KOUSALI INSTITUTE OF MANAGEMENT STUDIES

KARNATAK UNIVERSITY, DHARWAD

A REPORT ON

Customer Relationship management

onReliance Life Insurance

Submitted By: Submitted To:

Vishwanath M Patil(15MBA052) Dr. N.Ramanjaneyalu

 Title of the Project

Customer Relationship Management in Reliance Life Insurance

OBJECTIVES

1. To study the companys procedures conducted by the company for retaining the
customers.

2. To study the current market trends in Customer Relationship Management.

3. To study the companies efforts in maintaining and motivating the advisors for
retaining an existing customer and building a new customer
 SCOPE OF THE STUDY

To understand the relations maintained by the Reliance Insurance Company with its
customers. Ever increasing competition, low interest rates, and declining margins have driven
firms to discover the customer as the basic element in their business equation Insurance as a
sector has shown tremendous growth in recent years. People now are becoming more secured
in terms of their life as well as their money. They want a profitable benefit out of their
investment. There is a need to know the companies efforts towards convincing the customer
about their product and to know how to create loyal customers. Insurance happens to be a
mega opportunity in India. Its a business growing at the rate of 15-20 per cent annually and
presently is of the order of Rs 450 billion.
 PROFILE OF THE COMPANY

RELIANCE LIFE INSURANCE CO. LTD.

Few men in history have made as dramatic a contribution to their countrys economic
fortunes as did the founder of Reliance, Shri. DHIRUBHAI AMBANI. Fewer still have left
behind a legacy that is more enduring and timeless.

As with all great pioneers, there is more than one unique way of describing the true
genius of DHIRUBHAI: The corporate visionary, the unmatched strategist, the proud
patriot, the leader of men, the architect of Indias capital markets, the champion of
shareholder interest.

But the role Dhirubhai cherished most was perhaps that of Indias greatest wealth creator.
In one lifetime, he built, starting from the proverbial scratch, Indias largest private sector
enterprise.

When Dhirubhai embarked on his first business venture, he had a seed capital of barely
US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this
fledgling enterprise into aRs 60,000 crore colossusan achievement which earned
Reliance a place on the global Fortune 500 list, the first ever Indian private company to
do so.

Dhirubhai is widely regarded as the father of Indias capital markets. In 1977, when
Reliance Textile Industries Limited first went public, the Indian stock market was a place
patronised by a small club of elite investors which dabbled in a handful of stocks.

Undaunted, Dhirubhai managed to convince a large number of first-time retail investors

to participate in the unfolding Reliance story and put their hard-earned money in the
Reliance Textile IPO, promising them, in exchange for their trust, substantial return on
their investments. It was to be the start of one of great stories of mutual respect and
reciprocal gain in the Indian markets.
 Under Dhirubhai extraordinary vision and leadership, Reliance scripted one of the
greatest growth stories in corporate history anywhere in the world, and went on to
become Indias largest private sector enterprise.

Through out this amazing journey, Dhirubhai always kept the interests of the ordinary
shareholder uppermost in mind, in the process making millionaires out of many of the
initial investors in the Reliance stock, and creating one of the worlds largest shareholder
families.
 .

RELIANCE CAPITAL

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance -
Anil DhirubhaiAmbani Group. Reliance Capital is one of Indias leading private sector
financial services companies, and ranks among the top 3 private sector financial services and
banking companies, in terms of net worth. Reliance Capital has interests in asset
management and mutual funds, stock broking, life and general insurance, proprietary
investments, private equity and other activities in financial services.

Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC)

registered with the Reserve Bank of India under section 45-IA of the Reserve Bank of
India Act, 1934.

Reliance Capital sees immense potential in the rapidly growing financial services sector
in India and aims to become a dominant player in this industry and offer fully integrated
financial services.

Reliance Life Insurance is another step forward for Reliance Capital Limited to offer
need based Life Insurance solutions to individuals and Corporate.

Reliance capital entered into the life insurance business by acquiring AMP Sanmar in
October 2005. The business was thereafter renamed Reliance Life Insurance. Today RLIC
has over 20 products - 16 individual plans and 4 employee benefit plans - including the two
new innovative products Connect to Life and Reliance Money Guarantee Plan - that were
launched recently.
Reliance Life Insurance Company (RLIC) has been accorded the ISO 9001-2000 certificate
for its best-in-class management systems in Quality, Customer & Process orientation.

With this, RLIC is one of the only two life insurance companies in India to get ISO
9001:2000 certifications covering all functional areas.

The scope of the certification covers the entire gamut of business processes ranging from
product design, sales - front-end and back-end operations, customer care and investment, to
all business support functions. The certification has been awarded by internationally
acclaimed Bureau VERITAS and is valid till 2010 subject to continued satisfactory operation
of RLIC's Quality Management System.

"This certification is a significant milestone in our continuous quest to offer innovative

products, outstanding services and improved customer satisfaction. It indicates that we have
been able to install systems, processes & performance measures that are in line with the best
in the industry and will form the basis of our business growth in future", said P
Nandagopal, CEO, Reliance Life Insurance Company.

Reliance Life Insurance is the fastest growing life insurance company in India and has an
incremental market share of 4 per cent amongst private insurers. The company has third
largest distribution network in terms of number of agents operating out of 143 locations
across the country.

CORPORATE OBJECTIVE

At Reliance Life Insurance, we strongly believe that as life is different at every stage, life
insurance must offer flexibility and choice to go with that stage. We are fully prepared and
committed to guide you on insurance products and services through our well-trained
advisors, backed by competent marketing and customer services, in the best possible way.
 CORPORATE VISION AND MISSION

Vision

Empowering everyone live their dreams

Mission

Create unmatched value for everyone through dependable, effective, transparent and
profitable life insurance and pension plans.

