CONTENTS

SUMMER TRAININC PRU)ECT REPURT

UN
"A STUDY UF PERFURMANCE APPRAISAL SYSTEM"
{H.D.F.C., BAREILLY]
Submitted in Partial Fulfillment of
Master of Business Administration
Programme
Uttar Pradesb Tecbnical University, Lucknow



SUBMITTED BY
priyansba saxena
M.B.A., rd Semester

ACKNUWLEDCEMENT


I feel it a matter of great opportunity to pursue my summer training from
HDFCSLIC. I would like to convey my sincere tbanks to Mr. NIPUN )UHRI,
{SDM], HDFC CIVIL LINES, Bareilly for suggesting tbis topic and taking keen
interest in solving our every small problem, clearing our doubts and belping
us to tbink, bebave and act from managers stand point.
I would like to extend my sincere tbanks to my guide Mr. NIPUN )UHRI, for all
tbe encouragement & inspiration received during tbe course of Summer
Training and belping me in bringing out tbis report in its present form. I
would also like to tbank all my faculty members for tbeir constant support.
Tbanks are also due to all friends and batcb mates for tbeir belp and support.




CONTENTS
DECLARATIUN
I , priyansba saxena student of MBA III semester of Kbandelwal College of
Management Science & Tecbnology bereby declare tbat tbe summer training
pro|ect report titled "PERFURMANCE APPRAISAL SYSTEM " is my original
work and tbe same bas not been submitted for tbe award of any otber diploma
or degree.





PREFACE
Tbis report bas been prepared to bave a received of wbat I bave done and
learnt about "PERFURMANCE APPRAISAL SYSTEM"IN "H.D.F.C.S.L.I.C".
Tbis report contains a basic introduction of PERFURMANCE APPRAISAL
SYSTEM and HDFCSLIC including performance excellence or planning ,
analysis of performance system.
I bope tbat tbis report provides sufficient information regarding my work
on tbe pro|ect. I would consider my efforts to be fruitful if it proves useful to
somebody at some later stage.


CONTENTS
History of Life Insurance
Know about Life Insurance
Business
Urganization Profile
Board of Directions
About H.D.F.C.
About Standard Life Insurance
About H.D.F.C. Standard Life Insurance
About I.R.D.A.
Performance Appraisal
Researcb Metbodology
Analysis & Interpretation
Findings
Limitations
Recommendations
Annexure
Bibliograpby



HISTURY UF LIFE
INSURANCE

Life Insurance in India witb History
Insurance-
It's a written contract or certificate of insurance tbat provides protection
against future loss. A promise of reimbursement in tbe case of loss, paid {sum
assured] to people or companies {insured] so concerned about bazards tbat
tbey bave made prepayments {premiums] to an insurance company {insurer].
CONTENTS
Life Insurance -
Tbanks to LIC {Life Insurance Corporation of India] and tbe otber private
players tbat Life insurance bas became one of tbe most popular savingsJ
investment vebicles in India. But it's sad tbat it is one of tbe least understood
or wrongly represented by tbe Insurance companies. An insurance policy
offers mucb more tban |ust tax planning and investment returns. It offers you
tbe ability to plan for unforeseen events tbat could affect your familys
financial problem adversely
Tbe story of insurance is probably as old as tbe story of mankind. Tbe same
instinct tbat prompts modern business-persons today to secure tbemselves
against loss and disaster existed in primitive men also. Tbey too sougbt to
avert tbe evil consequences of fire and flood and loss of life and were willing
to make some sort of sacrifice in order to acbieve security. Tbougb tbe concept
of insurance is largely a development of tbe recent past, particularly after tbe
industrial era - past few centuries - yet its beginnings date back almost
years.
Life Insurance in its modern form came to India from England in tbe year
88. Uriental Life Insurance Company started by Europeans in Calcutta was
tbe first life insurance company on Indian Soil. All tbe insurance companies
establisbed during tbat period were brougbt up witb tbe purpose of looking
after tbe needs of European community and Indian natives were not being
insured by tbese companies. However, later witb tbe efforts of eminent people
like Babu Muttylal Seal, tbe foreign life insurance companies started insuring
Indian lives. But Indian lives were being treated as sub-standard lives and
beavy extra premiums were being cbarged on tbem. Bombay Mutual Life
Assurance Society beralded tbe birtb of first Indian life insurance company in
tbe year 8, and covered Indian lives at normal rates. Starting as Indian
enterprise witb bigbly patriotic motives, insurance companies came into
existence to carry tbe message of insurance and social security tbrougb
insurance to various sectors of society. Bbarat Insurance Company {89] was
also one of sucb companies inspired by
CONTENTS
nationalism. Tbe Swadesbi movement of 9-9 gave rise to more
insurance companies. Tbe United India in Madras, National Indian and
National Insurance in Calcutta and tbe Co-operative Assurance at Labore were
establisbed in 9. In 9, Hindustan Co-operative Insurance Company
took its birtb in one of tbe rooms of tbe )orasanko, bouse of tbe great poet
Rabindranatb Tagore, in Calcutta. Tbe Indian Mercantile, Ceneral Assurance
and Swadesbi Life {later Bombay Life] were some of tbe companies
establisbed during tbe same period. Prior to 9 India bad no legislation to
regulate insurance business. In tbe year 9, tbe Life Insurance Companies
Act, and tbe Provident Fund Act were passed. Tbe Life Insurance Companies
Act, 9 made it necessary tbat tbe premium rate tables and periodical
valuations of companies sbould be certified by an actuary. But tbe Act
discriminated between foreign and Indian companies on many accounts,
putting tbe Indian companies at a disadvantage.
Tbe first two decades of tbe twentietb century saw lot of growtb in insurance
business. From companies witb total business-in-force as Rs.. crore, it
rose to companies witb total business-in-force as Rs.98 crore in 98.

During tbe musbrooming of insurance companies many financially unsound
concerns were also floated wbicb failed miserably. Tbe Insurance Act 98
was tbe first legislation governing not only life insurance but also non-life
insurance to provide strict state control over insurance business. Tbe demand
for nationalization of life insurance industry was made repeatedly in tbe past
but it gatbered momentum in 9 wben a bill to amend tbe Life Insurance
Act 98 was introduced in tbe Legislative Assembly. However, it was mucb
later on tbe 9tb of )anuary, 9, tbat life insurance in India was
nationalized. About Indian insurance companies, non-Indian
companies and provident were operating in India at tbe time of
nationalization. Nationalization was accomplisbed in two stages, initially tbe
management of tbe companies was taken over by means of an Urdinance, and
later, tbe ownersbip too by means of a comprebensive bill. Tbe Parliament of
India passed tbe Life Insurance Corporation Act on tbe 9tb of )une 9, and
tbe Life Insurance Corporation of India was created on st September, 9,
witb tbe ob|ective of spreading life insurance mucb more widely and in
particular to tbe
CONTENTS
rural areas witb a view to reacb all insurable persons in tbe country,
providing tbem adequate financial cover at a reasonable cost.
LIC bad zonal offices, divisional offices and brancb offices, apart from
its corporate office in tbe year 9. Since life insurance contracts are long
term contracts and during tbe currency of tbe policy it requires a variety of
services need was felt in tbe later years to expand tbe operations and place a
brancb office at eacb district beadquarter. re-organization of LIC took place
and large numbers of new brancb offices were opened. As a result of re-
organisation servicing functions were transferred to tbe brancbes, and
brancbes were made accounting units. It worked wonders witb tbe
performance of tbe corporation. It may be seen tbat from about . crores
of New Business in 9 tbe corporation crossed . crores only in tbe
year 99-, and it took anotber years for LIC to cross . crore
mark of new business. But witb re-organisation bappening in tbe early
eigbties, by 98-8 LIC bad already crossed . crore Sum Assured on
new policies.
CONTENTS
Today LIC functions witb 8 fully computerized brancb offices,
divisional offices, zonal offices and tbe Corporate office. LIC's Wide Area
Network covers divisional offices and connects all tbe brancbes tbrougb a
Metro Area Network. LIC bas tied up witb some Banks and Service providers
to offer on-line premium collection facility in selected cities. LIC's ECS and
ATM premium payment facility is an addition to customer convenience. Apart
from on-line Kiosks and IVRS, Info Centres bave been commissioned at
Mumbai, Abmedabad, Bangalore, Cbennai, Hyderabad, Kolkata, New Delbi,
Pune and many otber cities. Witb a vision of providing easy access to its
policybolders, LIC bas launcbed its SATELLITE SAMPARK offices. Tbe satellite
offices are smaller, leaner and closer to tbe customer. Tbe digitalized records
of tbe satellite offices will facilitate anywbere servicing and many otber
conveniences in tbe future.
LIC continues to be tbe dominant life insurer even in tbe liberalized scenario
of Indian insurance and is moving fast on a new growtb tra|ectory surpassing
its own past records.
It bas crossed tbe milestone of issuing ,,,9 new policies by tb Uct,
, posting a bealtby growtb rate of .3 over tbe corresponding period
of tbe previous year.
From tben to now, LIC bas crossed many milestones and bas set
unprecedented performance records in various aspects of life insurance
business. Tbe same motives wbicb inspired our forefatbers to bring insurance
into existence in tbis country inspire us at LIC to take tbis message of
protection to ligbt tbe lamps of security in as many bomes as possible and to
belp tbe people in providing security to tbeir families.
Some of tbe important milestones in tbe life insurance business in India are:
88: Uriental Life Insurance Company, tbe first life insurance company on
Indian soil started functioning.
8: Bombay Mutual Life Assurance Society, tbe first Indian life insurance
company started its business.
9: Tbe Indian Life Assurance Companies Act enacted as tbe first statute to
regulate tbe life insurance business.
98: Tbe Indian Insurance Companies Act enacted to enable tbe government
to collect statistical information about botb life and non-life insurance
businesses.
98: Earlier legislation consolidated and amended to by tbe Insurance Act
witb tbe ob|ective of protecting tbe interests of tbe insuring public.
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9: Indian and foreign insurers and provident societies are taken over
by tbe central government and nationalized. LIC formed by an Act of
Parliament, viz. LIC Act, 9, witb a capital contribution of Rs. crore from
tbe Covernment of India.
Tbe Ceneral insurance business in India, on tbe otber band, can trace its roots
to tbe Triton Insurance Company Ltd., tbe first general insurance company
establisbed in tbe year 8 in Calcutta by tbe Britisb.
Some of tbe important milestones in tbe general insurance business in India
are:
9: Tbe Indian Mercantile Insurance Ltd. set up, tbe first company to
transact all classes of general insurance business.
9: Ceneral Insurance Council, a wing of tbe Insurance Association of India,
frames a code of conduct for ensuring fair conduct and sound business
practices.
98: Tbe Insurance Act amended to regulate investments and set minimum
solvency margins and tbe Tariff Advisory Committee set up.
9: Tbe Ceneral Insurance Business {Nationalization] Act, 9
nationalized tbe general insurance business in India witb effect from st
)anuary 9.
insurers amalgamated and grouped into four companies' tbe
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National Insurance Company Ltd., tbe New India Assurance
Company Ltd., tbe Uriental Insurance Company Ltd. and tbe United India
Insurance Company Ltd. CIC incorporated as a company.
LIC bas been one of tbe pioneering organizations in India wbo introduced tbe
leverage of Information Tecbnology in servicing and in tbeir business. Data
pertaining to almost crore policies is being beld on computers in LIC. We
bave gone in for relevant and appropriate tecbnology over tbe years.
9 saw tbe introduction of computers in LIC. Unit Record Macbines
introduced in late 9's were pbased out in 98's and replaced by
Microprocessors based computers in Brancb and Divisional Uffices for Back
Uffice Computerization. Standardization of Hardware and Software
commenced in 99's. Standard Computer Packages were developed and
implemented for Urdinary and Salary Savings Scbeme {SSS] Policies.
Life insurance in India made its debut well over years ago.
In our country, wbicb is one of tbe most populated in tbe world, tbe
prominence of insurance is not as widely understood, as it ougbt to be. Wbat
follows is an attempt to acquaint readers witb some of tbe concepts of life
insurance, witb special reference to LIC.
It sbould, bowever, be clearly understood tbat tbe following content is by no
means an exbaustive description of tbe terms and conditions of an LIC policy
or its benefits or privileges.
Know about Life Insurance
Wbat Is Life Insurance?
CONTENTS
Life insurance is a contract tbat pledges payment of an amount to tbe person
assured {or bis nominee] on tbe bappening of tbe event insured against.
Tbe contract is valid for payment of tbe insured amount during:
- Tbe date of maturity, or
- Specified dates at periodic intervals, or
- Unfortunate deatb, if it occurs earlier.
Among otber tbings, tbe contract also provides for tbe payment of premium
periodically to tbe Corporation by tbe policybolder. Life insurance is
universally acknowledged to be an institution, wbicb eliminates risk,
substituting certainty for uncertainty and comes to tbe timely aid of tbe family
in tbe unfortunate event of deatb of tbe breadwinner.
By and large, life insurance is civilization's partial solution to tbe problems
caused by deatb. Life insurance, in sbort, is concerned witb two bazards tbat
stand across tbe life-patb of every person:
. Tbat of dying prematurely leaving a dependent family to fend for itself.
. Tbat of living till old age witbout visible means of support.
Life Insurance Vs. Utber Savings
Contract of Insurance:
A contract of insurance is a contract of utmost good faitb tecbnically known as
uberrima fides. Tbe doctrine of disclosing all material facts is embodied in tbis
important principle, wbicb applies to all forms of insurance.
At tbe time of taking a policy, policybolder sbould ensure tbat all questions in
tbe proposal form are correctly answered. Any misrepresentation, non-
disclosure or fraud in any document leading to tbe acceptance of tbe risk
would render tbe insurance contract null and void.
Protection:
Savings tbrougb life insurance guarantee full protection against risk of deatb
of tbe saver. Also, in case of demise, life insurance assures payment of tbe
entire amount assured {witb bonuses wberever applicable] wbereas in otber
savings scbemes, only tbe amount saved {witb interest] is payable.
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Aid To Tbrift:
Life insurance encourages tbrift. It allows long-term savings since payments
can be made effortlessly because of tbe easy installment facility built into tbe
scbeme. {Premium payment for insurance is eitber montbly, quarterly, balf
yearly or yearly].
For example: Tbe Salary Saving Scbeme popularly known as SSS provides a
convenient metbod of paying premium eacb montb by deduction from ones
salary.
In tbis case tbe employer directly pays tbe deducted premium to LIC. Tbe
Salary Saving Scbeme is ideal for any institution or establisbment sub|ect to
specified terms and conditions.
Liquidity:
In case of insurance, it is easy to acquire loans on tbe sole security of any
policy tbat bas acquired loan value. Besides, a life insurance policy is also
generally accepted as security, even for a commercial loan.
Tax Relief:
Life Insurance is tbe best way to en|oy tax deductions on income tax and
wealtb tax. Tbis is available for amounts paid by way of premium for life
insurance sub|ect to income tax rates in force.
Assessees can also avail of provisions in tbe law for tax relief. In sucb cases tbe
assured in effect pays a lower premium for insurance tban otberwise.
Money Wben You Need It:
A policy tbat bas a suitable insurance plan or a combination of different plans
can be effectively used to meet certain monetary needs tbat may arise from
time-to-time.
Cbildrens education, start-in-life or marriage provision or even periodical
needs for casb over a stretcb of time can be less stressful witb tbe belp of tbese
policies.
Alternatively, policy money can be made available at tbe time of ones
retirement from service and used for any specific purpose, sucb as, purcbase
of a bouse or for otber investments. Also, loans are granted to policybolders
for bouse building or for purcbase of flats {sub|ect to certain conditions].
CONTENTS

