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Project Report On A Study of Insurance as a Tool of Investment

Submitted in partial fulfillment for the degree of

Master of Business Administration in Finance

Submitted to: Mrs. Shallu Gupta HOD (Management)


Submitted By:

Vikram Singh MBA 4th Sem.

Roll No-

Co-ordinator Mr. Manjeet Singh Chhabra

Deptt. Of MBA Gujranwala Guru Nanak Institute of Vocational Studies, Civil Lines, Ludhiana

Affiliated to PTU, Jalandhar

I am privileged to have successfully undergone my training with the highly acclaimed organization The ICICI PRUDENTIAL . I would like to thank our Company Guide ,Mr. Paramdeep Singh for extending his immense help while completing our project successfully and to our Faculty Guide, Mr. Ramanjeet Singh who was always their to guide us. I would like to take this opportunity to extend our heartfelt gratitude to Miss Vidhi Jain (Distribution and channel Manager), ICICI PRUDENTIAL , for his immense support and guidance throughout the project. He guided us and gave valuable inputs and advises at every stage of our project. I am also thankful to Mr. Anirudh Sharma, Area Manager, ICICI PRUDENTIAL for providing us the deep insight into the of the Project, under whose guidance I was able to take initial steps in the corporate world and also have the feel of the market, giving us the opportunity to apply our theoretical knowledge into the practical application we gained throughout of our one year studies we have done in our Post Graduation Program in Management.

Pretty Bhalla

MBA is a stepping-stone to the management carrier and to develop good manager it is necessary that the theoretical must be supplemented with exposure to the real environment. Theoretical knowledge just provides the base and its not sufficient to produce a good manager thats why practical knowledge is needed. Therefore the research product is an essential requirement for the student of MBA. This research project not only helps the student to utilize his skills properly learn field realities but also provides a chance to the organization to find out talent among the budding managers in the very beginning. In accordance with the requirement of MBA course I have a project on the topic INSURANCE AS A TOOL OF INVESTMENT. The main objective of the research project was to know the investors behavior. This research project is conducted in the area of Ludhiana. For conducting the research project sample size of 100 investors was selected. The information regarding the project research was collected through the questionnaire filled by the investors & personal interview. Now, I take this opportunity to present my project report and sincerely hope that it would be useful for readers.

Vikram Singh



This is certifying that Miss. Pretty Bhalla MBA (3) has successfully completed his project titled A study on Insurance as a Tool of Investment in Chandigarh under the guidance of respected Mr. Ramanjeet Singh. This project is in partial fulfillment of his MBA curriculum (2005-07)


Mr. Ramanjeet Singh (Project Guide)


I the undersigned hereby declare that the summer training report, which is entitled A study on insurance as a tool of investment in Chandigarh , is completed and submitted by me is my original work. The findings in the report are based on the data collected by me while preparing this report. I have not copied the data from any previous report. However, my project guide respected Mr. Ramanjeet Singh helped me at various points while preparing this report.



Chapter Number 1


1.1 1.2 1.3 1.4 1.5 1.6 1.7 2 2.1 2.2 2.3 2.4

Introduction to Insurance Classification of Insurance History of Life Insurance Insurance in India Insurance companies in India Legislative and Regulatory Matters Report Card of Life Insurance Companies COMPANYS PROFILE About TATA
TATA-AIG Life Insurance company

About the Promoters About the Products

2.6 2.7 2.8 2.10 3


Vision Achievements


Process Data collection

3.2 4 4.1 4.2 5 6 7

Analysis SWOT Analysis Challenges before Industry RECOMMENDATIONS



8.1 Questio nnaire 8.2 Forms


The Life Insurance market in India is an underdeveloped market that was only tapped by the state owned LIC till the entry of the private insurers. The penetration of the insurance products was 19 percent of the total 400 millions of the total 400 millions of the insurable population. The state owned LIC sold insurance s a tax instrument, not as a product giving protection. Most customers were under insured with no flexibility or transparency in the products. With the entry of the private insurers the rules of the game have changed.

I have completed my summer training in TATA-AIG . It is number one private life insurance company in India. It is a joint venture between Tata Group and American International Group. Tata-AIG was amongst the first to identify the emerging opportunity in the pension segment and launched two pension products. Tata-AIG the dominant life and pension player built on trust by the world class people and services. Innovative products, smart marketing and aggressive distribution. Thats the triple combination that has enabled fledgling private insurance companies to sign up Indian customers faster than any one ever expected. Indians, who have seen life insurance as a tax saving device, are now suddenly turning to private sector and snapping up new innovative products on offer.

The growing popularity of the private insurers shows in the other ways. They are coming money in new niches that they have introduced. The state owned companies still dominate segments like endowment plans and money back policies. But in the annuity or pension product business, the private insurers have already wrested over 33 percent of the market. And in popular unit linked insurance schemes they have virtual monopoly, with over 90 percent of the customers.

The objective of this project was to assist TATA-AIG Life Insurance in expanding their channel by recruiting financial Agents For the company. For the company to successfully continue its operations, it needs to undergo change to get some new customers and to get some new ideas. Moreover insurance is such a growing sector that it has full potential to have new customers. So it very essential to have new people in the system which can add new customers to the company.

Literature Review

The Katie School of Insurance and Financial Services provides the following literature review (of refereed papers and magazines or newspapers articles) pertaining to consolidation efforts between the financial and the insurance markets.

Financial Convergence Issues- Article Summaries

Despite the adoption of the Gramm-Leach-Bliley Act (also called Financial Services Modernization Act) in November 1999, there have been few strategic attempts in consolidating financial and insurance businesses and some of them (i.e. the Citigroup/Travelers or the General Electric/ Employers Re. mergers) have failed. This, despite the fact that some of the research papers cited in the attached literature review do identify diversifications gains from potential consolidation of banking and insurance firms. However, the inability of banks and insurance companies to merge effectively has not stopped the convergence process from a product offering standpoint.

The Insurance Information Institute routinely publishes a chart of financial and insurance products available through major financial services companies from all sectors (financials, securities, P/C insurance and life insurance). The chart demonstrates that all major financial services companies offer a diversified range of financial and insurance services. This suggests that, although some issues like consumer privacy provisions, data consolidations and other technological differences between both industries need to be ironed out, the convergence process is on its way. Literature Review of Recent Articles on the Convergence of Insurance and Financial Markets and Services Refereed Papers Carrow Kenneth A. and Heron R. Capital market reactions to the passage of the Financial Services Modernization Act of 1999. The authors investigate how the passage of the Financial Services Modernization Act of 1999 (FMA) affected stock prices of banks, thrifts, finance companies and insurance companies. The study looks at stock excess returns across sectors and company size. The idea is that the passage of the FMA opens doors for potential mergers and consolidations across banking, financial and insurance sectors, translating into abnormal positive returns for businesses that are the likely candidate for mergers and consolidation. The results of the study suggest that the largest returns to the FMA passage were realized by large investment banks and insurance companies. The stock prices of banks, both small and large, seemed

to be unaffected by the new legislation while thrifts, finance companies and foreign banks lost value. Carrow Kenneth A. Citicorp-Travelers Group merger: Challenging barriers between banking and insurance This paper is conceptually similar to the one cited above, in that the author investigate whether the announcement of a merger between Citicorp and Travelers abnormally impacted stock prices of financial and insurance companies. Analysis of abnormal returns surrounding the merger show that life insurance companies and large banks experienced significant stock price increases, while the returns of stocks of smaller banks, health insurers and property/casualty insurers remain relatively unchanged. Estrella, Arturo. Mixing and matching: Prospective financial sector mergers and market valuation, This paper analyses which types of mergers are likely to be most productive for banks and other financial firms in the U.S. The author acknowledges that the extent to which different business activities are fundamentally distinct induces a tradeoff between diversification gains and loss of efficiency. The research considers life insurance, property/casualty insurance, securities and commercial firms as potential matches for firms and concludes that potential diversification gains arise from almost all combinations involving banking and insurance. The paper stands out because it shows, unlike other earlier research, that property and casualty insurance companies offer larger diversification gains to banks than life insurance companies.

Johnston, Jarrod and Madura J. valuing the potential transformation of banks into financial service conglomerates: Evidence from the Citigroup merger The authors first summarize previous literature that examined motives for combining bank and other financial services. Diversification benefits and product complementarities (i.e. mortgage and mortgage insurance, auto financing and auto insurance) seem to be the prime motives. However, some earlier research also suggests that there are few linkages between bank services ands underwriting services in terms of customers, outlets or other characteristics that generate efficiencies. Given the sources of potential gains, it appears that life insurance companies with their limited underwriting risk and wide variety of other products offered to individual customers would be more attractive targets for banks than other types of insurance companies. Industry Publications Armstrong, Ed and Buse, Youve got the green light, whats it worth? ABA Banking Journal, The article projects that banks would add 5-10% to their after tax profits if they aggressively pursue their insurance opportunity. The author develops a pro forma statement for banks selling 12 different insurance items. Boros, Joan E. (2002). Are Convergence Products Happening?

