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Serial No. I.
Chapter Name INTRODUCTION
EXECUTIVE SUMMARY INTRODUCTION TO INVESTMENT ANALYSIS INDUSTRIAL SCOPE INVESTMENT STYLES PERFORMANCE MEASUREMENT INTRODUCTION TO STUDY(FINANCE) REVIEW OF LITERATURE HYPOTHESIS RESEARCH DESIGN SCOPE OF STUDY LIMITATION OF STUDY CHAPTER SEHEME
8to17 18to47 48 49to50 51 52 53
PROFILE OF THE COMPANY PRODUCTSANDSERVICES 54to68
III. IV. V.
SUMMARY OF FINDINGS, SUGGESTION AND CONCLUSION
In today’s corporate and competitive world, I find that insurance sector has maximum growth potential as compare to the other sector.Insurance has the maximum growth rate of 70-80% while as FMCG sector has maximum 12-15% of growth rate. This growth potential attracts me to enter in this sector and KOTAK LIFE INSURANCE has given me the opportunity to work and get experience in highly competitive and enhancing sector. Companies now are tapping a lot of ways to capture the market and hence adopting different ways to hold the large portion of the market. My summer training learning helped me a lot to complete my project in order to learn a lot of things of the corporate. As a project trainee the first task given to me was to understand the basic behaviour of the consumer in order to manipulate the market according to our target competition. For this I developed a questionnaire and I did my survey in Jaipur city. This job training also helped me a lot in understanding the process of building effective marketing channels for life insurance products by establishing network of life insurance advisors. The success story of good market share of different market organizations depends upon the availability of the product and services near to the customer, which can be distributed through a distribution channel. In Insurance sector, distribution channel includes only agents/advisors or agency holders of the company. If a company like KOTAK LIFE INSURANCE, ICICI PRUDENTIAL, RELIANCE LIFE INSURANCE, TATA MAX etc has adequate agents in the market, they can capture big market as compared to the other companies.
BANGALORE INSTITUTE OF MANAGEMENT STUDIES
Investment management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds).
The term asset management is often used to refer to the investment management of collective investments, (not necessarily) while the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as wealth management or portfolio management often within the context of socalled "private banking". The provision of 'investment management services' includes elements of financial statement analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments. Investment management is a large and important global industry in its own right responsible for caretaking of trillions of yuan, dollars, euro, pounds and yen. Coming under the remit of financial services many of the world's largest
BANGALORE INSTITUTE OF MANAGEMENT STUDIES
there are compliance staff (to ensure accord with legislative and regulatory constraints). so a major fall in asset prices causes a precipitous decline in revenues relative to costs. dealing. and the preparation of reports for clients. computer experts. settlement. The largest financial fund managers are firms that exhibit all the complexity their size demands. Key problems of running such businesses Key problems includeRevenue is directly linked to market valuations. Apart from the people who bring in the money (marketers) and the people who direct investment (the fund managers). and clients may not be patient during times of poor BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 4 . above-average fund performance is difficult to sustain. financial controllers (to account for the institutions' own money and costs). including the employment of professional fund managers. marketing. Fund manager (or investment adviser in the United States) refers to both a firm that provides investment management services and an individual who directs fund management decisions . internal auditing. INDUSTRY SCOPE The business of investment management has several facets.companies are at least in part investment managers and employ millions of staff and create billions in revenue. and "back office" employees (to track and record transactions and fund valuations for up to thousands of clients per institution). internal auditors of various kinds (to examine internal systems and controls). research (of individual assets and asset classes).
accurate measurement is a necessity. value. For example. successful fund managers are expensive and may be headhunted by competitors. and in the institutional context. indexed. attributable to a single philosophy and internal discipline.they would rather see firm-wide success. etc. when such growth is plentiful. Each of these approaches has its distinctive features. clients are loath to stake their investments on the ability of a few individuals. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 5 . however. For that purpose. then there is evidence that value styles tend to outperform the indices particularly success.performance. growth. above-average fund performance appears to be dependent on the unique skills of the fund manager. in any particular financial environment. conversely. adherents and. analysts who generate above-average returns often become sufficiently wealthy that they avoid corporate employment in favor of managing their personal portfolios Investment styles There is a range of different style of fund management that the institution can implement. small capitalisation. Performance measurement Fund performance is often thought to be the acid test of fund management. For example. market neutral. there is evidence that growth styles (buying rapidly growing earnings) are especially effective when the companies able to generate such growth are scarce. distinctive risk characteristics.
it is probably appropriate for an investment firm to persuade its clients to assess performance over longer periods (e. Frank Russell in the USA or BISAM in Europe) compile aggregate industry data. The specialist performance measurement firms calculate quartile and deciles data and close attention would be paid to the (percentile) ranking of any fund. and performance is also measured by external firms that specialize in performance measurement. there is a serious preoccupation with short-term numbers and the effect on the relationship with clients (and resultant business risks for the institutions). e. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 6 .institutions measure the performance of each fund (and usually for internal purposes components of each fund) under their management. and with relevant indices (where available) or tailor-made performance benchmarks where appropriate. 3 to 5 years) to smooth out very short term fluctuations in performance and the influence of the business cycle. showing how funds in general performed against given indices and peer groups over various time periods. with performance data for peer group funds.g. This figure would be compared with other similar funds managed within the institution (for purposes of monitoring internal controls). Generally speaking. industry wide.g.g.. This can be difficult however and. +4.. The leading performance measurement firms (e. In a typical case (let us say an equity fund).. then the calculation would be made (as far as the client is concerned) every quarter and would show a percentage change compared with the prior quarter (e.g.6% total return in US dollars).
Financial function of a business may define as the procurement of funds and their effective utilization. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 7 .INTRODUCTION TO STUDY DEFINITION According to Joseph and Massie “financial management is the operational activity of a business that is responsible for obtaining and effectively utilizing the funds necessary for efficient operation” According to Prather and wert “Business finance deals primarily with raising administering and disbursing funds by privately owned business units operating in non-financial fields of industry” BUSINESS FINANCE “Business finance is that business activity which is concerned with the acquisition and conversion of capital funds in meeting financial needs overall objectives of business enterprises”.
where finds are involved sound financial management is necessary. which is concerned with the anticipation of financial needs acquiring financial resources allocating funds within the business. 4. 3. Objectives The main objective of financial management is as follows 1.Financial Management In every organization. Administrating the allocated funds and accounting and reporting to management over financial matters. It should give way for maintaining balanced asset Structure. To ensure fair returns to share holders. To ensure wealth maximization. but faulty financial management has slain in thousands”. 2. A business finance of financial management is a managerial activity. To maintain liquidity to meet debt obligation. As COLLINS BROOKS has remarked “Bad production management and bad sales management have stain in hundreds. To archive profit maximization as a corporate Social objective. 5. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 8 .
Financial decision The function of finance manager is to review and control decision to commit or recommit funds to new or outgoing uses thus in addition to raising funds. The types of financial decision are 1 Funds requirement decision 2. Dividend decision Financial statements A financial statement is an organized collection of data according to logical and consistent accounting procedure. financial management is concerned with production marketing and other function whenever decision are made up on the acquisition or destruction’s of asset. Financing decision 3. It may show a position at a movement of time it the case of balance sheet or may reveal a series of activity over a given period of time as in the of income statement. Investment decision 4. Its purpose is to convey an understanding of some financial aspects of business firm. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 9 .
