state controls on insurance, including mandatory investments in approved securities, but regulation remained ineffective. In 1949, Purshottamdas Thakurdas, chairman of the Oriental Assurance Company, admitted: "We cannot deny that, today, there is a tendency on the part of insurance companies in general to make illicit gains. Can we overlook the cutthroat competition for acquiring business? And still worse is the dishonest practice of adjusting of
6|Page

accounts." After a 1951 inquiry, the government was dismayed that companies had high expense and premium rates, were speculating in shares, and giving loans regardless of security. No wonder that between 1945 and 1955, 25 insurers went into liquidation and 25 transferred their business to other companies. 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 Dalmias 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 spread from an urban-oriented, high-end business to a mass one.
7|Page

Today, 48 per cent Of LIC's new business is rural. Net premium income in general insurance grew from Rs222 crore in 1973 to Rs 5,956 crore in 1995- 96. Yet, rigid controls hamper operational flexibility and initiative so both customers service and work culture today are dismal. The frontier spirit of the early insurers has been lost. Insurance companies have also been timid in managing their investment portfolios. Competition between the four GIC subsidiaries remains illusory. If Nationalization ever had a purpose, it has been served. It's now time to turn back the clock in some respects, and open up the again. The government already intends to insist on large minimum capital requirements, a strong regulator, and a healthy distance between insurers and industry.

1.3 POST LIBERALIZATION SCENARIO

While no aspect of the reform process in India has gone smoothly Since its inception in 1991, no individual initiative has stirred the proverbial hornets' nest as much as the proposal to liberalize the country's insurance industry. However, the political debate that followed the submission of the report by the Malhotra Committee has presumably come to an end with the ratification of the Insurance Regulatory Authority (IRA) Bill both by the central Cabinet and the standing committee on finance. This section traces the evolution of the life insurance companies in the US from firms underwriting plain vanilla insurance contracts to those selling sophisticated investment contracts bundled with insurance products.
8|Page

In this context, it brings into focus the importance of portfolio management in the insurance business and the nature and impact of portfolio related regulations on the asset quality of the insurance companies. It also provides a rationale for the increased autornatisation of insurance companies, and the increased emphasis on agentindependent marketing strategies for their products. If politicized, regulations have potential to adversely affect the pricing of risks, especially in the non-life industry, and hence the viability of the insurance companies.

9|Page

2. TRENDS IN INSURANCE

2.1 INDIAN INSURANCE IN 21ST CENTURY 2000: IRDA starts giving licenses to private insurers: ICICI prudential And HDFC Standard Life insurance first private insurers to sell A policy. 2001: Royal Sundaram Alliance first non life insurer to sell a policy. 2002: Banks allowed selling insurance plans. As TPAs enter the Scene, insurers start setting non-life claims in the cashless mode. 2007: First Online Insurance portal, https:/// set up by an Indian Insurance Broker, Bonsai Insurance Broking Pvt Ltd. The Government of India liberalized the insurance sector in March 2000 with the passage of the Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players to enter the market with some limits on direct foreign ownership. Minimum capital requirement for direct life and Non-life Insurance Company is INR1000 million and that for reinsurance company is INR 2000 million. In the 2004-05 budgets, the Government proposed for increasing the foreign equity stake to 49%, this is yet to be effected. Under the current guidelines, there is a 26 percent equity cap for
10 | P a g e

foreign partners in direct insurance and reinsurance Company. 2.2 EMERGING TRENDS IN INDIAN INSURANCE SECTOR 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. Change is the eternal law of nature. Everything is changing according to the need of the time. Economic growth and social development in present scenario is due to sudden change in industrial policy and economic planning. Globalization has been the basic mantra after 1991, so everyone thinks of being global. Liberalization, privatization and globalization are the basic concept of success in all aspect of development. Competition is tough now due to globalization. Business has positioned the entire economy, and industrialists think about making things global. There are no stringent rules or regulations for making any business house or industry. Government gives more emphasis on export and entrepreneurship. This is a changing world. Everyone has to compete for better success. Marketing is the major concept for developing any type of business. After globalization, marketing has taken a new dimension and it is the most challenging task now. The new horizon of marketing in the field of finance and insurance in present scenario is a good sign of development.

