You are on page 1of 64

MARKETING AND SALES STRATEGIES OF HDFC SLIC

1. INTRODUCTION

"The victory o£ success is half won when one gains the habit
of work."
- Sarah Knowles Bolton
When it says role of any life insurance company then one can define it in
a very simple way that a company is selling promise to a person and trying to
take the persons worries by taking less but by paying more. So, in this project I
will highlight all the major facts which have come across in Indian Life Insurance
Industry since its birth.

1.1 INSURANCE:

Insurance is a system by which a person, business or organization


transfers a risk to an insurance company, which reimburses the insured for
covered losses and provides for sharing the costs of losses among all insurers.

The major benefit of insurance is the indemnification of insurers for


covered losses. To indemnify is to restore the party that has had a loss to the
same financial position as before the loss occurred. Through indemnification,
insurance allows individuals, businesses and organizations to maintain their
economic position and not suffer financial setbacks causing a burden to society
or to other individuals. In addition, insurance indemnifies the injured persons.

When a family’s house is destroyed by fire and the loss is covered by


insurance, the family is less likely to be dependent on relatives or public
assistance for lodging. Likewise, when a business is covered for a large liability
loss that would have otherwise driven the firm into bankruptcy, insurance
contributes to society because the firm continues to provide jobs for its workers,
products for its customers and business for its suppliers.

Page 1 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

1.1.1 LIFE INSURANCE

Life Insurance can be defined as a policy that will pay a specified sum to
beneficiaries upon the death of the insured. It is an agreement that guarantees
the payment of a stated amount of monetary benefits upon the death of the
insured. Life Insurance could be said as protection against the death of the
insured in the form of payment to a designated beneficiary, typically a family
member or business.
The primary purpose of life insurance is therefore protection of the family
in the event of death. Today, insurance is also seen as a tool to plan effectively
for your future years, your retirement, and for your children's future needs.
Today, the market offers insurance plans that not just cover your life and but at
the same time grow your wealth too.

1.1.2 BENEFITS OF LIFE INSURANCE

1. Superior to Any Other Savings Plan:


Unlike any other saving plan, a life insurance policy affords full protection
against risk of death. In the event of death of a policyholder, the insurance
company makes available the full sum assured to the policyholder’s near and
dear ones. In comparison, any other saving plan would amount to the total
saving accumulated till date. If the death occurs prematurely, such savings can
be much lesser than the sum assured. Evidently, the potential financial loss to
the family of the policyholder is sizable.

2. Encourages and Forces Thrift:


A savings deposit can be easily withdrawn. The payment of life insurance
premiums, however, is considered sacrosanct and is viewed with the same
seriousness as the payment of interest on a mortgage. Thus, a life insurance
policy in effect brings about compulsory savings.

3. Easy Settlement and Protection against Creditors:

Page 2 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

A life insurance policy is the only financial instrument the proceeds of


which can be protected against the claims of a creditor of the assured by
effecting a valid assignment of the policy.

4. Administering the Legacy for Beneficiaries:


Speculative or unwise expenses quickly cause the proceeds to be
squandered. Several policies have foreseen this possibility and provide for
payments over a period of years or in a combination of installments and lump
sum amounts.

5. Ready Marketability and Suitability for Quick Borrowing:


A life insurance policy can, after a certain time period (generally three
years), be surrender for a cash value. The policy is also acceptable as a security
for a commercial loan, for example, a student loan. It is particularly advisable for
housing loans when an acceptable LIC policy may also cause the lending
institution to give loan at lower interest rates.

6. Disability Benefits:
Death is only the hazard that is insured; many policies also include
disability benefits. Typically, these provide for waiver of future premiums and
payments of monthly installments spread over certain time period.

7. Accidental Death Benefits:


Many policies can also provide for an extra sum to be paid (typically equal
to the sum assured) if death occurs as a result of accident.

8. Tax Relief:
Under the Indian Income Tax Act, the following tax relief is available:
a) 20% of the premium paid can be deducted from your total income tax
liability.

b) 100% of the premium paid is deductible from your total taxable


income. When these benefits are factored in, it is found that most
policies offer returns that are comparable/or even better than other

Page 3 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

saving modes such as PPF, NSC etc. Moreover, the cost of insurance
is a very negligible.

1.1.3 LIFE INDUSTRY IN INDIA


Origin of Insurance in India:
The business of life insurance in India in its existing form started in
India in the year 1818 with the establishment of the Oriental Life
Insurance Company in Calcutta. Some of the important milestones in the
life insurance business in India are:
 1912: The Indian Life Assurance Companies Act enacted as the
first statute to regulate the life insurance business.
 1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
 1938: Earlier legislation consolidated and amended to by the
Insurance Act with the objective of protecting the interests of the insuring
public.
 1956: 245 Indian and foreign insurers and provident societies taken over by
the central government and nationalized. LIC formed by an Act of Parliament,
viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the
Government of India.
 1999: After the amendment to the relevant laws in 1999, the LIC did not have
the exclusive privilege of doing life insurance business in India. By 31st
march 2002, eleven new insurance companies had been registered and
began to transact life insurance business in India. These private companies
have approved license from IRDA with a clause that an Indian company has
to hold majority stake i.e.74% and the foreign player can have a minority
stake of 26%. As a license fee every company has to deposit Rs.100 crore
with IRDA to start its business in India.
 2000: In February insurance bill are presented in budget session and in
October private insurance were back.

Page 4 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

1.1.4 INDIAN INSURANCE MARKET (FACTS AND FIGURES)


• Indian insurance industry is one of the fastest growing with annual growth
rate of more than 40% after liberalization of insurance sector.
• Indian insurance industry is US$25 billion industry with US$I4 billion
accounting for the first year premium.
• Only 20% of the insurable population of India is insured showing a large
untapped market with immense opportunity for different companies.
• First year premium contribution is only1.26 %of GDP.
• Growth rate of average increase in premium in India is 8.2% compared to
global average of 3%.Per capita premium is only $5 compared to $3236
in Japan $1079 in USA,$14 in Mexico.
• LIC's survey reveals that more than 40 percent of insurance-buyers look
at insurance products as a means of savings. Risk coverage is only a
secondary objective for them and nearly 26 percent of the insurance
policies sold are on considerations of old age security. Only 18 percent of
insurance policies are sold on death risk considerations.
• More than 80% of the premium collected during last 5 years was from
ULIP.
• Among total insured population only 14 % are female.

1.2 LIFE INSURANCE CORPORATION OF INDIA


Life Insurance Corporation of India (LIC) was formed in September, 1956 by
an Act of Parliament, viz., Life Insurance Corporation Act, 1956, with capital
contribution from the Government of India. The then Finance Minister, Shri C.D.
Deshmukh, while piloting the bill, outlined the objectives of LIC:
• 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 invest the funds for obtaining maximum yield for the policy holders
consistent with safety of the capital.

Page 5 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• To render prompt and efficient service to policy holders, thereby making


insurance widely popular.
Since nationalization, LIC has built up a vast network of 2,048 branches, 100
divisions and 7 zonal offices spread over the country. The Life Insurance
Corporation of India also transacts business abroad and has offices in Fiji,
Mauritius and United Kingdom. LIC is associated with joint ventures abroad in
the field of insurance, namely, Ken-India Assurance Company Limited, Nairobi,
United Oriental Assurance Company Limited, Kuala Lumpur and Life Insurance
Corporation (International) E.C. Bahrain. The Corporation has registered a joint
venture company in 26th December, 2000 in Kathmandu, Nepal by the name of
Life Insurance Corporation (Nepal) Limited in collaboration with Vishal Group
Limited, a local industrial Group.
Followings are some of the points that describe LIC:
 Monopoly of four decade: before 1999 LIC was the only insurance company
allowed to do life insurance business in India. Therefore it had monopoly of
over four decades. Despite being a monopoly, it has some 60-70 million
policyholders. Given that the Indian middle-class is around 250-300 million,
the LIC has managed to capture some 30 odd percent of it.
 Large distribution network: LIC has maximum number of branches (2048
computerized branches) and largest number of tied agents (819000) .Most of
its business comes from these agents but LIC has worked very little towards
giving training to these agents.
 Strong Brand Image: With over fifty years of business LIC has made a
strong brand image which gives it a competitive advantage over other
companies. Most of the people in India associate life insurance with LIC.
People in India have immense faith on LIC than private players despite of its
poor customer service.
 First mover advantage: LIC is the company that has shown India the need
of insurance. Therefore it has tie ups with the various big corporate and HNI
clients, which gives it good business premiums.

Page 6 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

 Largest life fund: With a business of more than 50 years LIC has maximum
amount of life fund (More than US$40 billion). Despite of it LIC‘s premium is
not the cheapest in the industry and also it does not give the highest returns
to its policyholders.
 High clerical costs: In this modern era where everything is automated the
need for clerical staffs has reduced significantly. LIC has the maximum
numbers of employee in this clerical category which incurs LIC a large
amount of fixed costs.

