GROWTH STRATEGY OF

LIFE INSURANCE COMPANIES /

(WITH SPECIAL REFERENCE TO LIC)
Submitted in p!ti" #u"#i""ment $# t%e !e&ui!ement $#
'(%e"$! $# 'u)ine)) Admini)t!ti$n
O#
MAHARSHI *AYANAN* UNI+ERSITY,
ROHTA-
Submitted './ Submitted T$/
YOGESH -UMAR CHO-EN M! P!m$d Pnd.
Re0n N$1 2234354436
R$"" N$1 2274222558
''A(II) + Seme)te!
0
JAGANNATH INSTITUTE OF MANAGEMENT
SCIENCES
VASANT KUNJ, NEW DELHI-110070
1
*ECLARATION
The matter contained in the project is authenticated and purely based on the
understanding of the subject matter of the project and copied from the any
published source or media or website.
Place: +ASANT -UN9 Y$0e)% -um! C%$:en
Date: 5;/3/5426 Re0n1 N$1 2234354436
ROLL NO1 2274222558
2
CONTENT
1. Acnowledgement !
2. "ntroduction #
!. $esearch %bjecti&e '
#. $esearch (ethodology )
'. "ntroduction of the *ompany +,"*- .
). Products of ,"* 1/
0. 1ision 2 (ission of ,"* !#
/. 3rowth of Pri&ate ,ife "nsurance *ompanies
in the last ' years !'
.. $ole %4 4oreign *ompanies "5 "ndia #2
10. 4indings ##
11. *onclusion ''
12. $ecommendations '/
1!. 6ibliography )0
1#. Anne7ure 8 9uestionnaire )1
!
AC-NOWLE*GEMENT
A lot of effort has gone into this project and my
thans are due to many people with whom " ha&e been
closely associated. 4irst of all: " gratefully acnowledge the
continuous assistance and inspiration gi&en to me by
*ollege 4aculty.
4inally: " would lie to than my family for pro&iding
me monetary and non 8 monetary support: as and when
re;uired: without which this project would not ha&e
completed on time.
#
INTRO*UCTION
"nsurance is a social de&ice where uncertain riss of indi&iduals
may be combined in a group and thus made more certain 8 small
periodic contributions by the indi&iduals pro&ide a found out of
which those who suffer losses may be reimbursed. "n addition to
being a means to protect oneself: the insurance "ndustry is an
efficient conduit for the sa&ing of people to be channelled
towards economic growth. "n "ndia: the "nsurance "ndustry0 is
more than 1'0 years old. Today: it is monopolised by two P<=>s
in their respecti&e fields of life and 3eneral "nsurance. ?owe&er:
with the successful passage "$DA 6ill through both houses of
parliament in December 1... the sector has been opened up to
pri&ate players. This will pro&ided much needed impetus to the
"ndustry and will impro&e the ;uality of ser&ice and products and
will also increase employment opportunities. There are still some
issues their need to be sorted out: particularly with regard to the
status of intermediaries as en&isaged by the "nsurance $egulatory
Authority.
'
RESEARCH O'9ECTI+E
The report gi&es the brief bacground of the sector and proceeds
to highlight the short comings of the e7isting setup and players.
The benefits of liberalised sector are enumerated. The report also
tries to identify the maret potential for insurance products and
the strategy that can be employed to e7ploit the same. The stress
is also gi&en on nowing the awareness le&el of general public.
)
RESEARCH METHO*OLOGY
To conduct the maret research first of all it is necessary to
create a research design. A research design is basically a blue
print of how a research is to be conducted: it may include@
1. *hoosing the approach
2. Determining the types of data needed.
!. ,ocating the source of data.
#. *hoosing a method of data.
RESEARCH *ESIGN
6asically there are ! types of approaches used during the any
research :A
1. B7ploratory.
2. Descripti&e.
!. B7perimental.
During this research *e)(!ipti<e and E=p"$!t$!. approach is
taen into consideration because of the a&ailability of rele&ant
0
information to describe the relationships between the mareting
problem and the a&ailable information.
TYPES OF *ATA USE*1
6oth primary and secondary data is used in the research 8
*t C$""e(ti$n Met%$d)
To conduct the maret research the data is collected by two
source.
SECON*ARY *ATA
<econdary data is one which already e7ist and is collected from
the published sources.
The sources from which secondary data was collected are :
5ewspapers and (agaCines lie Bconomic Times: "nsurance
Times: "nsurance Post.
"nternet
/
PRIMARY *ATA
The primary sources of data refer to the first hand information
Primary data is collected during the sur&ey with the help of
9uestionnaires.
.
INTRO*UCTION OF THE COMPANY
LIFE INSURANCE CORPORATION OF IN*IA (LIC)
,ife "nsurance *orporation of "ndia +,"*- was formed in
<eptember: 1.') by an Act of Parliament: &iC.: ,ife "nsurance
*orporation Act: 1.'): with capital contribution from the
3o&ernment of "ndia. The then 4inance (inister: <hri *.D.
Deshmuh: while piloting the bill: outlined the objecti&es of
,"* thus: to conduct the business with the utmost economy: in
a spirit of trusteeship@ to charge premium no higher than
warranted by strict actuarial considerations@ to in&est the
funds for obtaining ma7imum yield for the policy holders
consistent with safety of the capital@ to render prompt and
efficient ser&ice to policy holders: thereby maing insurance
widely popular.
10
<ince nationalisation: ,"* has built up a &ast networ of 2:0#/
branches: 100 di&isions and 0 Conal offices spread o&er the
country. The ,ife "nsurance *orporation of "ndia also
transacts business abroad and has offices in 4iji: (auritius
and =nited Dingdom. ,"* is associated with joint &entures
abroad in the field of insurance: namely: DenA"ndia Assurance
*ompany ,imited: 5airobi@ =nited %riental Assurance
*ompany ,imited: Duala ,umpur and ,ife "nsurance
*orporation +"nternational- B.*. 6ahrain. The *orporation has
registered a joint &enture company in 2)th December: 2000 in
Dathmandu: 5epal by the name of ,ife "nsurance *orporation
+5epal- ,imited in collaboration with 1ishal 3roup ,imited: a
local industrial 3roup. An offAshore company ,.".*.