11 | P a g e

2.3 GLOBALIZATION - "THE DYNAMIC FORCE" Many people consider globalization nothing new - societies have been interconnected for years. The world has never experienced globalization at this level of intensity before, or the speed at which it is transforming and integrating societies. Herman E. Daly, an analyst of Global Policy Forum, characterizes globalization as, "Global integration of many former national economies into global economy, mainly by free trade and free mobility, but also by easy or uncontrolled economic purposes." He further clarifies that globalization is not internationalization globalization brings about a single, integrated, global economy, while internationalization is a federation of nations cooperating as sovereign units to advance the national interest of all members. Though globalization has become a broad heading for a multitude of global interactions, ranging from the expansion of cultural influences across borders to the enlargement of economic and business relations throughout the world, it has different dynamic force for different person. For the economist, globalization is essentially the emergence of a global market. For a historian, it is an epoch dominated by global capitalism. Sociologists see globalization as the celebration of diversity and the convergence of social preferences in matters of life style and social values. To the political scientist, it represents the gradual erosion of state sovereignty. But discipline specific studies explain only a part of the phenomenon.

12 | P a g e

From a multi-disciplinary angle, globalization may be treated as a phenomenon, a philosophy and a process, which affects human beings as profoundly as any previous event. Several factors have been responsible for this phenomenon. This study confines its attention to four growth-enhancing facets of globalization that have been among its key drivers, namely trade, finance, communication and transport. 2.4 MNCs - "THE NEW PATH MAKER" 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. Insurance being an integral part of financial service could not claim immunity to the impact of the globalization process and opened up to private and global players world over, including India. So many MNCs are now entering into the insurance sector which is now a booming sector.

13 | P a g e

2.5 NEW HORIZONS OF INSURANCE MARKET AFTER GLOBALIZATION After 1970, insurance sector has become more prosperous. For a long time, the two most important insurance players were LIC & GIC. Now so many MNCs have entered into the same sector like Bajaj Allianz, Aviva, Birla Sunlife, ICICI Prudential, etc. Insurance is now acting on two dimensions, i.e., the element of investment and the element of protection. The Economic Value Addition (EVA) has taken the major concern of the same business. 2.6 MARKETING AFTER GLOBALIZATION More customers oriented Mostly better service oriented More competitive Better satisfaction, more value addition and strategic development can help any insurance sector to sustain in the present era. 2.7 NEW MARKET SCANARIO Insurance market in present scenario though is a booming sector, but the market has changed from simpler to complex, less challenging to more challenging. Going domestic to international is a very difficult task. Understanding market synergy and cognisation of perception of customer in the insurance field is very difficult. The Regulatory Board like 'IRDA' is playing a very crucial role for the benefit of the insurance holder.

14 | P a g e

3. TECHNOLOGY TREND IN INSURANCE MARKET ARE AS FOLLOWS

3.1 COMPUTERIZATION Initially, in the late 1950's the insurance companies used Unit Record Machines (Electro Magnetic Machines) to process data punched into cards. Computers were introduces in the mid 1960's and by the 1980's the Unit Phased Machines were phased out and the entire process was computerized. This brought about greater efficiency and quick service delivery 3.2 INTERNET Today, the internet has completely changed the service delivery process. Internet is today used to even sell insurance policies. Internet is, in fact, proving to be one of the widely used distribution networks for selling insurance policies. Also internet is used for sending premium notices to policy holders through e-mails Companies like LIC (www.licindia.com), ICICI (www.iciciprudential.com) all have websites from which people can get the information about their products, prices, various schemes, and lots of other information. People can also purchase the product through this website.

15 | P a g e

3.3 ELECTRONIC CLEARANCE SYSTEM (ECS): 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. 3.4 CALL CENTRES AND SMS SERVICES Almost all the insurance companies have their own call centers 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.