1.2.1 REFORMS IN THE INSURANCE SECTOR

In 1993, Malhotra Committee, headed by former Finance Secretary and


RBI Governor R. N. Malhotra, was formed to evaluate the Indian insurance
industry and recommend its future direction. The Malhotra committee was set up
with the objective of complementing the reforms initiated in the financial sector.
The reforms were aimed at “creating a more efficient and competitive
financial system suitable for the requirements of the economy keeping in mind
the structural changes currently underway and recognizing that insurance is an
important part of the overall financial system where it was necessary to address
the need for similar reforms…” In 1999, the committee submitted the report and
some of the key recommendations included:
I. Structure
• Government stake in the insurance Companies to be brought down to 50%.
• Government should take over the holdings of GIC and its subsidiaries so that
these subsidiaries can act as independent corporations.
• All the insurance companies should be given greater freedom to operate.
II. Competition
• Private Companies with a minimum paid up capital of Rs.1bn should be
allowed to enter the industry.
• No Company should deal in both Life and General Insurance through a single
entity.

Page 7 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• Foreign companies may be allowed to enter the industry in collaboration with


the domestic companies.
• Postal Life Insurance should be allowed to operate in the rural market.
• Only one State Level Life Insurance Company should be allowed to operate
in each state.
III. Regulatory Body
• The Insurance Act should be changed.
• An Insurance Regulatory body should be set up.
• Controller of Insurance (Currently a part from the Finance Ministry) should be
made independent.
IV. Investments
• Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%.
• GIC and its subsidiaries are not to hold more than 5% in any company (There
current holdings to be brought down to this level over a period of time).
V. Customer Service
• LIC should pay interest on delays in payments beyond 30 days.
• Insurance companies must be encouraged to set up unit linked pension
plans.
• Computerization of operations and updating of technology to be carried out in
the insurance industry.

1.3 ORIGIN AND DEVELOPMENT OF THE INDUSTRY

Page 8 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Development of Insurance in India


A thriving insurance sector is of vital importance to every modern
economy. First because it encourages the savings habit, second because it
provides a safety net to rural and urban enterprises and productive individuals.
And perhaps most importantly it generates long-term investible funds for
infrastructure building. The nature of the insurance business is such that the
cash inflow of insurance companies is constant while the payout is deferred and
contingency related.

This characteristic of their business makes insurance companies the


biggest investors in long-gestation infrastructure development projects in all
developed and aspiring nations. This is the most compelling reason why private
sector (and foreign) companies which will spread the insurance habit in the
societal and consumer interest are urgently required in this vital sector of the
economy.

With the nation's infrastructure in a state of imminent collapse, India


couldn't have afforded to be lumbered with sub-optimally performing monopoly
insurance companies and therefore the passage of the Insurance Regulatory &
Development Authority Bill on December 2, 1999 heralds an era of cautious
optimism where stakes are high for all parties concerned. For the Govt. of India,
Foreign Direct Investment (FDI) must pour in as anticipated; for foreign insurers,
investments must start yielding returns and for the domestic insurance industry -
their market penetration should remain intact. On the fringe, the customer is
pondering whether all the hype created on liberalization will actually benefit him.

The IRDA Bill provides for the establishment of an authority to protect the
interests of the holders of insurance policies, to regulate, promote and insure
orderly growth of the insurance industry and amend the Insurance Act, 1938, the
Life Insurance Act, 1956 and the General Insurance Business (Nationalization)
Act, 1972. The bill allows foreign equity stake in domestic private insurance
companies to a maximum of 26 per cent of the total paid-up capital and seeks to
provide statutory status to the insurance regulator. Before privatization,

Page 9 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

insurance business in India was pegged at $ 6.6 Billion whereas industry leaders
expected at that time that privatization will increase it to $ 40 Billion within next 3-
5 years.

1.3.1 INSURANCE REGULATION & DEVELOPMENT BILL


On October 21st, 1999 the government finally offered IRDA bill for the
consideration of the new parliament. The new bill called insurance Regulatory
Authority Bill 1999. Bills to provide for establishment of an authority to protect the
interest of holders of insurance policies and to regulate promote and insure
orderly growth of the industry.

IRDA
As per the section 4 of IRDA Act' 1999, Insurance Regulatory and
Development Authority (IRDA, which was constituted by an act of parliament)
specify the composition of Authority.

The Authority is a ten-member team consisting of:

a) A Chairman;
b) five whole-time members;
c) four part-time members, (all appointed by the Government of India)

Duties, Powers and Functions of IRDA


Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of
IRDA.

(1) Subject to the provisions of this Act and any other law for the time being in
force, the Authority shall have the duty to regulate, promote and ensure
orderly growth of the insurance business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section.


I. The powers and functions of the Authority shall include, -
a) Issue to the applicant a certificate of registration, renew, modify,
withdraw, suspend or cancel such registration;

Page 10 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

b) Protection of the interests of the policy holders in matters


concerning assigning of policy, nomination by policy holders,
insurable interest, settlement of insurance claim, surrender value of
policy and other terms and conditions of contracts of insurance;
c) Specifying requisite qualifications, code of conduct and practical
training for intermediary or insurance intermediaries and agents;
d) Specifying the code of conduct for surveyors and loss assessors;
e) Promoting efficiency in the conduct of insurance business;
f) Promoting and regulating professional organizations connected
with the insurance and re-insurance business;
g) Levying fees and other charges for carrying out the purposes of
Act;
h) Calling for information from, undertaking inspection of, conducting
enquiries and investigations including audit of the insurers,
intermediaries, insurance intermediaries and other organizations
connected with the insurance business;
i) Control and regulation of the rates, advantages, terms and
conditions that may be offered by insurers in respect of general
insurance business not so controlled and regulated by the Tariff
Advisory Committee under section 64U of the Insurance Act, 1938
(4 of 1938);
j) Specifying the form and manner in which books of account shall be
maintained and statement of accounts shall be rendered by
insurers and other insurance intermediaries;
k) Regulating investment of funds by insurance companies;
l) Regulating maintenance of margin of solvency;
m) Adjudication of disputes between insurers and intermediaries or
insurance intermediaries;
n) Supervising the functioning of the Tariff Advisory Committee;

Page 11 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

o) Specifying the percentage of premium income of the insurer to


finance schemes for promoting and regulating professional
organizations referred to in clause (f);
p) Specifying the percentage of life insurance business and general
insurance business to be undertaken by the insurer in the rural or
social sector; and
q) Exercising such other powers as may be prescribed.

1.3.2 GROWTH AND PRESENT STATUS OF INDUSTRY:


The life insurance industry in India grew by an impressive 47.38%, with
premium income at Rs. 1560.41 billion during the fiscal year 2006-2007. Though
the total volume of LIC's business increased in the last fiscal year (2006-2007)
compared to the previous one, its market share came down from 85.75% to
81.91%. Total life insurance premium in India is projected to grow Rs 1,230,000
Crores by 2010-11.
The 17 private insurers increased their market share from about 15% to
about 19% in a year's time. The figures for the first two months of the fiscal year
2007-08 also speak of the growing share of the private insurers. The share of
LIC for this period has further come down to 75 percent, while the private players
have grabbed over 24 percent.
With the opening up of the insurance industry in India many foreign
players have entered the market. The restriction on these companies is that they
are not allowed to have more than a 26% stake in a company’s ownership.
Since the opening up of the insurance sector in 1999, foreign investments
of Rs. 8.7 billion have poured into the Indian market and 19 private life insurance
companies have been granted licenses.
Innovative products, smart marketing, and aggressive distribution have
enabled fledgling private insurance companies to sign up Indian customers faster
than anyone expected. Indians, who had always seen life insurance as a tax
saving device, are now suddenly turning to the private sector and snapping up
the new innovative products as an offer. Some of these products include

Page 12 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

investment plans with insurance and good returns (unit linked plans), multi-
purpose insurance plans, pension plans, child plans and money back plans.

Future of Industry:
We live in the information age. Most of the people are becoming more
aware of the importance of insurance in their life.
Today, natural disasters on a large scale occur regularly and even
terrorism is increasing day by day. Specialized software’s are used in actuarial
science to predict accurately life expectancy and mortality. But natural disasters
are difficult to predict.
This shows that insurance is a basic and fundamental need for the safety
and security of the person and his family. Only a larger insurance cover can
guarantee a better future. However insurance claims for natural disasters are
very low. This is because insurance coverage was too low, and those who really
needed insurance had not taken it. There is the need to push insurance as a
social responsibility for those who really need it.

Therefore future of insurance industry is very bright and growth oriented.

