Pramod Project11

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO
CHAPTER 1 INTRODUCTION
1.1Insurance in India
In 2003, the Indian insurance market ranked 19th globally and was the fifth largest in Asia. Although it accounts for only 2.5% of premiums in Asia, it has the potential to become one of the biggest insurance markets in the region. A combination of factors underpins further strong growth in the market, including sound economic fundamentals, rising household wealth and a further improvement in the regulatory framework. The insurance industry in India has come a long way since the time when businesses were tightly regulated and concentrated in the hands of a few public sector insurers. Following the passage of the Insurance Regulatory and Development Authority Act in 1999, India abandoned public sector exclusivity in the insurance industry in favor of market-driven competition. This shift has brought about major changes to the industry. The inauguration of a new era of insurance development has seen the entry of international insurers, the proliferation of innovative products and distribution channels, and the raising of supervisory standards. The insurance sector in India has come with a full circle from being an open competitive market to nationalization and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. Insurance in India used to be tightly regulated and monopolized by state-run insurers. Following the move towards economic reform in the early 1990s, various plans to revamp the sector finally resulted in the passage of the Insurance Regulatory and Development Authority (IRDA) Act of 1999.
EAST POINT COLLEGE OF HIGHER EDUCATION
Significantly, the insurance business was opened on two fronts. Firstly, domestic private-sector companies were permitted to enter both life and non life insurance business. Secondly, foreign companies were allowed to participate, albeit with a cap on shareholding at 26%. With the introduction of the 1999 IRDA Act, the insurance sector joined a set of other economic sectors on the growth march. During the 2003 financial year1, life insurance premiums increased by an estimated 12.3% in real terms to INR 650 billion (USD 14 billion) while non-life insurance premiums rose 12.2% to INR 178 billion (USD 3.8 billion). The strong growth in 2003 did not come in isolation. Growth in insurance premiums has been averaging at 11.3% in real terms over the last decade. Insurance in India can be traced back to the Vedas. For instance, yogakshema, the name of Life Insurance Corporation of India's corporate headquarters, is derived from the Rig Veda. The term suggests that a form of "community insurance" was prevalent around 1000 BC and practiced by the Aryans. Burial societies of the kind found in ancient Rome were formed in the Buddhist period to help families build houses, protect widows and children. Bombay Mutual Assurance Society, the first Indian life assurance society, was formed in 1870. Other companies like Oriental, Bharat and Empire of India were also set up in the 1870-90s. It was during the swadeshi movement in the early 20th century that insurance witnessed a big boom in India with several more companies being set up. As these companies grew, the government began to exercise control on them. The Insurance Act was passed in 1912, followed by a detailed and amended Insurance Act of 1938 that looked into investments, expenditure and management of these companies' funds.
1.2Insurance sector reforms

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N. Malhotra, was formed to evaluate the Indian Insurance Industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at 'creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms. In 1994, the committee submitted the report and some of the key recommendations included:
I) Structure
Government stake in the insurance companies to be brought down to 50%. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to operate.
II) Completion
Private Companies with a minimum paid up capital of Rs. 1bn should be allowed to enter the industry. No Company should deal in both Life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies.
III) Regulatory Body
The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller of Insurance (Currently a part from the Finance Ministry) should be made independent.
IV) Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time).
V) Customer Service
LIC should pay interest on delays in payments beyond 30 days. Insurance companies must be encouraged to set up unit linked pension plans. Computerization of operations and updating of technology to be carried out in the insurance industry.
CHAPTER 2 RESEARCH DESIGN

2.1Title of project
An in-depth analysis of life insurance as a better investment avenue in present scenario
2.2Statements of Problem
Life insurance being a service industry needs the support of the people; very often many do not consider life insurance as an investment opportunity. Hence, in todays investment avenue inflation with special reference to Reliance Life insurance Ltd has to be taken. Keeping the above in mind , I have found the need of doing the An in-depth analysis of life insurance as a better investment avenue in todays inflation with special reference to Reliance Life insurance Company Ltd.
2.3Objectives of the study

To study the life insurance investment at Reliance Life insurance Ltd. To analyze the risk & Return involved in life insurance investment. To analyze the acceptability of the products of Reliance Life insurance Ltd. To probe into the reasons why consumers go for an insurance policy. To know and analyze the awareness of RELIANCE life insurance Ltd. To compare traditional investment instruments (Mutual Funds etc.) with investment in insurance.
2.4 Sources of data

The study is conducted by making use of both primary and secondary data.
2.5 Primary data

The primary data has been collected from the discussions and meetings with managers, clerks and other officials and interviewing the borrower.
2.6 Secondary data

The following are the data collected from the secondary sources: Books Internet Company website Competitors website Newspaper & Articles
2.7 Plan of Analysis

The data collected will be tabulated to enable analysis. Percentages and averages will be calculated wherever required. The data will be diagrammatically represented in the form of graphs and charts.
2.8 The Tools Used For Calculation

Standard deviation Beta Alpha Arithmetic mean AM=y/N
Where y= returns of NAV values N= number of observation Average returns that can be expected from investment. The Arithmetic returns is appropriate as a measure of a central tendency of a number of returns calculated from particular time i.e. for 5 years.
2.9 Returns
Investor wants to maximize expected retunes subject to their tolerance for risk. Returns are the motivating force and principal reward in investment process and it is the key method available to investors in comparing alternative the investments. Measuring the historical returns allows investor to access the how well the stocks have performed. Investor get returns either in form of interest, dividend or capital appreciation. There are two terms, realized term and expected return. Realized return earned in past. RETURN=( Closing price-opening price) /opening price*100
2.10 Standard Deviation

The Standard deviation is measure of the variables around its mean or it is square root of the sum of the squared root deviations from the mean divided the number of observation. S.D is used to measure the variability of return i.e the a measure of dispersion. S.D is calculated as the square root of variation. In finance investments volatility.S.D is also know as historical volatility and its used by investors as a gauge from the amounted of volatility. S.D=(y-Y)
N Where y= return of Investment Y=average return of Investment N= number of months SD = (R- R1)2 /n
BETA: Beta describes the relationship between the securities return and the index
returns. Beta = + 1.0 One percent change in market index returns causes exactly one percent change in the security return. It indicates that the security moves in tandem with the market.
Beta = + 0.5 One percent change in the market index return causes 0.5 percent change in the security return. The security is less volatile compared to the market. Beta = + 2.0 One percent change in the market index return causes 2 percent change in the security return. The security return is more volatile. When there is a decline of 10% in the market return, the security with beta of 2 would give a negative return of 20%. The security with more than 1 beta value is considered to be risky. Negative Beta
Negative beta value indicates that the security return moves in the opposite direction to the market return. A security with a negative beta of -1 would provide a return of 10%, if the market return declines by 10% and vice-versa. Beta= N*xy-(x)(y) N*(x)-(x) Where N=No of observation X=Total of market index value Y=Total of return to Nav B = [ (Ra Ra1)(Rm-Rm1)]/ (Rm-Rm1)2
Where Ra = Return on Company, Ra1= Average return on company Rm= Return on market, Rm1= Average return on market
ALPHA:
Alpha represent the forecast of residual return, which we consider the future return of any Investment. Alpha measures the unsystematic risk of a Investment property because the portfolio Investment also consists of both residual return and future expectation. It is important to remember that the risk-free Investment will always show a zero residual return hence, any risk less security like cash will have always alpha equal to zero. A positive alpha of 1.0 means the fund has outperformed its benchmark index by 1% correspondingly, a similar negative alpha would indicate an underperformance of 1%. Alpha indicates that the stock return is independent of the market return .A positive value of alpha is a
healthy sign. Positive alpha values would yield profitable return. The Formula is used to calculate:Alpha=Y-beta(x) Where Y-average return to nav return Alpha = (Ra1-Rm1)*B X-average return to market index
CHAPTER 3 INDUSTRY PROFILE

