Work Culture

The company attributes its success to the contributions made by its employees. We believe that our strength is our people, so our endeavour is to surpass their expectations and give them the best possible work environment and benefits that match the best in the industry. Talent management initiatives in HDFC Life are driven by a set of organizational core competencies (Mantra 10) as well as position-specific competencies. The competency set includes knowledge, skills, experience, and personal traits (demonstrated through defined behaviors) based on the bedrock of sharp vision and strong values of HDFC Standard Life. In this endeavor of shaping and nurturing our talent pool, HDFC Life adopts a four-step model:

Introduction to the Insurance Industry Insurance and risk management make up an immense global industry. According to a survey conducted by a leading global insurance firm, Swiss Re, worldwide insurance premiums totaled $4.33 trillion in 2010 (the latest data available), up from $4.06 trillion in 2009. This was equal to 6.89% of global GDP. Global life insurance premiums were $2.52 trillion during 2010, while all other types of insurance totaled $1.81 trillion. In America alone, the insurance business employed about 2.23 million people in 2010. Gross insurance premiums totaled $1.16 trillion (per SwissRe). More than 4,000 companies underwrite insurance in America, but the industry is dominated by a handful of major players.

Total insurance premium volume for 2010 in industrialized nations was $3.6 trillion. In emerging nations, where the fastest growth is to be found, total premiums were $650 billion, up 10.9% over the previous year, including $128 billion in Latin America and the Caribbean; $33 billion in the Middle East and Central Asia; and $67 billion in Africa. Again, these figures are from Swiss Re (www.swissre.com/sigma/). Premiums on a per capita basis remain very low in much of the world, pointing to excellent longterm opportunity for expansion of sales of insurance products of all types, including annuities. It would be hard to overstate the importance of emerging nations, especially China, India, Brazil and Indonesia, to the future growth of the insurance industry. Total premiums in China were $215 billion in 2010. That may not sound like much compared, for example, to $310 billion in the U.K., but Chinas premiums were up 26.2% over the previous year, while the U.K.s were down by 2.7%. Indias premiums in 2010 totaled $78 billion, up a respectable 4.9%. Much of the world is still clearly a fertile field for expansion of companies that are willing and able to invest time and money in emerging markets. The insurance market in the emerging world will be boosted by a combination of rising household incomes, increasing education and financial sophistication among consumers, extending life spans, and a tradition of families relying on personal savings and initiative rather than government social programs to provide for retirement funds and health care. Massive amounts of insurance company earnings come from the sale of annuities and other retirement and investment products, along with profits (or losses) that insurance underwriters earn on the investment of their own assets and reserves. 2008s stock market meltdown had a significant effect on profits and assets at life insurance companies in particular, and property & casualty companies to a lesser degree. Insurance companies also hold immense investments in real estate, hedge funds, private equity, venture capital funds and other types of investments. The global financial crisis hurt nearly all of these asset classes and thus hit the capital base of the insurance industry in a hard way. At the same time, business bankruptcies, unemployment and cost-cutting by both businesses and consumers hurt insurance sales. However, a recovery in stock and bond markets that began in the spring of 2009 and ran through late 2011 provided a boost to the investment earnings of the insurance industry. In America, insurance is unique in the financial services field because, unlike banking and investments, which are regulated largely (although not entirely) by federal agencies such as the Securities and Exchange Commission, insurance is regulated primarily at the state level. This means that insurance firms must deal with up to 50 different sets of state regulations and 50 different state regulatory agencies. At the same time, they must develop dozens of different premium rate structures that appropriately reflect the costs of meeting local risks and fulfilling state requirements. As a result, few insurance underwriters offer all of their insurance products in all 50 states; many do business only in a limited number of states. It is a regulatory and administrative nightmare that limits consumer choices and drives up overall insurance costs. Insurance underwriting does not earn consistent levels of profits. Property and casualty insurance companies sometimes face a year of losses, rather than profits, due to natural disasters such as hurricanes, floods or an overly active fire season. The devastating tsunami and related nuclear power plant meltdown in Japan in March 2011 put a severe strain on the insurance

industry; however, much of the total loss was either uninsured or was covered by government. Occasionally, insurance underwriters go broke, and firms that rate the financial stability of insurance underwriters always list more than a few that are not financially sound. For example, Yamato Life Insurance Company, a leading Japanese firm that had been in business for nearly 100 years, took bankruptcy in October 2008. During 2005, Hurricanes Katrina and Rita in the U.S. cost insurance underwriters vast amounts (damages, both insured and non-insured, totaled about $58 billion) and created significant controversy over flood insurance in general. Many changes resulted, and insurance underwriters felt compelled to boost rates for many types of insurance, especially in Gulf Coast markets. More recently, much of each hurricane seasons risk has been sold by primary underwriters to hedge funds and reinsurers who buy portions of large, high-risk insurance policies. This enables property & casualty underwriters to continue to earn reasonable profits while laying-off a significant part of potential losses if there is a devastating hurricane. The insurance industry includes a wide variety of sectors and services. The most obvious are insurance underwriters that cover the risks and issue the policies, along with the agencies that sell insurance. However, there are also large numbers of consulting firms, claims processing firms, data collection firms and myriad other specialized fields serving the industry. In addition, there are insurance brokers, which have traditionally posted enviable profits. Insurance brokers represent the interests of corporate clients while finding these customers the best coverage at the best rates. Recent regulatory changes have heightened competition within the insurance industryan area in which competition has always been fierce. Massive mergers and acquisitions have resulted, creating financial services mega-firms, some of which offer a broad range of services and products to their customers, from checking accounts to investment products to life insurance. In some cases, this strategy was a failure, most notably in Citigroups attempt to put together a financial empire by adding a major investment firm (Smith Barney) and a leading insurance company (Travelers) to its existing banking organization. Elsewhere, banks such as Wells Fargo are slowly gaining market share in the sale of insurance products, particularly annuities and life insurance. Investment companies like Merrill Lynch (now part of Bank of America) have been eager to sell insurance to their customers as well. At one time, bank holding companies were aggressively acquiring insurance agencies. Competition will only become more intense. While there are tens of thousands of small insurance firms worldwide, the industry tends to be concentrated in a few hundred major companies, many of which enjoy brands that are household names. A handful of these leading firms operate on a truly global scale. In the worlds leading economies, regulators are in the process of forcing vast changes in the regulation and oversight of financial services firms of all types. The focus is on making risks held by such firms more transparent and maintaining sufficient levels of capital to cover potential losses. The insurance industry is going through significant scrutiny and oversight as a result.

