A Project Study Report On Training Undertaken at TATA AIG LIFE INS. CO.

LTD, JHALAWAR Titled Agency business model of insurance companies “competitive strategies”
Submitted in partial fulfilfilment for the Award of degree of Master of Business Administration

Submitted By:Ashwani kant Shrivastva MBA 2ed year

Submitted To: Aditi Dwivedi Asstt.Prof.





I hereby declare that this report on “Agency business model of

insurance companies competitive strategies” has been
written and prepared by me during the academic year 20102011.This project was done under the able guidance and supervision of Prof. Mrs. Aditi Dwivedi, Faculty, Govt. Engeneering College, Jhalawar and Mr. Manoj Kumar Bairwa, SM, TATA AIG Life Insurance Company Ltd., Calicut in partial fulfillment of the requirement for the Master Of Business Administration Degree course of the Govt. Engeenering College, Jhalwar I also declare that this project is the result of my own effort and has not been submitted to any other institution for the award of any Degree or Diploma.

Place: Jhalawar Ashwani Kant Shriwastwa 09MBA013


Jhalawar.Acknowledgements If words are considered to be signs of gratitude then let these words convey the very same My sincere gratitude to TATA AIG Life for providing me with an opportunity to work with TATA AIG Life and giving necessary directions on doing this project to the best of my abilities. I also thank Prof. Engeenering College. Aditi Dwivedi. I am highly indebted to Mr. who has sincerely supported me with the valuable insights into the completion of this project. 4 .. Jhalawar and my friends who have helped me in the successful completion of this project. Manoj Kumar Bairwa. Sales Manager and company project guide. Govt. Engeenering College. I am grateful to all faculty members of Govt. Mrs. Faculty. who has provided me with the necessary information and also for the support extended out to me in the completion of this report and his valuable suggestion and comments on bringing out this report in the best way possible.

4 2.1 1.5 5.Contents Sr.5 7.2 1.52 53 . Subjects Covered Project Proposed Objective of the project Methodology Sampling Limitations Introduction Definition of insurance Functions of insurance Definitions of life insurance Role of life insurance Importance of life insurance Agency business model Insurance agencies Functions of agency manager Operational work of insurance agency Indian insurance industry History IRDA Changing perception of customers Changing face of Indian life insurance industry Possibilities Global insurance industry Functioning of insurance industry Insurer’s business model Investment management Key ratios and terms Requirements of an insurance risk Various types of insurance products Insurance and economy TATA AIG Life insurance company Distribution of insurance product Effective marketing strategies for insurance companies Competitors of TATA AIG Life Comparison of ULIP products 5 Pages 9 – 11 12 . 6.2 6.36 37 .2 2.1 6.1 2. 9.62 63 .3 4.5 3. 11.42 43 .3 4.4 6.16 17 .2 4.19 20 . 1. 6. 8.4 2.3 1. 12.2 3.39 40 .27 28 .1 4.4 4.1 3.69 .29 30 . 4. 1. No. 3. 10.46 47 .3 2. 2.3 6.

91 92 1. Questioner Conclusions and findings Recommendations 70 . Tendency of a human being to secure themselves against loss and disaster has been from the starting of world. Insurance business is divided into four classes: • Life Insurance 6 . They sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. 15.71 72 .13. particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years as per records. Introduction The story of insurance is probably as old as the story of mankind. Though the concept of insurance is largely a development of the recent past. 14.

but can certainly provide for the losses of risk. • Accumulation of savings. accidents and uncertainty. Functions of insurance: • Provide protection: The primary function of insurance is to provide protection against future risk. Insurance is actually a protection against economic loss. by sharing the risk with others. • Channeling these savings into sectors needing huge long term investment. Insurance cannot check the happening of the risk. • Collective bearing of risk: Insurance is an instrument to share the financial loss of few among many others.• Fire • Marine • Miscellaneous Insurance. Insurance is a mean by which few losses are shared among larger number 7 . Insurance provides: • Protection to investor.

insurance is a compulsory way of savings and it restricts the unnecessary expenses by the 8 . • Provide certainty: Insurance is a device. by paying small amount of premium against larger risks and uncertainty. which helps to change from uncertainty to certainty. • Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. • Means of savings and investment: Insurance serves as savings and investment. • Small capital to cover larger risk: Insurance relieves the businessmen from security investments. Risk is the basis for determining the premium rate also. • Contributes towards the development of 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.of people. Insurance is device whereby the uncertain risks may be made more certain. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid.