3.1Present Scenario of Insurance Industry
India with about 200 million middle class household shows a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. The insurance sector in India has come to a position of very high potential and competitiveness in the market. Indians, have always seen life insurance as a tax saving device, are now suddenly turning to the private sector that are providing them new products and variety for their choice. Consumers remain the most important centre of the insurance sector. After the entry of the foreign players the industry is seeing a lot of competition and thus improvement of the customer service in the industry. Computerization of operations and updating of technology has
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become imperative in the current scenario. Foreign players are bringing in international best practices in service through use of latest technologies The insurance agents still remain the main source through which insurance products are sold. The concept is very well established in the country like India but still the increasing use of other sources is imperative. At present the distribution channels that are available in the market are listed below.
Direct selling Corporate agents Brokers and cooperative societies Banc assurance
Customers have tremendous choice from a large variety of products from pure term (risk) insurance to unit-linked investment products. Customers are offered unbundled products with a variety of benefits as riders from which they can choose. More customers are buying products and services based on their true needs and not just traditional moneyback policies, which is not considered very appropriate for long-term protection and savings. There is lots of saving and investment plans in the market. However, there are still some key new products yet to be introduced - e.g. health products. The rural consumer is now exhibiting an increasing propensity for insurance products. A research conducted exhibited that the rural consumers are willing to dole out anything between Rs.3,500 and Rs.2,900 as premium each year. In the insurance the awareness level for life insurance is the highest in rural India, but the consumers are also aware about motor, accidents and cattle insurance. In a study conducted by MART the results showed that nearly one third said that they had purchased some kind of insurance with the maximum penetration skewed in favor of life insurance. The study also pointed out the private companies have huge task to play in creating
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awareness and credibility among the rural populace. The perceived benefits of buying a life policy range from security of income bulk return in future, daughter's marriage, children's education and good return on savings, in that order, the study adds.
3.2A brief history of the Insurance sector

The business of life insurance in India in its existing form started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.
Some of the important milestones in the life insurance business in India are
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses. 1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 1956: 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.
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The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.
3.3Industry Structure
3.4Insurance Companies
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IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies. If the existing public sector insurance companies are included, there are currently 13 insurance companies in the life side and 13 companies operating in general insurance business. General Insurance Corporation has been approved as the "Indian reinsurer" for underwriting only reinsurance business. Particulars of the life insurance companies and general insurance companies including their web address is given below
Life Insurers
Public Sector Life Insurance Corporation of India Private Sector Allianz Bajaj Life Insurance Company Limited Birla Sun-Life Insurance Company Limited HDFC Standard Life Insurance Co. Limited ICICI Prudential Life Insurance Co. Limited ING Vysya Life Insurance Company Limited Max New York Life Insurance Co. Limited MetLife Insurance Company Limited Om Kotak Mahindra Life Insurance Co. Ltd. SBI Life Insurance Company Limited Dabur CGU Life Insurance Co. Pvt. Limited
Websites
www.licindia.com www.allianzbajaj.co.in www.birlasunlife.com www.hdfcinsurance.com www.iciciprulife.com www.ingvysayalife.com www.maxnewyorklife.com www.metlife.com www.omkotakmahnidra.com www.sbilife.co.in www.avivaindia.com
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General Insurers Public Sector National Insurance Company Limited New India Assurance Company Limited Oriental Insurance Company Limited United India Insurance Company Limited Private Sector Bajaj Allianz General Insurance Co. Limited ICICI Lombard General Insurance Co. Ltd. IFFCO-Tokio General Insurance Co. Ltd. Reliance General Insurance Co. Limited Royal Sundaram Alliance Insurance Co. Ltd. TATA AIG General Insurance Co. Limited Cholamandalam General Insurance Co. Ltd. Export Credit Guarantee Corporation HDFC Chubb General Insurance Co. Ltd. REINSURER General Insurance Corporation of India www.gicindia.com www.bajajallianz.co.in www.icicilombard.com www.itgi.co.in www.ril.com www.royalsun.com www.tata-aig.com www.cholainsurance.com www.ecgcindia.com www.nationalinsuranceindia.com www.niacl.com www.orientalinsurance.nic.in www.uiic.co.in
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3.5Regulatory Body in Industry-IRDA

The Insurance Regulatory and Development Authority Act was introduced toend the monopoly of State-owned companies and to invest in the Insurance Regulatory Authority power to control the insurance sector. The Insurance Regulatory and Development Authority (IRDA) is a national agency of the government of India, based in Hyderabad. It was formed by an act of Indian Parliament known as IRDA Act 1999, which was amended in 2002 to incorporate some emerging requirements.
3.6Mission
Mission of IRDA as stated in the act is "to protect the interests of the policyholders, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto."
3.7Expectations
The law of India has following expectations from IRDA To protect the interest of and secure fair treatment to policyholders; To bring about speedy and orderly growth of the insurance industry (including annuity and superannuation payments), for the benefit of the common man, and to provide long term funds for accelerating growth of the economy;
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To set, promote, monitor and enforce high standards of integrity, financial soundness, fair dealing and competence of those it regulates;
To ensure that insurance customers receive precise, clear and correct information about products and services and make them aware of their responsibilities and duties in this regard.
To ensure speedy settlement of genuine claims, to prevent insurance frauds and other malpractices and put in place effective grievance redressal machinery; To promote fairness, transparency and orderly conduct in financial markets dealing with insurance and build a reliable management information system to enforce high standards of financial soundness amongst market players;
To take action where such standards are inadequate or ineffectively enforced; To bring about optimum amount of self-regulation in day to day working of the industry consistent with the requirements of prudential regulation.
3.8 Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA o Subject to the provisions of this Act and any other law for the time being in force, the Authority shall o Have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. o Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include,
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Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration.
Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance. Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents. Specifying the code of conduct for surveyors and loss assessors. Promoting efficiency in the conduct of insurance business. Promoting and regulating professional organizations connected with the insurance and re-insurance business. Levying fees and other charges for carrying out the purposes of this Act. Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organizations connected with the insurance business. Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938). Specifying the form and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries. Regulating investment of funds by insurance companies. Regulating maintenance of margin of solvency.
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Adjudication of disputes between insurers and intermediaries or insurance intermediaries. Supervising the functioning of the Tariff Advisory Committee.
Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organizations referred to in clause. Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector.
3.9.Features of Insurance Industry

Insurance Policy India provides the clients with the details required for the coverages in the policy, date of commencement of the policy and their adopting organizations. It plays a important role in the Indian insurance sector. The Insurance Policy India is regulated by certain acts like the Insurance Act (1938), the Life Insurance Corporation Act(1956), General Insurance Business Nationalization) Act(1972), Insurance Regulatory and Development Authority IRDA) Act(1999). The insurance policy determines the covers against risks, sometime opens investment options with insurance companies setting high returns and also informs about the tax benefits like the LIC in India. There are two types of insurance covers: Life insurance General insurance
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3.10 Life insurance

This sector deals with the risks and the accidents affecting the life of the customer. Alongside, this insurance policy also offers tax planning and investment returns. There are various types of life Insurance Policy India: Endowment Policy Whole Life Policy Term Life Policy Money-back Policy Joint Life Policy Group Insurance Policy
3.11 General Insurance

This sector covers almost everything related to property, vehicle, cash, household goods, health and also one's liability towards others. The major segments covered under general Insurance Policy India are: Home Insurance Health Insurance Motor Insurance Travel Insurance
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Some of the well known Insurance Policy India are

Social Security Group Scheme
A scheme covering the age group of 18-60 years and an insurance of Rs.5000 for natural death and of Rs.25000 on due to accidental death.
Shiksha Sahyog Yojana

A scheme providing an educational scholarship of Rs.300 per quarter per child is given for a period of four years.
Jan Arogya Bima Policy

A scheme for the adults upto the age of 45 years is Rs. 70 and for children it is Rs. 50. The limit coverage is fixed at Rs.5000 per annum.
Mediclaim Insurance Policy

A scheme covering the age group from 5-80 years with a tax benefit of up to Rs 10,000.
Jana Shree Bima Yojana

This is coverage of Rs 2,000 on natural death and Rs 50,000 for accidental death. The premium amount is fixed at Rs. 200 for single member.
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Videsh Yatra Mitra Policy