The author states that convergence depends on its definition. She offers very useful definitions for convergence: Merger of banks and insurers, heretofore independent, into a financial supermarket with endless cross-selling potential. A combination of insurance and capital markets products moving into a union and uniformity, or separate markets performing the same functions. This could also be labeled as securitization of insurance risk and or insurancization of financial risk. Crystal, Mary (1997). That was then, this is tomorrow. This panel discussion on bank marketing suggests more direct interaction with customers by direct mail or personal contact. Doing it pro-actively and by alternative methods: call centers, PC-banking, internet banking and supermarket banking. Using branding and other retail marketing skills. Bankers have tried to cut down on personal contact and may have alienated their customers. Gjertsen, Lee Ann (2002). Insurance Agents Thrift Seeks OK to Widen Reach.. Insurance agents of New Jersey, Connecticut and Massachusetts founded an association as Independent Insurance Agents and Brokers and have applied for a charter for an association savings bank. The bank products are to be sold by

the independent insurance agents that own their own agencies. The bank is to be named InsurBanc. Gorski, Lorraine (2002a). The New Producers. The article describes how insurers can use the banks customer base to reach new customers. Banks have the trust of their customers and that would be a good distribution channel for life insurance, especially in the midlevel or mass market. Banks could represent 3-4 different insurers therefore the insurance products need to be competitive (for the customer and the representative) and specific for bank employee selling. Furthermore, stable relationships are necessary and the product needs to be branded and well advertised. Gorski, Lorraine (2002b). Banking on Policy Holders Insurers have founded banks to offer banking products. 135 applications were made between Jan.1, 1997 and May 31, 2001. Insurance banks have an uphill battle to convince their customers to establish a bank account because it is hard to determine when and why an insurance customer needs a bank account. On the other hand, it is easier for a bank that provides a loan to sense when insurance is necessary. Since most people already have a bank account, customer as well as agents have to be motivated to deal with another financial institution or to switch. In addition these new institutions often have no brick and mortar establishment but rather rely on Internet applications and Internet interactions. Establishing banks enable insurers to get into the trust business and offer a sophisticated retirement package and to be able to cross-sell insurance products

to their customers and to earn fee income. Although this can be done through partnerships some insurers want to do it alone and thus to avoid finding later on unpleasant surprises. They count on their name recognitions and the availability of their agents (State Farm, Allstate). Increasing brand awareness, direct mailing, providing up-to-date interest rates should help to lure customers. - Most insurance firms have hired experienced bankers to create and manage these banks. Hogan, John D (2001). Financial Services Reform: The Gramm-LeachBliley Act and its implications for insurance, In this paper, the author contends that the impact of the GLB Act on the insurance industry is unclear. It had been widely assumed that the banking industry would quickly expand into non-banking activities, as synergies could be expected from the large bank customer information base and frequent contacts with customers. However, this quick response has not taken place, partly because of perception of risk in the insurance business. The author also cites a research study by The Federal Reserve Bank of Atlanta that suggests that bank holding companies will add insurance products to their lines of business for sound reasons such as: 1) small increment costs involved, 2) the presence of existing customer relationships, 3) revenue diversification, 4) absence of interest rate risk in insurance compared with loans and 5) banks web-based marketing capability.

McDaniel, David (1995): Agents worst nightmare: Banks are gaining the edge to sell insurance in a big way The article explains that insurance agents are afraid of banks cutting into their business as they have in Europe where banks are far more efficient than agents. The article lays out how to make the proposed legislation ineffective, by warning of unsubstantiated tie-ins and bank coercion, proposing 10-day waiting periods, state legislation, and tough fire walls. Milligan, John (1996). Banking like it used to be. First Long Island Bank prospers because it serves a small niche of small privately owned companies and upscale consumers that it coddles by being available both in person/ phone and online. Pasini, Roy (1997). Alliances Lawson cites three issues critical to future. The author states that the insurance industry can defend itself against the invasion by banks through better customer service and greater use of technological efficiencies. Weber, Irene (2002). No Sale. Weber reports that, since the GLB Act of 1999, a few banks have acquired insurance firms and then Citigroup split up again. She provides the following reasons for non-convergence: a. Regulation: financial and bank holding companies are federally regulated, insurance firms are state regulated. GLB requires US jurisdiction to adopt

uniform or reciprocal agent and broker licensing laws by November 2002. Reciprocity has apparently been approved by most states. But new insurance products need to have state approval before they are allowed to be marketed, which is a slow process. Will there be federal chartering of insurance firms in the future? b. Technology: banks are able to offer interactive online services, while insurance products apparently dont lend themselves to it. Also otherwise insurance are slower to adopt new technology. c. Financial reasons: Return on equity for insurers was for 2000 only 7.42% while banks made 12.2%. Probably Citigroup spun off Travelers because it did not make double digit growth, a norm for Citibank. . Newspaper Articles Aquino, Norman P. and Junia C: Thrift Firms Join Foreign Firms Lobby for Cross-Selling Venture. This article describes a recent example of convergence in the Philippines. The US embassy is lobbying for New York Life to sell its insurance through Philippines banks. European insurance firms are also interested in it. Philippines thrifts are accusing the Central bank of not including them. The Philippe Central

bank is interested that banks show that the insurance products are not guaranteed by the PDIC. Bowman, Lisa. Bancassurance in the U.K. is not taking off as expected. Firms are not making use of the data available and the products are not streamlined for bank sales. Consumers apparently prefer professional advice from insurance agents, while banks have a bad reputation for poor service. The author recommends that banks should take on more rich clients. Instead they stay with second tier customers, thus should employ second tier agents which would provide off the shelve advice but that has not been created. This approach would also be more cost efficient. . Gibson Henry, This journalist highly supported the Dresdner Allianz merger. The new institution is called Allianz Group. The logic behind this giant merger is that the German government is in favor of German citizens to pursue private and company pensions which it will support with tax incentives and coercion. The pension industry is supposed to grow by 15% annually. The article suggests that that the familiarity and easy branch access of Dresdner would better service this population. Lipin, Steven and Frank, S. (1998). One stop shopping is the reason for deal. The big umbrella: Travelers/Citigroup merger. The authors wonder whether the merger will bring about the promised synergies, and whether

consumers really want all their services from one provider. Can they cross-sell their brands? Walker, Marcus (2002). Germanys Commerzbank Is Still in No Mans Land. This article on the state of the Commerzbank mentions that tightly focused banks with strong market shares, such as U.K. retail banks, have made money. Diversified universal banks with no dominant market share such as Commerzbank or Frankfurt rival Dresdner Bank AG have slipped to losses in some quarters, raising doubts about their long term viability




Insurance may be defined as asocial device to reduce or eliminate the risk of loss pf life and property. Under the plan of insurance a large number of people associate themselves by sharing risk attached to individuals, the risk, which can be insured against, including fire, perils of sea, death, accidents and burglary. Any risk contingent upon this may be insured against a premium commensurate with the risk involved. Thus we can say, collective bearing of risk is insurance.

Insurance is a plan by themselves which number of people associate and transfer to the shoulders of all, risk that attach to individuals . ..JOHN MAGEE

Insurance is a contract in which a sum of money is paid to be assured as consideration of in surer incurring the risk of paying a large sum on a given contingency. .JUSTICE TINDALL

Insurance is a protection against financial loss arising on the happening of an unexpected event. Insurance companies collect premiums to provide for this protection. A loss is paid out of the premiums collected from the insuring public and the Insurance Companies act as trustees to the amount collected. "Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event." For Example, in a Life Policy, by paying a premium to the Insurer, the family of the insured person receives a fixed compensation on the death of the insured. Similarly, in car insurance, in the event of the car meeting with an accident, the insured receives the compensation to the extent of damage. Insurance is desired to safeguard oneself and one's family against possible losses on account of risks and perils. It provides financial compensation for the losses suffered due to the happening of any unforeseen events. By taking life insurance a person can have peace of mind and need not worry about the financial consequences in case of any untimely death. Certain Insurance contracts are also made compulsory by legislation. For example, Motor Vehicles Act 1988 stipulates that a person driving a vehicle in a public place should hold a valid insurance policy covering Act" risks. Another example of compulsory insurance pertains to the Environmental Protection Act,

wherein a person using or carrying hazardous substances (as defined in the Act) must hold a valid public liability (Act) policy. In India, prior to liberalization Insurance protection was made available through Public sector Insurance Companies, namely, Life Insurance Corporation of India (LIC) and the four subsidiaries of General Insurance Corporation of India (GIC).By the passing of the IRDA Bill, the Insurance sector has been opened up for private companies to carry on Insurance business. One alternative to Insurance is to provide self-Insurance i.e. the individual has to create a fund to meet risk exigencies. Specified trusts have also tried to provide insurance by a scheme of self-insurance. However, these are not very popular. The postal department provides Insurance coverage to all working people. There are many financial instruments which advocate savings and provide future returns at specific intervals such as the provident fund and pension plans. However, none of these provide for life coverage.