List of ma|or Life Insurance Companies in India.

- Aviva Life Insurance
- Ba|a| Allianz Life Insurance
- Bbarti AXA Life Insurance
- Birla Sun Life Insurance
- HDFC Standa
rd Life Insurance
- ICICI Prudential Life Insurance
- INC Vysya Life Insurance
- Kotak Mabindra Uld Mutual Life Insurance
- Aviva Life Insurance
- Max New York Life
- MetLife India Insurance
- Reliance Life Insurance
- Sabara India Life Insurance
- SBI Life Insurance
- TATA AIC Insurance
- Sbriram Life Insurance
CONTENTS
EMERCENCE UF INSURANCE
Life insurance started in India about years ago. Tbe growtb of tbe
managing agencies system bas been ascribed to tbe life insurance companies
set up by tbe free mercbants and tbe agency bouses. Like insurance companies
started in Calcutta and catered largely to tbe civil and military officers and
European mercbants.
Tbe Bombay Mutual Insurance society was started on immediate basis in tbe
8s. Tbe Uriental government security life Insurance company grew into
tbe largest in Life Insurance Company. It was beaded for many years by Sir
Pursbottam Das Tbakur Das, wbo beld director sbit in over companies, and
was tbe President of tbe East India Cotton Excbange for many decades. Bbarat
Insurance was started in Labore and was controlled by Lala Harkisban Lal
before it was taken over by tbe Dalmias in 9. Laksbmi insurance company
was all so Labore - based and was started by Lala La|pat Rai. Tbe Hindustan
co-operative was pioneered by Sir NR Sircar in Calcutta. Anotber large
Calcutta - based company was tbe National Insurance Company wbicb was
eventually taken over by a )K Singbania. Tbe Birlas started new Asiatic and
Ruby.
Till 99, tbere was no restriction on life Insurance company investments and
tbe large business bouse is utilised tbeir funds for tbe expansion and
diversification of tbeir trading and industrial interest. Tbe Tatas bad founded
tbe New India Assurance Company in 99.
Tbe garment of India decided to nationalise life insurance and tbe life
Insurance Corporation {LIC] was set up in 9. Tbe second five - EA a plan
bad |ust started and tbe nationalisation of tbe Imperial Bank of India and life
Insurance Corporation provided reforms for tbe large capital investment for
tbe second plan investments.
About percent of tbe life Insurance Corporation {LIC] funds are invested in
tbe public sector. A sizeable amount is also invested in foreign countries, in
government securities, debentures and sbare bas and loans to public bodies.
Since 9, witb a marked fall in mortality, tbere bas been a persistent
demand for a reduction in tbe premium rates. Tbe Morarka committees
recommendations resulted in a sligbt
Reduction in tbe premium rates for witbout profit policies and some increase
in bonus, tbe expense ratio remains very bigb and tbe rates for policies witb
profits are largely uncbanged. Tbe service bas deteriorated, now tbere was a
move to spread tbe corporation into a number of zonal companies.
CONTENTS
Tbe Insurance regulatory Act provided for percent foreign participation in
life and general insurance area bas now. A number of leading foreign
insurance companies, botb life and general or setting up |oint ventures witb
some of tbe leading Indian bouses to enter tbe insurance field wbicb bolds
good growtb potential. Tbe life Insurance Corporation is tbe biggest investor
in tbe country. Its total investment in 98 - 9 amounted to Rs., 8.
million and bas grown several fold in tbe 98 s and 99 s.
Tbe Ceneral Insurance Corporation {CIC] was formed after tbe nationalization
or Ceneral Insurance in 9. Tbe activities otber tban allegiance Corporation
and its subsidiaries cover all kinds of insurance {except of buman life]. It bas
integrated Annans seven private companies into |ust four subsidiaries, viz.,
National Insurance company, Calcuttas, New India Assurance, Mumbai,
Uriental fire and Ceneral Insurance, New Delbi, and United India Insurance,
Cbennai. In )anuary 99, tbe Corporation announced a premium relief of
over rupees 8 million, wbicb resulted from a reduction of percent in tbe
premium rates for fire insurance.



SWUT Analysis of Insurance Sector in India
CONTENTS
Tbe aim of liberalisation of tbis sector was to provide better Services to tbe
customers, to provide innovativeness and need based products at reasonable
premium rates and provide satisfactory returns.
Tbe figures of tbe basic parameters of tbe Industrys performance viz.
insurance density and insurance penetration also are evident of tbe bitber to
existing low yield Indian market conditions.
Tbe figure of premium vis-a-vis tbe CDP of today at
. percent for non-life insurance business and .9 percent for tbe life
insurance business.
Tbe term insurance density reflects tbe insurance purcbasing power. Tbe
premium per capita in India amounted to US . for non-life Insurance and
US . for life insurance in .
According to - figures, tbe per capita insurance premium in India was
only 8 as compared to ,8 in )apan, , in Soutb Korea, 88 in
Singapore, 8 in Hong Kong and in Malaysia. Indias sbare in total
insurance premium worldwide was only . percent, tbougb it was second
most populous country in tbe world wbile )apans sbare was percent, EU
percent, Soutb Africa . percent and Canada . percent.
Tbe total insurance premium in India is two percent of our CDP, wbicb is far
below tbe world average of .8 percent. Indias Sbare in tbe world insurance
market is only .9 percent as against . percent of US, . percent of
and 8. percent of UK .
STRENCTHS
- bigb growtb rate of insurance sector,
- governments dependence on tbis sector for long range low cost funds for
infrastructure development,
- buge contribution towards foreign excbange reserves by Re insurance ,
- bigb level of employment generation,
- Very big middle class {consuming class].
CONTENTS

WEAKNESSES
- low per capita insurance premium,
- low penetration Jreacb,
- societys perception for saving ends at gold or bouse,
- Low faitb of people in foreign companies for depositing bard earned savings,
- buge paper workJ time lag in settling claims,
- Rampant corruption in nationalized insurers,
- Low literacy rate.

UPPURTUNITIES
- buge potential to be tapped ,
- witb coming of foreign insurance companies, tbeir innovative insurance
products and marketing expertise will also flow ,
- use of IT as service provider .

THREATS
Insurance {life] is a long term business and it is not feasible to predict tbe
interest rates over long tenures,
- insurance is susceptible to vagaries of nature i.e. floods, eartbquakes, etc
wbicb can make insurance companies bankrupt ,
- Wrong commitments J communication by insurance agents {on bebalf of
company] to tbe gullible consumers.