A scheme covering medical expenses during the period of overseas travel.
Bhagya Shree Child Welfare Bima Yojana

A scheme covering one girl child in a family upto the age of 18 whose parents age does not exceed 60 years, with a premium of Rs.15 per annum.
Raj Rajeshwari Mahila Kalyan Yojana

A scheme providing protection to woman in the age group of 10 to 75 years with an insurance of Rs. 25,000 and premium Rs.15 per annum.
Ashray Bima Yojana

A scheme covering workers in case of loss of jobs.
Personal Accident Insurance Scheme for Kissan Credit Card a scheme covering all the KCC holders up to an age of 70 years. Insurance coverage includes 50,000 for accidental death and 25,000 for partial disability. The functions of Insurance can be bifurcated into two parts Primary Functions Secondary Functions Other Functions
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The primary functions of insurance include the following Provide Protection

The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.
Collective bearing of risk

Insurance is a device to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid.
Assessment of risk
Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also.
Provide Certainty
Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.
The secondary functions of insurance include the following
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Prevention of Losses
Insurance cautions individuals and businessmen to adopt suitable device to prevent unfortunate consequences of risk by observing safety instructions; installation of automatic sparkler or alarm systems, etc. Prevention of losses cause lesser payment to the assured by the insurer and this will encourage for more savings by way of premium. Reduced rate of premiums stimulate for more business and better protection to the insured.
Small capital to cover larger risks

Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty.
Contributes towards the development of larger industries

Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.
The other functions of insurance include the following
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Means of savings and investment

Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance.
Source of earning foreign exchange

Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways.
Risk Free trade

Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover.
3.12 Current Scenario In Industry

Liberalization and Globalization have allowed the entry of foreign players in the Insurance sector. With the entry of private and foreign players in the Insurance business, people
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have got a lot of options to choose from. To survive, the focus of the modern insurers shifted to a customer-centric relationship. India's economic development made it a most lucrative Insurance market in the world. Before the year 1999, there was monopoly state run LIC transacting life business and the General Insurance Corporation of India. In the wake of reform process and passing Insurance Regulatory and Development Authority (IRDA) Act through Indian parliament in 1999, Indian Insurance was opened for private companies. India offers immense possibilities to Insurers since it is the world's most populous country having over a billion people. At present there are fourteen companies each in Life and General Insurance. Private and Foreign entrants in the Insurance Industry made others difficult to retain their market. Higher customer aspirations lead to new expectations and compel him to move towards the insurer who provides him the best service in time.
3.13Factors Involved in Current Market Scenario Information Technology

The Insurance companies are utilizing the Information technology applications for better customer service, cost reduction, new product design and development and many more. In the initial years IT was used more to execute back office functions like maintenance of accounts, reconciling broker accounts, client processing etc. With the advent of "database concepts", these
functions are better integrated in an administrative efficiency. The internet technology has enabled the Insurer to innovate new products, provide better customer service and deeper and wider insurance coverage to them. At present, Insurance companies are giving customers a distinct claim id to track claims on-line, entertaining on-line enrollment, eligibility review, financial reporting, and billing and electronic fund transfer to its benefit customers.
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Product Innovation
Insurers are continuously innovating new products based on forward-looking models. They have developed new products addressing the new challenges in society and products to address the hazards from new environmental issues. Understanding the customer better enable Insurance companies to design appropriate products, determine price correctly and to increase profitability. Since a single policy cannot meet all the Insurance objectives, one should have a portfolio of policies covering all the needs. Product development is made possible by integrating actuarial, rating, claims and illustration systems. At present, the Life Insurers are concentrating on the pension schemes and the Non-Life Insurers on many innovative schemes of various realms and thereby enriching their market share. Moreover, with increased commoditization of insurance products, brand building is going to play a vital role.
Distribution Network
While companies have been successful in product innovation, most of them are still grappling with right mix of Distribution Channels for capturing maximum market share to build brand equity, building strong and effective customer relationships and cost effective customer service. While the traditional channel of tied up advisors or agents would be the chief distribution channel, insurer should innovate and find new methods of delivering the products to customers. Corporate agency, brokerage, Bank assurance, e-insurance, cooperative societies .
Customer services
In the present competitive scenario, a key differentiator is the professional customer service in terms of quality of advice on product choice along with policy servicing. Servicing focus
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is on enhancing the customer's experience and maximizing his convenience. This calls the effective CRM system, which eventually creates sustainable competitive advantage and enables to build long lasting relationship.
1. Modern Marketing Approach

After doing market research and finalizing on segmentation, targeting and positioning the strategy would focus on the marketing mix namely, Product, Price, Place and Promotion. While determining the implementation methodology, the four characteristics viz. Intangibility, Inseparability, Perish ability and Variability gives rise to certain unique requirements that deserve careful attention while formulating the marketing strategy for insurance. After implementation, the insurers should concentrate on the effective control that would enhance their business. In India Insurance is sold and not bought. The agents / Advisors by using various strategies sell the product by convincing the customers. Moreover, they push Policies with the highest premium to pocket a higher commission. The consultative approach to selling is the modern approach, which helps customers and prospects to buy. A consultant makes calls and sells just like any other sales person. The difference is in their attitude, their approach and their commitment. Here, the customer is seen as a person to be served and not a person to be sold. It helps the purchaser to make an intelligent decision. The four-step process includes
1. Need discovery. 2. Selection of the product. 3. Need satisfaction presentation. 4. Serving the sale.
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3.14 Key Players With Market Share

Global integration of financial markets resulted from de-regulating measures, technological information explosion and financial innovations. Liberalization and Globalization have allowed the entry of foreign players in the Insurance sector. With the entry of private and foreign players in the Insurance business, people have got a lot of options to choose from. Radical changes are taking place in customer profile due to the changing life style and social perception, resulting in erosion of brand loyalty. To survive, the focus of the modern insurers shifted to a customer-centric relationship. The paper focuses the current position of insurance industry.
Liberalization And Privatisation (How The Different Key Players Came Into Market?)
India's economic development made it a most lucrative Insurance market in the world. Before the year 1999, there was monopoly state run LIC transacting life business and the General Insurance Corporation of India with its four Subsidiaries transacting the rest. In the wake of reform process and passing Insurance Regulatory and Development Authority (IRDA) Act through Indian parliament in 1999, Indian Insurance was opened for private companies.
Liberalization on the Insurance sectors has allowed the foreign players to enter the market with their Indian partners. Most of the foreign Insurers have joined within the local market. India offers immense possibilities to foreign Insurers since it is the world's most populous country having over a billion people. Insurance industry had ten and six entrants in life and non-life sector respectively in the year 2000-2001. The industry again saw two and three entrants in the life and non-life business respectively in the year 2001-2002. One additional entrant was made both in the life and in non-life
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business in 2004 and 2005 respectively. At present there are fourteen companies each in Life and General Insurance. The Funds earlier generated by the state owned insurers have been diversified with other new insurers. We should wait and see how the new players are going to boost up our economy.
Competition
Private and Foreign entrants in the Insurance Industry made others difficult to retain their market. Higher customer aspirations lead to new expectations and compel him to move towards the insurer who provides him the best service in time. It becomes less viable for them even to maintain the functional networks or competitive standards and services. To survive in the Industry they analyse, the emerging requirements of the policyholders/insurers and they are in the forefront in providing essential services and introducing novel products. Thereby they become niche specialists, who provide the right service to the right person in right time.
In the above table shows, the private players in the life insurance business have increased their market share to 23.93 per cent. Among them ICICI prudential is ranked first in capturing the market followed by Bajaj Allianz and HDFC Standard. In the General Insurance sector the private players have captured 27.35 per cent. Among them ICICI-Lombard is ranked first, followed by Bajaj Allianz and IFFCO-Tokyo. The healthy competition in the sector enabled the State owned insurers of our mother country to reduce its market share to 76.07 per cent and 72.65 percent in life and non-life business respectively. Moreover, private insurers have planned to increase their market share in the next five years. The public insurers have to enrich its approach to withhold its share.
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3.15 International Scenario