Insurance is the method of spreading and transfer of risks. Losses of unfortunate few are shared by and spread over to many exposed to the same risk. Assets created by the owner in expectation of future needs or benefits have a value.

Loss of assets for any reasons deprives the owner of the expected benefit. Insurance in this context is a mechanism that helps to reduce the adverse consequences due to loss of assets.


Assets are likely to be destroyed or made non-functional due to perils like fire, floods, breakdowns, lightning and earthquake.

Damage to assets caused by any peril is the risk that assets are exposed to.

Insurance becomes relevant only if there are uncertainties of occurrence of event leading to loss.

We can say that human life is an income generating assets which can be lost on early death or disabilities caused by accidents.

Insurance does not protect the assets but only compensates the economic or financial loss.


Investments are necessary for economic development. Life insurance plays a major role in mobilization of public savings.

Savings out of life insurance funds are utilized in investments for growth. Looking to general insurance business, industry, trade would be seriously handicapped in the absence of insurance cover relating to fire and engineering risks.


Life is full of uncertainty. Trials and tribulations abound in each and every aspect of life. No one can truly predict or even estimate what the future has in store for him. Life offers no guarantees by itself, except the incidences of death and taxation. This lack of security present throughout life can be overcome partially through insurance. Insurance can never replace or repair a loss. But the monetary value offered by insurance helps in adjusting to the new circumstances. Despite offering innumerable options and immense scope, insurance can be classified into four main categories.

Insurance of Person Insurance of Property Insurance of Interest

Insurance of Liability

Insurance of Person
Under the purview of this class of insurance, the risks associated with human life in general can be covered up to the limit specified. A person can insure his or her life and his health against any unplanned contingencies. In event of his death, his dependants will be reimbursed to the full amount that he was insured for. Or if the insured person meets with an accident or suffers from an illness that cripples him forever, he will be compensated with the complete sum assured anyway since he may not be able to lead a normal life again. In case, the accident is not that severe, he should be able to recover after medical treatment and rehabilitation. If he has opted for medical cover, then his medical expenses, treatment and medication will be paid for by his insurance policy.

Insurance of Property
Everyone possesses material value in the form of tangible assets. Assets can be in the form of a landed estate or a vehicle, share holdings or plain old paper money. Since tangible property has a physical shape and consistency, it is subject to many risks ranging from fire, allied perils to theft and robbery. An individual's lifetime of hard work can be wiped out in a blink of an eye.

But if a person judiciously invests in insurance for his property prior to any unexpected contingency then he will be suitably compensated for his loss as soon as the extent of damage is ascertained.

Insurance of Interest
Every individual has to discharge certain specific duties. Everyone is expected to maintain a standard of conduct. But then, it is an intrinsic part of human nature to err. No one is infallible and no one will ever be. Owing to an occasional error or omission committed by us, our clients or customers might suffer a loss. In turn we might have to pay those damages or compensation out of our own personal resources. However, if our chosen profession qualifies for insurance of interest, then our insurance policy will more than suffice in arranging for the funds and court formalities that might ensue in the aftermath of legal libel.

Insurance of Liability
Every person has to regulate his actions and behaviour so as not to cause injury or damage to other people and their property. Everyone is personally responsible and liable for his actions. If due to lack of control over his actions or prejudiced behaviour, a person incurs any liability then he has to provide compensation out of his personal resources.

Liabilities: legal, civil or criminal can have severe repercussions on social standing and prestige besides the financial status. By investing in liability insurance, an individual can ward off any liabilities he might incur due to his actions and behaviors. Besides, the premiums payable on liability insurance are fairly minimal when compared to the damages that have to be compensated in the long run.



The earliest type of life insurance was started by the Greeks and Romans. All surviving members for the burial cost if the member made contributions. in case of the death of a member the cost of the burial was made out of the contributed fund. In the 17th century, the Tontine Annuity system was introduced where Associations of the individuals were formed without any reference to age, and a fund was created by equal contributions from each member. The sum collected was invested, and at the end of each year the Interest was divided among the survivors,. The last remaining Survivor received both the years interest and the entire sum of the principal. The first organized Life Insurance Company was founded in 1759 in Philadelphia, in north America. Subsequently, over the past three centuries, numerous life insurance companies sprung up, making life insurance a popular tool for protection coupled with investment. The origin of insurance is very old. The time when when we were not born; man sought some sort of protection from the unpredictable calamities of the nature. The basic urge in man to secure himself against any form of risk and uncertainty led to the origin of insurance. The insurance came up in India from UK; with the establishment of the Oriental Life Insurance Corporation in 1818. The Indian Life Insurance act 1912 was the first statutory body that started to regulate the life insurance business in India.


The insurance sector in India has come 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. A 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. The General insurance business in India, on the other hand, can trace its roots to theTriton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are: 1907: The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business. 1957: General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices. 1968: The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. 1972: The General Insurance Business (Nationalisation) Act, 1972 nationalised the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company.


IRDA has so far granted registration to 12 private life insurance companies and 9 general insurance companies are also included, there are currently 13 insurances companies in life side and 13 companies in general insurance business. General Insurance Corporation has been approved as the Indian reinsures for underwriting only reinsurance business. Particulars of the insurance companies are belows:

LIFE INSURANCE Public Sector Life Insurance Corporation of India Private Sector Allianz Bajaj Life Insurance Company Limited Birla Sun-Life Insurance Co. ltd HDFC Standard Life Insurance Co. Ltd ICICI PRUDENTIAL Life Insurance Co. Ltd ING Vysya Life Insurance Co. Ltd Max New York Life Insurance Co. Ltd MetLife Insurance Company Limited Om Kotak Mahindra Life Insurance Co. ltd SBI Life Insurance Company Ltd TATA AIG Life Insurance Co. Ltd AMP Sanmar Assurance Co. Ltd Dabur CGU Life Insurance Co. Pvt. Ltd

COMPANIES LIC ICICI PRUDENTIAL Bajaj Allianz HDFC Standard Life Max New York Life SBI Life Aviva Tata AIG Birla Sun life

MARKET SHARE 75% 7.24% 4.18% 3.20% 1.33% 1.69% 1.14% 1.93% 1.84%

1.5a Market Share Of Different Insurance Companies

The private insurer, ICICI PRUDENTIAL is far ahead of others with a market share of 75% Table : Showing Market Share of Various firms


LIC ICICI Prudential Bajaj Allianz HDFC Standaed Life Max New York Life SBI Life Aviva Tata AIG Birla Sunlife

1.5b Opportunities For Insurance Industry

As shown in the pie chart only 25% of the insurable population is covered. They yet have to cover 75% of the population.

Percentage of Insured and Uninsured People

25% Insured Uninsured 75%


INSURANCE REGULATORY & DEVELOPMENT AUTHORITY (IRDA) ACT, 1999. Under this Act an authority called IRDA has been set up. This is a corporate body established for the purpose and objects as set out in the explanation to the title. The Authority replaces Controller under Insurance Act 1938. The first schedule amends Insurance Act 1938. It states that if Authority is superceded by Central Government, the Controller of Insurance may be appointed till such time as Authority is reconstituted.


The Insurance Regulatory and Development Authority consists of the following members: 1. Chairperson. 2. Less than five whole time members. 3. Less than four part time members.

Members should be persons of Ability, Integrity & Standing. They should have experience in the fields of 1. Life Insurance 2. General Insurance 3. Actuarial Science

4. Finance 5. Economics 6. Law 7. Accountancy 8. Administration Chairperson, members, officers and other employees of Authority shall be public servants.


1. To issue certificate of registration, renew, withdraw, suspend or cancel such registration. 2. To protect the interest of policyholders/insured in the matter of insurance contract with the insurance company. 3. To specify requisite qualification, code of conduct and training for insurance intermediaries and agents. 4. To specify code of conduct for surveyors/loss assessors. 5. To promote efficiency in the conduct of insurance business. 6. To promote and regulate professional organizations connected with the insurance and reinsurance business. 7. To undertake inspection, conduct enquiries and investigations including audit of insurers and insurance intermediaries.

8. To control and regulate the rates, terms and conditions to be offered by the insurer regarding general insurance business not so controlled by Tariff Advisory Committee u/s 604 of Insurance Act, 1938. 9. To regulate investment of funds by the insurance companies. 10. To adjudicate dispute between insurers and intermediaries of insurance.


Life insurance business was nationalized in India with effect from 19 th January 1956.

The life insurance business of 154 Indian life offices constituted by 16 non-Indian insurers operation in India and 75 Provident Societies was taken over by the Government of India.

LIC of India Act was passed by the Parliament on 18 th June 1956 and it came into effect from 1st July 1956.



