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A
REPORT
On
Potential of Life insurance Industry in Surat Market
By
Chirag Patel
COMPANY GUIDE
FACULTY GUIDE
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using business knowledge to drive efficiencies and strengthen their competitive
advantage.
CERTIFICATE
This is to certify that the Summer Internship Project titled
Potential of Life Insurance Industry in Surat market a bona fide
work of , is original and has been done under my
supervision in partial fulfillment of the requirement for the award
of M.B.A for the period of 4 months ... This report neither
full nor in part has ever before been submitted for awarding of
any degree of either this university or any other university. I am
pleased to stay that his performance during the period was
extremely satisfactory.
Faculty Guide
DECLARAION
Chirag Patel
TABLE OF CONTENTS
Contents
Acknowledgements
List of Tables
List of Illustrations/Diagrams
Executive Summary
Chapter 1: introduction
Objective
Limitation
Research Mythology
Data Collection
Chapter 2: Life Insurance Industry
Industry profile
important milestones in the life insurance business
Insurance sector reforms
IRDA
Chapter 3: Contribution of Life Insurance Industry
Contribution of Life Insurance in the Economy
Flow of Insurance Industry in India
Structure of life Insurance Industry
Life Insurance industry
Aggregation of Long Term Savings
Spread of financial services in rural Areas
Long term funds for infrastructure Development of Capital
Markets/Economic Growth
Employment generation
Special Features
Growth Potential
Phase of transition
Chapter 4:Company Profile
Management
Area of Business
KMOM progress till date
KMOM-the partnership and Lineage
Products
Hierarchy of KMOM of Surat branch
Chapter 5: Survey
Data interpretation , editing and coding
Graph analysis
Chapter 6: Finding and Suggestion
Chapter 7: Conclusion
Chapter 8: References
Chapter 9: Annexure
Page No.
5
6
7
9
10
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56
65
66
69
71
72
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73
83
84
85
86
List of Tables
Name of Tables
Page no
38
Potential of Life Insurance sector
38
Market share of LIC and all private
player
39
Individual Market share of
Insurance company
41
Total asset of Life Insurance
companies
41
Total premium generated
41
The future premium income
Generated will be
44
Untimely death benefit to policy
holder in the past
73
Age vise classification
74
Gender wise classification
75
Income wise classification
76
No of member having insurance
77
How many person having insurance
in family
78
Different policy bought by
customers
79
Fully insured and under insured
persons
80
Market share of different life
insurance policy
6
List of Illustrations/Diagrams
Name of Illustrations/Diagrams
Page
No
57
73
74
75
76
77
78
79
80
Chapter 1:
Introduction
Executive Summary
The service industry is one of the fastest growing sectors in India
today. The upcoming sectors which are really showing the graph
towards upwards are - Telecom, Banking, and Insurance. These
sectors really have a lot of responsibility towards the economy.
after the industrial era past few centuries yet its beginnings date
back almost 6000 years.
Life Insurance in its modern form came to India from England in
the year 1818. Oriental Life Insurance Company started by
Europeans in Calcutta was the first life insurance company on
Indian Soil. All the insurance companies established during that
period were brought up with the purpose of looking after the needs
of European community and these companies were not insuring
Indian natives. However, later with the efforts of eminent people
like Babu Muttylal Seal, the foreign life insurance companies
started insuring Indian lives. But Indian lives were being treated as
sub-standard lives and heavy extra premiums were being charged
on them. Bombay Mutual Life Assurance Society heralded the
birth of first Indian life insurance company in the year 1870, and
covered Indian lives at normal rates. Starting as Indian enterprise
with highly patriotic motives, insurance companies came into
existence to carry the message of insurance and social security
through insurance to various sectors of society. Bharat Insurance
Company (1896) was also one of such companies inspired by
nationalism. The Swadeshi movement of 1905-1907 gave rise to
more insurance companies. The United India in Madras, National
Indian and National Insurance in Calcutta and the Co-operative
Assurance at Lahore were established in 1906. In 1907, Hindustan
10
at
disadvantage.
Channel partners are those who are going to be into direct selling
of companys products i.e. the insurance policies. They are the link
11
12
13
Chapter 2
Objective
Limitation
Methodology
Data collection
14
1. Objective:
The main of the present study of is accomplish the following
objective.
15
16
5: Limitation:
Some of the difficulties and limitations faced by me
during my training are as follows:
Lack of awareness among the people This is the biggest
Insurance sector People still today are not aware about the
earning opportunity that the Insurance sector gives. After the
privatization of the insurance sector many private giants have
entered the insurance sector. These private companies in order to
beat the competition and to increase their Insurance Advisors to
increase their reach to the customers are giving very high
commission rates but people are not aware of that.