Life insurance not plays an important role in national economy but also in international economy. Marine cargo insurance provides risk coverage for shippers and the banks, which finance international trades. This role becomes all the more important in the context of an active government policy to encourage exports. Indian life insurer operates in more than 30 countries through agencies, branches, associates companies. These operations earn foreign exchange. The insurance business is concerned with North America, Western Europe, Japan and Oceania. Together these regions accounts for about 91 % of the world annul remium. By regions North America and western Europe are growing moderately while oceanic, Latin America, eastern Europe and Africa display growth above lone term trends to a global context globalization of life insurance helps companies practices underwriting discipline in one regions globalization of the insurance industry received a big boost.
Countries United Kingdom Japan United States South Africa Australia South Korea India China Malaysia Indonesia Brazil
Insurance Penetration Insurance Density (Per (premium as a% of GDP) Capita Premiums in USD) 12.71 3028.5 8.70 3165.1 4.48 1611.4 14.04 392.9 6.04 1193.5 9.89 935.6 1.77 7.6 1.12 9.5 2.13 86.4 0.54 4.0 0.36 12.9
India and the World Market

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Unfortunately, the progress achieved by the life insurance industry in India, it compares unfavorably not just with the developed countries. But also even with the developing world. The global market for the life insurance is estimated to be around $ 1412.3 billions.
3.16 Market Share Of Insurance Industry
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3.17 Life Insurance Industry grows 49 per cent in April

New Delhi: The life insurance industry clocked 49 per cent growth in new businesses, while general insurance players saw 16 per cent increase in April, the first month of the current financial year.
Strong performance by Life Insurance Corporation, ICICI Prudential and SBI Life helped the 16 player-strong life insurance industry to mop up Rs 2,982 crore in April this year compared with Rs 1,996 crore collected in the same month last year, according to data compiled by the Insurance Regulatory and Development Authority. The countrys largest life insurer, LIC, saw new premiums grow 57 per cent to Rs 2,134 crore in April by selling 15,89,684 policies against Rs 1,355 crore a year ago. It had a market share of 71.56 per cent in April.
Insurers ICICI Prudential Bajaj Allianz
Premium (Rs cr) 271.00 124.00
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SBI Life HDFC Standard Max New York Life Tata AIG Aviva Reliance Life Birla Sunlife Kotak Mahindra Old Mutual ING Vysya Met Life Shriram Life Sahara Life
90.00 70.00 69.00 48.00 39.00 33.00 28.00 26.00 22.00 19.00 4.50 1.70
3.18 current Market Share Of Life Insurance Companies

LIC still remains the largest life insurance company accounting for 64% market share. Mainly owing to entry of private players with innovative products and better sales force. Bajaj Allianz Life Insurance Co Ltd has reported a growth of 52% and its market share went up to 6.98% in 2007-08. The company ranked second (after LIC) in number of policies sold in 2007-08, with total market share of 7.36%. ICICI Prudential Life Insurance Co Ltd is the biggest private life insurance company in India. Accounting for increase in market share to 8.93% in 2007-08. SBI Life Insurance Co Ltd in terms of new number of policies sold, the company ranked 6th in 2007-08. New premium collection for the company was Rs.4,792.66 crore in 200708, an increase of 87% over last year.
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Reliance Life Insurance Co Ltd Total collected was Rs.2,792.76 crore and its MARKET SHARE went up to 2.96% from 1.23% a year back. HDFC Standard Life Insurance Co Ltd with an income of Rs.2,680 crore in FY2007-08, registering a year-on-year growth of 64%. Its MARKET SHARE is 2.88% and it ranks 6th among the insurance companies and 5th amongst the private players. Birla Sun Life Insurance Co Ltd market share of the company increased from 1.22% to 2.11% in 2007-08. The company moved to the 7th position in 2007-08 from 8the a year before.
Max New York Life Insurance Co Ltd has reported growth of 73% in 2007-08. Total new business generated was Rs.641.83 crore as against Rs.387.51 crore. The company was pushed down to the 8th position from 7th in 2007-08. Kotak Mahindra Old Mutual Life Insurance Ltd the fiscal 2007-08, the company reported growth of 80%, moving from the 11th position to 9th. It captured a market share of 1.19% in 2007-08.
3.22 Future Trends in Market Growth

With a huge population base and large untapped market, insurance industry is a big opportunity area in India for national as well as foreign investors. India is the fifth largest life insurance market in the emerging insurance economies globally and is growing at 32-34% annually. This impressive growth in the market has been driven
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by liberalization, with new players significantly enhancing product awareness and promoting consumer education and information. The strong growth potential of the country has also made international players to look at the Indian insurance market. Moreover, saturation of insurance markets in many developed economies has made the Indian market more attractive for international insurance players. This research report will help the client to analyze the leading-edge opportunities critical to the success of insurance industry in India. Based on this analysis, the report gives a future forecast of the market that is intended as a rough guide to the direction in which the market is likely to move. -Total life insurance premium in India is projected to grow Rs 1,230,000 crore by 2010-11.
-Total non-life insurance premium is expected to increase at a CAGR of 25% for the period spanning from 2008-09 to 2010-11. -With the entry of several low-cost airlines, along with fleet expansion by existing ones and increasing corporate aircraft ownership, the Indian aviation insurance market is all set to boom in a big way in coming years. -Home insurance segment is set to achieve a 100% growth as financial institutions have made home insurance obligatory for housing loan approvals. -Health insurance is poised to become the second largest business for non-life insurers after motor insurance in next three years. -A booming life insurance market has propelled the Indian life insurance agents into the top 10 country list in terms of membership to the Million Dollar Round Table (MDRT) an exclusive club for the highest performing life insurance agents. To grab the maximum market share, the companies are focusing on the following aspects
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Information Technology
Insurers are the earlier adopters of technology. Because of the Information revolution, customers are free to choose from a wide range of new and innovative products. The Insurance companies are utilizing the Information technology applications for better customer service, cost reduction, new product design and development and many more.
New technology gives the policyholders / insured better, wider and faster access to products and services. The impact of Information Technology in Insurance business is being felt at an accelerating pace. In the initial years IT was used more to execute back office functions like maintenance of accounts, reconciling broker accounts, client processing etc. With the advent of "database concepts", these functions are better integrated in an administrative efficiency. The real evolution is however emerged out of Internet boom. The Internet has provided brand new distribution channels to the Insurers. The technology has enabled the Insurer to innovate new products, provide better customer service and deeper and wider insurance coverage to them. At present, Insurance companies are giving customers a distinct claim id to track claims on-line, entertaining on-line enrollment, eligibility review, financial reporting, and billing and electronic fund transfer to its benefit clan customers.
Product Innovations
Insurers are continuously innovating new products based on forward-looking models. They have developed new products addressing the new challenges in society and products to address the hazards from new environmental issues. Companies will need to constantly innovate in terms of product development to meet ever-changing consumer needs. Understanding the customer better will enable Insurance companies to design appropriate products, determine price
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correctly and to increase profitability. Since a single policy cannot meet all the Insurance objectives, one should have a portfolio of policies covering all the needs. Product development is made possible by integrating actuarial, rating, claims and illustration systems. At present, the Life Insurers are concentrating on the pension schemes and the Non-Life Insurers on many innovative schemes of various realms and thereby enriching their market share.
Distribution Network
While companies have been successful in product innovation, most of them are still grappling with right mix of Distribution Channels for capturing maximum market share to build brand equity, building strong and effective customer relationships and cost effective customer service. While the traditional channel of tied up advisors or agents would be the chief distribution channel, insurer should innovate and find new methods of delivering the products to customers. Corporate agency, brokerage, Banc assurance, e-insurance, cooperative societies and panchayats are some of the channels, which can be tapped by the insurers to reach the appropriate market segments. Now days, the urban masses are tapped with the new techniques provided by Information Technology through Internet. Rural masses are attracted by the consultative approach adopted by the Insurers. Moreover, they attract the customers through telephone and mobile also.
Customer Education and Services

