ACKNOWLEDGEMENT

Heartfelt Thanks to the following people..

A few typewritten words of thanks can not really express the sincerity of my gratitude. But I am still trying to put into words my gratefulness towards all who have helped & encouraged me in carrying out this project. I express my humble gratitude to all those who had helped me in completion of this project. My sincere thanks to Mr. Randeep Singh (Agency Manager) for his valuable inputs and guidance during the course of project. I take this opportunity to particularly thank the following who lend a supporting hand and without whose support this project would have not been a success.

1. 2. 3. 4.

Mr. Virender Jaitly (Branch Head) Mr. Deepak Sharma (Assistant Sales Manager) Mr. Anit Moza (ASM Channel Development) Mr. Sandeep Punj (Trainer)

Last but not the least; I am thankful to all the staff for lending a supporting hand during the project.

CONTENTS
EXECUTIVE SUMMARY ABOUT THE COMPANY VISION MANAGEMENT DISTRIBUTION PRODUCTS ABOUT THE PROJECT OBJECTIVE OF RESEARCH RESEARCH METHODOLOGY SCOPE OF RESEARCH INTRODUCTION TO INSURANCE INDUSTRY OVERVIEW INSURANCE INDUSTRY IN INDIA LEGISLATIVE & REGULATORY MATTERS A. INSURANCE ACT, 1938 B. LIFE INSURANCE CORPORATION ACT, 1956 C. INSURANCE REGULATION AUTHORITY, 1966 D. INSURANCE REGULATORY & DEVELOPMENT AUTHORITY ACT, 1999 LIBERALIZATION & AFTERWARDS

BUSINESS REQUIREMENTS FOR INSURANCE COMPANY ROLE OF ADVISOR WORKING ENVIRONMENT FOR ADVISOR OPPORTUNITY FOR THE ADVISOR PAYMENT & BENEFITS COMMISSION STRUCTURE RECOGNITION PROGRAMS CAREER PROGRESSION & FUTURE OPPORTUNITIES GRAPHS & TABLES EXPLANATION OF GRAPHS LIMITATION OF STUDY CONCLUSION SUGGESTIONS BIBLIOGRAPHY QUESTIONNAIRE

SUMMARY OF EXECUTIVE REPORT

ABOUT THE COMPANY

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and prudential policy, a leading international financial service 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 Prudentials equity base stands at Rs. 9.25 billion with ICICI Bank and Prudential Policy holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the company garnered Rs. 1584 crore of new business premium for a total sum assured of Rs. 13,780 crore and wrote nearly 615,000 policies. The company has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups. For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.

ABOUT THE PROJECT

ICICI Prudential is the No. 1 private life insurance company with the largest agency force and the maximum no. of policies being sold. The project is about presenting people with business partnership

opportunity by recruiting them as advisors for the ICICI PRUDENTIAL identification of the potential individuals so as to recruit them for the advisors role is an important aspect of the project.

ABOUT THE COMPANY

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a premier financial powerhouse and prudential policy, a leading international financial service 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 Prudentials equity base stands at Rs. 9.25 billion with ICICI Bank and Prudential Policy holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the company garnered Rs. 1584 crore of new business premium for a total sum assured of Rs. 13,780 crore and wrote nearly 615,000 policies. The company has a network of about 56,000 advisors; as well as 7 banc assurance and 150 corporate agent tie-ups. For the past four years, ICICI Prudential has retained its position as the No. 1 private life insurer in the country, with a wide range of flexible products that meet the needs of the Indian customer at every step in life.

VISION
Our Vision
To make ICICI Prudential 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 out 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 describes what the company stands for, the qualities of our people and the way we work. We do believe that we are on the threshold of an exciting new opportunity, where we can play a significant role in redefining and reshaping the sector. Given the quality of our parentage and the commitment of our team, there are no limits to out growth.

PROMOTERS
ICICI Bank
ICICI Bank is Indias second largest bank with total assets of about Rs. 112,024 crore and a network of about 450 branches and offices and about 1750 ATMs. It 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 area of investment banking, life and non-life insurance, venture capital, asset management and information technology. ICICI Bank posted a net profit of Rs. 1637 crore for the year ended March 31, 2004. ICICI Banks equity shares are listed in India on Stock Exchanges at Chennai, Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited ands its American Depository Receipts (ADRs) are listed on New York Stock Exchange (NYSE)

Prudential plc
Established in London in 1848, Prudential plc, through its business in the UK and Europe, the US and ASIA, provides retail financial services products and services to more than 16 million customers, policyholder and unit holder worldwide. As of June 30, 2004, the company had over US$300 billion in funds under management. Prudential has brought to market an integrated range of financial services products that now includes life assurance, pensions, mutual funds, banking, investment management and general insurance. In Asia, Prudential is the leading European life insurance company with a vast network of 24 life and mutual fund operations in twelve countries China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam.

MANAGEMENT
Board of Directors
The ICICI Prudential Life Insurance Company Limited Board comprises reputed people from the finance industry both from India and abroad. Mr. K.V. Kamath, Chairman Mr. Mark Norbom Mrs. Lalita D. Gupte Mrs. Kalpana Morparia Mrs. Chanda Kochhar Mr. Kevin Holmgren M.r M.P. Modi Mr. R. Narayanan Ms. Shikha Sharma, Managing Director

Management Team
Ms. Shikha Sharma, Managing Director & CEO Mr. V. Rajagopalan, Chief Actuary Mr. Sandeep Batra, Chief Financial Officer & Company Secretary Ms. Anita Pai, Chief Customer Service and Operations Mr. Puneet Nanda, Chief Investments Mr. Shubhro J. Mitra, Chief Human Resources Mr. Dipan Bhattacharya Chief Information Technology

DISTRIBUTION
ICICI Prudential has one of the largest distribution networks amongst private life insurers in India, having commenced operations in 74 cities and towns in India. These are: Agra, Ahmedabad, Ajmer, Allahbad, Amritsar, Anand, Aurangabad, Banglore, Bareilly, Bharuch, Bhatinda, Bhopal, Bhubhneshwar, Calicut, Chandigarh, Chennai, Coimbatore, Dehradun, Durgapur, Faridabad, Goa, Guntur, Guwahati, Gurgaon, Gwalior, Hyderabad, Hubli, Indore, Jaipur, Jallandhar, Jamnagar, Jamshedpur, Jodhpur, Kanpur, Karnal, Kochi, Kolkata, Kolhapur, Kota, Kottayam, Kozhikode, Lucknow, Ludhiana, Madurai, Mahglore, Meerut, Mehsana, Mumbai, Mysore, Nagpur, Nasik, Noida, New Delhi, Patiala, Pune, Raipur, Rajkot, Ranchi, Rourkela, Saharanpur, Salem, Shimla, Siliguri, Surat, Thane, Thrissur, Trichy, Trivendrum, Udaipur, Vadodra, Vapi, Vashi, Vijayawada and Vizag. The company has seven banc assurance tie-ups having

agreements with ICICI Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank and some co-operative banks as well as over 150 corporate agents and brokers. It has also tied up with NGOs, MFIs and corporate for the distribution of rural policies and organization like Dhan for distribution of Salaam Zindagi, a policy for the socially and economically underprivileged sections of society. ICICI Prudential has recruited and trained about 56,000 insurance advisors to interface with and advice customers. Further, it leverages

its state-of-the-art IT infrastructure to provide superior quality of service to customers.