To provide reliable financial information changes in Economic resource and obligation of the business Enterprises. since it reflects the result of people ration for a period of time.1. It represents summary of revenue. 4. It is the scoreboard of the firms’ performance. Balance sheet It is the most significant financial position statement. it is also called as the flow statement. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 10 . It contains information about resources along with the obligation of the business entity. Financial statement can be divided as under: Income statement It reflects the earning capacity and potential of a firm. It serves the firms profitability. To assist decision making 2. To provide financial information that assist in Estimating the earning potential of the enterprises 3 . expenses of and income of a firm. and abut it owners interest in the business at a particular point of time. These by providing information on its financial position. It communicates information about asset liability and owners equity of the business firm as on specific date.
A. B. Changes in working capital position Changes in cash position.Statement of changes in retained earnings The statement knows as statement of retaining earnings or profit and loss appropriation account or income disposal statement. The statement gives details of the distribution of earnings during a particular accounting period. The state meant may emphasize any of the following aspects relating to changes financial position of the business. Statement of changes in financial position The balance sheet shows the financial condition of business at a particular moment of time while income statement discloses the operations of business over a period of time. The balance shown by the income statement is transferable to the balance sheet through this statement after making necessary appropriation. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 11 .
BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 12 . cash inventories etc. more than 6 months etc. for 3 to 6 months. Financial Statement AnalysisIt involves the process of “Analysis” and “Interpretation” Analysis Refer to the proper arrangement of data. Egg: The amount of current assets in the balance sheet may be regrouped in to debtors.. where in the total figure in the financial statements are regrouped into their distinct and different component parts.Analysis and interpretation of financial statements Indicators of Financial statements are the two significant factors: Profitability Financial soundnessAnalysis and interpretation of financial statements refer to such a treatment of the information contained in the income statement and the balance sheet. Debtors further classified in to amounts due for less than 3 months. so as to afford full diagnosis of the profitability and financial soundness of the business.
It greatly helps the investor in studying the prospects. Both analysis and interpretation are closely related. It helps in forecasting: BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 13 .Interpretation Refer to the comparison of the various components and the examination of their content so that use full and decline conclusions may be drawn about the earning capacity. This significance could be summarized as follows: It helps in screening: Financial statement analysis serves as a preliminary screening tool in the selection of investment. Compression therefore is a pre requisite for meaningful interpretation. liquidity and solvency etc. payments. IMPORTANCE AND OTHER RELEVANT ASPECTS: The financial statement analysis helps in evaluating the relationship between different items constituting financial statements and understands the financial position and the performance of the firms. Analysis is always followed by interpretation and interpretation is performed through a process called comparison. profitability. and protection.
It can be used as forecasting tool for future profitability and financial soundness of the business It helps in Diagnosing: It helps the management in identifying the factors responsible for creating managerial operations and other financial problems. it is concerned with profitability of investment in the various assets of the company and in the efficiency of assets management BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 14 . In particular. Persons Interested In Financial Analysis The persons interested in the financial analysis can broadly be divided in to two categories: The insiders or management The management is basically interested in overall performance of the firm. It helps in Evaluation: It is an important tool for evaluating the performance of both management and the organization it is thus a yardstick used by the financial analysis to evaluate condition and performance of the firm. The management also employs financial analysis for purpose of internal control.
For instance the shareholders and potential investor would be more interested in the earnings per share and dividend pay-out ratio.. Common-size statement 3. These statements add time dimension to the analysis. Comparative financial statements 2. Cost-volume profit statement. Comparative financial statements Refers to examine and compare the various elements in financial statements. The outsiders of management They are mainly interested in the information that is relevant from their point of view. TOOLS AND TECHNIQUES OF ANALYSIS The purpose of analysis and interpretation can be served by using the following important tools as analysis: 1. The current year happenings are compared to the previous year and the direction of growth of the enterprises is BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 15 . Trend-Analysis 4. Ratio-Analysis 5.
They may be company specific or they may be relating to industry or economic average. Common size statement : Under common size statement method individual items of profit and loss account and balance sheet are reduced to a common base which is equivalent to hundred. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 16 . Trend Analysis- Emphasize on changes in the financial and operational data from year to year with the help of the trend analysis statement it is possible to identify the areas in which the organization has achieved improvement over the years. Ratio Analysis- The essence of ratio analysis is the linking of significant items of accounting data to each other to compute a ratio and comparing ratio with yardstick. in these statements each percentage will have a relative significance to its respective total. These statements are use full in comparative analysis of the data. They are useful in that a position and simplify on explanation of complicated statement by its expressions in one figure.found out. The two financial statements that are Balance sheet and profit and loss account are used for comparison.
Fund flow statement- Flow of funds means change in the amount of fund and net working capital either increase or decreased of working capital. Cash flow statement: It refers to which defects the change in the cash position and a concerned between one balance sheet data and another is know as cash flow statement. Increase in working capital leads to sources of fund and decreased in working capital is application of fund. Definition: According to “Robert Anthony. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 17 . The fund flow statement described the source flow which additional finds were derived and cases which these funds were put”.
Difference between FFS AND CFS Fund flow statement is based on working capital where as cash flow statement is based on cash position. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 18 . Cash flow statement difference the change in cash position of enterprise between two balance sheets where as fund flow statement defects the changes in working capital position of enterprises between two balance sheets. Cash flow statement deals with the inflow and outflow of only cash where as fund flow statement deals with all items of the working capital. Cash flow statement is only supplementary statement where as fund flow statement is main statement . Cash flow statement is useful short-term financial analysis taking where as fund flow statement useful to long period.
BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 19 . but can certainly provide for the losses of risk. Insurance cannot check the happening of risk.REVIEW OF LITERATURE & RESEARCH DESIGN INTRODUCTION The story of insurance is probably as old as the story of mankind. accidents and uncertainty. Collective bearing of risk: Insurance is an instrument to share the financial loss of few among many others. by sharing the risk with others. Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. They sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Insurance is actually a protection against economic loss. Insurance is a mean by which few losses are shared among larger number of people. Functions of insurance: Provide Protection: The primary function of insurance is to provide protection against future risk. particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years as per records. Tendency of a human being to secure themselves against loss and disaster has been from the starting of world. Risk is the basis for determining the premium rate also. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid. Though the concept of insurance is largely a development of the recent past.
insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also. Life insurance BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 20 . by paying small amount of premium against larger risks and uncertainty. Insurance is device whereby the uncertain risks may be made more certain Small capital to cover larger risk: Insurance relieves the businessmen from security investments. Risk free trade: Insurance promotes exports insurance. which makes the foreign trade risk free with the help of different types of policies under marine insurance cover. Insurance is divided into two basic zones: 1. Means of savings and investment: Insurance serves as savings and investment. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. Contributes towards the development of industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Source of earning foreign exchange: Insurance is an international business. which helps to change from uncertainty to certainty.Provide certainty: Insurance is a device. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. people invest in insurance. General Insurance 2.
in General Insurance the monopoly of the general Insurance public sector’s companies has been broken. fire. The Non Life Insurers: National Insurance Co. this includes loss of asset against water. Ltd United India Insurance Co. Ltd Bajaj Allianz General Insurance Co. Ltd Royal Sundaram Alliance Insurance Co. General Insurance is a sector which alone has many type of insurance coverage in it like Fire Insurance. Ltd Tata AIG General Insurance Co. Ltd ICICI Lombard General Insurance Co. Ltd Oriental Insurance Co. Liability Insurance. Engineering Insurance etc.GENERAL INSURANCE Insurance of the non life assets are called general insurance. In general insurance Around 17% of the market has been captured by the private players. Ltd Reliance General Insurance Co. With the opening up of the Indian Market in Insurance sector for private players. Ltd IFFCO Tokyo General Insurance Co. Ltd New Indian Assurance Co. With the entrance of the new private player market innovative technique has been introduced to capture the market. motor Insurance. Marine Insurance. earthquake etc. Ltd Bharti Axe General Insurance HDFC Chub BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 21 .