Our Goal

Reliance Life Insurance would strive hard to achieve the 3 goals mentioned below:

Emerge as transnational Life Insurer of global scale and standard

Create best value for Customers, Shareholders and all Stake holders

Achieve impeccable reputation and credentials through best business practices

Achievements

RLIC has been one of the fast gainers in market share in new business premium
amongst the private players with an incremental market share of 4.1% in the
Financial Year 2007-08 from 3.9% in April 07 to 8% in Feb 08. ( Source: IRDA)
Also continues to beamongst the fast growing Private Life Insurance
Companieswith a YOY growthof195% in new business premiumas ofMar08.
A Company that has crossed 1.7 Million policies in just 2 years of operation, post
takes over of AMP Sanmar business.
Initiated Express Life an Unique Over the Counter sales process for Unit
Linked Insurance Policies in the Industry.
Accomplished a large distribution ramp-up in the Industry in a short span of time by
opening 600 branches in 10 months taking the overall branch network above 740.
 RLIC continues to be one of the two Life Insurance companies in India to be certified
ISO 9001:2000 for all the processes.
Awarded the Jamnalal Bajaj UchitVyavaharPuraskar 2007- Certificate of Merit
in the Financial Services category by Council for Fair Business Practices (CFBP).

PRODUCTS OFFERED BY RELIANCE LIFE

Reliance has number of insurance products in its Portfolio. It offers different products for
different customer profile. It targets its product according to the needs of people which make
them its customer.

Protection Plans

In todays uncertain world, there could be calamity at every step of the life. It is up to you to
ensure that your family stays protected always.

Reliance Protection Plans helps you do exactly the same. You have a wide range of options to
choose a plan from. Right from limited period plans to lifetime protection plans, you can opt
for the one that suits your lifestyle.

While we understand that nothing can compensate for the loss of a life, we intend to provide
you the peace of mind. Investing in Reliance Protection Plans would mean your familys
future is in safe hands.

1.Reliance Term Plan

Invest in the Reliance Term Plan, a pure life insurance plan that offers you comprehensive
and affordable coverage for a limited period of time to suit your needs.
2. Reliance Simple Term Plan
Make a smart investment move by investing in the cost-effective Reliance Simple Term Plan,
which offers you comprehensive coverage for a specified period of time to suit your need.

3. Reliance Special Term Plan

Imagine a life insurance policy, which on maturity returns to you all the premiums you had
paid for your basic policy. The Reliance Special Term Plan offers that and much more.

4. Reliance Credit Guardian Plan

The Reliance Credit Guardian Plan secures your family from any loan liabilities you have
incurred in case of your untimely demise. On survival at maturity, you will be returned all the
premiums paid for the basic policy.

5. Reliance Special Credit Guardian Plan

Invest in the Reliance Special Credit Guardian Plan and protect your family from any loan
liabilities you have incurred. On survival at maturity, all premiums paid for the basic policy
will be returned to you.

6. Reliance Endowment Plan

The Reliance Endowment Plan gives you financial independence by allowing you to decide
the amount of Sum Assured based on your current financial position and expected future
expenses Dream!!..

7. Reliance Special Endowment Plan

Imagine an endowment plan that protects you for a certain period even after you have
received your lump sumthat is exactly what the Reliance Special Endowment Plan offers
you with other added benefits.
8. Reliance Connect 2 Life
The Reliance Connect 2 Life Plan gives you the option to upgrade your life cover to keep
pace with your changing lifestyle. As your income grows, your family will have sufficient
cover.

9.Reliance Whole Life Plan

Give your family a lifetime of timely financial support by investing in the Reliance Whole
Life Plan. This will help you enjoy your life to the fullest.

10. Reliance Wealth + Health Plan

Invest in the Reliance Wealth Health Plan and balance your health needs and wealth needs,
without compromising on either health or wealth.

11. Reliance Cash Flow Plan

Invest in the Reliance Cash Flow Plan and reap the dual benefits of a life insurance plan and
easy liquidity through lump sum cash, which means you can get a percentage of the Sum
Assured at periodic intervals.

Savings & Investment Plans

In life, you have always given your family whatever they have wanted. Yet, there are some
promises you have to fulfill, such as taking your family for a vacation, or buying that dream
house.

Set aside some money to achieve these specific goals with the help of Reliance Savings &
Investment Plans. The plan allows you to experience the joys of life and provide for your
familys needs.

Enjoy life without worrying about the promises you have madewe are here to fulfill them.
1. Reliance Super Invest Assure Plan
Reliance Super Invest Assure is a complete plan which addresses your vital needs like
Flexibility, Security, Investment Return and Financial Planning. With all its key benefits, it is
here to ensure that there will always be more than you can ask for!

2. Total Investment Plan I - Insurance

Reliance TIPS -Series I- Insurance is a Unit Linked Investment + Insurance Plan that helps
you meet all your financial needs, without the complexity of managing multiple products.

3. Reliance Wealth + Health Plan

Invest in the Reliance Wealth Health Plan and balance your health needs and wealth needs,
without compromising on either health or wealth.

4. Reliance Automatic Investment Plan

The Reliance Automatic Investment Plan is an enhanced unit linked plan that allows you to
choose the right investment mix to reap maximum benefits. It also provides you with
enhanced Life Cover.

5. Reliance Money Guarantee Plan

To reap the benefits of a rising market and to protect yourself from any market decline, invest
in the unit linked Reliance Money Guarantee plan that gives you the perfect balance between
Protection and Savings.