During the first half of the current financial year, the 16 life insurers have underwritten first year premium of Rs.5, 43,595.87 lakhs towards 87, 38,024 policies. Of this individual business accounted for Rs.4, 41,760.09 lakhs for 87, 32,435 policies. The group business accounted for Rs.1, 01,835.78 lakhs for 5,589 policies. Interestingly about 60% of the business done by the life insurers during the current financial year has been in the second quarter. Correspondingly 63% of the policies underwritten during the six month period have been accounted for in July to September 2003. Analysis of individual business statistics shows that LIC accounted 88% of the business in the terms of premium. As against this the private insurers captured 12% of the premium. In terms of group business LIC captured 93.63% of the premium. The twelve private insurers captured only 6.37% of the premium in the total group business. A review of the performance of the private players further reveals of rapid business expansion. The latest quarterly figures released by the Insurance Regulatory Development Authority (IRDA) show that ICICI PRUDENTIAL Life Insurance Company is continued to lead with a premium income of Rs.70.2 Crore in the first quarter of this year followed by HDFC Standard Life Insurance. The maximum growth in the first quarter has come from unit-linked products (ULIPs) which contributed over 60% of business, along with retirement products, said Saugata Gupta, head of marketing at ICICI PRUDENTIAL Life

Insurance. She added, In fact we have identified retirement solutions and child plans as two growth areas and have decided to invest the 2005- 2006 Sr. No. 1 2 3 L.I.C. ICICI Pru. Bajaj Allianz Industry May Up To May 11,78,458 1,67,513 33,226 24,988 70,733 39,106 No. Of Policies 2004-05 20,30,354 -8.02 64,181 18,253 10.21 114.24 Growth Mkt. Share 86.25 3.27 1.81

4 5 6

S.B.I. Life Tata Aig HDFC Standard

18,911 18,356 15,757

21,458 41,062 28,238

10,639 33,149 17,019

101.69 23.87 65.92

0.99 1.90 1.30

Birla Life

Sun 9,426





Max York

New 18,954





9 10

Aviva ING Vysya

6,906 4,979

10,880 5,697

9,916 8,710

9.72 -34.59

0.50 0.26

CHAPTER -2 Companys Profile


ICICI Bank is India's second-largest bank. The Bank has a network of about 573 branches and extension counters and over 2,000 ATMs. ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned Subsidiary. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses.

In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank.

In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. In 2001, ICICI bank acquired Bank of Madura limited.

ICICI Bank set up its international banking group in fiscal 2002 to cater to the

cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh and South Africa.

Today, ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management.

ICICI Bank Group

ICICI Bank is India's second-largest bank with total assets of about Rs. 2,513.89 bn (US$ 56.3 bn) at March 31, 2006 and profit after tax of Rs. 25.40 bn (US$ 569 mn) for the year ended March 31, 2006 (Rs. 20.05 bn (US$ 449 mn) for the year ended March 31, 2005). ICICI Bank has a network of about 614 branches and extension counters and over 2,200 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank set up its international banking group in fiscal 2002 to cater to the cross border needs of clients and leverage on its domestic banking strengths to offer products internationally. ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa and Bangladesh. Our UK subsidiary has established a branch in Belgium. ICICI Bank is the most valuable bank in India in terms of market capitalization. ICICI Bank's equity shares are listed in India on the Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

Table 2.1 History of ICICI
1955 : The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative of the World Bank, the Government of India and representatives of Indian industry, with the objective of creating a development financial institution for providing medium-term and long-term project financing to Indian businesses. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI Limited ICICI emerges as the major source of foreign currency loans to Indian industry. Besides funding from the World Bank and other multi-lateral agencies, ICICI also among the first Indian companies to raise funds from International markets. ICICI declared its first Dividend at 3.5%. Mr.G.L.Mehta was appointed the 2nd Chairman of ICICI Ltd. ICICI building at 163, Backbay Reclamation was inaugurated. The first West German loan of DM 5 million from Kredianstalt was obtained by ICICI. ICICI made its first debenture issue for Rs.6 crore, which was oversubscribed. First two regional offices in Calcutta and Madras were opened. Second entity in India to set-up merchant banking services. Mr. H. T. Parekh appointed as the third Chairman of ICICI. ICICI sponsors the formation of Housing Development Finance Corporation. Managed its first equity public issue Mr. James Raj appointed as the fourth Chairman of ICICI. Mr.Siddharth Mehta appointed as the fifth Chairman of ICICI. Becomes the first ever Indian borrower to raise European Currency Units. ICICI commences leasing business. Mr. S. Nadkarni appointed as the sixth Chairman of ICICI. Mr.N.Vaghul appointed as the seventh Chairman and Managing Director of ICICI. ICICI first Indian Institution to receive ADB Loans. First public issue by an Indian entity in the Swiss Capital Markets. ICICI along with UTI sets up Credit Rating Information Services of India Limited, (CRISIL) India's first professional credit rating agency. ICICI promotes Shipping Credit and Investment Company of India Limited. (SCICI) The Corporation made a public issue of Swiss Franc 75 million in Switzerland, the first public issue by any Indian equity in the Swiss Capital Market. ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth

1956 : 1958 : 1960 : 1961 : 1967 : 1969 : 1972 :

1977 : 1978 : 1979 : 1982 :

1984 : 1985 : 1986 : : : : 1987 :

1988 : 1993 : : 1994 : 1996 : : : 1997 :

Development Corporation (CDC), the first loan by CDC for financing projects in India. ICICI promotes TDICI - India's first venture capital company. ICICI sets-up ICICI Securities and Finance Company Limited in joint venture with J. P. Morgan. ICICI sets up ICICI Asset Management Company. ICICI sets up ICICI Bank. ICICI becomes the first company in the Indian financial sector to raise GDR. ICICI announces merger with SCICI. Mr.K.V.Kamath appointed the Managing Director and CEO of ICICI Ltd ICICI was the first intermediary to move away from single prime rate to three-tier prime rates structure and introduced yield-curve based pricing. The name "The Industrial Credit and Investment Corporation of India Limited " was changed to "ICICI Limited". ICICI announces takeover of ITC Classic Finance. Introduced the new logo symbolizing a common corporate identity for the ICICI Group. ICICI announces takeover of Anagram Finance. ICICI launches retail finance - car loans, house loans and loans for consumer durables. ICICI becomes the first Indian Company to list on the NYSE through an issue of American Depositary Shares. ICICI Bank becomes the first commercial bank from India to list its stock on NYSE. ICICI Bank announces merger with Bank of Madura. The Boards of ICICI Ltd and ICICI Bank approved the merger of ICICI with ICICI Bank. Moodys' assign higher than sovereign rating to ICICI. Merger of ICICI Limited, ICICI Capital Services Ltd and ICICI Personal Financial Services Limited with ICICI Bank

: : 1998 : : 1999 : : 2000 : : 2001 : 2002 : :


ICICI PRUDENTIAL Life Insurance Company is a joint venture between ICICI, a premier financial powerhouse and Prudential, a leading international financial services group headquartered in the United Kingdom. ICICI PRUDENTIAL was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI PRUDENTIAL s equity base stands at Rs.1185 Crore with ICICI Bank and Prudential holding 74% and 26% stake respectively. As of march 31, 2006, the company had issued over 8,37,963 policies, with a sum assured exceeding Rs.45,888 Crore and premium income of nearly Rs.2,412 Crore.The company has a network of over 72,000 advisors; as well as 9 banc assurance partners and 200 corporate agent and broker tie-ups. Today the company is the #1 private life insurer in the country. Strength rating of AAA (lnd) from filch ratings. The AAA rating is the highest credit rating, and is a clear assurance of ICICI PRUDENTIAL s ability to meet its obligations to customers at the time of maturity or claims.

DISTRIBUTION TATA-AIG has one of the largest distribution networks amongst private life insurers in India, having commenced operations in over 86 cities and towns in India. TATA-AIG Life Insurance Company offers and services its insurance and pensions products in Mumbai, Chennai, Banglore, Kolkata, Chandigarh, Hyedrabad, Delhi, Pune, Ahmedabad, Kochi, Jamshedpur, Guwahati, Jaipur, Manglore and now in Ahmedabad. TATA-AIG has recruited and trained more than 65,000 insurance advisors to interface with and advise customers. Further, it leverages its state-of-the-art IT infrastructure to provide superior quality of service to customers. 2.3 PRODUCTS Insurance Solutions for Individuals TATA AIG Life Insurance offers a range of innovative, customer-centric products that meet the needs of customers at every life stage. Its 28 products can be enhanced with up to 6 riders, to create a customized solution for each policyholder. Insurance Solution for Individuals: (a) Assure One year/ Five Years/10 Years/ 15 Years / 20 Years / 25 Years Lifeline Plans, and Term to age 60 known as Assure Lifeline to Age 60 : You get the luxury of high coverage but at an affordable cost. You have the flexibility to choose the term of cover.


