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PREFACE
There are number forces that make marketing an endlessly changing activity. The constantly activity sociological, psychological and political environment may represent the uncontrollable marketing factors. To understanding these factors in better way marketing research is of atmost importance. This Project Report has been completed in Partial fulfillment of my Management Program, Master of Business Administration in the company HDFC STANDARD LIFE INSURANCE. The objective of my project was Enhancement of Channel Distribution.
HDFC STANDARD LIFE is the name which is working as one of the best private insurance company in insurance secto33r.
With such large population and the untapped market of populations insurance happens to be very big opportunity in India. Today it stands as a business growing at the rate of 15-20 percent annually. In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. This is an indicator that growth potential for the insurance sector is immense in India.
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CONTENT
ACKNOWLEDGEMET05
EXECUTIVESUMMARY10 PROJECT OBJECTIVE.13 RESEARCH METHODOLOGY.19-24 a) Types of Research b) Data Collection c) Sampling unit & Size d) Limitation Section 1: INDUSTRY PROFILE.26-50 a) Overview & Historical Perspective b) Insurance Sector Reforms c) Nature of Industry d) Indian Insurance Industry Regulatory Body : IRDA e) Impact of Liberalization Market share of various players f) Current Scenario g) SWOT Analysis of Industry h) Conclusion Section 2: COMPANYS PROFILE..51-75 HDFC Ltd: a) Introduction b) Subsidiary & Associate Companies
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HDFC STANDARD LIFE: a) Introduction b) Key Personnel c) Knowledge Management .Life Stages d) Product Mix e) Current Sales f) Future Plans Section 3: MAIN SECTION.76-88 a) Financial Planning b) 360 Financial Planning c) Consumption Pattern d) Objective & Sales Procedure Section 4: DATA ANALYSIS AND FINDING.89-108 Section 5: CONCLUSIONS & RECOMMENDATIONS109-116 Section6: APPENDICES117-137 a) Questionnaire b) Glossaire c) Bibliographie
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ACKNOWLEDGEMENT
On the successful completion of the project I would like to express my gratitude to all the people who have helped me throughout the project At first, I owe my debt of thanks to HDFC Standard Life, which gave me
an opportunity to do this project work. I wish to extend my deep and sincere gratitude to Mr. Varun Singh (CDM) who provided me with their guidance from day one and also helped me whole heartedly to achieve the ultimate goal of the project. I would also like to thank all the employees of HDFC SLIC MEERUT zonal office for their expert guidance and encouragement they have given me in spite their demanding schedule. Their informal discussions and constructive criticism of has helped this project a rewarding experience for me. . I am also indebted to the Institute faculty Mr. Anirudha Ghosh Vidya College of Engineering for his continuous encouragement and suggestions offered by him. Last but not least, I must acknowledge the encouragement and help given by my beloved parents, friends, teacher family members, whose best wishes and emotional
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DECLARATION
The summer project on Enhancement of channel of Distribution in HDFC Standard Life Insurance is the original work done by me. This is the property of the institute and use of this report without prior permission of the institute will be considered illegal and actionable.
Date:
Place: Meerut
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EXECUTIVE SUMMARY
Overall, the life insurance and pension sector is set for rapid changes and growth in the years ahead. Delivering service, building trust and being innovative are key areas in which any company will have to excel in order to do well in the long road ahead. Different companies will take different approaches and it would be myriad of solutions that will be found to delight the Indian customer. During the first part, I was given complete classroom training about the various Commission and Renewal structure, Club Membership-Additional benefit which the company offers. Later, Market Research was done through various activities and tele-calling which are discussed further in the report finally, interesting conclusions were drawn out of the data collected regarding the Awareness of Financial Planning among the people in todays environment. It was great experience because conveing general people to make him Financial Consultant are a great deal of confidence.
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PROJECT OBJECTIVES
1) To
Consultant. 2) To study the awareness of Financial Planning among the people. 3) To study the importance of Insurance in todays scenario. 4) Other Objective: Brand awareness of various private insurance companies Preference among different investment tools
Preference in choosing channel for buying life insurance. Quality of service provided by agents and clients satisfaction Level. Customers perception of improvements brought in by entry of Private Insurance Companies.
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RESEARCH METHODOLOGY
1- JOB PROFILE Working in HDFC-SLIC was of a very good learning experience for me. I learned a lot from my unit manager. He taught me different aspects of corporate world and how to make the sales effective. He made sure that I put in my best efforts and gave me the deep insight of insurance sector. From the very beginning he told me that he wont provide me with any kind of leads and databases, so that I put my efforts and generate my own leads and complete my targets in the given time.
During my training I interacted with customers who were very much unknown to me and in the nascent stages I was having a little bit of hitch but later on I started enjoying while interacting with the customers.
2-RESEARCH DESIGN The research design applied here was exploratory research and descriptive research.
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Exploratory Research is one in we dont know about the problem, we have to find about the problem and then work on solving the problem. Whereas in case of descriptive research, we know the problem, we just have to find the solution to the problem. Generally descriptive research design is applied after exploratory research design. As in first case we tried to find out the problem area, as in initially there was problem in pitching the right thing to the customer and finding out the right customer who is actually interested in entering into the insurance market..
3-SAMPLE SIZE: To complete the research, the questionnaire was filled by minimum 100 sales development managers.
4- RESEARCH TOOL AND QUESTIONNAIRE Research tool: In this project we have used primary data as well as secondary data. Primary data is one in which we find out the raw data through directly
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contacting the people and asking them to fill in the questionnaire ands secondary data is by using the contacts which are already available Primary data is applied as we have used the questionnaire and through marketing activities, secondary data has been used in form various personal contacts.
Questionnaire: Questionnaire contains around fifteen questions contain the information about the financial consultants and their work. The questions relate to as in what kind of difficulties do they face before becoming the financial consultants and how much the company helps them to achieve their goals.