Roles of Life Insurance Life insurance as an investment: Insurance products yield more than any other investment instruments and it also provides added incentives or bonus offered by insurance companies. Importance of Life Insurance BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 22 . the payment for life insurance policy is certain.LIFE INSURANCE Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a premium paid undertakes to pay a fixed sum of money on the death of the insured or on the expiry of a specified period of time. The subject matter of insurance is life of human being. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy. The Event insured against is sure to happen only the time of its happening is not known. So life insurance is known as ‘Life assurance’. Life insurance provides risk coverage to the life of a person. Life insurance as risk cover: Insurance is all about risk cover and protection of life. Life insurance as tax planning: Insurance serves as an excellent tax saving mechanism too. whichever is earlier. In case of life insurance. Insurance provides a unique sense of security that no other form of invest can provide .
Life insurance enables a person to provide for education and marriage of children and for construction of house. Credit worthiness: Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of business. Promotion of savings: Life insurance encourages people to save money compulsorily. Life sense of security in his/her old age.Protection against untimely death: Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely Death. the policyholder gets the surrendered value only after the expiry of duration of the policy. the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums. In case of surrender of policy. Social Security: Life insurance is important for the society as a whole also. . Initiates investments: Life Insurance Corporation encourages and mobilizes the public savings and channelizes the same in various investments for the economic development of the country. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 23 . When life policy is taken. It helps a person to make financial base for future. Life insurance is an important tool for the mobilization and investment of small savings. only surrender value can be returned to him. Saving for old age: After retirement the earning capacity insurance enables a person to enjoy peace of mind and a of a person reduces. The dependents or family members get a fixed sum of money in case of death of the assured.
After this many insurance companies had been started in India. To regulate Indian insurance business first insurance act came in 1912 as life insurance company act and provident fund act. These acts consist of premium rates tables and periodical valuations of companies. First Indian life insurance company came as Bombay mutual life insurance assurance. In 1956 the life insurance business in India was BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 24 . But these companies were looking after only the needs of European community established in India. national Indian and national insurance in Calcutta and the co-operative assurance in Lahore were established in 1906. premium paid is allowed as a deduction from the total income under section 80C. INDIAN INSURANCE INDUSTRY HISTORY: Life insurance came to India from England in 1818 when oriental life insurance company started in Calcutta by Europeans. Second company was Bharat insurance company came in 1896. After this the united India in Madras. Indian people were not being insured by these companies. In the first two decade of 20th century many life insurance companies were started. So the insurance act came in 1938 to governing life and non life insurance companies and to provide strict state control.Tax Benefit: Under the Income Tax Act.
1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. Foreign companies were allowed ownership of up to 26%. In 1957 the business of LIC of sum assured of 200crores. Promoting efficiency in the conduct of insurance business. while ensuring the financial security of the insurance market. The Authority has the power to frame regulations under Section 114A of the Insurance Act. 3. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 25 . Specifying the code of conduct. and 7000crores in 1986. 4. Establishing guidelines for the operations of insurers and brokers. 33 divisional offices and 212 branch offices. 2000. The IRDA opened up the market in August 2000 with the invitation for application for registrations. 1000crores in 1970. In that year LIC had 5 zonal offices. Protecting the interests of policyholders. Role of IRDA 1. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums. the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY: In 1999. The IRDA was incorporated as a statutory body in April. qualifications and training for insurance intermediaries and agents. In 1956 life insurance corporation of India (LIC) was created to spreading life insurance much more widely particularly in rural areas. 2.nationalized.
All that got changed with passage of IRDA act in 1999. 6. New insurance companies have come into existence leading to open competition and hence better products for customers. There are not ready to accept any product. Specifying the percentage of business to be written by insurers in rural sectors. Regulating the investment of funds by insurance companies. Indian consumers were at receiving end.5. Changing perception of Indian customers: Indian Insurance consumers are like Indian Voters. For historical years. that is given to them. should that product is not serving the purpose. Indian customers have become very sensitive to Coverage / Premium as well as the Products (read Risk Solution). Insurance Product was underwritten and was practically forced onto consumers on a “Take-it-As-it-basis”. they demand and seek necessary changes. The new products are constantly being demanded BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 26 . no matter even if that is coming from the market leader. they are soft but when time is right and ripe. Handling disputes between insurers and insurance intermediaries. De-tariff of many Insurance Products are the reflection of changing aspirations and growing demand of Indian consumers. A case in point is ULIP product / Group Life and Credit Life in Life Insurance segment and Travel / Family Floater Health and Liability Insurance in the Non-life segment are new age Avatar.
They would not accept any type of insurance product unless it fulfills their requirements and needs. Another good reason why we are seeing quick changes in the buying behavior of Insurance from mere Investment to risk mitigation is the cost of Replacement of Goods (ROG) or Cost of Services (COS). Now Indian customers are aware of insurance industry and insurance products provided by companies. BANKS SHARES AND DEBENTURES MUTUAL FUNDS NBFC’S GOVT. The Indian customer’s forms the pivot of each company’s strategy. Customers are looking at Insurance for covering Pure Risk now which I have covered in my next section. In historic day’s customers looking at insurance products as a life cover which can provide security against any unacceptable events. but now customers look at insurance products as an investment as well as life cover. which is putting huge pressures on Insurance companies (Read Risk Under-writers) and Brokers to respond. So today’s customers wants good return from the insurance companies.by Indian consumers. They have become more sensitive. BONDS INSURANCE PF/ RETIRE FUNDS 39 2 1 2 3 13 13 21 BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 27 . Investment of Indian household savings (as a % in different sector) BANK DEPOSITS CORP.
bonds. Previously there was a monopoly business for Life Insurance Corporation of India (L.insurance market is the target market of all the companies who either want to extend or diversify their business.I. These companies have every aspects and needs of our life covered along with the death-benefit. People are demanding for higher returns with the life risk cover and private companies are giving 30. giving birth and rearing up a child. Everyone is trying to capture the fresh market here and penetrate it with aggressive marketing strategies. still holds 71. These life-insurance companies have every kind of policies suiting every need right from financial needs of. L. meeting daily financial needs of life. his education.40% average growth per annum. Today life-insurance is not only limited up to just life risk cover and maturity period bonuses but changed to greater return from the investments. But after the introduction of private life insurance companies there is a great competition in Indian market now.C.4% of the market share in 2006.com 6 Changing face of Indian insurance industry: After the Insurance Regulatory and Development Authority Act have been passed there has been establishment of many private insurance companies in India.CURRENCY Source: www. pension solutions after retirement. So Indian life. debentures.avivaindia.C.I. To tap the Indian market there has been tie-ups between the major Indian companies with other International insurance companies to start up their business.) who was the only life-insurance company for the people till 2000. government and other securities. In India only 25% of the population has life insurance. marriage. The BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 28 . With the introduction of the unit linked insurance policies these companies are investing the money in different investment instruments like shares.