REASONS FOR LIBERALIZATION OF INSURANCE SECTOR


Indian economy was growing at a very high rate after liberalization .Due to
development in the services sectors increase in literacy and per capita income,
demand for various financial instruments including insurance increased. Among
the emerging economy India was the least insured country. And it was found that
after liberalization of insurance sectors Korean and Taiwan economy increased
at a very high pace (almost 3-4 times more than GDP growth).It was very difficult
for LIC to cover whole population of India. Further it was necessary to open
insurance to foster competition, innovation and variety of products. And also it
was necessary to generate greater awareness on the need of buying insurance
as a service not merely as a tax exemption.

Page 13 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

1.4 BRIEF DESCRIPTION ABOUT THE COMPANY

“HDFC STANDARD LIFE”


ORIGIN OF THE ORGANIZATION
HOUSING DEVELOPMENT FINANCE CORPORATION LTD.

Founded in 1977, HDFC is today the market leader in housing finance in


India and has extended financial assistance to more than 15 lacks homes. HDFC
has more than 110 offices in Dubai and 3 more services associates’ insurance
Kuwait, Qatar and Sultanate of Oman. HDFC’s assets base amount to over
15,000 crores. Its financial strength is reflected in highest safety rating of “FAAA”
and “MAAA” awarded by CRISIL and ICRA- two of India’s leading credit rating
agency respectively, for the last 6 years consecutively, it has a depositor base of
over 11 lacks customer and a deposit agents force of over 46,000 of the total
deposit, 73% are sourced from individual and trust depositories, which
demonstrates the tremendous confidence that retail investors have insurance the
company.
HDFC- Promoted companies have emerged to meet the investors and
customers needs; HDFC bank for commercial banking, HDFC mutual fund for
products, to be followed very shortly by HDFC Standard Life Insurance Company
for the life insurance and pension products.
Being an institution that is strongly committed to the highest of quality and
excellence, HDFC has won several accolades in the past few years. One such
award is the ‘Ramakrishna Bajaj National Quality Award” for the year 1999. This
award was instituted to Award Recognition to Indian Companies for business
excellence and quality achievement. HDFC is the only company so far to receive
this award in the service category.
The road to success is a tough and challenging journey in the dark where
only obstacles light the path. However, success on a terrain like this is not
without a solution.

Page 14 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

As we found out nearly three decades ago, in 1977, the solution for
success is customer satisfaction. All you need is the courage to innovate, the
skill to understand your clientele and the desire to give them your best 32
Today, nearly three million satisfied customers whose dream we helped
realize, stand testimony to our success.
Our objective, from the beginning, has been to enhance residential
housing stock and promote home ownership.
Now, our offerings range from hassle-free home loans and deposit
products, to property related services and a training facility.
We also offer specialized financial services to our customer base through
partnerships with some of the best financial institutions worldwide.

Objectives & Background

Housing Finance Sector


Against the milieu of rapid urbanization and a changing socio-economic
scenario, the demand for housing has grown explosively. The importance of the
housing sector in the economy can be illustrated by a few key statistics.
According to the National Building Organization (NBO), the total demand for
housing is estimated at 2 million units per year and the total housing shortfall is
estimated to be 19.4 million units, of which 12.76 million units is from rural areas
and 6.64 million units from urban areas. The housing industry is the second
largest employment generator in the country. It is estimated that the budgeted 2
million units would lead to the creation of an additional 10 million man-years of
direct employment and another 15 million man-years of indirect employment.
Having identified housing as a priority area in the Ninth Five Year Plan
(1997-2002), the National Housing Policy has envisaged an investment target of
Rs. 1,500 billion for this sector. In order to achieve this investment target, the
Government needs to make low cost funds easily available and enforce legal
and regulatory reforms.

Page 15 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Background
HDFC was incorporated in 1977 with the primary objective of meeting a
social need – that of promoting home ownership by providing long-term finance
to households for their housing needs. HDFC was promoted with an initial share
capital of Rs. 100 million.

Business Objectives
The primary objective of HDFC is to enhance residential housing stock in
the country through the provision of housing finance in a systematic and
professional manner, and to promote home ownership. Another objective is to
increase the flow of resources to the housing sector by integrating the housing
finance sector with the overall domestic financial markets...

Organizational Goals
HDFC’s main goals are to
a) Develop close relationships with individual households.
b) Maintain its position as the premier housing finance institution in the
country.
c) Transform ideas into viable and creative solutions.
d) Provide consistently high returns to shareholders, and
e) To grow through diversification by leveraging off the existing client base.

Organization and Management


HDFC is a professionally managed organization with a board of directors
consisting of eminent persons who represent various fields including finance,
taxation, construction and urban policy & development. The board primarily
focuses on strategy formulation, policy and control, designed to deliver
increasing value to shareholders.

Page 16 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Board of Directors:
Mr. Deepak S. Parekh - Chairman
Sir Alexander M. Crombie - Group CEO
Mr. Keki M. Misty - MD
Ms. Marcia D. Campbell - Group operation Director
Ms. Renu S. Karnad - Executive Director
Mr. Norman K. Skeoch - Chief Executive
Mr. Gautam R. Divan - CA
Mr. Ranjan Pant - Global Management Consultant
HDFC has a staff strength, which includes professionals from the fields of
finance, law, accountancy, engineering and marketing.

STANDARD LIFE INSURANCE COMPANY (SLIC)


The Standard Life Assurance Company ("Standard Life") was established
in 1825 and the first Standard Life Assurance Company Act was passed by
Parliament in 1832. Standard Life was reincorporated as a mutual assurance
company in 1925.
The Standard Life group originally operated only through branches or
agencies of the mutual company in the United Kingdom and certain other
countries.
Its Canadian branch was founded in 1833 and its Irish operations in 1838.
This largely remained the structure of the group until 1996, when it opened a
branch in Frankfurt, Germany with the aim of exporting its UK life assurance and
pensions operating model to capitalize on the opportunities presented by EC
Directive 92/96/EEC (the “Third Life Directive”) and offer a product range in that
market with features which local providers were unable to offer.
In the 1990s, the group also sought to diversify its operations into areas
which complemented its core life assurance and pensions business, with the
intention of positioning itself as a broad range financial services provider.

Page 17 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Banking, Healthcare & Investments


The group set up Standard Life Bank, its UK mortgage and retail savings
banking subsidiary, in 1998 and Standard Life Investments, which had previously
been the in-house investment management unit of the group’s life assurance and
pensions business, was separated into a distinct legal entity in the same year,
with the aim of establishing it as an independent investment management
business providing services to both the group and third party retail and
institutional clients. The group acquired Prime Health Limited (subsequently
renamed Standard Life Healthcare) in the United Kingdom in 2000. Standard Life
Healthcare expanded in March 2006 with the acquisition of the PMI business of
First Assist.
Standard Life Asia Limited/Joint ventures –
The group’s Hong Kong subsidiary, Standard Life Asia Limited (“SL
Asia”), was incorporated in 1999 as a joint venture and became a wholly-owned
subsidiary of Standard Life in 2002. The group’s operations in Hong Kong were
established to give the group a presence in the Far East from which it could
expand into China. The group’s joint ventures in India with Housing Development
Finance Corporation Limited (“HDFC”) were incorporated in 2000 (in relation to
the life assurance and pension’s joint venture) and 2003 (in relation to the
investment management joint venture). The group’s joint venture in China with
Tianjin Economic Development Area General Company (“TEDA”) became
operational in 2003.
Standard Life International Limited
The group also incorporated Standard Life International Limited (“SLIL”) in
2005 for the purposes of providing the group with an offshore vehicle, based in
Ireland, through which it could sell tax-efficient investment products into the
United Kingdom. Sales of these products commenced in 2006.
Service Company
Following the group’s strategic review in 2004, the group established a
service company structure for the provision of central corporate services to the

Page 18 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

group’s business units. Standard Life Employee Services Limited (“SLESL”)


supplies a wide range of central services to the rest of the group, including IT,
facilities, legal and human resources services, and employs staff working in the
group’s UK and Irish operations (other than SLI, SLB and SLH, which employ
their staff directly). This service company structure was created to enable
Standard Life to comply with regulatory restrictions on the provision of non-
insurance services and to exploit group-wide synergies.

Standard Life plc structure


Underneath Standard Life plc are Standard Life Healthcare Limited,
Standard Life Investments (Holdings) Limited (and underneath it, Standard Life
Investments Limited), Standard Life Oversea Holdings Limited, Standard Life
Employee Services Limited, Standard Life Assurance Limited and Standard Life's
Joint Venture interest in China
Underneath Standard Life Oversea Holdings are Standard Life Asia
Limited and Standard Life Financial Inc (and underneath it, The Standard Life
Assurance Company of Canada).
Underneath Standard Life Assurance Limited are Standard Life Direct
Limited, Standard Life Savings Limited, Standard Life Direct Limited, Standard
Life Trustee Company Limited, Standard Life Bank Limited, Standard Life
Pensions Funds Limited, Standard Life International Limited and The Standard
Life Assurance Company 2006, which currently holds Standard Life's Joint
Venture interests in India.