SPSS & Excel has been used to fill in the data and to analyze the data collected.
5- ACTION PLAN The target given to me was to recruit 5(five) Insurance Advisors and with
the Guidance and Motivation of my sales development Manager I achieved my target during my training of 8 Weeks and I recruited 5(five) Insurance Advisors,
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I Divided whole period of my training into four parts: 1 Finding the data and appropriate leads 2 Fixing the appointments 3 Negotiating with customers
4 Closing the case
Collection of data or leads is the first thing before making a customer a client of HDFC STANDARD LIFE. I collected data by six ways: 1 Through Yellow Pages 2 Through marketing activities 3 Through Telephone Directory 4 Through Internet 5 Through Newspaper 6 Through cold calling
After collection of data my second job was to make cold calls and door-todoor marketing. Which I did by making Tele calls from the Company and went to different offices as well as to the court clients about latest offer of part
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time Business opportunity as a life advisor. In all, I collected data of about 150 customers. So Data Collection Means Looking for the Suspect who May or May Not be interested in the Business Proposal.
Data collection and cold calling are just the primary steps in marketing of any product the real thing is to find out opportunities out of those leads which one has generating. I got many opportunities where the customer was interested in becoming the client of mine and I use to fix meetings with these customers so that I can tell them the details of our Part time Business Opportunity. In all I got 40 opportunities where the customer was interested in becoming the Life Advisor. So these 40 Clients were those who were converted into Prospects of becoming a Life Advisor.
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After meeting with the customers and negotiating with them I tried to convince them to become the Insurance Advisor of the best Private Life insurance Company which already has more than 30,000 Insurance Advisors. And through this interaction I came to know about the one to one interaction skills. And at the end I closed the Deal by convincing about 5 Clients for becoming the Corporate Agents of HDFC STANDARD LIFE within a period of 8 weeks.
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6- MAJOR PROBLEMS FACED Some people, even if hey are not interested, they directly dont say NO rather they linger on and have a series of appointments till the time the seller loses enthusiasm and makes sure that the client is not going to give a sale. Some of the prospects dont even listen to anything and straight away say NO they dont even give you the chance to say what one wants to ; most of these men were businessmen who perhaps had less time to listen to sales pitch I find difficulty in interacting with people due to negative responses that made me demoralized sometimes Some people dont even understand the concept of insurance the worse is that they dont even want to know about it.
The other difficulty was sometimes the client was ready to become the insurance advisor of HDFC STANDARD LIFE but it was difficult to fetch out nine hundred for the examination fees.
I also faced difficulty in traveling to different areas of Delhi, Gurgaun, Gr.Noida and Noida to meet the clients for part time business proposal.
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It was difficult to convince the clients to become insurance advisor of HDFC STANDARD LIFE by paying nine hundred rupees when some other companies were taking less or no fees for the examination.
The difficulty was to maintain a continuous level of self-motivation because we are giving our best shot but results dont come. The sales pitch if delivered to a group of friends together, has a more probability of landing up in a mockery, as then everyone in group tries to out smart the salesperson.
7- DATA ANALYSIS The whole project work of 8 weeks gave an understanding that the insurance is one of the most difficult products to sell because of its nature being intangible but convincing peole to become the insurance advisor is much more difficult then selling insurance policies. Insurance sector has a huge potential in India to grow, keeping in mind the huge unexplored market in India and increasing per capita income of the country. People today are more educated and hence more aware and receptive towards the concept of life insurance.
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Private players in the market have really revolutionized the insurance industry by providing immaculate services, unique policy options, great distributions channels and greater awareness through advertisement.
The real difference today lies in how much the customers are aware of the brand and how much do they have faith on the brand. The distribution channel and reaching the customer first is also a major aspect to counter the competition. Insurance is a product that is sold by putting the hands over the nerve of emotion so the products and the company should be positioned as a family member to the client.
Major thing is to do marketing at two levels both internal as well as external. In this business, because the products are almost same for all the companies, the real edge can be provided if the life advisors or agents of the company themselves have real faith on their products and integrity of the company. Only a well motivated and aware sales person can make the great sales. The other type of marketing is external marketing, which is done for the end customer of the product and this marketing should also be appropriate providing the company a great positioning in the minds of the customer.
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The study of awareness about Financial Planning among the people and particularly the insurance sector covers data collection through questionnaire and interview of consumers.
Identify the course of action to solve it. For this purpose the information proved useful for giving right suggestion to the company.
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INDUSTRY PROFILE
Overview
With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually.
Together with banking services, it adds about 7 percent to the countrys GDP .In spite of all this growth the statistics of the penetration of the insurance in the country is very poor. Nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income
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Historical Perspective The insurance came to India from UK; with the establishment of the Oriental Life insurance Corporation in 1818.The Indian life insurance company act 1912 was the first statutory body that started to regulate the life insurance business in India. By 1956 about 154 Indian, 16 foreign and 75 provident firms were been established in India. Then the central government took over these companies and as a result the LIC was formed.
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Structure
Government stake in the insurance Companies to be brought down to 50%. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations.
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Competition
Private Companies with a minimum paid up capital of Rs.1 billion should be allowed to enter the sector. No Company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies.
Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance- a part of the Finance Ministry- should be made independent
Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company (there current holdings to be brought down to this level over a period of time)
Customer Service
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LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans Computerization of operations and updating of technology is to be carried out in the insurance industry
The global life insurance market stands at $1,521.2 billion while the non-life insurance market is placed at $922.4 billion.
The United States itself accounts for about one-third of the $2443.6 billion global insurance market and Japan stands next with a 20.62% share.
India takes the 23rd position with US $9.933 billion annual premium collections and a meager 0.41% share.
