1.

INTRODUCTION TO FINANCE
Finance may be defined as the provision of money at the time when it is required. Finance refers to the management of flows of money through an organization. It concerns with the application of skills in the manipulation, use and control of money. Every enterprise, whether big, medium of small, needs finance is so indispensable today that it is rightly said to be the lifeblood of an enterprise. Finance is the integral part of modern business. The subject of finance has been traditionally classified into two classes:

2. Private finance 1. Public finance

FINANCE

1. Public finance:
Public finance deals with the requirements, receipts and disbursements of funds in the government institutions like states, local self governments and central government.

2. Private finance:
Private finance concerned with requirements, receipts and disbursements of funds in case of an individual, a profit seeking business organization and a non profit organization. Finance tells how people make decisions about the collection and allocation of resources in organizations like corporation , school or bank or government agency therefore, it is important for all individuals , businesses governments and non government organizations to

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appreciate the significance of finance in their day to day businesses . Finance was a branch of economics till the closure of nineteenth century. Finance as a separate academic discipline is still evolving. Practicing managers and academicians have been contributing in its expansion and enrichment.

Meaning of Finance:
In simple words, Arrangement of funds is called finance. All organizations need finance for operating its different activities. So, we can say finance is just like blood for survival the business in changing economic environment. Fund, money, saving, cash, reserves and assets are the basics of finance. Finance word is very deep and in modern age, this word is also known Business Finance. To create equilibrium in business finance, we used different tools like financial analysis, financial planning, ratio analysis, cash flow analysis, fund flow analysis and working capital management analysis. In other words Finance is the study of how and under what terms, savings (money) are allocated between lenders and borrowers. Finance is distinct from economics in that it addresses not only how resources are allocated but also under what terms and through what channels. Financial contracts or securities occur whenever funds are transferred from issuer to buyer.

Definition of Finance:
Finance is the study of how investors allocate their assets over time under conditions of certainty and uncertainty. A key point in finance, which affects decisions, is the time value of money, which states that a unit of currency today is worth more than the same unit of currency tomorrow. Finance aims to price assets based on their risk level, and expected rate of return. Finance can be broken into three different sub categories: public finance, corporate finance and personal finance.

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Objectives of Finance:
The goal of the Ministry of Finance to design and develop policies and financial plans of the state, coordinate budgets, streamline the government's expenditure and develop tax revenues in order to achieve economic and social objectives.

Scope of finance
At the present state, the academic discipline of finance includes the following specialized areas in its scope.

1. Public financ e 5. Financi al manage ment

SCOPE OF FINANCE

2. Securities and investme nt analysis

4. Internation al finance

3. Investment finance

1. Public finance:
Public finance like business organizations, governments (local, state or federal) raise and spend large sum of money, but unlike business organizations, they pursue non profit goals. To deal with governmental financial matters, a separate and specialized field of finance has emerged as public finance.

2. Securities and investment analysis:

This area is of interest to individuals and institutional investors. It covers mainly measurement of risk and return on investment in securities.

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3. Investment finance:
Investment finance deals with issues of capital formation and the organizations that perform the financing function of the economy. Therefore, it mainly studies saving and capital formation and institutions involved in this process such as banks, insurance companies, provident and pension funds etc.

4. International finance:
International finance studies economic transactions among nations, corporations and individually internationally. It is concerned with flows of money across international boundaries.

5. Financial management:
Business firms face problems dealing with acquisition of funds and optimum methods of employing the funds. Thus financial management studies financial problems in individual firms, seeks low cost funds and seeks profitable business activities.

Importance / Significance of Finance:

Economic growth and development: through investing decision, financing decision, dividend decision, and risk management decision, better and more economically viable projects are undertaken by companies. The resultant effect on the economy is economic growth and development. Financial management serves as a good guide to online investing.

Improved standard of living: growth and development in the economy that is brought about by financial management will ultimately translate into improved standard of living for all.

Improved health: again, good economic condition and improved standard of living culminates into improved health as a lot of financial stress related sicknesses will

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be completely eliminated or reasonably reduced. Creates jobs those that teach financial management and the jobs that are created as a result of flourishing economy. Better financial decisions will lead to profitability, and profitability will eventually lead to expansion which will in turn mean more jobs.

Alleviation of poverty

Preserve our environment

Promotes efficiency: good financial management does not give room for wastes and inefficiencies that characterizes poor financial management and decision making.

The study of finance

The study of finance requires a basic understanding of:

The study of finance

2. Corporate law 1. Securities 3. Financial institutio ns and market

Securities Corporate law Financial institutions and market

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Constituents of a Financial System

FINANCIAL INTERMEDIATION
Having designed the instrument, the issuer should then ensure that these financial assets reach the ultimate investor in order to garner the requisite amount. When the borrower of funds approaches the financial market to raise funds, mere issue of securities will not suffice. Adequate information of the issue, issuer and the security should be passed on to take place. There should be a proper channel within the financial system to ensure such transfer. To serve this purpose, financial intermediaries came into existence. Financial intermediation in the organized sector is conducted by a wide range of institutions functioning under the overall surveillance of the Reserve Bank of India. In the initial stages, the role of the intermediary was mostly related to ensure transfer of funds from the lender to the borrower. This service was offered by banks, FIs, brokers, and dealers. However, as the financial system widened along with the developments taking place in the financial markets, the scope of its operations also widened. Some of the important intermediaries operating in the financial markets include; investment bankers, underwriters, stock exchanges, registrars, depositories, custodians, portfolio managers, mutual funds, financial advertisers financial consultants, primary dealers, satellite dealers, self regulatory organizations, etc. Though the markets are different, there may be a few intermediaries offering their services in move then one market e.g. underwriter. However, the services offered by them vary from one market to another.