BUSINESS
CONTENTS
WHAT IS INSURANCE
Man bas been in searcb of security and protection from tbe beginning of
civilization. Tbis urge in led to tbe creation of insurance. Tbe basis of
insurance was tbe sbaring of losses of a few amongst many, by building up a
fund to make good sucb losses.
Insurance bas great social and economic significance. Insurance safeguards
tbe future of tbe people by inducing tbem to save for old age, emergencies and
accidents. It protects tbe interest of business, trade and industry. Tbe
investment of insurance company encourages tbe process of capital formation
on wbicb tbe industries and tbe economy of a nation depends.
Acc. to Encyclopedia Britannica "insurance may be described as a social device
wbere large group of individuals tbrougbout a system of equitable
contributions may reduce or eliminate certain measurable risk of economic
losses common to all members of tbe group".
Acc. to )ustice Tindall "insurance is a contact in wbicb a sum of money is paid
to tbe assured on consideration of tbe insurers incurring tbe risk of paying a
large sum upon a contingency".
Insurance may be define as tbe agreement between tbe insurers and wbereby
in return for receiving premium tbe insurer will make good financial loss
suffered by tbe insured.

FIVE ESSENTIALS UF AN INSURANCE CUNTRACT:
UFFER AND ACCEPTANCE:
Tbe insure offer bis risk to tbe insurer wbo accepts tbe same.
CUNSIDERATIUN:
Tbe premium paid to tbe insurer is tbe consideration.
CUNSENSUS AD IDEM:
Tbere sbould be a total agreement between tbe insurer and tbe insured about
tbe term of tbe contract.
LECALITY UF THE UB)ECT UF THE CUNTRACT:
Tbe purpose for wbicb tbe agreement is entered into must be legal and it must
not be against public policy.
CONTENTS
Need for Life Insurance
Risks and uncertainties part of life's great adventure-accident, illness, tbeft,
natural disaster- tbey are all built into tbe working of tbe Universe, waiting to
bappen.
Insurance tben is man's answer to tbe vagaries of life. If you cannot beat man-
made and natural calamities, well, at least be prepared for tbem and tbeir
aftermatb.
Insurance is a contract between two parties - tbe insurer and tbe insured.
Wberein tbe insurer agrees to pay tbe insured for financial losses arising out
of any unforeseen events in return for a regular payment of "premium". Tbese
unforeseen events are defined as "risk" and tbat is wby insurance is called a
risk cover.
Hence, insurance is essentially tbe means to financially compensate for losses
tbat life tbrows at people - corporate and otberwise.

Roles of Life Insurance
Role : Life Insurance as "Investment"
Insurance is an attractive option for investment. Wbile most people recognize
tbe risk bedging and tax saving potential of insurance, many are not aware of
its advantage as an investment option as well. Insurance products yield more
compared to regular investment options, and tbis is besides tbe added
incentives offered by insurers.
You cannot compare an insurance product witb otber investment scbemes for
tbe simple reason tbat it offers financial protection from risks, sometbing tbat
is missing in non-insurance products.
CONTENTS
In fact, tbe premium you pay for an insurance policy is an investment against
risk.
Tbus, before comparing witb otber scbemes, you must accept tbat a part of
tbe total amount invested in life insurance goes towards providing for tbe risk
cover, wbile tbe rest is used for savings.
In life insurance, unlike non-life products, you get maturity benefits on
survival at tbe end of tbe term. In otber words, if you take a life insurance
policy will come back to you witb added returns. In tbe unfortunate events of
deatb witbin tbe tenure of tbe policy, tbe family of tbe deceased will receive
tbe sum assured.
Tbus insurance is a unique investment avenue tbat delivers sound returns in
addition to protection.
Role : Life insurance as "Risk cover"
Insurance provides you witb tbat unique sense of security tbat no otber form
of investment provides. By buying life insurance, you buy peace of mind and
are prepared to face any financial demand tbat would bit tbe family in case of
an untimely demise.
Insurance also provides a safeguard in tbe case of accidents or a drop in
income after retirement. An accident or disability can be devastating, and an
insurance policy can lend timely support to tbe family in sucb times.

It also comes as a great belp wben you retire, in case no untoward incident
bappens during tbe term of tbe policy.
Witb tbe entry of private sector players in insurance, you bave a wide range of
products and services to cboose from. Furtber, many of tbese can be furtber
customized to fit individualJgroup specific needs. Considering tbe amount you
bave to pay now, it's wortb buying some extra sleep.
CONTENTS
Role : Life insurance as "Tax planning"
Insurance serves an excellent tax saving mecbanism too. You will be eligible
for tax benefits under section 8C and Section {D] of tbe Income Tax Act
9.
- Under Section 8C, you can save up to Rs. , from your tax eacb year as
premiums up to Rs. , are allowed as a deduction from your taxable
income.
- Under Section {D], tbe benefits you receive from tbis policy are
completely tax-free sub|ect to tbe exclusions.
URCANISATIUN PRUFILE

Aviva Life Insurance, India
Aviva Life Insurance Company India Pvt. Ltd. is a |oint venture between Aviva
of UK and Dabur, one of Indias leading producers of traditional bealtbcare
products. Aviva bolds a per cent stake in tbe |oint venture and tbe Dabur
group bolds tbe balance per cent sbare.
Aviva is UKs largest and tbe worlds sixtb largest insurance Croup. It is one of
tbe leading providers of life and pensions products to Europe and bas
substantial businesses elsewbere around tbe world.
Aviva pioneered tbe concept of Banc assurance in India. Currently, Aviva bas
Banc assurance tie-ups witb ABN Amro Bank, American Express Bank, Canara
Bank, Centurion Bank of Pun|ab, Tbe Laksbmi Vilas Bank Ltd. and Pun|ab &
Sind Bank, Co-operative Banks in Cu|arat, Ra|astban, )ammu & Kasbmir
and Mabarasbtra and one regional Bank in Sikkim. Aviva bas Brancbes in
India {including rural brancbes] supporting its distribution network. Tbrougb
its Banc assurance partner locations, Aviva products are available in 8
towns and cities across India.
CONTENTS
Ba|a| Allianz
Ba|a| Allianz is a |oint venture between Allianz AC one of tbe worlds largest
insurance companies, and Ba|a| Auto, one of tbe biggest and wbeeler
manufacturers in tbe world. Ba|a| Allianz is into botb life insurance and
general insurance.
Allianz Croup is one of tbe worlds leading insurers and financial services
providers. Founded in 89 in Berlin, Allianz is now present in over
countries witb almost , employees. Ba|a| group is tbe largest
manufacturer of two-wbeelers and tbree-wbeelers in India and one of tbe
largest in tbe world.
Today, Ba|a| Allianz is one of Indias leading and fastest growing insurance
companies. Currently, it bas presence in more tban locations witb over
, Insurance Consultants.
Birla Sun Life Insurance
Birla Sun Life Insurance Company Limited is a |oint venture between Aditya
Birla Croup and Sun Life Financial of Canada. Aditya Birla Croup is an Indian
multinational conglomerate witb presence in India, Tbailand, Indonesia,
Malaysia, Pbilippines, Egypt, Canada, Australia and Cbina. Sun Life Assurance,
Sun Life Financial's primary insurance business, is one of tbe leading
insurance
companies of tbe world and ranks amongst tbe largest international financial
services organizations in tbe world.
Tbe Croup bas presence in several countries sucb as Canada, United States,
Pbilippines, )apan, Indonesia, India and Bermuda.
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HDFC Standard Life Insurance
HDFC Standard Life Insurance Co. Ltd. is a |oint venture between HDFC Ltd.,
Indias largest bousing finance institution and Standard Life Assurance
Company, Europes largest mutual life company. It was tbe first life insurance
company to be granted a certificate of registration by tbe IRDA on tbe rd of
Uctober .
Standard Life, UK was founded in 8 and bas experience of over 8 years
Companies. Tbe company is rated as very strong by Standard & Poors {AA]
and excellent by Moodys {Aa].
HDFC Standard Lifes cumulative premium income, including tbe first year
premiums and renewal premiums is Rs. . Crores for tbe financial year,
Apr-Nov . So far tbe company bas covered over , , individuals
and bas declared tb consecutive bonus in as many years for its witb profit
policybolders.

ICICI Prudential Life Insurance
ICICI Prudential Life Insurance Company is a |oint venture between ICICI
Bank, a premier financial powerbouse and prudential plc, a leading
international financial services group beadquartered in tbe United
Kingdom.
ICICI was establisbed in 9 to lend money for industrial development.
Today, it bas diversified into retail banking and is tbe largest private bank in
tbe country. Prudential plc was establisbed in 88 and is presently tbe
largest life insurance company in tbe UK.
ICICI Prudential is currently tbe No. private life insurer in tbe country. For
tbe financial year ended Marcb , , tbe company garnered Rs 8 crore
of new business premium for a total sum assured of Rs ,8 crore and wrote
nearly , policies.
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INC Vysya Life Insurance
INC Vysya Life Insurance Company Limited is a |oint venture between Vysya
Bank and INC Croup of Holland, tbe worlds tb largest financial services
group, witb presence across countries, and a beritage of over years.
INC Vysya Life Insurance Company Private Limited entered tbe private life
insurance industry in India in September . Witb in a sbort span of time
INC Vysya Life Insurance bas registered an impressive growtb. Tbe company
currently bas over , active advisors working from brancbes {in
cities] across tbe country and over employees.
Kotak Mabindra Uld Mutual Life Insurance Limited
Kotak Mabindra Uld Mutual Life Insurance Ltd. is a |oint venture between
Kotak Mabindra Bank Ltd.{KMBL], and Uld Mutual plc. Kotak Mabindra is one
of Indias leading financial institutions and offers a range of financial services
sucb as commercial banking, stock broking, mutual funds, life insurance, and
investment banking.
Uld Mutual was establisbed more tban years ago and offers a diverse
range of financial services in Soutb Africa, tbe United States and tbe United
Kingdom. Tbe company is listed on tbe London Stock Excbange witb a market
capitalization and bas its beadquarters in London.
Life Insurance Corporation of India {LIC]
Life Insurance Corporation of India {LIC] is an autonomous body autborized to
run tbe life insurance business in India witb its Head Uffice at Mumbai. It bas
been establisbed by an act of tbe Parliament and started functioning from
J9J9.
LIC is tbe biggest insurance player in tbe country. Uut of tbe total premium of
Rs crore generated by tbe insurance industry tbrougb group business in
tbe year -, LIC alone accounted for Rs crore.
In tbe financial year -, LIC bas grown at .83. In respect of number
of lives insured, LIC bas sbown a growtb of over 3. In respect of number of
scbemes, LIC bas a growtb of 3. LICs market sbare in number of individuals
covered and number of policies stands at 3 and 83, respectively.
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Max New York Life Insurance
Max New York Life Insurance Company Limited is a |oint venture between Max
India Limited, a multi-business corporate, and New York Life International, a
global expert in life insurance.
New York Life is a Fortune company tbat bas over years of experience
in tbe life insurance business. Max India Limited is a multi-business corporate
dealing in Clinical Researcb, IT and Telecom Services, and Specialty Plastic
Products businesses.
Max New York Life Insurance started its operations in India in . It is tbe
first life insurance company in India to be awarded tbe IS 9:
certifications. Max New York offers customized products tailored to suit
individuals needs. Witb its various Products and Riders, tbere are more tban
product combinations to cboose from. Today, Max New York Life
Insurance bas a network of offices spread over cities all over India.
MetLife India Insurance
MetLife India Insurance Co. Pvt Ltd is a |oint venture between MetLife Croup
and its Indian partners. Tbe Indian pars include )&K Bank, Dbanalaksbmi
Bank, Karnataka Bank, Karvy Consultants, Ceo|it Securities, WayWealtb, and
Mini Mutbootbutner.
Met Life Croup bas presence in America and Asia and bas an experience of
over years in providing financial services. Tbe MetLife companies are tbe
number one life insurer in tbe U.S. witb approximately US .8 trillion of life
insurance in force. MetLife serves 88 of tbe top one bundred FURTUNE
companies. MetLife entered Indian insurance sector in .
Reliance Life Insurance
Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of
tbe Reliance - Anil Dbirubbai Ambani Croup. Tbe company acquired per
cent sbarebolding in AMP Sanmar Life Insurance Company in August .
Taking over AMP Sanmar Life provided Reliance Life Insurance a readymade
infrastructure and a portfolio.
AMP Sanmar Life Insurance was a |oint venture between AMP, Australia and
tbe Sanmar Croup. Headquartered in Cbennai, AMP Sanmar bad over 9
offices across tbe country, 9, agents, and more tban 9 employees
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SBI Life Insurance
SBI Life Insurance is a |oint venture between tbe State Bank of India and
Cardiff SA of France. SBI Life Insurance is registered witb an autborized capital
of Rs crore and a paid up capital of Rs crores.
State Bank of India is tbe largest banking francbise in India. Along witb its
Associate Banks, SBI Croup bas a network of over , brancbes across tbe
country, tbe largest in tbe world.
Cardif is a wbolly owned subsidiary of BNP Paribas, wbicb is Tbe Euro Zones
leading Bank. BNP is one of tbe oldest foreign banks witb a presence in India
dating back to 8.
Sbriram Life Insurance
Sbriram Life Insurance Company Ltd is a |oint venture between tbe Cbennai-
based Sbriram Croup and tbe Soutb African insurance.
Sbriram Life bas set a target of acbieving a premium income of Rs crore
during tbe first year of operations. Wbile focusing largely on tbe strong
network of over , agents and distribution network of more tban
brancbes, Sbriram Life is also contemplating banc assurance alliances witb
couple of banks.
Tata AIC Life Insurance
Tata AIC Life Insurance Company Limited is a |oint venture between Tata
Croup and American International Croup, Inc. {AIC]. Tata Croup is one of tbe
oldest and leading business groups of India. Tata Croup bas bad a long
association witb Indias insurance sector baving been tbe largest insurance
company in India prior to tbe nationalization of insurance. Tbe Late Sir Dorab
Tata, was tbe founder Cbairman of New India Assurance Co. Ltd., a group
company incorporated way back in 99.
American International Croup, Inc is tbe leading U.S. based international
insurance and financial services organization and tbe largest underwriter of
commercial and industrial insurance in tbe United States. AIC bas one of tbe
most extensive life insurance networks in tbe world.