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Out of one billion people in India, only 35 million people are covered by insurance.
The income derived by GIC and its subsidiary companies through investment was Rs.2991.76 crore and the investable fund generated was Rs.3543 crore in 2001-2010.
Indian insurance market is set to touch $25 billion by 2010, on the assumption of a 8 per cent real annual growth in GDP.
A variety of perils. By purchasing insurance policies, individuals and businesses can receive reimbursement for losses due to car accidents, theft of property, and fire and storm damage; medical expenses; and loss of income due to disability or death. The insurance industry consists mainly of insurance carriers (or insurers) and insurance agencies (Financial Consultant) and brokerages. In general, insurance carriers are large companies that provide insurance and assume the risks covered by the policy. Insurance agencies and brokerages sell insurance policies for the carriers.
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Insurance companies assume the risk associated with annuities and insurance policies and assign premiums to be paid for the policies. In the policy, the companies states the length and conditions of the agreement, exactly which losses it will provide compensation for, and how much will be awarded. The premium charged for the policy is based primarily on the amount to be awarded in case of loss, as well as the likelihood that the insurance carrier will actually have to pay. In order to be able to compensate policyholders for their losses, insurance companies invest the money they receive in premiums, building up a portfolio of financial assets and income-producing real estate which can then be used to pay off any future claims that may be brought.
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An Annuity product provides a series of monthly payments on stipulated dates provided that the life assured is alive on the stipulated dates. A Linked product provides not only a fixed amount of money on death but also sums of money which are linked with the underlying value of assets on the desired dates. There are a variety of life insurance products to suit to the needs of various categories of peoplechildren, youth, women, middle-aged persons, old people; and also rural people, film actors and unorganized laborers. Life insurance products could be purchased from registered life insurers notified by the IRDA. Insurers appoint insurance agents to sell their products. As per regulations, insurers have to give the various features of the products at the point of sale. The insured should also go through the various terms and conditions of the products and understand what they have bought and met their insurance needs. They ought to understand the claim procedures so that they know what to do in the event of a loss.
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REGULATORY BODY
Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is: Insurance Act, 1938, and Insurance Regulatory & Development Authority Act, 1999.
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MISSION-IRDA To protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto.
The following companies have the rest of the market share of the insurance industry.
COMPANY NAME LIC ICICI PRUDENTIAL BAJAJ ALLIANZ HDFC STANDARD LIFE BIRLA SUNLIFE TATA AIG SBI LIFE MAX NEWYORK AVIVA LIFE ING VYSYA OM KOTAK LIFE AMP SANMAR METLIFE RELIANCE LIFE
MARKET SHARE 79.30 5.63 3.27 3.11 2.32 1.45 1.24 0.90 0.82 0.66 0.54 0.38 0.33 0.05
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INSURANCE MARKET IN INDIA India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Innovative products and aggressive distribution have become the say of the day. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice. Life insurance industry is waiting for a big growth as many Indian and foreign companies are waiting in the line for the green signal to start their operations. The Indian consumer should be ready now because the market is going to give them an array of products, different in price, features and benefits. How the customer is going to make his choice will determine the future of the industry.
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CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerization of operations and updating of technology has become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies. The one time monopoly of the LIC and its agents are now going through a through revision and training programs to catch up with the other private players. Though lot is being done for the increased customer service and adding technology to it but there is a long way to go and various customer surveys indicate that the standards are still below customer expectation levels.
DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. It therefore makes sense to look at well- balanced, alternative channels of distribution.
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LIC has already well established and have an extensive distribution channel and presence. New players may find it expensive and time consuming to bring up a distribution network to such standards. ]. At present the distribution channels that are available in the market are: Direct selling/Retail Corporate agents Group selling Brokers and cooperative societies Bancassurance
DIRECT SELLING/RETAIL
Direct selling or retail business is carried out by Agents (Financial Consultant) of the company. This is the main distribution channel due to the complexity of most insurance products (Endowment, Whole of Life, Unit Linked). This tends to be the focus of most companies due to its past success as well as its ability to deliver the right advice. However, this channel can be expensive. Hence it is important that this face is always smiling and presentable and the facts and figures at his/ her command are updated and correct.
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.BANCASSURANCE Banc assurance is the distribution of insurance products through the bank's distribution channel. It is a phenomenon wherein insurance products are offered through the distribution channels of the banking services along with a complete range of banking and investment products and services. To put it simply, Bancassurance, tries to exploit synergies between both the insurance companies and banks.
Agents and therefore reduce earnings of small and inactive agents. During the year we have not renewed agency contracts with inactive agents and hence our numbers of agents has fallen to around 1.5 lacks from 2 lacks six months back.
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Our distribution mix witnessed a change in the share of new business EPI. The share of ban assurance channel of distribution viz. banks, brokers and other corporate agents increased to 62.3% from 56.4% in first half of 2009-10. The banc assurance channels EPI grew by 60.3% to `8.5bn from `5.3bn in first half of 2009-10. The retail (tied agency) channel grew by 22.1% to `4.8bn from `4.0bn in first half of 2009-10. Our focus on direct channel has yielded an EPI growth of 112.3% to `0.31bn from ` 0.15bn in first half of 2009-10.
Advantages to banks
Productivity of the employees increases. Increase in return on assets by building fee income through the sale of
Insurance products.
Banks can cross sell insurance products e.g.: insurance products with Loans.
Advantages to insurers Insurers can exploit the banks' wide network of branches for distribution of products. The penetration of banks' branches into the rural areas can be utilized to sell products in those areas.
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Customer database like customers' financial standing, spending habits, investment and purchase capability can be used to customize products and sell accordingly.
Since banks have already established relationship with customers, conversion ratio of leads to sales is likely to be high. Further service aspect can also be tackled easily.