+(auritius- %ffAshore ,imited has also been set up in 2001 to
tap the African insurance maret.
Gene!" In)u!n(e/
11
3eneral insurance business in the country was nationalised with
effect from 1st Eanuary: 1.0! by the 3eneral "nsurance
6usiness +5ationalisation- Act: 1.02. (ore than 100 nonAlife
insurance companies including branches of foreign companies
operating within the country were amalgamated and grouped
into four companies: &iC.: the 5ational "nsurance *ompany
,td.: the 5ew "ndia Assurance *ompany ,td.: the %riental
"nsurance *ompany ,td.: and the =nited "ndia "nsurance
*ompany ,td. with head offices at *alcutta: 6ombay: 5ew
Delhi and (adras: respecti&ely. 3eneral "nsurance
*orporation +3"*- which was the holding company of the four
public sector general insurance companies has since been
delined from the later and has been appro&ed as the F"ndian
$einsurerF since !rd 5o&ember 2000. The share capital of
3"* and that of the four companies are held by the
3o&ernment of "ndia. All the fi&e entities are 3o&ernment
companies registered under the *ompanies Act.
12
The general insurance business has grown in spread and &olume
after nationalisation. The four companies ha&e 2).. branch
offices: 1!)0 di&isional offices and .2 regional offices spread
all o&er the country. 3"* and its subsidiaries ha&e
representation either directly through branches or agencies in
1) countries and through associateG locally incorporated
subsidiary companies in 1# other countries. A whollyA owned
subsidiary company of 3"*: i.e. "ndian "nternational P&t. ,td.
is operating in <ingapore and there is a joint &enture
company: &iC. Denindia Assurance ,td. in Denya. A new
wholly owned subsidiary called 5ew "ndia "nternational ,td.:
=D has also been registered.
1!
NEW INSURANCE SCHEMES
Uni<e!)" He"t% In)u!n(e S(%eme
The =ni&ersal ?ealth "nsurance policy is a&ailable to groups of
100 or more families. The policy pro&ides for reimbursement
of medical e7penses upto $s.!0000GA towards hospitalisation
floated amongst the members of the family: death co&er due to
an accident for $s.2'000 to the earning head of the family
and compensation due to loss of earning head of the family H
$s.'0GA per day upto a ma7imum of 1' days: after a waiting
period of three days: when the earning head of the family is
hospitalised. The premium under the policy is $s.1GA per day
+i.e. $s.!)'GA per annum- for an indi&idual: $s.1.'0 per day
for a family of fi&e limited to spouse and children +i.e. $s.'#/
per annum-: and $s.2GA per day +i.e. $s. 0!0 per annum- for
co&ering dependent parents within the o&erall family siCe of
se&en. A subsidy of $s. 100 per year towards annual premium
for F6elow Po&erty ,ifeF families is also pro&ided under the
<cheme.
4or purpose of this policy ?%<P"TA, means:
1#
Any ?ospitalG5ursing home registered with the local
authorities and under the super&ision of a registered and
;ualified (edical practitioner.
?ospitalG 5ursing ?ome run by 3o&ernment.
Bnlisted hospitals run by 53%sG TrustsG selected pri&ate
hospitals with fi7ed schedule of charges.
?ospitalisation should be for a minimum period of 2#
hours. ?owe&er: this time limit is not applied to some
specific treatments and also where due to technological
ad&ancement hospitalisation for 2# hours may not be
re;uired.
1'
Min E=("u)i$n)
All preAe7isting diseases.
*orrecti&e: cosmetic or aesthetic dental surgery or
treatment.
*ost of spectacles: contact lens and hearing aid.
Primarily diagnostic e7penses not related to sicnessGinjury.
Treatment for Pregnancy: *hildbirth: (iscarriage: abortions
etc.
A0e Limitti$n)/
This policy co&ers people between the age of ! months to )'
years.
F"$te! ')i)/
reimbursement of $s. !0:000GA can be a&ailed of indi&idually or
collecti&ely by members of the family. 4or further The
benefit of family will operate on floater basis i.e. the total
details please refer the Prospectus or the Policy Document
issued by the "nsurance *ompany.
1)
+!i)%t% Pen)i$n 'im Y$>n
S(%eme
"ndian citiCens aged '' years +last birthday- and abo&e are
eligible +no upper age ceiling-.
Pension will be paid during the lifetime of the pensioner.
"n the e&ent of unfortunate death of the pensioner: purchase
price will be paid to the nomineeG legal heir of the
pensioner.
(ode of payment of pension : (onthly: 9uarterly: ?alf
Iearly or Iearly.
(inimum pension is $s. 2'0GA per month
(a7imum pension is $s. 2000GA per month.
%nly one person from a family can apply. The family for
this purpose shall comprise of the pensioner: hisG her
spouse and dependants.
Age proof will be re;uired. Jhere age is to be admitted on
declaration basis: declaration on a stamp paper: signed in
front of a notary shall be re;uired.
10
P!emium
%nly single premium +purchase price- is payable i.e. premium is
to be paid in one lump sum. 4urther: premium shall be accepted
by che;uesG drafts payable on the 6ranch of the ban which is
the member of the local clearing house.
O'9ECTI+ES OF LIC
<pread ,ife "nsurance widely and in particular to the rural areas
and to the socially and economically bacward classes with a
&iew to reaching all insurable persons in the country and
pro&iding them ade;uate financial co&er against death at a
reasonable cost.
(a7imiCe mobiliCation of peopleK s sa&ings by maing
insuranceAlined sa&ings ade;uately attracti&e.