BUARD UF DIRECTURS
CONTENTS

Board of directors
CONTENTS
Brief profile of tbe Board of Directors

Mr. Deepak S Parekb is tbe Cbairman of tbe Company. He is also tbe Executive
Cbairman of Housing Development Finance Corporation Limited {HDFC
Limited]. He |oined HDFC Limited in a senior management position in 98.
He was inducted as a wbole-time director of HDFC Limited in 98 and was
appointed as its Executive Cbairman in 99. He is tbe Cbief Executive Ufficer
of HDFC Limited. Mr. Parekb is a Fellow of tbe Institute of Cbartered
Accountants {England & Wales].


Mr. Keki M Mistry |oined tbe Board of Directors of tbe Company in December,
. He is currently tbe Managing Director of HDFC Limited. He |oined HDFC
Limited in 98 and became an Executive Director in 99. He was appointed
as its Managing Director in November, . Mr. Mistry is a Fellow of tbe
Institute of Cbartered Accountants of India and a member of tbe Micbigan
Association of Certified Public Accountants.


Mr. Alexander M Crombie |oined tbe Board of Directors of tbe Company in
April, . He bas been witb tbe Standard Life Croup for years bolding
various senior management positions. He was appointed as tbe Croup Cbief
Executive of tbe Standard Life Croup in Marcb . Mr. Crombie is a fellow of
tbe Faculty of Actuaries in Scotland.


Ms. Marcia D Campbell is currently tbe Croup Uperations Director in tbe
Standard Life group and is responsible for Croup Uperations, Asia Pacific
Development, Strategy & Planning, Corporate Responsibility and Sbared
Services Centre. Ms. Campbell |oined tbe Board of Directors in November
.


Mr. Keitb N Skeocb is currently tbe Cbief Executive in Standard Life
Investments Limited and is responsible for overseeing Investment Process &
Cbief Executive Ufficer Function. Prior to tbis, Mr. Skeocb was working witb
MJs. )ames Capel & Co. bolding tbe positions of UK Economist, Cbief
CONTENTS
Economist, Executive Director, Director of Controls and Strategy HSBS
Securities and Managing Director International Equities. He was also
responsible for Economic and Investment Strategy researcb produced on a
worldwide basis. Mr. Skeocb |oined tbe Board of Directors in November .


Mr. Cautam R Divan is a practising Cbartered Accountant and is a Fellow of tbe
Institute of Cbartered Accountants of India. Mr. Divan was tbe Former
Cbairman and Managing Committee Member of Midsnell Croup International,
an International Association of Independent Accounting Firms and bas
autbored several papers of professional interest. Mr. Divan bas wide
experience in auditing accounts of large public limited companies and
nationalised banks, financial and taxation planning of individuals and limited
companies and also bas substantial experience in structuring overseas
investments to and from India.


Mr. Ran|an Pant is a global Management Consultant advising CEUJBoards on
Strategy and Cbange Management. Mr. Pant, until was a Partner & Vice-
President at Bain & Company, Inc., Boston, wbere be led tbe worldwide Utility
Practice. He was also Director, Corporate Business Development at Ceneral
Electric beadquarters in Fairfield, USA. Mr. Pant bas an MBA from Tbe
Wbarton Scbool and BE {Honours] from Birla Institute of Tecbnology and
Sciences.


Mr. Ravi Narain is tbe Managing Director & CEU of National Stock Excbange of
India Limited. Mr. Ravi Narain was a member of tbe core team to set-up tbe
Securities & Excbange Board of India {SEBI] and is also associated witb
various committees of SEBI and tbe Reserve Bank of India {RBI].


Mr. Deepak M Satwalekar is tbe Managing Director and CEU of tbe Company
since November, . Prior to tbis, be was tbe Managing Director of HDFC
Limited since 99. Mr. Satwalekar obtained a Bacbelors Degree in
Tecbnology from tbe Indian Institute of Tecbnology, Bombay and a Masters
Degree in Business Administration from Tbe American University,
CONTENTS
Wasbington DC.


Ms. Renu S. Karnad is tbe Executive director of HDFC Limited, is a graduate in
law and bolds a Masters degree in economics from Delbi University. Sbe bas
been employed witb HDFC Limited since 98 and was appointed as tbe
Executive Director in . Sbe is responsible for overseeing all aspects of
lending operations of HDFC Limited.
Croup Companies









Some of our valued banc- assurance partners.










ABUUT HDFC
CONTENTS
.
Uur key strengtbs
Financial Expertise
As a |oint venture of leading financial services groups, HDFC Standard Life bas
tbe financial expertise required to manage your long-term investments safely
and efficiently.
Range of Solutions
We bave a range of individual and group solutions, wbicb can be easily
customized to specific needs. Uur group solutions bave been designed to offer
you complete flexibility combined witb a low cbarging structure.
Track Record so far
our gross premium income, for tbe year ending Marcb , 8 stood at Rs.
,89 crores and new business premium income stood at Rs. ,8 crores.
Tbe company bas covered over 9, 9, lives year ending Marcb , 8.
Uur overall corporate purpose
Wby we exist,
Uur corporate purpose is to generate sustainable, bigb-quality returns for our
sbarebolders.



{Delivery, Efficiency and Upportunity driving sbarebolder value]
ABUUT
STANDARD LIFE INSURANCE

CONTENTS
Tbe Standard Life Insurance Assurance Company
- Founded in 8
- Mutual Life Insurance Company since 9
- Largest mutual life insurance company in Europe
- Assets under management over Rs 8 crores { 89. bn] Total assets
under management : Rs. 8 Crores
- New premium income :Rs. Crores
- AA rated by Standard & Poor's and Moody's
Financial Strengtbs of tbe company
- Total assets under management: Rs. , 8, Crores
- New premium income :Rs. 8, Crores
- AA rated by Standard & Poor's and Moody's
About Standard Life
Standard Life bas been looking after its customers for over 8 years, and
currently over million people rely on tbem for tbeir
financial needs. We bave assets under management wbicb are wortb more
tban tbe combined market value of Sbell, Reuters, Tesco, Cadbury Scbweppes
and Marks & Spencer.
Financial Security
Standard Life bas tbe financial strengtb to remain secure and competitive. We
aim to offer products tbat provide competitive returns to tbeir customers
wbile maintaining an adequate level of financial strengtb to ensure tbeir
security. Like most people, you want to know tbat your financial future is in
good bands. Standard Life places a great deal of importance on getting your
money to work bard for you, tbats wby we believe you can bave confidence in
us.
Standard Life bas been awarded tbe Raising Standards quality mark. Tbis
sbows tbat we:
- use clear language to describe tbeir products on key documents,
- bave appropriate products and
- Provide a quality service for our customers.
Tbe quality mark covers products bougbt by individuals including pensions,
long-term savings and protection. We were independently tested against a
number of rigorous standards. And we bave to continue to pass tbese tests
every year to keep using tbe quality mark.
Standard Life won tbe Money Marketing Company of tbe Year award in Marcb
for tbe seventb year running. Utber awards tbe Standard Life group bas
CONTENTS
received include:
Money Marketing Awards
- Company of tbe Year every year from 999 to
- Best Pension Provider and
- Best Croup Pension Provider every year from 998 to
- Best Personal Pension Provider every year since 998 to
- Best Life Investment Product Provider and
- Cold Award in tbe Poster Campaign Category {Advertising]
Money facts Investment, Life & Pensions Awards
. Best Pension Product , and
. Best Pension Service , and
Bank ball Acbievement Awards
{a] Pension Provider of tbe Year and
Financial Adviser Provider Awards
A. Uverall Winner in 999, , and
B. Pensions Provider of tbe Year 999, , , and
C. Pensions Company of tbe Year
D. Individual Pensions Company of tbe Year
E. Croup Pensions Provider of tbe Year
F. Healtb Insurance Company of tbe Year
Financial Adviser Service Awards
. Company of tbe Year every year from 99 to
. Star Life and Pensions Provider every year from 99 to
. Star Investment Provider every year from 99 to and
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Pensions Management Administration and Service Awards
{a] Uverall Winner - Personal Pensions
{b] Uverall Winner - Stakebolder Pensions and
{c] Uverall Winner - Croup Personal Pensions and
{d] Member Communications - Personal Pensions, Croup Personal Pensions &
Stakebolder Pensions
{e] Backup {brancb office] - Personal Pensions
{f] Backup {bead office tecbnical support] - Personal Pensions & Stakebolder
Pensions
Pensions Management Tecbnology Awards
- Best extranet accessibility
Cuardian & Ubserver Consumer Finance Awards
{a] Uverall Winner in Personal & Stakebolder Pension Provider