The Partnerships
HDFC and Standard Life commenced discussions about possible joint
venture, to enter the life insurance market, in Jan. 1995. It was clear from the
outset that both companies shared similar values and benefits and a strong
relationship quickly formed. In Oct.1995 the companies signed a 3 year joint
venture agreement.
Around this time Standard Life purchased a 5% stake in HDFC, further
strengthening the relationship.

Page 19 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

A small project term was set up in UK and India and set about preparatory
work. Among other things, the team conducted market research, looked at
possible information technology, documented high level business process maps
and set about preparing the first project plan.
The next three years were filled uncertainty, due to change in insurance
Govt. and both ongoing delays in getting the insurance bill passed in parliament.
Despite this both companies remained firmly committed to venture.
In Oct.1998, the joint venture agreement was removed and additional
resources made available. Around this time Standard Life purchased 2%
Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also
started to use the services of the HDFC Treasury Department to advise them
upon their investment insurance India.
One of many success stories over the last few years has been the
actuarial student program. The program was designed to identify high caliber
individuals who would be sponsored by Standard Life to study for their actuarial
qualification in the UK.
The new company has 1 Indian actuary and 5 actuarial students in the
team. With a further 2 students undergoing training in the UK, Both parent
companies strongly believe the program will benefit the new company. Towards
the end of 1999, the opening of the market looked very promising and both
companies agreed the time was right to move the operation to the next level.
Therefore, in Jan.2000 and expect team form the UK joined a handpicked team
from HDFC to form the core project term based in Mumbai.
Around this time Standard Life purchased a further 5% stake in HDFC
bank. The Assets Management Company promoted by HDFC to enter the
mutual fund market. The mutual fund market was launched on 20 th July 2000 and
on 10th Nov.2000 assets under the management reached Rs. 1,063 crores. The
company was incorporated on 14th Aug. 2000 under the name of HDFC
Standard Life Insurance Company Limited. The ambition of the company from
as far as back as Oct. 1995 was first to be private company to re-enter in the life
insurance market in India. On 23rd of Oct.2000, this ambition was realized when

Page 20 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

HDFC Standard Life Insurance Company Limited were only life company to be
granted a certificate of registration.
HDFC are main shareholders in HDFC Standard Life Insurance Company
Limited with 81.4% while Standard Life own 18.6% given Standard Life’s existing
investment in the HDFC Group. This is maximum investment allowed under
current regulations.

HDFC Standard Life Insurance Company Ltd.


HDFC Standard Life Insurance Company Ltd. is one of India's leading
private insurance companies, which offers a range of individual and group
insurance solutions. It is a joint venture between Housing Development Finance
Corporation Limited (HDFC Ltd.), India's leading housing finance institution and a
Group Company of the Standard Life, UK. HDFC as on March 31, 2007 holds
81.9 per cent of equity in the joint venture.

Growth and Development of Company:

Highlights of Financial Year 2008-09 in comparison of FY 2007-08


 Total Premium Income is up by 15% at Rs. 5564.69 crores as against Rs.
4858.56 crores in FY2007-08.
 Renewal premium collected increased to Rs. 2913.58 crores from Rs.
2173.19 crores in the previous year, registering a growth of 34%.
 A well balanced product portfolio with pension comprising over 40% children
plans around 25% and the remaining constituting protection and savings
plans.
 Total assets under management increased to Rs. 10,595 crores, registering a
growth of 24% over FY2007-08.
 Assets under management for the Group business have increased to Rs.
1075 crores, registering a growth of 12% over FY2007-08.
 Strength of Financial Consultants reported year-on-year growth of 43% to
over 2, 07,000 in FY2008-09 compared to 1, 45,000 last financial years.
 The sum assured in-force for 2008-09 was Rs. 57,158 crores as compared to

Page 21 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Rs. 45,743 crores for the previous year.


 Number of working financial agents is 1,657,042 in 2007-08 than 970,774 in
2006-07.
 As on February 28, 2009 HDFC Ltd. holds 72.43% and Standard Life
(Mauritius Holding) 2006, Ltd. holds 26.00% of equity in the joint venture,
while the rest is held by others.
HDFC Standard Life believes that establishing a strong and ethical
foundation is an essential prerequisite for long-term sustainable growth. To
ensure this, we have concentrated our focus on expansion of branch network,
organizing an efficient and well trained sales force, and setting up appropriate
systems and processes with optimum use of technology. As all these areas form
the basic infrastructure for establishing the highest possible customer service
standards.
Our core values are drilled down to all levels of employees, as these are
inviolable. We continue to promote high integrity in business practices and shun
short cuts and unethical practices, as we wish to be perceived as an institution
with high moral standing. Since our inception in 2000, when the Indian insurance
space was opened for private participation, we have consistently focused on
setting benchmarks in all aspect on insurance business. Being the first private
player to be registered with the IRDA and the first to issue a policy on December
12, 2000, our differentiators are:

Present Status of the Company:


Highlights of Financial Year 2008-09 ending March 31, 2009:
 Total Premium Income is up by 15% at Rs. 5564.69 crores as against Rs.
4858.56 crores in FY2007-08.
 Renewal premium collected increased to Rs. 2913.58 crores from Rs.
2173.19 crores in the previous year, registering a growth of 34%.
 Effective Premium Income (EPI) in respect of retail business increased by
5%, growing from Rs 2,425 crores in 2007-08 to 2,552 crores in 2008-09.

Page 22 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

 Alternate Channels, including banc assurance, contributed about 45% to


the Effective Premium Income (EPI).
 A well balanced product portfolio with pension comprising over 40%
children plans around 25% and the remaining constituting protection and
savings plans.
 Total assets under management increased to Rs. 10,595 crores,
registering a growth of 24% over FY2007-08.
 Assets under management for the Group business have increased to Rs.
1075 crores, registering a growth of 12% over FY2007-08.
 Company products and services are now available through a network of
595 offices serving over 700 cities and towns across the country. This is
further complemented by corporate agency relationships with public,
private and cooperative banks.
 Strength of Financial Consultants reported year-on-year growth of 43% to
over 2, 07,000 in FY2008-09 compared to 1, 45,000 last financial years.
 The sum assured in-force for 2008-09 was Rs. 57,158 crores as
compared to Rs. 45,743 crores for the previous year.
 The company has received accreditation from the Insurance Regulatory
and Development Authority (IRDA) for 149 training centers housed in its
branches.
 To meet the demands arising from the company’s rapid growth, the
promoters contributed an additional Rs. 525 crores of equity to take the
paid-up share capital as on March 2009 to Rs. 1796 crores.

Vision & Values:


Vision:
“The most successful and admired life insurance company, which mean
that we are the most trusted company, the easiest to deal with, offer the best
value for money, and set the standards in the industry.”
“The most obvious choice for all”

Page 23 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Values:
Values that we observe while we work:
 Integrity
 Innovation
 Customer centric
 People Care “One for all and all for one”
 Team work
 Joy and Simplicity
Awards & Accolades:
Awards received in 2008:
 Received 2008 CIO Bold 100 and CIO Security Awards in Sept,
2008.
 Received PCQuest Best IT Implementation Award 2008 in May,
2008.
 Silver Abby at Goafest 2008 in March, 2008.
 Unit Linked Savings Plan Tops Mint Best TV Ads Survey in March,
2008.
 Deepak M Satwalekar Awarded QIMPRO Gold Standard Award
2007 in Feb, 2008.
 Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising Moments
in Jan, 2008.
Other rewards and honors:
 “Best New Insurer” Award from Outlook Money – 2003.
 “Most Respected Private Insurance Company” Award from
Business World – 2004.
 “Best New Insurer” Award from Outlook Money – 2006.

Page 24 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

 First Private Life Insurance Co. to get license from IRDA.