6ear in mind: in the in&estment of funds: the primary
obligation to its policyholders: whose money it holds in
trust: without losing sight of the interest of the community
as a whole@ the funds to be deployed to the best ad&antage
of the in&estors as well as the community as a whole:
1/
eeping in &iew national priorities and obligations of
attracti&e return.
*onduct business with utmost economy and with the full
realiCation that the moneys belong to the policyholders.
Act as trustees of the insured public in their indi&idual and
collecti&e capacities.
(eet the &arious life insurance needs of the community that
would arise in the changing social and economic
en&ironment.
"n&ol&e all people woring in the *orporation to the best of
their capability in furthering the interests of the insured
public by pro&iding efficient ser&ice with courtesy.
Promote amongst all agents and employees of the
*orporation a sense of participation: pride and job
satisfaction through discharge of their duties with
dedication towards achie&ement of *orporate %bjecti&e.
1.
PRO*UCTS OF LIC
W%$"e Li#e Wit% P!$#it) P"n ? 445
Fetu!e)/
This plan is mainly de&ised to create an estate for the heirs of the
policyholder as the plan basically pro&ides for payment of sum
assured plus bonuses on the death of the policyholder. ?owe&er:
considering the increased longe&ity of the "ndian population: the
*orporation has amended the abo&e pro&ision: thereby pro&iding
for payment of sum assured plus bonuses in the form of maturity
claim on completion of age /0 years or on e7piry of term of #0
years from date of commencement of the policy whiche&er is
later.
The premiums under the policy are payable up to age /0 years of
the policyholder or for a term of !' years whiche&er is later.
"f the payment of premium ceases after ! years: a paidAup policy
for such reduced sum assured will be automatically secured
pro&ided the reduced sum assured e7clusi&e of any attached
bonus is not less than $s.2'0GA. <uch reduced paidAup policy is
not entitled to participate in the bonus declared thereafter but the
20
bonuses already declared on the policy will remain attach:
pro&ided the policy is con&erted in to a paidAup policy after the
premiums are paid for ' years.
Suitb"e F$!/
This policy is suitable for people of all ages who wish to protect
their families from financial crises that may occur owing to the
policyholder>s premature death.
'ENEFITS
'ENEFIT ILLUSTRATION
SUR+I+AL 'ENEFIT /
<um assured plus accrued bonuses and the terminal bonuses: if
any: on the policyholder attaining age /0 years or on e7piry of
term of #0 years from the date of commencement of the policy
whiche&er is later.
*EATH 'ENEFIT /
<um assured plus accrued bonuses and the terminal bonuses: if
any: on the death of the policyholder are paid to hisGher
nomineesGheirs.
21
LIMITE* PAYMENT WHOLE LIFE ? PLAN 44; (WITH
PROFITS)
Fetu!e)/
This is the best form of life assurance for family pro&ision since
it enables the ,ife Assured to pay all the premiums during the
ordinarily &igorous and most producti&e years of life. ?e need
not pay any premium in the later stages of life if and when his
conditions might become ad&erse.
Jith Profits ,imited Payments Policies do not cease to
participate in profits after completion of the premium paying
period but continue to share in the periodical 6onus Distribution
until the death of the ,ife Assured.
The JithoutAProfit option is a&ailable under Table no. !.
"f the policyholder pays at least ! yearsK premiums and then
discontinues paying any more premium: a reduced paidAup
assurance policy comes into force.
<uch a reduced paidAup Policy will not be entitled to participate
in the profits declared thereafter: but such 6onus as has already
been declared on the Policy will remain attached thereto. The
22
premium paying term under this plan is fi&e years minimum and
'' years ma7imum.
'ENEFITS
Su!<i<" bene#it)
"f the ,ife Assured sur&i&es the premium paying period and the
policy continues in full force: pro&ided all premiums ha&e been
paid: but no further premiums are re;uired to be paid.
2!
*et% 'ene#it)/
<um Assured plus 6onuses accrued and &ested in the policy.
Plan Parameters:
(inimum (a7imum
Bntry age 12 +nearer birthday- )0
<um assured +$s.- '0000 5% ,"("T
Term +years- ' ''+(a7. Prem. ceasing age
is 00-
(ode of Payment (a7imum premium paying period
Policy loan a&ailable
Iearly: half yearly: ;uarterly: monthly: salary sa&ing scheme
/0 yrs. of age or #0 yrs. of premium paying term from the date of
commencement whiche&er is later.
2#
EN*OWMENT WITH PROFIT PLAN ? 426
FEATURES/
(oderate Premiums
?igh bonus
?igh li;uidity
<a&ings oriented
This policy not only maes pro&isions for the family of the
,ife Assured in e&ent of his early death but also assures a
lump sum at a desired age. The lump sum can be rein&ested
to pro&ide an annuity during the remainder of his life or in
any other way considered suitable at that time.
Premiums are usually payable for the selected term of years or
until death if it occurs during the term period.
2'
Suitb"e F$!/
6eing an endowment assurance policy: this plan is apt for people
of of all ages and social groups who wish to protect their
families from a financial setbac that may occur owing to their
demise.
The amount assured if not paid by reason of his death earlier will
payable at the end of the endowment term where it can be
in&ested in an annuity pro&ision for the rest of the policyholderK s
life or in any other way he may thin most suitable at that time.
'ENEFITS
*i)bi"it. 'ene#it/
"n case policy holder becomes totally and permanently disabled
due to an accident before reaching the age of 00 and the policy is
in full force: he will not be re;uired to pay further premiums:
+the Disability 6enefit is a&ailable in respect of the first
$s.20:000 sum assured on any one life- and the policy will
continue to be in force.
2)
A((ident 'ene#it/
6y paying a small e7tra premium of $s.1 per $s.1000GA sum
assured per year he or his family are entitled to the following
benefits on death or permanent disability caused by accident.