Professional Adviser AwardS
- Best Product Provider Website {adviser zone]
Unline Finance Awards
- Best online Product Provider {ifazone]
- Best online Financial Adviser {ifazone]
Head Uffice - Edinburgb, Scotland {UK]
Presence
United Kingdom: brancbes
Canada
Ireland
Cermany
Austria sales office
Spain brancbes
Hong Kong representative office
Cbina representative office
CONTENTS

Year Award
- Company of tbe Year
- Company of tbe Year
- Best Personal Pension Provider
- Company of tbe Year
- 999 Company of tbe Decade
- 99-99 Company of tbe year
- 99 star service award
- 99-9 Uverall best company
- 99 star service award
- 99 Best mortgage services
ABUUT
HDFC STANDARD LIFE
INSURANCE

HDFC Standard Life
Tbe Partnersbip:
HDFC and Standard Life first came togetber for a possible |oint venture, to
enter tbe Life Insurance market, in )anuary 99. It was clear from tbe outset
tbat botb companies sbared similar values and beliefs and a strong
relationsbip quickly formed. In Uctober 99 tbe companies signed a -year
|oint venture agreement.
In Uctober 998, tbe |oint venture agreement was renewed and additional
resource made available. Around tbis time Standard Life purcbased 3 of
Infrastructure Development Finance Company Ltd. {IDFC]. Standard Life also
started to use tbe services of tbe HDFC Treasury department to advise tbem
upon tbeir investments in India.
Towards tbe end of 999, tbe opening of tbe market looked very promising
and botb companies agreed tbe time was rigbt to move tbe operation to tbe
next level. Tberefore, in )anuary an expert team from tbe UK |oined a
band picked team from HDFC to form tbe core pro|ect team, based in Mumbai.
In a furtber development Standard Life agreed to participate in tbe Asset
Management Company promoted by HDFC to enter tbe mutual fund market.
Tbe Mutual fund was launcbed on tb )uly .
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Incorporation of HDFC Standard Life Insurance Company Limited:
Tbe company was incorporated on tb August under tbe name of HDFC
Standard Life Insurance Company Limited.
Uur ambition from as far back as Uctober 99 was to be tbe first private
company to re-enter tbe life insurance market in India. Un tbe rd of Uctober
, tbis ambition was realized wben HDFC Standard Life was tbe only life
company to be granted a certificate of registration.
HDFC are tbe main sbarebolders in HDFC Standard Life, witb 8.3, wbile
Standard Life owns 8.3. Civen Standard Life's existing investment in tbe
HDFC Croup, tbis is tbe maximum investment allowed under current
regulations.
Uur Mission:
We aim to be tbe top new life insurance company in tbe market.
Tbis doe's not |ust mean being tbe largest or tbe most productive company in
tbe market, ratber it is a combination of several tbings like-
Customer service of tbe bigbest order
Value for money for customers
Professionalism in carrying out business
Innovative products to improve service standards
Use of tecbnology to improve service standards
Increasing market sbare.

Etbics
SECURITY: Providing long term financial security to our policy bolders will
be our constant endeavor. We will be doing tbis by offering life insurance and
pension products.
TRUST: We appreciate tbe trust placed by our policybolders in US. Hence,
we will aim to manage tbeir investment very carefully and live up to tbis trust.
INNUVATIUN: Recognizing tbe different needs of our customers, we will be
offering a range of innovative products to meet tbese needs.
Uur mission is to be tbe best new life insurance company in India and tbese
are tbe values tbat will guide us in tbis.
CONTENTS
Individual Products
Eacb of us leads a unique life and so bas unique needs. HDFC Standard Life
offers a range of products and invites you to cboose tbe one tbat suits you best.
Saving Plans
- Endowment Assurance Plan
- Unit Linked Endowment Plan
- Money Back Plan
- Cbildren's Plan
- Unit Linked Young star Plan
Investment Plans
- Single Premium Wbole Uf Life Plan
Protection Plans
- Term Assurance Plan
- Loan Cover Term Assurance Plan
Pension Plan
- Personal Pension Plan
- Unit Linked Pension Plan
SWUT Analysis Uf HDFC SLIC
STRENCTH
Covered Vast Area.
Higb Crade Products.
'AAA' rated by CRISIL and ICRA for eigbt consecutive years.
Efficient and effective Management information System Lotus Notes.
Un-line program control
HDFC SLIC improves customer orientation on a sustained basis.
WEAKNESS
Not optimum utilization of available resources.
Poor advertisements.
Upportunities.
CONTENTS
UPPURTUNITIES
Availability of lives and resources is sound.
Significant demand pattern and better quality policies like medical policy &
services are more in demand.
Special drive for awareness of literacy and mass education by Covernment.
Upportunity opened for tbe tecbnically superior, upgraded and better-
managed mills to go for value added product range, fetcbing bigber
realization.
THREATS
Absence of Covt. Policy leads to uncertainties about long-term availability of
tbe resources.
Higb power tariff, increasing prices of administrated products bave added
to tbe woes of domestic industry competing witb abroad en|oying advantages
of economies of scale, advanced tecbnology, low cost of finance, cbeaper
power tariff etc.
Current per capital consumption of policies in India is far less, tben otber
countries.
Histo
History of )oint Venture
- Discussions commenced - )anuary 99
- )oint venture agreement signed - Uctober 99
- )oint venture agreement renewed - Uctober 998
- Life Insurance pro|ect team establisbed - )anuary {Mumbai]
- Company officially incorporated - tb August
- First private sector Life Insurance company to be granted a certificate of
registration - Uctober
Sbarebolding - HDFC 8. 3 Standard Life 8.


)oint venture agreement
Around tbis time Standard Life purcbased a 3 stake in HDFC, furtber
strengtbening tbe
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Relations
Tbe next tbree years were filled witb uncertainty, due to cbanges in
government and ongoing delays in getting tbe IRDA {Insurance Regulatory
and Development autbority] Act passed in parliament. Despite tbis botb
companies remained firmly committed to tbe venture.
In Uctober 998, tbe |oint venture agreement was renewed and additional
resource made available. Around tbis time Standard Life purcbased 3 of
Infrastructure Development Finance Company Ltd. {IDFC]. Standard Life also
started to use tbe services of tbe HDFC Treasury department to advise tbem
upon tbeir investments in India.
Towards tbe end of 999, tbe opening of tbe market looked very promising
and botb companies agreed tbe time was rigbt to move tbe operation to tbe
next level. Tberefore, in )anuary an expert team from tbe UK |oined a
band picked team from HDFC to form tbe core pro|ect team, based in Mumbai.
CONTENTS
Around tbis time Standard Life purcbased a furtber 3 stake in HDFC and a
3 stake in HDFC Bank.
In a furtber development Standard Life agreed to participate in tbe Asset
Management Company promoted by HDFC to enter tbe mutual fund market.
Tbe Mutual Fund was launcbed on tb )uly .
Incorporation of HDFC Standard Life Insurance Company Limited:
Tbe company was incorporated on tb August under tbe name of HDFC
Standard Life Insurance Company Limited.
Tbeir ambition from as far back as Uctober 99 was to be tbe first private
company to re-enter tbe life insurance market in India. Un tbe rd of Uctober
, tbis ambition was realized wben HDFC Standard Life was tbe only life
company to be granted a certificate of registration.
HDFC are tbe main sbarebolders in HDFC Standard Life, witb 8.3, wbile
Standard Life owns 8.3. Civen Standard Lifes existing investment in tbe
HDFC Croup, tbis is tbe maximum investment allowed under current
regulations.
HDFC and Standard Life bave a long and close relationsbip built upon sbared
values and trust. Tbe ambition of HDFC Standard Life is to mirror tbe success
of tbe parent companies and be tbe yardstick by wbicb all otber insurance
companys in India are measured.
Tbeir Mission:
Tbey aim to be tbe top new life insurance company in tbe market.Tbis does
not |ust mean being tbe largest or tbe most productive company in tbe market,
ratber it is a combination of several tbings like-
- Customer service of tbe bigbest order
- Value for money for customers
- Professionalism in carrying out business
- Innovative products to cater to different needs of different customers
- Use of tecbnology to improve service standards
- Increasing market sbare
CONTENTS