PRODUCTS

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customercentric products that meet the needs of customers at every life stages. Its 27 product can be enhanced with up to 6 riders, to create a customized solution for each policyholder.

Savings Solutions
Secure Plus is a transparent and feature-packed savings plan that offers 3 levels of protection. Cash Plus is a transparent, feature-packed savings plan that offers 3 levels of protection as well as liquidity options. Save & Protect is a traditional endowment savings plan that offers life protection along with adequate returns. Cash Back is an anticipated endowment policy ideal for meeting milestone expenses like a childs marriage, expenses for a childs higher education or purchase of an asset. Lifetime & Lifetime II offer customers the flexibility and control to customize the policy to meet the changing needs at different life stages. Each offer 4 funds options Preserver, Protector, Balancer and Maximiser. Life Link II is a single premium market linked insurance plan, which combines life insurance cover with the opportunity to stay, invested in the stock market.

Premier Life is a limited premium-paying plan that offers customers life insurance cover till the age of 75. Invest Shield life is a market linked plan that provides capital guarantee on the invested premiums and declared bonus interest.

Invest Shield Cash is a market linked plan that provides capital guarantee on the invested premiums and declared bonus interest along with flexible liquidity options.

Invest Shield Gold is a market linked plan that provides capital guarantee on the invested premiums and declared bonus interest along with limited premium payment terms.

Protection Solutions
Life Guard is a protection plan, which offers life covers at very low cost. It is available in 3 options level term assurance, level term assurance with return of premium and single premium.

Child Plans
Smart Kid Education Plan provides 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. Smart Kid are also available in unit-linked form, both single premium and regular premium.

Retirement Solutions
Forever Life is a retirement product targeted at individuals in their thirties.

Secure plus Pension is a flexible pension plan that allows one to select between 3 levels of cover.

Market-linked Retirement Products

Life Time Pension II is a regular premium market-linked pension plan Life Link Pension II is a single premium market-linked pension plan. Invest Shield Pension is a regular premium pension plan with a capital guarantee on the investible and declared bonuses. ICICI Prudential also launched Salaam Zindagi, a social sector group insurance policy targeted at the economically underprivileged sections of the society.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance benefits to their employees. ICICI Pru Group Gratuity Plan: ICICI Pru group gratuity plan helps employees fund their statutory obligation in a scientific manner. The plan can also be customized to structure schemes that can provide benefits beyond the statutory obligations. ICICI Pru Group Superannuation Plan: ICICI Pru 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. ICICI Pru Group Term Plan: ICICI Pru 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.

Flexible Rider Options

ICICI Pru Life offers flexible riders, which can be added to the basic policy at a marginal cost, depending on the specific needs of the customer. 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. Accident Benefit: This rider option pays the sum assured under the rider on death due to accident. 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. Major Surgical Assistance Benefit: Provides financial supports in the event of medical emergencies, ensuring benefits are payable to the life assured for medical expenses incurred for surgical procedures. Cover is offered against 43 surgical procedures. 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 Smart Kid, Secure Plus and Cash Plus.

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 Secure Plus and Cash Plus.

ICICI Pru Life Time (ICICI Flexible Bond HDFC PRU LIFE) Standard Life Single Premium Whole of Life Suitability
This policy is a long term market plan. same linked The time protection offers the plan allows

Suitability
It is a single premium policy providing risk cover, liquidity and returns.

protections for life at the policyholder to get marketlinked returns. It is a single product benefits plan. product flexibility. combining and This offers apart, a lot the the of insurance

Salient Features
Death Premium (Maximiser, Protector deducting expenses. Policyholder has the option to vis vary the amount of insurance protection vis-investment the while same maintaining premium. The returns depend on the plan chosen-growth, balanced and income and one can switch from one fund to another depending on the financial priorities. Once in a year switching is done free of cost. Adding accident & disability benefit, benefits premium. major can critical surgical enhance illness assistance, benefit paid will will be be or after multiple of premium paid. invested in the fund chosen Balancer Fund)

Salient Features
It is a single the premium paid are policy. under Premiums policy

invested in the companys (HDFC Standard Life) with Profit Fund. Policy Holder has the option to receive sum assured + bonus on 10th, 15th, 20th and subsequent anniversaries. money has policy ceases. The company will declare a compound reversionary bonus every year, which will be added to the policy on its anniversary. In additions to the bonus, the company based on its performance terminal may bonus pay on five-yearly Once been the taken

mortality

charges and administrative

surrender or death or on guaranteed dates. Policyholder can surrender the policy anytime after it has been in force for a period of 6 months.

benefits at a nominal extra

Entry into the plan will be based on the Unit Value applicable on the date of policy issue. The amount of premium towards death benefit decreases with the increase in the value of the units.

No medical examination is required to take this policy.

One has the flexibility to increase the death benefit by 25% subject to a maximum of Rs. 1,00,000 every third year up to 3 times without any underwriting. Death benefit can be increased beyond this limit with underwriting.

Apart from the above the policyholder can increase the death benefit at different stages of life such as marriage, birth of first child and birth of second child. This is irrespective of when the last increase was done.

One death

can

decrease in

the the

benefit

multiple of Rs. 1,00,000. However a minimum of Rs.

1,00,000 maintained.

has

to

be

Policy holder has the option to increase the investment by the way of top ups with a lump sum payment at any time.

If after at least 3 years premium made unable and to payments then one pay are is the

subsequent premiums the cover under the policy will continue and the premiums towards the life cover and riders will be debited from the unit fund. Unit Value is calculated bi-weekly on a forward pricing basis every Tuesday and Friday. Unit Value = Market/Fair Value of the relevant Plans Investments plus Current Assets less Current Liabilities and Provisions. Number of Units outstanding under the relevant Plan The returns depend on the

plan If

chosen growth

Maximiser is your

(Growth) Plan high priority this is the plan for you. You can enjoy longterm from capital a appreciation that is in portfolio

invested

primarily

equity-related securities Protector (Income) Plan If on the other hand your priority is steady returns, you can opt for the Income Plan. Here you a can steady accumulate

income at a low risk across a medium to long term period.

Balancer (Balanced) Plan If you prefer a balance of growth and steady returns choose our Balanced Plan. This would ensure that your portfolio equity is and invested in equity-linked

securities as well as in fixed income securities.

Benefits

Benefits

On Death On Survival In the event of death of the There is no maturity period and policy holder has the policy holder, beneficiaries option to receive sum will be paid the higher of assured + bonus on 10th, 15th, 20th and subsequent death benefit and value of five-yearly anniversaries. the units. Once the money has been taken policy ceases. On Survival There is no maturity period On Death and policyholder has the option to withdraw units under the plan at anytime after the policy has been in force for three years. Provides that the policy is in plus force, sum assured bonus is secured by the premium attached payable.

Riders
Accident & Disability benefit 10% of SA each year for 10 years in case of permanent total disability. Additional SA, if death is due to an accident while traveling as a passenger in train or bus. Critical illness benefit 9 medical conditions are covered. On admission of claim, sum assured under the rider is paid and the rider comes to an end.