Assure 10 Years / 20 Years / 30 Years Security & Growth Plans: This amazing endowment policy enables you keep your money safe and have it grow. In the unfortunate event you die while under this cover, your dependants will get the sum assured. However, if you outlive the term, you still get the sum assured along with a whole range of bonuses.


Assure 21 years Money Saver: This plan offers you cash payments at the end of every 3 years during the term of the policy. You also get the dual benefits of life insurance coverage plus the flexibility of periodic payments.


Assure Golden Years Plan: This endowment policy gives you safety AND returns. In case of death, your dependants get the sum assured otherwise your savings grow. If you live past the term you still get that sum assured along with a whole host of bonuses.


Easy Retire This is an immediate annuity plan with Return of Purchase Price (RoPP) which can be purchased through a single premium payment. The plan provides for annuity payments which are paid throughout the life time of an annuitant.


Health Investor: This plan offers a lumpsum benefit on diagnosis of 12 critical illnesses, a cover in case of unfortunate death and a 100% return of premium in case of no claims.


Invest Assure II: This highly flexible plan gives you full life cover AND high returns AND the flexibility of deciding the length of your life cover term, the amount of cover you receive & where the rest of your premium is invested.


InvestAssure Extra: This is a unique investment linked insurance plan for protection and is specially designed for customers of premier banks. One also gets an in-built payor benefit rider.


InvestAssure Care: This is a non-participating unit linked insurance plan with inbuilt Critical Illness benefit. The available policy terms are 15 years and 20 years.


InvestAssure Flexi This plan is a unit linked endowment investment plan and provides you with ample flexibility to suite your needs and priorities and to help you to achieve your financial goals.


InvestAssure Gold: This a unique whole life plan that takes care of your changing requirements throughout your life - additional protection for additional future needs, flexibility to invest more money as per your requirements, providing for emergency cash requirements or a steady post-retirement income.


InvestAssure Plus: This is a unique, flexible insurance plan with a singlepremium paying term, which combines the security of a life insurance policy with an opportunity of enjoying potentially higher returns on your insurance premiums.

2.3.2 Protection Solutions


LIFE Plus This plan lets you win no matter what happens. Get your premiums back if you outlive the term. Get sum assured in case of death by natural causes. Get DOUBLE the sum assured in case of death by accidental causes.


MahaLife Gold This is the ideal planning vehicle for your retirement. It provides you a steady income and insurance coverage for life! Premiums are payable only for the first 15 years. You can even use this to cover future expenses of your children.


Raksha 10/15/20/25 This plan offers you a large cover at a small premium with the flexibility to choose the term of cover.


ShubhLife This plan provides you 100% life insurance protection and high returns on your investment but the premiums you pay are among the lowest of any similar endowment policy.


Tata AIG Health First Quality healthcare is incredibly expensive. You need a policy that covers all contingencies including prolonged hospitalization, major surgery, critical illness, post hospitalization fees and even the unfortunate event of your death. HealthFirst provides a lump sum irrespective of what your medical bills are.


Tata AIG Life Health Protector - 5 Year Guaranteed Renewal Accident and Health Plan The average cost for a major surgery or treatment in hospital is between three to five lakh. Health Protector is the first product of its kind in India that offers you protection in case ANYONE in your family has an accident or falls ill.

2.3.3 Child Solutions

SmartKid child plans provide guaranteed educational benefits to a child along with life insurance cover for the parent who purchases the policy. The policy is designed to provide money at important milestones in the childs life. SmartKid child planed are also available with in unit-linked form - both single premium and regular premium. 2.3.4 Market-linked Solutions LifeLink is a single premium Market Linked Insurance Plan which combines life insurance cover with the opportunity to stay invested in the stock market.

LifeTime offers customers the flexibility and control to customize the policy to meet the changing needs at different life stages. It offers 3 investment options - Growth Plan, Income Plan and Balanced Plan.

2.3.5 Retirement Solutions LifeTime Pension is a regular premium market-linked pension plan. LifeLink Pension is a single premium market-linked pension plan.

2.3.6 Group Insurance Solutions TATA-AIG also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees. 1. Group Gratuity Plan: TATA-AIG group gratuity plan helps employers fund their statutory gratuity obligation in a scientific manner. The plan can also be customized to structure schemes that can provide benefits beyond the statutory obligations. 2. Group Superannuation Plan: TATA-AIG offers a flexible defined contribution superannuation scheme to provide a retirement kitty for each member of the group. Employees have the option of choosing from various annuity options or opting for a partial commutation of the annuity at the time of retirement.


Group Term Plan: TATA-AIG flexible group term solution helps provide affordable cover to members of a group. The cover could be uniform or based on designation/rank or a multiple of salary. The benefit under the policy is paid to the beneficiary nominated by the member on his/her death.

2.3.7 Flexible Rider Options TATA-AIG Life offers flexible riders, which can be added to the basic policy at a marginal cost, depending on the specific needs of the customer. 1. Accident & Disability benefit: If death occurs as the result of an accident during the term of the policy, the beneficiary receives an additional amount equal to the sum assured under the policy. If the death occurs while traveling in an authorized mass transport vehicle, the beneficiary will be entitled to twice the sum assured as additional benefit. 2. Accident benefit: This rider option pays the sum assured under the rider on death due to accident. 3. Critical Illness Benefit: protects the insured against financial loss in the event of 9 specified critical illnesses. Benefits are payable to the insured for medical expenses prior to death.


Income Benefit: This rider pays the 10% of the sum assured to the nominee every year, till maturity, in the event of the death of the life assured. It is available on SmartKid, InvestAssure II and InvestAssure Gold.


Waiver of Premium: In case of total and permanent disability due to an accident, the premiums are waived till maturity. This rider is available with InvestAssure II and InvestAssure Gold.

In TATA-AIG smart kid plan, the parent of the kid is insured and not the kid. Incase some mishappening occurs and parent dies with in the term, full sum assured is paid immediately and all future premium are waived. And these death benefits are in addition to the benefit that child is likely to get in normal course of policy, i.e. at important milestone of education, irrespective of death of the life assured. In TATA-AIG Save and Protect plan the additional free life cover for 5 years from date of maturity for 50% of original sum is assured.

In TATA-AIG lifeguard the premium paid are returned but without any interest that is not there in LICs whole life plan.

In TATA-AIG Money Back plan we get 120% of the basic sum assured plus guaranteed addition plus vested bonus.

In TATA-AIG pension plan i.e. Forever Life it gives you the option to postpone the vesting age up to maximum of 65 years. Secondly the policyholder is at an option to opt pension from any other insurance company. Thirdly he has an option to terminate his policy after three years premium are paid and a guaranteed surrender value is payable.

In its Investment plan ICICI gives us the option to shift from one option to other four times a year.

2.4 ABOUT THE PROMOTERS The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2006-07 of $28.8 billion (Rs.1,29,994 crore), the equivalent of about 3.2 per cent of the country's GDP, and a market capitalisation of $73.6 billion as on December 2007. Tata companies together employ some 2,89,500 people. The Group's 27 publicly listed enterprises-among them stand out names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market capitalisation that is the highest among Indian business houses in the private sector, and a shareholder base of over 2.9 million. The Tata Group has

operations in more than 85 countries across six continents, and its companies export products and services to 80 countries.

TATA AIG Life Insurance, the country's third-largest private insurance player, is targeting a 45 per cent increase in premium income at over Rs 500 crore this fiscal. The company, which started operations in January 2001, is expected to break even by 2005-06. The Tata family of companies shares a set of five core values; integrity, understanding excellence, unity and responsibility. These values, which has been part of the Group's beliefs and convictions from its earliest days, continue to guide and drive the business decisions of Tata companies. This is a legacy that

has earned the Group the trust of many millions of stakeholders in a measure few business houses anywhere in the world can match. 2.5 ABOUT THE PARTNERS Tata Enterprises with 82 companies, spread over seven sectors and with an annual turnover exceeding US $ 8.8 billion, employs more than 262,000 people. Tata Group has shown over years that it is a value driven company and has pioneering contributions in various fields including insurance, aviation, iron and steel. Tata companies have forged a number of global alliances with eminent international partners in several fields. In terms of capital market performance as many as 40 listed Tata companies account for nearly 5% of the total market capitalization of all listed companies. The Group has had a long association with India's insurance sector having been the largest insurance company in India prior to the nationalisation of insurance. AIG American International Group, Inc is the leading U.S. based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. Its member companies write a wide range of commercial and personal insurance products through a variety of distribution channels in over 130 countries and jurisdictions throughout the world.

AIG's Life Insurance operations comprise of the most extensive worldwide network of any life insurer. AIG's global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. The Joint Venture Tata AIG Life Insurance Co. Ltd. is capitalised at Rs. 185 crores of which 74 per cent has been brought in by Tata Sons and the American partner brings in the balance 26 per cent. Mr. George Oommen has been named managing director of Tata AIG Life.