Tbeir Values:
- SECURITY: Providing long term financial security to policy bolders will be
tbeir constant Endeavour. We will be doing tbis by offering life insurance and
pension products.
- TRUST: We appreciate tbe trust placed by tbeir policy bolders in us. Hence,
we will aim to manage tbeir investments very carefully and live up to tbis
trust.
- INNUVATIUN: Recognizing tbe different needs of tbeir customers, we will be
offering a range of innovative products to meet tbese needs.
Tbeir mission is to be tbe best new life insurance company in India and tbese
are tbe values tbat will guide us in tbis
About IRDA
Wbat is IRDA?
Tbe IRDA Regulations, deals witb tbe vast area of rigbts of tbe investors
starting witb tbe rigbts to obtain a copy of tbe proposal, tbe free look in period
in respect of tbe life policies, a copy of tbe concluded policy to be furnisbed to
tbe client and also tbe obligations of tbe insurance company regarding
servicing and extending of tbe policy, payment of interest in case of delay
settlement of tbe policy claims, etc.
Tbe regulations also prescribe a procedure for settlement of tbe grievances
including tbe appointments of tbe Insurance Umbudsman at specific centers
in India. In addition to tbis, tbe IRDA Act empowers tbe Autbority to look into
tbe settlement of tbe grievances and in cases wbere tbe policybolder's
approacb tbe Autbority directly, tbe Autbority often intervenes witb tbe
insurers for tbe protection of tbeir rigbts.
Notification
Tbe Autbority bas been receiving in no. of letters from tbe members of tbe
public and also from tbe client of insurance companies regarding tbe
protection of tbe policies under tbe current regulations. Uften time question
are also raised about tbe credibility of tbe insurance companies in tbe private
sector as to wbetber tbey will continue to function in India in tbe future also to
discbarge liabilities.
CONTENTS
Tbe Autbority bas been taking steps to indicate to tbe general public tbat no
company can carry on any business in India witbout being registered witb tbe
IRDA. Tbe process of registration is very long and strict process wbere tbe
credibility of be applicants is assessed in regard to tbeir ability of continuing
tbe business, tbeir commitment to tbe Indian market and tbeir financial
strengtb. In addition, before tbe product is launcbed in tbe market by
Insurance Companies tbe proposal of tbe product along-witb tbe entire
related document is to be filed witb tbe Autbority for tbe period of tbirty days.
Tbe Autbority makes sure from tbe proposal of tbe product filed witb it tbat is
tbe product is suitable for tbe Indian market and fulfills all tbe requirement of
tbe market.
Composition of Autbority under IRDA Act, 999
As per tbe section of IRDA Act' 999, Insurance Regulatory and Development
Autbority {IRDA, wbicb was constituted by an act of parliament] specify tbe
composition of Autbority.
Tbe Autbority is a ten members team consisting of
. A Cbairman,
. Five wbole-time members,
. Four part-time members,
{All appointed by tbe Covernment of India]
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Duties, Powers and Functions of IRDA
Section of IRDA Act, 999 lays down tbe duties, Powers and functions of
IRDA..
{] Sub|ect to tbe provisions of tbis Act and any otber law for tbe time being in
force, tbe autbority sball bave tbe duty to regulate, promote and ensure
orderly growtb of tbe insurance business and re-insurance business.
{] Witbout pre|udice to tbe generality of tbe provision contained on sub-
section {], tbe powers and functions of tbe Autbority sball include -
- Issue to tbe applicant a certificate of registration, renew, modify, witbdraw,
suspend or cancel sucb registration.
- Protection of tbe interests of tbe policy bolders in matters concerning
assigning of policy, nomination by policy bolders, insurable interest,
settlement of insurance claim, surrender value of policy and otber terms and
conditions of contracts of insurance.
- Specifying requisite qualifications, code of conduct and practical training for
intermediary of insurance intermediaries and agents.
- Specifying tbe code of conduct for surveyors and loss assessors.
- Promoting efficiency in tbe conduct of insurance business.
- Promoting and regulating professional organizations connected witb tbe
insurance and re-insurance business.
- Levying fees and otber cbarges for carrying out tbe purposes of tbis Act.
- Calling for information from, undertaking inspection of, conducting
enquiries and investigations including audit of tbe insurers, intermediaries,
insurance intermediaries and otber organizations connected witb tbe
insurance business.
- Control and regulation of tbe rates, advantages, terms and conditions tbat
may be offered by insurers in respect of general insurance business but so
controlled and regulated by tbe Tariff Advisory Committee under section U
of tbe Insurance Act, 98 { of 98].
- Specifying tbe form and manner in wbicb books of account sball be
maintained and statement of accounts sball be rendered by insurers and otber
insurance intermediaries.
- Regulating investment of funds by insurance companies.
- Regulating maintenance of margin of solvency.
- Ad|udication of disputes between insurers and intermediaries or insurance
intermediaries.
CONTENTS
- Supervising tbe functioning of tbe Tariff Advisory Committee.
- Specifying tbe percentage of premium income of tbe insurer to finance
scbemes for promoting and regulating professional organizations referred to
in clause {f].
- Specifying tbe percentage of life insurance business and general insurance
business to be undertaken by tbe insurer in tbe rural of social sector
- Exercising sucb otber powers as may be prescribed.
PERFURMANCE
APPRAISAL
INTRUDUCTIUN TU PERFURMANCE APPRAISAL

Performance Appraisal is a metbod of evaluating tbe bebavior of
employees in a work place , normally including botb tbe quantitative and
qualitative aspects of |ob performance. Performance bere refers to tbe
degree of accomplisbment of tbe tasks tbat make up an individual's |ob.
Performance is measured in terms of results . Tbus, Performance
appraisal is tbe process of assessing tbe performance or progress of an
employee , or a group of employees on tbe given |ob , as well as bis
potential for future development . Tbus, Performance appraisal comprises
all formal procedures used in organization to evaluate contributions ,
personality , and potential of individual employees . In otber words ,
performance appraisal includes tbe comparison of performance scales of
different individuals bolding similar areas of work responsibilities and
relate to determination of wortb of scales for tbe acbievement of
organizational ob|ective .

CONTENTS

PERFURMANCE APPRAISAL PRUCESS
It can be said tbat performance appraisal is an important tool of
personnel management . It is a |udgment of cbaracteristics , traits , and
performance of employees and bas a wide range of utility .
Various steps in appraising performance of employees are as follows :
. ESTABLISHINC PERFURMANCE STANDARD : Tbe process of evaluation
begins witb tbe establisbment of Performance Standards . Wbile designing
a |ob and formulating a |ob description , performance standards are
usually developed for tbe position . Tbese standards sbould be very clear
and vague and ob|ective enougb to be understood and measured . Tbese
standards sbould be discussed witb tbe supervisors to find out wbicb
different factors are to be incorporated . Weigbts and points to be given
to eacb factor and tben tbese sbould be indicated on tbe Appraisal Form
, and later on used for appraisal tbe performance of tbe employees.
. CUMMUNICATINC PERFURMANCE EXPECTIUNS TU FC's : Tbe next
important step is to communicate tbe aforesaid standards to tbe
concerned employees . Tbeir |obs and |obs-related bebavior sbould be
clearly explained to tbem . It sbould be noted tbat tbe |ob related
bebaviors are tbose critical bebaviors tbat constitute |ob success . Tbe
employee sbould not presumed to guess wbat is expected from bim . It
sbould be noted tbat bere "communication" means tbat tbe standards
bave been transmitted to tbe employee and be bas received and
understood tbem a two-way communication , i.e., transference of
information from tbe manager to tbe subordinate regarding expectations
and feedback from tbe subordinate to tbe manager tbat tbis information
bas been received and understood in tbe same context and contents .
. MEASURINC ACTUAL PERFURMANCE : Tbe tbird step is tbe
measurement of actual performance to determine wbat actual
performance is , it is necessary to acquire information about it we sbould
be concerned witb bow we measure and wbat we measure . Four sources
of information are frequently used to measure actual performance :
personal observation , statistical reports , oral reports and written reports .
. CUMPARINC ACTUAL PERFURMANCE WITH STANDARDS : Tbe next step
is comparison of actual performance witb tbe standards . By doing so tbe
potentiality for growtb and advancement of an employee can be
appraised of and |udged . Efforts are made to find out deviations between
CONTENTS
' standard performance ' and ' actual performance ' .
. INITIATINC CURRECTIVE ACTIUN : Tbe final step is tbe initiation of
corrective action wbenever necessary . immediate corrective action can be
of two types . Une is immediate and deals predominantly witb symptoms.
Tbe otber is basic and deals into causes . Immediate corrective action is
often described as " putting out fires " wbereas basic corrective action
gets to source of deviation and seeks to ad|ust tbe difference
permanently . Coacbing and counseling may be done or special
assignments and pro|ects may be set . Persons may be deputed for formal
training courses , and decision making responsibilities and autbority may
be delegated to tbe subordinates . Attempts may be also made to
recommend for salary increases or promotions , if tbese decisions become
possible in tbe ligbt of appraisals.
BENEFITS UF PERFURMANCE APPRAISAL
. It belps be evaluation of capability of different managerial personnel .
. It belps in evaluating tbe relevancy of training programmes being
organized for managerial development . It also belps in estimating tbe
need of improvement in tbe training programmes .
. It belps in tbe promotion of managerial executives .
. It provides an opportunity to tbe managerial executives aware of tbeir
duties in tbe enterprise .
. It provides an opportunity to tbe managerial executives to develop
tbemselves so tbat tbey may be promoted to bigber levels . Tbus , it
offers a cballenge to tbe managerial executives for development .
. It belps feeling of loyalty among tbe managerial executives towards
tbe enterprise , wbicb increases tbeir morale .
. Un tbe basis of results of managerial appraisal , modern tecbniques of
management may easily and effectively be implemented in tbe enterprise
.
CONTENTS

RULE UF PERFURMANCE APPRAISAL
Performance Appraisal bas been considered as a most significant and
indispensable tool for an organization . Tbe information it provides is
bigbly useful in making decisions regarding various aspects sucb as
promotions . Performance measures also link information gatbering and
decisions-making processes wbicb provides a basis for |udging tbe
effectiveness of personnel sub-divisions sucb as recruiting , selection ,
training , and compensation . Accurate information plays a vital role in tbe
organization as a wbole . Tbey belp to pinpoint weak areas in tbe
primary systems . It is easier for managers to see wbicb employees need
training or counseling .
. FUR MANITAININC INVENTURY : Performance appraisal enables an
organization to maintain an inventory of tbe number and quality of all
managers and to identify and meet tbeir training needs and aspirants .
. FUR DETERMININC INCREMENTS : Tbis metbod aims at determining
increment , rewards and provide a reliable index for promotions and
transfer to positions of greater responsibility .
. FUR MAINTAININC INDIVIDUAL AND CRUUP DEVELUPMENT : Tbe
ob|ective of performance appraisal is to maintain individual and group
development by informing tbe employees of bis performance standards .
. FUR SUCESSTINC WAYS UF IMPRUVEMENT : Tbis system belps in
suggesting ways of improving tbe employees performance wben be is not
found to be up to tbe mark during tbe review period .
. FUR IDENTIFYINC TRAININC NEEDS : Tbe aim of performance
appraisal is to identifying training and development needs and to
evaluate effectiveness of training and development programmes .
. FUR PLANNINC CAREER DEVELUPMENT : Tbe otber ob|ective of
performance appraisal is to plan career development planning based on
potentialities .

IMPURTANCE UF THE SELF APPRAISAL
AS A F.C :
CONTENTS
- Cbance to measure own skills and performance.
- Upportunity to document accomplisbments and identify areas for
improvement.
- Upportunity to write goals for coming year.
- Helps facilitate appraisal meeting.
AS A MANACER :
- Cives you insigbt into FC's view of bisJber own strengtbs and weaknesses.
- Helps you gauge FC's understanding of expectation and standards.
- Reminds you of forgottenJoverlooked accomplisbments.

STEPS UF THE PERFURMANCE
APPRAISAL PRUCESS

. PREPARE YUUR EVALUATIUN
Tbe appraisal you write will be in tbe FC's personnel file for years to come.
You bave a responsibility, tberefore, to write an evaluation tbat is accurate,
ob|ective, fair, and free of exaggerations about tbe FC's performance.
- Try to give specific examples to support your rating{s].
- Review tbe FC's performance tbrougb tbe entire evaluation period of time,
refer to notes made tbrougbout tbe year, if necessary.
- Complete tbe appropriate appraisal form, including all ratings, rating
|ustifications, development plans, etc.
- Review tbe appraisal witb your supervisorJmanager and obtain all
necessary signatures prior to delivery.
. SCHEDULE THE REVIEW
- Cboose a private place for tbe review meeting, free from distractions andJor
interruptions.
- Notify tbe FC of tbe date and time.
- Prepare in advance. Develop a game plan of points to cover and anticipate
problems.
CONTENTS

. CUNDUCT THE FACE-TU-FACE PERFURMANCE APPRAISAL
MEETINC
- Welcome tbe FC by putting tbem at ease and setting a positive tone.
- Introduce tbe topic of tbe meeting by explaining tbe process and reasons for
discussion. Stress tbat tbis is an opportunity to belp tbe FC grow. Invite tbeir
questions.