B&en students abo&e the age of 1/ years can a&ail of this benefit.
P!emium St$pp0e/
"f payment of premiums ceases after at least T?$BB yearsK
premiums ha&e been paid : a free paidAup policy for a reduced
sum assured will be automatically secured pro&ided the reduced
sum assured: e7clusi&e of any attached bonus: is not less than $s.
2'0GA. The reduced sum assured will become payable on the
e&ent as stipulated in the policy..
20
'$nu)/
"s there anything e7tra payable besides the sum assured at the
time of claim settlementL Ies: but only if it is a Mwith profits>
policy. B&ery year the ,ife "nsurance *orporation distributes its
surplus among policyholder to Mwith profits> polices in the form
of bonuses. <ubstantial bonuses ha&e been declared in the past
after each &aluation of policy liabilities.
'ENEFITS
Su!<i<" bene#it)/
Payment of full <um Assured N 1ested 6onus N 4inal Additional
bonus: if any.
*et% 'ene#it)/
Payment of full sum assured N 1ested 6onus.
2/
P"n P!mete!)/

(inimum (a7imum
Bntry Age +years- 12 )'
<um Assured +$s.- '0000 no limit
Term +years- ' ''
(ode %f Payment (a7 (aturity Age Policy loan a&ailable
(onthly: 9uarterly:?alfA 0' years yes
Iaerly: Iearly: <alary
<a&ing <cheme.

2.
ANMOL 9EE+AN ? I (WITHOUT PROFITS)
'ENEFITS
%n Death during the Term of the Policy : <um Assured
%n (aturity / 5il
RESTRICTIONS
+A- (inimum age at entry : 1/ years +completed-
+6- (a7imum age at entry : '' years +nearer
birthday-
+*- (a7imum age at maturity : )' years
+D- (inimum Term : ' years
+B- (a7imum Term : 2' years
+4- (inimum <um Assured : $s. 4i&e ,ah
+3- (a7imum <um Assured : $s. Three *rore +"nclusi&e of
all Term Assurance plans-
Note : The policy would be issued in multiples of Rs. one
lakh for Sum Assured above Rs. five lakh.
!0
+?- (ode of Premium Payment : Iearly: ?alfA Iearly and <ingle
premium.
+3- Rebte) /
Sum Assured Rebate : 5", in case of regular premium
policies and $e.1G
00
<um Assured for policies of $s.2' lah
and abo&e in case of single premium policies.
Mode Rebate : 1 O of Annual premium for yearly
mode and nil for ?alfAIearly mode.
UN*ERWRITING, AGE PROOF AN* ME*ICAL
RE@UIREMENTS /
The plan is a&ailable to <tandard and <ubAstandard li&es +upto
*lass 1" B($-. This plan is also a&ailable to female li&es
+category " and "" li&es only- and to physically handicapped
persons subject to certain conditions. <tandard age proof will
ha&e to be submitted along with the Proposal 4orm.
PAI*?UP AN* SURREN*ER +ALUE /
The policy will not ac;uire any paidAup &alue.
5o <urrender 1alue will be a&ailable under this plan.
!1
LOAN : 5o loan will be granted under this plan.
GRACE PERIO* FOR NON?FORFEITURE
PRO+ISIONS/
A grace period of 1' days will be allowed for payment of yearly
or halfAyearly premiums. "f death occurs within this period and
before the payment of the premium then due: the policy will
still be &alid and the <um Assured paid after deduction of
the said premium as also unpaid premiums falling due before the
ne7t policy anni&ersary of the Policy. "f the premium is not paid
before the e7piry of the days of grace: the Policy lapses.
RE+I+AL /
"f the Policy has lapsed: it may be re&i&ed during the life time of
the ,ife Assured: but before the date of e7piry of policy term: on
submission of proof of continued insurability to the satisfaction
of the *orporation and the payment of all the arrears of premium
together with interest at such rate as may be pre&ailing at the
time of the payment. The corporation reser&es the right to accept
or decline the re&i&al of discontinued policy. The re&i&al of the
!2
discontinued policy shall tae effect only after the same is
appro&ed by the *orporation and is specifically communicated to
the ,ife Assured. The cost of the (edical reports: including
<pecial $eports: if any: re;uired for the purposes of re&i&al of
the policy: should be borne by the ,ife Assured.
PAYMENT OF CLAIMS
5o *laims concession will be applicable to this Policy.
'AC-?*ATING INTEREST
The policy can be bac dated within the financial year. 5o dating
bac interest shall be charged.
!!
9EE+AN SATHI? PLAN NO187
Fetu!e)/
This policy is issued on the li&es of the husband and wife
pro&ided the femaleK s life belongs to *ategory " or is acti&ely
engaged in her spouseK s business.
"ncase of death of one of the policy holder the sur&i&ing partner
gets the sum assured: the premium is stopped and on death or
maturity full sum assured along with bonus is paid bac.
<uitable 4or:
This policy protects the incomes of both husband and wife: also
grants e;ui&alent benefits to their sur&i&ors in case neither
sur&i&e the policy term period.
!#
'ENEFITS
Su!<i<" bene#it)/
"f one or both the li&es sur&i&e to the maturity date: the sum
assured: along with the accumulated bonus: is payable.
*et% 'ene#it)/
f cost.
The sum assured is again be payable on the death of the other
partner in case both the "n case either of the couple dies during
the policy>s term: two things happen. %ne: ,"* pays to the
sur&i&ing spouse the full sum assured. And: two: the policy
continues on the life of the sur&i&ing partner without himGher
ha&ing to pay any further premiums: i.e. the life co&er on the
sur&i&or continues free ohusband and wife were to die during the
term of the policy. 1ested bonus would also be paid along with
the sum assured on the second death.
!'