Penetration of life insurance is beginning to cut across socio-economic classes and attract people who have never purchased insurance before. Several of private insurers have introduced attractive products to meet the needs of their target customers and in line with their business objectives. A wide range of products. Indian insurance industry can be featured by: 1. the Indian life insurance industry has more than a dozen private players. each of which are making strides in raising awareness levels. 5. Application of information technology for business.government of India has set up rules that no foreign insurance company can set up their business here and they have to tie up with an Indian company and this foreign insurance company can have an investment of only 24% of the total start-up investment. and the Indian customer’s forms the pivot of each company’s strategy. Rebate from government in the form of tax incentives to be insured. introducing innovative products and increasing the penetration of life insurance in the vastly underinsured country. 2. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 29 . 4. 3. Ever growing Low middle class component in population. Market penetration. Growth of customer’s interest with an increasing demand for better Insurance products. Today. 6. customer focused service and professional advice has become the mainstay of the industry. The biggest beneficiary of the competition among life insurers has been the customer. The success of their effort is that they have captured over 28% of premium income in five years.
This provides market linked returns and is among the most flexible policies available today for investment. 3. Whatever the developments. Now products are priced. 9. The number of companies in Insurance particularly in Life Insurance has changed drastically . flexible. Apart from the traditional term and saving insurance policies. 10. 4. 12. 6. ICICI Prudential Life Insurance TATA AIG Life Insurance Max New York Life Insurance AVIVA Life Insurance Bharti AXA Life Insurance Kotak Mahindra Life Insurance Reliance Life Insurance SBI Life Insurance HDFC Standard Life Insurance Birla Sun Life Insurance Sahara Life Insurance ING Visya Life Insurance And so on… Increasing growth since liberalization: BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 30 . and realistic and Sustain people in better position to understand the risk and benefits of the product and they are accepting these innovative products.Life insurance is also now being regarded as a versatile financial planning tool. 5. 7. 8. the future and the opportunities in this industry will surely be exciting. List of them are mentioned as below: 1. industry has seen the entry and growth of unit linked products. So it is clear that the face of life insurance in India is changing. 11. 2. but with the changes come a host of challenges and it is only the credible players with a long term vision and a robust business strategy that will survive.
resulting in decrease in insurance policies BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 31 . insurers increasingly are pressured by the demands of their clients.YEAR FY 03 FY 04 FY 05 FY 06 FY 07 LIC (in billion Rs. Further deregulation of the market. Cost effective operations. Convergence of financial services. 9. Newer products and services. while demand did not develop at the same pace. Technology driven shift in product design. Restructuring of the public sector. 5. Competition and quality consciousness. Actual operations and distribution. Consolidation of domestic insurance markets. 4. GLOBAL INSURANCE INDUSTRY Globally.) 110 120 130 140 240 PRIVATE PLAYER 10 20 40 60 160 Possibilities for insurance companies in India: 1. 6. 8. 2. The development of global insurance industry over the past few years was influenced by booming stock markets which enabled considerable capital gains to be made in non life business. 7. Increase in insurers equity capital increased underwriting capacity. 10. 3. Greater concern for the customers.
$1521. insurance companies face a dynamic global environment. Insurance companies have collected $2443. Dramatic changes are taking place owing to the internationalization of activities. new types of covers to match with new risk situations. changing customers needs. The US accounted for 35% of global life and non life premium. Lot of mergers and acquisition are taking place in the insurance world. technological improvement has resulted in pressures on a few economic parameters. Low growth rates in developed markets.prices. The stock market boom of the past few years led to demand for unit linked insurance products.7 as non life insurance premium. and the uncertain economic conditions in the developing world are exerting pressure on insurer’s resources and testing their ability to survive. Most of the markets are undergoing globalization. Japan had global share of 21%. and UK was having 10% of global share. Influence on Indian Insurance Industry In this era of globalization. The global insurance industry is growing at rapid pace. Global insurance market is increasing by an average of six percent per year since 1990. appearance of new risk. and unconventional and innovative ideas on customer services. The world insurance industry is at peak of its globalization process. The rapidity in the industry. Now the existing insurers are facing difficulties from non-traditional competitors those are entering the retail market with new approaches and through new channels BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 32 .7 billion premium worldwide according to the global development of premium volume in 144 countries in 2005.3 has been generated as life insurance premium and $922.
It is a highly specialized technical business and customer is the most concern people in this business. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 33 .indianinsuranceresearch. therefore this business is able to spur the growth of infrastructure and act as a catalyst in the overall development of Indian economy. Life Insurance Penetration as a % of GDP United Kingdom Japan Korea United States Malaysia India China Brazil 8.8 1.3 7.3 4. Business of insurance with its unique features has a special place in Indian economy .com INSURANCE AND ECONOMY Indian economy is growing in reference to global market.9 8.0 1.1 3. This shows the attraction that the Indian market holds for foreign insurers who have been putting pressure on developing countries as well as on India to open up its market.3 Source: www.6 3.India has a rapidly growing middle class and this section can afford to buy insurance products.
Insurance is a type of savings. facilitate investment. Insurance and economic growth mutually influences each other. This explains the current scenario of mergers. they also cover service industries. as the economics widens the demand for new types of insurance products emerges. and with system wide risks balanced out. In fact. Risk is inherent in all economic activities. and protect economic entities against external risk. Insurance is no longer confined to product markets. profits improve. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 34 . It can be serving as an essential service which a welfare state must make available to its people. the living standards of people increase. the demand for general insurance also increases. to mobilize and distribute savings for productive use. allowing a lowering of the rates of the premium to be charged and in turn. acquisitions. some of these activities will not be carried out at all. As a consequence. raising profits. As the assets of people and of business enterprises increase in the growth process. Insurance play a crucial role in the commercial lives of nations and act as the lubricants of economic activities. A well-developed insurance sector promotes economic growth by encouraging risk-taking. but also for savings and for providing security. Without some kind of cover against risk. When there is a bigger base. There is thus a mutually beneficial interaction between insurance and economic growth. It is equally true that growth itself is facilitated by insurance. the probabilities become more predictable. Insurance is not only important for tax benefits. support and encourage external trade. As the economy grows. Insurance firms help to spread the potentially financial consequences of risk among the large number of entities.The high volumes in the insurance business help spread risk wider. the demand for life insurance increases. Also insurance and more particularly life insurance is a mobilize of long term savings and life insurance companies are thus able to support infrastructure projects which require long term funds. and globalization of insurance.