In the U.S. a sweeping reform bill, the Dodd-Frank Wall Street Reform and Consumer Protection Act, was signed by President Obama in July 2010, after European finance ministers approved similar regulations a few months earlier. Most of the 2,300-page reform act does not apply to the insurance industry. For better or worse, regulation of insurance remains largely with the 50 states. However, one section of the act creates a new Federal Insurance Office (FIO), described as a non-regulatory, informational office. The FIOs role includes monitoring the American insurance industry, including gathering data from the various state-level insurance regulators. It will advise Congress and various federal agencies on insurance matters. Also, the act streamlines the reinsurance and surplus lines sector. A key provision makes the home state of an insured party the sole regulatory authority in a surplus lines transaction. The FIO will also represent America, when needed, in dealings with the International Association of Insurance Supervisors. In March 2010, President Obama signed the Patient Protection and Affordable Care Act. Designed to strengthen insurance company regulation and provide medical coverage to more than 30 million uninsured Americans, the act was hotly contested in both houses of Congress. The act calls for sweeping changes in the near term to be followed by even more comprehensive changes by 2014 or beyond. Provisions taking effect within the first six months of signing include coverage for adult children up to age 26 on their parents policies; making it unlawful for insurers to place lifetime caps on payouts or deny coverage should a policy holder become ill; and new policies being required to pay the full cost of selected preventive care and exempt that care from deductibles. Effective in 2010, small businesses with fewer than 25 employees and average annual wages of less than $50,000 will be eligible for tax credits to cover up to 35% of staff insurance premiums. After 2014, a 3.8% unearned income tax will be levied on individuals earning more than $200,000 per year and families earning more than $250,000 per year to fund the programs in the act. Large employers with more than 50 employees that do not offer health benefits would begin paying $2,000 per full time staff member if any of the workers receives a tax credit to buy coverage. Businesses with more than 200 employees will be required to enroll all staff automatically in health insurance plans. Also in 2014, the government will begin fining citizens who choose not to carry health insurance. The fine will start at $95 per year or 1% of annual income (whichever is greater), and rise to $695 per year or 2.5% of income by 2016. Initially, health care reform may provide positive growth to the earnings of health insurance providers. The problem for the industry is that Congress will undoubtedly attempt to reduce costs and profits throughout the health industry. Insurance providers may eventually suffer, or be forced into consolidation in order to streamline operations and deal with lower profit margins. On the other hand, insurance providers may find that they have to innovate and evolve by offering supplemental policiesthat is, policies that provide enhanced coverage above and beyond basic coverage mandated by universal care. Supplemental insurance is typically a much higher profit margin business. The result could easily turn into a profit squeeze for both insurers and providers. Costs for the government could rise so quickly and so high that it could even impose profit limits. For

example, both Massachusetts and Tennessee have been forced to backtrack substantially on their relatively new statewide universal plans because costs ramped up much higher and much faster than they ever thought possible. It is reasonable to assume that pain from a scenario like this would be passed along to insurers.

Swot Analysis Of Hdfc Standard Life Insurance

Analysis of the industrys environment (SWOT Analysis) HDFC and Standard Life first came together for a possible joint venture, to enter the life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995, the companies signed a 3-year joint venture agreement. STRENGTH 1. Domestic image of HDFC supported by Prudentials international image is strength of the company. 2. Strong and well spread network of qualified intermediaries and sales person. 3. Strong capital and reserve base. 4. The company provides customer service of the highest order. 5. Huge basket of product range which are suitable to all age and income groups. 6. Large pool of technically skilled manpower with in depth knowledge and understanding of the market. 7. The company also provides innovative products to cater to different needs of different customers. WEAKNESS 1. Heavy management expenses and administrative costs.
2. Low customer confidence on the private players. 3. Vertical hierarchical reporting structure with many designations and cadres leading to power politics at all levels without any exception. 4. Poor retention percentage of tied up agents. OPPORTUNITIES 1. Insurable population According to ING only 10% of the population is insured, which represents around 30% of the insurable population. This suggests more than 300m people, with the potential to buy insurance, remain uninsured.

2. There will be inflow of managerial and financial expertise from the world s leading insurance markets. Further the burden of educating consumers will also be shared among many players. 3. International companies will help in building world class expertise in local market by introducing the best global practices. 4. Insurance liberalization in India is expected to result in a wider choice of major commercial insurance covers, such as fire, export credit,...