16 | P a g e

4. PRIVATE V/S PUBLIC INSURANCE SECTOR

Private players in the life insurance business are growing at a scorching pace. Within three years of their inception, they have seized about 14 per cent of the market. Compare this to new generation private-sector banks, which took nine years for 20 per cent share in the Indian banking industry. And after seven years in the industry, in 2000, private mutual funds accounted for just 9 per cent of a market that had been dominated by the Unit Trust of India. There's another dimension to the insurance numbers game. While the private insurance companies have attained 13 to 14 per cent share of the overall insurance market, their share in the key metros (Mumbai and Delhi) is as high as 30 to 40 per cent. "We have to struggle to complete a deal in the metros now, because policyholders are comparing products and asking for better deals," says S B Mathur, chairman of the Life Insurance Corporation of India. Private insurance companies are essentially joint ventures with global insurance companies holding a maximum of 26 per cent stake. The foreign partners are investing heavily in the Indian market and, thereby, driving sales, because they see India emerging as one of the biggest markets in the Asian region. "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.
17 | P a g e

Private players have certainly done their bit to increase the penetration levels of insurance, mainly by creating alternative distribution channels--such as associations with banks, brokers and corporate agents. "Our bancassurance channel--with tie-ups with four banks-- contributes almost 70 per cent of our total sales," says Aviva CEO Stuart Purdy. OM Kotak Mahindra Life, which is ranked eighth among private players, is also leaning towards alternative distribution channels that will contribute to 45 per cent of total sales, in line with the contribution from its tied agency force. In sharp contrast, most of the LIC's policies continue to be sold through its tied-agency network. Thestate life corporation acknowledges that it is unable to maintain its lead in some metros: penetration by the private-sector insurers has come of age and they are giving the LIC a run for its money. The multi-channel approach adopted by private insurance companies has proved to be a boon in terms of costing and their ability to capture business. Earlier, most private insurance companies focused their energies on the top 20 cities. Today they are moving to smaller cities. "The potential in smaller cities is increasing and companies are moving to smaller cities and towns because these are increasingly becoming more prosperous with a rise in agricultural income. With the increase in buying power, this has fuelled growth opportunities for us," says Max New York Life CEO Anuroop Tony Singh. "The rural populace is managing their money well and no longer keeping it under their beds. They have mobile phones and have opened bank accounts. They are not very different from their urban
18 | P a g e

counterparts when it comes to purchasing life insurance covers," he points out. 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. Of course, the private insurance sector has also been steadily increasing its ad spend, from Rs 29 crore (Rs 290 million) in fiscal 2001 when the industry opened up, to Rs 92 crore (Rs 920 million) the following year. In fiscal 2003, private insurers spent Rs 143 crore (Rs 1.43 billion) on advertising. 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 150,000odd life insurance advisors of the private insurance companies.

"The private insurance agents sell better than their counterparts at the LIC. Life insurance advisors of private sector insurance companies adopt the need-based selling approach, unlike the LIC's agency force that
19 | P a g e

pushes the number of policies," says Dam. This also gets reflected in the average sum assured by private insurance companies being higher than that of the LIC. Policies sold by the private players tend to be of a higher value. For instance, Birla Sun Life's average premium stands at Rs 24,500, while that of OM Kotak Mahindra Life is equally high at Rs 20,400. Against this is the LIC's average premium of Rs 3,200. Of course, there's also a difference in the target client of the private and the state-run insurance companies. While the private players are targeting the upper middle-class and high net-worth individuals, the LIC aims for the masses through its 2,048 branches spread across semi-rural and rural towns. Meanwhile, private insurance companies are capitalizing on global relationships. "Business deals are often a call away since we capitalize on AIG's global relationship with multinational companies such as GE and Kodak," says Tata AIG Life Ian Watts. 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. "The key in product sales lies in offering unbundled and transparent products that give customer value," points out Dam. The biggest draw in insurance in fiscal 2004 was unit-linked plans. Ninety-five per cent of the policies sold by Birla Sun Life and over 80 per cent of the 436,000 policies sold by ICICI Prudential were unit- linked plans.
20 | P a g e

And even though the LIC was late (January 2004) in pushing its unitlinked 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. The advantage with unit-linked plans is that they offer policyholders transparency in terms of costs, annual returns and bonus calculations. With many companies guaranteeing the capital.