Associate Companies:
 HDFC Limited
 HDFC Bank
 HDFC Mutual Fund
 HDFC Sales
 HDFC Realty
Other Companies:
 HDFC Trustee Company Ltd.
 GRUH Finance Ltd.
 HDFC Developers Ltd.
 HDFC Property Ventures Ltd.
 HDFC Ventures Trustee Company Ltd.
 HDFC Investments Ltd.
 HDFC Holdings Ltd.
 Credit Information Bureau (India) Ltd
 HDFC Securities
Brief Introduction to associate companies:
HDFC Limited:
 HDFC is abbreviation of Housing Development Finance Corporation Ltd.
 It is a unique example of a housing finance company.
 It is viewed as an innovative institution and a market leader in the housing
finance sector in India.
 HDFC’s executives have undertaken consultancy assignments related to
housing finance and urban development on behalf of multilateral agencies all
over the world.
 At the national level, HDFC executives have played a key role in
formulating national housing policies and strategies.
HDFC Bank:

Page 25 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

 HDFC Bank was incorporated in August 1994, and, currently has a


nationwide network of 1412 Branches and 3295 ATM's in 528 Indian
towns and cities.
 Its single-minded focus on product quality and service excellence
 Business declared the ‘Best Bank 2008’.
 The bank won The bank won the 'Nasscom - CNBC TV18 IT User Award
2008' in the Banking sector.the ‘Nasscom CNBC TV 18 IT User Award 2008’
in banking sector.
 HDFC Bank chosen as one of the Asia Pacific’s best 50 companies by
Forrbes magazines.
HDFC Mutual Fund:
HDFC Asset Management Company Limited (AMC):
HDFC Asset Management Company Ltd (AMC) was incorporated under
the Companies Act, 1956, on December 10, 1999, and was approved to act as
an Asset Management Company for the HDFC Mutual Fund by SEBI vide its
letter dated July 3,2000.
The registered office of the AMC is situated at Ramon House, 3rd Floor,
H.T. Parekh Marg, 169, Backbay Reclamation, Churchgate, Mumbai 400020.
In terms of the Investment Management Agreement, the Trustee has
appointed the HDFC Asset Management Company Limited to manage the
Mutual Fund. The paid up capital of the AMC is Rs. 25.161 crore.
 The AMC is managing 24 open-ended schemes of the Mutual Fund like
HDFC Growth Fund (HGF), HDFC Balanced Fund (HBF), HDFC Income
Fund (HIF), HDFC Liquid Fund (HLF), HDFC Long Term Advantage etc.
 The AMC is also managing 13 closed ended Schemes of the HDFC Mutual
Fund viz. HDFC Long Term Equity Fund, HDFC Mid-Cap Opportunities
Fund, HDFC Infrastructure Fund etc.
 Lipper Fund Awards 2008 :
HDFC Equity Fund - Growth has been awarded the 'Best Fund over Ten
Years' in the 'Equity India Category' at the Lipper Fund Awards 2008 (form

Page 26 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

amongst 23 schemes). It was awarded the Best Fund over ten years in 2006 and
2007 as well. 2008 makes it three in a row.
 ICRA Mutual Fund Awards – 2008 :
HDFC MF Monthly Income Plan - Long Term Plan - Ranked a Seven Star
Fund and has been awarded the Gold Award for "Best Performance" in the
category of "Open Ended Marginal Equity" for the three year period ending
December 31, 2007 (from amongst 27 schemes).

HDFC Sales:
 HDFC Sales is a wholly owned subsidiary of HDFC Ltd. The company has
been floated as a distribution arm of HDFC with an objective of offering
doorstep service to prospective clients of HDFC group.
 HDFC Sales offers financial management solutions to individuals
encompassing among other products Home Loans, Life Insurance, Mutual
Funds, Fixed Deposits and property Solutions.
 Home Loans: HDFC Sales is present in over 100 locations across the
country with 55 offices and over 1750 employees.
 Financial Management: HDFC Sales offers financial management solutions
in 9 cities and is continuously expanding its reach. HDFC Sales employs
sales persons across all spectrums of financial management enabling them
to meet a range of financial needs.
HDFC Realty:
 HDFC Realty is a wholly owned subsidiary of HDFC. It assisted individuals in
acquiring homes valued at 5000 million rupees.
 HDFC is a pioneer housing finance institution in India and with over 30 years
in operations has provided finance to over a million families in India.
 It is a team of real estate professionals facilitating Buying, Selling or Leasing
of Residential / Commercial property.

Page 27 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

 HDFC Realty provides personalized attention to the individuals and


corporate in their process of identifying properties. From understanding the
requirement to organizing the site visits to completion of transaction, the
company makes every effort to make the process of acquiring a property,
hassle free and convenient.
 Presently its services are available in Mumbai, Navi Mumbai, Pune,
Bangalore, Delhi / NCR, Kolkata, Kochi & Hyderabad.
HDFC ERGO General Insurance:
 HDFC ERGO General Insurance Company Limited is a 74:26 joint venture
between HDFC Limited, India’s premier Housing Finance Institution & ERGO
International AG, the primary insurance entity of Munich Re Group
 HDFC ERGO focuses on providing the “Right Insurance Solution” for all.
 It offers its customers complete range of general insurance products ranging
from Motor, Health, Travel, Home and Personal Accident in the retail space
and customized products like Property, Marine and Liability Insurance in the
corporate space.
It has been expanding its presence across the country and is today present
across 46 cities with 52 branch offices with an employee base of over 650
professionals.
1.5 FUNCTIONAL DEPARTMENTS OF THE ORGANIZATION:

1. Human resource department:


The HR department performs the role of recruiting the efficient employees
and financial consultants for the company. It also takes care of their appraisal to
track their performance and contribution to the company. It gets the resume of
applicants and processes it to check for its eligibility criteria, after that put that
resume for the further processing of selection.
2. Marketing department:
Marketing department takes care of the marketing of all the products of
the company. It helps in the increase of the business. It plays the major role in
making the people aware of their product. It concentrates on making the

Page 28 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

strategies of how to increase the sales of the products. How they can segment
the market to tap out its maximum potential profits. It also works on sales
promotion to increase the sales of company.
3. Sales department:
Controlling the sales force that brings the business to the company.
Maintain the regular flow of information about the product. These are sales
manager only who see after the acquiring and maintaining their agents.
The sales manager goes to different places and acquires the sales agents who
are IRDA certified.

4. Finance department:
This department keeps the proper track record of all the transactions
taking place. It maintains the record of all the insurance policies being issued
and their premium payments.
Organization structure:

Chairman

MD

Zonal
Manager

Regional
Manager

Retail Alternative Operation Human


Marketing Channel Channel Resource

Territory Territory Team Manager HR Manager


Manager Manager
Page 29 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Branch Manager Branch Manager Operation


Manager

Asst. B.M. CDM

Recruitment
BDM Consultant Project Trainee

SDM
CDM – Channel Development Manager
BDM – Business Development Manager
SDM – Sales Development Manager
Financial
Consultant

Company structure:

Structure of the my company HDFC standard life Insurance, BTM Branch

Area Manager

Branch Manager CDM

BDM Project Trainee

Recruitment
SDM
Consultant

Financial
Consultant

Page 30 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Different Products of HDFC standard life:

S. Plans/ Products HDFC SLIC


No.
1 Children Plans  HDFC Children's Plan
 HDFC Unit Linked Young Star II
 HDFC Unit Linked Young Star Plus II
 HDFC Unit Linked Young Star Champion

2 Health Plans  HDFC Critical Care Plan


 HDFC Surgi Care Plan
3 Retirement/  HDFC Personal Pension Plan
Pension Plans  HDFC Unit Linked Pension II
 HDFC Unit Linked Pension Maximiser II
 HDFC Immediate Annuity

Page 31 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

4 Savings &  HDFC Unit Linked Endowment Plus II


Investment Plans  HDFC SimpliLife
 HDFC Unit Linked Endowment II
 HDFC Unit Linked Enhanced Life
Protection II
 HDFC Unit Linked Wealth Maximiser Plus
 HDFC Unit Linked Wealth Multiplier
 HDFC Unit Linked Endowment Winner
 HDFC Endowment Assurance Plan
 HDFC Money Back Plan
 HDFC Single Premium Whole of Life
Insurance Plan
 HDFC Assurance Plan
 HDFC Savings Assurance Plan
5 Rural Products  HDFC Gramin Bima Mitra Yojana
 HDFC Bima Bachat Yojana
6 Social Products  HDFC Development Insurance Plan

2. WORK SCHEDULE

Page 32 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Work in our project was mainly divided into four phases

2.1 PHASE A: In this phase we were told to generate leads from our natural
market. I collected names, phone number of most prospective clients. Then I
divided these data into different parts based on the age of the client. This helped
me doing need analysis of the client .I also collected some references from those
clients .Then I created database in which I recorded all the relevant information
about the clients.

2.2 PHASE B: TRAINING

IRDA TRAINING: There was a compulsory 50 hours training at HDFC SLIC


(BTM 1st Stage). In this training we were taught the following topics:
• Basics of insurance
• Premiums and bonuses
• Life insurance products

• Underwriting, insurance document, policy conditions, claims

Page 33 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• Linked life insurance products

PRODUCT TRAINING: A product training of 3 days was given at HDFC


Standard Life Jayanagar branch following topics were discussed:
• About HDFC Standard Life
• Other investments instrument
• Selling skills

• Stock market

• Various insurance products offered by HDFC Standard Life.

2.3 PHASE C: SELLING OF INSURANCE PRODUCT HDFC


STANDARD LIFE
“Success is focusing the full power of all you are on what
you have a burning desire to achieve”.
- Wilfred A. Peterson

“Patient, Perseverance, Persistent, Professional”


These are the 4Ps which acts as the key words in unlocking any sales figure
Life Insurance selling is unique because of the following 3 star contradictions:

 Everybody knows that he/she will die


Nobody feels that he/she will die
 Everybody needs life insurance
Nobody wants life insurance
 Life Insurance is generally sold
Life insurance is seldom bought.