Through Underwriting. while the problems of life or of conduct at least. it would completely negate entrepreneurship. At this point. In the case of insurable risks.The low income levels of the vast majority of population have been one of the factors inhibiting a faster growth of insurance in India. it is important to note that not all activities can be insured. The real management challenges are uninsurable risks. FUNCTIONING OF INSURANCE INDUSTRY Insurer’s Business Model : Profit = Earned Premium + Investment Income –Incurred Loss –Underwriting expenses Insurers make money in two ways: 1. The average rate of growth of the economy in the last three years was 8. If that were possible. According to him. This is as true of business as of other spheres of activity”. and a world of uncertainty. He made a distinction between quantifiable risk and non-quantifiable risk. We live only by knowing something about the future. and BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 35 . He wrote “It is a world of change in which we live. To some extent this is also compounded by certain attitudes to life. risk is avoided at a cost. it is non. the processes by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks.quantifiable risk that leads to profit.1 per cent. Professor Frank Knight in his celebrated book “Risk Uncertainty and Profit” emphasized that profit is a consequence of uncertainty. arise from the fact that we know so little. This strong growth will bring about significant changes in the insurance industry. The economy has moved on to a higher growth path.
Upon termination of a given policy. the “float” method is difficult to carry out in an economically depressed period. at hand at any given moment that an insurer has collected in insurance premiums but has not been paid out in claims. The most difficult aspect of the insurance business is the underwriting of policies. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. insurers predict the likelihood that a claim will be made against their policies and price products accordingly. and these scientific principles are used to determine an insurer's overall exposure. A combined ratio of less than 100 percent indicates underwriting profitability. The loss ratio(incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Naturally. “Float” or available reserve is the amount of money. while anything over 100 indicates an underwriting loss.2. Using a wide assortment of data. The combined ratio is a reflection of the company's overall underwriting profitability. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. Insurance companies also earn investment profits on “float”. Actuarial science uses statistics and probability to analyze the risks associated with the range of area covered. By investing the premiums they collect from insured. Bear markets do cause insurers to shift away from investments and to toughen up BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 36 . To this end. the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy An insurer's underwriting performance is measured in its combined ratio.
whereas today the focus has shifted to fund management. Finally. and have traditionally viewed as secondary to underwriting. Investment Management : Investment operations are often considered incidental to the business of insurance. In life insurance. claims and loss handling is the materialized utility of insurance. Insurance companies are Among the largest institutional investors in the world. Returns on investments influence the premium rates and bonuses and hence investment income will continue to be an important component of insurance company profits. In managing the claims-handling function. skilful and careful management of funds. These funds arise out of policyholder funds in the case of life insurance. administrative handling expenses. In non life insurance BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 37 . So a poor economy generally means high insurance premiums. insurers seek to balance the elements of customer satisfaction. Assets managed by insurance companies are estimated to account for over 40% of the world’s top ten asset managers.their underwriting standards. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. Time lag between the procurement of premium and the payment of claim provides an interval during which the funds can be deployed to generate income. In the past risk management was the most important part of business. Investment income is a large component of insurance revenues. benefits from insurance profits accrue directly to policy holders when it is passed on to him in the form of a bonus. Insurance is a business of large numbers and generates huge amount of funds over time. and technical and free reserves in the non-life segments. and claims overpayment leakages.
Insurance premium collected is converted in a pool of fund then divided in to four expenses. In the case of insurance. • • • Revenue = Premium Expenses = (Sum of Claims + Commission payable on procurement of business + Operating expenses) Operating Surplus = (Revenue – Expenses) Net investment income includes income from trading in and holding stock market securities including government securities.certain requirements usually must be fulfilled before a pure risk can be privately insured . Investment income has to compensate for underwriting results which are increasingly under pressure. the difference between revenue and the expenses is known as operating surplus. To pay the expenses of the management To pay agency commission To pay for the claims Surplus money will be invested in govt. there are ideally six requirement of an insurable risk: BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 38 .However. securities Requirements of an insurance risk Insurance normally insure only pure risks . special deposits with the central government.the benefits are indirect and mostly by the creation of an investment portfolio.From the view point of the insurer. not all pure risk is insurable . loans to several public utilities and service providers in state government.
Both parties win if the loss does occur .the risk of fire is already present and is transferred to the insurer by a contract.There are two important differences between them First . Insurance and Hedging compared BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 39 . The loss should not be catastrophic The chance of loss must be calculable The premium must be economically feasible Comparison of Insurance with other Similar Factors 1. because the winner’s gain comes at the expense of the loser . gambling creates a new speculative risk . consistent gambling transaction generally never restore the losers to their former financial position. There must be a large number of exposure units 2. The insurer and the insured have a common interest in the prevention of a loss.Moreover. The second difference between insurance and gambling is that gambling is socially unproductive.but if you pay Rs 300 to an insurer for fire insurance .1. The loss must be determinable and measurable 4. No new risk is created by the transaction. 2. The loss must be accidental and unintentional 3.thus . In contract insurance contracts restore the insured’s financially in whole or in part if a loss occurs .a new speculative technique is created . insurance is always socially productive.In contract.while insurance is a technique for handling an already existing pure risk . Insurance and Gambling compared Insurance is often erroneously confused with gambling .if you bet Rs 300 on a horse . because neither the insurer nor the insured is placed in a position where the gain of the winner comes at the expense of the loser.
thus.Although both technique are similar in that risk is transferred by a contract.An insurance contract.The concept of hedging is to transferring the risk to the speculator through purchase of future contracts . In contract. because the relative variation of actual loss from expected loss will decline . because the requirement of an insurable risk generally can be met . hedging typically involves only risk transfer. As the number of exposure units increases. A second difference between insurance and hedging is that insurance and hedging is that insurance can reduce the objective risk of an insurer by application of the law of large numbers. the insurer’s prediction of future losses improves.However.such as protection against a decline in the price agriculture products and raw materials. First. however. is not the same thing as hedging . many insurance transactions reduce objective risk. and prediction of loss generally is not based on the law of large numbers. not risk reduction . Various types of life insurance policies: BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 40 . and no new risk is created. hedging is a technique for handling risks that are typically uninsurable . not reduced.The risk of adverse price fluctuation is transferred because of superior knowledge of market conditions The risk is transferred. an insurance transaction involves the transfer of insurable risks. there are some important difference between them.
Endowment policies : This type of policy covers risk for a specified period. professionals. Sum assured is payable on the first death and again on the death of survival during the term of the policy. Joint life insurance policies: These policies are similar to endowment policies in maturity benefits and risk cover. No surrender. and at the end of the maturity sum assured is paid back to policyholder with the bonuses during the term of the policy. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 41 . loan or paid up values are in such policies. If the policy holder survives the term. Money back policies: This type of policy is for periodic payments of partial survival benefits during the term of the policy as long as the policy holder is alive. but joint life policies cover two lives simultaneously such as married couples. Group insurance: This type of insurance offers life insurance protection under group policies to various groups such as employers employees. Whole life insurance policies: This type of policy runs as long as the policyholder is alive and is covered for the entire life of the policyholder. risk cover comes to an end. These types of policies are for those people who are unable to pay larger premium required for endowment and whole life policies. Term life insurance policies: This type of insurance covers risk only during the selected term period. In this policy the insured amount and the bonus is payable only to nominee on the death of policy holder. cooperatives etc it also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost.