+ISION OF THE LIFE INSURANCE CO1
FA transAnationally competiti&e
financial conglomerate of
significance to societies and
Pride of "ndiaF A
MISSION OF THE LIFE INSURANCE CO1
FB7plore and enhance the ;uality of life
of people through financial security by
pro&iding products and ser&ices of
aspired attributes with competiti&e
returns: and by rendering resources for
economic de&elopment.F
!)
GROWTH OF PRI+ATE LIFE INSURANCE
COMPANIES IN THE LAST ; YEARS
The insurance industry recorded a booming growth of !'O in
premium income during 200#A0' with the 1! pri&ate sector
players waling away with an impressi&e 12.O while the ,ife
"nsurance *orporation of "ndia recorded a 21O growth.
Thus the maret share of state behemoth>s dropped to 0/O in
200#A0' from /0O a year ago.
According to A<<%*?A( Bco Pulse +ABP- <tudy: the industry
premium increased to $s2'!.#2bn in 200#A0' from $s1/0.1bn in
200!A0#. The ,"* total premium for the year 200#A0' amounted
to $s1.0./'bn as against the $s1)2./#bn during pre&ious year.
The figures for the first two months of the fiscal 200'A0) also
spea of the growing share of the pri&ate insurers. The share of
,"* for this period has further come down to 0'O: while the
pri&ate players ha&e grabbed o&er 2#O share.
PJith the huge potential the maret has: the 3o&ernment should:
more seriously loo into increasing the 4D" cap in the sectorQ
said (ahendra D. <anghi: A<<%*?A( President.
!0
During AprilAEune 200': the largest pri&ate company "*"*"
Prudential has increased its share from ).2'O in 200#A0' to
0.)/O in current fiscal.
The opening up of the sector has gi&en some of the most
inno&ati&e products lie the customiCed insurance policies and
now the unit lined policies that ha&e gained much of customer
attention. The sector has huge potential and certain other new
and inno&ati&e areas can also be looed into for enhancing
maret share and premium income: said <anghi.
?D4* is ne7t in the row with 2..1O maret share which has
increased from 1..2O last fiscal followed by TATA A"3 which
now shares 2O of the maret from 1.1/O last fiscal.
6irla <un life>s share has dropped from 2.#'O during 4I>0' to
1.0)O in first two months of 4I>0). <6" life comes ne7t with
1.02O share and has infact dropped a few percent points from
last year.
(a7 5ew Ior life and A&i&a ,ife "nsurance ha&e captured more
than 1O share each from less than 1O share during 4I>0'.
!/
%thers lie "53: A(P <anmar: (et ,ife and <ahara "ndia ha&e
less than 1O share.
The details of the maret share of life insurance companies is
attached. The maret share of the pri&ate players has doubled
e&ery year from '.)O in 2002A0! to 12O in 200!A0# and close to
22O in 200#A0'.
The state run insurance company has the biggest ad&antage of its
huge networ which the company can use to penetrate into rural
maret that is still lying untapped. Another option with the life
insurance companies to capture more and more maret share
could be product inno&ation and constantly de&eloping an
insurance product in order to meet the e&erAchanging
re;uirements of the customer. 9uality customer ser&ice and
education can be another area where a company can differentiate
itself from other companies.
IT t$ b$$)t "i#e m!:et 0!$At%B
T?B ,"4B "nsurance *orporation of "ndia +,"*- has turned to
information technology in a bid to shed its image as a dinosaur
among more nimble pri&ate sector companies. ,"*: "ndiaK s
!.
dominant life insurer: is encouraging policyholders to use its
website to pay premiums and mae claims. ,ast month: it
announced new mobile phone <(< +te7ting- ser&ices to alert
policyholders of news about their plans. These mo&es:
unmatched by most of ,"*K s smaller pri&ate sector ri&als: are part
of an effort to open new channels to increase the speed and
;uality of customer ser&ice A long seen as ,"*K s weaness after
decades as "ndiaK s monopoly life insurer. ,"*K s performance in
the year to (arch 200# suggests that these efforts are woring. "t
sold 20 million new policies generating $s/'.0 billion +=<R1..
billion- in premium income A an annual growth of about 11
percent. ,"*K s deployment of information technology may ha&e
helped it maintain its // percent maret share of premium sales.
Iet few belie&e that technology alone will dri&e the companyK s A
and in effect: the "ndian life industryK s A e7pansion.
F=ltimately the growth of life insurance depends on growth of
the economy:F said TD 6anerjee: a board member of the
"nsurance $egulatory De&elopment Authority.
"ndiaK s economic growth rate in (arch 200# hit doubleAdigit
figures to become AsiaK s fastestAgrowing economy. (ost
#0
economists forecast growth to stabilise at around 0 percent to
200'. 6anerjee said that this climate of rising economic
prosperity is encouraging consumers to thin more about
insurance.
5onetheless: most life companies belie&e consumers still need
prompting. According to <ubramaniam: mareting manager of
A(P <anmar: FPeople still donK t thin that insurance is
important. (ost sales happen after personal interaction.F
A(P <anmar: a twoAyear old joint &enture between southA"ndian
based conglomerate <anmar and AustraliaK s A(P: has employed
some !:000 sales agents who are targeting small and mediumA
siCed towns that ha&e low penetration rates of life insurance.
"ndiaK s life insurance penetration is less than three percent.
FJeK re focussed on places where there is no other company A not
e&en ,"*:F <ubramaniam said: remaring that unlie ,"*: A(P
<anmar regards the internet and mobile phones as channels for
promotion: not sales. ?e said that the internet is not widespread
as a channel to sell consumer products in "ndia: but <ubramaniam
has not ruled out deploying such technology in the future.