Insurance is a unique service industry. The key industry drivers are related to life style issues in terms of perceiving insurance as a savings instrument rather than for risk cover, need based selling, quality of service and customers awareness. In the present competitive scenario, a key differentiator is the professional customer service in terms of quality of advice on product choice along with policy servicing. Servicing focus is on enhancing the customer's experience and maximizing his convenience. This calls the effective
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CRM system, which eventually creates sustainable competitive advantage and enables to build long lasting relationship.
4. COMPANY PROFILE
The Reliance group founded by Dhirubhai H.Ambani (1932-2002) is Indias largest business house with total revenue of over Rs 99,000 crores (US$ 22.6 billion), each profit of Rs. 12,500 crores(US$ 2.8 billion), net profit Of Rs. 6,200 crores(US$1.4 billion ) and exports of Rs. 15,000 crores (US$ 3.6 billion). Reliance Group revenue is equivalent to about 3.5% of Indias GDP. The Group contributes nearly 10% of the countries indirect tax revenues and over 6% of the Indias exports. Reliance is trusted by an investor family of over 3.1 million- Indias largest Reliance General Insurance Company Limited (RGICL) is one of the first no life companies to get the license from the IRDA. The paid up capital stands at Rs.102 crores .it is one of the few companies in the private sector to provide a complete insurance solution.
4.1 Indias No. 1 Business Group

Founded as a textile mill in 1966 by Dhirubhai Ambani, the chairman of the Reliance continued to be a textile company until early 1980s. However, seizing the opportunities emanating from the growing Indian economy as well as the opening up of the regulation-driven sectors of the economy such as petrochemicals, plastics etc., Reliance pursed the policy of backward integration from textiles as well as
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diversification from the early 1980s onwards to set up world-scale facilities for the manufacturing polyster and textile intermediates, detergent intermediates etc.
Today, Reliance is Indias largest business house with total revenue of Rs80,000 crores (US$ 16.8 billion), cash profit of Rs 9,800 crores (US$ 2.1billion), net profit of over Rs 4,700 crores (US$990 million)and exports of Rs 11,900 crores (US$2.5 billion). The reliance Group companies include: Reliance industries Limited, Reliance Capital Limited, Reliance industrial infrastructure Limited, Reliance Telecom Limited, Reliance infocomm Limited, Reliance General insurance company Limited, Indian Petrochemicals Corporation Ltd. And Reliance Energy Limited.
4.2 Reliance Life Insurance

Reliance Life Insurance, one of the leading life insurance companies of India, today announced it First Year Premium (FYP) income for financial year ended March 2009. During the year the company has recorded a growth of 70 per cent in individual first year premium adjusted for single pay. The adjusted individual FYP for FY 2009 stood at Rs.1,308 crore as compared to Rs.769 crore during previous financial year. During the last quarter of the financial year (January-March 09), the company grew by 95 per cent over the corresponding period last year. The adjusted individual FYP for quarter ended March 2009 stood at Rs.471 crore as compared to Rs.241 crore for quarter ended March 2008.
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The Reliance Life Insurance has built a robust and values driven business model. The Company as the best in class agent advisors who are acknowledged for their quality of advice.It has a strong focus on customer needs and during past one year we further sharpened our
customer centricity. This reflects in our entry into new product segments like health insurance and retirement planning and superior customer service and claims record. Reliance Life Insurance sold 8.7 lakh policies during the financial year 2008, an increase of 58 per cent over 5.5 lakh policies sold during financial year 2008. The company has acquired around 23 lakh policies since inception. In the financial Year 2009 the assets under management also doubled to over Rs.3, 600 crore as compared to Rs.1, 800 crore as at the end of previous financial year. During the Financial Year 2009, Reliance Life Insurance further strengthened its distribution network. The company launched 55 new offices and now has presence in 157 cities across the country through 200 offices. Reliance Life Insurance offers you products that fulfill your savings and protection needs. Our aim is to emerge as a transnational Life Insurer of global scale and standard. Reliance Life Insurance is an associate company of Reliance Capital Ltd., a part of Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of Indias leading private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, stock broking, life and general insurance, proprietary investments, private equity and other activities in financial services.
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Reliance - Anil Dhirubhai Ambani Group also has presence in Communications, Energy, Natural Resources, Media, Entertainment, Healthcare and Infrastructure. The rural business Reliance Life Insurance started in 2003 its hub and spoke operations in Mumbai after witnessing stupendous success in Maharashtra.
Reliance Life Insurance launched 13 new products during the financial year and now has a portfolio of 38 products and eight riders for individuals. The company entered the health insurance segment with the launch of Lifeline Health Insurance Plans in February 2008. It also strengthened its ULIP portfolio through launch of like maker range of products and retirement portfolio through Smart Invest. Reliance Life Insurance has a strong growth focus. The company plans to significantly expand its distribution footprint by opening more than 100 new offices every year for next 3-4 years. The number of agent advisors is expected to touch 2, 00,000 from current 36,500. The growth in agency distribution will be complemented by strong growth in partnership distribution. The company currently has an equity base of Rs.1, 032 crore. To support this growth plan, the shareholders are committed to increase the capital base to Rs. 2,650 cores over the next 3-4 years.The company has positioned itself on the quality platform. In line with its vision to be the Most Admired Life Insurance Company in India, it has developed a strong corporate governance model based on the core values of excellence, honesty, knowledge, caring, integrity and teamwork. Reliance Life Insurance Company Ltd. a Fortune 100 company one of India's leading business corporations. The company has positioned itself on the quality platform. In line with its vision to be the most admired life insurance company in India, it has developed a strong corporate governance model based on the core values of excellence, honesty, knowledge, caring,
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integrity and teamwork. The strategy is to establish itself as a trusted life insurance specialist through a quality approach to business.
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The first Insurance in Private sector without any Foreign Collaboration to start in India after LIC. In line with its values of financial responsibility, Reliance Life has adopted prudent financial practices to ensure safety of policyholder's funds. The Company's paid up capital is Rs. 907.4 core, which is more than the norm laid down by IRDA. Reliance Life has identified individual agents as its primary channel of distribution. The Company places a lot of emphasis on its selection process, which comprises four stages - screening, psychometric test, career seminar and final interview. The agent advisors are trained inhouse to ensure optimal control on quality of training. Reliance Life invests significantly in its training programmed and each agent is trained for 152 hours as opposed to the mandatory 100 hours stipulated by the IRDA before beginning to sell in the marketplace. Training is a continuous process for agents at Reliance Life and ensures development of skills and knowledge through a structured programmed spread over 500 hours in two years. This focus on continuous quality training has resulted in the company having amongst the highest agent pass rate in IRDA examinations and the agents have the highest productivity among private life insurers.450 agent advisors have qualified for the Million Dollar Round Table (MDRT) membership in 2009. MDRT is an exclusive congregation of the worlds top selling insurance agents and is internationally recognized as the standard of excellence in the life insurance business. Having set a best in class agency distribution model in place, the company is spearheading a major thrust into additional distribution channels to further grow its business. The company is using a five-pronged strategy to pursue alternative channels of distribution. These include the franchisee model, rural business, direct sales force involving group insurance and telemarketing opportunities, banc assurance and corporate alliances.
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Reliance Life offers a suite of flexible products. It now has 24 life insurance products that can be customized to over 800 combinations enabling customers to choose the policy that best fits their need.
4.3 Vision
Empowering everyone live their dreams.
4.4 Mission
Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and pension plans.
4.5 Goal
Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below: Emerge as transnational Life Insurer of global scale and standard Create best value for Customers, Shareholders and all Stake holders Achieve impeccable reputation and credentials through best business practices.
4.6 values Knowledge