Increased competition Today the competition in the
Insurance sector has became very stiff. Currently there are 14
Life Insurance companies working in India including the LIC
(life insurance Corporation of India). Today each and every
company is trying to increase their Insurance Advisors so that
they can increase their reach in the market. This situation has
created a scenario in which to recruit Life insurance Advisors and
to sell life Insurance Policy has became very very difficult.
18
RESEARCH METODOLOGY
Research always starts with a question or a problem. Its purpose is
to question through the application of the scientific method. It is a
systematic and intensive study directed towards a more complete
knowledge of the subject studied. Marketing research is the
function which links the consumer, customer and public to the
marketer through information- information used to identify and
define marketing opportunities and problems generate, refine, and
evaluate marketing actions, monitor marketing actions, monitor
marketing performance and improve understanding of market as a
process.
19
20
21
DATA COLLECTION
After the research methodology, research problem in
marketing has been identified and selected; the next step is
together the requisite data. There are two types of data collection
method primary data and secondary data.
22
Chapter: 3
Industry profile:
23
24
25
at
disadvantage.
The first two decades of the twentieth century saw lot of growth in
insurance business. From 44 companies with total business-inforce as Rs.22.44 crore, it rose to 176 companies with total
business-in-force
as
Rs.298
crore
in
1938.
During
the
26
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 with a view to reach all
insurable persons in the country, providing them adequate financial
cover at a reasonable cost.
LIC had 5 zonal offices, 33 divisional offices and 212 branch
offices, apart from its corporate office in the year 1956. Since life
insurance contracts are long-term contracts and during the currency
of the policy it requires a variety of services need was felt in the
later years to expand the operations and place a branch office at
each district headquarter. Re-organization of LIC took place and
large numbers of new branch offices were opened. As a result of
re-organization servicing functions were transferred to the
branches, and branches were made accounting units. It worked
wonders with the performance of the corporation. It may be seen
that from about 200.00 Crores of New Business in 1957 the
corporation crossed 1000.00 Crores only in the year 1969-70, and
it took another 10 years for LIC to cross 2000.00 crore mark of
new business. But with re-organization happening in the early
eighties, by 1985-86 LIC had already crossed 7000.00 crore Sum
Assured on new policies.
27
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 to 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.
28
business
in
India
are:
life
insurer
1956 245 Indian and foreign insurers and provident societies taken
over by the central government and nationalized. LIC formed by
an Act of Parliament, viz. LIC Act, 1956, with a capital
contribution of Rs. 5 Crore from the Government of India.
29
and
sound
business
practices.
Insurance
regulator
IRDA
set
up
first
private
insurers
to
sell
policy
a policy 2002
31
since
the
Government
owned
the
insurance
companies.
But the scenario changed with the private and foreign companies
foraying in to the insurance sector. This necessitated the need for a
strong, independent and autonomous Insurance Regulatory
Authority was felt. As the enacting of legislation would have taken
time, the then Government constituted through a Government
resolution an Interim Insurance Regulatory Authority pending the
enactment
of
comprehensive
legislation.
Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and
the General insurance Business (Nationalization) Act, 1972 to end
the monopoly of the Life Insurance Corporation of India (for life
insurance business) and General Insurance Corporation and its
subsidiaries
(for
general
insurance
business).
The act extends to the whole of India and will come into force on
such date as the Central Government may, by notification in the
Official Gazette specify. Different dates may be appointed for
different
provisions
of
this
Act.
The Act has defined certain terms; some of the most important
ones
are
as
follows
Words and expressions used and not defined in this Act but
defined in the Insurance Act, 1938 or the Life Insurance
Corporation Act, 1956 or the General Insurance Business
33
to
them
in
those
Acts
1956
34
Chapter: 4
35
STRUCTURE OF INSURANCE
INDUSTRY: Snap Shot
Historical Perspective
(i) Prior to 1956 242 companies operating
(ii) 1956 - 2001 Nationalization LIC monopoly
player Government control
(iii) 2001 -- Opened up sector
Industry
Snap Shot - Contd.