• Source of earning foreign exchange: Insurance is an international business. which makes the foreign trade risk free with the help of different types of policies under marine insurance cover. In case of life insurance. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy. The subject matter of insurance is life of human being. Life insurance: Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a premium paid undertakes to pay a fixed sum of money on The death of the insured or on the expiry of a specified period of time Whichever is earlier. Life insurance provides risk coverage to the life of a person. 9 .insured's For the purpose of availing income-tax exemptions also. So life insurance is known as ‘Life Assurance’. The Event insured against is sure to happen only the time of its happening is not known. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways. the payment for life insurance policy is certain. • Risk free trade: Insurance promotes exports insurance. people invest in insurance.

Roles of life insurance: • Life insurance as an investment: .Insurance products yield more than any other investment instruments and it also provides added incentives or bonus offered by insurance companies.Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death.After retirement the earning capacity of a person reduces. • Life insurance as tax planning: .Insurance is all about risk cover and protection of life. Importance of life insurance:• Protection against untimely death: . The dependents or family members get a fixed sum of money in case of death of the assured. • Saving for old age: . Life insurance enables a person to enjoy peace of mind and a sense of security in his/her old age.Insurance serves as an excellent tax saving mechanism too. 10 . Insurance provides a unique sense of security that no other form of invest can provide. • Life insurance as risk cover: .

Life insurance is important for the society as a whole also.• Promotion of savings: .Life insurance encourages people to save money compulsorily.Under the Income Tax Act. • Tax Benefit: . premium paid is allowed as a deduction from the total income under section 80C. In case of surrender of policy. the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums. It improves the credit worthiness of business. • Social Security: . only surrender value can be returned to him. the policyholder gets the surrendered value only after the expiry of duration of the policy. • Credit worthiness: . Life insurance is an important tool for the mobilization and investment of small savings. 11 . When life policy is taken. It helps a person to make financial base for future. Life insurance enables a person to provide for education and marriage of children and for construction of house.Life insurance policy can be used as a security to raise loans. • Initiates investments: - Life Insurance Corporation encourages and mobilizes the public savings and canalizes the same in various investments for the economic development of the country.

12 . To regulate Indian insurance business first insurance act came in 1912 as life insurance company act and provident fund act. First Indian life insurance company came as Bombay mutual life insurance assurance. In that year LIC had 5 zonal offices. Indian insurance industry History: Life insurance came to India from England in 1818 when oriental life insurance company started in Calcutta by Europeans. In 1956 the life insurance business in India was nationalized. 33 divisional offices and 212 branch offices. After this the united India in madras. In 1956 life insurance corporation of India (LIC) was created to spreading life insurance much more widely particularly in rural areas. Second company was Bharat insurance company came in 1896. So the insurance act came in 1938 to governing life and non life insurance companies and to provide strict state control. These acts consist of premium rates tables and periodical valuations of companies. In the first two decade of 20th century many life insurance companies were started. In 1957 the business of LIC of sum assured of 200crores. and 7000crores in 1986. After this many insurance companies had been started in India. But these companies were looking after only the needs of European community established in India. Indian people were not being insured by these companies. 1000crores in 1970.2. national Indian and national insurance in Calcutta and the co-operative assurance in Lahore were established in 1906.

1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders’ interests. and training for insurance intermediaries and agents. • Promoting efficiency in the conduct of insurance business. The Authority has the power to frame regulations under Section 114A of the Insurance Act. while ensuring the financial security of the insurance market. Role of IRDA: • Protecting the interests of policyholders. The IRDA was incorporated as a statutory body in April. and brokers. The IRDA opened up the market in August 2000 with the invitation for application for registrations. 13 .Indian regulatory development authority: In 1999. • Specifying the code of conduct. 2000. • Establishing guidelines for the operations of insurers. • Regulating the investment of funds by insurance companies. Foreign companies were allowed ownership of up to 26%. qualifications. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums. the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry.

they demand and seek necessary changes. De-tariff of many Insurance Products are the reflection of changing aspirations and growing demand of Indian consumers. no matter even if that is coming from the market leader. Changing perception of Indian customers: Indian Insurance consumers are like Indian Voters. Indian consumers were at receiving end. There are not ready to accept any product. All that got changed with passage of IRDA act in 1999. For historical years. A case in point is ULIP Product / Group Life and Credit Life in Life Insurance segment and Travel / Family Floater Health and 14 . • Handling disputes between insurers and insurance intermediaries. should that product is not serving the purpose. they are soft but when time is right and ripe. New insurance companies have come into existence leading to open competition and hence better products for customers. that is given to them. Insurance Product was underwritten and was practically forced onto consumers on a “Take-it-As-it-basis”.• Specifying the percentage of business to be written by insurers in rural sectors. Indian customers have become very sensitive to Coverage / Premium as well as the Products (read Risk Solution).