Tata-AIG plans to provide broad array of life insurance plans to cover to both individuals and groups.

The company is headquartered in Mumbai, with branch operations in Delhi, Chennai, Hyderabad, Bangalore ,Calcutta, Pune and Chandigarh.

Channel Partners: HSBC, DBS, UBI, PNB Principal, Bajaj Capital, Religare, Anand Rathi and many more. Sales force of approx. 33,650 advisors.

2.6 VISION To make TATA - AIG the dominant Life and Pensions player built on trust by world-class people and service.

This we hope to achieve by : Understanding the needs of customers and offering them superior products and service. Leveraging technology to service customers quickly, efficiently and conveniently. Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to our policyholders. Providing an enabling environment to foster growth and learning for our employees. And above all, building transparency in all our dealings. The success of the company will be founded in its unflinching commitment to 5 core values Integrity, Customer First, Boundary less, Ownership and Passion. Each of the values describe what the company stands for, the qualities of our people and the way we work.

2.8 Achievements
No 3 Pvt life insurance company. Nominated in New York stock exchange. Enlisted in fortune 500 lists. Got AAA rating. Largest premium income. Biggest pension player. Maximum number of policies sold, more than 1 million. Highest capital base of 925 Rs. Office in 221 locations & 86 branches. Largest agency force i.e. above 56,300 well trained world class Leader: Leader in market share(Apr 05-March-06) Highest share of a private player in the overall Insurance market: 7.3% Highest share of the private insurance market: over 31.6% Highest Share of the unit Linked Market: 49%(Sept 2004) Dominant player in pensions overall market (31%) private market (70%)Sept 2004 figures. 16.5% of the group insurance market. Largest AD business in value terms. Approx. Rs. 30,000 crore Sum Assured.

Over 1 million policies. Rs 3,800 crore AUM.

2.9 Strategies:
One needs to sketch a perfect road map or adopt a strategy to the destination and also need to follow the path strictly. The strategies applied to achieve the above mentioned targets are as follows. 1. Direct Marketing. 2. Cold Calling. 3. Through friends, and the references given by the company. 4. Advertisements etc. I am also applying some other strategies like 5. Time management 6. Punctuality 7. Preplanning 8. Never leave even single prospect. 9. Always be in touch from previous customers 10. The most important thing is always create the URGENCY because in the market there are near about 14 insurance sectors with L.I.C. and all trying to capture the market.



Every research work does have some limitations and so this research work is also having its limitations. The following are limitations of this research study: L.I.C. is a strong competitor for insurance companies. Customers perception about private sector (TATA-AIG Service) Due to lack of time, the research study was conducted in Ludhiana. There may be a possibility of biasness on the part of some respondents, but very much care has been taken to make this report unbiased. Some respondents might not given the correct information due to their lack of interest and shortage of time. In order to keep their views secret, some of the respondents might have provided to wrong information.

Learning from the On The Job Training 1 Selling Skills 2 Communication Skills 3 Never ignore single prospect from market 4 Have more patience 5 Ability to work under pressure 6 Atmosphere of the corporate 7 Adjusting nature according to situation 8 Always focus on target with preplanning 9 Knowledge of share market 10 Never interfere in the office politics

High probability of success

Tax/ financial consultants, C.A.s Bond / mutual fund agents Small business owner

House wives

Avoidable profiles

New to the city Income profile approx Rs. 1 lac p.a. People who do not own their transport. Characteristics of a good insurance sales person

He should be speedy, needy and Greedy He should be presentable. He should have good Communication Skills. He should be ready to serve with a smiling face.

CHAPTER -3 Research methodology is a way to systematically solve the research problem. It may be understood as a science of studying how research is done scientifically. In it we study the various steps, the research process that are generally adopted to study the research problem and basic logics behind them. The basic steps in this research are shown in the chart below OBJECTIVES: To check the interest of the customers in buying the life insurance policy from the private company To check the perception of the customers of knowing that which factor affects there policy purchase decision To check the difference in perception b\w the young(20-35 yrs) and old(35-50) generations towards private companies To check the difference in perception b/w the businessman and serviceman towards private companies

3.1 The Research Process

Define the research problem and its objectives

Review concepts and theories

Research design including sample design Collection of data survey

Analysis of data

Interpretation and report writing

The research consisted of two stages. In the first stage, a survey was conducted to collect the data about the people. The second stage involved analysis of the data collected in the first stage. 3.2 Data Collection

`Data has been collected both from primary as well as secondary sources as described below.

3.3 Sample size The sample size for the survey was 100. In addition, data about ICICIs services was collected through discussions with the ICICI employees. 3.4 Primary sources The primary source of data was Questionnaire filled by people at places in Ludhiana. 3.5 Field work Since the task was to recruit some people for the company. So the first thing was to look for the people in the field and various offices. Various CA, Lawyers and other professionals were interviewed for the recruitment purpose.

3.6 Secondary sources

The secondary sources of data were the various websites and insurance manuals. This mainly provided information about the insurance sector and the companys profile. These helped in gaining knowledge about the industry. These sources are listed in References.

3.7 Research design

The methodology consisted of Descriptive research. The problem was solved by recruiting people into the system. The information was collected through Questionnaire is as follows General Information Time that can be devoted for this profession To know the awareness about. TATA- AIG To know about their interest in becoming advisors. To fix an interview if interested.

3.8. Sample composition:

The sample composition (Sex, age group, Income group and occupation) for the survey has been shown below:


Female 20% Male Female Male 80%

Fig 3.81 : Sample composition (Sex) As it is clear from the figure males dominate the market share as compared to females with about 80% males who have invested and only 20% females.


40% 25% 15% 20%

Less than 25



Greater than 44

Age in Years

Fig3.82: Sample composition (Age) From the above graph it is evident that the people belonging to the age group of 25 to 34 have invested the most in various insurance schemes (40 out of 100). And only 15 people below age of 25, and 25 people between age group of 35-44, and the aged people above 44 have only 20% share.

More than 4.5 Lakh 15%

3 Lakh - 4.5 Lakh


1.5 Lakh - 3 Lakh 25% Percentage


Less than 1.5 Lakh

Fig3.83 : Sample composition (Income) From the total of 100 respondents, 40 respondents were from income group of 1.5 3 lakh, and 25 people belonged to group of income varying till 1.5 lakh per year.

45% Percentage




O th er s


es s


ro fe ss io n

er vi

us in

Fig3.84: Sample composition (occupation) Sample mainly consisted of service class people with their percentage 45, than were the business class people , next to them were the professionals like teachers, doctors etc, only 7% were the retired people and 3% were the housewifes and students.

R e

tir e

4.1 Have you taken any life insurance policy? (a) Yes
Yes No

(b) No
76 24

Sample size 100

Having insurance policy

80% No. of respondents 70% 60% 50% 40% 30% 20% 10% 0% Yes No 24% 76%

Fig 4.1 The bar

diagrams above shows the percentage of people who have taken any insurance policy. The percentage was good, nearly 76% people have taken insurance policies (76 people out of 100).


Do u know the products offered by TATA-AIG. (a) Yes (b) No

If yes, tick the product most preferred by you Money back Children plan Retirement plans Any other 48 20 22 10

Money back Children plan Retirement plans Any other


50 40 30 20 10 0 1 any other retirement plan children plan Money lan back Money back children plan retirement plan any other

fig 4.2 Money back plan is perceived as the best plan provided by the TATA-AIG. 48% of the respondents has opted for it, retirement plan is the second most preferred policy with good rating as compared to children plan with 10% and only 10% people have gone for other policies.

4.3 Rank the Insurance Companies according to the perceived value.




fig 4.3 Life insurance company is perceived as the best company.68 percent of respondents has rated it the best insurance company. LIC is the oldest insurance company of India. MAX NEW YORK LIFE and ICICI are other insurance companies which has got good rating from respondents.

4.4 How much is your annual income?

Less than 1,00,000 1,00,000 - 2,00,000 2,00,000 -3,00,000 3,00,000 -4,00,000 4,00,000 and above

15 34 26 18 7

Fig 4.4 The interpretation of the graph is that 34% of the people lies between the income group of 1,00,000 and 2,00,000. that is the highest proposition. Second highest proposition is of 26% with income ranging between 2,00,000 3,00,000.

4.5 From which of the following companies would you like to buy insurance policy? (You can tick more than one) LIC ICICI HDFC Max New York life TATA-AIG Any other, please specify --------------PREFERENCE OF PEOPLE TO BUY INSURANCE POLICY

10% 7% 11%



fig 4.5

The above data reveals that 68% of the respondents prefer to buy insurance policy from LIC and only 11% respondents preferred TATA-AIG.