Jhate&er the merits of new distribution channels: the industry
#1
fears a decline in sales following new ta7es le&ied on single
premium products. <ingle premium life insurance has been
popular in "ndia mainly because guaranteed returns were ta7A
free. This encouraged policyholders to pay large premiums with
minimal ris co&er: for payments at maturity that often e7ceeded
the returns of more sophisticated financial products such as
mutual funds. 6ut last %ctober: the go&ernment decided to ta7
premiums that paid abo&e 20 percent of the sum assured. The
decision has reduced sales of single premium products: which is
liely to restrain the o&erall growth of "ndiaK s life industry. The
industry regulator has forecast growth of life premiums to be
around 20 percent to (arch 200#: about the same le&el as 1...:
down from a burst of sales in 2002 of #!.' percent.
"ndiaK s life insurers ha&e rallied to persuade the go&ernment to
rescind the ruling later this year: but any decision must wait for
the end of parliamentary elections currently underway.
#2
CURRENT STAN*ING OF PRI+ATE LIFE
INSURANCE COMPANIES IN UR'AN SECTOR
,ife insurance is possibly the most retail of all financial
ser&ices: and is re;uired by people of all segments and in all
locations. At a broad le&el: "*"*" Prudential aims to secure the
families of the middle and upper class woring people in urban
"ndia. To this end: they ha&e pursued a panA"ndia distribution
strategy and baced it up with a range of products that meets the
needs of a wide range of people: be they from rural or urban
areas. Today: they ha&e branches in 0# locations and rural
presence in more than 1' states. *ertainly: the majority of the
business still comes from urban areas such as metros and miniA
metros. ?owe&er: they ha&e seen rural business grow
significantly and e7pect it to continue maing greater
contribution in the years to come.
#!
ROLE OF FOREIGN COMPANIES IN IN*IA
3o&ernment has allowed 2)O foreign e;uity participation in the
insurance sector. This has its limitations. Jhile most foreign
insurers planning to start their ser&ices in "ndia were not pleased
by this condition: they reluctantly agreed that this was e7pected
in an opening economy and this will not change their outloo for
"ndia. After all no insurance company can afford to ignore a
maret of 1bn people. 6ut the fact remains that they:
*an not appoint majority directors on the company board@
*an not ha&e say in the day to day worings of the
company@
*an Affect %nly <pecial $esolutions.
This cap: howe&er: will ha&e a great impact on the "ndian counter
part to raise 0#O of the funds in their joint &enture. To add to
this if "ndian partners lie <tate ban of "ndia: with o&er .000
branches nationwide: will demand premium for their e7isting
distribution networ: we will see the foreign insurance
companies demand hefty premiums for bringing in their global
e7pertise and brand. (r. 1aidya: *hairman of <6": has recently
stated that all it is looing for is a good and reliable partner and
##
the ;uestion of a hefty premium to be charged to its foreign
partner is not significant. The monolith has finally come to
business sensesS
4oreign companies are unhappy e&en about laws pertaining to
repatriation of funds. The stipulated in&estment criteria is also
something that all players in the sector: be it "ndian or foreign:
are closing watching.
The foreign players are essentially looing to tap their global
e7pertise in the &aried marets and use that nowAhow to wor in
the "ndian scenario. Designing of products: information systems:
technical e7pertise: manpower planning etc is what one e7pects
the foreign players to ha&e a say in.
Any &enture of the joint inds needs to be between e;uals. "f this
is not there then there are e&ery chances that a partner in the
&enture will feel increasingly uncomfortable and would be
looing to call the joint &enture off.
#'
FIN*INGS
@UESTIONNAIRE ANALYSIS
Re)p$ndent) C 84
Re)p$ndent) !e)p$nded C D4
Re)p$n)e !te C E;F
$espondents are taen from pri&ate: go&ernment and business
sectors.
#)
21 A(($!din0 t$ .$u, A%i(% %<e p".ed m>$! !$"e
in t%e #ie"d $# "i#e?in)u!n(e ($mpnie)1
In)u!n(e P<t1
Emp"$.ee
)
G$<t1
Emp"$.ee)
'u)ine))
mn
,"* 10 1! 10
?D4* ' ! '
"*"*" ! ! #
%thers 2 1 1
After analysing this data it is found that from the gi&en three
respecti&e le&el of P&t.: 3o&t. and 6usiness 10 out of 20 +!0O-:
1! out of 20 +!.O- and 10 out of 20 +!0O- are in fa&our of ,"*:
while ' out of 20 +1'O-: ! out of 20 +.O- and ' out of 20 +)O-: 1
#0
0
2
4
6
8
10
12
14
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
LI !"# III $t%ers
out of 20 +!O- and 1 out of 20 +!O- are in fa&our of other P&t.
companies.
51 W%i(% in)u!n(e ($mpnie) %<e been )u((e))#u"
t$ m:e )t!$n0 pub"i( b)e b. d<e!ti)ementB
In)u!n(e P<t1
Emp"$.ee
)
G$<t1
Emp"$.ee)
'u)ine))
mn
,"* 12 1# 12
?D4* ! 2 #
"*"*" # ! !
%thers 1 1 1
#/
0
2
4
6
8
10
12
14
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
LI !"# III $t%ers
31 W%i(% in)u!n(e ($mpn. %) 0ined m))i<e
pubi( )upp$!t in t%e (u!!ent #i)(" .e!B
In)u!n(e P<t1
Emp"$.ee
)
G$<t1
Emp"$.ee)
'u)ine))
mn
,"* 12 1# 10
?D4* ! 2 '
"*"*" ! 2 #
%thers 2 2 1
4rom the abo&e table: it is found that from the gi&en three sector
Pri&ate: 3o&t. and 6usiness 12 out of 20 +!)O-: 1# out of 20
+#2O-: 10 out of 20 +!0O-: are in the fa&our of ,"* ! out of 20
+.O-: 2 out of 20 +)O- and # out of 20 +12O- are in fa&our of
"*"*": whereas only 2 out of 20 +)O-: 2 out of 20 +)O- 1 and out
of 20 +!O- fa&our others company.
#.