Knowledge leads to expertise; and our expertise is in helping people protect them. Perfectly combining global expertise with local knowledge, we are India's life insurance specialist. Reliance Life believes that for knowledge to be of value it must be focused, current, tested and shared.
Caring
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Reliance Life is redefining the life insurance paradigm by focusing on customers first. The service process is responsive, personalized, humane and empathetic. Every individual who represents the company is for our brand champion
Honesty
Honesty is the heart of the life insurance business. It is all about trust. Transparency, integrity and dependability form the cornerstones of the Reliance Life experience. The company ensures that everyone who represents the brand carries a promise: we car in word as well as deed.
Excellence
Excellence at Reliance Life implies the ability to perform at a consistently high level. Focused on the value of continuous improvement in people, processes and the organization, the company strives for the highest standards of quality in every aspect of its business.
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NATURE OF BUSINESS
Reliance Life Insurance has LIFELINE.
Reliance Life Insurance launches range of superior health insurance plans. These plans take health insurance services to a new level with long-term, fixed benefits, largest scale of coverage against ailments. Reliance Life Insurance took health insurance services to a new level with the introduction of its LIFELINE health insurance plans. Reliance Life Insurance's LIFELINE series, launched all across the country , brings long term insurance coverage for hospitalization, surgeries and critical illness. The LIFELINE series comprises of 3 distinct groups of solutions The Medicash Plans are hospital cash plans that provide the customer a fixed per day benefit for hospitalization, ICU admission, recuperation benefit and a lump sum benefit against an unlimited number of surgeries. The Wellness Plans are critical illness covers against as many as 38 critical medical conditions from Alzheimer's to liver disease, deafness to permanent disability, cancer to heart ailments, a range offered by no other insurer in India under one plan. The Safety Net is a comprehensive term plus health protection plan, offering the policyholder protection from any losses arising from critical illness, accident, disability and death. It is the only plan of its nature in the Indian market.
4.7 Risk Return Analysis Of The Schemes
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A rational investor before investing his/her money in stock analysis the risk associated with the particular stock. The actual returns he receives from the stock may vary from the expected one and thus an investor is always caution about the rate of risk associated with particular stock. hence it becomes very essential on the part of investors to know the risk as the hard earned money is being invested with the view to good return on investment. Risk mainly consists of two components. Systematic risk unsystematic risk
Systematic risk
The systematic risk affects the entire market. The economic conditional, political situation, sociological change affects the entire market in turn affecting the company and even the stock market. These situations are uncontrollable by corporate and investeors.
Unsystematic risk
The Unsystematic risk is unique to industries. It differs from industries to
industries. Unsystematic risk stems from managerial inefficiency, technological change in production process, availability of raw materials, change in the customer preference and labour problem. The nature and magnitude of above mentioned factors differ from industry to industry and company to company.
In general view, the risk for any investor would be the probably loss from investing money in any mutual fund.but when look at the technical side of its, we cant just say these
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schemes/ fund carry risk without any proof. They are certain set formulas to say the percentage risk associated with it. There are certain tools or formulas used to calculate the risk associated with schemes. These tools helps us to understand the associated wit the schemes. These schemes are compared with the benchmark BSE 100
CHAPTER 5 ANALYSIS AND INTERPRETATION
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5.1 Reliance Vision Fund

Reliance Vision Fund is large cap open ended growth fund. Its objective is to achieve long term growth of capital through a research based Investment approach. Monthly risk & return from 01sApril 2005 to 31st March 2008 is calculated below Table 5.1 Calculation of Risk and Return
Date
1-Apr-05 29-Apr-05 31-May-05 30-Jun-05 29-Jul-05 31-Aug-05 30-Sep-05 1-Oct-05 30-Nov-05 30-Dec-05 31-Jan-06 28-Feb-06 31-Mar-06 29-Apr-06 31-May-06 30-Jun-06 31-Jul-06 31-Aug-06 29-Sep-06 31-Oct-06 30-Nov-06 29-Dec-06 31-Jan-07 28-Feb-07 30-Mar-07 30-Apr-07 31-May-07 29-Jun-07 31-Jul-07 31-Aug-07 28-Sep-07
Asset Value
88.13 86.10 91.64 91.49 99.75 104.82 114.32 105.35 118.05 125.97 134.38 139.26 155.75 165.65 141.84 137.65 138.85 150.99 160.53 171.09 174.93 183.67 184.14 171.42 169.70 183.80 200.00 207.32 219.24 214.28 235.29
Return in %
2.30 6.43 -0.16 9.03 5.08 9.06 -7.85 12.06 6.71 6.68 3.63 11.84 6.36 -14.37 -2.95 0.87 8.74 6.32 6.58 2.24 -7.00 0.26 -6.91 -1.00 8.31 8.81 3.66 5.75 -2.26 9.80
(R-R1)
-4.96 3.77 -2.82 6.37 2.42 6.40 -10.51 9.40 4.05 4.02 0.97 9.18 3.70 -17.03 -5.61 -1.79 6.08 3.66 3.92 -0.42 2.34 -2.40 -9.57 -3.66 5.65 6.15 1.00 3.09 -4.92 7.15
R-R1)2
24.63 14.25 7.97 40.56 .87 41.01 110.37 88.28 16.40 16.13 0.94 84.30 13.67 290.13 31.51 3.20 37.01 13.39 15.36 0.17 5.46 5.78 1.53 13.42 31.91 37.88 1.00 9.55 24.22 51.06
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31-Oct-07 30-Nov-07 31-Dec-07 31-Jan-08 29-Feb-08 31-Mar-08
268.30 264.45 287.66 246.44 240.47 206.12 Total
14.03 -1.43 8.78 -14.33 -2.42 -14.28 5.74
11.37 -4.09 6.12 -16.99 -5.08 -16.94
129.28 16.76 37.42 288.62 25.83 287.10 911.97
Table 5.2 Calculation of Beta Return of Company -2.30 6.43 -0.16 9.03 5.08 9.06 -7.85 12.06 6.71 6.68 3.63 11.84 6.36 -14.37 -2.95 0.87 8.74 6.32 6.58 Return of Market -4.84 8.70 5.51 7.16 2.77 9.12 -8.91 11.79 6.53 5.49 3.78 8.88 5.88 -13.86 -0.06 0.75 9.43 6.65 4.35 [Ra-Ra1] (Rm-Rm1) 37.34 22.70 -7.97 28.45 0.19 41.21 121.88 85.49 15.54 11.24 1.07 56.85 11.80 281.79 15.41 3.47 41.02 14.49 6.51 (RmRm1)2 56.62 36.15 7.97 19.96 0.01 41.42 134.59 82.79 14.72 7.82 1.20 38.33 10.20 273.69 7.54 3.76 45.47 15.69 2.76
Date 31-Apr-05 29-Apr-05 31-May05 30-Jun-05 29-Jul-05 31-Aug-05 30-Sep-05 31-Oct-05 30-Nov-05 30-Dec-05 31-Jan-06 28-Feb-06 31-Mar-06 29-Apr-06 31-May06 30-Jun-06 31-Jul-06 31-Aug-06 29-Sep-06 31-Oct-06
Ra-Ra1
Rm-Rm1
-4.96 3.77 -2.82 6.37 2.42 6.40 -10.51 9.40 4.05 4.02 0.97 9.18 3.70 -17.03 -5.61 -1.79 6.08 3.66 3.92
-7.52 6.01 2.82 4.47 0.08 6.44 -11.60 9.10 3.84 2.80 1.10 6.19 3.19 -16.54 -2.75 -1.94 6.74 3.96 1.66
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30-Nov-06 29-Dec-06 31-Jan-07 28-Feb-07 30-Mar-07 30-Apr-07 31-May07 29-Jun-07 31-Jul-07 31-Aug-07 28-Sep-07 31-Oct-07 30-Nov-07 31-Dec-07 31-Jan-08 29-Feb-08 31-Mar-08 Total
2.24 5.00 0.26 -6.91 -1.00 8.31 8.81 3.66 5.75 -2.26 9.80 14.03 -1.43 8.78 -14.33 -2.42 -14.28 95.74
4.96 0.74 2.34 -8.66 0.92 6.77 6.20 1.83 5.24 -1.83 14.12 15.88 -0.07 7.41 -15.36 -0.38 -12.46 96.77
-0.42 2.34 -2.40 -9.57 -3.66 5.65 6.15 1.00 3.09 -4.92 7.15 11.37 -4.09 6.12 -16.99 -5.08 -16.94
2.27 -1.94 -0.35 -11.35 -1.77 4.08 3.51 -0.86 2.55 -4.52 11.44 13.19 -2.75 4.73 -18.05 -3.07 -15.15
-0.94 -4.54 0.84 108.56 6.47 23.04 21.59 -0.86 7.89 22.23 81.72 149.96 11.27 28.91 306.62 15.60 256.71 1823.56
5.16 3.78 0.12 128.76 3.12 16.63 12.31 0.74 6.52 20.41 130.78 173.96 7.58 22.33 325.74 9.42 229.54 1897.60
Calculation of Risk and Return Return = (P1-P0 /P0 *100) - 100 Where, P1 = Current month price, P0 = Previous month price R1 = R/n, Where n=number of months. R1 = 95.74/36 =2.66
SD = (R- R1)2 /n = 1911.77/36
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SD = 7.29 Calculation of Beta B = [ (Ra Ra1)(Rm-Rm1)]/ (Rm-Rm1)2 Where Ra = Return on Company Ra1= Average return on company Rm= Return on market Rm1= Average return on market = 1823.56/1897.60 B = 0.96 Calculation of Alpha Alpha = (Ra1-Rm1)*B = (2.66-2.69)*0.96 =-0.027
Risk And Return Of Reliance Vision Fund Factor Risk Return Beta
Percentage 7.29 2.66 0.96