4.6 Rate the following reasons for taking policy from TATA-AIG?

Reasons Less premium/ Extra benefits Money is safe Good returns Tax benefit

Good 19 10 11 14

Average 31 35 36 33

Bad 9 5 3 3

Mean score 1.98 1.9 1.78

40 30 20 10 0

31 19 9 Less premium/ Extra



33 Good 14 3 3 Average Bad



fig 4.6 The above graph reveals that their was a mixed response , when the respondents were asked the reasons for taking policy from TATA-AIG. The most

Good returns

of the respondents rated extra benefits, safe money, returns, and tax benefits on an average margin.

4.7 Why do you own an insurance policy? (You can tick more than one). For an investment purpose Protection Future expenses Tax benefits Any other


For investment purpose protection future expenses tax benefits

9% 8%


fig 4.7

When the respondents were asked as to what motivates or de-motivates them when they think of TATA-AIG, they came up with this response. The customers

own an insurance policy mostly for the investment purpose, nealy 62% people had gone for investment bcoz of the investment purpose and nearly 21% people to evade the taxes.

4.8 What importance do you assign to each of the following factors for choosing the above mentioned company?
Very High Company name Company agent Family Friends Advertisements 14 12 36 32 9 Very low 11 9 6 6 7 Mean Score 3.33 3.25 3.68 3.62 2.71

High 42 38 24 26 12

Indifferent 18 22 18 20 47

Low 15 19 16 16 15

Mean Score
4 3 2 1 0

Company name 3.33

Company agent 3.25

Family 3.68

Friends 3.62

Advertisem ents 2.71

Mean Score

fig 4.8

According to ones perception various respondents have ranked various factors like company name, company agent, friends, and family advertisements
Highly satisfied 20 Satisfied 36 Indifferent 11 Dissatisfied 19 Highly dissatisfied 14

differently. This graph helps us to know which factor is most influential to make customers.

4.9 .Are you satisfied with the product you have bought?

Satisfaction with the product

14% 19%




Highly satisfied Satisfied Indifferent Dissatisfied Highly dissatisfied

fig 4.9

From the response of the respondents we got that nearly 36% of the people are highly dissatisfied with their insurance policy and nearly 20% people placed themselves to be highly satisfied ones. Next, 19% dissatisfied and 14%satisfied respondents comes the varying ranges

4.10. If you are given a chance to repurchase an insurance policy again from the same company, would you?
Yes No 32 68

80 70 60 50 40 30 20 10 0 Yes No

fig 4.10

Nearly 68% of the people were not interested in repurchase of the policy from same company.

4.11 Would you refer a friend/ relative to buy an insurance policy from TATA-AIG? Definitely yes Probably yes Probably not . Not sure Definitely not


12 12 Definitely yes Probably yes Not sure Probably no Definitely no




fig 4.11 People when asked that would they recommend their friends or family for the policy they already had, response was mixed with only 12% people would definitely yes, 12% with probably yes and even 32% people were not sure. Moreover, nearly 24% people said that probably they wont refer any one giving hints that they were not satisfied with the policy 4.12 What are the reasons for not taking the insurance cover? No savings No benefits No interest Non taxable income No need Any other reason-------------------

No savings 7% 46% 18% 16% No benefits No intreset Non taxable income No need


fig 4.12 The respondents, when questioned why they dont take any insurance policy, nearly 46% replied that they have no savings to invest for further use. And 16 people said that they see no benefit in it. And nearly 135 people with non-taxable income.









Satisfaction with the product

40 35 30 25 20 15 10 5 0 1 2 36 19


11 Different Highly indifferent

fig 4.13

Highly satisfied



Highly satisfied Satisfied Indifferent Different Highly indifferent

This fig reveals the satisfaction level of the people has been shown. Only 20% of the people were delighted with life insurance products of TATA-AIG whereas 14%people was unhappy about it. Here again the reason could be the information given by TATA-AIG or the experience they had previously in terms of losses they bear. There is 11% respondent who cannot say whether they are satisfied or not.

4.14 Insurance policy is taken by which age group? Less than 25yrs 25 yrs -34 yrs 35 yrs -44 yrs 44 yrs and above


6 34


LESS THAN 25 25 -34 34 -44 44 - AND ABOVE


fig 4.13 The graph shows that; 46percent respondents owing life insurance belong to the age group of more than 44 years. Than comes the age group between 35 years Post office / Bank fixed deposits 38 mutual funds / shares 18 Pension plans 16 Havent planned yet 28 to 44 years. Lower the age group, percentage of people taking insurance is decreasing. It can be clearly seen that this the product affected by the age of customer. People normally think or prefer taking the life insurance at the later stage of the life.


How do you plan to meet your retirement expenses?




45 40 35 30 25 20 15 10 5 0




fig 4.15 The above graph reveals the various investment instruments, where the people plan to invest for their retirement benefits. Most of the people preferred post offices and banks.



TATA-AIG is one of the most powerful, world class Life Insurance Co., gaining appreciation for their strong work ethics, excellent performance, professionalism and team work which led them to progress in todays challenging environment. Though with its excellence performance and every efforts has been made to

present the most authentic and truly representative findings, but some uncontrollable factors do affect the performance and thus bring about some deviations and hurdles in progress. So, with its strengths and good quality, the company is having some weaknesses, and threats and opportunities. Its SWOT analysis is as below:

Strengths TATA-AIG is the largest private player in the insurance industry in India. Excellent services. Customization of Products as per customers needs. Brand Image. Business Experience. Strong Financial Base. Innovative products, Technology, organization culture and climate. The company has a large network of branches which is helpful to customer for the payment.

Weaknesses Lot of competitors are in the market offer same product by the title difference in the premium and offerings.

Target only higher income group whereas other companies are trying to catch middle-lower level people. Higher premiums as compared to the other companies Clients face problems to get insured due to large number of formalities. High targets for financial advisors and for the sales department.

Opportunities Huge market is literally untapped. Out of estimated 320 million insurable markets only 20% of the population is insured. In a conservative society of India where people are more inclined towards risk free investments such as Bank FDs and savings rather than equity and high risk investments insurance offers the best of both worlds The security with high returns. So there exists high potential for insurance company like TATA-AIG. In the pension field where people want good life after their retirement. Indian people are more emotional towards their children thats why children plans are selling like hot cakes. Health insurance and pension Schemes, an estimated market potential of approximately $15 billion.


Weak perception of private players in the minds of Indian people due to frequent financial scams Large number of insurance players Existing wrong business practices of companies like LIC First premium is paid by their agents where as IRDA suggests that even forms to be filled by the clients themselves Players like Allianz Bajaj and Birla sun life with low premium for the similar plans Entry of many other private companies with equally strong experience and financial strength of foreign partners making the competition difficult and saturating the urban markets. LIC has woken up from sleep and is following competitive strategies. Its huge surplus in Life Fund gives a capability to lodge Price war. Current Government policies do not encourage Gross Domestic Savings. If the Tax Liability of the service class rises, the customer will have little money to invest. For the Insurance sector Government set the authority that is IRDA (Insurance Regulatory and Development Authority) which is undertaken to track record of all the companies and change rules day by day more rigid which is very difficult for the companies.


Broadening the benefits India has an amorphous middle class of about 300 million people who can afford to buy life, health, disability and pension plan products. Out of this 30% have insurance and that too covers only 25% of their needs and financial capacity. The remaining 70% have no insurance cover. The life insurance market in India therefore is practically untapped. Since 1956, with the nationalization of insurance industry, the state-run Life Insurance Corporation (LIC) has held the monopoly in the country. With around 600000 agents in every nook and corner, it has created a viable brand name, particularly among the rural population of the country. However, on the qualitative side, it has very little to take pride in. and there lies the potential for foreign players to challenge this behemoth. As is typical with monopolies, the premium rates charged by LIC are among the highest with a huge unionized, rigid workforce mostly in the clerical category. Technology used is outdated.

Channel of distribution

Since distribution will be a key determinant of success for all insurance companies regardless to age and ownership. The nationalized insurance currently has a reach and presence. New entrants cannot and does not expect to supplant or duplicate such a network. Building a distribution network is expensive and time consuming to reach existing and new customers. There would be substantial shifts in the distribution in insurance in India. Worldwide,

insurance products move along a continuum from pure service product to pure commodity product then they could be sold through the medical shops, groceries, novelty stores etc. once communication ,popularity and awareness of product is attained then the products can move to remote channels such as telephone or direct mail

Expectation of the consumers

Today LIC has more than 60 products and GIC has more than 80 products to offer in the market. But most of them are outdated, as they are not suitable to the needs of the customers. Hence old as well as new insurers will have to offer innovative products to the customers.

Consumer Education Very soon market will be flooded by a large number of products by a fairly large number of insurers operating in the Indian market. The existing level of awareness of the customers for insurance plans is very low, it is so because only 62% of the population in India is literate and less than 10% well educated. Even the educated customer is ignorant about the various products of the insurance. Hence it is necessary that all the insurers should undertake the extensive plan for education of consumers. The consumer organizations and the media also can play very important role in education of the consumers. This will result in

expansion of the insurance market and will also enable the needy consumer to purchase to purchase appropriate products.

