THE INSURANCE INDUSTRY IN INDIA

AN OVERVIEW

With the largest number of life insurance policies in force in the world, Insurance

happens to be a mega opportunity in India. It’s a business growing at the rate of 15-20

per cent annually and presently is of the order of Rs 1560.41 billion (for the financial

year 2006 – 2007). Together with banking services, it adds about 7% to the country’s

Gross Domestic Product (GDP). The gross premium collection is nearly 2% of GDP

and funds available with LIC for investments are 8% of the GDP.

Even so nearly 65% of the Indian population is without life insurance cover while

health insurance and non-life insurance continues to be below international standards.

A large part of our population is also subject to weak social security and pension

systems with hardly any old age income security. This in itself is an indicator that

growth potential for the insurance sector in India is immense.

A well-developed and evolved insurance sector is needed for economic development

as it provides long term funds for infrastructure development and strengthens the risk

taking ability of individuals. It is estimated that over the next ten years India would

require investments of the order of one trillion US dollars. The Insurance sector, to

some extent, can enable investments in infrastructure development to sustain the

economic growth of the country.

 HISTORICAL PERSPECTIVE

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu

( Manusmrithi ), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). The

writings talk in terms of pooling of resources that could be re-distributed in times of

calamities such as fire, floods, epidemics and famine. This was probably a pre-cursor

to modern day insurance. Ancient Indian history has preserved the earliest traces of

insurance in the form of marine trade loans and carriers’ contracts. Insurance in India

has evolved over time heavily drawing from other countries, England in particular.

1818 saw the advent of life insurance business in India with the establishment of

the Oriental Life Insurance Company in Calcutta. This Company however failed in

1834. In 1829, the Madras Equitable had begun transacting life insurance business in

the Madras Presidency. 1870 saw the enactment of the British Insurance Act and in

the last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental

(1874) and Empire of India (1897) were started in the Bombay Residency. This era,

however, was dominated by foreign insurance offices which did good business in

India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe

Insurance and the Indian offices were up for hard competition from the foreign

companies.

In 1914, the Government of India started publishing returns of Insurance Companies

in India. The Indian Life Assurance Companies Act, 1912 was the first statutory

measure to regulate life business. In 1928, the Indian Insurance Companies Act was

enacted to enable the Government to collect statistical information about both life and

non-life business transacted in India by Indian and foreign insurers including

provident insurance societies. In 1938, with a view to protecting the interest of the

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Insurance public, the earlier legislation was consolidated and amended by the

Insurance Act, 1938 with comprehensive provisions for effective control over the

activities of insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there

were a large number of insurance companies and the level of competition was high.

There were also allegations of unfair trade practices. The Government of India,

therefore, decided to nationalize insurance business.

An Ordinance was issued on 19th January, 1956 nationalising the Life Insurance sector

and Life Insurance Corporation came into existence in the same year. The LIC

absorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245

Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the

Insurance sector was reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west

and the consequent growth of sea-faring trade and commerce in the 17th century. It

came to India as a legacy of British occupation. General Insurance in India has its

roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in

Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This

was the first company to transact all classes of general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance

Association of India. The General Insurance Council framed a code of conduct for

ensuring fair conduct and sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum

solvency margins. The Tariff Advisory Committee was also set up then.

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In 1972 with the passing of the General Insurance Business (Nationalization) Act,

general insurance business was nationalized with effect from 1st January, 1973. 107

insurers were amalgamated and grouped into four companies, namely National

Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental

Insurance Company Ltd and the United India Insurance Company Ltd. The General

Insurance Corporation of India was incorporated as a company in 1971 and it

commence business on January 1sst 1973.

This millennium has seen insurance come a full circle in a journey extending to nearly

200 years. The process of re-opening of the sector had begun in the early 1990s and

the last decade and more has seen it been opened up substantially. In 1993, the

Government set up a committee under the chairmanship of RN Malhotra, former

Governor of RBI, to propose recommendations for reforms in the insurance sector.

The objective was to complement the reforms initiated in the financial sector. The

committee submitted its report in 1994 wherein , among other things, it recommended

that the private sector be permitted to enter the insurance industry. They stated that

foreign companies be allowed to enter by floating Indian companies, preferably a

joint venture with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the

Insurance Regulatory and Development Authority (IRDA) was constituted as an

autonomous body to regulate and develop the insurance industry. The IRDA was

incorporated as a statutory body in April, 2000. The key objectives of the IRDA

include promotion of competition so as to enhance customer satisfaction through

increased consumer choice and lower premiums, while ensuring the financial security

of the insurance market.

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The IRDA opened up the market in August 2000 with the invitation for application

for registrations. Foreign companies were allowed ownership of up to 26%. The

Authority has the power to frame regulations under Section 114A of the Insurance

Act, 1938 and has from 2000 onwards framed various regulations ranging from

registration of companies for carrying on insurance business to protection of

policyholders’ interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India

were restructured as independent companies and at the same time GIC was converted

into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries

from GIC in July, 2002.

Today there are 14 general insurance companies including the ECGC and Agriculture

Insurance Corporation of India and 14 life insurance companies operating in the

country.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.

Together with banking services, insurance services add about 7% to the country’s

GDP. A well-developed and evolved insurance sector is a boon for economic

development as it provides long- term funds for infrastructure development at the

same time strengthening the risk taking ability of the country.

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 KEY MILESTONES

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 by the Insurance Act with the

objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers along with provident societies were taken over

by the central government and nationalized. LIC was formed by an Act of

Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the

Government of India.

INDUSTRY REFORMS

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body

in April 2000 has fastidiously stuck to its schedule of framing regulations and

registering the private sector insurance companies. Since being set up as an

independent statutory body the IRDA has put in a framework of globally compatible

regulations.

The other decision taken simultaneously to provide the supporting systems to the

insurance sector and in particular the life insurance companies was the launch of the

IRDA online service for issue and renewal of licenses to agents. The approval of

institutions for imparting training to agents has also ensured that the insurance

companies would have a trained workforce of insurance agents in place to sell their

products.

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PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA

The life insurance industry in India grew by an impressive 47.38%, with premium

income at Rs. 1560.41 billion during the fiscal year 2007-2008. Though the total

volume of LIC's business increased in the last fiscal year (2007-2008) compared to

the previous one, its market share came down from 85.75% to 81.91%.

The 17 private insurers increased their market share from about 15% to about 19% in

a year's time. The figures for the first two months of the fiscal year 2008-09 also

speak of the growing share of the private insurers. The share of LIC for this period

has further come down to 75 percent, while the private players have grabbed over 24

percent.

With the opening up of the insurance industry in India many foreign players have

entered the market. The restriction on these companies is that they are not allowed to

have more than a 26% stake in a company’s ownership.

Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7

billion have poured into the Indian market and 19 private life insurance companies

have been granted licenses.

Innovative products, smart marketing, and aggressive distribution have enabled

fledgling private insurance companies to sign up Indian customers faster than anyone

expected. Indians, who had always seen life insurance as a tax saving device, are now

suddenly turning to the private sector and snapping up the new innovative products on

offer. Some of these products include investment plans with insurance and good

returns (unit linked plans), multi – purpose insurance plans, pension plans, child plans

and money back plans.

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 INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY

Reforms in the Insurance sector were initiated with the passes of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body

in April 2000 has fastidiously such to its schedule of framing regulations and

registering the private sector insurance companies.

The other decision taken simultaneously to provide the supporting systems to the

insurance sector and in particular the life insurance companies was the launch of the

IRDA online service for issue and renewal of licenses to agents.

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..