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Intermediary
Stock Exchange Investment Bankers

Market
Capital Market Capital Market, Credit Market Capital Market, Money Market

Role
Secondary Market to securities Corporate advisory services, Issue of securities Subscribe to unsubscribed portion of securities Issue securities to the investors on

Underwriters

Registrars, Depositories, Custodians Primary Dealers Satellite Dealers Forex Dealers

Capital Market

behalf of the company and handle share transfer activity

Money Market Forex Market

Market making in government securities Ensure exchange ink currencies

FINANCIAL INSTRUMENTS Money Market Instruments

The money market can be defined as a market for short-term money and financial assets that are near substitutes for money. The term short-term means generally a period up to one year and near substitutes to money is used to denote any financial asset which can be quickly converted into money with minimum transaction cost.

Capital Market Instruments

The capital market generally consists of the following long term period i.e., more than one year period, financial instruments; In the equity segment Equity shares, preference shares, convertible preference shares, non-convertible preference shares etc and in the debt segment debentures, zero coupon bonds, deep discount bonds etc.

Hybrid Instruments
Hybrid instruments have both the features of equity and debenture. This kind of instruments is called as hybrid instruments. Examples are convertible debentures, warrants etc.
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Financial markets

1. Primary market 6. over thecounter 2. Secondary market

Financial markets
5. Organized exchange 4. Capital market 3. Money market

1. Primary market: Primary issues of securities are sold, allows governments, banks, corporations to raise money by directly selling financial instruments to the public. 2. Secondary market: Secondary market allows investors to trade financial instruments between themselves. Secondary transactions take place. 3. Money market: Short term assets (maturity less than 1 year) are traded: Certificate of deposits. Commercial papers Treasury bills 4. Capital market: Long term assets (maturity longer than 1 year) are traded: Stocks
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Corporate bonds Long term governments bonds 5. Organized exchange: Organized exchanges most of stocks, bonds and derivatives are traded. Has a trading floor where floor traders execute transactions in the secondary market for their clients. 6. Over-the-counter: Stocks not listed on the organized exchange are traded in the over-the-counter (OTC) market, Facilitates secondary market transactions. Unlike the organized exchanges, the over-thecounter market doesnt have a trading floor. The buy and sell order are completed through a telecommunications network.

INTRODUDCTION ON INSURANCE OF ICICI PRUDENTIAL

In India, Insurance is a national matter, in which life and general insurance is yet a booming sector with huge possibilities for different global companies, as life insurance premiums account to 2.5% and general insurance premiums account to 0.65% of Indias GDP. The Indian Insurance sector has gone through several phases and changes, especially after 1999, when the Govt. Of India opened up the insurance sector for private companies to solicit insurance, allowing FDI up to 26%. Since then, the Insurance sector in India is considered as a flouring market amongst global insurance companies. However, the largest life insurance company in India is still owned by the government. The business of insurance related to the protection of an economic asset. Every asset has a value. The asset would have been created through the effort of the owner, because he expects to get some benefits from it. It is a benefit because it meets some of his needs. 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.

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In case of a motor car, it provides comfort and convenience in transportation. There is no direct income. Both are assets and provide benefits. Every asset is expected to last for a certain period of time during which it will provide the benefits. After that, the benefit may not be available. Insurance promises to pay to the owner or beneficiary of the asset, a certain sum if the loss occurs.

Meaning of Insurance:
Insurance is a contract between the insurance company (insurer) and the policy holder (insured). In return for a consideration (the premium), the insurance company promises to pay a specified amount to the insured on the happening of a specific event.

Definition of Insurance:
In the words of a layman, insurance means managing risk. For instance, in life insurance segment, the insurance company tries to manage mortality (death) rates among the wide array of clients.

Need of Insurance
The risk only means that there is a possibility of loss or damage. The damage may or may not happen. Insurance is done against the possibility that the damage may happen. There has to be an uncertainty about the risk. The earthquake may occur, but the building may not have been affected at all. The word possibility implies uncertainty. Insurance is relevant only if there are uncertainties. In case of a human being, death is certain, but its time is uncertain. The person is insured, because of the uncertainty about the time of his death. In the case of a person who is ill or the time of death is not uncertain, though not exactly known. It would be soon. He cant be insured. The mechanism of insurance is very simple. People who are exposed to the same risks come together and agree that, if any one of them suffers a loss, the others will share the loss and make good to the person who lost. The manner in which the loss is to be shared can be

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determined beforehand. It can be equal among all. It can also be proportional to the risk that each person is exposed to. All assets have some economic value attached to them. No person can deny that there is also a possibility that these assets may get damaged/ destroyed or become non-operational due to risks like breakdowns, fire, floods, earthquake etc. Different assets are exposed to different types of risks like a car has a risk of theft or meeting an accident, a house is exposed to risk of death/ accident. Insurance is needed because of following reasons:

NEED OF INSURANCE
Social Security Tool Social Security Tool
Insurance acts as an important tool providing a sense of security to the society on a whole. It is the right of every human being to have basic amenities li9ke food, clothing, housing medical care, standard of living necessary for his personal and familys well being, and right to security in case of unemployment, disability, sickness or any other circumstances out of his control. In case the bread earner of a family dies, the family suffers from direct financial loss as familys income ceases. As a result, familys economic condition gets affected unless there are other arrangements to rescue the family from this situation. Life insurance is one alternate arrangement that offers some respite to the family from financial distress. Otherwise this family would have been pushed into the lower strata of the society, which would be an additional cost to the society. This is because subsidies would have to be given to the family so as to enable it to survive and enjoy the basic rights at par with other people. Moreover, a poor family is generally seen to have a large family size with family members being illiterate. This on a whole affects the society and is a cost to the society. Therefore, insurance compliments the state in social management efforts.

Uncertainty

Economic Development

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Uncertainty
The basic need of insurance arises as risks are uncertain and unpredictable in nature. Getting insurance for an asset does not mean that the asset is protected against risks or its exposure to risk is reduced, but it actually implies that in case the asset suffers any loss in value due to such risk, the insurance company bears the loss and compensates the insured by making payment to him.

Economic Development
The premium paid by people to the insurance companies is a part of their savings. Insurance, thus, acts as a useful instrument in promoting savings and investments, particularly with the lower-income and middle-income families. These savings are ultimately used as investments fuelling economic growth.

Purpose of Insurance
Insurances widely popular and beneficial because of its following general purposes Protection or safety (Term insurances) : These plans are best suited for people aged up to 35 years as it provides higher protection at low cost. These plans are also beneficial for a person whose income is low and want to secure their family from financial default in case of his death. Marriage or education of the child (Children plans) Speedy growth of money & risk cover (Unit Linked Plans) Saving, protection & liquidity (Money back and Endowment type plans).

Characteristics of Life Insurance

Insurance plan or arrangement includes the following characteristics according to the meaning of insurance.

1. Pooling of losses:
Insurance spreads few losses over the whole group so the average loss is substituted for actual loss.
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2. Compensation of Fortuitous Losses:

Payment of fortuitous losses is the second basic characteristics of insurance. Fortuitous loss is that type of loss which is unforeseen and unexpectedly occurs as a result of chance.

3. Risk transfer:
Risk transfer is third basic characteristic of insurance. Insurance helps to transfer risk from the insured to insurer.

4. Indemnification:
Indemnification is the final basic characteristic of the insurance. The insured is restored to his her appropriate financial position prior to the occurrence of the loss.

5. Payment of happening of a special event 6. Co-operative device 7. The success of insurance business depends upon the large number of people
insured against similar risk.

8. Sharing of risk. Types of Insurance

Types of Insurance
2. Health Insuranc e

1. Life Insurance

3. Liability Insurance

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1. Life Insurance

- Insurance guaranteeing a specific sum of money to a

designated beneficiary upon the death of the insured, or to the insured if he or she lives beyond a certain age.

2. Health Insurance insured.

- Insurance against expenses incurred through illness of the

3. Liability Insurance - This insures property such as automobiles, property and professional/ business mishaps.

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: 1818: First insurance company in 1818 the Oriental Life Insurance 1829: Company in Kolkata (then Calcutta) was the first company to start a life insurance business in India. However, the company failed in 1834. In 1829 the Madras Equitable had begun transacting life insurance business in the Madras Presidency. 1870: Following the enactment of the British Insurance Act 1870, the last three decades of the nineteenth century saw the creation of the Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) in the Bombay Residency. 1912: The Indian Life Assurance Companies Act 1912 was enacted as the first statute to regulate the life insurance business. 1928: The Indian Insurance Companies Act 1928 gave the Government the power to collect statistical information about both life and non-life insurance business transacted in India by Indian and foreign insurers, including provident insurance societies.

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1938: To protect the interest of the insuring public, the earlier legislation was consolidated and amended by the Insurance Act 1938 which gave the Government effective control over the activities of insurers. 1950: 245Indian 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. 5crore from the Government of India. 1957: Formation of the General Insurance Council (GI Council) the GI Council represents the collective interests of the non-life insurance companies in India. The Council speaks out on issues of common interest, participates in discussions related to policy formation, and acts as an advocate for high standards of customer service in the insurance industry. 1972: The General Insurance Business (Nationalization) Act 1972 (GIBNA) was passed.

The General Insurance Corporation of India (GIC) was formed in pursuance of Section 9(1) of GIBNA. It was incorporated on 22 November 1972 under the Companies Act 1956 as private company limited by shares. The General insurance business in India, on the other hand, can trace its roots the Triton Insurance Company Ltd., the general insurance company established in the year 1850 in Calcutta by the British. Insurance sector reforms In 1993, Malhotra Committee headed by former finance Secretary and RBI Governor R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector.

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The reforms were aimed at creating a more efficient and competitive financial system suitable for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that insurance is an important part of the overall financial system where it was necessary to address the need for similar reforms In 1994, the committee submitted the report and some of the key recommendations included: i) Structure Government stake in the insurance Companies to the brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to operate ii) Competition Private Companies with a minimum paid up capital of Rs. 1bn should be allowed to enter the industry. No Company should deal in both life and General Insurance through a single entity. Foreign companies may be allowed to enter the industry in collaboration with the domestic companies. Postal Life Insurance should be allowed to operate in the rural market. Only one State Level Life Insurance Company should be allowed to operate in each state iii) Regulatory Body The Insurance Act should be changed An Insurance Regulatory body should be set up Controller of Insurance (Currently a part from the Finance Ministry) should be made independent iv) Investments

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Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time) v) Customer Service LIC should pay interest on delays in payments beyond 30 days Insurance companies must be encouraged to set up unit linked pension plans Computerization of operations and updating of technology to be carried out in the Insurance industry The committee emphasized that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100crore. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body.