Catering the Rural Area

All those people who live in rural areas dont have any knowledge regarding all the new companies so main thing is just to make them aware about that these companies are and tell them about various services provide by these companies just because of ignorance and illiteracy. There is lots of potential in those rural areas so our motto should be to make them aware of various things which are prevalent in the insurance sector.

LIC awakes at a long period of time.

Since 2000 there was a monopoly of LIC but after privatization of insurance companies are introduced. Before that when there was monopoly of LIC they were quite satisfied but now with privatization it creates a tension for them. The main challenge before private sector is that LIC is providing one facility to them that they pay 50% of their first premium. But the thing which is provided by private company is services. Main question arises there is this is private company some people are not interested because of this reason but we can just assure you that we will go anywhere by taking your money because this is regulated by IRDA and backup by RBI (Reserve Bank of India).

Large number of private companies

In market there are large numbers of private companies this will become a main challenge in front of us. However the company which provide good services is the winner and this time TATA-AIG is at number one and many more provisions also been made in favor of customers.


Our span with TATA-AIG made us realize that we are not practicing the role of investment advisor in its true sense. We used to sell only those products, which needed immediate attention in order to fulfill our targets, even when we knew that the product was hardly required by the customer.

B) NEVER LOOK FOR TARGET FULFILLMENT i.e.. such events can affect the image of TATA-AIG.

C) EDUCATE THE CUSTOMER: TATA-AIG has the largest number of retail customer in most of the urban areas where it holds its operation. Most of these customers have immense confidence in TATA-AIG. It is really very easy to convince them about the various investment options available with the bank. All that is needed is to educate the customer about the basic know how about the policies, general insurance and life insurance products. Given the prospects and the results and the enormous choice of the various instruments available it is very easy to convert them into an investor. D) COLD CALLING IS THE MANTRA: The least followed practice in the investment and services division of the TATAAIG is that of cold calling. Cold calling means going to a particular customers place without prior contact or appointment.

On the basis of analysis done, following are the findings: Most of the customers are aware of the product range offered by TATAAIG. There is enormous scope of cross selling if proper services are offered to the customer and the products are competitive.

The organization has been successful in attracting customers and penetrating the potential market. This is evident from the association of respondents with TATA-AIG. Very Few respondent were not associated with TATA-AIG. It seems from the analysis that the bank has grown exponentially in terms of number of customers in the last three years.

The effectiveness of promotional strategies has been moderate .Though; there is definitely a scope of improvement.



Although the staff of TATA-AIG was highly co-operative and devoted enough to its valuable time on me. But because of their busy schedule and time allotted for study .being limited I feel I was not able to gain complete knowledge. Both of these became limiting factors to get thoroughly familiar with entire organization activities.


Lack of comparative data for deep comparison of products, the informative comparison of TATA-AIG with LIC has not been done to full extent due to non availability of full data required regarding this study.


The main factors which influence the policy purchase decision are the money is safe and good returns.


In comparison of the business class people, service class people are more aware of the private life insurance company TATA-AIG. In comparison to 70% business class aware

people, there are 90%aware service class people

Ques 1. Have you taken any life insurance policy? (a) Yes (b) No

Ques 2.

Do u know the products offered by TATA-AIG. (a) Yes (b) No

If yes, tick the product most preferred by you Money back Children plan Retirement plans Any other

Ques 3. Rank the Insurance Companies according to your perceived value LIC ------------------HDFC ----------------

ICICI -------------------TATA-AIG---------------

MAX NEW YORK LIFE ------------

Ques 4.

How much is your annual income? Less than 1,00,000 1,00,000 2,00,000 2,00,000 3,00,000 3,00,000 4,00,000 4,00,000 and above

Ques 5.

From which of the following companies would you like to buy

insurance policy? (You can tick more than one) LIC TATA-AIG HDFC Max new York life Birla life insurance Any other, please specify----------------------------------------

Ques 6.

Rate the following reasons for taking policy from TATA-AIG?

Reasons Less premium/ Extra benefits Money is safe Good returns Tax benefit




Ques 7.

Why do you own an insurance policy? (You can tick more than one).

For an investment purpose Protection Future expenses Tax benefits

Any other Ques 8. What importance do you assign to each of the following factors for

choosing the above mentioned company?






Ques 9 . Insurance policy is taken by which age group?

Less than 25yrs 25 yrs -34 yrs 35 yrs -44 yrs 44 yrs and above


Ques 11. Would you refer a friend/ relative to buy an insurance policy from TATA-AIG? Definitely yes

Probably yes Not sure Probably not Definitely not

Ques 12. If you are given a chance to repurchase an insurance policy again from the same company , would you? YES NO Ques 13.What are the reasons for not taking the insurance cover? No savings No benefits No interest Non taxable income No need Any other reason-------------------

Ques14. Do you wish to take insurance policy now? (a) Yes (b) No

Ques. 15. How do you plan to meet your retirement expenses?

Post office/bank fixed deposits Mutual funds/shares Pension plans Havent planned yet

A. A. B.

Name Age

___________________ ----------------------------Male Female











BOOKS Kothari, C.R.; Research methodology Mishra, M.N,; Insurance principle and practice.

www.licindia.com www.economywatch.com www.indianmba.com www.Irdaindia.org. www.tata-aig.com www.financialexpress.com www.insuranceguide.com

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Many people input underlines an effective research project report. I wish to

acknowledge a great sense of gratitude to all those persons who are connected with the presentation of the project report. This work would not have been

possible without their overwhelming support and co-operation. It is my proud privilege to express my profound sense of gratitude and indebt ness to my advisor Prof. Mrs. Shallu Gupta, GGNIVS Campus, Ludhiana for his enlightened guidance, keen interest ad encouragement during the preparation of project report. I would like to thank Mr. Manjeet Singh Chhabra, Co-ordinator of GGNIVS Campus, Civil Lines, Ludhiana for his inspiration to prepare this project report. His unfailing guidance and encouragement made us understand the concept of our project report who guided and supervised us throughout our training program and remained an active supporter from the beginning till end. I would also like to thank my parents who motivated me for the completion of this project and gave me financial assistance during the project report.


Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life combines the Tata Groups pre-eminent leadership position in India and AIGs global presence as the worlds leading international insurance and financial services organization. The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. Tata AIG Life provides insurance solutions to individuals and corporates. Tata AIG Life Insurance Company was licensed to operate in India on February 12, 2001 and started operations on April 1, 2001. American International Group, Inc. (AIG), a world leader in insurance and financial services, is the leading international insurance organization with operations in more than 130 countries and jurisdictions. AIG companies serve commercial, institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. In addition, AIG companies are leading providers of retirement services, financial services and asset management around the world. AIG's common stock is listed on the New York Stock Exchange, as well as the stock exchanges in Paris and Tokyo Management. Its member companies write a wide range of commercial, personal and life insurance products through a variety of distribution channels in approximately 130 countries and jurisdictions throughout the world. AIGs global businesses also include financial services and asset management, including aircraft leasing,

financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products. Trevor Bull Managing Director Mr. Trevor Bull joined Tata AIG Life as Managing Director in January 2006. Prior to this, Trevor was Senior Vice President and General Manager at American International Assurance in Korea. Trevor has over 28 years of experience in the life insurance industry and has spent considerable time working in Japan and Britain. His experience covers an array of skills at various authority levels including Director, Regional Executive, Senior Line Management and Project Management. Additionally, Trevor has acquired keen insights into Unit Linked, conventional life and health insurance/ reinsurance and all major products & distribution channels.

Tata Group Profile

The Tata Group comprises 96 operating companies in seven business sectors: information systems and communications; engineering; materials; services; energy; consumer products; and chemicals. The Group was founded by Jamsetji Tata in the mid 19 th century, a period when India has just set out on the road to gaining independence from British rule. Consequently, Jamsetji Tata and those who followed him aligned business opportunities with the objective of nation building. enshrined in the Group's ethos to this day. The Tata Group is one of India's largest and most respected business conglomerates, with revenues in 2006-07 of $28.8 billion (Rs.1,29,994 crore), the equivalent of about 3.2 per cent of the country's GDP, and a market capitalisation of $73.6 billion as on December 2007. Tata companies together employ some 2,89,500 people. The Group's 27 publicly listed enterprises-among them stand out names such as Tata Steel, Tata Consultancy Services, Tata Motors and Tata Tea - have a combined market capitalisation that is the highest among Indian business houses in the private sector, and a shareholder base of over 2.9 million. The Tata Group has This approach remains

operations in more than 85 countries across six continents, and its companies export products and services to 80 countries. The Tata family of companies shares a set of five core values; integrity, understanding excellence, unity and responsibility. These values, which has

been part of the Group's beliefs and convictions from its earliest days, continue to guide and drive the business decisions of Tata companies. This is a legacy that has earned the Group the trust of many millions of stakeholders in a measure few business houses anywhere in the world can match.