(1) Subject to the provisions of this Act and any other law for the time being in force,

the Authority shall have the duty to regulate, promote and ensure orderly growth of

the insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section (1),

the powers and functions of the Authority shall include,

(a) issue to the applicant a certificate of registration, renew, modify, withdraw,

suspend or cancel such registration;

(b) 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;

(c) specifying requisite qualifications, code of conduct and practical training for

intermediary or insurance intermediaries and agents;

(d) specifying the code of conduct for surveyors and loss assessors;

(e) promoting efficiency in the conduct of insurance business;

(f) promoting and regulating professional organisations connected with the insurance

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and re-insurance business;

(g) levying fees and other charges for carrying out the purposes of this Act;

(h) calling for information from, undertaking inspection of, conducting enquiries and

investigations including audit of the insurers, intermediaries, insurance intermediaries

and other organisations connected with the insurance business;

(i) 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);

(j) 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;

(k) regulating investment of funds by insurance companies;

(l) regulating maintenance of margin of solvency;

(m) adjudication of disputes between insurers and intermediaries or insurance

intermediaries;

(n) supervising the functioning of the Tariff Advisory Committee;

(o) specifying the percentage of premium income of the insurer to finance schemes

for promoting and regulating professional organisations referred to in clause

(p) specifying the percentage of life insurance business and general insurance

business to be undertaken by the insurer in the rural or social sector; and

(q) exercising such other powers as may be prescribed

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 RESEARCH DESIGN

INTRODUCTION

A Research Design is the framework or plan for a study which is used as a guide in

collecting and analyzing the data collected. It is the blue print that is followed in

completing the study. The basic objective of research cannot be attained without a

proper research design. It specifies the methods and procedures for acquiring the

information needed to conduct the research effectively. It is the overall operational

pattern of the project that stipulates what information needs to be collected, from

which sources and by what methods.

TITLE OF THE STUDY

“Comparative analysis of HDFC standard life insurance company limited with

other insurance company for HDFC standard life insurance company ltd.”

STATEMENT OF THE PROBLEM

This study was undertaken to identify which type of insurance plans HDFC SLIC

should market to beat other insurance company in India. A survey was undertaken to

understand the preferences of Indian consumers with respect to insurance. While

marketing policies the sole duty of an advisor/ agent is to provide insurance plans as

per customer requirements.

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 In effect plans (insurance products) should be flexible to suit individual requirements.

This research tries to analyze some key factors which influence the purchase of

insurance like the term of the policy, the type of company, the amount of annual

premium payable (capacity and willingness to spend), risk taking ability and the

influence of advertising. Solutions and recommendations are made based on

qualitative and quantitative analysis of the data.

OBJECTIVES OF THE STUDY

 To analysis the product details of HDFC Standard life Insurance Company limited

and other insurance company.

 To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard

Life Insurance Company Limited and other insurance company.

 To find out factors that influence customers to purchase insurance policies

and give suggestions for further improvement.

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 RESEARCH METHODOLOGY

TYPE OF DATA COLLECTED

There are two types of data used. They are primary and secondary data. Primary data

is defined as data that is collected from original sources for a specific purpose.

Secondary data is data collected from indirect sources.

PRIMARY SOURCES

These include the survey or questionnaire method, telephonic interview as well as the

personal interview methods of data collection.

SECONDARY SOURCES

These include books, the internet, company brochures, product brochures, the

company website, competitor’s websites etc, newspaper articles etc.

SAMPLING

Sampling refers to the method of selecting a sample from a given universe with a

view to draw conclusions about that universe. A sample is a representative of the

universe selected for study.

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SAMPLE SIZE

The sample size for the survey conducted was 270 respondents. This sample size was

taken on 95% confidence level and 6 significant level. Data universe for this sample is

10,00,000 which is approx population of Delhi excluding people below age of 18

years.

SAMPLING TECHNIQUE

Random sampling technique was used in the survey conducted.

PLAN OF ANALYSIS

Tables were used for the analysis of the collected data. The data is also neatly

presented with the help of statistical tools such as graphs and pie charts. Percentages

and averages have also been used to represent data clearly and effectively.

STUDY AREA

The samples referred to were residing in Jodhpur City. The areas covered were

Paschim Vihar, Panjabi Bagh, Naraina, New Friends Colony, Nehru Place.

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 OVERVIEW OF CHAPTER SCHEME

CHAPTER 1:

Introduction to insurance - An overview of the insurance industry in India, history,

key milestones, reforms in the industry, present scenario in India.IRDA

CHAPTER 2:

Research Design - Introduction, title of the study, statement of the problem,

objectives of the study, research methodology, sampling, plan of analysis and study

area.

CHAPTER 3:

Company profile of HDFC SLIC – Introduction of HDFC SLIC, Board members,

HDFC Profile, Standard life Profile, Join venture, products and services, Awards and

Accolades, Distribution Strategy , Achievements, Limitation, Field methodology

CHAPTER 4:

Competitive analysis – Information about the plans offered by LIC, ICICI prudential,

Birla Sun Life, Bajaj Allianz and Tata AIG.

CHAPTER 5:

Marketing problems - The techniques used to market insurance and their advantages

and disadvantages along with suggestions for improvement.

CHAPTER 6:

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Analysis and Interpretation – A survey on factors that influence people to purchase

Life Insurance Policy.

CHAPTER 7:

Future Line Of Research – Future topic for research.

CHAPTER 8:

Conclusion.

References

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 HDFC STANDARD LIFE INSURANCE COMPANY LIMITED

Introduction:

HDFC Standard Life Insurance Company Limited. is one of India's leading private

insurance companies, which offers a range of individual and group insurance

solutions. It is a joint venture between Housing Development Finance Corporation

Limited (HDFC Limited), India's leading housing finance institution and a Group

Company of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds

72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity in

the joint venture, while the rest is held by Others.

As a joint venture of leading financial services groups, HDFC Standard Life has the

financial expertise required to manage your long-term investments safely and

efficiently.

HDFC SLIC have a range of individual and group solutions, which can be easily

customised to specific needs. Group solutions have been designed to offer complete

flexibility combined with a low charging structure.

The gross premium income, for the year ending March 31, 2009 stood at Rs. 5,564.69

crores.

The company has covered over 8,33,070 lives as on March 31, 2009.

HDFC Standard Life believes that establishing a strong and ethical foundation is an

essential prerequisite for long-term sustainable growth. To ensure this, we have

concentrated our focus on expansion of branch network, organising an efficient and

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well trained sales force, and setting up appropriate systems and processes with

optimum use of technology. As all these areas form the basic infrastructure for

establishing the highest possible customer service standards.

Our core values are drilled down to all levels of employees, as these are inviolable.

We continue to promote high integrity in business practices and shun short cuts and

unethical practices, as we wish to be perceived as an institution with high moral

standing. Since our inception in 2000, when the Indian insurance space was opened

for private participation, we have consistently focused on setting benchmarks in all

aspect on insurance business. Being the first private player to be registered with the

IRDA and the first to issue a policy on December 12, 2000, our differentiators are:

Strong promoter

HDFC Standard Life is a strong, financially secure business supported by two strong

and secure promoters – HDFC Ltd and Standard Life. HDFC Ltd’s excellent brand

strength emerges from its unrelenting focus on corporate governance, high standards

of ethics and clarity of vision. Standard Life is a strong, financially secure business

and a market leader in the UK Life & Pensions sector.

Preferred and Trusted Brand

Our brand has managed to set a new standard in the Indian life insurance

communication space. We were the first private life insurer to break the ice using the

idea of self-respect instead of ‘death’ to convey our brand proposition (Sar Utha Ke

Jiyo). Today, we are one of the few brands that customers recognize, like and prefer

to do business. Moreover, our brand thought, Sar Utha Ke Jiyo, is the most recalled

campaign in its category.

Investment Philosophy

|Page 17
We follow a conservative investment management philosophy to ensure that our

customer’s money is looked after well. The investment policies and actions are

regularly monitored by a formal Investment Committee comprising non-executive

directors and the Principal Officer & Executive Director.

As a life insurance company, we understand that customers have invested their

savings with us for the long term, with specific objectives in mind. Thus, our

investment focus is based on the primary objective of protecting and generating good,

consistent, and stable investment returns to match the investor’s long-term objective

and return expectations, irrespective of the market condition.

Need-Based Selling Approach

Despite the criticality of life insurance, sales in the industry have been characterized

by over reliance on tax benefits and limited advice-based selling. Our eight-step

structured sales process ‘Disha’ however, helps customers understand their latent

needs at the first instance itself without focusing on product features or tax benefits.