Page 34 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Flow chart: sales process

DATA BASE COLLECTION

CALLING CUSTOMER

APPOINTMENT

CUSTOMER PROFILING

NEED ANALYSIS

ASSIGNING BEST PRODUCTS

FOLLOW UP

CLOSING THE DEAL

DOCUMENTATION

ACTUAL SALES

REFERALS

AFTER SALE FOLLOW UP

Page 35 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Database in my case comprised of mainly:


• References from my own natural market
• Secondary references
Due to the shortage of time I preferred not to use cold calling as an option, since
the conversion ratio is known to be extremely low.

Customer profiling helped me in exploring the need & requirement of each


individual by having 100 forms as customer database. While profiling the
customers we emphasize on the following parameters:
• Age

• Occupation

• Annual income

• Marital status

• Property (Whether owned or rented)


The Process that I followed in the company for pitching the product to the
customer is as follows:
The questions which I would normally ask are:

1. Do you make an investment?


2. Are you looking for investment i.e. related to tax benefit as well as
giving high returns?
3. If yes, then could we fix an appointment so that we could make you
aware of the various products that HDFC Standard Life has to offer?

After fixing an appointment we would visit the prospective customers and explain
them about the product which would suite their requirements. Apart from this
while pitching a Unit Linked Insurance Plan we would show them a chart for the

Page 36 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

comparison of various products which is as follows:

WE ARE HERE TO HELP YOU OUT


Three Most Important Questions:
• Where Do I Invest?

• Will My Money Grow?


• Will I Get Tax Benefit?

Investment Options Safety Growth Liquidity Tax Benefits


RBI Bonds High Low Low Yes
Fixed Deposits High Low Moderate No
NSC High Low Moderate Yes *
Post Office Savings High Moderate Moderate No
Mutual Fund Moderate High Moderate Yes
Share Market Low High High No
Other ULIPs’ Moderate High Moderate Yes
HDFC SL’s ULIP High # High $ Moderate @ Yes^

* Investment is exempted u/s 80C. Accrued interest is taxable.


# Your Capital is guaranteed.
$ Annualized return till date is 30%
@ 3 year Lock-in period for getting Tax-benefits
^ Investment is exempted u/s 80C. Maturity is exempted u/s 10 (10D).

Need analysis During need analysis we found as we move through different


stages in life, our financial priorities changes. For example, when we are young
we wish to invest more into investment products. As we grow older and as
responsibilities increases, we want to set aside more amount for insurance, to
protect our family against uncertainties. Therefore, it is very important to
understand the need of different group of customers and provide them with an
appropriate solution. In this phase we are trying to explore the needs of the
customer & match them with the best suitable product. For the need analysis
portion we had been given the Need Analyzer form by the company through

Page 37 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

which we could actually get the various needs of the customer. Depending upon
the need we approached the customer with the specific product.

People say that insurance selling is the most difficult in terms of selling
products. This phase is most important because it will decide the company’s
profitability & also the best way of testing the skills of a sales person.

Selling consists of three sub-phases in it. These are:


• Information about the product
• Convincing the customer
• Finally closing the deal.

During my internship at HDFC SLIC I met around 100 people for selling in
which I converted four client and 2 are in process of documentation the company
in the month of November.
2.4 LEARNING
LEARNINGS FROM TRAININGS
From IRDA Training as well as product training I taught a lot about
insurance, insurance industry, different types of product s its features and
benefits, different distribution channels.

LESSONS & LEARNING’S FROM THE SELLING EXPERIENCE


 Be patient : In insurance industry conversion ratio is very low .if you meet
100 people there may be a chance that you may not be able to convert even
a single customer .but by meeting 100 people you will face100 different
situation which will enhance your skill of selling as well as need analysis.
Lastly, remember those 100 people can give you 1000 references.
 Don’t sell like you buy: It is a faulty assumption that your prospects respond
similarly to the type of sales approach that works for you...
 Treat Your Customers like Royalty to Gain Loyalty: Remember the rule
20% of the loyal customer gives you 80% of your total business.
 Understand the difference between features and benefits of the product

Page 38 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

 Good sales people create and demonstrate strong value propositions


for why their clients will want to engage their services.
 The best way to improve your win ratio is to stop bidding on stuff you
can’t win
 Maintain ethics, service, and hard work towards the customer to build a
long lasting relationship to generate repeat sales.
 Driving demand and building a solid, predictable sales pipeline is at the
very core of every sales effort.
 The most successful sales professionals win more business by working
smart and carefully assessing the viability of each opportunity at the
beginning of the sales campaign.
 Value — perceived or real, personal or business — is the only thing that
separates one product or alternative from another
 Sales are a numbers game, but in insurance sector the quality of client
from whom the sales is being generated do matter.

LESSIONS FROM DATA COLLECTION AND DATA ANALYSIS

For data collection we went to various people which helped us to get different
views of them about insurance industry.

Data analysis helped us to gain confidence as this was our first project based on
primary data.

Data analysis helped us to know which techniques to be used.

MY ACHIEVEMENT: I sold two policies during October, November and four


policies are in the Process.

Page 39 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

3. PURPOSE OF THE PROJECT

3.1 INTRODUCTION

3.2 AIM
• To study the marketing and sales strategies of HDFC SLIC
3.3 OBJECTIVE OF THE PROJECT
• The new marketing strategies to be taken to get closer to its customer.

• To know about sales strategies of HDFC SLIC.

• To create positive feelings in the minds of consumer.

• To increase awareness of the range of the product and services.

Page 40 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• To have a direct feedback from its customers.

• To know how people perceive HDFC SLIC as a brand.

• To make a Comparative analysis of major players.

• To know how to reach the unexplored market.

• To sell insurance policies and generate revenue for the company.

3.4 SCOPE OF THE PROJECT


• To know various new selling techniques of insurance.
• To study various other financial products.
• To know various marketing strategies of life insurance products.
• To make strategy in a competitive environment.

3.5 LIMITATIONS
• Our studies are mainly confined to Bangalore only so there may be
irregularity in survey of consumer behavior due to geographical factor.
• Since our data consist of primary data and some people are reluctant to
give actual information so there may be some error in data analysis.
• Our sample consists of 100 people only so there may be error in data
analysis.
• Time constraint due to a wide geographical area that I had to travel to
customer’s premise where he wanted to meet at a given time.
• We have collected secondary data mainly through internet, newspaper,
magazines etc. So we are assuming those a data to be authentic as
those data may not be authentic.
• Introducing me as a financial consultant and explaining them need of
taking a life insurance is difficult many a times.
• It was very difficult to know all the required information related to our
project as executives and agents did not have that much time.

Page 41 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• There could be some errors in sample size, data collection and data
interpretation.
• Historical secondary data.

3.6 METHODOLOGY
 SAMPLING DESIGN
Due to time and cost limitations we took sample of 100 people only. As it was
convenient to collect data through questionnaire\in small sample.
 QUESTIONNAIRE DESIGN
The final questionnaire evolved after many stages of reformulating and
restructuring. A pilot test was conducted with a sample of 30 respondents
prior to conducting the actual interviews. This was done to mainly to test the
language of the questionnaire and know whether the respondents interpreted
the question as intended. Errors and Confusing words were modified and
certain explanations were added. More questions were added to get the
responses about the required variables.
 DATA COLLECTION
Primary Data
• Taking informal interview of agents: We took information from the agents
of various companies to know their views about the company. We took this
interview because we think that agents play very important role.
• Data related to analysis were collected by questionnaire.

Secondary Data
• Secondary data where mainly collected from internet, journals
etc.
 DATA TABULATION: After data collection data were tabulated in SPSS.
 DATA ANALYSIS: Data analysis were mainly done through three statistical
techniques.
1. Factor Analysis
2. Regression Analysis

Page 42 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

3. Cluster Analysis

LITERATURE SURVEY
 IC – 33
This book is issued by the IRDA (Insurance Regulatory and Development
Authority of India). It contains all the minute details about insurance, its parties,
contract and various types of product.
 Insurance Rules & Regulation
An in depth study of an insurance contract and parties to the contract. It also
speaks in detail about the rules and regulations of the contract and the
procedures that are to be undertaken at the time of death, maturity and claims.
 Journals by IRDA, ICMR.
 Books On Services Marketing

3.7 ANALYSIS
Analysis of Graphs as per Questionnaire:
AGE GROUP

• Among the responses we took 11% were of age group 18-25, 31% of age 26-
33,34% of age 34-45,20% of age 46-60 ,4% of age 60 and above.