The Touch point with the ultimate customer is the distributor or the producer and the role played by them in insurance markets is critical. It is the distributor who makes the difference in terms of the quality of advice for choice of product.Building faith about company in the mind of clients. Building personal credibility with the clients. servicing of policy post sale and settlement of claims. In today's scenario. It offers a guaranteed income either for a life or certain period. Unit linked insurance plan: ULIP is a kind of insurance plan which provides life cover as well as return on premium paid over a certain period of time. The distributors have to become trusted financial advisors for the clients and trusted business associates for the insurance Companies. In the Indian market. with their distinct cultural and social ethics. DISTRIBUTION OF INSURANCE PRODUCTS Insurance has to be sold the world over. these conditions will play a major role in shaping the distribution channels and their effectiveness. insurance companies must move from selling insurance to marketing an essential financial product. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 42 . Challenges for insurance companies and intermediaries in India.Pension plan: a pension plan or annuity is an investment over a certain number of years but does not provide any life insurance cover. The investment is denoted as units and represented by the value called as net asset value (NAV).
The public and private sector insurance companies have their branches in almost all parts of the country and have attracted local people to become their agents. Each of the markets requires a different approach. Different multi-distribution channels in India are as follows: Agents: Agents are the primary channel for distribution of insurance. every new company is the same. and himself to the customer. Apart from geographical spread the socio. Banks: Banks in India are all pervasive. Indian insurance market is a combination of multiple markets. exhibiting different traits and needs. are helpful to insurance companies. and also know his competitor's products to be an effective salesman who can sell his company.Different distribution channels in India: A multi-channel strategy is better suited for the Indian market. Companies which are bank owned. Today's insurance agent has to know which product will appeal to the customer. the product. The public sector banks. Perceptions about the public sector companies are also cemented in his mind.cultural and economic segmentation of the market is very wide. This channel of selling insurance is known as Bank assurance. with their vast branch networks. especially the public sector banks. Many insurance companies are selling their products through banks. So an insurance agent can play an important role to create a good image of company. To the average customer. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 43 . they are selling their products through their parent bank.
Bank of Rajasthan. They are taking some underwriting charges from the insurance companies to sell their insurance products. South Indian Bank. Punjab and Maharashtra Cooperative Bank State Bank of India Deutsche Bank. Khaitan’s Williamson major and bridge foundation for selling rural policies. Such as. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 44 . Insurance industry. Federal Bank. 2007 Brokers: Now a day’s different financial institution are selling insurance. during the past 2 years has witnessed a number of such strategic tie-ups and alliances. Canara Bank HDFC Bank. Internet: In this technological world internet is also a channel of selling insurance. This can be as direct marketing. Andhra Bank Vysya Bank ABN Amro Bank. Allahabad Bank. Citibank. Citibank. Insurance companies’ tie-up with business houses in other industries to sell insurance either to their employees or their customers. January 08. Corporate agents have become a major force to reckon with in distributing insurance products. Indian Bank Karnataka Bank. Bank of India. Corporate agents: Corporate agency is a cross selling type of channel. Union Bank.Bajaj Allianz tied up with Maruti Udyog and Ford for auto insurance and Tata AIG life has tied up with Tata tea.INSURANCE COMPANY ICICI Prudential ASSOCIATE BANKS ICICI Bank. J&K Bank SBI Life Birla Sun Life ING Vysya Bank Aviva Life Insurance HDFC Standard Life Met Life Source: Hindu Business Line. These financial institutions are known as brokers.
but at integrated financial solutions that can offer stability of returns along with total protection. the insurance managers need to understand more about the details that go into the introduction of insurance products to make it attractive in this competitive market. 2. 2. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 45 . Growth in population. marketing and human resource polices of the corporations influence the unit mangers to make decisions. People are increasingly looking not just at products. 9. 7. Effective pricing. Financial. The following factors influence the market and demand of product1. 4. The importance of relationship. and flexibility. Customer satisfaction research. 5. Marketing mix. So now days an insurance manager requires leadership. Positioning. "Every family in every village in the country should feel safe and secure". Branding. Segmentation. This vision alone will help to bring the new ideas to the insurance manager. In view of this. Insuring service quality. commitment. creativity. 8. The growth of insurance sector is governed largely by factors external to it. 3. Performance of insurance company 1.EFFECTIVE MARKETING STRATEGIES FOR INSURANCE PRODUCTS Now the Indian consumer is knowledgeable and sensitive. Government policies. Consumers are increasingly more aware and are actively managing their financial affairs. 6. Value addition.
3. Level of insurance awareness. 7. Changing age profile. which involve a heavy investment in developing relationships with policyholders. 5. risk management advice. Different companies adopt different approaches in their marketing strategies. Income wise distribution of the population. Expected product: Because of competition customers start to expect more from an insurance product. An insurance product can be classified into three phases: Core product: In insurance industry the core product is the policy that provides protection to the customers. The aversion to risk. the effort should be tie clients to the company by customized combination of coverage. One approach is focus upon product quality which can give confidence in the mind of customers that they are offered by best featured products. easy payment plans. By providing instruction manual with the policy BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 46 . Under this approach customer can expect a range of products and service offered to him. such as1.Brand 2. and convenient and quick claim handling. Social and political features of the country. The economic climate of the country. Then insurance companies provide some tangible attributes in their product to differentiate from competitors. 6. Growth scenario in the world.Some additional features in existing product 3. 9. Third approach is market segmentation under which the population can be divided into several homogeneous products and groups. 8. The pricing of the policies. 10. 4. And other approach is focusing on customer’s needs.
4. Branches in different places for customers. The entry of private players and their foreign partners has given domestic players a tough time. Utmost care is being taken to maximize customer satisfaction. Payment option convenient to customers. through conducting research and analysis. Success of an insurance company depends on four important functions: Identification of markets: Identification of markets means need to understand the trends in culture and businesses constantly. because the opening up of the sector has not brought in only foreign players. But the most important gift of privatization is the introduction of customer.oriented services. Insurance companies can take this job on their own or assign it to an external agency. but also professional techniques and technologies. 3. There are marketing strategies more for survival than growth. Relying on an external agency can be risky due to the questionable loyalty of the agents.Augmented product : An insurance company can provide different types of services to differentiate their products1. The present scene in India is such that everyone is trying to put in the best efforts. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 47 . 2. Customer complaint management. Post sales services.
Well trained. Estimating potential for specific products within local markets. Identifying high opportunity areas. 3. growth rate in earnings or turnover. Allocating marketing strategies against market potential. increase in number of branches and divisions etc. Efforts of the company as a whole and that of the divisions and branches are assessed to measure the effectiveness. Penetration into and exploitation of markets: Market penetration or exploitation of a company can be identified with the growth in number of policies in each type of insurance. Optimizing your agency network against market potential. 2. 4. machines. company’s market share. 5. and materials at each level of the organization provides measures of efficiency of a unit as well as the organization.Assessment of risks (of the insured and the insurance corporation) and estimation of losses: Efficiency of actuaries and assessors of the insurance policies in fixing premiums and settling claims is foremost an important area for achieving overall efficiency in operations. experienced and expert hands are needed for the operations. Investment control and expense control are dealt separately and the effectiveness of management’s’ decisions at various levels is to be assessed separately. To find best prospects: 1. Attributes to develop marketing strategies : BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 48 . The quality of assessing the risk and estimation of losses has the largest claim on the performance of an insurance company. Measuring agency performance relative to market potential. Control over investment and operating costs: Control over resources such as men.