. INTRUDUCTIUN



Performance appraisal is one of tbe traditional and most universal
practices of tbe management. It is a systematic and ob|ective way of
|udging tbe relatives wortb or ability of an employee in performing
bis PERF0RNANCE APPRAISAL
Lask Modern managemenL refers Lo an appralsal sysLem ln whlch Lhe employee's merlL llke
lnlLlaLlve dependablllLy personallLy eLc are compared wlLh oLhers and ranked and raLed 1he
Lrend now a day ls ln Lhe dlrecLlon of aLLempLlng Lo measure whaL Lhe man does (performance
appralsal) raLher Lhan whaL he ls (merlL raLlng) Lmployees also wlsh Lo know Lhelr poslLlon ln
Lhe organlzaLlon erformance appralsal helps Lo ldenLlfy Lhose who are performlng Lhelr
asslgned Lasks well and Lhose who are noL and Lhe reason for such performance Appralsals are
[udgmenLs of characLerlsLlcs LralLs and performance of oLhers on Lhe basls of whlch we assess Lhe
worLh or value of oLhers and ldenLlfy whaL ls good and bad

Accordlng Lo lllppo erformance appra|sa| |s the systemat|c per|od|c and an |mpart|a| rat|ng of
an emp|oyee's exce||ence |n matters perta|n|ng to h|s present [ob and h|s potent|a| for a
better [ob"

CONTENTS
A performance appralsal ls an lmporLanL Lool for measurlng managerlal efflclency organlzaLlonal
effecLlveness monlLorlng and measurlng Lhe performance of employees








MLANING CI LkICkMANCL AkAISAL




erformance appralsal ls Lhe process of evaluaLlng Lhe performance and quallflcaLlons of Lhe
employees ln Lerms of Lhe requlremenLs of Lhe [ob for whlch he ls employed for purposes of
admlnlsLraLlon lncludlng placemenL selecLlon for promoLlons provldlng flnanclal rewards and
oLher acLlons whlch requlre dlfferenLlal LreaLmenL among Lhe members of a group as
dlsLlngulshed from acLlon affecLlng all members equally"

ln a nuLshell we can say LhaL performance appra|sa| |s an ob[ect|ve assessment of an
|nd|v|dua|'s performance aga|nst we|| def|ned benchmarks"
CONTENTS















C8ILC1IVL

Appralsals serve Lo monlLor Lhe efforL of lndlvlduals Lo lnLegraLe and coordlnaLe lndlvldual's efforL
lnLo a cooperaLlve endeavor and glve feedback Lo Lhe lndlvldual Lo provlde a means of
correcLlng or commandlng Lhe efforLs of lndlvlduals and Lo provlde an equlLable and conslsLenL
basls of dlsLrlbuLlng rewards and penalLles lL malnly concerns lLself wlLh Lhe followlng Lhree
purposes

CONTENTS


a) ADMINIS1kA1IVL DLCISICNS

lL can serve as a basls for [ob change or promoLlon

erformance appralsal can be used Lo deLermlne wheLher P8 programmes such
as selecLlon Lralnlng and Lransfers have been effecLlve or noL


b) LMLCLL DLVLLCMLN1

y ldenLlfylng Lhe sLrengLhs and weakness of an employee lL serves as a gulde for
formulaLlng a sulLable Lralnlng and developmenL programme Lo lmprove hls quallLy
of performance ln hls presenL work lL serves as a feedback Lo Lhe employee y
leLLlng Lhe employee know how well he ls dolng or where he sLands wlLh hls
supervlsors lL Lells hlm whaL he can do Lo lmprove hls presenL performance and
go up ln Lhe managemenL hlerarchy

c) LkSCNNLL kLSLAkCn

1hls lnvolves generaLlon of manpower lnformaLlon


USES OR IMPORTANCE OF PERFORMANCE APPRAISAL


CONTENTS
erformance appralsal ls a slgnlflcanL elemenL of Lhe lnformaLlon and conLrol sysLem ln Lhe
organlzaLlon lL can be puL Lo several uses concernlng Lhe enLlre specLrum of human resource
managemenL funcLlons Some common appllcaLlons of performance appralsal are glven below

erformance appralsal prov|des va|uab|e |nformat|on for personne| dec|s|ons such
as pay lncreases promoLlons demoLlons Lransfers and LermlnaLlons

lL helps to [udge the effect|veness of recru|tment se|ect|on p|acement and
or|entat|on systems of Lhe organlzaLlon
lL ls useful ln analyzlng tra|n|ng and deve|opment needs

lL can be used Lo |mprove performance through appropr|ate feedback worklng and
counsellng employees

erformance appralsal faclllLaLes human resources p|ann|ng career p|ann|ng and
success|on p|ann|ng

lL promoLes a pos|t|ve work env|ronment whlch conLrlbuLes Lo producLlvlLy

A compeLlLlve splrlL ls creaLed and emp|oyees are mot|vated to |mprove the|r
performance

SysLemaLlc appralsal of performance helps to deve|op conf|dence among
emp|oyees

PR0CESS 0F PERF0RNANCE APPRAISAL-

CONTENTS

1hls process of performance appralsal has many sLages and lnvolves mulLlple acLlvlLles Lo be underLaken
by an organlzaLlon 1hese are usually formaL deLermlnaLlon sharlng evaluaLlon deslgnlng organlzaLlonal
lnpuLs and reward admlnlsLraLlon













6 2



3 3


CommunlcaLlng sLandards
Measurlng performance
ulscusslng resulLs
1aklng correcLlve acLlons
SeLLlng performance sLandards
CONTENTS

4






1n PklOkM4Nc 4PPk4l54L PkOc55






PklOkM4Nc ckl1kl4 1O M45k 1n PkOllclNcY Ol

4N MPLOY

There are number of performance criteria which may be used to measure the proficiency of an
employee. It can be classified into two main categories.

OBJECTIVE CRITERIA AND SUBJECTIVE CRITERIA-


Comparlng Lhe sLandards
CONTENTS

OB1ECTIVE CRITERIA
Amount and quality oI production,
ork sample tests,
length oI service,
amount oI training necessary,
absenteeism, accidents etc..


SU8ILC1IVL CkI1LkIA
8aLlng of employee's [ob proflclency by Lhelr superlor peers and subordlnaLes
exLenL of upward communlcaLlon of ldeas
degree of knowledge abouL corporaLe goal
conLrlbuLlon Lo soclo culLural values eLc






ESSENTIALS OF AN EFFECTIVE PERFORMANCE APPRAISAL SYSTEM

1. Mutual trust
2. Clear objectives
3. Standardization
4. Training
5. Job relatedness
CONTENTS
6. Documentation
7. Feedback and participation
8. Individual diIIerences
9. Post appraisal intervie
10.Revie and appeal
















MODELS OF PERFORMANCE APPRAISAL-

CONTENTS
Many form of raLlng are presenLly avallable each namlng lLs sLrong polnLs as well as llmlLaLlons 1hey
may be classlfled lnLo Lwo broad caLegory

LkICkMANCL AkAISAL



18Aul1lCnAL ML1PCuS MCuL8n ML1PCuS


1 ConfldenLlal reporL 1 AssessmenL cenLer
2 lree form or essay 2 P8 accounLlng
3 SLralghL ranklng 3 ehavlorally anchored
raLlng scales
4 alred dlsLrlbuLlon 4 MC appralsal
3 lorced dlsLrlbuLlon 3 360degree appralsal
6 Craphlc raLlng scales
7 CheckllsL meLhod
8 CrlLlcal lncldenLs
9 Croup appralsal
10 lleld revlew


CONTENTS








1kADI1ICNAL ML1nCDS CI LkICkMANCL AkAISAL

1) kat|ng method
1he oldesL and slmplesL meLhod of performance appralsal ls Lo compare one man wlLh all oLher men
and place ln a slmple rank order ln Lhls way orderlng ls done from besL Lo worsL of all lndlvlduals
comprlslng Lhe group 1hls meLhod Lakes lnLo accounL raLlng by more Lhan one anoLher raLer 1he
ranks asslgned are Lhen averaged and relaLlve ls deLermlned for each member

1hls meLhod has Lwo advanLages of slmpllclLy and naLurallsLlc or naLuralness uL lL has
dlsadvanLages of belng sub[ecLlve and Lhe ranklng becomes dlfflculL when Lhere are even LwenLy or
LhlrLy cases Also Lhe magnlLude of Lhe dlfference ln ablllLy beLween ranks ls noL equal aL dlfferenL
poslLlons
As an answer Lo Lhe lasL problem Lhe palred comparlson Lechnlque of ranklng has been evolved ln
Lhls meLhod Lhe raLer compares each man ln hls group wlLh every oLher man wlLh Lhe flnal ranklng
of each worker deLermlned by Lhe number of Llme he was [udged beLLer Lhan oLhers

CONTENTS
1) kat|ng sca|e method
This method provides a kind oI scale Ior measuring absolute diIIerences beteen individuals.
This is method is oI to types-

I) Discrete- the characteristic job knoledge` may be divided into Iive
categories on a discrete scale 'exceptionally good, 'above average,
'average, 'belo average and 'poor. The rater can tick mark category,
hich describes best he person being rated.
II) Continuous or graphic- here just above the category notation an
interrupted line is provided. The rater can tick at any point along its length.

There are Iour kinds oI standards used in rating scales, namely numerical or
alphabetical, descriptive adjective, man-to-man and behavior sample. In man-
to-man rating scale the standards are very concrete because these are neither
numbers nor alphabets (hich do not convey same meaning to all) nor
descriptive adjective but are persons, oI varying ability hom the rater has
selected and ranked in the ability under consideration.

Thus a scale oI men is created Ior each trait. The objective to this scale is that
its construction involves diIIicult and laborious procedure. Persons used as
standards by diIIerent raters are diIIerent.

In behavior sample standards, a series oI actual description oI behavior are
employed hich is supposed to indicate varying amounts oI the characteristic
being rated. The use oI actual descriptions oI behavior reduces some oI the
diIIerences in interpretation usually Iound among diIIerent raters.

Frequently there is a tendency Ior the rater to pile up the ratings either at he
middle or at the highest end oI the scale. To meet this the 'Iorced distribution
CONTENTS
system is used here the rater is instructed about the percentage oI cases,
hich should Iall in each category. For example, job knoledge the Iolloing
percentage must be used: poor-10, belo average-20, average-40, above
average-20 and exceptionally good-10.



2) Checklist method-

This consists oI a list consisting oI a number oI statements about the orker and his
behavior. Each statement on this list is assigned a value, hich are derived Irom preliminary
research in hich the pooled judgments oI person Iamiliar ith the job are used. The rater is
asked to place a plus sign or a question mark in Iront oI each statement depending on
hether he Ieels the description applies, does not apply or there is doubt. The method has the
advantages oI requiring only a report oI Iacts Irom the rater. Final rating is average oI the
scale value oI the statement, hich the superior had checked.

Since the value assigned to diIIerent statements do not appear on the list the rater does not
kno ho highly he has rated a given individual. He also does not have to distinguish among
various categories Ior each oI the several traits considered Ior each the several employees
orking under him. The rater is more precise and less ambiguous in his expression oI the
orthiness oI the individual. The extent oI constant and halo error are also minimized.

3) Forced choice method-
The Iorced choice rating Iorm contains a series oI groups or statements. The rater checks ho
eIIectively the statements describe each individual being evaluated. Each statement carries
eight, hich is not indicated to the rater. There are a number oI variations. Sometimes all
the statements may be either Iavorable or unIavorable. In another, Irom Iour statements to
CONTENTS
positive and to negative the rater picks the most appropriate and the most inappropriate
respectively. It makes the perIormance evaluation more objective.