Advantages to consumers Comprehensive financial advisory services under one roof. i.e., insurance services along with other financial services such as banking, mutual funds, personal loans etc.
Enhanced convenience on the part of the insured Easy accesses for claims, as banks are a regular go. Innovative and better product ranges
Indians have always been wary of employing their hard-earned money in a venture that will pay them on their death. Insurance has always been used as a Tax saving tool. No more, no less. It is depend upon the Financial Consultant to educate the people to secure/insure their future against any unknown calamity and make a shield around their families and businesses.
The reason for this being on the top of our understanding is that when ever we have seen any sector open up in India there are always grey areas and unsure policies. These are not exactly what any player, be it Indian or foreign, looks for. It creates an air of uncertainty in all the decision making process. Insurance as a sector requires players who are strong financially and are willing to wait for returns. Their confidence can be bolstered only if there is an open and a transparent policy guidelines. This will also help the consumers feel safe that the regulatory is an active one and cares to do everything possible to keep things under control and help the insurance environment grow maturely.
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To cater to the largest democracy in the world is by no means a cakewalk. Insurance profits are directly related to number of insured and this is in turn related to the reach.
It is said that the insurance agent (Financial Consultant) is the best salesman in the world. He makes you pay, regularly, an amount promising to pay back only on your death. Thus the players will require an excellent sales team to sell their products in the now competitive environment.
Encouragement of new and better products and letting the hackneyed ones die out.
This will itself ensure the market grows. And that every class/society gets a product that best suits them.
SPECIAL PROVISIONS
The Income Tax Act and Life Insurance policies
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Under Section 10(10D), any sum received under a Life Insurance policy
(not being a Key Man policy) is also exempt from taxation. But it is wise to remember that Pensions received from Annuity plans are not exempted from Income Tax.
POLICYHOLDERS GRIEVANCES
Policyholders may have complaints against insurers either in respect of their policies or their claims. As per Regulations for Protection of policyholders interests, 2008, every insurer should have in place, a grievance redressal system to address the complaints of policyholders. The IRDA has a Grievance Redressal Cell which plays a facilitative role by taking up complaints against insurers with the respective companies for speedy resolution. The IRDA however does not adjudicate on complaints.
STRENGTH
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1. Best returns with the added advantage of 100% life insurance coverage. 2. Good option for new investors into the market as all the money is invested By best fund managers so with less knowledge also they can earn good Returns. 3. Best commission charges paid to the agents which vary from 12% to 40% Which is much higher as compared to mutual funds i.e. only 2-2.5%.
WEAKNESS
1. HDFC SLIC could not able to match LIC in remote areas services. 2. Misleading facts given by Financial Consultant about the returns of ULIPs. 3. Hidden charges taken by the companies. 4. Less Promotional Campaigns.
OPPORTUNITY
1.
2. As the stock market can be under the mark any time so it can bring loss to the investors but as in ULIPs there is proper mixture of debt securities and Equity so the loss is incurred during dark trading days also. 3. Unit-linked products are exempted from tax and they provide life insurance. 4. Increasing consumer awareness about Insurance and its use.
THREAT
1. Cannibalism within the industry by providing misleading figures to the investors. 2. Govt.s instability has a long term repercussions affecting companys policies and its growth.
CONCLUSION
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With largest number of life insurance policies in force in the world, Insurance happens to be a mega opportunity in India, which is growing at the rate of 1520 per cent annually. Nearly 80 per cent of Indian population is without life insurance cover while health insurance and non-life insurance continues to be below international standards. And this part of the population is also subject to weak social security and pension systems with hardly any old age income security. And also the changing attitude and increasing awareness level of the population is an indicator that growth potential for the insurance sector is immense.
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COMPANYS PROFILE
INTRODUCTION Helping Indians experience the joy of home ownership. Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC has since emerged as the largest residential mortgage finance institution in the country. The corporation has had a series of share issues raising its capital to Rs. 119 crores. HDFC operates through 75 locations throughout the country with its Corporate Headquarters in Mumbai, India. OBJECTIVES AND BACKGROUND Background HDFC was incorporated in 1977 with the primary objective of meeting a social need that of promoting home ownership by providing long-term finance to households for their housing needs. HDFC was promoted with an initial share capital of Rs. 100 million.
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Business Objectives
The primary objective of HDFC is to enhance residential housing stock in the country through the provision of housing finance in a systematic and professional manner, and to promote home ownership. Another objective is to increase the flow of resources to the housing sector by integrating the housing finance sector with the overall domestic financial markets..
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BOARD OF DIRECTORS
Mr. D S Parekh Chairman Mr. Keshub Mahindra Vice Chairman Ms. Rene S. Karnad Executive Director Mr. K M Mistry Managing Director Mr. Shirish B. Patel Mr. B S Mehta Mr. D M Sukthankar Mr. D N Ghosh Dr. S A Dave Mr. S Venketaraman Dr. Ram S. Tarneja Mr. N M Munjee Mr. D M Satwalekar
HDFC has a staff strength of 1229, which includes professionals from the fields of finance, law, accountancy, engineering and marketing.
HDFC Bank
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HDFC Reality
Other Companies Co-Promoted by HDFC HDFC Trustee Company Ltd. HDFC Developers Ltd.
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HDFC Venture Capital Ltd. HDFC Ventures Trustee Company Ltd. HDFC Investments Ltd. HDFC Holdings Ltd. Home Loan Services India Pvt. Ltd. Credit Information Bureau (India) Ltd
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INTRODUCTION HDFC Standard Life Insurance Company Limited was one of the first companies to be granted license by the IRDA to operate in life insurance sector. Each of the JV player is highly rated and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
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HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000. HDFC is the majority stakeholder in the insurance JV with 81.4 % stake and Standard Life has a stake of 18.6%. Mr. Deepak Satwalekar is the MD and CEO of the venture.