PREFERRED INSURANCE COMPANY

Page 43 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• Among all the responses we took 62% preferred pvt .insurance Company
and 38%prefered LIC.

REASON FOR INVESTING MONEY IN INSURANCE

• Among the responses we took 39% of the people spend for tax purpose,
21%for life risk cover, 23% for future security, and 17% for pension. It
implies that tax is the major factor for investing in insurance; life risk is the
secondary objective.

Page 44 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

COMPARISON OF LIC AND PVT INSURANCE COMPANIES ON GIVEN


PARAMETERS

IMPORTANT FACTORS WHILE INVESTING

Parameters Strongly Agree Neutra Disagre strongly


agree l e disagree

Brand 46 31 11 12 0

Trust 16 66 18 0 0

Safety 62 38 0 0 0

Service 51 32 17 0 0

Liquidity 21 68 11 0 0

Page 45 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• Based on survey we found that 62 people strongly agree that safety of


money is the important factor while investing, 46 people strongly agree
that brand is the important factor while investing.

SATISFACTION WITH PRIVATE INSURANCE COMPANIES

Page 46 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• Based on survey we found that 10% strongly agree, 67% agree, 14 % are
neutral, 9% disagree, and 0% strongly disagree with the service of the
company.

AWARENESS OF HDFC STANDARD LIFE INSURANCE

• Based on the survey we found that 15 %strongly agree, 35 %agree, 26 %


are neutral, 19%disagree, and 5% strongly disagree about the awareness
of the HDFC Standard Life insurance.

SATISFIED WITH ELECTRONIC CLEARING SYSTEM OFFERED BY HDFC


STANDARD LIFE INSURANCE:

Level No. of Respondents Percentage

Yes 73 73%

No 27 27%

Total 100 100%

Page 47 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

27

Yes
No

73

• The above graph shows that 73% of people are satisfied with ECS facility
while only 27% are not satisfied

RESPONDENTS FOR CLARIFY ANY QUERY TO WHOM YOU CONSULT


FIRST

Services No. of Respondents Percentage

Adviser 39 39%

company website 16 16%

customer care 28 28%

branch manager 17 17%

Total 100 100%

Page 48 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

45
40
35
30
25 Adviser
20 company website
15
10 customer care
5 branch manager
0
Adviser company customer care branch
website manager

• The above graph shows that 39% people believes in Adviser, 28% of
people believes Customer care while company website and branch
Manager People clarify any query first respectively 16% and 17%.

SOME STATISTICS OF FY2009


MARKET SHARE (ASSET UNDER MANAGEMENT)

Page 49 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

From the figure we can see that LIC is market leader in market share (asset
under management) with 63.64%, followed by ICICI Prudential, Bajaj Allianz
but still there is large difference between first and second. LIC has approx
8 times market share than ICICI Prudential. HDFC Standard Life market
share fell to 2.88% from 4 %last year.
 LIC policy sold fell down by 1.6%.
 There was a growth of 23.31% (92,988 crores) in new premium
collected with LIC 59,182 crores and others by 33,806 crores.
 Bharati axa showed a phenomenal growth of 1355.7% (premium
collected). It is due to base effect.
 Birla Sun Life showed a growth 122.61% (premium collected).
 HDFC Standard Life grew by 63% (premium collected).
 ICICI Prudential grew by 68% (premium collected).

Key Changes – Regulations

FY 2008-09

Page 50 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

 Changes in unit linked product guidelines – premium reduction capped at


25%.
 Investment norms tightened (Process and risk management related).
 Reduction in solvency norms.
 Change in service tax from 12% to 10%.
 Insurers instructed to separate out assets backing the required Solvency.
 Margin, from the other shareholder assets and hold it in a separate
account.
 New requirement to disclose payouts to non individual distributors.

FY 2009-10
 PFRDA launches pension solutions for unorganized sector.
 Committee set up for review of multi-ties for banking companies.
 Corporate governance framework in process.
 Changes in investment and accounting regulations likely.
 Disclosure & EV framework.
 Circular for cap on ULIP charges.

3.8 MARKETING STRATEGIES OF HDFC SLIC


Strategy of private insurance players can be divided into two main parts:
1) Target marketing strategy
2) Marketing strategy according to 7 P’s (Marketing mix of services
marketing)

3.8.1 TARGET MARKETING STRATEGY:

Page 51 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Since every life has a value so insurance is required for every person from a
child to an old person. Therefore insurance companies have divided the markets
according to following divisions:
I. Stage of life cycle
II. Regions
III. Occupation
IV. Gender
V. Psychographic

STAGES OF LIFE CYCLE: Insurance companies have divided the market into
various segments:
• Old people: As most of the families in India are becoming nuclear family
therefore the old people are becoming insecure about their future. To solve
this problem insurance companies are targeting old people by providing
pension plans and by various promotion tools. HDFC standard life has a
punch line” RESPECT YOURSELF” and “SAR UTHA KE JIO” .This gives a
feeling of respect and confidence to old people. People invest in pension
plans to make their future secure and can lead a respectful life. Private
companies have more market share in pension plans than LIC.ICICI
PRUDENTIAL is the top seller of pension plans in India. Products offered by
HDFC standard life for old people are Unit Linked Pension Plan (+, +2),
Pension Plan (Traditional).
• Young people: young people have now become very selective .therefore all
the insurance companies are providing sufficient choices. Companies provide
different products which cater the needs of insurance as well as security.
Companies are also providing various fund options according to risk taking
behavior. Like in ULIP for High risk taking people they have growth fund
option and for risk adverse people they have balanced fund where one can
choose ratio of debt and equity. Products offered by HDFC Standard Life for
young people are endowment plans (traditional, unit linked), money back
plans etc.

Page 52 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

• Children: For children below 18 years all the companies are having policies
that help in securing child’s future. Every company has policies that have
many benefits that help in saving money for a child’s education, marriage,
health etc.

REGIONS: In these companies has divided India into three divisions:


• Urban: Now as in urban areas lifestyles of people are changing very rapidly,
companies are coming with various policies which suits their needs and
wants. Companies are also trying to give best of their services .all the private
companies started their operation from urban areas only. Urban areas helps
in getting high premium per person .this helps in increase in per capita
premium.
• Rural areas: Rural areas are the most untapped market in India. As 70% of
the whole population live in rural areas, therefore every company is trying to
tap this market by offering low premiums and other additional benefits. Many
companies have special policies designed for rural areas only.
• Semi urban areas: As urban market is leading towards maturity therefore
semi urban areas are next destination for these insurance companies. Semi
urban areas are becoming industrial hub of country .As in these areas
competition is not tough therefore it is very easy for private companies to tap
these markets.

OCCUPATION: In this segment companies has divided it into various divisions:


• Businessman/self employed professionals: Companies target this
segment by offering them pension plans, term plans .As these people don’t
have any fixed income and they more prone to risks therefore companies
are offering these products to make them secure for their present as well as
future.
• Service: These people have fixed income and therefore they want to save
their money for their future as well as better returns. Many ULIP plans are
provided which provide both returns as well investments. Private Service

Page 53 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

people also don’t have any pension therefore pension plans are offered to
them.
Gender: In this there are two divisions

Source (IRDA)

• Female: As among insured people only 14% of the females are insured
therefore there are large potential in this segments. As more number of
females are becoming working women .Therefore insurance is must for
them .companies are taking emotional route through various advertising
techniques to attract these segments. Some companies are coming with
various kinds of policies which are specially designed for these segments.
• Males: These segments accounts for more than 80% of working classes. As
they are more than 90% contributor of premium .Therefore these classes are
targeted the most by the companies .Still 80% of the male population in India
is uninsured ,therefore there immense opportunity in this segment.

PSHYCHOGRAPHIC COMPONENT: People in India have different opinion


about the insurance .Based on these opinion they have divided it into mainly two
segments:
• Security: Those people who see insurance as a security (basic need) for
them companies are having traditional policies such as term plan,
endowment plan, pension plans etc.
• Investment :As in India most of the people see insurance as a product of
investment rather than security .Companies have come with ULIPS which

Page 54 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

give high returns to customer .In this customers are free to choose the
allocations of money in debt and equity. Risk adverse people can keep
their more money in debt based fund. Risk loving people can keep their
more money in equity based fund.

3.8.2 MARKETING STRATEGIES ACCORDING TO 7 P’s OF SERVICES


MARKETING

PRODUCTS
Innovative products: After liberalization every companies are coming with
innovative products .these products are designed according to needs of the
customers to facilitate need based selling. These policies have different features
like transparency, flexibility, freedom to choose fund option, switching between
funds etc.