. 3. Promoting company towards its position to improve Developing the financial status of company. learning about products and purchase channels. HYPOTHESIS 1. 4. Learn how to find a proper perspective and how to turn off all the signals that cause people not to buy from you. 3. and with which company the current policy is held. Effective Strategies for Insurance Agents: 1. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 49 . Analyzing the annual report of the company. 2. 5. number of annuities owned. Consumption data: .Useful to know future buying preferences. Learn how the order in which you explain the types of policies can double your income.Useful to evaluate annual premiums. 2. Analyzing the financial position of company. value of annuities. Channel data: . 6. Learn how to get and set more appointments. 3. Learn how to construct a mental image for success. Learn how to act when you meet a client for the first time. 2. Consumer attitudes. Learn how to convert a new lead into sales.1.
news papers.RESEARCH DESIGN Research was initiated by examining the secondary data to gain insight into the problem. Auto loan providers were personally visited and interviewed. generates specific and to the point information. The secondary data was collected on the basis of organizational file. Chartered Accountants. preserved information in the company’s database and website of the company. Insurance Agents. both the types of questions has been used. easier to tabulate and interpret. A structured questionnaire was framed as it is less time consuming. The primary data is evaluated on the basis of the analysis of the secondary data. DEVELOPING THE RESEARCH PLAN The data for this research project has been collected through self administration. official records. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 50 . The method of collection of primary data was direct personal interview through a structured questionnaire. In questionnaires open ended and closed ended. COLLECTION OF DATA Secondary Data: It was collected from internal sources. magazines. management books. Moreover respondents prefer to give direct answers. Tax Consultants. Primary data: Individual respondents. They were the main source of Primary data. Due to time limitation and other constraints direct personal interview method is used.
Business Men. I have prepared the questionnaire according to the necessity of the data to be collected. selected randomly from different areas in Jaipur. Government Offices. Primary data collection is based on personal interview.SAMPLING PLAN Since it is not possible to study whole population. Research Instrument: Structured Questionnaire 4. it is necessary to obtain representative samples from the population to understand its characteristics. 1. Tax Consultants. Sample Technique: Random Sampling 3. Lawyers. Professionals and House Wives of Jaipur for recruitment of Life Insurance Advisors 2. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 51 . like various shopping malls and markets. Sampling Units: Individual respondents for studying Customer Buying Behavior and Market Segmentation. Chartered Accountants. Contact Method: Personal Interview SAMPLE SIZE Study of Customer Buying Behaviour and Market Segmentation: 100 respondents Recruitment of Life Insurance Advisors for Kotak Life Insurance: 200 respondents DATA COLLECTION INSTRUMENT DEVELOPMENT The mode of collection of data is based on Survey Method and Field Activity.
Conduct market survey on a sample selected from the entire population and derive opinion on that research.. Proper understanding and analysis of life insurance industry. 2. SCOPE & OBJECTIVE OF THE STUDY The objectives of the present study are as following : 1. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. The research is confined to certain parts of Jaipur and does not necessarily show a pattern applicable to all of country. To help company in establishing a network of Life Insurance Advisors and to promote the benefits those are provided by Kotak Life Insurance to its Life Insurance Advisors. . 4. 2. 5. To offer suggestions based upon findings.RESEARCH LIMITATIONS 1. 3. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 52 . To know about brand awareness of Kotak Life Insurance and customer’s preference about Kotak Life Insurance.
only few of them were taken in to account. they are follows: 1. As this study is related to the financial aspects the union could not revel all the information. It is only the study of interim reports. Constraints of time due to busy schedule of organizational Personnel. The study no doubt with relation to objective. some data were confidential. 2. Due to time constraints. all the ratios could not be calculated.LIMITATIONS Through the study displays all most all relevant data. 3. Discussion about the project could be conducted only with a few officials due to time constraints face by them. 7. it suffers from some inherent limitations. but it does not give complete and total accuracy of findings. Analysis and interpretation of the report is purely based on the manual provided by the finance department BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 53 . 4. 6. 5.
CHAPTER SCHEME Introduction It introduces the reader to the influencing introduction about investment analysis. Research Design This part explains about the modes of operations of the research work. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 54 . in relation to its Interpretation Data Analysis It introduces the reader to the subject of total analysis and interpretation towards KOTAK Annual Reports and financial position of the company. Company Profile The background of the company and its significance in the financial analysis in world.
and insurance part of their business came into existence in the year 2001. Evolution of Insurance business in Kotak Mahindra business is like this:YEAR 1985 1986 1990 1991 1992 1995 1997 1998 2001 SIGNIFICANT CHANGES BUSINESS DEVELOPMENT Trade Finance Corporate Finance Car Finance Investment Banking Brokerage and Distribution Commercial Vehicle Consumer Finance Mutual Fund Life Insurance Goldman Sachs Ford Credit Old Mutual Plc 2003 Bank KMOM.The Partnership and Lineage A 26% .COMPANY PROFILE (About Kotak Mahindra Old Mutual Life Insurance) Kotak Mahindra is in business since 1985 as a partnership between Uday Kotak and Mr. Mahindra.74% Joint Venture Between BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 55 .
A FTSE 100 financial services group and Ranks as a Fortune Global 500 company.As stated above Kotak Mahindra Life Insurance has Joint venture with Old Mutual plc. It has its base of over 4 million life assurance policyholders. Features of Kotak Mahindra and Old Mutual plc at a glance: KOTAK MAHINDRA Brand Equity Branch Network Entrepreneur Employees Knowledge of Indian Market Access to customer base Distribution Associates Multi Channel Working System OLD MUTUAL Domain Knowledge Technology Product Innovation Training Expertise Global Perspectives System and Process BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 56 . The company is 160 years old and has prominent presence in the United States and the United Kingdom. It has one of the best “Solvency Ratios” among insurers in the world. The Old Mutual group manages in excess of 239 billion pounds in funds (Dec’06). Now the question arises that why for the business in India of life insurance Kotak Mahindra chose Old Mutual plc and vice versa. Old Mutual Plc is the 12th largest Insurance Company in the world. It has one of the best “Payouts” among insurers in the world.
Kotak Premium Return Plan Unit Linked Plans i. Kotak Capital Multiplier Plan v. ii. Term Assurance Plan Kotak Preferred Term Plan Endowment Plans i.PRODUCTS Term Plans i. Kotak Endowment Plan ii. iii. ii. Kotak Money Back Plan iii. iv. Kotak Retirement Income Plan (Unit Linked) Kotak Safe Investment Plan II Kotak Flexi Plan Kotak Easy Growth Plan Kotak Privilege Assurance Plan Group BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 57 . Kotak Child Advantage Plan iv. Kotak Retirement Income Plan vi. v.
Kotak Term Group Plan Rural i. iv.56 7.31 1.23 1. Employee Benefits ii.35 2.89 1.14 1.29 1.03 BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 58 .i.79 0.40 0. Kotak Credit-Term Group Plan Kotak Complete Cover Group Plan Kotak Gratuity Group Plan Kotak Superannuation Group Plan Kotak Gramin Bima Yojna If we look at the status of Kotak Life Insurance’s market share in comparison of other private company in comparison of premium earned:- No.11 0. ii. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 INSURER Bajaj Allianz ICICI Prudential HDFC Standard Life SBI Life Birla Sun Life Tata AIG Max New York Aviva Kotak Mahindra Old Mutual ING Vysya Reliance Life Met Life Sahara Life Shri ram Life Market Share (%) 7.87 2. iii.06 0.54 0.
the data will reflect:- Structure of Kotak Life Insurance Director: GAURANG SHAH CFO: G.MURALIDHAR Managing Vice President (Training and Management Development): ARUN PATIL Vice President (HR): SUGATTA DUTTA Vice President (Distribution Development and Planning): KAMLESH VORA Appointed Actuary: JOHN BRYCE BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 59 .If we talk the growth of Insurance industry’s private players in recent years.