Claim under this rider is not admissible during first six months of the policy. Major Surgical Assistance 43 Surgical procedures are covered 1. Major Surgical procedure 50% of SA 2. Intermediate surgical procedure 30% of SA 3. Minor surgical Procedure 20% of SA Claims can be made for more than one surgical to a procedure, subject

maximum of 50% of SA, claim under this rider is not allowed during first 6 months of the policy.

Other Conditions
Minimum age at entry; 0 years Maximum age at entry; 60 years (completed years) Minimum Minimum premium; sum Rs.

Other Conditions
Minimum sum assured; Rs. 25,000 Maximum sum assured; Rs. 5,00,000 Minimum age at entry; 18 years. assured

18,000 per annum under riders; Rs. 1,00,000

Maximum

sum

assured

under riders; Rs. 10,00,000/ Following are the charges

applicable under the policy: The would initial in be administrative the 20% for less For 1st of year the Rs.

charges premium, amounts 50,000/-.

premium than premiums

equal to or more than Rs. 50,000/-. It is 18% of the premium. Annual net asset administrative for protector and charges of 1.00% p.a. of (Income) and 1.25% p.a. for Maximiser Balancer (Growth) (Balanced)

options. Annual investment charge of 0.5% p.a. of the net assets for Protector and 1% p.a. of the net assets for Maximiser charge and towards Balanced. Mortality death benefit. Initial charges of 1% on Top-ups.

One free switch every year after which switching fee of 1% of the switching amount will be levied. Any unutilized free switch can not be carried forward.

Note: In case the unit value is inadequate to cover, the policy will terminate.

ABOUT THE PROJECT

ICICI Prudential is the no. 1 Private Life Insurance Company with the largest agency force and the maximum no. of policies being sold. The project is about presenting people with business partnership opportunity by recruiting them as advisors for the ICICI PRUDENTIAL identification of the potential individuals so as to recruit them for the advisors role is an important aspect of the project. The project is for the period of 6 to 8 weeks and required to recruit a minimum of 5 advisors for the company.

To be recruited for the role of an advisor the minimum education requirement is 10+2 apart from this the candidate must posses: Confidence Self Motivation Persuasion Urge to be financially independent Relationship Skills

It is very important that the potential advisor is able to understand his/her role that is supposed to be performed.

OBJECTIVE OF RESEARCH

The purpose of research is to discover answers to questions through the application of scientific procedures. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. Through each research study has its own specific purpose, we may think of research objectives as falling into a number of following broad groupings. To gain familiarity with a phenomenon or to achieve new insights into it (studies with this object in view are termed as exploratory or formulative research studies).

To

portray

accurately

the

characteristics

of

particular

individual, situation or a group (studies with this object in view are known as descriptive research study) To determine the frequency with which something occurs or with which it is associated with something else (studies with this object in view are known as diagnostic research studies). To test the hypothesis of a casual relationship between variables (such studies are known as hypothesis testing research studies.)

RESEARCH METHODOLOGY

Research refers to the search for knowledge. It can be defined as scientific and systematic search for pertinent information on a specific topic. It is careful investigation or inquiry through search for new facts of any branch of knowledge. Research plays an important role in the project work. The results of the project are completely based upon the research of the facts and figures collected through the different ways of research.

That is why it is also called a movement from known to unknown. Research is the original contribution to the existing stock of knowledge. 1. 2. 3. 4. Exploratory or Formularize Research:- To achieve new Descriptive Research:- To Portray the characteristics of an individual, group, situation etc. Diagnostic Research:To determine the frequency of occurrence of an event. Hypothesis Testing:- To test hypothesis of casual relationships of the variables. Research Methodology deals with, the procedure adopted to carry out the study. According to Green and Tull:

insights.

A Research design is the specification of methods and procedures for acquiring the information needed. It is the overall operational pattern framework of the project that stipulates which information is to be collected from which sources by what procedures.
For conducting the study, the researcher has adopted both primary and secondary method of data collection. Primary Data For the purpose of collecting primary data, I have adopted the method of survey. Survey can be telephonic, by mail personal and by the diary. For the purpose of collected detailed information. I have chosen surveys based on personal interview by means of a questionnaire. Secondary Data

It has been collected from various books and internet sites. Researcher has adopted this method of data collection, as the researcher liters no access to magazines and journal but a plenty of material was available on the internet sites. Sample Due of time and resource constraints, the sample of the study is taken as three hundred and the technique of sampling adopted is: convenient sampling.

FURTHER SCOPE OF STUDY

There is a lot of scope of further scope since the research was undertaken for short time and at the end of financial year closing. Due to busy schedule of deep analysis could not be made. The researcher is assured of the fact that if the research is carried out for longer duration then further interesting findings could be revealed. However,

maximum efforts had been applied in convincing the persons to be life Advisor of ICICI Prudential. The research can further take a more comparative study of what the persons expect from the company. Also which type of company they wishes to join and why?

INTRODUCTION TO INSURANCE
Introduction
INSURANCE may be described as a method of sharing of financial losses of a few from a common fund formed out of the many that are equally exposed to the same loss. It can be said to be a system of spreading the losses of an individual over a group of individuals. SINCE it is an intangible product, INSURANCE INDUSTRY is a service industry. INSURANCE INDUSTRY does not procedure any goods but sell

the promise. A promise to take care of the customers or their dependents in case they suffer a loss due to some peril during the durrency of policy.

INSURANCE BUSINESS
Insurance business is divided into four classes: 1. 2. 3. 4. Life Insurance Fire Insurance Marine Insurance Miscellaneous Insurance

Life Insurers transact life insurance business; General Insurers transact the rest. No composite are permitted as per law.

TYPES OF INSURANCE COMPANIES

Insurance companies may be classified as Life Insurance companies, who sell life insurance, annuities and pensions products. Non-Life or General Insurance companies, who sell other types of insurance. In most countries, life and non-life insurers are subject to different regulations, tax and accounting rules. The main reason for the

distinction between the two types of company is that life business is very long term in nature coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance covers usually shorter periods such as one year. Companies may sell both life and non life insurance, in which case they are sometimes known as composite insurance companies. Insurance companies are also often classified as either mutual or stock companies. This is more of a traditional distinction as true mutual companies are becoming rare. Mutual companies are owned by the policyholder, while stockholders, (who may or may not own policies) own stock insurance companies. Reinsurance companies sell insurance to other insurance companies. This helps insurance companies to spread their risks and protects them from very large losses. The reinsurance market is dominated by a few very large companies with huge reserves.

INSURANCE INDUSTRY OVERVIEW

CLASSIFICATION OF INSURANCE INDUSTRY
Insurance Industry is basically a risk covering industry. Insurance risks are classified into two industries:A) B) A) General Insurance Life Insurance

General Insurance

General Insurance meets the demand of all types of non-life insurance. It provides financial coverage to all types of losses under fire, marine including vehicle insurance etc. General insurance business in India since its nationalization in Jan 1973 is being conducted by the four subsidiary companies named:1. 2. 3. 4. National Insurance Co. Ltd. The New India Assurance Co. Ltd. The Oriental Insurance Co. Ltd. United India Insurance Co. Ltd.

b)

Life Insurance
As is evident from its very name, it deals with insurance of

human life. Life Insurance Corporation of India a public sector undertaking has the monopoly in this sector since its nationalization. In our wordily life, whenever there is uncertainty, there is an involvement of risk. The instinct foe security against such risk is one of the basic motivating forces determining human attitudes. As a sequel of this quest for Security, the concept of insurance must have been

born. The urge has promoted people to make some sort of loss of life and property must achieve security through Collective Cooperation. In this sense, story of insurance is probably as old as the story of mankind. So the insurance covers two types of risks: 1. 2. General Risk Life Risk

1.