36
37
Total population
1.1 billion
Total population of
Insurable class
253 millions
Total population
insured
88.5 millions
Market share:
2001-02 2002-03
2003-04
2004-05
200506
98%
94%
87%
78%
72%
6%
13%
22%
28%
LIC
Private
Players 2%
Market Share
38
Company
Aviva life
Bajaj
Allianz
Birla sun
life
HDFC
Standard
ICICI
Prudential
ING
Vysya
Indian
Promoter/
Partner
Market
share
based on
premium
Dabur
Aviva, UK
1.12
Bajaj Auto
Allianz,
6.12
Germany
Aditya
Sun Life,
1.84
Birla
Canada
group
HDFC
Standard
2.96
Life, UK
ICICI
Prudential,
7.11
Bank
UK
Vysya
ING
0.63
Bank
Insurance,
Netherlands
Kotak
Old Mutual
0.71
Mahindra
South
Bank
Africa
Kotak
Mahindra,
Old
Mutual
Max New Max India
York
MetLife Jammu &
Kashmir
Bank
Sahara
Sahara
Life
India
Insurance
SBI Life
SBI
Tata AIG
Tata
Group
Foreign
Insurance
New York
Life, US
MetLife,
US
1.32
0.40
None
0.80
Cardiff,
France
AIG, US
1.52
1.78
39
CONTRIBUTION TO INDIAN
ECONOMY
(i) Life Insurance is the only sector which garners
long term savings
(ii) Spread of financial services in rural areas and
amongst socially less privileged
(iii) Long term funds for infrastructure
(iv) Strong positive correlation between
development of capital markets and insurance/
pension sector
(v) Employment generation
40
2002-2003
2,80,450Cr
2003-2004
3,52,608Cr
2004-2005
4,23,000 Cr
2003-2004
66,278 Cr
2004-2005
79,000 Cr
2006-2007
1,12000 Cr
2007-2008
1,33,000 Cr
42
2003-2004
2004-2005
20,800 Cr
24,200 Cr
28,700 Cr
EMPLOYMENT GENERATION
Life insurance industry provides increased
employment opportunities.
Employees in insurance sector as on 31st March,
2005 is around 2 lakhs.
Many agents depend on insurance for their
LivelihoodNo. of agents on 31st March 2004
15.59 lakhs
44
SPECIAL FEATURES
Tax clubbing of various savings short term and long term into
same bracket have a bias towards short term savings.
Distinction between the short term savings and long term savings
is critical from investors point of view. More prone to inflationary
pressures
Clearly, long term savings more than 10 years deserve special
consideration under tax regime.
45
GROWTH POTENTIAL
At present insurance penetration in India is quite low
2.26% of GDP.
PHASE OF TRANSITION
Life Insurance industry is under the phase of infancy after 50
years of monopoly
46
Chapter: 5
Company profile
Management
Areas of Business
Products
COMPANY PROFILE
Stock broking businesses in the UK. Kotak Group was established
in 1985.Kotak Mahindra Bank is the parent company of the group.
Kotak Group entered into the life insurance business in 2001.
Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture
between Kotak Mahindra Bank Ltd. (76%) and Old Mutual plc.
(24%)
49
Mission:
At Kotak Life Insurance, we aim to help customers take important
financial decisions at every stage in life by offering them a wide
range Of innovative life insurance products, to make them
financially independent.
MANAGEMENT
Other Top Management persons are as follows:Mr. Gaurang Shah (Managing Director)
50
51
52
53
54
AREAS OF BUSINESS
Kotak Mahindra one of India's leading financial institutions was
born in 1985 as Kotak Capital Management Finance Limited. This
company was promoted by Mr. Uday Kotak, Mr. Sidney A. A.
Pinto and Kotak & Company. Industrialists Mr. Harish Mahindra
55
and Mr. Anand Mahindra took a stake in 1986, and that's when the
company changed its name to Kotak Mahindra Finance Limited.
It's been a steady and confident journey to growth and success.
by
Kotak
Group.
In March 2006, Kotak Group has agreed to buy 25% stake held
by Goldman Sachs in KMCC and KS subject to regulatory
approvals.
56
The group has a net worth of around Rs.2,000 crore and employs
around 6,000 employees across its various businesses servicing around
one million four hundred thousand customer accounts through a
distribution network of branches, franchisees, representative offices
and satellite offices across 216 cities and towns in India and offices in
New York, London, Dubai and Mauritius.
57
58
59
60
63
44 branches in 31 cities.
2001-02: 7 Crores
2002-03: 35 Crores
2003-04: 124 Crores
2004-05: 375 Crores
64
KOTAK MAHINDRA
AND
OLD MUTUAL
65
Old Mutual was established more than 150 years ago. Old
mutual plc. is a world-class international financial service
company. It owns the largest companies in the following areas in
South Africa. They are:
1. Life Insurance Company
2. Asset Management Company
3. Bank
4. Non-life insurance company
It has been developed into an International financial services group
whose activities are focused on asset gathering and asset
management. The Old Mutual Group offers a diverse range of
financial services in three principal geographies: South Africa, the
United States and the United Kingdom. The company is listed on
the London Stock Exchange with a market capitalization of
approximately $6 billion and is a member of the elite FTSE 100
index. In the 2003 rankings of the World's 500 largest corporations
by Fortune magazine, Old Mutual climbed 87 places to position
number 366 and was also listed as the 14th largest insurance
company in the world.