PRIORITIES AT DIFFERENT STAGES OF LIFE Insurance for every life stages

At different stage of your life, your needs will change. To help you understand how insurance may apply to you at the different life stages in life, we have outlined the four main life stages which may apply to you. 1) For the young singles who are young graduates, ambitious, independent and carefree Priority: Establishing a career and setting financial goals
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 Considerations: - Will my employer provide health benefits? - Will an accident or illness impair my current lifestyle either temporarily or permanently? - Do I demonstrate financial instability? - Should I buy a car? Insurance for consideration: - Health insurance or Shield plans - Personal Accident Insurance - Savings plan - Car insurance - Life insurance

2) For the newly married couples who are buying new house, managing additional
household finances and doing family planning Priority: Protection for your spouse, paying mortgage loans and building financial security Considerations: - How much can I afford to pay for my house? - What will happen to my spouse should an unfortunate event happen to me? - What are my financial obligations?

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 Insurance for consideration: - Life insurance - Personal Accident insurance - Home insurance - Critical illness coverage - Investment plans

3) For new families who are nurturing parents with children

Priority: Protection for your dependents and providing financial security for your childrens education Considerations: - How much should I set aside for my childrens education? - What will happen to my dependents should an unfortunate event happen to me? - Are my children susceptible to accidents? Insurance for consideration: - Health insurance for the children - Endowment plans - Savings plans - Life insurance - Child Personal Accident insurance

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4) For retirees and senior citizens who are spending time with their grandchildren and
has accumulated wealth and assets Priority: Secure regular income for retired life, adequate medical and accident coverage and protection of assets Considerations: - How much do I need to maintain the desired living standard when I retire? - Am I susceptible to accidents? - Do I have enough medical protection? Insurance for consideration: - Health insurance - Annuity plans - Senior Personal Accident plans - Long-term care insurance

LAW AND REGULATION INSURACE ACT, 1938

In 1938, with a view to protecting the interest of the Insurance public, the earlier legislation was consolidated and amended by the Insurance Act, 1938 with comprehensive provisions for effective control over the activities of insurers. The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a large number of insurance companies and the level of competition was high. There were also allegations of unfair trade practices. The Government of India, therefore, decided to nationalize insurance business.

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An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurance sector and Life Insurance Corporation came into existence in the same year. The LIC absorbed 155 Indian, 16 non-Indian insurers as also 75 provident societies-245 Indian and foreign insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector. The history of general insurance dates back to the Industrial Revolution in the west and the consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a legacy of British occupation. General Insurance in India has its roots in the establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian Mercantile Insurance Ltd., was set up. This was the first company to transact all classes of general insurance business. 1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of India. The General Insurance Council framed a code of conduct for ensuring fair conduct and sound business practices. In 1968, the Insurance Act was amended to regulate investments and set minimum solvency margins. The Tariff Advisory Committee was also set up then. In 1972 with the passing of the General Insurance Business (Nationalization) Act, general insurance business was nationalized with effect from 1st January, 1973. 107 insurers were amalgamated and grouped into four companies, namely National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a company in 1971 and it commence business on January 1st 1973. This millennium has seen insurance come a full circle in a journey extending to nearly 200 years. The process of re-opening of the sector had begun in the early 1990s and the last decade and more has seen it been opened up substantially. In 1993, the Government set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations for reforms in the insurance sector. The objective was to complement the reforms initiated in the financial sector. The committee submitted its report in 1994 wherein, among other things, it recommended that the private sector be permitted to enter the

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insurance industry. They stated that foreign companies be allowed to enter by floating Indian companies, preferably a joint venture with Indian partners. Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums, while ensuring the financial security of the insurance market. The IRDA opened up the market in August 2000 with the invitation for application for registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders interests. In December, 2000, the subsidiaries of the General Insurance Corporation of India were restructured as independent companies and at the same time GIC was converted into a national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002. Today there are 14 general insurance companies including the ECGC and Agriculture Insurance Corporation of India and 14 life insurance companies operating in the country. The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with banking services, insurance services add about 7% to the countrys GDP. A welldevelopment as it provides long-term funds for infrastructure development at the same time strengthening the risk taking ability of the country.

Life Insurance Corporation Act, 1956

The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas

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with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost. LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued over 1crore policies during the current year. It has crossed the milestone of issuing. 1, 01, 32, 955new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the corresponding period of the previous year. From then to now, LIC has crossed many milestones and has set unprecedented performance records in various aspects of life insurance business. The same motives which inspired our forefathers to bring insurance into existence in this country inspire us at LIC take this message of protection to light the lamps of security in as many homes as possible and to help the people in providing security to their families.

The Insurance Regulatory and Development Authority

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decisions taken simultaneously to provide the supporting systems to the insurance, sector and in particular the life insurance companies was the launch of the IRDAs online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year.

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Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.