0
2
4
6
8
10
12
14
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
LI !"# III $t%ers
61 *$ .$u t%in: in)u!n(e p$"i(. i) in t%e di!e(ti$n $#
pub"i( Ae"#!eB
P<t1 Se(t$! G$<t1 Se(t$! 'u)ine))
mn
Ies 1! 1) 12
5o 0 # /
The abo&e table shows that from pri&ate sector 1! out of 20
+!0O- agree and 0 out of 20 +21O- disagree: from go&t. sector 1)
out of 20 +#/O- thin it right but # out of 20 +12O- don>t thin it
so and from business man 12 out of 20 +!)O- are in fa&our of the
abo&e statement but / out of 20 +2#O- don>t fa&our it.
'0
0
&
10
1&
20
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
'es No
;1 I) !eti!ement b$nd $! pen)i$n p$"i(. "un(%ed b.
t%e numbe! $# p!i<te p".e! ) Ae"" ) pub"i(
)e(t$! ($mpn. in t%e di!e(ti$n $# )e(u!ed $"d
0eB
P<t1 )e(t$! G$<t1 Se(t$! 'u)ine))
mn
Ies 1' 1/ 1!
5o ' 2 0
"t is ob&ious from the abo&e table that 1' out of 20 +#'O-: 1/ out
of 20 +'#O- and 1! out of 20 +!.O- from the gi&en three thin
retirement bend or pension policy a legitiment step in the
doretion of secure old age but ' out 20 +1'O-: 2 out of 20 +)O-
and 0 out 20 +21O- don>t agree with the opinion of the majority
class.
'1
0
&
10
1&
20
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
'es No
D1 *$ .$u t%in: t%t !i): ($<e!0e #(t$! in("uded in
In)u!n(e p$"i(. tt!(t) 0ene!" pub"i( t$A!d)
t%e p$"i(.B
P<t1 )e(t$! G$<t1 Se(t$! 'u)ine))
mn
Ies 12 1) 11
5o / # .
4rom the abo&e table it is found that 12 out of 20 +!)O- from
Pri&ate sector 1) out of 20 +#/O-. 4rom 3o&t. sector and 11 out
of 20 +!!O- thins ris co&erage factor attracti&e but rest / out
of 20 +2#O-: # out of 20 +12O- and . out 20 +20O- from the
abo&e them sector don>t thin it so.
'2
0
2
4
6
8
10
12
14
16
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
'es No
E1 *$ .$u t%in: t%e m$ne. b(: p$"i(. en($u!0e)
p$"i(. %e"e!) t$A!d) )<in0 t!de)B
P<t1 )e(t$! G$<t1 Se(t$! 'u)ine))
mn
Ies 10 1/ 1)
5o ! 2 #
4rom analysing the abo&e data: it is found that from the gi&en
three sector respecti&ely P&t.: 3o&t. and 6usiness. 10 out of
20 +'1O-: 1/ out of 20 +'#O- and 1) out of 20 +#/O- thin
money bac policy encouraging towards sa&ing trend whereas !
out of 20 +.O-: 2 out of 20 +)O- and # out of 20 +12O- don>t
thin it so.
'!
0
&
10
1&
20
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
'es No
81 W%t (($!din0 t$ .$u, t%e te!m p"n t%t $n".
($<e!) !i): nd d$e)nGt ($<e! mtu!it. bene#it $n
)u!<i<" t t%e end $# t%e te!m p!$<ide) )e(u!it.
($<e! $<e! p$"i(. %$"de!) $! )m!t A. $#
((umu"ti<e m$ne. #!$m p$"i(. %$"de!)B
P<t1 )e(t$! G$<t1
Se(t$!
'u)ine))
mn
<ecurity co&er 11 1' 12
Accumulati&e
money
. ' /
"t is ob&ious from the abo&e data that 11 out of 20 +!!O-: from
the P&t. sector: 1' out of 20 +#'O- from 3o&t. sector and 12 out
of 20 +!)O- thin term plan as a security co&er but . out of 20
+20O-: ' out of 20 +1'O- and / out of 20 +2#O- from the three
respecti&e group thin it as a way of accumulating money
insurance company.
'#
0
&
10
1&
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
(e)urity )over *))umulative money
71 *$ .$u t%in: t%t t%e !!i<" $# )$ mn. p!i<te
($mpnie) in t%i) in)u!n(e )e(t$! en<i)0e "$t
$# (%$i(e t$ p$"i(.%$"de!B
P<t1 )e(t$! G$<t1 Se(t$! 'u)ine))
mn
Ies 1) 1/ 1)
5o # 2 #
4rom analysing the abo&e data it is found that 1) out of 20 +#/O-
from P&t. <ector: 1/ out of 20 +'#O- from 3o&t. sector and 1)
out of 20 +#/O- thin that the arri&al of pri&ate players en&isage
a lot of choice to policy holder. 6ut # out of 20 +12O-: 2 out of
20 +)O- and # out of 20 +12O- don>t thin it so.
''
0
&
10
1&
20
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
'es No
241 *$ .$u 0!ee t%t (u)t$me!?(ent!i(it. nd
t!n)p!en(. !e t%e buHHA$!d) #$! )u((e)) in t%i)
e<$"<in0 indu)t!.B
P<t1 )e(t$! G$<t1 Se(t$! 'u)ine))
mn
Ies 1/ 20 1.
5o 2 A 1
4rom this abo&e data: it is found the 1/ out of 20 +'#O- from
P&t. <ector and 20 out of 20 +)0O- from 3o&t. <ector 1. out of
20 +'0O- from 6usiness men agree with this statement whereas
only 2 out of 20 +)O- from p&t. sector and 1 out of 20 +!O- from
6usiness men do not agree with this statement.
')
0
&
10
1&
20
N
o
.

o
f

r
e
s
p
o
n
d
e
n
t
s
Pvt. Employees Govt. Employees Business man
'es No
CONCLUSION
After o&erhauling the all situation that boosted a number of P&t.