HIERARCHY OF KOTAK LIFE INSURANCE LIMITED BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 60 .
DATA VALIDATION COSTOMER BUYING BEHAVIOUR & MARKET SEGMENTATION FORLIFE INSURANCE PRODUCTS DATA ANALYSIS The data of the collection is reduced to workable size . and it is interpreted and conclusions are drawn. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 61 . Finally recommendations shall be made based on this. Table showing insured & uninsured respondent in the company From the above table 33% of respondents are insured and 67% of respondents are uninsured for investment in policies.The data then it is analyzed using various statistical tools.
DATA ANALYSIS BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 62 .2.
2%gives to KOTAK & 1%gives to RELIANCE LIFE.From the above table 66% of respondents give more preference to LIC insurance company. DATA ANALYSIS BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 63 .11% gives to ICICI PRUDENTIAL.6%gives to HDFC standard life. 3.5%gives to TATA AIG.9%gives to SBI LIFE.
4% for whole life & 1% for whole life.20% for less than 5years. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 64 . 4.From the above table 58% of respondents want to invest for 10-20years.17% for 5-10 years.
From the above table 47% perception of respondents are comprehensive investment & risk coverage instrument,34% wants to cover future uncertainty,13% are for investment purpose & 6% are for tax savings.
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From the above table there are some features of insurance policy that attracts respondents,37% are attracted by companies credibility,30%attracted by large risk coverage,15% are attracted by money back guarantee,11% are attracted by low premium & 7% are attracted by easy access to agent.
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From the above table it shows the buying preference of the respondents,55% insurance company/agent approaching the customer & 45% customer approaching insurance com[any/agent.
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7. 73% are aware about this.& 27% are not aware about. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 68 . DATA ANALYSIS From the above table it shows the awareness about kotak life insurance.
BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 69 .8. DATA ANALYSIS From the above table it shows that 85% of the respondents are willing to be associated with kotak life insurance & 15% are not willing to this.
35% wants weekends and holidays & 24% cannot commit specific time schedule. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 70 . 41% wants few hours daily.9. DATA ANALYSIS From the above table it shows the time commitment of willing respondents for kotak life insurance.
through advertisement and through walk-in interviews. 2. Networking is needed to be made broad as the number of branches with Kotak Life Insurance is only 75 and only 7 states are touched by the company so. Better service quality. They must also recruit them though placement agencies on trial basis. State and Central Government employees should be targeted because of reasons like: They don’t have Life Insurance cover other than that provided by their respective employers and LIC. . 3. . Better service quality may be in the form: BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 71 . 6. 5. has to be made because there were respondents who haven’t even heard about Kotak Life Insurance. Most of them are underinsured. hoardings and signage etc.Kotak Life Insurance must build its reputation by focusing on service quality. 4. Awareness camp for sub-urban area should be focused.Kodak Life Insurance recruits its advisors mainly through personal reference. there is a huge untapped market available for Kotak Life. Marketing in terms of the media via advertisements on Television to small commercials on FM. They have a stable source of income and social security.FINDINGS 1.
Making customers aware about their status of policy BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 72 .Issuing policy in time. Providing claims in time.
especially by smaller companies like Kotak Life Insurance to establish their market presence. Here lies the opportunity for a relatively new comer like Kotak Life Insurance. A high penetration of print. LIC has never been known for prompt service or customer oriented methods but Kotak Life Insurance can build its reputation based on these factors. The general satisfaction levels among public with regards to policy and agents still requires improvement.CONCLUSION During the data collected. Another important trend was in terms of people viewing insurance as a tax saving and investment instrument as much as protective one. radio and TV ad campaigns over the years is beginning to have its impact now. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 73 . People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money People in general have been influenced by the marketing activities of insurance companies. it has been found that people have great awareness about various companies but a lot more has to be done.
and NEWS PAPERS etc.. BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 74 .SUGGESTIONS 1 2 3 4 5 6 Provide more and more training to employees and financial consultants Introduce new life insurance product Open more and more branches as according to the growth of business Increase financial consultant commission and incentives Increase sales promotional activities and advertisement The company can use latest advertisement media like INTERNET.. RADIO. TV.
kotak.kotak. Websites www.com www.BIBLOGRAPHY Text Books Organizational Behaviour .C B Mamoria Insurance in India – Kapoor(page 5to35) Other References Brochures.com www.kotaksecurites.K Ashwathappa Personnel Management .com BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 75 . pamphlets & financial consultants manuals published by KOTAK MAHINDRA LIFE INSURANCE PVT LTD.privatequityfund.investmentkotak.com www.
course from B. I have set aside savings to cover large expenses such as purchasing a home. Agree 3. Disagree 4. Strongly agree 2. Is solicited to complete this project and your information will be kept in confidential. Disagree 4. Name: 2. A.ANNEXURE I AMREEN QURESHI introduce myself as a student of M. Strongly agree 2. Country of residence at present: 4. Agree 3. Agree 3.M. I am more interested in their long-term growth potential: 1. college tuition or financial emergency: 1.I. I do not need a high level of current income from my investments. Disagree BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 76 .S College Bangalore I have completed my project work on “PORTFOLIO ANALYSIS” in your company. Strongly disagree 6. Strongly agree 2. B. Strongly disagree 7. I am concerned about the effects of inflation on my investments: 1. 1. Phone number with country code : 5. Email address: 3.
I am comfortable holding on to an investment even though it declines sharply in value: 1. Strongly disagree 9. For how many years do you plan to stay invested with your investments: 1. Strongly disagree 11. Strongly agree 2. Agree 3. Disagree 4. Disagree 4. Agree 3. Strongly agree 2. Agree 3. Disagree 4. More than 15 2. Agree 3. I am willing to take the risk associated with my investments in order to earn a potential return greater than the rate of inflation: 1. Strongly disagree 10. mutual funds and other types of securities 1. Strongly disagree 12. Strongly disagree 8. Strongly agree 2. Disagree 4. I can tolerate sharp ups and downs in the short-term value of my investments in return for potential long-term gains: 1.4. I consider myself knowledgeable about the risks and potential returns associated with investing in stocks. Less than 5 BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 77 . More than 10 3. Strongly agree 2. More than 5 4.
Between 5 and 10 years 3. Strongly agree 2. Disagree 4. Very unstable 2. Moderately stable 4. How stable is your current income source: 1. Agree 3. In how many years will you withdraw all or the majority of this investment: 1. Moderately unstable 3. I am comfortable with an investment that may take 5 years to provide the returns I expect: 1. Less than 5 years 2. Very stable 15. Strongly disagree 14. More than 20 years ANY SUGGESTIONS BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 78 . Between 11 and 20 years 4.13.
BANGALORE INSTITUTE OF MANAGEMENT STUDIES Page 79 .