4.1 COMPANY PROFILE OF LIC Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from its corporate office in the year 1956. Since life insurance contracts are long term contracts and during the currency of the policy it requires a variety of services need was felt in the later years to expand the operations and place a branch office at each district headquarter. Re- organization of LIC took place and large numbers of new branch offices were opened.

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
21 | P a g e

selected cities. LIC's ECS and ATM premium payment facility is an addition to customer convenience. Apart from on-line Kiosks and IVRS, Info Centers have been commissioned at Mumbai, Ahmadabad, 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.

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 Promote within the Corporation greater awareness of the changing environment and the need to align the corporate policy to the emerging situation. Help fashioning, within the constraints, its policies, programmes,
22 | P a g e

practices and products tomeettheexpectations of the Public. Help the public to appreciate the performance and the limitations of LIC.

COMPANY PROFILE OF ICICI PRUDENTIAL The company assigned to me is ICICI Prudential Life Insurance Company. It is in to selling life insurance products. 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 insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). At present it is growing at a tremendous pace. Now we can say there is no close competitor to ICICI Prudential. ICICI Prudential's equity base stands at Rs. 9.25 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. 1,584 crores of new business premium for a total sum assured of Rs. 13,780 crores and wrote nearly 6,15,000 policies. The company has a network of about 56,000 advisors as well as 7-bank assurance and 150 corporate agent tie-ups. For the past five years, ICICI Prudential has retained its position as No. 1 private life insurance in the country, with a wide range of flexible products that meet the needs of Indian customer at every step in life. The company mainly depends on advisors. The advisors are
23 | P a g e

considered as the brand ambassadors of the company or the working partner who doesn't have to invest to get returns but just work with the company to make money. Advisors main job is to sell policy and in return the advisors get huge return like high commission, rewards, recognition etc. He is, for all purposes, an authorized salesman for insurance. Advisors can become the Unit Manager of the company if they pass the pinnacle program. ICICI Prudential has recruited and trained about 56,000 insurance advisors to interface with and advise customers. Further, it leverages its state-of-the-art IT infrastructure to provide superior quality of service to customers. Manager will get a fixed salary and the commission on the policies sold by his advisor and the commission of the policies which he has already sold. Tiger team manager is one who gets to sell the policy and get commission, train the advisors about the product and he is also a paid up employee of the company.

VISION To be the dominant Life, Health and Pensions player built on trust by world-class people and service

24 | P a g e

HOPE TO BE ACHIEVED 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 our policyholders Providing an enabling environment to foster growth and learning for our employees And above all, building transparency in all our dealings

VALUES Very member of the ICICI Prudential team is committed to 5 cores values: Integrity, Customer First, Boundaryless, Ownership, and Passion. These values shine forth in all we do, and have become the keystones of our success

4.2 INNOVATION STARTEGY IN LIC LIC has realized the importance of personal involvement and has included it in the training program itself. Once the Agent is recruited he needs to undergo a compulsory training program designed by LIC. The Training Program also explains them the importance of the smallest of the customer .i.e. customer who is just seeking general information.
25 | P a g e

The Agents and Employees are trained to Apologize to its customers even if they are not at fault. "SO IT DOSENT TAKE MUCH OF TIME FOR THE HANDS OF THE LIC LOGO TO COME CLOSER FOR APOLOGY" LIC has established elaborate Grievance Redressal Machinery at different level as per the customer requirement. There are Complaint cells which are specially set up to listen up to each and every customer's problems. LIC gas also set up Policyholder Councils and Zonal Advisory Boards to understand the problems of their customer situated in any part of the city. 1. Offers a Fair Fix to Problem: Customers want wrong to be set right and expects service contact employee to be skilled, empowered and interested in setting things right. This is the main reason why LIC conducts training programs for the newly recruited Agents as well as the other Employees. In any kind of breakdown situations LIC try to offer a rational explanation and demonstrate sensitivity and concern to the customer rather than defending themselves. 2. Offers Some Compensation for the Inconvenience: Compensation here wouldn't mean of just monetary compensation or some extreme measures like firing the Branch Manager Etc; but it is just to make-up for the loss of customer satisfaction. It could be like "it's on us"; "free service" etc. The service provider should plan certain
26 | P a g e

compensation policies in advance for various types of situations and deliver it as and when the situation is faced. 3. Keep the Promises: 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. 4. Follow Up: This is the most important step in Service Recovery as it ensures that whether the implemented Service Recovery was Satisfactory or not. It would include Internal and External Follow-up. Internal Follow-up would be to ensure that the solutions they put in motion are actually executed and the External part would be to get feedback from the customer whether he is satisfy.