DUTIES, POWERS AND FUNCTIONS OF IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include,Issues to the applicant a certificate of registration, renew, modify , withdraw, suspend or cancel such registration; Protection of the interests of the policy holders in matters concerning assigning of policy, nomination by policy holders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents Specifying the code of conduct for surveyors and loss assessors; Promoting efficiency in the conduct of insurance business; Promoting and regulating professional organizations connected with the insurance and re-insurance business; Levying fees and other charges for carrying out the purposes of this Act; Calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organization connected with the insurance business; Control and regulation of the rates, advantages, terms and conditions that may be offered by insurers in respect of general insurance business not so controlled and

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regulated by the Tariff Advisory Committee under section 64U of the Insurance Act, 1938 (4 of 1938); Specifying the forms and manner in which books of account shall be maintained and statement of accounts shall be rendered by insurers and other insurance intermediaries; Regulating investment of funds by insurance companies; Regulating maintenance of margin of solvency; Adjudication of disputes between insurers and intermediaries or insurance intermediaries; Supervising the functions of the Tariff Advisory Committee; Specifying the percentage of premium income of the insurer to finance schemes for promoting and regulating professional organization referred to in clause (f); Specifying the percentage of life insurance business and general insurance business to be undertaken by the insurer in the rural or social sector; and Exercising such other powers as may be prescribed

Insurance Companies in India

ICICI Prudential Life Insurance Co. Ltd. Bajaj Allianz Life Insurance Co. Ltd. Birla Sun Life Insurance Co. Ltd. HDFC LIFE Insurance Co. Ltd. ING Vysya Life Insurance Co. Ltd. Life Insurance Corporation of India Max New York Life Insurance Co. Ltd Met Life India Insurance Co. Ltd. Kotak Mahindra Old Mutual Life Insurance Ltd. SBI Life Insurance Co. Ltd. Tata AIG Life Insurance Co. Ltd. Reliance Life Insurance Co. Ltd. Aviva Life Insurance Co. India Pvt. Ltd. Shriram Life Insurance Co. Ltd.
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Sahara India Life Insurance Bharti AXA Life Insurance Future Generali Life Insurance IDBI Fortis Life Insurance Canara HSBC Oriental Bank of Commerce Life Insurance Reliance Life Insurance DLF Pramerica Life Insurance Star Union Dai-I chi Life Insurance Agriculture Insurance Company of India Apollo DKV Insurance Cholamandalam MS General Insurance HDFC Ergo General Insurance Company ICICI Lombard General Insurance IFFCO Tokio General Insurance National Insurance Company Ltd New India Assurance Oriental Insurance Company Reliance General Insurance Royal Sundaram Alliance Insurance Shriram General Insurance Company Limited Tata AIG General Insurance United India Insurance UniveHDFC Co.1 Sompo General Insurance Co. Ltd

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NAME OF THE INSURANCE COMPANY AND THE SHARE HOLDING PATTERN Name of the company Allianz Bajaj Life Insurance Co. Ltd Aviva Life Insurance Birla Sun Life Insurance Co. Ltd HDFC LIFE Insurance Co. Ltd ICICI Prudential Life Insurance Co. Ltd ING Vysya Life Insurance Co. Ltd Life Insurance Corporation of India Max New York Life Insurance Co. Ltd MetLife Insurance Co. Ltd Om Kotak Mahindra Life Insurance Co. Ltd Reliance Insurance Co. Ltd SBI Life Insurance Co. TATA-AIG Life Insurance Co. Ltd Nature of Holding Private Private Private Private Private Private Public Private Private Private Private Public Private

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2. RESEARCH DESIGN
2.1. INTRODUCTION

In India, Insurance is a national matter, in which life and general insurance yet a booming sector with huge possibilities for different global companies, as life insurance premiums account to 2.5% and general insurance premiums account to 0.65% of Indias GDP. The Indian Insurance sector has gone through several phases and changes, especially after 1999, when the Govt. of India opened up the insurance sector for private companies. However, the largest life insurance company in India is still owned by the government.

2.2.

STATEMENT O F PROBLEM

There are lot of insurance companies are offering a number of insurance policies with different schemes and befits. These policies have to be framed considering interest and preferences of the different kinds of people. The insurance companies has to know which type of the policies can satisfy the needs and preferences of the different people in the society, so that the investor can invest his/ her savings in those policies which are most suitable & beneficial. Therefore this study was conducted to throw the light on some of the policies and to study the investors preference regarding insurance products, and awareness of different products, services, likes and dis-likes of the investors and what are all the benefits expected from the life insurance products by the investors.

2.3.

SCOPE OF THE STUDY

The study is confined only to insurance investors who invested in various insurance companies with special reference to ICICI PRUDENTIAL Life Insurance, Sheshadhripuram, Bangalore.

2.4.

OBJECTIVE OF THE STUDY

To know about an Insurance needs and analysis of various products by customer respondents. To know what are basic benefits that the customers expect when they secure their life. To study the relationship of annual income and premium amount paid.
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To study the difference between premium amount and period insurance policy. To study the difference between yearly premium paid and satisfactory level towards insurance policy. To analyze the factor that influence customer to choose particular company in buying an insurance policy.

2.5.

RESEARCH DESIGN

Research design is the plan, structure to answer whom, when, where and how the subject is under investigation. Here plan is an outline of the research scheme & which the researcher has to work. The structure of the research is a more specific outline and the strategy out, specifying the methods to be used in the connection & analysis of the data.