Need-based selling process, 'Disha', the first of its kinds in the industry, looks at the

whole financial picture. Customers see a plan not piecemeal product selling.

|Page 18
Risk Control Framework

HDFC Standard Life has fully implemented a risk control framework to ensure that

all types of risks (not just financial) are identified and measured. These are regularly

reported to the board and this ensures that the company management and board

members are fully aware of any risks and the actions taken to ensure they are

mitigated

Focus on Training

Training is an integral part of our business strategy. Almost all employees have

undergone training to enhance their technical skills or the softer behavioural skills to

be able to deliver the service standards that our company has set for itself. Besides the

mandatory training that Financial Consultants have to undergo prior to being licensed,

we have developed and implemented various training modules covering various

aspects including product knowledge, selling skills, objection handling skills and so

on.

Focus on Long-Term Value

HDFC Standard Life do not focus in the business of ramping up the topline only, but

to create maximisation of stakeholder's value. Today, we are extremely satisfied with

the base that we have created for the long-term success of this company.

Transparent Dealing

We are one of the few companies whose product details, pricing, clauses are clearly

|Page 19
 communicated to help customers take the right decision.

Strict Compliance with Regulations

We have initiated and implemented many new processes, some of which were found

useful by the IRDA and later made mandatory for the entire industry.The agents who

successfully completed this training only, were authorized by the company to sell

ULIPs. This has now been made compulsory by IRDA for all insurance companies

under the new Unit Linked Guidelines.

Diversified Product Portfolio

HDFC Standard Life’s wide and diversified product portfolio help individuals meet

their various needs, be it:

 Protection: Need for a sound income protection in case of your unfortunate

demise

 Investment: Need to ensure long-term real growth of your money

 Savings: Save for the milestones and protect your savings too

 Pension: Need to save for a comfortable life post retirement

 Health: Cover for health related exigencies

|Page 20
 BOARD MEMBERS

Brief Profile of The Board of Directors

Mr. Deepak S. Parekh is the Chairman of the

Company. He is also the Executive Chairman of

Housing Development Finance Corporation

Limited (HDFC Limited). He joined HDFC

Limited in a senior management position in 1978. He was inducted

as a whole-time director of HDFC Limited in 1985 and was

appointed as its Executive Chairman in 1993. He is the Chief

Executive Officer of HDFC Limited. Mr. Parekh is a Fellow of the

Institute of Chartered Accountants (England & Wales).

Sir Alexander M. Crombie joined the Board of

Directors of the Company in April, 2002. He has

been with the Standard Life Group for 34 years

holding various senior management positions. He

was appointed as the Group Chief Executive of the Standard Life

Group in March 2004. Sir Crombie is a fellow of the Faculty of

Actuaries in Scotland.

Mr. Keki M. Mistry joined the Board of Directors

of the Company in December, 2000. He is

currently the Managing Director of HDFC

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 Limited. He joined HDFC Limited in 1981 and became an Executive

Director in 1993. He was appointed as its Managing Director in

November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered

Accountants of India and a member of the Michigan Association of

Certified Public Accountants.

Ms. Marcia D. Campbell is currently the Group

Operations Director in the Standard Life group and

is responsible for Group Operations, Asia Pacific

Development, Strategy & Planning, Corporate

Responsibility and Shared Services Centre. Ms. Campbell joined the

Board of Directors in November 2005.

Ms. Renu S. Karnad is the Executive director of

HDFC Limited, is a graduate in law and holds a

Master's degree in economics from Delhi

University. She has been employed with HDFC

Limited since 1978 and was appointed as the Executive Director in

2000. She is responsible for overseeing all aspects of lending

operations of HDFC Limited.

Mr. Norman K. Skeoch is currently the Chief

Executive in Standard Life Investments Limited

and is responsible for overseeing Investment

Process & Chief Executive Officer Function. Prior

to this, Mr. Skeoch was working with M/s. James Capel & Co.

|Page 22
 holding the positions of UK Economist, Chief Economist, Executive

Director, Director of Controls and Strategy HSBS Securities and

Managing Director International Equities. He was also responsible

for Economic and Investment Strategy research produced on a

worldwide basis. Mr. Skeoch joined the Board of Directors in

November 2005.

Mr. Gautam R. Divan is a practising Chartered

Accountant and is a Fellow of the Institute of

Chartered Accountants of India. Mr. Divan was the

Former Chairman and Managing Committee

Member of Midsnell Group International, an International

Association of Independent Accounting Firms and has authored

several papers of professional interest. Mr. Divan has wide

experience in auditing accounts of large public limited companies

and nationalised banks, financial and taxation planning of

individuals and limited companies and also has substantial

experience in structuring overseas investments to and from India.

Mr. Ranjan Pant is a global Management Consultant advising

CEO/Boards on Strategy and Change Management. Mr. Pant, until

2002 was a Partner & Vice-President at Bain & Company, Inc.,

Boston, where he led the worldwide Utility Practice. He was also

Director, Corporate Business Development at General Electric

headquarters in Fairfield, USA. Mr. Pant has an MBA from The

|Page 23
 Wharton School and BE (Honours) from Birla Institute of

Technology and Sciences.

Mr. Ravi Narain is the Managing Director & CEO of

National Stock Exchange of India Limited. Mr. Ravi

Narain was a member of the core team to set-up the

Securities & Exchange Board of India (SEBI) and is

also associated with various committees of SEBI and the Reserve Bank

of India (RBI).

Mr. Gerald E. Grimstone was appointed

Chairman in May 2007, having been Deputy

Chairman since March 2006. He became a director

of The Standard Life Assurance Company in July

2003. He is also Chairman of Candover Investments plc and was

appointed as one of the UK’s Business Ambassadors by the Prime

Minister in January 2009. Gerry held senior positions within the

Department of Health and Social Security and HM Treasury until

1986. He then spent 13 years with Schroders in London, Hong Kong

and New York, and was Vice Chairman of Schroders’ worldwide

investment banking activities from 1998 to 1999. He is the Alternate

Director to Sir Alexander Crombie.

Mr. Paresh Parasnis is the Principal Officer and

Executive Director of the company since

November 14, 2008. A fellow of the Institute of

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 Chartered Accountants of India, he has been associated with the

HDFC Group since 1984. During his 16-year tenure at HDFC

Limited, he was responsible for driving and spearheading several

key initiatives. As one of the founding members of HDFC Standard

life, Mr. Parasnis has been responsible for setting up branches,

driving sales and servicing strategy, leading recruitment,

contributing to product launches and performance management

system, overseeing new business and claims settlement, customer

interactions etc.

HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since

emerged as the largest residential mortgage finance institution in the country. The

corporation has had a series of share issues raising its capital to Rs. 119 Crores. The

gross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores

and new business premium income at Rs. 1,624 Crores. The company has covered

over 8,77,000 lives year ending March 31, 2007.

HDFC operates through almost 450 locations throughout the country with its

corporate head quarters in Mumbai, India. HDFC also has an International Office in

Dubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largest

housing company in India for the last 27 years.

SNAPSHOT - I

 Incorporated in 1977 as the first specialized Mortgage Company in India.

|Page 25
 Almost 90% of initial shareholding in the hands of domestic institutes and

retail investors. Current 77% of shares held by foreign institutional investors.

 Besides the core business of mortgage HDFC has evolved into a financial

conglomerate with holdings In:

 HDFC Standard Life insurance Company- HDFC holds 78.07 %.

 HDFC Asset Management Company – HDFC holds 50.1%

 HDFC Bank- HDFC holds 22.25%.

 Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.

 HDFC Chubb General Insurance Company – HDFC holds 74%.

SNAPSHOT-II

 Loan Approvals Rs. 805 billion.

(US $ 18.30 bn.)

 Loan Disbursements Rs.669 billion

(US $ 15.20 bn)

 Housing Units Financed 2.5 million.

 Distribution

KEY PLAYERS

Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive

Chairman of Housing Development Finance Corporation Limited (HDFC Limited).

He joined HDFC Limited in a senior management position in 1978. He was inducted

|Page 26
as a whole-time director of HDFC Limited in 1985 and was appointed as its Executive

Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is

a Fellow of the Institute of Chartered Accountants (England & Wales).

Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since

November, 2000. Prior to this, he was the Managing Director of HDFC Limited since

1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian

Institute of Technology, Bombay and a Masters Degree in Business Administration

from The American University, Washington DC.

GROUP COMPANIES

HDFC Bank: World Class Indian Bank- among the top private banks in India.

HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.

Intelenet Global: BPO services for international customers.