6. Reliance Cash Flow Plan

Invest in the Reliance Cash Flow Plan and reap the dual benefits of a life insurance plan and
easy liquidity through lump sum cash, which means you can get a percentage of the Sum
Assured at periodic intervals.
7. Reliance Market Return Plan
The Reliance Market Return Plan gives you insurance protection and allows you to benefit
from investment growth. It works through your life and meets the changing requirements you
may have from time to time.

8. Reliance Endowment Plan

The Reliance Endowment Plan gives you financial independence by allowing you to decide
the amount of Sum Assured based on your current financial position and expected future
expenses.

9. Reliance Special Endowment Plan

Imagine an endowment plan that protects you for a certain period even after you have
received your lump sumthat is exactly what the Reliance Special Endowment Plan offers
you with other added benefits.

10. Reliance Whole Life Plan

Give your family a lifetime of timely financial support by investing in the Reliance Whole
Life Plan. This will help you enjoy your life to the fullest.

11. Reliance Golden Years Plan

The Reliance Golden Years Plan helps you save systematically and generate the much-
needed corpus to help you enjoy life after retirement.

12. Reliance Golden Years Plan Value

Realize all your dreams of playing golf, or going for a world tour after retirement by
investing in the Reliance Golden Years Plan Value, which helps you generate the amount you
will need for the future.
13. Reliance GoldenYears Plan Plus
Invest in the special Reliance Golden Years Plan Plus that not only helps you build the corpus
you need after, but also collects a basic minimum amount in case something were to happen
before you realize your dreams.

14. Reliance Connect 2 Life Plan

The Reliance Connect 2 Life Plan gives you the option to upgrade your life cover to keep
pace with your changing lifestyle. As your income grows, your family will have sufficient
cover.

Retirement Plans

You are a young and earning individual. The income you earn allows you to enjoy life, your
only worry being whether you will be able to continue the same lifestyle after retirement.

A Reliance Retirement Plan will help you save money for your retirement. It ensures that you
continue to get some income after retirement thereby ensuring that you do not have to depend
on any other person or make any compromises to maintain the same lifestyle.

Invest in a Reliance Retirement Plan today and enjoy life after retirement on your own terms.

1. Total Investment Plan II - Pension

When you invest in the Reliance Total Investment Plan, you give yourself the assurance that
you will make each one of your dreams come true!.

2. Reliance Golden Years Plan

The Reliance Golden Years Plan helps you save systematically and generate the much-
needed corpus to help you enjoy life after retirement.
3. Reliance Money Guarantee Plan
To reap the benefits of a rising market and to protect yourself from any market decline, invest
in the unit linked Reliance Money Guarantee plan that gives you the perfect balance between
Protection and Savings...

Child Plans

Being a parent is one of the joys of life. Your child looks up to you and depends on you for
love, protection and support. You want to provide your child with the best in life.

The Reliance Child Plan helps you save systematically so that you can secure your childs
future needs. Be it higher education, his or her first home or any other requirement, you will
always be there for your child when he or she needs you.

So, invest in a Reliance Child Plan right awayit is the best gift you could ever give your
child.

1. Reliance Super InvestAssure Plan

Reliance Super InvestAssure is a complete plan which addresses your vital needs like
Flexibility, Security, Investment Return and Financial Planning. With all its key benefits, it is
here to ensure that there will always be more than you can ask for!

2. Reliance Child Plan

Save systematically and secure the financial future of your child by investing in the Reliance
Child Plan and let your child enjoy today without worrying about tomorrow.

3. Reliance Secure Child Plan

Reliance Life Insurance presents a unit linked insurance plan that secures your childs
financial future, leaving you free from worry.
4.Reliance Wealth + Health Plan
Invest in the Reliance Wealth Health Plan and balance your health needs and wealth needs,
without compromising on either health or wealth.

SOME LUCRATIVESPLANS WHICH RELIANCE OFFERS

RELIANCE ENDOWMENT PLAN

It takes a lot for a dream to become a reality. And money is surely an important part of it.

Reliance Endowment Plan gives you just the financial independence to realize your dreams
in the future. It lets you decide how much you would like to set as your Sum Assured based
on your current financial position and your expected future expenses.

So, go ahead... dream!!.

Key Features

1 .On maturity receive Sum Assured plus bonuses

2. Wealth creation through bonus additions

3. More Value for your money by way of High Sum Assured Rebate

4. Choose to add the Benefit of three Riders-Reliance Term Life Insurance Benefit Rider, 5.
Reliance Critical Conditions Rider and Reliance Accidental Death and Total and 6.Permanent
Disablement Rider

7. Choose to avail of Policy Loan after three years

CASH FLOW PLAN

While most insurance plans block your money for a certain period of time, Reliance Cash
Flow Plan gives you the double benefit of life insurance along with easy liquidity through
lump sum cash. It provides money periodically when you need it.
It lets you live life to the fullest today and at the same time, helps you stay protected for
tomorrow by giving you the flexibility of receiving a specified percentage of the Sum
Assured at specified intervals

Key Features

Easy Liquidity - Get periodic cash flows at the end of the fourth year and thereafter at the end
of every three years

Wealth creation through bonus additions

On maturity, accumulated bonuses along lump sum payout receive with final

More value for your money by way of High Sum Assured Rebate

Full Sum Assured plus bonuses in case of your unfortunate death, this is

over and above the Survival Benefits already paid

Option to add two Riders - Critical Illness Rider & Accidental Death Benefit and Total and
Permanent Disablement Rider

RELIANCE SUPERINVESTASSURE PLAN

UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT PORTFOLIO IS

BORNE BY THE POLICYHOLDER.

You have always aspired for the best in life. And we help you achieve that.

Heres a unique plan which combines protection and savings. It also offers complete
flexibility to gain control over your investments vis--vis your financial needs and risk
appetite.