General Risk
General risk is a risk by theft, fire etc. This type of risk is insured by the General Insurance Corporation of India.

2.

Life Risk The history of life insurance is enveloped in the must of antiquity. In India, now-a-days, this risk is insured by many huge corporations of life insurance: LIC

ICICI PRUDENTIAL HDFC KOTAK MAHINDRA OLD MUTUAL BIRLA SUNLIFE BAJAJ ALLIANZ TATA AIG AVIVA LIFE INSURANCE

SO LONG AS THE MAINTENANCE OF A FAMILY DEPENDS ON THE EARNING POWER OF BREAD-WINNER AS LONG AS THE POWER CAN BE DESTROYED BY DEALTH, OLD AGE OR DISABILITY. JUST SO LONG LIFE WILL LIFE INSURANCE CONTINUE TO BE THE KEYSTONE OF THE INDIVIDUAL & THOSE WHO ARE DEPENDENT UPON HIM

INSURANCE INDUSTRY
Year 2000-2001: (From 2nd April 2000 to 31st December 2001) Insurance Industry in the year 2000-2001 had 16 new entrants, namely: Life Insures:

S.No Registratio . n No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 101 104 105 107 109 110 111 114 116 117

Date of Registratio n 23.10.2000 15.11.2000 24.11.2000 10.01.2001 31.01.2001 12.02.2001 30.03.2001 02.08.2001 03.08.2001 06.08.2001

Name of the company HDFC Standard Life Insurance Company Ltd. Max New York Life Insurance Co. Ltd. ICICI Prudential Life Insurance Company Ltd. Kotak Mahindra Old Mutual Life Company Limited Birla Sun Life Insurance Company Ltd. Tata AIG Life Insurance Company Ltd. SBI Life Insurance Company Limited. ING Vysya Life Insurance Company Private Limited. Bajaj Allianz Life Insurance Company Limited. Metlife India Insurance Company Pvt. Ltd.

General Insurers S.No Registratio . n No. 1. 2. 3. 102 103 106 Date of Registratio n 23.10.2000 23.10.2000 04.12.2000 Name of the company Royal Sundaram Alliance Insurance Company Limited. Reliance General Insurance Company ltd. IFFCO Tokio General Insurance

4. 5. 6.

108 113 115

22.01.2001 02.05.2001 03.08.2001

Co. Ltd. TATa AIG General Insurance Company Ltd. Bajaj Allianz General Insurance Company Limited. ICICI Lombard General Insurance Company Limited.

Year 2001-2002: (From 1st Jan 2001 to Dec. 2002) Insurance Industry in this year, so far has 5 new entrants, namely. Life Insurer S.No Registratio . n No. 1. 2. 121 122 Date of Registratio n 03.01.2002 14.05.2002 Name of the company AMP SANMAR Assurance Company Ltd. AVIVA Life Insurance Co. India Pvt. Ltd.

General Insurers S.No Registratio . n No. 1. 2. 3. 123 124 125 Date of Registratio n 15.07.2002 27.08.2002 27.08.2002 Name of the company Cholamandalam General Insurance Co. Ltd. Export Credit Guarantee Corporation Ltd. HDFC-Chubb General Insurance Co. Ltd.

Year 2003-2004 (From 1st Jan 2003 till date) Insurance Industry in this year, so far has 2 new entrants, namely General Insurers:

S.No Registratio . n No. 1. 126

Date of Registratio n 29.10.2003

Name of the company Agriculture Insurance co. of India Ltd.

Life Insurers: S.No Registratio . n No. 1. 127 Date of Registratio n 06.02.2004 Name of the company Sahara India Insurance Company Ltd.

FIGURES IN THE SECTOR

The Insurance Regulatory and Development bill is not an Act. With this India is now the cynosure of all the global insurance players. Numerous

players, both Indian and foreign, have announced their intention to start their insurance shops in India. IRDA, under the chairmanship of Mr. Rangachary, opened the window for applying licenses in India on the 16th of August. Dabur-All State (Dreams turned nightmare) and Prudential ICICI were the first of the block to apply on the very first day. Figures in the sector

Life Insurance Statistics

Indian Population GDP as on 2000 (Rs bn)

Table No.1

1 bn 20000 bn 23% 240 mn 650 mn

Gross domestic savings as a % of GDP NCAER estimate of insurable population Estimated market by 2005

India has an enormous middle-class, can afford to buy life, health and disability and pension plan products. The low level of penetration of life insurance in India compared to other developed nations can be judged by a comparison of per capita life premium. Table No. 2

Life Premium Per Capita US$ in 1994

Japan UK USA India 3,817 1,280 964 4

Clearly, there is considerable scope to raise per capita life premium if the market is effectively tapped.

India has traditionally been a high savings oriented country often described as being on par with the thrifty Japan. Insurance sector in the USA is as big in size as the banking industry there. This gives as an idea of how important the sector is. Insurance sector channelises the savings of the people to long term investments. In India where infrastructure is said to be of critical importance, this sector will bring the nations own money for the nation. In 3 years time we would expect the 10% of the population to be under some sort of an insurance cover. This assuming a premium of Rs. 5000 on an average, amounts to 100 million x Rs. 5000 = Rs. 500 bn This has made the sector the hottest one in India after IT. With social security and security to the public at large being the agenda for opening the sector, the role of the regulator becomes all the more serious and one that would be carefully watched at every step.

INSURANCE INDUSTRY IN INDIA

India is marching ahead to more prosperous future. The economy is on a high growth path, domestic savings are growing. Exports have risen and inflation has stabilized. Infrastructure sector, which even today is woefully inadequate to meet the expected increased industrial activities, has been accorded top priority by the government. All this should reflect in a growth rate of 7 to 8% for the next 3-4 years. With this scenario of high economic growth further reforms in the financial sector are in the Common Minimum Program of Government. The insurance industry, which still remains a state monopoly, is therefore engaging serious attention of the Government. De-regulation of insurance sector has already been recommended by the Malhotra Committee and has generally been welcomed by a dominant body of industry and populace through the employees unions and some others remain opposed to the idea of introducing competition in the insurance sector. India is regarded as an under-insured country with insurance penetration at a very low level of 0.6% of GDP. Insurance, as a rule, has always been given very low priority of Corporate India. It is always taken with reluctance, usually only when it is compulsory, and then only by big industrial houses. Without exception it is always inadequate to meet the needs of the Corporate Sector. In additions to the traditional exposure of fire, floods, workers compensation and the interruptions, Corporate India also has to

address

unpredictable

changes

in

areas

such

as

environment;

occupational health and safety; public liabilities; Directors and Officers Liability and product liability. It therefore becomes quite obvious that purchase of insurance, in itself, will not substitute for a soundly based and property implemented Risk Management Program as insurance can only offer some financial relief by replacing the plants; it cannot replace the loss in development of a business or development of the market.