CIBIL: Credit Information Bureau India Limited.

HDFC Chubb: Upcoming Private companies in the field of General Insurance.

HDFC Mutual Fund

HDFC reality.com: Helps to search properties in all major cities in India

HDFC securities

|Page 27
 STANDARD LIFE

Standard Life is Europe’s largest mutual life assurance company. Standard Life,

which has been in the life insurance business for the past 175 years is a modern

company surviving quite a few changes since selling its first policy in 1825. The

company expanded in the 19th century from kits original Edinburgh premises, opening

offices in other towns and acquitting other similar businesses.

|Page 28
 Standard Life Currently has assets exceeding over £ 70 billion under its management

and has the distinction of being accorded “AAA” rating consequently for the six years

by Standard and Poor.

SNAPSHOT

 Founded in 1875, company supporting generation for last 179 years.

 Currently over 5 million Policy holders benefiting from the services offered.

 Europe’s largest mutual life insurer.

JOINT VENTURE

HDFC Standard Life Insurance Company Limited was one of the first companies to

be granted license by the IRDA to operate in life insurance sector. Reach of the JV

player is highly rated and been conferred with many awards. HDFC is rated ‘AAA ’

by both CRISIL and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’s

and Standard and Poor’s. These reflect the efficiency with which HDFC and Standard

Life manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.

|Page 29
HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August 2000.

HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard

of as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.

HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private Life

Insurance Companies, which offers a range of individual and group insurance

solutions. It is a joint venture between Housing Development Finance Corporation

Limited (HDFC Ltd.) India’s leading housing finance institution and the Standard

Life Assurance Company, a leading provider of financial services from the United

Kingdom. Both the promoters are will known for their ethical dealings and financial

strength and are thus committed to being a long-term player in the life insurance

industry- all important factors to consider when choosing your insurer.

BUSINESS GROWTH
Track Record so far

The gross premium income of HDFC, for the year ending March 31, 2010 stood at Rs.

3,256 crores and new business premium income at Rs. 1,924 crores.

The company has covered over 9, 22,000 lives year ending March 31, 2010. Company

also declared our 5th consecutive bonus in as many years for our ‘with profit’

policyholders.

KEY STRENGTH

Financial Expertise

|Page 30
As a joint venture of leading financial services groups. HDFC standard Life has the

financial expertise required to manage long-term investments safely and efficiently.

Range of Solutions

HDFC SLIC has a range of individual and group solutions, which can be easily

customized to specific needs. These group solutions have been designed to offer

complete flexibility combined with a low charging structure.

Strong Ethical Values:

HDFC SLIC is an ethical and Cultural Organization. False selling or false

commitment with the customers is not allowed.

Most respected Private Insurance Company

HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World

Class Magazine Business World for Integrity, Innovation and Customer Care.

CORPORATE OBJECTIVE

Vision

'The most successful and admired life insurance company, which means that we are

the most trusted company, the easiest to deal with, offer the best value for money, and

set the standards in the industry'.

'The most obvious choice for all'.

Values

|Page 31
.Integrity .Innovation

.Customer centric .People Care One for all

.Teamwork .Joy and Simplicity

PRODUCTS & SERVICES

The right investment strategies won't just help plan for a more comfortable tomorrow

-- they will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life insurance plans are

created keeping in mind the changing needs of family. Its life insurance plans are

designed to provide you with flexible options that meet both protection and savings

needs. It offers a full range of transparent, flexible and value for money products.

HDFC SLIC products are modern and contemporary unitized products that offer

unique customer benefits like flexibility to choose cover levels, indexation and partial

withdrawals.

PLANS THAT ARE OFFERED BY

HDFC STANDARDS LIFE INSURANCE

Individual Products

Protection Plans

A person can protect his family against the loss of his income or the burden of a loan

in the event of his unfortunate demise, disability or sickness. These plans offer

valuable peace of mind at a small price. Protection range includes our

Term Assurance Plan & Loan Cover Term Assurance Plan.

|Page 32
Investment Plans

HDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long term

investment needs. This provides attractive long term returns through regular bonuses.

Pension Plans

Pension Plans help to secure financial independence even after retirement. Pension

range includes Personal Pension Plan, Unit Linked Pension, Unit Linked Pension

Plus.

Savings Plans

Savings Plans offer a flexible option to build savings for future needs such as buying

a dream home or fulfilling your children’s immediate and future needs.

Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit

Linked Endowment Plus, Unit Linked Endowment Plus II, Money Back,

Unit Linked Enhanced Life Protection II, Children's Plan, Unit Linked Young Star,

Unit Linked Young Star Plus, Unit Linked Young Star Plus II.

Group Products

One-stop shop for employee-benefit solutions

HDFC Standard Life has the most comprehensive list of products for progressive

employers who wish to provide the best and most innovative employee benefit

solutions to their employees. It offers different products for different needs of

employers ranging from term insurance plans for pure protection to voluntary plans

such as superannuation and leave encashment.

HDFC SLIC offers the following group products to esteemed corporate clients:

|Page 33
 A) Group Term Insurance

B) Group Variable Term Insurance

C) Group Unit-Linked Plan

An investment solution that provides funding vehicle to manage corpuses with

Gratuity, Defined Benefit or Defined Contribution Superannuation or Leave

Encashment schemes of your company

Also suitable for other employee benefit schemes such as salary saving schemes and

wealth management schemes.

Social Product

Development Insurance Plan

Development Insurance plan is an insurance plan which provides life cover to

members of a Development Agency for a term of one year. On the death of any

member of the group insured during the year of cover, a lump sum is paid to those

member beneficiaries to help meet some of the immediate financial needs following

their loss.

Eligibility

Members of the development agency and their spouses with:

Minimum age at the start of the policy 18 years last birthday

Maximum age at the start of policy 50 years last birthday

|Page 34
Employees of the Development Agency are not eligible to join the group. The group

to be covered is only eligible if it contains more than 500 members.

Premium Payments

The premium to be paid will be quoted per member in the group and will be the same

for all members of the group.

The premium can only be paid by the Development Agency as a single lump sum that

includes all premiums for the group to be covered. Cover will not start until the

premium and all the member information in our specified format has been received.

Benefits

On the death of each member covered by the policy during the year of cover a lump

sum equal to the sum assured will be paid to their beneficiaries or legal heirs. Where

the death is as a result of an accident, an additional lump sum will be paid equal to

half the sum assured. There are no benefits paid at the end of the year of cover and

there is no surrender value available at any time.

The role of the Development Agency

Due to the nature of the groups covered, HDFC Standard Life will be passing certain

administrative tasks onto the Development Agency. By passing on these tasks the

premium charged can be lower. These tasks would include:

Submission of member data in a specified computer format

Collection of premiums from group members

|Page 35
 Recording changes in the details of group members

Disbursement of claim payments and the mortality rebate (if any) to group

members

These tasks would be in addition to the usual duties of a policyholder such as:

Payment of premiums

Reporting of claims

Keeping policy holder information up to date

Training and support will be available to give guidance on how to complete the tasks

appropriately. Since these additional tasks will impose a burden on the Development

Agency, the Development Agency may charge a Rs. 10 administration fee to their

members.

Prohibition of rebates

Section 41 of the Insurance Act, 1938 states

No person shall allow or offer to allow, either directly or indirectly, as an inducement

to any person to take out or renew or continue an insurance in respect of any kind of

risk relating to lives or property in India, any rebate of the whole or part of the

commission payable or any rebate of the premium shown on the policy, nor shall any

person taking out or renewing or continuing a policy accept any rebate, except such

rebate as may be allowed in accordance with the published prospectus or tables of the

insurer

If any person fails to comply with sub regulation (previous point) above, he shall be

liable to payment of a fine which may extend to rupees five hundred

|Page 36
 INTROUCTION TO UNIT LINKED FUNDS

Unit linked plans are based on the component of the premium or the contribution of

the customer towards the plan. This contribution can be in different modes like yearly,

half yearly, quarterly and monthly. Unit linked plans have multiple benefits like life

protection, rider protection, savings, transparency, investment choices, liquidity and

planning for taxes. These plans work like mutual funds.

The premium is collected from the policy holder. He is allotted a certain number of

units based of his contribution. The Net Asset Value is the value of each unit of the

fund. It is found by subtracting the charges and current liabilities from the current

assets and investments and dividing this number by the total number of outstanding

units.

Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. The

total value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now the

money (Rs. 1000) is invested in the debt or equity market. Suppose the fund value

increased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence the

value of every investor is now Rs. 12 and not Rs. 10.

UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTS

Parameters RBI Bonds Fixed Deposits Mutual Funds Unit linked

Safety High High Medium High

Liquidity None High High High

Returns Low Low High High

Life Cover 1 time amount 1 time amount 1 time amount 10 times

Tax benefits Tax free Taxed Taxed Tax free

|Page 37
We find that life insurance unit linked plans is a good area to invest money in as it

provides liquidity, safety, high returns, life cover and tax benefits in a single plan.

HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to a

large extent as the company invests in a diversified portfolio of stocks.

Tax Benefits

INCOME TAX GROSS ANNUAL HOW MUCH TAX HDFC STANDARD

SECTION SALARY CAN YOU SAVE? LIFE PLANS

Sec. 80C Across All income Upto Rs. 33,990 All the life insurance

Slabs saved on investment plans.

of

Rs. 1,00,000.
Sec. 80 CCC Across all income Upto Rs. 33,990 All the pension plans.

slabs. saved on Investment

of Rs.1,00,000.
Sec. 80 D Across all income Upto Rs. 3,399 saved All the health

slabs on Investment of insurance riders

Rs. 10,000. available with the

|Page 38
 conventional plans.
TOTAL

SAVINGS Rs37,389

POSSIBLE

Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec.

80 D, calculated for a male with gross annual income

exceeding Rs. 10,00,000.

Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely tax-free,

subject to the conditions laid down therein.

Awards & Accolades

Sept, 2008

Received 2008 CIO Bold 100 and CIO Security Awards

HDFC Standard Life has received the 2008 CIO

Bold 100 Award. This annual award recognizes

organizations that exemplify the highest level of

operational and strategic excellence in information

technology. This year's award theme, ‘The Bold

100,’ recognized those executives and organizations that embraced great risk for the

sake of great reward.

HDFC Standard Life has also been one of the five recipients of the Special 2008 CIO

Security Award aimed at CIOs, whose pioneering implementations have taken their

enterprise security to the next level. This award category identifies innovative and

|Page 39
groundbreaking deployment of technologies aimed at creating a secure business

infrastructure.

The company received the 2008 CIO Bold Award

for its mobile workforce portal and the CIO

Security Award for its initiatives for a secure

computing environment, including identity

management.

May, 2008

Received PCQuest Best IT Implementation Award 2008

HDFC Standard Life received the PCQuest Best IT Implementation Award 2008 for

Consultant Corner, the applications for its financial consultants, providing centralized

control over a vast geographical spread for key business units such as inventory,

training, licensing, etc. Read more about the ‘Consultant Corner’ tool in the

‘HDFCSL in News’ Section.

HDFC Standard Life has won the PCQuest Best IT Implementation Award for two

years consequently. Last year, the company received the award for Wonders, its path-

breaking implementation of an enterprise-wide workflow system.

March, 2008

Silver Abby at Goafest 2008

|Page 40
HDFC Standard Life's radio spot for Pension Plans won a Silver Abby in the radio

writing craft category at the Goafest 2008 organised by the Advertising Agencies

Association of India (AAAI). The radio commercial ‘Pata nahin chala’ touched

several changes in life in the blink of an eye through an old man’s perspective. The

objective was drive awareness and ask people to invest in a pension plan to live life to

the fullest even after retirement, without compromising on one’s self-respect

March, 2008

Unit Linked Savings Plan Tops Mint Best TV Ads Survey

The Unit Linked Savings Plan advertisement of HDFC Standard Life, one of the

leading private insurance companies in India, has topped Mint’s Top Television

Advertisement survey conducted, for February 2008. HDFC Standard Life’s Unit

Linked Savings Plan advertisement was ranked 4th in terms of a combined score of ad

awareness and brand recall and 3rd in terms of ad diagnostic scores (likeability,

enjoyment, believability, and claim). The respondents were between 18 and 40 years.

Mint’s exclusive report, ‘New voices in a makeover’ outlines the survey in detail.

February, 2008

Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007

Mr Deepak M Satwalekar, Managing Director and CEO, HDFC Standard Life,

received the QIMPRO Gold Standard Award 2007 in the business category at the 18th

annual Qimpro Awards function. The award celebrates excellence in individual

performance and highlights the quality achievements of extraordinary individuals in

an era of global competition and expectations.

January, 2008

Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments

HDFC Standard Life’s advertising slogan honoured as one of ‘60 Glorious

Advertising & Marketing Moments' over the last 60 years in India,’ by 4Ps Business

|Page 41
 and Marketing magazine. The magazine said that HDFC Standard Life is one of the

first private insurers to break the ice using the idea of self respect (Sar Utha Ke Jiyo)

instead of 'death' to convey its brand proposition. This was then, followed by others

including ICCI Prudential, thus giving HDFC Standard Life the credit of bringing up

one such glorious advertising and marketing moment in the last 60 years.

DISTRIBUTION STRATEGY

Why HDFC is better …?

1. Investment returns: investment returns and business growth provided by

HDFC is validated by bajaj Capital report. HDFC pacify the need of invertors up to

healthy level and make the strong relationship with them.

2. Financial Background and Experience: HDFC existing in the market since

1977. It has a very handsome experience in the field of finance because it completely

involved in finance Sector only where as the others are running in many other field

also like Reliance (Petroleum, Textile, Telecom etc.)

|Page 42
3. Ethics and Values: HDFC is an ethical and cultural organization which

prevents the false selling and prohibit the false commitment to the customer.

4. Sales Force: Properly trend licensed and Educated People are the strength of

the company. So that they could give the best customer service.

5. Huge branch network HDFC is having 450 branches in all over the country.

6. Online accessibility : It makes the process faster and make the customer

delighted.

Who can be the financial consultant: ?

Section 42(4) of the amended Insurance Act, 1938 states an agent to be one who is

not: A minor.

 Found to be sound mind by a court of competition jurisdiction.

 Found guilty of criminal background.

 Found guilty of having knowingly participated in or connived at any fraud

/dishonesty or misrepresentation against an insured.

Work of financial consultant:

The FC is the interface between the customer and insurance company. The agent

should be able to accomplish the following service.

 Assessing and analyzing the clients risk profile.

 Finding the best product or products available in the market.

 Negotiating the best deal available.

 Continuity of service throughout the period of insurance.

Objective of FC:

|Page 43
 Recruitment of Financial consultant (FCs) of a excellent profile and their retention

strategies and what are their benefit that company going to provided for retention of

their FCs.

(A) What type of people are we looking for ?

1- Committed people who have the drive, determination and ability to become

professional financial consultants.

2- Ability to sell a range of financial products.

(B) What do We Expect from financial Consultant ?

1- Devote a time and energy during training.

2- Sell at least 5 policies each month once after licensed with company.

3- We look forward to a long term mutually beneficial relationship.

(C) Why should financial consultant choose HDFC standard life ?

Brand value and the reputation of the partners (HDFC Limited) Market leader in

housing finance:

15 lakhs home financed.

11 lakhs retail deposits customer base.

 Reputation for providing the higher standards of customer service.

 Financial Strength of the partners.

 Brand value and the reputation of the partners standard life:

 175 years experience in life insurance.

 Largest mutual life insurer in Europe.

 Product innovation.

Strategies for recruitment of FC:

|Page 44
Strategies Employed to achieve the target are as follows:-

 Telecalling

 Contacting the person directly (interview)

 Collect references.

Some important steps to make effective telecalling:-

Open the call in a friendly and positive way.

State the name, position and company name.

Check the prospect has time to speak.

State the reason for the call.

Clearly succinctly explain how the meeting will be benefiting the prospect.

Achievements:

Recruited eight financial consultants for company.

Increase in confidence level.

Got the knowledge about, how to differentiate our product form that of LIC.

Made more and more people aware about my companies Products (Policies)

Taken some appointments for policies and got positive response from 8 persons with

the help of my BDM.

Limitations:-

|Page 45
 So though the study aim to achieve the above mentioned Objective in full earnest and

accuracy, it may be hampered due to certain limitation. Some of the limitations are as

follows:

 To cover the various section for the society.