We value your regular investments and thus reward you with guaranteed additions thus
promising unmatched benefits. This plan also offers you a unique option of moving from a
conservative fund to an aggressive fund systematically, to take advantage of the Rupee cost
averaging model.

A plan that promises you, what you ought to deserve as you reach greater heights in life.
What more can you ask for except gifting yourself with Reliance Super InvestAssure Plan

Key features Reliance Super InvestAssure Plan

Twin benefit of market linked return and insurance protection.

Guaranteed additions at the rate of 50% of your first years basic premium at interval of
every 5 years from 10th year till policy is in force

Investment opportunity with flexibility -Choose from 8 pure investment fund options.

Option to pay Top-up premium(s)

Liquidity in the form of partial withdrawals

A host of optional rider benefits to enhance protection cover.

RELAINCE AUTOMATIC INVESTMENT PLAN

UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT PROTFOLIO IS

BORNE BY THE POLICYHOLDER

Life is indeed delightful if you have the freedom to make choices. The Reliance Automatic
Investment Plan gives you just that ample freedom! And we make this freedom more
enjoyable by giving you a sense of security. Whether its your insurance or investments, we
let you make the choice and leave the rest to us.

So allow us to take over and you can be rest assured, because for us your LIFE comes
FIRST always.

This plan promise enhanced Life Cover, with complete flexibility to gain control over your
investments in tune with your financial needs and your risk appetite. A plan that promises
you what you deserve as you reach greater heights in life.
For a select few like you, the Reliance Automatic Investment Plan is an enhanced Unit
Linked plan addressing comprehensive needs to strike that perfect balance of protection and
Savings with full flexibility as you grow in your career. The Reliance Automatic Investment
Plan gives you full flexibility to choose just the right investment mix to reap higher benefits.

Key Features

Two plan option to choose from Ready-made and Tailor-made

Life Stage asset allocation to ensure automatic change in investment patterns, under the
Ready-made Plan option

Freedom to decide your own fund mix based on your risk profile under the Tailor-made Plan

Allows Systematic Transfer Plan to average out the cost of unit purchased in equality

Regular, limited, single premium paying options

Unmatched flexibility through out Exchange Option

Liquidity in the form of partial withdrawal

Option to avail of Accidental Death and Total & Permanent Disability and Term Insurance
riders

RELAINCE TOTAL INVESTMENT PLAN SERIES -1

The journey of life, even though it may seem simple, comes with its own twists and turns,
some good, some unfortunate. And along with these moments come new dreams. With every
little twist, our dreams change and so do our ambitions. And most of all we desire a security
that will help us follow our dreams, both financial and emotional. It is this security that
Reliance Life Insurance Company Limited promises to bring to you with its Total Investment
Plan Series I Insurance.

To know more, read further

We value your dreams in this journey of life. Reliance Total Investment Plan Series I
-Insurance (TIPS-I -Insurance) helps you bring them to reality. Your need for investment,
protection and financial liquidity keeps changing at different stages of life. The birth of a
child will require you to increase your insurance cover; a marriage in the family will require
additional money. We provide you that kind of flexibility which suits you best at your
convenience. Similarly on a promotion you may want to increase your investments to create
a large kitty for future expenses. As you progress on this ladder of life we provide you the
platform to increase your investment. Usually you would require multiple financial products
to meet all your needs and would have to actively manage them. However with the Reliance
TIPS-I -Insurance, Unit Linked Investment + Insurance Plan you can meet all your financial
needs, without the complexity of managing multiple products

Key Features

This is a Single Premium unit linked savings life insurance plan with options to purchase the
same plan with reduced allocation charges in subsequent policy years. Since more Premium
is allocated towards investment due to lower allocation charges on subsequent purchases,
greater would be the returns. Purchasing the same plan in the subsequent years is an option.

1st purchase would be called as Classic

2nd purchase would be called as Silver

3rd purchase would be called as Gold

4th purchase would be called as Diamond

5th purchase would be called as Platinum

Once you purchase the first policy there will full flexibility, as to when second and
subsequent purchase can be made and how much Premium should be paid for each purchase
subject to the following:

The minimum Premium on each purchase should be at least Rs. 25000 for life assured aged
up to 40 and Rs. 50000 for life assured aged 41 to 64.

The maturity date on each purchase cannot exceed 70 years.

All the polices should mature on maturity date of the first purchase.
The term of the polices purchased during second, third, fourth and fifth policy years will be
9, 8, 7 and 6 respectively.

New policy can be purchased only if all the previous polices are in force on the date of
purchase of new policy.

Plan Objective :

The pace setter plan with protection to life which gives

Tax benefit under Sec. 80C and Sec. 10(10D)* of Income Tax Act 1961

Investment opportunity with flexibility

Life protection

Control over your investments

OVERVIEW OF INSURANCE SECTOR

With largest number of life insurance policies in force in the world, Insurance
happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per
cent annually and presently is of the order of Rs 450 billion. Together with banking services,
it adds about 7 per cent to the countrys GDP. Gross premium collection is nearly 2 per cent
of GDP and funds available with LIC for investments are 8 per cent of GDP.

Yet, nearly 80 per cent of Indian population is without life insurance cover while
health insurance and non-life insurance continues to be below international standards. And
this part of the population is also subject to weak social security and pension systems with
hardly any old age income security. This itself is an indicator that growth potential for the
insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic development

as it provides long-term funds for infrastructure development and at the same time
strengthens the risk taking ability. It is estimated that over the next ten years India would
require investments of the order of one trillion US dollar. The Insurance sector, to some
extent, can enable investments in infrastructure development to sustain economic growth of
the country.

Insurance is a federal subject in India. There are two legislations that govern the
sector- The Insurance Act- 1938 and the IRDA Act- 1999. The insurance sector in India has
come a full circle from being an open competitive market to nationalization and back to a
liberalized market again. Tracing the developments in the Indian insurance sector reveals the
360-degree turn witnessed over a period of almost two centuries.