THE PARTNERSHIP: HDFC and Standard Life first came together for a possible joint venture, to enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3 year joint venture agreement. .In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from the UK joined a hand picked team from HDFC to form the core project team, based in Mumbai.
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Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank.
COMPANYS MISSION: To be the top life insurance company in the market. This not only means being the largest or the most productive company in the market, but a combination of several things like
Customer service of the highest order Value for money for customers Professionalism in carrying out business Use of technology to improve service standards Increasing market share
COMPANYS VISION:
The most successful and admired Life Insurance company. Which means that We are the most trusted company, the easiest to deal with offer the best value for money, and set the standards in the industry.
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IN SHORT:
COMPANYS VALUES:
SECURITY: Providing long term financial security to our policy holders will be our constant endeavor. This is done by offering life insurance and pension products.
TRUST: Company appreciates the trust placed by our policy holders in us. Hence, company will aim to manage their investments very carefully and live up to this trust.
INNOVATION: Recognizing the different needs of our customers, company will be offering a range of innovative products to meet these needs.
Companys mission is to be the best new life insurance company in India and these are the values that will guide us in this.
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Board of Directors:
Mr. K. M. Mistry Ms. Renu S. Karnad Mr. A. M. Crombie Ms. Marcia D. Campbell Mr. Norman Keith Skeoch Mr. G. R. Divan Mr. G. N. Bajpai Mr. Ranjan Pant Mr. Ravi Narain
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AUDIT COMMITTEE
Haribhakti & Company Chartered Accountants B.K. Khare & Co. Chartered Accountants
Bankers
HDFC Bank Ltd. Union Bank of India Indian Bank The Saraswat Co-operative Bank Ltd. Federal Bank
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KNOWLEDGE MANAGEMENT
stages may pose a different insurance need/cover for you. In this section, we have drawn up the basic life stages and help you analyze various insurance needs accordingly.
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Your needs: oSave for a home and wedding oTax Planning oSave for Golden years
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for retirement planning can make a significant difference to your savings. Think about your golden years even before you have reached them. The key is to think ahead and plan well using your time and money. Your needs: o o o Provide for regular income post retirement Immediate Tax benefits Lead a secure, independent and comfortable life style after retirement
PRODUCT MIX
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At HDFC Standard Life, there is a bouquet of insurance solutions to meet every need. They cater to both, individuals as well as to companies looking to provide benefits to their employees. For individuals, they have a range of protection, investment, pension and savings plans that assist and nurture dreams apart from providing protection. One can choose from a range of products to suit ones life-stage and needs. For organizations they have customized solutions that range from Group Term Insurance, Gratuity, Leave Encashment and Superannuation Products.
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INVESTMENT - This includes a plan that is well suited to meet your long
term investment needs. We provide you with attractive long term returns through regular bonuses. Plan: Single Premium Whole Of Life
PENSION - Our Pension Plans help you secure your financial independence
even after retirement and live a relaxed retired life.
Plans:
Personal Pension Plan Unit Linked Pension Unit Linked Pension Plus
SAVING - Our Savings Plans offer you flexible options to build savings for
your future needs such as buying a dream home or fulfilling your childrens immediate and future needs.
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Plans:
Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Money Back Plan, Childrens Plan, Unit Linked Youngstar, Unit Linked Youngstar Plus .
GROUP PLANS
HDFC Standard Life has the most comprehensive list of products for progressive employers who wish to provide the best and most innovative
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employee benefit solutions to their employees. They offer different products for different needs of employers ranging from term insurance plans for pure protection to voluntary plans such as superannuation and leave encashment.
Plans: Group Term Insurance with Riders Group Term Insurance with Profit-Share Group Unit-Linked Plan For Gratuity For Defined Benefit Superannuation For Defined Contribution Superannuation Group Leave Encashment Plan
DISTRIBUTION OFFICES
In addition to the corporate office at Mumbai, your Company had 169 offices in over 135 cities/towns in the country. It has a widespread network of Financial Consultants, Corporate Agents and Brokers servicing customers in these cities and towns.
FINANCIAL CONSULTANTS
The number of licensed Financial Consultants appointed by your Company increased from over 23,000 in the previous year to over 33,000 in the current year. During the year, the Company continued its
HDFC Standard Life has recorded a strong year-on-year growth of 112% for the period April-March 2006-07, in comparison to the same period 2005-06, with a new business first year premium of Rs 1,029 crore. In terms of effective premium income (EPI), which gives a 10% value to a Single Premium policy and is an internationally-accepted indicator of an insurance company's performance, the EPI grew by 103% to Rs 887 cr from Rs 436 crore. HDFC Standard Life's growth in new business is a manifestation of the number of lives insured as well as an increase in the average premium. For the individual business, volume measured by the number of lives insured witnessed a 32% growth. The average premium also grew by 62% to Rs 27,500 in 2006-07 from Rs 17,000 in 2005-06. During the year the company issued over 3, 97,000 policies and has covered more than 22, 50,000 lives
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April-March Parameters 2006-07 (Rs. Cr) Total received premium i. New Business ii. Renewal Effective Premium Income (Total) Group Business Premium (EPI) 436.08 49.40 668.40 486.15 182.25
April-March 2007-08 (Rs. Cr) 1532.21 1028.94 503.27 Growth (%) 129.23 111.65 176.14
887.30 135.15
103.47 173.58
FUTURE PLANS
HDFC has always been market-oriented and dynamic with respect to resource mobilization as well as its lending program. This renders it more than capable to meet the new challenges that have emerged. Over the years, HDFC has developed a vast client base of borrowers, depositors, shareholders and agents, and it hopes to capitalize on this loyal and satisfied client base for future
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growth. Internal systems have been developed to be robust and agile, to take into account changes in the volatile external environment. HDFC has developed a network of institutions through partnerships with some of the best institutions in the world, for providing specialized financial services. Each institution is being fine-tuned for a specific market, while offering the entire HDFC customer base the highest standards of quality in product design, facilities and service
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FINANCIAL PLANNING
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A comprehensive financial advisory service involving financial strategies, tax, corporate/trust structures, estate planning, legal issues, family law, asset allocation, asset protection and investment advice.