Descriptive Research Design

The type of research design used in this study is the descriptive research. The main characteristics of this method is that the researcher has no control over the variables and he can only report what has happened or what is happening. This study which compares the performance of ICICI PRUDENTIAL Life Insurance with its industrial competitors has been undertaken based on the opinions of the consumers. Hence, this research study is categorized as Descriptive Research Method.

DATA COLLECTION
The main source of information for this study is based on the data collection. Data collected are both primary and secondary in nature. Primary Data Primary data have been directly collected from the clients of ICICI PRUDENTIAL Life Insurance as well from the clients of other insurance companies by survey method through undisguised structured questionnaire.

Questions like open ended, close ended, multiple choice, dichotomous and ranking type have been used for the purpose of data collection.

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 Secondary Data Secondary data have been collected from official website of ICICI PRU and also from other official websites related to general insurance industry.

TYPES OF QUESTIONS
Open ended question Open ended question are the type of question used to get suggestion from the respondent in order to give feed back to the organization. Close ended question Close ended question are the type of questions with a clear declined set of alternatives that confine the respondents to choose one of them. Multiple choice question It consists of multiple choices in which the respondents can choose more than one. Dichotomous question It consists of two choices of answers in which the respondent has to choose one of them.

SAMPLING
Convenience sampling is been used in the study. This type of sampling is basically used when you simply stop anybody in the street who is prepared to stop, or when you wander round a business, a shop, a restaurant, a theatre or whatever, asking people you meet whether they will answer your questions. In other words, the sample comprises subjects who are simply available in a convenient way to the researcher. There is no randomness and the likelihood of bias is high. You cant draw any meaningful conclusions from the results you obtain.

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However, this method is often the only feasible one, particularly for students or others with restricted time and resources, and can legitimately be used provided its limitations are clearly understood and stated.

SAMPLE SIZE
Sample size is the total number of samples selected for the study from the sampling population. Sampling size for the study is 120 respondents.

2.6.

LIMITATIONS

The study has major limitations of the time and resources The person who conducts the study is not professional so there might be some errors. Sample size is limited due to limited period, allocated for the survey. Respondents may have to be contacted repeatedly.

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3. COMPANY PROFILE

THE ICICI GROUP

The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of the World Bank in 1955, the Government of India and representatives of Indian industry with the objective of creating a development financial institution for providing project and corporate finance to Indian industry. It started off its operations by providing finance for industrial development, and it has diversified into housing finance, consumer finance, mutual funds and its latest venture Life Insurance. Following the market oriented economic policy reform in the 1990s, ICICI moved away from its traditional role into a new era of liberalized regulation and intense competition. A series of initiatives were championed to keep up with keen competition in Indias financial service sector, and access to international capital markets was crucial to the success of the new mandate. Since inception, ICICI has grown from a development bank to a financial conglomerate and has become one of the largest public financial institutions in India. ICICI has thus far financed all the major sectors of the economy

THE ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD

ICICI Prudential Life Insurance was established in the year 2000 with a commitment to expand and reshape the life insurance industry in India. The company was amongst the first private sector insurance companies to begin operations after receiving approval from Insurance Regulatory Development Authority (IRDA) and in the time since, has taken several steps towards its realizing its goal. ICICI Prudential understands that different people have their own sets of needs at various stages of their lives. That's why they offer a choice of solutions depending on whether you are a young individual planning for the years ahead or an established professional planning for your retirement. The Company is now operational in ten cities throughout the country.

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GROUP COMPANIES OF ICICI

ABOUT ICICI PRUDENTIAL LIFE INSURANCE COMPANY LTD. ICICI Prudential Life Insurance Company is a joint venture between ICICI Group and Prudential plc, of the UK. ICICI started off its operations in 1955 with providing finance for industrial development, and since then it has diversified into housing finance, consumer finance, mutual funds to being a Virtual Universal Bank and its latest venture Life Insurance. A premier financial powerhouse and Prudential, a leading international financial services group headquartered in the United Kingdom. ICICI and Prudential came together in 1993 to form Prudential ICICI Asset Management Company, which has today emerged as one of the largest private sector mutual fund company in India. The two companies bring together the strongest financial service brands in Asia, known for their professionalism, excellent quality of service and long - term commitment to consumers. Riding on the success of this relationship, the two companies joined hands once more in 2000, to form ICICI Prudential Life Insurance Company, with a commitment to provide leading- edge life insurance solutions. This venture plans to take care of the insurance needs at various stages of life. ICICI Prudential has been adjudged the Best Life Insurer by Outlook Money. This is the

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only award that recognizes the value delivered to customers in addition to business performance. ICICI Prudential's equity base stands at Rs. 6.75 billion with ICICI Bank having 74%stake in the company and Prudential having 26%. The Company was granted Certificate of Registration for carrying out Life Insurance business, by the IRDA on November 24, 2000. It commenced commercial operations on December 19, 2000, becoming one of the first few private sector players to enter the liberalized arena. ICICI Prudential was positioned as an enabler of protection relevant to the needs of the life stage. The Company issued its first policy on December 12, 2000. In the year ended March 31, 2004, the company had issued over 430,000 policies. ICICI Prudential was amongst the first to identify the emerging opportunity in the Pension segment and launched two linked pension products- Life Time Pension and Life Link Pension, which have been well received in the market. The company has a network of about 30,000 advisors as well as12 banc assurance tie-ups. ICICI Prudential has one of the largest distribution networks amongst private life insurers in India. Today the company is the #1 leading private life insurer in the country. The company has a commitment to increase consumer knowledge about Life Insurance.