THE LIKELY PRIVATE PLAYERS

A number of foreign insurance companies have set up representative office in India and have also tied up with various asset management companies. They have either signed Memorandum of Understanding with Indian companies or are trying to do the same. A few of them have been around for the last four to five years. Some have carried out extensive research on the Indian Insurance Sector. Others have set up liaison officers. All of them are waiting with bated breathe for the opening up of the sector and taking a bite of the great Indian Insurance pie. The following tie-ups are already in place: Indian Partner Alpic Finance Tata CK Birla Group ICICI Sundaram Finance Hindustan Times Ranbaxy HDFC Bombay Dyeing DCM Shriram Dabur Group Kotak Mahindra Godrej Sanmar Group Cholamandalam SK Modi Group 20 Century Finance
th

International Partner Allianz Holding, Germany American Int. Group, US Zurich Insurance, Switzerland Prudential, UK Winterhur Insurance, Switzerland Commercial Union, UK Cigna, US Standard Life, UK General Accident, UK Royal Sun Alliance, UK Liberty Mutual Fund, US Chubb, US J Rothschild, UK Gio, Australia Guardian Royal Exchange, UK Legal & General, Australia Canada Life Met Life ING

M A Chidambaram Vysya Bank

LEGISLATIVE & REGULATORY MATTERS

Insurance Sector Reforms

Having looked at the insurance sector, let us look at the efforts made by the government to make the industry more dynamic and customer friendly. To begin with, the Malhotra Committee was set up with the objective of suggesting changes that would achieve the much required dynamism.

The Malhotra Committee Report

In 1993, Malhotra Committee, head by former Finance Secretary and RBI Governor R.N. Malhotra, was formed to evaluate the Indian Insurance Industry and recommend its future direction. In 1994, the committee submitted the report and gave the following recommendations: Structure Government stake in the insurance companies to be brought down to 50%. Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations. All the insurance companies should be given greater freedom to create operate. Competition Private Companies with a minimum paid up capital of Rs. 1 bn should be allowed to enter the industry.

No company should deal in both life and General insurance through s 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.

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. Investments Mandatory Investment 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). 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.

Overall, the committee strongly felt that in order to improve the customer services and increase the coverage of the insurance, INSURANCE INDUSTRY should be opened up to competition. Bu at the same time, the committee felt the need of the 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. 1 bn. This amount is not very high for foreign firms, as it translates to only about US$25 milion. Further, to date it is unclear whether equity should be payable in one go or should be brought in as installments. Also, the foreign equity participation was to be restricted to only 40%. 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. The industry and analysts find that there is lack of clarity in the following areas:-

Through coverage of rural areas was to be made compulsory, it raises the question as to who would subsidize the rural policies as they would be difficult to service and hence costs will go up.

There is some confusion with respect to investments. Where the funds should be invested? Currently 70% of the finds with LIC and GIC are invested in Government Securities. Would new entrants be allowed to invest in GOI Securities?

The Report also does not enumerate exit options available to the new entrants. In the event of failure, there should be an arrangement made whereby the other companies pool in to bail the customers, who in all probability would be middle class individuals.

On the basis of the report, the then Finance Minister P. Chidambaram proposed the opening up of insurance to the private sector, including multinational companies.

INSURANCE ACT 1938

Background In 1912, The Indian Insurance Companies Act & Provident Fund Insurance Societies Act was passed. This was the first legislation in India to regulate the business of insurance. It had been observed that the provision of Indian Companys Act did not meet the purpose. A further legislation was passed in 1928.

However, a comprehensive legislation was passed in 1938.

Insurance Act 1938 The Act aimed to consolidate & amend the law relating to the business of insurance. It came into force with effect from 1st July 1939.

Important changes Effected in 1950 Provisions were made for the abolition of the Chief Agents, Special agents & Principal agents. The expenses were sought to be limited.

Investments were controlled much more.

The Insurance Association, Insurance Councils & Tariff Advisory Committees were formed as a matter of Self Regulation.

After nationalization of Insurance Business, the application of Insurance Act of LIC & GIC & its subsidiaries was limited.

Further amendments have been made in insurance Act 1938 through IRDA Act 1999 in view of the new circumstances arising out of the opening up of Insurance Industry in 2000.

Other Important Provision of Insurance Act 1938 Registration of Insurance Companies Maintenance & Scrutiny of accounts & valuation reports. Investment & utilization of funds Permissible limits of expenditure Approval of premium rates and plans Verifying solvency margins. The Act also vests the IRDA with powers to o Inspect Documents o Appoint Additional Directors o Issue Directions o Take over the Management of the Insurer Through the appointment of an Administrator to be made by Central Government.

LIFE INSURANCE CORPORATION ACT, 1956

1. General Life Insurance Business was nationalized in India with effect from 19th January 1956. The Life Insurance Business of 154 Indian Line Offices, 16 NonIndian Insurers operating in India & 75 Provident societies were taken over by the Government of India. LIC of India Act was passed by the parliament on 18 th June 1956 & it came into effect from 1st July 1956.

2.

Life Insurance Corporation of India The working of LIC is governed by the LIC Act.

LIC of India started its functioning as a body corporate from 1 st September 1956.

It has perpetual succession & common seal.

It has power to acquire, hold & dispose property.

It can sue and be sued in its name.

Functions / Powers General duty to carry on life insurance business, whether in or outside India. To exercise powers under the act to secure that life insurance business is developed to the best advantage of the community. Other powers: o To carry on Capital Redemption Business, Annuity Certain Business Reinsurance Business o To acquire, hold and dispose of any property for purpose of business. o To Transfer whole or any part of the life insurance business carried on outside India to any other person or persons, if in the interest of corporation, it is expedient to do so. o To advance or lend money upon the security of any movable or immovable property or otherwise.

INSURANCE REGULATORY AUTHORITY, 1996 (IRA)

The IRA was set up in January 1966.

The IRA Bill has first to be passed by parliament to make the IRA a statutory body.

Second, the powers of the erstwhile Controller of Insurance have to be conferred on the IRA.

Third,

comprehensive Act of

legislation and 1956 and

aimed the

at

reviewing

the

insurance Act Corporation

of 1938

repealing

the Life Insurance General Insurance

(Nationalization) Act of 1972 have to be passed. These are the tough steps required to be taken before the IRA can announce entry rules and issue extensive guidelines. While customer protection, strict entry norms and high solvency criteria will be pillars on which IRA will ultimately stand, several other issues related to the operation of the insurers are still being thrashed out. The IRA is also preparing an internal rating system to screen all applicants, as entry will be phases. The joint venture status of insurance companies (with majority holding of the domestic partner) is likely to be approved by the parliament. Consensus also seems to be emerging on the minimum of Rs. 1 bn capital stipulations for new insurance companies. The exhaustive guidelines will also be issued for the appointment of intermediaries (brokers, agents, surveyors and

actuaries). Norms for investment of insurance funds will be spelt out to ensure the safety of policyholders money.

Governments Pronouncements
Post statutory status, IRA to be centre-piece for future insurance sector reforms. IRA will be sole authority, which will be responsible for awarding of licensing i.e. little or no government or political interference in licensing process. No restriction on the number of licenses.

No composite license for life & non-life business.

Licensing to be only on national basis (no city-by-city approach)

Ombudsman scheme to be introduced.

IRA Proposals
New Player should commence business within 15-18 months.

Trafficking of licensing not to be permitted.

IRA to seek business plan with 5 year protections for applicants.