The different products type offered by various insurance companies are-


Unit Linked Insurance Plans:

This is a plan which runs on market and here the risk is high but at the same
time return is also high. There is a perception in the minds of investing public that
the return from the traditional Life insurance products is not attractive and
therefore a demand arose for unit linked policies. Life Insurance companies
therefore design unit linked policies. A small part of the contribution is utilised for
providing life cover and the balance is invested in units (shares).
*Source –Outlook Money (March 2009)

Page 55 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Term Plan:
Term Plan is a pure risk product that aims to cover your life at a nominal cost.
You may want to take this plan to cover your outstanding debts like a mortgage,
a home loan etc. Since this is a pure risk cover product, there are no maturity
benefits payables on survival. This is a non-participating plan.

Endowment Plan:
Endowment Plan is a protection plan that covers your life and at the same time
ensures that your money does not lie idle. It invests a portion of your premium in
financial instruments and ensures a considerable growth in savings. This is a
participating plan (with profits).

Money Back Plan:


Money Back Plan not only covers your life, it also assures you a certain percent
of the sum assured as cash payment at regular intervals of time. It is a savings
plan with the added advantage of life cover and regular cash inflow. This plan is
ideal for planning special moments like a wedding, your child's education or
purchase of an asset etc. This is a participating plan (with profits).

Retirement Plan:
Income Plan is a savings plan designed to meet your post-retirement needs. It is
a plan that gives you the choice to remain independent even after retirement.

PRICE
The main factor that affects the price of the products is the cost that they incur in
providing their best services to the customers. All the companies are trying to cut
the cost by adapting new technology etc. All the companies are trying to cut the
cost and transfer this benefit to the customer .As all the private insurance
companies are in the introduction stage .Therefore their cost of promotion is high
in this stage as they have to make awareness about their products and build
strong brand image. Despite of that some private companies charge fewer
premiums than LIC. The companies which are charging higher premium are
justifying it by giving better services. Companies have various pricing strategy
based on the factors such as age, sex, occupation, family history, health,

Page 56 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

habits, hobby, riders etc.


Annual premium for 5 years (TERM PLAN) for sum assured 1,000,000

Source: money outlook

If we will look at the graph we can easily see that premium charged by HDFC is
minimum in all the cases except for age 25 and 30.hdfcslic keeps its premium for
higher age group(>30) because they are the segment that require the term plan
most.
PLACE: This mainly deals with various distribution channels .private companies
now adapting mainly four ways of distribution

Traditional agencies: This is the oldest form of distribution. Private companies


get most of the business through this channel .HDFC SLIC has 145000 certified
agents, ICICI Prudential has 291000 agents. This is most effective channel in
India because by this a customer can get more information about any product,
features .This channel is more important in rural areas where there is no banks
etc.
Bancassurance: The Bancassurance is the distribution of insurance products
through the bank's distribution channels. It is a phenomenon where in insurance

Page 57 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

products are offered through the distribution channels of the banking services
along with a complete range of banking & investment products & services. In
simple term we can say Bancassurance tries to exploit synergies between both
the insurance companies & banks. This is one of the most effective distribution
channels where one company uses the distribution channels of banks to
distribute policies. This is beneficial for all the three parties, customers, banks
and insurance company. HDFC standard life has HDFC, HDFC Bank, Union
Bank of India as Bancassurance partners.

Brokers: These are broking firms which sells all the financial products in India. In
broker firms one can find policy of different companies under one roof. Some of
the broker firms in India are India Infoline, Kotak Securities, Anand Rathi,
Religare, India Bulls etc.

Direct Marketing: This is the most recent distribution channel that all the private
companies have adapted .This is best way of selling those policies which have
very few features .Direct selling is mainly done through call centre .Now
companies are also adapting online direct selling through internet. This method
of selling is very useful for selling those product in which there is very low
features .It helps in preventing mis –selling as customer get all the information
directly from the company .

Page 58 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

From the figure above we can see that tied agents source the maximum amount
of business, followed by corporate agents and bancassurance.After two or three
years this ratio is going to change as bancaassurance and direct marketing are
becoming popular.

PROMOTION
As all the insurance companies are trying to build awareness as well as brand
image .therefore all companies are spending heavily on advertising.

From the figure we can see that around 80% of the total expenditure in insurance
industry comes from life insurance industry.

From the above figure we can see that advertising index has increased 138%
from 2004.yhat means private companies are spending heavily on advertising.

Page 59 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

Among private and public companies 78% expenditure on advertising is done by


private companies.Companies are taking various mode of distribution such as
print media ,telivision ,radio,internet ,banner etc.

PEOPLE
As insurance is a service industry so people are the most important asset .All the
private companies are working in this segment in the following manner:
• Employment: Insurance industry is one of the largest employment
providers in India .Private companies are providing jobs to a large number
of people .These jobs are from top managerial to clerk jobs. It is also
helping in eliminating employment in India.
• Training :All the private companies give training to employees .This
training helps in development of skills such as selling ,product
knowledge . It also helps in confidence development.
• Awards and recognition: All the private companies give awards and
recognition to top performer .these awards includes cash awards, medals,
tours, gifts etc.
• Incentives and commission: Incentives and commission given by private
companies are highest in any industry in India.

Despite of the above reason working in Insurance industry is not preferred by


people in India. 68% of the people do not prefer to work in Insurance industry.

Page 60 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

PHYSICAL EVIDENCE: This include following elements:


• Physical location: All the private companies are opening their offices all
over India .Companies are also opening their offices in rural areas. These
offices are generally present those places where more customer can
come. HDFC Standard Life has 726 offices in India.
• Services lay out and ambience: All the private companies have better
service layout, ambience than LIC. Maintenance of services and
cleanliness are very critical factors to attract customers.
• Name tags of key service employee: All the key employee service
employees are being provided with name tags .So it is easy to recognize
them.
• All private companies have a formal way of greeting customers.
• There is prompt telephone handling.
• There are signages within the service location, so that customer can
know which counter approach.
• Comfortable waiting areas are provided for customers.

PROCESS
These are the flow of activities through which the insurance company provide
services to their customer .Every company has standardized process of
providing services .These process are simple .Employees are trained to deal
with various situation that might arise while delivering services .Companies are

Page 61 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

using various new technology to develop very good customer relationship


management .

3.8.3 SPECIAL MARKETING STRATEGIES OF HDFC Standard life


• Very Tough Underwriting Procedure: HDFC Standard life has very
tough underwriting procedure to avoid delay during claim settlement.
• Transparency: HDFC Standard life is very transparent in disclosing
various charges to the customer.
• Advertising: HDFC Standard life give best advertising by targeting two
segments simultaneously (old and women) .This award was awarded best
awards in insurance sector.
• Lowest fund management charges and maximum switches facility :
HDFC Standard life charges lowest fund management charges and has
maximum switching option (24 switches)
• Fastest claim settlement: HDFC Standard life was the first company to
give claims to people who died in Hyderabad explosion and Jaipur Bomb
Blast.
• HDFC Standard life gives high focus on training.
• HDFC Standard life has all ranges of products and maximum fund
option available.
• Premium charged by HDFC Standard life is lowest in the industry.

Page 62 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

CONCLUSION

Private insurance industry in India has changed the scenario of insurance


industry in India by offering different products, new technology, better customer
services etc. This fact is justified by decreasing market share of LIC, and market
growth rate of insurance industry in India. Market penetration of insurance has
also increased significantly. Companies have reached rural areas to offer
insurance as well micro insurance. This will help in availing insurance to
everybody. Growth in insurance industry will also help in creating employment
and growth in GDP. Insurance companies should take various steps to create
awareness among the people of India. Because ignorance about the insurance is
the biggest challenge that the companies are facing today.

Page 63 of 64
MARKETING AND SALES STRATEGIES OF HDFC SLIC

RECOMMENDATIONS

Focus on Rural Areas: As rural areas are the large untapped market in India,
there is a huge market potential, private insurance companies have very small
presence in the rural market .Companies should open more offices in rural
areas. Company should also recruit financial consultant from rural areas to have
large penetration.

Avoid mis-selling: After arrival of ULIPS mis-selling has increased significantly.


Now most of the agents say to deposit money for first three years because three
years is the locking period and in the first three years agents get the more
commission.

Focus on human resources: In services industry human is the most important


asset .So, companies should focus more on HR activities like recruitment,
training etc .Because most of the mis-selling occur due to lack of knowledge.

Balance between ULIPS and Traditional Policies: All the companies should
maintain balance between ULIPS and traditional policies .As ULIPS give high
returns on bullish market but very low return in bearish market .As main objective
of insurance is security so company should avoid adverse situation.

Lowest premium should be reduced: In ULIPS lowest premium charged by


HDFC Standard Life is Rs 12000(annual) .This amount should be reduced to
make it affordable for all.

Special Policies for a particular segment such as woman, rural areas


should be designed to gain competitive advantage over others.

HDFC Standard Life should use infrastructure, distribution channel of


HDFC, HDFC Bank .This is justified by SBI Life Insurance which was the
fastest company to cross its break even by using infrastructure,
distribution channel of SBI.

Page 64 of 64