Indian Insurance Industry: Insurance may be described as a social device to reduce or

eliminate risk of life and property. Under the plan of insurance, a large number of people
associate themselves by sharing risk, attached to individual.
The risk, which can be insured against include fire, the peril of sea, death, incident, &
burglary. Any risk contingent upon these may be insured against at a premium
commensurate with the risk involved.

Insurance is actually a contract between 2 parties whereby one party called insurer
undertakes in exchange for a fixed sum called premium to pay the other party happening of
a certain event.

Insurance is a contract whereby, in return for the payment of premium by the insured,
the insurers pay the financial losses suffered by the insured as a result of the occurrence of
unforeseen events.

With the help of Insurance, large number of people exposed to a similar risk make
contributions to a common fund out of which the losses suffered by the unfortunate few,
due to accidental events, are made good

Potential Largely untapped market: 17% of the worlds population

o Nearly 80% of the Indian population is without Life, Health and Non-life
insurance
 o Life insurance penetration is low at 4.1% in 2006-07
o Non-life penetration is even lower at 0.6% in 2006-07
o The per capita spend on life and non-life insurance is US$33.2 and US$5.2
(2006-07), respectively compared to a world average of US$330 and US$224
o Strong economic growth with increase in affluence and rising risk awareness
leading to rapid growth in the Insurance sector
o Innovative products such as Unit Linked Insurance Policies are likely to drive
future industry growth
o Investment opportunities exist in both Life and Non-life segments
o Total estimated investment opportunity of US$14-15 billion

STRUCTURE

Indian Insurance market was opened to private & foreign investment in 1999-2000

The Indian Insurance industry consists of a total of 31 players

Life: 1 Public sector player; 15 private players
Non-Life: 6 public sector players; 9 private players
Major international players like AIG, Aviva, MetLife, New York Life, Prudential,
Allianz, Sun Life, Standard Life and Lombard are already present with minority
stakes in joint ventures with Indian companies for both Life and Non-life segments
Life Insurance market is still dominated by Life Insurance Corporation (LIC) - a
public sector company which has 75% share of first year premium in 2006-07
In Non-life, private sector companies (almost all are joint ventures with foreign
insurers) accounted for 34% of the market in 2006 to 07.

POLICY

FDI up to 26% is permitted under the automatic route subject to obtaining a license from
the Insurance Regulatory and Development Authority (IRDA)

Plans to increase FDI up to 49%

Insurance Regulatory Development Authority (IRDA) is the regulator for the Insurance
industry

In a landmark move the government detariffed the General Insurance business on 1st January
2007

What is Life Insurance?

Life insurance is a guarantee that your family will receive financial support, even in
your absence. Put simply, life insurance provides your family with a sum of money should
something happen to you. It thus permanently protects your family from financial crises.

In addition to serving as a protective cover, life insurance acts as a flexible money-

saving scheme, which empowers you to accumulate wealth-to buy a new car, get your
children married and even retire comfortably.

Life insurance is a contract that pledges payment of an amount to the person assured
(or his nominee) on the happening of the event insured against.

The contract is valid for payment of the insured amount during:

The date of maturity, or

Specified dates at periodic intervals, or

Unfortunate death, if it occurs earlier

The functions of Insurance can be bifurcated into two parts:

1. Primary Functions
2. Secondary Functions
3. Other Functions

The primary functions of insurance include the following:

Provide Protection - The primary function of insurance is to provide protection against
future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but
can certainly provide for the losses of risk. Insurance is actually a protection against
economic loss, by sharing the risk with others.

Collective bearing of risk - Insurance is a device to share the financial loss of few among
many others. Insurance is a mean by which few losses are shared among larger number of
people. All the insured contribute the premiums towards a fund and out of which the persons
exposed to a particular risk is paid.

Assessment of risk - Insurance determines the probable volume of risk by evaluating various
factors that give rise to risk. Risk is the basis for determining the premium rate also

Provide Certainty - Insurance is a device, which helps to change from uncertainty to

certainty. Insurance is device whereby the uncertain risks may be made more certain.

The secondary functions of insurance include the following:

Prevention of Losses - Insurance cautions individuals and businessmen to adopt suitable

device to prevent unfortunate consequences of risk by observing safety instructions;
installation of automatic sparkler or alarm systems, etc. Prevention of losses cause lesser
payment to the assured by the insurer and this will encourage for more savings by way of
premium. Reduced rate of premiums stimulate for more business and better protection to the
insured.

Small capital to cover larger risks - Insurance relieves the businessmen from security
investments, by paying small amount of premium against larger risks and uncertainty.

Contributes towards the development of larger industries - Insurance provides

development opportunity to those larger industries having more risks in their setting up. Even
the financial institutions may be prepared to give credit to sick industrial units which have
insured their assets including plant and machinery.
THE OTHER FUNCTIONS OF INSURANCE INCLUDE THE FOLLOWING:

Means of savings and investment - Insurance serves as savings and investment, 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, people invest in insurance.

Source of earning foreign exchange - Insurance is an international business. The country

can earn foreign exchange by way of issue of marine insurance policies and various other
ways.

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.

Need for Life Insurance

Today, there is no shortage of investment options for a person to choose from.
Modern day investments include gold, property, fixed income instruments, mutual funds and
of course, life insurance. Given the plethora of choices, it becomes imperative to make the
right choice when investing your hard-earned money. Life insurance is a unique investment
that helps you to meet your dual needs - saving for life's important goals, and protecting your
assets.

LET US LOOK AT THESE UNIQUE BENEFITS OF LIFE INSURANCE IN DETAIL.