HISTORY

ICICI Prudential was established in Dec 2000. Since the brand ICICI is well known in the country, they did not have to face that particular challenge. They wanted to build an organization with culture different from that of LIC. Life Insurance was positioned as a high excitement and emotive product. The task at the time of set up was to establish the ICICI brand, build awareness and give the brand a larger than life image by addressing the issue of credibility and trust to invest funds with. Another big initiative that ICICI Prudential launched was a quality initiative Six Sigma. For promoting the company, the theme was cover every Indian with joy, hope, freedom, life. Further, they chose children from municipal schools who received endowment policies. These programs were to deliver the brand promise. Today the company has set themselves metrics that is best in class for various categories of players. In terms of service the companys benchmarks are the best retail financial services player in the world. The company is hopeful of playing a major role in the expanding the life insurance market in this country.

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Vision, Mission And Values

VISION - Be the trusted learning partner for our customers through motivated people, enabling processes and empowering technology.

MISSION - Our mission is to become the best 'Customizable E-Learning and Applications Company' in terms of quality, cost and delivery. The fundamental goal of the company is to raise the practice as well as level of collaborative rapid E-Learning and Applications Development. Through our products, services & solutions we facilitate the process of knowledge sharing smoothly and in a cost effective manner.

VALUES - Zobble believes technology, howsoever brilliant, is not an end in itself but a means to an end the end being: making life better, easier and more productive for every stakeholder in the global ecosystem.

MILESTONES OF THE COMPANY Dec 12th 2000 : ICICI Prudential issues its first policies to underprivileged children. Dec 20th 2001 : Launched Market-linked insurance schemes. Feb 19th 2002 : Launched innovative child product. Feb 25th 2003 : Company grabs 73% of private sector pensions market. April 7th 2003 : ICICI Prudential crosses Rs. 500crore premium milestone. July 15th 2003 : ICICI Prudential became the first Life Insurance Company to cross Rs.500crore capital base. Sept 25th 2003 : ICICI Prudential launched Smart kid unit linked child plans.

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April 2004

: ICICI Prudential tops the premium income chart among private players for

the third time in a row.

ICICI Prudential Life Insurance has increased its market share among private life insurers to nearly 40%.

Best Life Insurer award by Outlook Money. ABOUT THE PARTNERS ICICI BANK ICICI Bank is Indias second largest bank. ICICI Bank provides a broad spectrum of financial solutions for corporate and retail customers. It has about 450 branches and extension counters, 1675 ATMs, call centers and Internet banking. ICICI Bank is the only Indian company to be rated above the sovereign rating by the international rating agency Moodys and the only Indian company to be awarded an investment grade international credit rating. The Bank enjoys the highest AAA (or equivalent) rating from all leading Indian rating agencies. This is one of the largest financial institutions in India and trusted by millions of Indians over the years.

FOREIGN PARTNER PRUDENTIAL PLC

Prudential is a leading international financial services company in the UK. Prudential has brought to market an integrated range of financial services products that now includes life assurance, pensions, mutual funds, personal banking, investment management and general insurance. Prudential is one of the largest life insurance companies in the world. It also has its presence throughout Asia. Since 1923, Prudential has championed customer centric products and services. Solid reputation built over 150 years. Already Established as one of the biggest mutual fund companies in India (Prudential ICICAMC). It is truly a global brand.

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PRUDENTIAL ASIA

Prudential is the largest life insurance company in the United Kingdom. Asia has always been an important region for Prudential and it has had a presence in Asia for over 75years. It has over 45,000 staff agents and over 1 million customers. It has its operations in 12 countries throughout Asia.

SERVICE

ICICI Prudential has recruited and trained over 18,000 insurance advisors to interface with and advise customers and has the highest number amongst private life insurers on the renowned Million-Dollar Round Table (MDRT). Further, it leverages its state-of-the-art IT infrastructure to provide superior quality of service to customers. It has a Customer First philosophy.

COMPETITORS

ICICI Prudential faces tough competition from Life Insurance Corporation of India which is one of the oldest insurance company and also from other private insurers like Birla Sun life, Tata AIG, MetLife etc, HDFC Standard Life Insurance, ING Vysya etc.

LIFE INSURANCE SCORE CARD - (First year & single premium in 2003 04)

Insurance Company

Income (in Rs. Crore)

% Growth (over the previous year)

ICICI Prudential ING Vysya AMP Sanmar SBI Life Tata AIG HDFC Standard Allianz Bajaj

750.91 72.60 27.88 195.90 180.15 209.33 179.70

106.23 311.15 341.50 172.54 245.07 61.88 183.50

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Birla Sun life Aviva OM Kotak Max New york MetLife Private Total LIC

449.86 77.13 127.10 131.48 23.38 2425.46 16284.68

247.20 472.83 260.99 95.34 203.70 153.15 1.93

VARIOUS DEPARTMENTS Sales & Distribution Department Operations Department Banc assurance Risk Management Group Assurance Department Front Desk HR & Administration Department Training Department