Promoters share not transferable without IRAs approval.

Window of 90 days for receiving applications.

A system of direct brokers to be introduced.

IRA to vet top management appointments.

Effect of Reforms A number of concerns are being expressed regarding the opening up of the insurance sector. But most of them seem to be unfounded. The national interest lies in increasing the penetration of insurance products, increasing the retention of keeping in India and mobilizing resources for infrastructure needs. Competition means that players aggressively target potential customers and this will increase the penetration of insurance. The retention of premia in India has become a sensitive issue with some people who demand that the present outgo of around Rs. 10 bn by the way of reinsurance be stopped. Moreover, every regulator prescribes that the premium earned is retained in the country and the liabilities under the contract are matched with assets in the same country. In fact the opening up of the sector will increase the retention of premia in India and this reduces outgo of the valuable foreign exchange. The apprehension that there would be a flight of capital is also not borne by the experience of other countries. If anything, there has been a strong inflow of foreign capital in the fist 5 years for introducing new products and maintaining the requisite capital adequacy ratio.

The fear that new companies will displace existing players is also unfounded. In fact in China, Malaysia, Indonesia and Thailand where insurances firms were allowed entry the foreign companies account for only 10% of the market share.

The Foreign companies were not able to capture more than 0.4% of the domestic market. Closer home, we have the experience of the banking sector where despite the presence of 39 foreign banks their share in overall business is less than 10%.

The apprehension that competitive Insurance will result in shrinkage of jobs is equally untrue. The number of people working in Insurance Sector is much less as compared to UK, USA, Thailand, etc. with expected increase in the business the job opportunities will increase rather than decrease.

The Insurance sector is a service industry and international companies will help build local professionals with world-class expertise by introducing the best global practices.

Competition

will

also

develop

better

understanding

of

consumer requirements leading to more customized products apt for the market place. Besides it would improve the territory sector tremendously. Development of the tertiary sector would include new avenues for actuaries, accountants, stockbrokers and others. Thus it is seen that the apprehensions being expressed do not hold much water and the opening up of the Indian Insurance sector would bring about sweeping changes not only for the consumers but the economy as a whole.

Current status The Banking Regulation Act is to be modified to allow banks to become active players in the insurance sector. In addition to this, banks will also be allowed entry to the insurance sector through the joint venture route and bank assurance. It is understood that only strong banks with threeyear track records will be allowed to enter the business-entry is a strict no-no to the weaker banks. The Insurance Regulatory and Development Authority (IRDA) Bill provides for three levels of players An Insurance company, Insurance Broker and an agent. Banks will work as agents and brokers in this proposed structure. This is an attempt to make the insurance sector more dynamic this is likely to happen as banks will use their formidable branch network to market and distribute the insurance products. This amendment could also forge alliances in the banking sector. Initial reports indicate that the State Bank of India and Bank of Baroda have expressed interest in entering into joint ventures. ING Barings who already has a 20% stake in Vysya Bank, plans to broad base its alliance to add on insurance-based activities. This could be a timely move one that will allow the domestic players to prepare for the competition ahead. It would also bring

them on par with international players who are accustomed to operate in a liberalized environment. A closer look at the amendment indicates that it is tantamount to creating stronger public sector monopolies with the behemoths like SBI and BOB entering the fray. The government may have made a move that could be counter productive in that the protests against entry of foreign players will only get more vociferous and strong with many strong arms entering the rally. It is evident that the insurance industry needs to get its act together and do it fast. The key areas for a changeover would be in the departments of marketing, distribution, new product development, development. New players too would do well to learn from past errors and concentrate on the above focus areas. product pricing and human resources

INSURANCE REGULATORY & DEVELOPMENT AUHTORITY Act 1999 (IRDA, 1999)

IRDA Bill
The passage of the insurance regulatory & development authority (IRDA) Bill, the all important legislation required to unstable the monopoly of the life insurance corporation & the general insurance corporations in the insurance sector & the setting up of a regulatory authority to supervise & regulate the speedy changes that are likely to come about with the opening up of the industry to private, both domestic & foreign operations is all set to see the lights of knowledge. The bill is proposed in the winter session, dismantling the monopoly of the public sector over the insurance business. The introduction of innovative products by the new insurers for life insurance. There are few gaps in the product portfolio of the existing insurer which can be filled up by the pure term insurance, variable protection plan, mortgage protection insurance, investment life insurance & unit link insurance. On privatization of insurance sector, the customers will be able to get death risk cover at low premium under term insurance and can high yield on premium invested in investment oriented products like unit link insurance. The product mix for life insurance at present is highly skewed in favour of endorsement insurance & money back policies which all comparatively high priced compared to the cheaper products like Bima Sandesh, Bimkaram whole life. The sale of assurance & money back

policies accounted for 71% of the total sale of the life insurance policies in 1997-97. this is due to the unprofessional agents, lack of competition & also because of lack of customer awareness. Under the pressure of competition this fault will be corrected & the customers will be able to pick-up the appropriate life insurance products at lower price. Passing of IRDA Bill on Dec 1999 The Insurance Regulatory & Development Authority Bill introduced 4 new amendments. These amendments were very much opposed by the employees of the LIC, GIC & Its subsidiaries: Oriental Insurance Corporation New India Assurance National Insurance Company United India Insurance Company They struck their work as they are opposing foreign equity participation in the insurance sector. After strong opposition, the bill was passed on 1st December 1999. According to official amendments the authority would give preference to those companies entering health insurance. Apply uniform rules to both public sector & private insurance companies regarding investments in the infrastructure and social sectors. Layout obligations crops. of the insurer in respect of rural or

unorganized sector & backward classes including insurance for

Stiff penalty of up to Rs. 25 lakh for failure to comply with the obligations spelt out by the authority.

At least 75% of the investigable funds of all insurance companies should be invested in the social sector to provide lowers like crop insurance and life and general insurance. For the unorganized sector the government agreed to all amendments suggested by the congress. The government did not specify the minimum limit on investigable funds but the finance minister Mr. Yashwant Sinha claimed that the existing guidelines provide for a minimum limit of 50%.

It was held that the clause on foreign equity specifies a cap of 26% equity by foreign companys but did not include foreign individuals. The Govt. wanted that the loophole be plugged to prevent circumventing the law by nominees of foreign companys to exceed the cap of 26% foreign equity. It was decided that employees who are working in concern at that time should not be out of job or retrenched. The IRDA bill was meant to encourage competition. Due to privatization the Insurance business would grow from about 2% of GDP now to 4.5% by 2002-03. The National Insurance Companies were already operating in 27 countries with 52 branches, subsidiaries & associates were competing well. The necessity for constituting an investor protection fund saying that the new companies would have to deposit Rs. 10 crore each, which would act as a nucleus for any eventuality.

LIBERALISATION & AFTERWARDS

Now it is the turn of the insurance industry to face the opening up of the market to private companies. The existing companies are not themselves being privatized but they will be in direct competition with private firms. Indian insurance is not only already a healthily growing industry, but that is at present invests 70% of its funds in government bonds and securities, where they can be used for public sector projects so that opening the industry up to private business, far from contributing to national growth, will only divert funds to short term and speculative investment. Large foreign firms could also afford to undercut the existing businesses and then exploit their monopoly. The nationalized insurance industry uses cross subsidies to help provide insurance for at least some of those who could not otherwise afford it such as life insurance for selected occupations.