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Alpha
-0.03
Chart Risk & Return Of Reliance Vision Fund
ANALYSIS Reliance Vision Fund has a risk factor of 7.29% Its rate of return on a monthly average is 2.66% Alpha and Beta are 0.96 and -0.03 respectively INTERPRETATION Beta of Reliance Vision Fund is 0.96 which is less than one; it shows less volatilityof the fund with respect to market. Risk of the fund is 7.29% and the rate of return is
2.66%.
RELIANCE GROWTH FUND

Benchmark -100
RETURN 0F INVESTMENT NA Rp(y) 34.95 MARKET RETURN (y-Y) (y-Y) INDEX 2946.14 m(x) (x*X) x*y
DATE Jan 04
55
Feb 04 Mar 04 Apr 04 May 04 Jun 04 Jul 04 Aug 04 Sep 04 Oct 04 Nov 04 Dec 04 TOTAL Y=y/12
35.5 27.99 29.83 25.59 25.88 28.31 31.23 32.93 30.48 3.52 35.41
1.5737 -21.155 6.5738 -14.214 1.1333 9.3895 10.314 5.4435 -7.44 9.9738 5.6384 7.2314 1.2052
0.36844 -22.36 5.36854 -15.419 -0.072 8.18426 9.10914 4.23825 -8.6453 8.76852 4.43319
0.136 500 28.82 237.7 0.005 66.98 82.98 17.96 74.74 76.89 19.65 1106
2923.99 2966.31 3025.14 2658.23 2561.16 2755.22 2789.07 2997.07 3027.96 3339.75 3580.34
-0.7518 1.44734 1.98327 -12.129 -3.6517 7.57704 1.22858 7.45768 1.03067 10.297 7.20383 TOTAL X=x/12
0.5653 2.0948 3.9334 147.11 13.335 57.411 1.5094 55.617 1.0623 106.03 51.895 21.693 1.9721
-1.1831 -30.618 13.038 172.4 -4.1383 71.144 12.672 40.596 -7.6682 102.7 40.618 440.56
4000 3500 3000 2500 2000 1500 1000 500 0 1 2 3 4 5 6 7 8 9 10 11 12
40 35 30 25 20 15 10 5 0 index Navs
Analysis
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The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2004 to Dec 2004. From the above graph we can see there is some correlation between the movement of both
Dec 04 Jan 05 Feb 05 Mar 05 Apr 05 May 05 Jun 05 Jul 05 Aug 05 Sep 05 Oct 05 Nov 05 Dec 05 TOTAL Y=y/12
35.41 35.35 37.91 32.61 33.66 36.16 36.75 41.13 45.72 47.57 42.94 47.74 48.57
-0.1694 7.2419 -13.98 3.2199 7.4272 1.6316 11.918 11.16 4.0464 -9.733 11.178 1.7386 35.679 2.9733
-3.1427 4.26861 -16.954 0.24661 4.45396 -1.3416 8.94511 8.18648 1.07311 -12.706 8.20513 -1.2347
9.877 18.22 287.4 0.061 19.84 1.8 80.01 67.02 1.152 161.4 67.32 1.524 715.7
3580.34 3521.71 3611.9 3481.86 3313.45 3601.73 3800.24 4072.15 4184.83 4566.63 4159.59 4649.87 4953.28 TOTAL X=x/12
-1.6376 2.56097 3.6003 -4.8368 8.7003 5.51152 7.15507 2.76709 9.12343 -8.9134 11.7867 6.52513 35.1422 2.92852
2.6816 6.5586 12.962 23.394 75.695 30.377 51.195 7.6568 83.237 79.448 138.93 42.577 554.71
0.2775 18.546 50.334 -15.574 64.619 8.9928 85.277 30.88 36.917 86.754 131.76 11.344 509.85
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6000 5000 4000 3000 2000 1000 0 1 2 3 4 5 6 7 8 9 10 11 12
60 50 40 30 20 10 0 index Navs
Analysis The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2004 to Dec 2004. From the above graph we can see there is some correlation between the movement of both
58
48.57 52.1 52.82 51.42 55.34 49.36 44.66 43.34 48.34 52.55 53.08 55.1 57.01
7.2679 1.382 -2.6505 7.6235 -10.806 9.5219 -2.9557 11.537 8.7091 1.0086 3.8056 3.4664 18.866 1.5721
5.69572 -0.1902 -4.2227 6.05135 -12.378 -11.094 -4.5278 9.96454 7.137 -0.5636 2.23343 1.89428
32.44 0.036 17.83 36.62 153.2 123.1 20.5 99.29 50.94 0.318 4.988 3.588 542.8
4953.28 5224.97 5422.67 5904.17 6251.39 5385.21 5382.11 5422.39 5933.77 6328.33 6603.6 6931.05 6982.58 TOTAL X=x/12
5.48505 3.78375 8.87939 5.88093 -13.856 -0.0576 0.74841 9.4309 6.6494 4.3498 4.95866 0.74347 36.9964 3.08303
30.086 14.317 78.844 34.585 191.98 0.0033 0.5601 88.942 44.214 18.921 24.588 0.5527 527.6
39.865 5.229 -23.535 44.833 149.72 0.5481 -2.212 108.8 57.911 4.3871 18.871 2.5772 407
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6000 5000 4000 3000 2000 1000 0 1 2 3 4 5 6 7 8 9 10 11 12 60 50 40 index 30 20 10 0 N av
Analysis The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2004 to Dec 2004. From the above graph we can see there is some correlation between the movement of both
Dec 06
57.01
6982.58
60
Jan 07 Feb 07 Mar 07 Apr 07 May 07 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07 Nov 07 Dec 07 TOTAL Y=y/12
59.12 55.73 47.86 50.8 54.29 56.7 59.77 53.86 60.06 69.89 72.38 81.43
3.7011 -5.7341 -14.122 6.1429 6.8701 4.4391 5.4145 -9.8879 11.511 16.367 3.5627 12.503 40.769 3.3974
0.30373 -9.1315 -17.519 2.74554 3.4727 1.04175 2.01709 -13.285 8.11395 12.9696 0.16537 9.10608
0.092 83.38 306.9 7.538 12.06 1.085 4.069 176.5 65.84 168.2 0.027 82.92 908.6
7145.91 6527.12 6587.21 7032.93 7468.7 7605.37 8004.05 7857.61 8967.41 10391.19 10384.4 11154.28 TOTAL X=x/12
2.33911 -8.6594 0.92062 6.76645 6.19614 1.8299 5.24209 -1.8296 14.1239 15.8773 -0.0653 7.41381 50.155 4.17958
5.4714 74.984 0.8475 45.785 38.392 3.3485 27.479 3.3473 199.48 252.09 0.0043 54.965 706.2
8.6573 49.654 -13.001 41.566 42.568 8.1232 28.383 18.091 162.58 259.86 -0.2328 92.698 698.95
12000
90 80
10000 70 8000 60 50 6000 40 4000 30 20 2000 10 0 1 2 3 4 5 6 7 8 9 10 11 12 0 index Navs
Analysis The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2004 to Dec 2004. From the above graph we can see there is some correlation between the movement of bot
61
100 00 90 00 80 00 70 00 60 00 50 00 40 00 30 00 20 00 10 00
81.43 67.48 65.61 65.61 56.16 53.7 45.81 48.2036 48.4178 42.6755 33.1429 30.471 32.8738
-17.1313 -2.77119 0 -14.4033 -4.38034 -14.6927 5.22506 0.44437 -11.8599 -22.3374 -8.06176 7.88553 -82.0829 -6.84025
-10.291 4.06905 6.84025 -7.563 2.4599 -7.8525 12.0653 7.28461 -5.0196 -15.497 -1.2215 14.7258
105.9 16.56 46.79 57.2 6.051 61.66 145.6 53.07 25.2 240.2 1.492 216.8 976.5
11154.28 9440.94 9404.98 8232.82 9199.46 8683.27 7029.27 7488.48 7621.4 6621.57 4953.98 4600.45 4988.04 TOTAL X=x/12
-15.36 -0.3809 -12.463 11.7413 -5.6111 -19.048 6.53283 1.77499 -13.119 -25.184 -7.1363 8.42505 -69.829 10.5004
8 0 7 0 6 0 5 0 4 0 3 0 2 0 1 0
235.94 0.1451 155.33 137.86 31.484 362.83 42.678 3.1506 172.1 634.24 50.927 70.981 1897.7
263.14 1.0555 0 -169.11 24.578 279.87 34.134 0.7887 155.59 562.55 57.531 66.436 1276.6
in e dx Nv as
0 1 2 3 4 5 6 7 8 9 1 0 1 1 1 2
Analysis: The above graph shows the movement of NAV of reliance growth fund and Benchmark index for the period from Jan 2004 to Dec 2004. From the above graph we can see there is some correlation between the movement of both
62
1) STANDARD DEVIATION S.D= (y-Y) N YEAR 2004 2005 2006 2007 2008 (y-Y) 1102.589 715.7085 542.8451 908.6373 76.5005 y-Y)/N 91.88242 59.64238 45.23709 75.71978 81.37504 Square root (S.D) 9.5855 7.7228 6.7258 8.7017 9.0208
2) BETA = N *XY-(X)(Y) NX-(X) BETA Y YEAR 2 2004 2 2005 2 2006 2 2007 2 2008 * XY 5286.72 6118.165 4883.992 8387.444 15318.71 N X) 21.69324 35.14223 36.99639 50.15499 -69.8287 ( Y) 7.231404 35.67909 18.86572 40.76851 -82.0829 ( x 5 286.692 6656.522 6331.154 8474.359 22772.07 N X) 470.5966 1234.977 1368.733 2515.523 4876.05 ( 0.9878 0.8972 0.8435 1.0644 0.5357
63
3) ALPHA =Y-(X) ALPHA YEAR 2004 2005 2006 2007 2008 Y 1.205234 2.973257 1.572144 3.397376 -6.84025 0.9878 0.8972 0.8435 1.0644 0.5357 1.972113 2.928519 3.083033 4.179583 -5.81906 X =Y-(X) -0.742819 0.34579 -1.02839 -`1.0513 \-3.7229
CHAPTER 6 FINDINGS
Savings money is not enough. Each of us also need to invest ones savings intelligently in order to have enough money available for funding the higher education of ones children, for buying a house, or for ones own golden years.
FINDINGS
Investments mutual fund schemes are subjected to market risk. Investment in equity and mutual fund schemes are increasing because ofFalling interest rates and awareness of equity capital and mutual fund Schemes in the minds of investors Beta of Reliance Vision Fund is 0.96 which is less than one; it shows less volatility of the fund with respect to market. Risk of the fund is 7.29% and the rate of return is 2.66% The returns on mutual fund are good and it will attract more and more customers.
64
On the basis of above statements it has provided that higher the risk higher the return and lower the risk lower the return. Standard deviation is one of the best ways for finding risk of scrips & Mutual fund units. In case of both equities and mutual funds(open ended) liquidity is very high, within three working days mutual funds will be converted into cash and liquidity of equity is based on demand and supply conditions of the market for a particular scrip
When we see Reliance growth fund it has high standard deviation in the year 2004 as compared to other 4 years i.e. 2005,2006,2007 &2008 Beta is referred to how much the portfolio is dependent on the market return so higher the higher the dependent hence high risk i.e systematic risk When we see Reliance growth fund in 2007 it has high i.e if 10% decrease in Rm result in 10%cRp which very dangerous to investors but at the when observe in 2008 i.e o.5357 which mean 10%decrease in Rm results in 5.3 Rp which is healty sigh i.e the 2005 the scheme has lowest systematic risk .
65
CHAPTER 7 SUGGESTIONS
This is the right time to invest in shares and mutual funds because of above reason. Interest rates are falling gradually and equity markets are booming because of this reason investors can move from bank deposits to mutual funds and equities Investors must have an investment approach to wealth. One must analyze one's risk appetite. One must possess a long-term outlook Never forget to do homework and analysis. It is essential to have control over one's emotions. Investment in both equity capital and mutual fund schemes are subjected to market risk. Following are the suggestions given to investors for investing rationally in equity capital and mutual fund schemes
Aggressive Growth Funds
66
Its good for investors who can assume the risk of potential loss in value of their investment in the hope of achieving substantial and rapid gains. They are not suitable for investors who must conserve their principal or who must maximize current income.
Growth Funds
Although Growth funds are more conservative than aggressive growth funds, they are still relatively volatile. They are suitable for growth-oriented investors but not for investors who are unable to assume risk or who are dependent on maximizing current income from their investments.
Growth and Income Funds