Asset Protection
From an investor's point of view, an investment can play two roles - asset
appreciation or asset protection. While most financial instruments have the underlying
benefit of asset appreciation, life insurance is unique in that it gives the customer the
reassurance of asset protection, along with a strong element of asset appreciation.

The core benefit of life insurance is that the financial interests of ones family remain
protected from circumstances such as loss of income due to critical illness or death of the
policyholder. Simultaneously, insurance products also have a strong inbuilt wealth creation
proposition. The customer therefore benefits on two counts and life insurance occupies a
unique space in the landscape of investment options available to a customer.

Goal based savings

Each of us has some goals in life for which we need to save. For a young, newly
married couple, it could be buying a house. Once, they decide to start a family, the goal
changes to planning for the education or marriage of their children. As one grows older,
planning for one's retirement will begin to take precedence.

Clearly, as your life stage and therefore your financial goals change, the instrument in
which you invest should offer corresponding benefits pertinent to the new life stage.

Life insurance is the only investment option that offers specific products tailor-made for
different life stages. It thus ensures that the benefits offered to the customer reflect the needs
of the customer at that particular life stage, and hence ensures that the financial goals of that
life stage are met.

The table below gives a general guide to the plans that are appropriate for different life
stages.

Life Insurance
Life Stage Primary Need Product

Young &
Asset creation Wealth creation plans
Single

Young & Wealth creation and

Asset creation &
mortgage protection
Just married protection
plans

Children's
Married education, Education insurance,
mortgage protection &
With kids Asset creation wealth creation plans
and protection

Middle aged Planning for Retirement solutions &

 with grown up retirement &
mortgage protection
kids asset protection

Across all lif-

Health plans Health Insurance
stages

Insurance Life V/S Other Savings

Contract of Insurance:
A contract of insurance is a contract of utmost good faith technically known as
uberrima fides. The doctrine of disclosing all material facts is embodied in this important
principle, which applies to all forms of insurance.

At the time of taking a policy, policyholder should ensure that all questions in the
proposal form are correctly answered. Any misrepresentation, non-disclosure or fraud in any
document leading to the acceptance of the risk would render the insurance contract null and
void.

Protection:
Savings through life insurance guarantee full protection against risk of death of the
saver. Also, in case of demise, life insurance assures payment of the entire amount assured
(with bonuses wherever applicable) whereas in other savings schemes, only the amount
saved (with interest) is payable.

Aid to Thrift:
Life insurance encourages 'thrift'. It allows long-term savings since payments can be
made effortlessly because of the 'easy installment' facility built into the scheme. (Premium
payment for insurance is monthly, quarterly, half yearly or yearly).
For example: The Salary Saving Scheme popularly known as SSS provides a convenient
method of paying premium each month by deduction from one's salary.
In this case the employer directly pays the deducted premium to LIC. The Salary Saving
Scheme is ideal for any institution or establishment subject to specified terms and conditions.

Liquidity:
In case of insurance, it is easy to acquire loans on the sole security of any policy that
has acquired loan value. Besides, a life insurance policy is also generally accepted as
security, even for a commercial loan.

Tax Relief:
Life Insurance is the best way to enjoy tax deductions on income tax and wealth tax.
This is available for amounts paid by way of premium for life insurance subject to income
tax rates in force.
Assesses can also avail of provisions in the law for tax relief. In such cases the assured in
effect pays a lower premium for insurance than otherwise.

Money When You Need It:

A policy that has a suitable insurance plan or a combination of different plans can be
effectively used to meet certain monetary needs that may arise from time-to-time.
Children's education, start-in-life or marriage provision or even periodical needs for cash
over a stretch of time can be less stressful with the help of these policies.
Alternatively, policy money can be made available at the time of one's retirement from
service and used for any specific purpose, such as, purchase of a house or for other
investments. Also, loans are granted to policyholders for house building or for purchase of
flats (subject to certain conditions) .

Who Can Buy A Policy?

Any person who has attained majority and is eligible to enter into a valid contract can
insure himself/herself and those in whom he/she has insurable interest.

Policies can also be taken, subject to certain conditions, on the life of one's spouse or
children. While underwriting proposals, certain factors such as the policyholders state of
health, the proponent's income and other relevant factors are considered by the Corporation.

Insurance For Women

Prior to nationalization (1956), many private insurance companies would offer
insurance to female lives with some extra premium or on restrictive conditions. However,
after nationalization of life insurance, the terms under which life insurance is granted to
female lives have been reviewed from time-to-time.

At present, women who work and earn an income are treated at par with men. In other
cases, a restrictive clause is imposed, only if the age of the female is up to 30 years and if she
does not have an income attracting Income Tax.

Medical And Non-Medical Schemes

Life insurance is normally offered after a medical examination of the life to be
assured. However, to facilitate greater spread of insurance and also to avoid inconvenience,
LIC has been extending insurance cover without any medical examination, subject to certain
conditions.

With Profit And Without Profit Plans

An insurance policy can be 'with' or 'without' profit. In the former, bonuses disclosed,
if any, after periodical valuations are allotted to the policy and are payable along with the
contracted amount.

In 'without' profit plan the contracted amount is paid without any addition. The
premium rate charged for a 'with' profit policy is therefore higher than for a 'without' profit
policy.

Life Insurance: Major Players

 Name of Company

Public Sector

LIFE INSURANCE CORPORATION

Private Sector

ICICI Prudential

Bajaj Allianz

Birla Sun Life

HDFC Standard Life

Tata AIG

Customer Relationship Management

Customer Relationship Management focuses on acquiring, developing and creating

satisfied loyal customer; achieving profitable growth; and creating economic value in
companys brand.
 Customer Relationship Management strives to improve the customers experience of
how they interact with the company and produce high customer equity .the more loyal
customer, the higher are the customer equity.