For those who can afford to pay for better services, privatization will bring a benefit al least in the short term.

BUSINESS REQUIREMENTS FOR INSURANCE COMPANY

An Indian Company will not be issued a license under the act, unless the IRDA is satisfied with the sound financial condition and the general character of management, the volume of business, the capital structure, earning prospects of the insurers and that the interests of the general public will be served if the certificate of registration is granted to the insurer. Foreign Insurance companies have been allowed to enter this industry, but they can do so only with an Indian partner subject to a maximum of 26% share holding. No life insurance company after the Act can be registered unless they have a paid-up capital of rupees 100 crores. Every insurer shall in respect of the lifer insurance business carried on by him in India, deposit with the Reserve Bank of India (RBI) a sum equivalent to one percent of the total gross premium written in India in any financial year, not exceeding rupees ten crores. This amount would not be susceptible to any assignment or change nor would it be available for the discharge of any liabilities of the insurer other than liabilities arising out of policies of insurances issued by the insurer, so long as any such liabilities remain discharged.

Investment of Assets Every insurer is required to invest, and at all times keep invested, assets equivalent to not less than the net liabilities as follows: 25% in government securities.

A further sum equal to not less than 25% of the said sum in government securities or other approval securities.

The balance in any of the approved investment rated as Very Strong or more by reputed independent rating agencies which include: o Secured Loans o Deposits o Debentures o Commercial papers o Bonds, Debt Instruments, Shares, Preference Shares.

FURTHER

Every insurer is required to maintain, at all times an excess of the value of his assets over the amount of his liabilities of nor less than: 50 crores of rupees in case of an insurer carrying of Life Insurance business 50 crores of rupees, a sum equivalent to 25% of net premium income or a sum equivalent on general insurance.

ROLE OF AN ADVISOR

It is important to us to know that what is the role that an advisor will play, at ICICI Prudential; you are as an advisor is to: 1. Provide ongoing financial advice for his/her clients : You are an advisor and just like a lawyer or a doctor you advice the client about insurance and finance. 2. Identify Future clients: Life Insurance is a business of contacts an the advisor constantly need to know people so that his business expands. 3. Constantly make appointments: Just making contacts will not be enough to develop a good life insurance business. The advisor needs to meet these contacts and this should make appointments on constantly. 4. Conduct financial review meeting with prospectus / clients: As an advisor it is necessary to meet with client not only for the purpose of selling but also to review the need of

the client and prospects. Many people would not be in for life insurance today but as time moves they can be requiring one. Similarly an existing client may also be in need of more insurance as responsibilities and liabilities increase. 5. Close sale: Ultimately success is defined as sales the advisor should lead each appointment towards a sale and close it effectively where is the client is happy on purchasing the insurance solution and feels satisfied with it. 6. Get Referrals: As mentioned above life insurance is a contact business the best way to build is through referrals. 7. Which you can take from your prospects and clients alike. Getting referrals will help you build a stronger business. 8. Provide service to clients: The role of an advisor truly starts after the sale has been made and servicing the policy sold is the most crucial role of an advisor. 9. Follow internal sales and reporting system: The

Company provides tools and systems for the advisor to increase and develop the business in an effective manner.

WORKING ENVIRONMENT FOR ADVISOR

1. World Class Sales Team: The advisor of ICICI became the part of the world class sales team they are provided each and every kind of help from there team. 2. Work From Office or Resident: The advisor is free for doing work from any place either he/she can perform work from its own office or its own residence. 3. Work Full Time or Part Time: The advisor can do his/her job as part time or full time, this is there own choice. 4. Commission, bonus and incentives: Advisor can earn commission, bonus, incentives according to there own working ability or skills. 5. Upper Limits in Earning: There is no fixed upper limit on earning of the advisor they can earn up to the sky and for this they have to use there best skills.

6.

Flexible Career: In ICICI Prudential the advisor have a flexible career.

OPPORTUNITY FOR THE ADVISOR

1. No Startup Capital Required: The advisor of ICICI have the best opportunity that they dont require any kind of startup capital for the work that they have to perform. 2. Flexible Working Environment: The second opportunity for the advisor is that they are being provided by the most flexible working environment. They are able to do work according to there convenience. 3. Be Your Own Boss: The next best opportunity for the advisor is that they dont have any boss on there head they are there own boss, they can choose there own way for doing things. 4. Unlimited earning potential: The next opportunity is that an advisor can earn unlimited this all depends upon the potential of that agent, no one is there who can stop them except till they stop themselves.

5.

To be Part of a World-Class Team Last but not the least opportunity for the advisor is that they get a chance to become a part of world class team i.e. ICICI.

EXTENSIVE TRAINING TO MAKE YOU A PROFESSIONAL ADVISOR

State-of-the-art training on:

Selling Skills Product knowledge Relationship skills

Training Delivery through Several convenient options: Face to Face Online Self Learning

EXTENSIVE PRODUCT PORTFOLIO

Extensive product range that provides financial solutions to cover all basic needs: Pre-mature death Living too long Living death Childrens future Wealth Creation

PAYMENTS & BENEFITS-COMMISSION STRUCTURE

Year 1 50 16000 800000 180000 180000 Year 2 75 16000 120000 0 270000 270000 Year 3 100 16000 1600000 360000 360000

No. of Policies sold Average Premium Rs. Total Premium earned Rs. Average Commission including bonuses estimate @22.5% Earnings from new business Commission on renewal premium @ 6% For Year 2, 3, & 3% after Earnings from renewal business Rs. Total earning Rs.

48000

72000 48000

48000 180000 318000

120000 480000

Depending on the product mix commission can go up to 35% in the 1 st year, 7.5% in 2nd year and 3rd year and 5% 4th year onwards?

Some of Our High Performers Get. Year 1 No. of Policies sold Average Premium Rs. Total Premium earned Rs. Average Commission including bonuses estimate @22.5% Earnings from new business Commission on renewal premium @ 6% For Year 2, 3, & 3% after Earnings from renewal business Rs. Total earning Rs. 100 20000 2000000 450000 450000 Year 2 150 20000 300000 0 675000 675000 Year 3 200 20000 4000000 900000 900000

120000

180000 120000

120000 450000 795000

300000 1200000

Depending on the product mix commission can go up to 35% in the 1 st year, 7.5% in 2nd and 3rd year and 5% in 4th year and onwards.