Buying a dream house, Providing your children with the best education,
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Planning a grand wedding for your children Having a great time after your retirement
But in today's world how many of these dreams can you hope to turn into reality? By planning well, you can utilize your limited resources to the fullest.
Financial help?
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Instead of investing in an ad-hoc manner, 360 Financial Planning helps you take a holistic, all-round view. Briefly, 360 Financial Planning comprises: Investment Planning Cash Flow Planning Tax Planning Insurance Planning Children Future Planning Retirement Planning
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CASH FLOW PLANNING: To provide for assets and meet the periodic
cash requirements In simple terms, cash flow refers to the inflow and outflow of money. It is a record of your income and expenses. Cash flow planning refers to the process of identifying the major expenditures in future (both short-term and long-term) and making planned investments so that the required amount is accumulated within the required time frame.
One has to compare the advantages of several tax saving schemes and depending upon your age, social liabilities, tax slabs and personal preferences, decide upon a right mix of investments, which shall reduce your tax liability to zero or the minimum possible.
It is extremely important that every person, especially the breadwinner, covers the risks to his life, so that his family's quality of life does not undergo any drastic change in case of an unfortunate eventuality. Insurance Planning is concerned with ensuring adequate coverage against insurable risks.
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Like every parent, you too must be overjoyed to watch your child grow. All parents want to give the best possible upbringing to their children. This includes good education and security, in case of any eventuality. Soon, your little bundle of joy will grow up, and it will be time to provide for his or her higher education and wedding. The purpose of Children's Future Planning is to create a corpus for foreseeable expenditures such as those on higher education and wedding, and to provide for an adequate security cover during their growing years.
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CONSUMPTION PATTERN
1.60% 2.10% 7.60% 2.3 30% 10.80% 3.90% 6.60% 7.90 % 8.80% 4.10% 0.80% 4.60%
Food & Grocery Home Textiles Personal Care Saving & Investment 40.10% Clothing Consumer Durable Vacation Eating out Footwear Movies & Theater Entertainment Accessories Books & Music
*Source-Business world magazine 2nd week April 2009 The consumption pattern is determined by the income so more would be the income more would be the consumption. The consumption though can differ in terms of areas where the money is actually spent. The above representation tells us the consumption pattern of the consumer in India i.e. where do they actually invest their money and in what proportion do they spend in various areas. The chart shows that people are spending 7.9% of their savings into savings and investments.
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SALES PROCEDURE:
FIRST CONVERSATION
Follow Up
APPOINTMENT
Follow Up
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Activity, we interacted with the shopkeepers as well as the walking People regarding their views about the industry.
3) TELE-CALLING: This was random calling from the data base
provided by the company and the aim was to collect information from them.
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STEP 2: APPOINTMENT
All the potential and interested customers of all the activities performed are then followed up and an appointment is fixed for further details.
The motive is to explain the customer in detail, about the various plans offered by the company. The customer is informed about the procedure and the options he can opt for like: 1) 2) Choose the premium he wish to invest Select the Premium Payment Option i.e. annual mode, half yearly Mode, quarterly mode, or monthly mode. 3) 4) Choose the amount of protection i.e. the sum assured, he desires. With Maturity Benefit, choose the additional benefits like:
a)
b)
Death Benefit
c)
Critical Illness
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5) Choose the Investment funds or funds one desires. The various funds available are:
Liquid Fund Secure Managed Fund Defensive Managed Fund Balanced Managed Fund Equity Managed Fund Growth Fund
6) Other information like: a) b) c) d) e) Tax Benefit Various Charges Switching option Surrendering Terms & Conditions etc.
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After the second step, the interested customers are required to fill the proposal form which requires the following information: b) Personal details of the policy holder, c) The Premium amount selected d) The Term of the policy e) The Fund choice for investment
Once the form is filled all the necessary documents are collected like : a) Address proof, b) DOB certificate etc. And also the first premium amount in form of cheque or cash is collected.
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Within 15 days, the policy documents reach the customers place, and the customer is required to read the documents carefully.
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AGE DISTRIBUTION
AGE DIS
24%
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Highest number of Respondents (41%) from Age group 31 to 45 yrs. 35% respondents are of age below 30 yrs, small percentage of which is unemployed.
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MARITAL STATUS
Total num of single respondents Total num of married respondents Total num of respondents
23 77 100
MARITAL STATU
100% 90% 80% Total number of single respondents 23 70% 60% 50%
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16
Income Distribution
40%
INCOME DISTR
> 5 lacs 1
10
INCOME
3 - 5 lacs
5
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Highest, 16 respondents in income bracket below 1.5 lacs, which mainly comprises of age group below 30 years.
Respondents of the age group 31-45 yrs, lie in all the income slabs. Minimum, 6 respondents in income bracket of above 5 lacs, which are in age group of above 45 years.