INNOVATION STRATEGY IN ICICI An innovation refers to any good, service, or idea. That is perceived by someone as new. The idea may have long history, but it is an innovation to the person who sees it as new. Innovation takes time to spread through the special system. The consumer adoption process focuses on the mental process through which an individual passes from first hearing about an innovation to final adoption.
27 | P a g e

Adopters of new products have moved through the following five stages. 1.Awareness: The consumer becomes aware of the innovation but lacks information about it. 2.Interest: The consumer is stimulated to see the information about the innovation. 3.Evaluation: The Consumer considers whether to try the innovation or not. 4.Trial: The consumer tries the innovation to improve his estimate of its value. 5.Adoption: The consumer decides to make full and regular use of the innovation

4.3 INFORMATION TECHNOLOGY 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 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
28 | P a g e

best IT products available and use them to cater to the needs of the customers and deliver anywhere any time service on demand and to add value to its new products. The trust and the goodwill of the customers gained in the last 50 years have to be consolidated by making all activities more customer-focused. For instance, LIC has a corporate Web site to provide information on products, services, policy status, grievances and premium calculator. Other facilities include touch-screen information kiosks at central locations to provide 24 x 7 inquiry services to customers.

INFORMATION TECNOLOGY IN ICICI PRUDENTIAL The Information technology function at ICICI Prudential is committed to enable a business through the use of technology. It is segmented into 4 groups to enable highest level of delivery of customer. Life Asia Solution Group that provide flexibility in designing better product offering to end user, the solution group- Web that provide real time information to customer and is responsible for customer relationship management, IT Architecture & corporate solution group is in charge of developing and marinating a blue print for the IT architecture for the enterprise as whole. This team work as an in house R&D solution group, exploring new technological initiatives and also caters to information needs of corporate function in the organization.

29 | P a g e

4.4 ADVERTISING TREND IN LIC NEWSPAPERS AND MAGAZINES LIC give ads in the news papers and magazines round the year to continue its brand image and also when new products are introduced. Normally its ads are published in Times of India.

TELEVISION Companies like LIC, advertise on television to make people aware of their products and services 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. ADVERTISING AT KUMBH MELA LIC has also advertised about its products and the corporation even in the kumbh mela ADVERTISEMENT ON RADIO CHANNEL Advertisement about LIC are frequently been telecast on radio and satellite channel.

30 | P a g e

ADVERTISING TREND IN ICICI RADIO ICICI Prudential advertises on 92.5 red Fm TELEVISION ICICI Prudential has been advertising in outdoor, TV and press. The company launched a corporate television campaign - Saat Phere which took the emotions and thoughts of initial Sindoor corporate film a few steps further. SEMINARS ICICI Prudential regularly holds consumer awareness meets on 'the need for retirement planning' in different cities such as Pune, Aurangabad, Coimbatore, Nagpur, Bangalore and Mangalore.

31 | P a g e

CONCLUSION
Competition will surely cause the market to grow beyond current rates, create a bigger "pie," and offer additional consumer choices through the introduction of new products, services, and price options. Yet, at the same time, public and private companies will be working together to ensure healthy growth and development of the. Challenges such as developing a common industry code of conduct, contributing to a common catastrophe reserve fund, and chalking out agreements between insurers to settle claims to the benefit of the consumer will require concerted effort from both s. The market is now in an evolving phase where one can expect a lot Of actions in coming days. The current impediments for foreign Participation - like 26% equity cap on foreign partner, ill defined regulatory role of IRDA (Insurance Regulatory development Authoritythe watchdog of the industry) in pension business etc.are expected to be removed in near future. The early-adopters will then have a clear advantage compared to laggards in gaining the market share and market leadership. The will need to make sure right now that their entire infrastructure is in place so that they can reap the benefit of an "unlimited potential."