RECOGNITION PROGRAMS
Foreign trip and seminars

Select club memberships: o Presidents Club o ICICI Presidential Star Club

MDRT Membership

ICICI PRUDENTIAL STAR CLUB BENEFITS

Platinum Star No. of People 25 Point 1500

Diamond Star Gold Star Silver star Bronze Star Total Participants

25 50 50 75 225

1000 750 600 500

Plus Free Accidental Insurance for all of Rs. 10 Lakhs

CAREER PROGRESSION AND FUTURE OPPORTUNITIES

Exclusive Program for high potential achievers Hand picked advisors A Fast track career path Recognition as tiger Continue doing your business Criteria

o Age 25-40 years o At least 1 year in system o Case count 2 per month

Part time career as a trainer Conduct foundation programs Share best filed practices Replicate your business Criteria o Age 25-45 years o At least 6 months in system o 2 case per month

Pinnacle Programme A full time career as a unit manager Growth within ICICI Prudential Greater earning potential Personal development Performance criteria o Age 25-45 years o At Least 1 year in system o Average 2 case count per month Fast Track Pinnacle Programme A full time career as a unit manager Growth within ICICI Prudential Greater earning potential Performance criteria o Age 25-45 years o At least 6 months in system

o 30 issuances with in 6 months Agency champion Take your business to the next level. Entrepreneurs, develop your own business. Recruit new advisors and make your own team. Increase reach and earning potential Criteria o At least 1 year in system o Minimum 36 policies and 3.6 lacs o Premium o Selection Process (Assessment center)

PRIVATE INSURERS ARE MORE CUSTOMER ORIENTED

The entry of private players has intensified competition in the life insurance sector. Every company is trying to crave a niche in a particular segment of insurance. So before investing the different areas that investor should take care of can be as under:Why should an investor choose to take an insurance policy from a private company? Private enterprise offers much alternative to the customer next the approach more customers oriented. Private life insurance have created an army of advisors and people dont mind calling them for consult for a policy. The advisor are no longer people to be avoided but people to be consulted. Besides, the private sector has come in with new product

ideas and new ways to market old ones. This offers customers the option to choose and invest in various financial markets best suited with their requirements. Do you see insurance policies completing with mutual fund schemes for the same investors fund? No insurance and mutual funds are fundamentally different in there objectives. Insurance is largely to cover the eventuality of death, and therefore, more long term in its outlook. Mutual funds, on the other hand are meant for purely making investment gains. They are to be used in different measures for meeting different needs.

What are the factors that should be kept in mind while choosing a policy? Need analysis is the best starting point. There are five needs that life insurance can satisfy: dying young, living to long, disability, care for children and wealth generation. Analysis of need if where a life advisor can play a crucial role. Based on the need the correct type of policy can easily be selected. Should people go in for more than one insurance product? Is it advisable to have more than one insurer? There are five main reasons to buy insurer policies. So, people have different policies to meet different needs. So, having more than one insurance policy is a matter of choice. With the no. of insurance products increasing, isnt the retail investor left confused?

Along with more products comes better training of life advisors. The effort and volume of resources that the private sector is spending to equip life advisors in huge. This is fighting against customer level confusions. Why does the premium for a similar policy vary across insurers? Isnt the cheapest policy always the best from the customers point of view? It depends on what policy the person is looking at. If the policy is being used to save monies and make investments, then the premium amount also include the savings portion. In such a case, premiums could amount to larger savings.

How are the investments of an insurance company structured? Investments are made to pre-defined plan under the supervision of the investment committee and strictly abiding by the investment norms issued by the insurance regulatory authority, the IRDA. IRDA norms should allow greater exposure to equities for participatory policies? Are Indian markets mature enough for that? The key is to set the right exposure norms and enforce the use of right benchmarks. Insurance companies manage monies over long horizons, and therefore they entry in the markets will have the effect of flattening out the volatilities.

GRAPHS & TABLES

No. of People having Life Insurance Policy Having Policy YES No. No. of Persons 220 80

No. of Persons having life insurance policy

250 220

200

150 No. of Persons

100 80

50

0 Yes no. of persons NO

No. of People having life insurance policy of ICICI Prudential Company LIC HDFC ICICI Others Percentage 80% 6% 10% 4%

Percentage
4% 10%

6%

80%

LIC

HDFC

ICICI

OTHERS

Knowledge about ICICI Prudential Know about ICICI YES No. No. of Persons 280 20

Knowledge about ICICI Prudential

300

280

250

No. of Persons

200

150

100

50

20
0

Yes No. of Persons

NO

People interested to be life advisors with ICICI Prudential Interested YES No. No. of Persons 60 240

Interest in Be Life Advisors with ICICI Pru

300

250

240

No. of Persons

200

150

100

60
50

Yes No. of Persons

NO

EXPLANATION OF GRAPHS
(A) Title Life Insurance Policy This graph shows the number of person having the life insurance policy. (B) Title Market share of Companies This graph shows the number of existing customers of different life insurance companies. (C) Title Knowledge of ICICI Prudential

This graph shows the number of person having knowledge of ICICI Prudential (D) Title Interested in Being Life Advisor This graph shows the number of person interested in associated with ICICI Prudential as a life advisor.

LIMITATIONS OF STUDY

No study is generally foot proof or error free. This study has also got some limitations given below: 1. Most of the persons were wither not very willing to spend time in discussing about the insurance company or were not interested in joining any insurance company. 2. Company was interested in mature persons, but there were either less educated or having no time for this job.

3.

Company was not giving any salary to selected persons. There were giving just commission on their task, and most of the persons were not interested on commission base job.

4.

Since the study involved a thorough analysis of the mass market and attracting persons to work without salary, so it was require a dedicated labour in term of both time and effort. Since the curriculum did not permit more time, the study had to be very limited.

CONCLUSION OF EXECUTIVE REPORT

In this economic competitive business environment all the companies are going to introduce their self as a best than others, this report about to know the ICICI Prudential position in Karnal Area, after the survey the executive report conclude that in the past scenario mostly customers having the life insurance policy but by the changing business competition policy presently customers are turn towards the ICICI policy due to their better services and their better plan policies. Most of the persons who are having time and good market relation are

interested in associated with ICICI Prudential as a life advisor and wants to sale the policies of ICICI Prudential to others. Now the time has changed and with time, behavior of persons also has changed. Once there was time when persons were wishing a fix salary job. But now they are wishing a job in which they can earn unlimited as per there performance. They are wishing to do a job, which is incentive basis. For these types of persons Life Advisor is best opportunity because in this they get unlimited commission schemes and unlimited future opportunities. After that they can work either part time or full time and they can work on there wishes.

SUGGESTION
1. Making ICICI More Accessible: Here I mean that as 80% of the population of the India is rural. Therefore, ICICI must have their branched in important towns such as Ambala, Jagadhari, not only these will increase the awareness among people, more over, it will help company to acquire local market and cater to their effetely. 2. Advertising should be done for recruiting advisors:

Here I mean that the proper advertising should be done to attract the person to apply in ICICI Prudential as life advisor. Advertising may be done by newspaper, audio, video, magazine etc 3. Management Trainees should be given proper training to convince the persons to be life advisors. 4. Seminars should be conducted to tell people about the company and its objective

BIBLOEGRAPHY

Marketing Management by Philip Kotler (Eleventh edition) Published by Pearson education (Singapore) Pvt. Ltd. Research Methodology (Methods and techniques) by C.R. Kothari

Published by new age international (P) Ltd.

Business research methods by William G. Zikmund Published by Thomson Pvt. Ltd. www.iciciprulife.com www.google.com (Search Engine)

QUESTIONNAIRE
1. Do you have a life Insurance Policy? YES 2. NO

Life Insurance Policy of which company you have? LIC HDFC ICICI Pru TATA AIG Kotak Others

3.

To which life insurance company you would like to be associated with and why? LIC HDFC ICIC Pru TATA AIG Kotak Others

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---------------------------------------------------------------------------------4. Do you know Company Ltd. YES 5. about ICICI NO Prudential Life Insurance

Would you like to be associated with ICICI Prudential as Life Advisor? YES NO

6.

Reason: -------------------------------------------------------------------------------------------------------------------------------------------------------------------