*ompanies associated with multinational in the "nsurance <ector
to gi&e befitting competition to the established behemoth ,"* in
public sector: we come at the conclusion that
1- There are &ery tough competition among the pri&ate
insurance companies on the le&el of new trend of
ad&ertising to lull a major part of *ustomers.
2- ,"* is not left behind in the present race of ad&ertisement.
!- The entry of the P&t. players in the "nsurance <ector ha&e
e7panded the product segment to meet the different le&el of
the re;uirement of the customers. "t has brought about
greater choice to the customers.
#- Pri&ate insurers ha&e restricted reach to the customers.
'- ,"* has &ast maret and &ery firm grip on its traditional
customers and monopoly of life insurance products.
)- 6an assurance A that allows life insurers to le&erage on the
ris product through ban networ: was adopted by pri&ate
players. 6ut ,"* was also not left behind as picing up
'0
majority stae in the corporation 6an and large e;uity
stae in the %riental 6an of *ommerce.
"$DA: is also playing &ery comprehensi&e role by regulating
norms mandating to pri&ate players in this sector: that increases
the confidence le&el of the customers to the pri&ate players.
'/
CONCLUSIONS GOT 'Y THE CONSUMER SUR+EY
ANALYSIS
1- 5ow a days also insurance is most popular as more plain
protection against death and people are unaware about the
other aspects of insurance.
2- According to current scenario life and motor "nsurance are
the most popular ones followed by fire "nsurance.
!- (ajority of people consider the "nsurance premium paid by
them as reasonable.
#- %nly few counted people are unaware about the entry of
pri&ate players into the insurance industry and a &ery high
majority of people support their entry.
'- 6y the entry of pri&ate players. *onsumers are e7pecting the
premium to down which would be the biggest blessing.
)- The no. of people holding health insurance policy was &ery
low and the reason behind this is that the people are not
awarded of the difference between the health and life
insurance policy.
'.
RECOMMEN*ATIONS
"n the modernised well ad&anced hiAtech approach to the
customer e&ery possible facilities and effort to build up the
confidence of the rising policyholders towards. "nsurance
companies: to complete one another nothing is left to
recommend. 6ut some recommendations that are intensely felt
and highly re;uired for insures to sustain in the maret. These
are as follows :A
a- (ore and more transparency should be ascertained between
insurers and policy holders.
b- Particularly: in the emerging boom in the insurance
company: e&ery insurance company should be customer
centred: and well &ersed in the handling of problem and
grie&ances of the policy holders.
c- Bach and B&ery product launched by the "nsurance company
should be in fa&our of increasing need of policy holders.
"$DA should be more and more responsible to the insurance
sector by determining some standard. "t should be mandatory to
e&ery insurers to mae more and more responsible and responsi&e
)0
to the policy holders so that comprehensi&e understanding may
be de&eloped among policy holders. "t may be beneficial on both
side.
)1
'I'LIOGRAPHY
'!$(%u!e) / In#$!mti$n '$$:"Et)
Product ,ist ,.".*.
,.".*. Annual $eport: 200#
Rep$!t/A(t)
(alhotra *ommittee $eport on $eforms in the "nsurance
<ector: 1..!.
The "nsurance $egulatory and De&elopment Authority 6ill:
1....
NeA)ppe!) / M0Hine)
The Bconomic Times
The "nsurance Times
"nsurance Post
'$$:)
6usiness <tatistics by Dr. <.P. 3upta: Dr. (.P. 3upta:
Addition 2002: 5ew Delhi
Web)ite)
w.w.w. licof"ndia.com
www."rdaindia.org.com
www.indiainfoline.com
)2
ANNEIURE
@UESTIONNAIRE
21 A(($!din0 t$ .$u, A%i(% %<e p".ed m>$! !$"e in t%e
#ie"d $# "i#e?in)u!n(e ($mpnie)1
51 W%i(% in)u!n(e ($mpnie) %<e been )u((e))#u" t$
m:e )t!$n0 pub"i( b)e b. d<e!ti)ementB
31 W%i(% in)u!n(e ($mpn. %) 0ined m))i<e pubi(
)upp$!t in t%e (u!!ent #i)(" .e!B
61 *$ .$u t%in: in)u!n(e p$"i(. i) in t%e di!e(ti$n $#
pub"i( Ae"#!eB
;1 I) !eti!ement b$nd $! pen)i$n p$"i(. "un(%ed b.
t%e numbe! $# p!i<te p".e! ) Ae"" ) pub"i( )e(t$!
($mpn. in t%e di!e(ti$n $# )e(u!ed $"d 0eB
D1 *$ .$u t%in: t%t !i): ($<e!0e #(t$! in("uded in
In)u!n(e p$"i(. tt!(t) 0ene!" pub"i( t$A!d) t%e
p$"i(.B
)!
E1 *$ .$u t%in: t%e m$ne. b(: p$"i(. en($u!0e) p$"i(.
%e"e!) t$A!d) )<in0 t!de)B
81 W%t (($!din0 t$ .$u, t%e te!m p"n t%t $n". ($<e!)
!i): nd d$e)nGt ($<e! mtu!it. bene#it $n )u!<i<" t
t%e end $# t%e te!m p!$<ide) )e(u!it. ($<e! $<e! p$"i(.
%$"de!) $! )m!t A. $# ((umu"ti<e m$ne. #!$m
p$"i(. %$"de!)B
71 *$ .$u t%in: t%t t%e !!i<" $# )$ mn. p!i<te
($mpnie) in t%i) in)u!n(e )e(t$! en<i)0e "$t $#
(%$i(e t$ p$"i(.%$"de!B
241 *$ .$u 0!ee t%t (u)t$me!?(ent!i(it. nd t!n)p!en(.
!e t%e buHHA$!d) #$! )u((e)) in t%i) e<$"<in0 indu)t!.B
)#