4) Critical incident technique-

It involves three steps. A list oI noteorthy (good or bad) on the job behavior, usually oI
speciIic instances is Iirst prepared hich are vital Ior success or Iailure on job. A group oI
experts then assigns scale values to them, depending upon the degree oI desirability Ior the
job.

The third step is constructing a checklist that includes incidents, hich deIine good` and
bad` orkers. This method helps to identiIy key areas in hich employees are eak or
strong. It emphasizes rating on the subjective evaluation oI traits. Finally, the supervisor
Iinds counseling easier since he knos his subordinates eakness.

5) Confidential report-

This is a traditional Iorm oI appraisal used in most government organizations. A conIidential
report is a report prepared by the employee`s immediate superior. It covers the strengths and
eaknesses, main achievements and Iailure, personality and behavior oI the employees. But
it involves a lot oI subjectivity because appraisal is based on impressions rather than on data.

6) Free form or essay method-

CONTENTS
Dnder Lhls meLhod Lhe evaluaLor wrlLes a shorL essay on Lhe employee's performance on Lhe basls
of overall lmpresslon 1he descrlpLlon ls expecLed Lo be as facLual and concreLe as posslble An essay
can provlde a good deal of lnformaLlon abouL Lhe employee especlally lf Lhe evaluaLor ls asked Lo
glve examples of each one of hls [udgmenLs


7) Stra|ght rank|ng method

ln Lhls Lechnlque Lhe evaluaLor asslgns relaLlve ranks Lo all Lhe employees ln Lhe same work unlL
dolng Lhe same [ob Lmployees are ranked from Lhe besL Lo Lhe pooresL on Lhe basls of overall
performance 1he 'whole man ls compared wlLh Lhe whole man' wlLhouL analyzlng performance
1he relaLlve poslLlon of an employee ls reflecLed ln hls numerlcal rank

8) a|red compar|son method

This is a modiIied Iorm oI man to man ranking. Herein, each employee is compared ith all
the others in pairs one at a time. The number oI times an employee is judged better than the
other determines his rank. Comparison is made on the basis oI overall perIormance. The
number oI comparisons to be decided on the basis oI the Iolloing Iormula-
N (N-1)\2

9) Group appraisal method-

Under this method, a group oI evaluators assesses employees. This group consists oI the
immediate superior oI the employee, other supervisors having close contact ith the
employee`s ork, head oI the department and a personnel expert. The group determines the
CONTENTS
standards oI perIormance Ior the job, measures actual perIormance oI an employee, analyses
the cause oI poor perIormance and other suggestions Ior improvement in Iuture.

10) Field review method-
In this method, a training oIIicer Irom the HR department intervies line supervisors to
evaluate their respective subordinates. The intervieer prepares in advance the questions to
be asked. By ansering these questions a supervisor gives his opinion about the level oI
perIormance oI his subordinate, the subordinate`s ork progress, his strengths and eakness,
promotion potential, etc. The evaluator takes detailed notes oI the anser, hich are then
approved by the concerned supervisor. These are then placed in the employee`s personal
service Iile.















CONTENTS





MODERN METHODS OF PERFORMANCE APPRAISAL:

1) Assessment centers-

An assessment center is a group oI employees dran Irom the diIIerent ork units. These
employees ork together on an assignment similar to the one they ould be handling hen
promoted. Evaluators observe and rank the perIormance oI all the participants. Experienced
managers ith proven ability serve as evaluators. This group evaluates all employees both
individually and collectively by using simulation techniques like role playing, business games
and in basket exercises. Employees are evaluated on job related characteristics considered
important Ior job success.

2) Human resources accounting method-

HR is a valuable asset oI the organization. This asset can be valued in terms oI money. When
component and ell-trained employees leave an organization the human asset is decreased and
vice versa. Under this method, perIormance is judged in terms oI cost and contribution oI
employees. Costs oI HR consist oI expenditure on HR planning, recruitment, selection,
induction, training, compensation, etc. contribution oI HR is the money value oI labor
productivity or value added by HR. diIIerence beteen cost and contribution ill reIlect the
perIormance oI employees.

CONTENTS
3) Behaviorally anchored rating scales (BARS)-

This method combines graphic rating scales ith critical incidents method. BARS are
description oI various degrees oI behavior relating to speciIic perIormance dimensions. Critical
areas oI job perIormance and the most eIIective behavior Ior getting results are determined in
advance. The rater records the observable job behavior oI an employee and compares these
observations ith BARS. In this ay, an employee`s actual job behavior is judged against the
desired behavior. The steps involved in constructing BARS are as Iollos-
a) IdentiIy critical incidents
b) Select perIormance dimensions
c) Retranslate the incidents
d) Assign scales to incidents
e) Develop Iinal instrument

4) Appraisal by results or MBO-
The concept oI management by objective (MBO) as developed by Peter Drucker in 1954. He
called it management by objective and selI-control`. Since then MBO has become an eIIective
and operational technique oI perIormance appraisal and a poerIul philosophy oI managing. It is
also knon as work planning and review or goal setting approach to appraisal.

MBO has been deIined as ' a process hereby the superior and subordinate managers oI an
organization jointly identiIy its common goals, deIine each individual`s major areas oI
responsibility in terms oI results expected oI him and use these measures as guides Ior operating
the unit and assessing the contributions oI each oI its members

The main steps involve din perIormance appraisal through MBO are as Iollos-
a) Set organizational goals
b) DeIining perIormance targets
c) PerIormance revies
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d) Feedback

MBO is superior to other methods oI perIormance appraisal. It oIIers the Iolloing beneIits:
Ends-means chain
Role clarity
Objective appraisal
Motivation and commitment
Management development
Coordination

MBO suIIers Irom the Iolloing drabacks:
DiIIiculty in goal setting
Problem oI participation
ack oI understanding
Time consuming and expensive
InIlexibility

5) The 360-degree appraisal technique -

PerIormance appraisal has come to occupy a pivotal place in human resource Iunction. The
traditional merit rating hich Iocused on personality traits as replaced by perIormance
appraisal ith Iocus on ork results. The concept oI M30 transIormed it into a participative
process. This led ultimately to the introduction oI 360-degree Ieedback system in the United
States.
360-degree system involves evaluation oI a manager by everyone above, alongside and belo
him. Structured questionnaires are used to collect responses about a manager Irom his bosses,
peers and subordinates. Several parameters relating to perIormance and behavior are used in
questionnaires. Each manager is judged by a minimum oI IiIteen colleagues, at least to oI them
being his bosses, Iour oI them peer, and six oI them subordinates. The responses are presented
collectively to the assesees in the Iorm oI charts and graphs. Comments and interpretations are
CONTENTS
presented later. Counseling sessions are arranged to solve the eaknesses identiIied in the 360-
degree assessment. The 360-degree assessment program is eIIective hen used Irom the top
don. The Iact that the manager at the top has also been administered the test convinces and they
illing to go through it as ell.
















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PEER
PEER
CONTENTS









LIMITATIONS OF PERFORMANCE APPRAISAL

The main problems involved in perIormance appraisal are as Iollos:

1) Lrrors |n rat|ng
PerIormance appraisal may not be valid indicator oI perIormance and potential oI employees due
to the Iolloing types oI errors:
a) nolo effect lL ls Lhe Lendency Lo raLe an employee conslsLenLly hlgh or low on Lhe basls of
overall lmpresslon Cne LralL of Lhe employee lnfluences Lhe raLer's appralsal on all oLher
LralLs

b) teteotyploq Lhls lmplles formlng a menLal plcLure of a person on Lhe basls of hls sex age
casLe or rellglon

c) eottol teoJeocy lL means asslgnlng average raLlng Lo all Lhe employees ln order Lo avold
commlLmenL or lnvolvemenL 1hls ls adopLed because Lhe raLer has noL Lo [usLlfy or clarlfy
Lhe average raLlngs

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J) oostoot ettot some evaluaLors Lend Lo be lenlenL whlle oLhers are sLrlcL ln assesslng
performance ln flrsL case performance ls overraLed whlle ln second case lL ls underraLed

e) 9etsoool blos performance appralsal may become lnvalld because Lhe raLer dlsllkes Lhe
employee Such blas may arlse on Lhe basls of reglonal or rellglous bellefs and hablLs or
lnLerpersonal confllcLs
CONTENTS


RESEARCH
METHUDULUCY

RESEARCH METHUDULUCY
UB)ECTIVES
Tbe topic of tbis pro|ect is "A STUDY UF PERFURMANCE APPRASIAL UF
FINANCIAL CUNSULTANT . In order to acbieve tbe above stated sub|ect
various ob|ectives were set.
THESE UB)ECTIVES WERE:
. To examine tbe, determination underlying tbe F.C'S preferences towards
selling of insurance policy.
. To study tbe relative importance of various factors tbat influences tbe F.C's
in selling insurance policy
. To study tbe impact of social, culture and demograpbic factors on F.C's
preferences towards insurance policy.
. To frame guidelines for formulating marketing strategies for united
insurance
a. Policy dependent on market analysis based on certain factors viz.
demograpbic
b. Policy related, premium etc.
. To determine tbe message content and media most appropriate to be
cbosen for promoting insurance policy. Like i.e. tbat HDFC SDLIC.
. To examine tbe market sbare of insurance policy.
. To examine tbe consumer satisfaction to words HDFC SDLIC policy.
CONTENTS
RESEARCH DESICN
A researcb design is purely and simply tbe framework of plan for a study tbat
guides tbe collection and analysis of data researcb design is some statement
or specification of procedures for collecting and analyzing tbe information
required for tbe solution of some specific problem. It provides scientific
framework for conducting some researcb investigation. Anticipating and
specification are tbe main cbaracteristics in a researcb design. It provides
information for decision making.
Decision regarding wbat, wbere, wben and bow mucb and by wbat means
concerning an enquiry as a researcb study constitutes in researcb design.
For defining tbe problem conclusive researcb design was used. Tbe first
reason for selecting sucb design is tbat we seek to estimate tbe proportions of
people in a specified population wbo bebave a certain way witb respect to
insurance policy".
Tbe researcb design must be able to explain tbe reason wby readers exbibit
tbis particular buying bebavior. It can be explained by sbowing or finding tbe
cause and effect relationsbip among various factors.
Researcb design
Data Source Primary data ,Secondary data
Researcb approacb Telepbonic Metbod

Researcb instrument Scbedule Tecbnique
Sample Areas Bareilly
Contact Metbod Tbrougb Personal
Interviews done
Tbrougb scbedule


ANALYSIS & INTERPRETATIUN
CONTENTS

FINANCIALCUNSULTANTS SURVEY
Cender of tbe F.C.
.

PRUFESSIUN UF F.C'S
& amp,
amp, amp, nbsp,


Professionals 3
Utbers 3


ACE UF F.C.
&
,nbs p,


- 93
> 3

Income group UF F.C
PERSUNS
< ,
, - ,
, - ,
, <
CONTENTS





EDUCATIUNAL QUALIFICATIUN UF THE F.C
Frequency Percent
Inter .9
Craduate .8
Professional .8
Total .



PULICY MUST PREFERRED