 Respondents may not be at home and may have to re-contacted or replaced by

others.

 Getting accurate response form the respondents due to their inherent problem

is difficult.

 Limited response from client.

 There is a time limitation it is not possible to study whole thing I covered

some special aspect as well as some topics.

FIELD METHODOLOGY

The methodology adopted in the field to collect the data represented diagrammatically

below:

Segmentation of
People

|Page 46
Meeting with People
Filling up questionnaire
and Schedule
 TABULATION AND ANALYSIS

In order to determine the willingness of the people to become FC for HDFC SLIC in

Gorakhpur, data collected by surveying is treated as analysis. Response to the

parameter like professional, unemployed students, housewives, investment consultant,

post office agent.

Willingness to be FC for HDFC

Yes No Total
Professional 2 28 30
Working employees 2 33 35
House wives 2 18 20
Students 3 22 25
Investment consultants 2 18 20
Post office agents 3 12 15
Others - - 10
Total 14 131 155

|Page 47
|Page 48
|Page 49
|Page 50
 COMPETITIVE ANALYSIS

LIFE INSURANCE CORPORATION OF INDIA (LIC)

LIC has an excellent money back policy which provides for periodic payments of

partial survival benefits as long as the policy holder is alive. 20% of the sum assured

is payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year

along with accrued bonus. (www.lic.com)

For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20

years and the balance 40% plus the accrued bonus becomes payable at the 25 th year.

An important feature of these types of policies is that in the event of the death of the

policy holder at any time within the policy term the death claim comprises of full sum

assured without deducting any of the survival benefit amounts which have already

been paid. The bonus is also calculated on the full sum assured.

HDFC SLIC does not have a money back policy. It could offer a money back plan

and capture some portion of this market. While marketing insurance products I found

that many customers wanted to purchase these plans.

LIC offers 66 different plans; plans are formulated for specific occasions – whole life

plans, term assurance plans, money back plan for women, child plans, plans for the

handicapped individuals, endowment assurance plans, plans for high worth

individuals, pension plans, unit linked plans, special plans, social security schemes –

diversified portfolio of products. HDFC SLIC could diversify its product portfolio. It

could add more plans for high worth individuals and women.

|Page 51
ICICI PRUDENTIAL

ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger

between ICICI Bank which is the biggest private bank in India and Prudential Plc

which is a global life insurance company.

The company has an investment plan which is market related – Invest Shield Life. In

this plan even if the market falls, the premium will be returned to investors. It is a

guaranteed plan which ensures the company carefully invests your money. The stock

market performance of ICICI Prudential is much better than HDFC SLIC. The returns

on the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC.

Customers are attracted by higher returns and this is a plus point for Prudential.

The company is very well advertised. The advertisements are showcased in movies,

television, newspapers, magazines, bill boards, radio etc. The company has an

excellent brand ambassador – Mr. Amitabh Bacchan. His promotion of the company

builds trust and faith in the minds of our people.

However the charges are very high in the plans offered by ICICI Prudential. It is 35%

during the first year, 15% in the next year and 3% from the third year onwards. Also a

higher minimum premium of Rs. 8000 is charged. Hence the policies are not

accessible to the lower strata of the society.

BIRLA SUN LIFE

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya

Birla Group, one of the largest business houses in India and Sun Life Financial Inc., a

leading international financial services organization. The local knowledge of the

Aditya Birla Group combined with the expertise of Sun Life Financial Inc., offers a

formidable protection for your future. (Source: www.birlasunlife.com)

|Page 52
The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market

capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000

employees across all its units worldwide. It is led by its Chairman - Mr. Kumar

Mangalam Birla. Some of the key organizations within the group are Hindalco and

Grasim.

Sun Life Financial Inc. and its partners today have operations in key markets

worldwide, including Canada, the United States, the United Kingdom, Hong Kong,

the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets under

management of over US$343 billion, as on 31st March 2007. The company is a

leading player in the life insurance market in Canada.

Being a customer centric company, BSLI has invested heavily in technology to build

world class processing capabilities. BSLI has covered more than a million lives since

inception and its customer base is spread across more than 1000 towns and cities in

India. All this has assisted the company in cementing its place amongst the leaders in

the industry in terms of new business premium income. The company has a capital

base of 520 crores as on 31st July, 2007.

Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100

years of age. There are guaranteed returns of 3% p.a. net of policy charges after every

5 years from the eleventh policy year onwards. However the charges are very high.

The initial charges for the first year are 65%. Hence the fund value is greatly reduced.

|Page 53
BAJAJ ALLIANZ

Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience

in over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55

years in the Indian market. Together they are committed to offering you financial

solutions that provide all the security you need for your family and yourself. Bajaj

Allianz is the number one private life insurer for the year 2005 – 2006. It is leading by

78 crores. It has experienced a whopping growth of 216% in the last financial year.

The company has sold 13, 00,000 policies and is backed by 550 offices across India.

It offers travel insurance, motor insurance, home insurance, health and corporate

insurance. The mortality charges are lower than HDFC SLIC. The entry age could be

zero years which allow even new born babies to be insured.

TATA AIG

Tata Aig is a joint venture between the Tata group and American International Group

Inc. In one of the plans the company offers hospital cash benefit wherein it will pay

Rs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the person

suffers from any critical illness. Annual premium is much less (about Rs. 6712) to

avail such a good benefit. Charges are relatively low compared to HDFC SLIC for

some policies.

The company offers high coverage plans at low cost. There is a plan even for a policy

term of 1 year. Your family can continue to enjoy their current lifestyle even in the

case of something happening to you. These plans are very flexible and HDFC SLIC

could adopt this idea of insuring individuals for short periods of time. For example;

there is a family of four. The only earning member is the father.

|Page 54
He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able

to repay the loan with his current salary in 15 years. The problem arises if something

were to happen to him within these fifteen years. Not only will the family face the

emotional and financial loss of their father but they will also have to repay the home

loan or risk being homeless.

|Page 55
 MARKETING PROBLEMS

The old and out dated technique of tele marketing is used to prospect customers. More

modern techniques must be adopted. The company must sponsor shows and give

presentations in corporate houses. The financial health check must be performed for

every prospect to assess his/her true financial position and needs. Some of the

advisors skip this vital step and the prospect ends up with a plan they do not

appreciate and soon surrender or discontinue.

Some of the main problems in marketing the policies are:

 Large amount of competition (18 players in the market)

 Other brands are well advertised and have higher recall value

 LIC is considered a safer option

 Face competition from banks and mutual funds

 High premium policies are difficult to market

 Incorrect perception about insurance

 Interested prospects might have a lack of time and postpone investments

 Customers get defensive if you cold call

 Short term plans are available only at large premium

 Customers do not have risk appetite to invest in shares

 Some prospects have already invested and are not interested in further

investments

 Consumers don’t want to undertake medical examinations

 Large amount of documentation

 Customers do not like their money locked up for many years

 Lack of awareness about the unit linked funds in the market

 No money back plan present in the product portfolio

|Page 56
 SUGGESTIONS FOR IMPROVEMENT

 Advertise about the company and its products – it motivates individuals to

purchase insurance

 Create a positive perception about insurance

 Speak about the good features a plan offers like high returns, life cover, tax

benefits, indexation, accident cover while prospecting customers

 Try to sell the product/plan which the consumer requires and not the plan

where the advisors benefit is higher

 Improve the efficiency in operations

 Bring out policies with small premiums payable for short periods of time – Rs.

5000 – Rs. 10000 per annum for 10 years

 Attract the youth of India with higher returns on investment as returns are the

motivating factor which influence purchase of insurance

 Promote insurance in colleges and corporate houses

 Promote HDFC SLIC as an Indian Company to build trust

 HDFC SLIC could have a brand ambassador or a mascot to promote its

services

 Should have partial withdrawals from the first year onwards

 Tap the rural market where there is large potential

 Diversify product portfolio

 Make products more straight forward – reduce complexities

|Page 57
 ANALYSIS & INTERPRETATION

“A SURVEY ON THE LIFE INSURANCE INDUSTRY IN INDIA”

AGE GROUP OF SURVEYED RESPONDENTS

TABLE 1:

Age group No. of Respondents

18 - 25 years 127

26 - 35 years 67

36 - 49 years 46

50 - 60 years 24

More than 60 years 6

|Page 58
CHART 1:

Analysis:

From the chart above we find that 47% of the respondents fall in the age group of 18 –

25 years, 25% fall in the age group of 26 – 35 years and 17% fall in the age group of

36 – 49 years.

|Page 59
Therefore most of the respondents are relatively young (below 26 years of age). These

individuals could be induced to purchase insurance plans on the basis of its tax saving

nature and as an investment opportunity with high returns.