M P Birla Institute of Management Page:1 06Growth and income funds have low to moderate stability of principal and moderate potential for current income and growth. They are suitable for investors who can assume some risk to achieve growth of capital but who also want to maintain a moderate level of current income.
Fixed-Income Funds
Fixed-income funds are suitable for investors who want to maximize current income and who can assume a degree of capital risk in order to do so. Again, carefully read the prospectus to learn if a fund's investment policy with respect to yield and risk coincides with your own objectives.
67
CHAPTER 8 CONCLUSION
Saving money is not enough. Each of us also need to invest ones savings intelligently in order to have enough money available for funding the higher education of one s children, for buying a house, or for one s own golden years. The study will guide the new investor who wants to invest in equity and mutual fund schemes by providing knowledge about how to measure the risk and return of particular scrip or mutual fund scheme. The study recommends new investors to go for mutual funds rather than equities, because of high risk and market instability. From the calculation it is found that the average risk of mutual funds is based on sample size is only 7.29 & they are earning 2.66 per month.
68
CHAPTER 9 BIBLIOGRAPHY
Books referred
o Principles and Practices of Insurance, Peraswamy .P 1st edition, Himalaya Publishing house 2003. o Financial services Khan, M.Y., , 3rd edition, New Delhi, TATA McGraw Hill Publishing Company Ltd., 2004. o Financial Management 9th Edition, by I. M. Pandey
Web sites
www.moneycontrol.com www.Reliancelife.com www.irda.gov.in
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AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

1.2Insurance sector reforms

III) Regulatory Body

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

CHAPTER 2 RESEARCH DESIGN

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

2.3Objectives of the study

2.4 Sources of data

2.5 Primary data

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

2.6 Secondary data

2.7 Plan of Analysis

2.8 The Tools Used For Calculation

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

2.10 Standard Deviation

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

CHAPTER 3 INDUSTRY PROFILE

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

3.2A brief history of the Insurance sector

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

3.5Regulatory Body in Industry-IRDA

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

3.8 Duties, Powers and Functions of IRDA

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

3.9.Features of Insurance Industry

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

3.10 Life insurance

3.11 General Insurance

EAST POINT COLLEGE OF HIGHER EDUCATION

AN IN-DEPTH ANALYSIS OF LIFE INSURANCE AS A BETTER INVESTMENT AVENUE IN PRESENT SCENARIO

Some of the well known Insurance Policy India are

Shiksha Sahyog Yojana