Recently CRM has taken a center stage in the business world with businesses
concentrating on saving money and increasing profits by redefining internal processes and
procedures. It costs a company dramatically less to retain and grow an existing client, than it
does to court new ones. It is said that It is seven times more expensive to acquire a new
customer than to keep an existing one, therefore the value of customer information and
management should never be underestimated

Customer equity comprises of three drives

Value equity

Brand equity

Relationship equity

CRM (Customer Relationship Management) is something that is not restricted to any

country or culture. Wherever customers are there, business cannot afford to keep them
unhappy; and that is where CRM comes in as a strong requirement.

In India, the trend is positive. When compared to about twenty years ago , people have
more choice and every company knows it cant take customer for granted .May be the
movement is slow ,but we see a steady progress towards an increased focus on the customer
rather than merely on the products and price .
 Todays era is of service because customers are ultimate base line for any business to
sustain in this competitative world

For example: Banks started providing gold, silver cards to its valued customer,
depending on their needs the customer get faster services.

The concept of CRM is relatively simple and familiar to insurers. The two points of the
concept are:

Understand your customers' unique requirements.

Offer them the services and products over their lifetime that will maintain or
increase their profitability and retain them as your customers.

These are the some supporting strategies that implement these concepts to yield
significantly greater results and a true competitive advantage.

These supporting strategies generally fall into three groupings: analytical, marketing
and operational. The analytical path focuses on mining the data you have on your existing
customers, and marrying that data with external data when possible to develop a scoring
index. This index can then be reliably applied to individual customers to indicate their level
of profitability, tendency to remain a customer, and propensity to acquire other products and
services.

The current trends in crm followed by insurance companies

While the CRM market in India is still nascent, bigger players such as ICICI
Prudential Life Insurance Company are adopting it in a big way. The company was earlier
using GoldMines (a sales and marketing tool) and HEAT (an operational CRM solution)
from FrontRange Solutions. Last year it took a decision to invest in CM3 from Teradata and
SASs statistical tool for BI. Anil Tikoo, head-IT at ICICI Prudential Life Insurance
Company says, As a forward looking company, we see CRM playing a significant role in
acquiring new customers. CRM lets us obtain granular details about our customers, helping
us to design better products, improve service levels and reduce operational costs. CRM has
helped ICICI Prudential Life capture five lack customers through effective event-based
marketing and lead tracking to cross- and up-sell products.

Business drivers for CRM

Margins are under pressure: A couple of years ago, LIC dominated the insurance
market with the help of its sales force and channels and margins were reasonably high.
Today, there are close to 20 companies offering both life and general insurance products. All
of them have equally strong international and local partners; all are focusing upon similar
geographies and target audiences. The new firms selling life insurance and non-life insurance
[pensions, insurance as saving, etc] have failed to emulate the LIC model because margins
are getting squeezed. There are several pain areas that new insurance firms faceacquiring
new customers, retaining them, cross-selling products and controlling rising costs while
providing comprehensive support.

Insurers have added a variety of products and services to their kitty. These range from
insurance as an investment option to pension plans. They target the younger generation in the
20 to 30 years age group. The convergence of four factorsprotection, saving (investment
option), loans and pensionhave compelled insurance companies to align with banks in
reaching out to a larger audience, says Tikoo. This trend has led to anotherinsurance
companies are joining hands with banks by becoming channel partners for insurance. Tata
AIG has a marketing alliance with HSBC, Birla Sun Life has one with Citibank and IDBI
and LIC ally with Corporation Bank, while Kotak Life Insurance has an arrangement with
Kotak Bank. This strategy helps insurance firms increase their footprint to cover a larger part
of the customer base in the 20-30 years demographic. CRM helps connect a banks high net
worth customers with insurance firms.
Operational CRM &analytical CRM

The choice between operational and analytical CRM as a starting point depends upon
the insurers needs. Gartner says that insurance companies with multiple financial products
and a big customer base, such as integrated insurance solution providers, will leverage their
customer base to cross- and up-sell different financial products, including insurance. Such
providers will benefit from adopting analytical CRM. Market segmentation, campaign
management and data mining applications will benefit them in many ways.

Call center text mining: This tool can help improve the customer experience by
resolving complaints rapidly. Insurers are using these tools to mine text from call
center transcripts to identify issues faced by customers. Text mining tools also help
detect and capture other useful pieces of information around a customers life stage,
financial needs and product interests. These can be used to generate leads and trigger
cross-selling. However, to be fully effective, customer service representatives must be
trained to probe for information that will help in cross selling during the text-mining
phase. Text mining tools are leading edge today, but are predicted to take off quickly.

Event-triggering and profiling: Insurers can use event triggers to generate leads that
can be acted upon quickly, usually within 24 hours, says Tikoo. Event-triggering
tools monitor incoming transaction and contact data in near-real-time to recognize
changes in a customers behavior or profile to trigger actions or alerts.

Lead management gets sophisticated: Often the ability of an insurer to generate leads by
means of event-triggering, re-engineered touch points and cross line-of-business referral can
outstrip their ability to manage said leads. In such a situation, though the number of leads
generated rises, the conversion rate does not. It may even drop. CRM can help provide sales
representatives with a mechanism to prioritize and manage leads.

Changing customer behavior in insurance buying

In insurance buying, most customers would probably describe their level of

understanding of insurance contracts in the above manner. Customers know generally what a
policy covers; they also know that there are several fine prints in insurance contracts, which
they do not know, or perhaps care to know, at the time of buying. And they also seem to
generally conclude that when it comes to making a claim under an insurance policy, there
could be several issues of which they are just unaware at the time of buying the policy in the
first place.