Individuals at this age are trying to buy a house or a car. Insurance could help them

with this and this fact has to be conveyed to the consumer. As of now many

consumers have a false perception that insurance is only meant for people above the

age of 50. Contrary to popular belief the younger you are the more insurance you need

as your loss will mean a great financial loss to your family, spouse and children (in

case the individual is married) who are financially dependent on you

GENDER CLASSIFICATION OF SURVEYED RESPONDENTS

TABLE 2:

Particulars No. of Respondents

Male 193
Female 77

CHART 2:

|Page 60
 CUSTOMER PROFILE OF SURVEYED RESPONDENTS

TABLE 3:

Customer profile No. of respondents

Student 62
Housewife 5
Working Professional 116
Business 49
Self Employed 24
Government service employee 14

CHART 3:

|Page 61
Analysis:

From the chart above it can clearly be seen that 43% of the respondents are working

professionals, 23% are students and 18% are into business. Therefore the target

market would be working individuals in the age group of 18 – 25 years having surplus

income, interested in good returns on their investment and saving income tax.

NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN

THEIR NAME

TABLE 4:

Person who have life insurance policy

Yes 103
No 167

CHART 4:

|Page 62
ANALYSIS:

This graph shows that out of total 270 respondents only 103 or 38% respondents have

life insurance policy in their name. Rest all don’t have a single policy in their name.

So there is a very big scope for life insurance companies to cover these people. So in

future business of life insurace will gro further.

MARKET SHARE OF LIFE INSURANCE COMPANIES

TABLE 5:

LIFE INSURER NUMBER OF POLICIES

HDFC STANDARD LIFE 4
BIRLA SUN LIFE 3
AVIVA LIFE INSURANCE 6
BAJAJ ALLIANZ 7
LIC 55
TATA AIG 6
ICICI PRUDENTIAL 12
ING VYSYA 6

|Page 63
 BHARTI AXA 2
OTHERS 2

CHART 5:

Analysis:

In India, the largest life insurance company is Life Insurance Corporation of India. It

has been in existence in India since 1956 and is completely owned by the Government

of India. Today the organization has grown to 2048 offices serving 18 crore policies

and has a corpus of over 340000 crore INR.

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 ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

TABLE 6:

Premium paid (p.a.) No. of respondents

Rs. 5000 - Rs. 10000 40
Rs. 10001 - Rs. 15000 26
Rs. 15001 - Rs. 24900 18
Rs. 25000 - Rs. 50000 10
Rs. 50001 - Rs. 60000 4
Rs.60001 - Rs. 80000 2
Rs. 80001 - Rs. 100000 3

CHART 6:

ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCE

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Analysis:

From the chart above we find that, 39% of the respondents surveyed pay an annual

premium less than Rs. 10001 towards life insurance. 25% of the respondents pay an

annual premium less than Rs. 15001 and 17% pay an annual premium less than

Rs. 25000. Hence we can safely say that HDFC SLIC would be able to capture the

market better if it introduced products/plans where the minimum premium starts at

Rs. 5000 per annum.

Only 19% of the respondents pay more than Rs. 25000 as premium and most products

sold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. They

should introduce more products like Easy Life Plus and Safe Guard where the

minimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This would

definitely increase their market share as more individuals would be able to afford the

policies/plans offered.

POPULAR LIFE INSURANCE PLANS

TABLE 7:

Type of Plan No. of Respondents

Term Insurance Plans 105
Endowment Plans 122
Pension Plans 16
Child Plans 8
Tax Saving Plans 19

CHART 7:

POPULAR LIFE INSURANCE PLANS

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Analysis:

From the chart given above we can clearly see that 45% of the respondents hold

endowment plans and 39% of the respondents hold term insurance plans. Endowment

plans are very popular and serve two purposes – life cover and savings.

If the policy holder dies during the policy term the nominee gets the death benefit that

is, sum assured and accumulated bonus. On survival the policy holder receives the

survival benefit with a bonus.

A term plan is a pure risk cover plan wherein the insured pays a lower premium for a

higher sum assured. Term insurance is the cheapest form of insurance and helps the

policy holder insure himself for a relatively low premium. For the returns sensitive

investor term plans do not find favor as they do not offer a return in case the

individual does not die during the policy term.

AWARENESS OF UNIT LINKED INSURANCE PLANS

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TABLE 8:

Awareness of Unit Linked Plans No. of Respondents

Yes 154
No 116

CHART 8:

AWARENESS OF UNIT LINKED INSURANCE PLANS

Analysis:

From the chart given above we find that 57% of the respondents are aware of unit

linked life insurance plans and 43% are not aware of such plans. These plans should

be promoted through advertising. The company can advertise through television,

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radio, newspapers, bill boards and pamphlets. This would increase awareness and

arouse curiosity in the minds of the consumer which would enable the company to

market its products more effectively.

Unit – linked plans are those where the benefits are expressed in terms of number of

units and unit price. They can be viewed as a combination of insurance and mutual

funds. The number of units a customer would get would depend on the unit price

when they pay the premium.

When the policy matures the individual gets his fund value. The value of his fund is

calculated by multiplying the net asset value and number of units held by them on that

day.

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE

PREMIUM

TABLE 9:

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 Willingness to spend on premium No. of respondents Percentage

Less than Rs. 6,000 41 15%

Rs. 6,001 - Rs. 10,000 73 27%

Rs. 10,001 - Rs. 25,000 110 41%

Rs. 25,001 - Rs. 50,000 41 15%

Rs. 50,001 - Rs. 1,00,000 5 2%

CHART 9:

CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUM

Analysis:

From the graph above, we can clearly see that 41% of the respondents would be

willing to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would be

|Page 70
willing to spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would be

willing to spend more than Rs. 25000 per annum as life insurance premium.

We could say that the maximum premium payable by most consumers is less than Rs.

25000 p.a. This is further reduced as most customers have already invested with LIC,

ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.

HDFC SLIC is faced with a large amount of competition. There are 18 insurance

companies in India inclusive of LIC. Hence to capture a larger part of the market the

company could introduce more reasonable plans with lesser premium payable per

annum.

CHART SHOWING IDEAL POLICY TERM

TABLE 10:

Ideal policy term No. of respondents

3 - 5 years 51
6 - 9 years 41
10 - 15 years 95

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16 - 20 years 38
21 - 25 years 24
26 - 30 years 5
More than 30 years 3
Whole life Policy 13

CHART 10:

CHART SHOWING IDEAL POLICY TERM

Analysis:

From the chart given above it can be seen that 35% of the respondents prefer a policy

term of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9

years. This means that HDFC SLIC could introduce more plans wherein the premium

paying term is less than 15 years.

The outlook of insurance as a product should be changed from something which you

pay for your whole life (whole life policy) and do not receive any benefit (the

nominee only receives the benefit in case of your death) to an extremely useful

|Page 72
investment opportunity with the prospects of good returns on savings, tax saving

opportunities as well as providing for every milestone in your life like marriage,

education, children and retirement.

FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE

INSURANCE

TABLE 11:

Parameter No. of Respondents

Advertisements 35
High returns 84
Advice from friends 46
Family responsibilities 89
Others 16

CHART 11:

|Page 73
Analysis:

From the chart above it can be seen that 33% of the respondents purchase life

insurance to secure their families, 33% take life insurance to get high returns, 17%

purchase insurance on the advice of their friends and 13% purchase insurance because

of the influence of advertisements.

The main purpose of insurance is to cover the financial or economic loss that occurs

to the family in case of the uncertain death of the policy holder. But now a day this

trend is changing. Along with protection (life cover), a savings element is being added

to insurance.