Old Mutual is the largest financial services business in South
Africa, through its life insurance, asset management, banking and
66
PRODUCTS
67
Term Plans
Kotak Term Assurance Plan
Kotak Preferred Term Plan
Endowment Plans
Kotak Endowment Plan
Kotak Money Back Plan
Kotak Child Advantage Plan
Kotak Capital Multiplier Plan
Kotak Retirement Income Plan
Kotak Premium Return Plan
Unit Linked Plans
Kotak Retirement Income Plan (Unit-linked)
Kotak Safe Investment Plan II
Kotak Flexi Plan
Kotak Easy Growth Plan
Kotak Privilege Assurance Plan
Group
Employee Benefits
Kotak Term Grouplan
Kotak Credit-Term Grouplan
Kotak Complete Cover Grouplan
Kotak Gratuity Grouplan
68
69
(SURAT BRANCH)
Branch manager
Assistant BM
Branch Operations In
charge (BOE)
Sales Manager
Operation Executive
Assistant SM
Operations
Life advisor
Chapter: 5
70
71
44
45
40
No. of Customers
35
30
25
23
22
20
15
11
10
5
0
18-25
26-30
31-45
46 & Above
Years
AGE
18-25
26-30
31-45
46 to above
No Of Members
11
22
44
23
72
Gender
No of Member
MALE
66
FEMALE
34
73
66
60
No. of
50
40
34
30
20
10
0
MALE
FEMALE
Years
74
Members
48
50
45
No. of Customers
40
40
35
30
25
20
15
12
10
5
0
2 to 4
5 to 8
Family member
2-4
5-8
8 to above
8 to aboce
No of members
No of Member
40
48
12
75
Income
40K -70K
70K-1 Lake
1 Lake to 3 Lakes
3 Lacks
No of Members
17
41
28
14
41
40
No. of Customers
35
28
30
25
20
17
14
15
10
5
0
40 k to 70k
70k to 1 Lake
1 Lake to 3
3 Lake to
Lakes
Above
Income (P.A)
76
Insurable Member
42%
Uninsurable member
58%
NO
58%
YES
42%
77
40
40
35
28
No. of Customers
30
25
21
18
20
15
11
10
5
0
Self
Spouse
Children
Parents
All
Having insurance
self
spouse
No of members
40
28
78
children
parents
all
21
18
11
35
LIC
30
25
20
15
No. of Customers
ICICI
Birla
Sunlife
SBI
HDFC
10
Bajaj
Alliance
TATA
AIG
0
Term Plan Endowment
Child Plan
Unit Link
Plan
Kotak
Mahindr
a
ING
Different Plans
79
Under Insured
82%
Fully Insured
18%
80
Insurance Plan
Term Plan
Money back Plan
Endowment Plan
Child Plan
Unit link Plan
Market Share
39%
14%
15%
8%
24%
Unitlink plan
24%
Child Plan
8%
Endownment Plan
15%
Term Plan
39%
Moneyback Plan
14%
81
Chapter 6:
Finding
Suggestion
82
83
Chapter 7
Conclusion
All the insurance company must advertise more in the market
because not all people know more about life Insurance
policy.
Most number of people wants Guaranteed Returns so
company must focus on this for the customer investment.
Make insurance policy which can buy any one so we can
insured them through this type of life insurance policy.
84
8 References
In order to obtain more information regarding the present study
and to substantiate it with theoretical proof, the following
references were made: -
Insurance
chronicle,
January
2006
Special
issue
Websites visited:
www.kotaklifeinsurance.com
www.google .com
85
Chapter 9:
Annexure
Questionnaire
1) Name ______________________________
2) Age
1) 18-25 2)26 to 30 3) 31 to 45 4) 46 to above
3) Gender 1) male ____) female____
4) Occupation:
1) Service 2) Business 3) Professional 4 ) other
5) Family member
1) 2 to 4 2) 5 to 8 3) 8 to above
6) Do u have a life insurance?
Yes_______
No_______
If yes,
Which is it?
86
LIC
ICICI
Prudential
Birla
Sunlife
SBI Life
HDFC
Standard
Life
Bajaj
Alliance
TATA AIG
Kotak
Mahindra
ING Vysya
Max
Newyork
Met Life
Reliance
Shri Ram
Sahara
87