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DO Y FINA
100 90 80 70
OF PEOPLE
60 BRAND RECALL 50 40
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NAME OF THE BRAND LIC ICICI PRUDENTIAL HDFC STD LIFE TATA AIG BIRLA SUN LIFE KOTAK MAHINDRA SBI LIFE AVIVA MAX NEW YORK MET LIFE INGVYSYA
BRAND RECALL 100% 96% 92% 82% 86% 72% 64% 75% 71% 60% 51%
BRAND RECALL
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BR
51
60
100 % respondents mentioned first name to be LIC
71
Among private players, ICICI Prudential has the highest Brand Recall i.e. 96% HDFC Standard life has Brand Recall of 92%
75
INVESTMENT PREFERENCE
64
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INVESTMENT PREFERENCE Banks & Post Office Share Market Insurance Bonds Mutual funds Real Estate Total Table of Investment preference
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INVESTMENT PREFE
9%
21% respondents prefer banks and post office schemes as an investment tool preference. Respondents of age group below 30 years prefer Mutual Funds,
21%
as they provide higher returns than banking investment tools. Insurance ranks 2nd as an investment tool choice, which itself
includes various protection, saving and pension plans. Govt. Bonds & securities are mostly preferred by people of
11%
20%
INSURED PERCENTAGE
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13%
family members.
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COMPANY PREFERENCE
COMPANY
55%
55% of respondents have insurance cover provided by LIC only 15% of respondents have insurance cover provided by Private
Cos. only
Whereas 30% have got insurance from both LIC and Private
Companies.
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share but Private Companies are making a fast move in the market.
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17, 20%
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Money back Policies have been most popular and also the
endowment plans. As people today are more aware about financial planning, so
people of the age 30 years have planned for their Retirement now. ULIPs are fast gaining popularity as they provide investment Benefit with Insurance.
PURPOS
Retirement Planning
insurance followed by option as Tax saving tools.
Retirement planning in a early period is also gaining the market
14%
Tax Benefit
23%
share. ULIPs are responsible for increasing popularity of insurance as an investment tool
Investment
11%
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C H AN
56
choice for buying Insurance. In retail also known Advisors are preferred over referrals.
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Insurance. Group insurance is a channel which customers expect but it is not so popular because only few employers have taken the initiative. Buying insurance from a unknown person or getting a phone call is still not preferred by most of the people
Jo kismet me likha hai wohi hoga, hum kya kar sakte hai
Charges Its better to invest in Mutual Funds, the charges there are very less
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RECOMMENDATION
Positioning insurance as a means to fulfilling ones duties during ones lifetime. Fears relating to thefts, ailments, death could be addressed through sensitive communication
Lack of understanding: Training of Channels To provide quality advice on products best suited
The
product:
Insurance market which not only faces the problem of securing and retaining customers in an increasingly competitive marketplace but also experiences the need for heightened relevance of the brand proposition in a world where brand has been termed the new religion. In rural India, the LIC is especially synonymous with insurance. But in the Wake of competition insurance companies have to do a considerable brand Building exercise at least in urban India. Adequate time, investment and Longer-term management of the brand is essential, not only for success but also survival. All brands need to be built around well-differentiated and Credible positioning that springs from the organizations history. The brand Must not only be believed but lived by management and employees.
Focus on different segments to survive and thrive in a competitive environment. Each company has to choose its own unique positioning
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based on its unique strengths. Below-mentioned positioning alternatives can be worth considering.
VARIETY-BASED POSITIONING This type of positioning is based on varieties in products and services rather than customer segments. It is a sensible strategy for those companies who have distinctive advantages or strengths in offering certain products and services. In the insurance industry too, it is possible to achieve a unique position by focusing on certain category of products.
NEEDS-BASED POSITIONING This is the most commonly understood positioning and is based on the differing needs of different groups of consumers. This can be done successfully if a company has unique strengths to service a group of customer needs better than others. The insurance needs of customers vary significantly for different groups of customers. The insurance needs of young family with small children will be quite different from that of a family in which the income-earner is close
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to retirement. However, in India most of the life insurance companies have a wide variety of products tailored for different customer needs and there is no company focusing on a particular customer need.
ACCESS-BASED POSITIONING Positioning of customers can also be done by the way they are accessible. That is different groups of customers may be accessible in different ways even though they may have similar needs. Access is typically a function of customer geography or customer scale. There is excellent opportunity in the insurance industry to employ access-based positioning by targeting the rural insurance sector.
The rural market for life insurance is very different from the urban market in terms of needs, income levels and distribution (seasonality, for example), penetration of media and so on. Rural market can be a highly profitable position if one is able to carefully plan and tailor an entire set of low-cost activities of advertising, distribution, and product design etc. to successfully exploit the potential.
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CONCLUSION
There has been a tremendous change in the insurance industry. And with it there has been continuous growth in this sector both in Indian as well as world context. The opening up of the insurance sector has changed the whole look of the industry. While the LIC, in order to face the competition is coming up with new strategies. New private players are leading the sector due to their strategic management and tailored made projects. From the research, we also conclude that though the awareness and people opting for LIC plans are more as compared to other private players but the latter are gaining momentum in the market day by day.
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The demand for insurance is likely to increase with rising per-capita income, rising literacy rates, and growth of service sector. In-fact opening up of the insurance sector is an integral part of the liberalization process being persued by many developing countries.
Life insurance as a form of protection is the single-most important financial product any earning member of a family must have. Having said this, a welldiversified portfolio is one of the first rules of financial planning, and as such one should consider different instruments as the ability to save increases. Possible investment options range from bank deposits and government small saving schemes to mutual funds, stocks and property.
Certainly ULIPs successfully combine the first and most important need of protection, with savings, and hence are an excellent addition to your portfolio. All financial products have a certain amount of risk and charges, be it a mutual fund, property, or even a bank deposit. It would be unrealistic to assume that the features and benefits of a ULIP come at no cost, though the charges are considerably lower than that of a traditional product.
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In fact, the very reason the product is transparent is because the customer knows the charges and risks. There is no right or wrong in this. The success of marketing insurance depends on understanding the social and cultural needs of the targe population, and matching the market segment with the suitable intermediary segment.