Changing expectations

A remarkable trend in the insurance industry in the last three years is the rapid change
in the knowledge level as well as expectations of the customers. A study conducted last year
by Forte, a collaborative effort between FICCI and ING Vysya Insurance Co. about the
consumer behavior in the pre and post liberalization days of the industry had revealed
stunning changes in consumer expectations.

It looks as though the docile, uninformed, insurance consumer has suddenly been
transformed into an aggressive and highly demanding species. While the fresh air of
competition in every sector of the economy brings in major changes in consumer
expectations (witness the sea change in the attitude of automobile buyers in India in the last
five years), the insurance industry has witnessed a few unique aspects, such as regulation-
inspired efforts to educate insurance buyers, and a vast change in the skills and capabilities of
the intermediaries involved in distribution.

Motivating factors

In respect of life insurance, potential buyers are driven to buying a policy for one or
more of three major reasons: security of the money invested, saving for one or more specific
purposes, and the availability of tax benefit. Customers are increasingly known to place less
reliance on the tax benefit factor, and stress more on the security aspect and the end-use
objective. The challenge of the insurance companies is to address the motivating factors
imaginatively and come up with genuine solutions. Take for example, the consumers
objective of taking a policy to save money for higher education of a child. This has been a
driving force in the sale of new insurance contracts in several other countries too, notably in
Asia.

A potential buyer primarily expects that the saving should be a painless process and
that the money saved should be absolutely safe. The challenge is to provide not only
convenient payment options, but also mechanisms that could offer some measure of
protection and relief to the customer if he is forced to disrupt the payment arrangement for
unforeseen reasons.

On the issue of the consumers perception of security of the money invested, there are
two important aspects. One is how the features of the insurance contract are put across to the
buyer (whether it is a unit-linked policy or endowment oriented).

The second is how to address more effectively the question about the dependability of
the new generation companies that potential new insurance buyers raise during sales calls
especially outside metros and in small towns (referred to in publicity jargon as buyers in the
SEC B and C categories). Both insurance companies and the Regulator need to address this
behavioral challenge more actively.

Consumers experience

There has been a vast change in the approach of the insurance agent from the pre-
liberalization days. While the agent in the past established informal contacts with potential
buyers and often depended on referrals from friends and family members, the new age
companies insist on a professional, and often aggressive stance on the part of the sales staff.
Customer expectations in this regard revolve around two key aspects: first, whether the
customer is getting truthful advice from the agent, or if he is pushing a product that yields
him the highest commission rate. Invariably, the customers today expect the insurance agent
(and other intermediaries such as the banc assurance sales staff) to provide a ready
comparison of competitors products and how the product the agent is suggesting is superior
to the others. How far is the need-based analysis of insurance requirement, that the new age
sales staff are trained to offer, found to be relevant and useful to potential insurance buyers?
The answer varies from the metro cities and small towns. However outside metro cities,
customers tend to take a clear view that saving-oriented policies are more needed. There is
also marked reluctance to disclose the true personal financial status and the corresponding
insurance needs to insurance salespersons.

The second aspect of customers perception about the new generation of insurance
agents is the level of continuing commitment of the agent to arrange post-sale service.
Potential insurance buyers are unsure that they would continue to deal with the same agent
who sold the policy throughout the term.

They would tend to place more reliance on the companys general promises of service
and commitment. This is an important message for the insurance companies. As insurance
customers increasingly make arrangements to pay periodical premiums directly through the
electronic medium, or though automatic transfers from their bank accounts, thereby
bypassing the need for regular post-sale service by the agents, customers would tend to place
more reliance on the direct standard of service from the company concerned. Instances of
customers requiring agents to arrange for loans against their policies, or change nominations
etc. are rare. Therefore companies need to gear themselves to provide high service standards
directly.

Premium shopping

Is pricing or the premium rate for a policy, a deciding factor for buying insurance? It
is indeed so in a price sensitive market such as ours. In several forums, customers have
voiced the general feeling that as insurance products become more complex, and they get
bundled with several riders, it is becoming impossible to make price comparisons between
different companies.

An increasingly larger segment of customers now questions why the premium rate
should be the same for a policy if bought direct from the company over Internet, or through a
channel considered simpler, such as the banc assurance channel. There is logic in the
insurance companies passing on the cost saving to customers in such cases.
 It is time the Regulator seriously considered the customer expectations of differential
premium rates for the same policy bought through different channels and allowed the
practice. It should therefore be conceivable to offer premium rebate to insurance buyers who
consciously decide to approach the company directly for buying a policy (after presumably
taking the trouble of educating themselves about the product features and other aspects), and
choose to deal with the company directly for future servicing needs.

High expectations

One aspect of customer service from new age insurance companies that a remains to
be tested widely is the claim payment record. While consumers seem to be satisfied that the
survival benefits under a life insurance policy would get paid rather promptly from the tech-
savvy new companies, obviating the need for interlocution by the insurance agent, insurance
buyers are not yet convinced about hassle-free payment in the event of a claim, whether
under a life policy or a general insurance policy. This is especially so in respect of rider
benefits such as critical illness or hospitalization benefits.

The level of consumer skepticism on claim payment is markedly high in respect of

non-life insurance products, such as Householders Package or Medicaid policies. There is
considerable work to be done to boost the level of confidence both by insurance companies
and the Regulator. By the time a company completes the development of a strategy and
makes investments to pursue the strategy, the opportunity often ceases to exist. It is therefore
important that the new age insurance companies become kinetic enterprises, which can take
advantage of unpredictable customer demands and unexpected market events immediately.
This is vastly relevant for the Indian market where the insurance consumers are rapidly
coming of age.
References

www.google.com
CRM by pearson
www.relianceinsurance.com
www.mbanotes.com