32 | P a g e

ARTICLES Life Insurance Trends for 2012

By Micheal Meulamans, about.com guide As 2012 begins a report by Ernst and Youngh suggests the U.S. life and annuity insurance industry will be challenged to find ways to manage both capital and risk in an economically and politically uncertain year, while continuing to lay the groundwork for future growth. In an era with increasing competition for life insurance sales, particularly from banks and other non-traditional sources, being efficient and effective in the use of all an insurers resources are essential. Another trend that may or may not continue is the increasing move toward whole life insurance products. The trends Ernst and Young identify were included in its new Global Insurance Center U.S. Outlook report. "Pressures such as low interest rates, volatile equities markets, and a political and regulatory environment in flux will continue to impact the industry, making it difficult for insurers to boost earnings," according to Doug French, financial services and insurance and actuarial advisory services leader at Ernst & Young. "In spite of the current environment, insurers should take advantage of opportunities to drive efficiencies through greater use of customer analytics and leveraging technology to develop stronger ties to clients."
33 | P a g e

Ernst & Young lists five issues they believe U.S. life and annuity insurers should focus on in order to make 2012 a successful year: First life and annuity insurers need to manage the company in a low interest rate environment with low interest rates which should persist until at least 2013, increasing the risk of spread compression for existing products. This will be difficult the report suggests because at the same time, efforts to increase sales of fixed annuities and universal life insurance are hampered by low rates. While interest rates are likely to remain low through 2013, they could climb rapidly after the Federal Reserve's Treasuries buying spree comes to an end, French says. Next, insurers also need to prepare for the impact of accounting and regulatory convergence. Regulatory ambiguity will likely persist through 2012. Although the Dodd-Frank legislation has passed its first anniversary, many key rules have yet to be formalized, and Ernst and Young suggest that several will impact insurers. The Federal Insurance Office (FIO), created under Dodd-Frank may contend with the National Association of Insurance Commissioners (NAIC) around the Solvency II issue of equivalency for U.S. insurance regulation. The report also suggests that insurers invest in customer analytics to drive efficiency and improve risk management. Analytic and predictive modeling techniques continue to improve, creating opportunities for increased sales, as well as improved efficiency and expanded capabilities.

34 | P a g e

Life insurers are looking to use predictive modeling to improve the speed and accuracy of underwriting, which is traditionally timeconsuming and expensive. Beyond underwriting, life insurers are increasingly using analytics and predictive modeling to create opportunities for increased sales and improved efficiency. The Ernst and Young report also suggests that analytics can even mitigate strategic risks. "Given the extensive modeling of multiple scenarios required by the developing principles-based regulations, insurers will find that they can improve their risk management processes by gaining insight into the range of outcomes that can occur in the current volatile environment", according to the report. And finally the Ernst and Young report suggest insurers fully embrace the web for those that haven't already done so. Insurance companies have historically operated via a very traditional sales model involving agents and face-to-face sales approaches. At present, the extent of a life insurers presence on the Internet largely consists of financial calculators of insurance needs; lead-generating activity like educational materials and product information; and proprietary web applications that support the sales force through online forms and illustrations. Ernst and Young suggest that those elements are simply the tip of the iceberg. "While insurance may not currently lend itself well to web sales, life insurers can leverage the technology to develop stronger ties to customers and build a better brand especially with younger, websavvy generations of insurance buyers," according to the report.

35 | P a g e

BIBILOGRAPHY
Important Website www.iciciprudential.com www.licindia.com www.scribd.com www.google.co.in/indian insurance industry Newspaper Times of India. Economic times.

36 | P a g e

37 | P a g e

38 | P a g e

39 | P a g e

40 | P a g e

HOW THEY STACK UP Premium income of life insurers in - June 2008 Growth % l Shar e (%) T ota

41 | P a g e

42 | P a g e