All intermediaries cant sell all lines of business profitably in all markets. There should be clear demarcation in the marketing strategies of the company from this perspective. Clients should also receive price differentials for using different channels. The intermediaries need to be empowered with the right learning, training and sales tools and technology enablers. Coupled with the right product mix, this will help the insurers to survive and flourish in this competitive market scenario. So lets conduct this business with utmost economy with the spirit of trusteeship; thereby making insurance widely popular.
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Step 1
Step 2
Step 3
Step 4
Step 6
Step 7
Step 8
Step 9
Step 10
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QUESTIONNAIRE
Introduction
This survey
Awareness of Financial Planning and Consumers Perception about Insurance Industry Name: Age: Gender: Marital Status: ________________________ _________________________ MALE Married FEMALE Single
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YES
NO
Q2) Mention the names of Life insurance companies you have heard of:
(a) 10 %
(b) 5%
(c)
2.5 %
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Q4)
where do you invest/would like to invest your savings? (Rank in order of preference, 1 being most preferable)
Banks
Share Market
Insurance
Mutual Funds
Real Estate/Property
Q5) Have you taken any life insurance policy on your own life or on life of
YES
NO
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Q6) LIC
which company(s) policy(s) you have? ICICI PRUDENTIAL ING VYSYA SBI LIFE TATA AIG AVIVA KOTAK MAHINDRA OTHER ____________
BIRLA SUNLIFE BAJAJ ALLIANZ HDFC STD. LIFE MAX NEW YORK LIFE RELIANCE MET LIFE (specify)
Q7) which type of plan did you buy? Money Back Plan Endowment Plan
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Q8) What was your purpose/will be your likely purpose of taking insurance? RANK THEM (1 being most ideal)
a) PROTECTION OF FAMILY
b) TAX BENEFIT
c) INVESTMENT
d) RETIREMENT PLANNING
Q9)
Have you ever been approached for Life insurance by any of the
following (Please ), also Rank according to your preference from whom you are most likely to buy insurance?
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Q10) Do you feel opening up of the sector has created more insurance
YES
NO
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<2
2-4
4-6
>6
Q12) Do you really think insurance cover in todays scenario is not Essential?
_____________________________________________________
_____________________________________________________
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GLOSSARY
Accident Benefit
An add-on with a life policy, It compensates a policyholder in the event of death or injury by accident
Annuity
An investment option that makes a series of regular payments to an individual in exchange for a premium or a series of premium.
Asset allocation How your investments are spread across various asset classes
Bonus The amount paid as return in a with-profit policy. The bonus, expressed as a percentage of the sum assured, is generally declared every year. The amount is linked to the profits earned by the insurer. Depending on the time of withdrawal, there are two kinds of bonuses reversionary and cash. A
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reversionary bonus can be encased only on maturity of the policy; a cash bonus can be withdrawn when declared
Capital gains
Profit earned from the sale of stocks, mutual fund units and real estate. Longterm capital gains arise from assets owned for more than a year while shortterm capital gains are made from assets owned for less than a year.
Corpus
The amount of money available with a scheme for investing If already invested, the corpus is the current value of the schemes portfolio.
Cover
Another word for insurance; it also refers to the amount of insurance.
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Death benefit
The amount payable to the nominee on death of the policyholder, The amount paid is the sum assured plus benefits applicable (if any) less outstanding loans.
Endowment plans
An insurance plan that provides a policyholder risk cover and some return on investment. Usually suitable for the risk-averse
Financial planning
It covers the essential elements of a persons financial affairs and is aimed at achieving a persons financial goals.
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Group Insurance An Insurance policy taken out by employers to provide life cover to their employees. Usually the cheapest form of Insurance.
Investments Assets like fixed deposits, post office savings, bonds and stocks that are acquired for the purpose of earning a return
Liquidity The quality of assets that can be easily and quickly converted into cash without any or significant, loss in value.
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Lock-in period The period of time for which investments made in an investment option cannot be withdrawn.
Maturity date The date on which a policy term or fixed-income Investment like fixed deposit or bond comes to an end.
Money-back plans A variant of Endowment plans in which survival benefits are disbursed through the policy term, rather than in a lump sum at the end.
Net asset value (NAV) The simplest measure of how a scheme is performing, it tells how much each unit of it is worth at any point in time. A schemes NAV is its net assets (the market value of the financial securities it owns minus whatever it owes) divided by the number of units it has issued.
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Nominee The person(s) nominated by the policyholder to receive the policy benefits in the event of his death.
Pension Plan Investment products offered by Insurance companies and mutual funds that required the Investor to make defined contributions over regular periods, mostly every year. The contributions are invested according to a pre-decided investment plan. At retirement, the accumulation is paid out through regular pay-out options.
Policy The legal document issued by an insurance company to a policyholder that states the terms and conditions of an insurance contract.
Policy term The period for which an insurance policy provides cover
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Premium
The amount paid by the insured to the insurer to buy cover
Riders
Additional covers that can be added to a life policy, for a cost
Sum assured
The amount of cover taken under a life insurance policy, it is the minimum amount that will be paid on death of the policyholder during the policy term.
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Surrender value
The amount payable by the insurer to the owner of an investment-based plan in case he opts to terminate the policy after three years (the mandatory lock-in period) but before its maturity date. The surrender value will be the premia paid till date minus surrender charges and any outstanding loans due.
Term plans
A plan that provides life cover for a specified period of time, but no return on the premium paid
Vesting date
In pension plans, it is the date from which the policyholder starts receiving pension. In childrens plans, it is the date from which a child becomes the owner of a policy taken out in his name (generally, around his 18th birthday).
Will
A document that designates the assets of a person-both financial and physicalto various family members and other heirs.
Whole-life plans
Class of life insurance policies that provide cover through your lifetime.
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BIBLIOGRAPHY
Websites
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