Products Offered by ICICI Prudential Life Insurance

Endowment Plans ICICI Prudential Save n Protect ICICI Prudential Assure Invest

Money Back Policy Plan ICICI Prudential Cash back (Anticipated Endowment Assurance)

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Retirement Plans ICICI Prudential Forever Life ICICI Prudential Reassure ICICI Prudential ForeverLife (Deferred Pension) ICICI Prudential LifeLink pension plan ICICI Prudential Lifetime Children's Plan ICICI Smart Kid Plan Term Plan Protection Plan ICICI Prudential Life Guard Single Premium Life Guard Level Term Assurance with Return of Premium ICICI Prudential Life Guard Level Term Assurance

Special Plans Invest Shield Life Invest Shield Cash Invest Shield Gold Premier Life Secure Plus

Group Plan ICICI Prudential Group Term Assurance Policy ICICI Prudential Group Gratuity Plan

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BOARD OF DIRECTORS

MS. CHANDA D. KOCHHAR CHAIRPERSON

MR. N. S. KANNAN DIRECTOR

MR. K. RAMKUMAR DIRECTOR

MR. RAJIV SABHARWAL DIRECTOR

MR. BARRY STOWE DIRECTOR

MR. ADRIAN O'CONNOR DIRECTOR

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MR. KEKI DADISETH INDEPENDENT DIRECTOR

PROF. MARTI G. SUBRAHMANYAM INDEPENDENT DIRECTOR

MS. RAMA BIJAPURKAR INDEPENDENT DIRECTOR

MR. VINOD KUMAR DHALL INDEPENDENT DIRECTOR

MR. SRIDAR IYENGAR INDEPENDENT DIRECTOR

MR. SANDEEP BAKHSHI MANAGING DIRECTOR & CEO

MR. PUNEET NANDA EXECUTIVE DIRECTOR

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Other Board Members on Board Members

Type of Name (Connections) Relationships Board Members Marti Subrahmanyam 50 Relationships Keki Dadiseth FCA 149 Relationships Rama Bijapurkar B.Sc (Hons), MBA Rajiv Sabharwal B.Tech,MBA,PGDM Sridar Iyengar 60 Relationships 44 Relationships 73 Relationships -Blume Venture Advisors 65 -ICICI Bank Ltd. 46 --The Goldman Sachs Group, Inc. CRISIL Limited 55 66 -Infosys Ltd. 65 Primary Company Age

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AWARDS & RECOGNITIONS

Awards 2012

ICICI Prudential Life Insurance has been pronounced winner in the 2nd Excellence Awards and Recognition for Shared Services, 2012. We won the award in the category - Shared Services in India - Insurance Domain. These awards have been instituted by All India Management Association (AIMA) & Delhi Management Association (DMA), in collaboration with R value Consulting as knowledge partners, to honour, recognize & promote transformative strategies for shared services.

Bronze Effie in the Financial services category for the campaign "Life Insurance in just 10 Minutes

ICICI Prudential iCare has been voted the Product of the Year 2012* * A survey by Nielsen for Insurance Category that included 30,000 people

Awards 2011

ICICI Prudential Life Insurance has been conferred the 'Insurance Company of the Year Award 2011' and Company of the Year Award 2011 Life Insurance at The Indian Insurance Awards 2011 instituted by the reputed insurance journal of India Insurance Review, in association with Celent, a research and consulting firm.
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ICICI Prudential Life Insurance has been awarded the prestigious award for the Best Leading Private Player Life Insurance 2011 at the CNBC TV18 Best Bank and Financial Institution Awards for FY11.

ICICI Prudential Life Insurance was awarded the ICWAI National Award for Excellence in Cost Management 2010 under the Private sector-Service (Large) category at ICWAI annual event.

www.iciciprulife.com has been awarded 1st Runners Up for the best financial website at the IAMAI India Digital Awards 2011.

Awards 2010

India's Most Customer Responsive Insurance Company, AGC Networks - Economic Times, Customer Responsiveness Awards, 2010

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Awards 2009

ICICI Prudential Life ranked as the Most Trusted Pvt. Life Insurance brand in the Brand Equity "Most Trusted Brands 2009" survey

The International Council of Customer Service Organizations (ICCSO) recently awarded ICICI Prudential Life, the International Service Excellence Awards 2009 in the categories of Customer Charter Winner, Service Excellence in Large Business Highly Commended and Customer Service Leader awarded to Ms. Priya Nayak, VP-Service Quality.

ICICI Prudential Life Insurance has won the first runner up award for the Best Defect Elimination in Service & Transaction category at Asian Six Sigma Excellence Summit 2009.

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Awards 2008

ICICI Prudential Life won a Gold award for AboutULIPS.com and Health Saver campaign, innovation award for www.taxguru08-09.com and a silver award for its Insurance yoga campaign at the ICICI Group Marketing Excellence award.

ICICI Prudential Life was awarded the Life Insurance Company of the Year at the12th Asia Insurance Industry Awards 2008.

Innovation Award for launching Diabetes Care Prudence Award 2006, People Award for excellence in training and people development - Prudence Award 2006

Recognitions

ICICI Prudential Life was recognized as the most trusted brand amongst private life insurers in the Economic Times-Most Trusted Brand survey 2008.

IMM Award for Excellence, Institute of Marketing & Management. Organization with Innovative HR Practices, Asia-Pacific H R Congress Awards for HR Excellence.

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