With the introduction of the new unit linked plans in the market, policy holders get

the option to choose where their money will be invested. They can invest their money

in the equity market, debt market, money market or a combination of these. The debt

and money markets usually have low risk attached whereas the equity market is a high

risk investment option.

PREFERRED COMPANY TYPE OF THE RESPONDENTS

TABLE 12:

Type of Company No. of Respondents Percentage

Government Owned

Company 127 47%

Public Limited Company 62 23%

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Private Company 49 18%

Foreign Company 32 12%

CHART 12:

PREFERRED COMPANY TYPE OF THE RESPONDENTS

|Page 75
Analysis:

From the graph above we find that 60% of the respondents preferred to purchase

insurance from a government owned company, 29% of the respondents preferred to

purchase insurance from a public limited company and only 4% of the respondents

preferred a foreign based company. Heavy advertising through television,

newspapers, magazines and radio is required.

MINIMUM EXPECTED RETURN ON INVESTMENT

TABLE 13:

Expected Returns No. of respondents

Less than 5% 5
5% - 10% 39
11% - 15% 46
16% - 20% 49
21% - 25% 46
26% - 30% 27
31% - 40% 22
41% - 50% 14
More than 50% 22

CHART 13:

|Page 76
Analysis:

From the chart above it can clearly been seen that 18% of the respondents would like

16 – 20% returns, 17% would like returns between 21 – 25% and 17% would like

returns of 11 – 15% on their investments. Therefore the average return on investment

should be at least 16 – 20 %.

Most consumers are willing to adapt to some amount of risk but still want some

guaranteed returns. Therefore the bulk of investment should be made in the balanced

fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteed

as these involve investment is government securities and the debt market. But the

returns on these instruments are low (8 – 10%). If the company invests in shares,

returns are higher (39%) but correspondingly risk borne by the policy holder is also

higher. Therefore a good combination of the two instruments is often a wise choice.

|Page 77
 FINDINGS

1- Customers are less aware about the private insurance company in market.

2- Some customer likes to join HDFC as FCs because it is a Part-time job.

3- Many professions like CA, tax planner wants corporate agency rather than to

be a financial consultant.

4- HDFC is too selective in making a FC rather than to appoint any one like LIC.

5- Customers don’t want to join as financial consultant because it’s on

commission basis and they want the job on salary basis.

6- Educated customers are now vending towards private insurance Companies,

due to the attractive packages and services provided by various new insurance

companies.

7- LIC has created a branded image in 3-4 decades, due to which new insurance

companies are facing trouble in capturing market share.

8- If the customers are joining HDFC the segment is more of tax consultant,

investment for consultant and other people who are engaged in investment business

that is because they want to diversity their portfolio.

|Page 78
9- HDFC SLIC is having good retention strategies for their financial consultant.

SUGGESTIONS

 Customers should be made aware of the brand name of Insurance company

through advertisement.

 The fear in the customer mind should be removed by company.

 The insurance companies should try to nurture their brand name timely and

attractive facility provide to customer.

|Page 79
 FUTURE LINE OF RESEARCH

The future topics for research in the organization could be setting up of an appropriate

ad campaign. It is very vital to the companies’ success that the people of India know

about HDFC SLIC, its products and their special features and how insurance in

general can help them in their future. The advertisements have to be emotionally

appealing. They might also include a celebrity. The brand name of HDFC could be

used to give a push to HDFC SLIC and its products. The general perception of

insurance as “inauspicious” should be done away with and individuals and

corporations accept insurance on power with other investment opportunities.

The other area of research could be in the management of funds HDFC SLIC

possesses and how it can maximize returns for its investors. A research project could

be undertaken on how to ensure that the money gets invested in the right companies

and earns a medium – high return on investment. Another area of research could be an

analysis of the sales and marketing techniques used by HDFC SLIC. A large number

of changes could be introduced and this would help in saving operating costs and

improving the efficiency of the firm.

|Page 80
 CONCLUSION

HDFC standard life insurance is first life insurance company in India. It has

businesses spread out across the globe. It was registered on 23 rd December 2000. It

currently ranks number 4 amongst the insurers in India (Source: annual premium

provided by the company)

The company faces a large amount of competition. To sustain itself it must promote

its products through advertising and improve its selling techniques. Consumers must

be aware of the new plans available at HDFC SLIC. The medium of advertising used

could be television since most of its competitors use this tool to promote their

products. The company must be promoted as an Indian company since consumers

seem to have more trust in investing in Indian firms.

The unit linked concept must be specifically promoted. The general perception of life

insurance has to change in India before progress is made in this field. People should

not be afraid to invest money in insurance and must use it as an effective tool for tax

planning and long term savings.

HDFC SLIC could tap the rural markets with cheaper products and smaller policy

terms. There are individuals who are willing to pay small amounts as premium but the

|Page 81
plans do not accept premiums below a certain amount. It was usually found that a

large number of males were insured compared to females. Individuals below the age

of 30 (mostly male) were interested in investment plans. This was a general

conclusion drawn during prospecting clients.

A SURVEY ON ‘INSURANCE INDUSTRY’

Dear Sir/Madam,

I am a student of Galgotia Institute of Management & Technology, Gretor Noida. As

part of the requirements for my Master of Business Administration, I am required to

do a research based project. Kindly spend a few minutes of your valuable time and fill

in this questionnaire.

Do you have a life insurance policy/investment plan in your name?

o Yes o No

If yes which company’s insurance policies do you hold?

o HDFC Standard Life Insurance o Birla Sun Life Insurance

o Aviva Life Insurance o Bajaj Allianz Life Insurance

o LIC o Tata AIG Life Insurance

o ICICI Prudential Life Insurance o ING Vysya Life Insurance

o Bharti Axa Life Insurance o Others (specify name)

______________________________

What is the approximate premium paid by you annually (in Rupees)?

o Rs. 5,000 – Rs. 10,000 o Rs. 10,001 – Rs. 15,000

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o Rs. 15,001 – Rs. 25,000 o Rs. 25,001 – Rs. 50,000

o Rs. 50,001 – Rs. 60,000 o Rs. 60,001 – Rs. 80,000

o Rs. 80,001 – Rs. 1,00,000

o More than Rs. 1,00,000 (specify premium) ____________________________

What kind of insurance policy would suit you best in your current stage of life?

o Life Insurance o Life Insurance and Investment Plans

o Pension Plans o Child Plans

o Tax saving plans

Are you aware of the new unit linked insurance plans in the market?

o Yes o No

How much would you be willing to spend per annum if you were to go for an

investment/insurance plan?

o Less than Rs. 6,000 o Rs. 6,001 – Rs. 10,000

o Rs. 10,001 – Rs. 25,000 o Rs. 25,001 – Rs. 50,000

o Rs. 50,000 – Rs. 1,00,000 o More than Rs. 1,00,000

Which according to you is an ideal policy term? (Number of years you would be

willing to pay premium)

o 3 to 5 years o 6 to 9 years

o 10 to 15 years o 16 to 20 years

o 21 to 25 years o 26 to 30 years

o More than 30 years o Whole life policy

What motivates you to purchase insurance/investment plans?

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o Advertisements o High Returns

o Advice from friends o Family responsibilities

o Others (specify)

In which kind of company would you prefer to make a purchase of insurance?

o Government owned company o Public Limited Company

o Private Company o Foreign based company

Typically what kind of returns would you look at from your investments? (Please

note: Higher returns involve greater risk)

o Less than 5% o 6% - 10 %

o 11% - 15 % o 16% - 20 %

o 21% - 25% o 26% - 30%

o 31% - 40% o 41% - 50%

o More than 50%

Personal Details :

Name :
__________________________________________________

Address :
__________________________________________________

Age :
__________________________________________________

Contact No. :
__________________________________________________

Profile of respondent:

Student Business

|Page 84
Housewife Self-Employed

Working Professional Government Service Employee

Date:_______________

REFERENCES

Web-Site :

www.hdfcslic.com

www.tata-aig-life.com

www.irdaindia.com

www.lic.com

www.money control.com

www.bajajallianz.com

www.icici.prulife.com

www.indiacore.com

www.bajajallianz.com

www.iciciprulife.com

www.tataaig.com

Magazine –

Insurance World

|Page 85
 The Outlook Money

Secrets of Successful Insurance Sales by Mr. Jack Kinder

|Page 86