Customers are looking at Insurance for covering Pure Risk now which I have covered in my next section.Liability Insurance in the Non-life segment are new age Avatar. They would not accept any type of insurance product unless it fulfills their requirements and needs. which is putting huge pressures on Insurance companies (Read Risk Under-writers) and Brokers to respond. They have become more sensitive. BANKS SHARES AND DEBENTURES MUTUAL FUNDS 15 39% 2% 1% 2% . The new products are constantly being demanded by Indian consumers. Another good reason why we are seeing quick changes in the buying behavior of Insurance from mere Investment to risk mitigation is the cost of Replacement of Goods (ROG) or Cost of Services (COS). but now customers look at insurance products as an investment as well as life cover. Now Indian customers are aware of insurance industry and insurance products provided by companies. In historic day’s customers looking at insurance products as a life cover which can provide security against any unacceptable events. Investment of Indian household savings (as a % in different sector) BANK DEPOSITS CORP. So today’s customers wants good return from the insurance companies. The Indian customer’s forms the pivot of each company’s strategy.

These life-insurance companies have every kind of policies 16 .I. government and other securities.com Changing face of Indian insurance industry: After the Insurance Regulatory and Development Authority Act have been passed there has been establishment of many private insurance companies in India. With the introduction of the unit linked insurance policies these companies are investing the money in different investment instruments like shares.I. Today lifeinsurance is not only limited up to just life risk cover and maturity period bonuses but changed to greater return from the investments.4% of the market share in 2006.) who was the only life-insurance company for the people till 2000. L. Previously there was a monopoly business for Life Insurance Corporation of India (L.C. People are demanding for higher returns with the life risk cover and private companies are giving 30-40% average growth per annum.C. debentures. BONDS INSURANCE PF/ RETIRE FUNDS CURRENCY 3% 13% 13% 21% 6% Source: .www.NBFC’S GOVT. avivaindia. still holds 71. bonds. But after the introduction of private life insurance companies there is a great competition in Indian market now. Everyone is trying to capture the fresh market here and penetrate it with aggressive marketing strategies.

• Application of information technology for business. These companies have every aspects and needs of our life covered along with the death-benefit. The government of India has set up rules that no foreign insurance company can set up their business individually here and they have to tie up with an Indian company and this foreign insurance company can have an investment of only 24% of the total start-up investment. his education. meeting daily financial needs of life. • Growth of customer’s interest with an increasing demand for better insurance products. So Indian life-insurance market is the target market of all the companies who either want to extend or diversify their business. pension solutions after retirement. 17 . In India only 25% of the population has life insurance. giving birth and rearing up a child. • Rebate from government in the form of tax incentives to be insured.suiting every need right from financial needs of. Indian insurance industry can be featured by: • Low market penetration. To tap the Indian market there has been tie-ups between the major Indian companies with other International insurance companies to start up their business. marriage. • Ever growing middle class component in population.

Today. introducing innovative products and increasing the penetration of life insurance in the vastly underinsured country. Apart from the traditional term and saving insurance policies. industry has seen the entry and growth of unit linked products. Penetration of life insurance is beginning to cut across socio-economic classes and attract people who have never purchased insurance before. Now products are priced. but with the changes come a host of challenges and it is only the credible players with a long term vision and a robust 18 . the Indian life insurance industry has a dozen private players. The success of their effort is that they have captured over 28% of premium income in five years. Several of private insurers have introduced attractive products to meet the needs of their target customers and in line with their business objectives. flexible. A wide range of products. The biggest beneficiary of the competition among life insurers has been the customer. customer focused service and professional advice has become the mainstay of the industry. So it is clear that the face of life insurance in India is changing. Life insurance is also now being regarded as a versatile financial planning tool. and realistic and sustain so people in better position to understand the risk and benefits of the product and they are accepting these innovative products. each of which are making strides in raising awareness levels. and the Indian customer’s forms the pivot of each company’s strategy. This provides market linked returns and is among the most flexible policies available today for investment.

Increasing growth since liberalization: YEAR FY03 FY04 FY05 FY06 FY07 LIC (in bn rs.Prudential and Standard life from UK. OM Kotak. AIG. 6 bank owned insurers: . 6 independent insurers: . Birla sun life.Insurance Industry (ICFAI publication book) Possibilities for insurance companies in India: • Further deregulation of the market. There are 12 private players in Indian life insurance market. 19 . MetLife. MetLife and New York life of the US.Aviva. Whatever the developments.business strategy that will survive. ANP sanmar. ING Vysya. ICICI prudential. Max New York life. Tata AIG. TATA AIG life. Sun life of Canada.) 110 120 130 140 240 PRIVATE PLAYER 10 20 40 60 160 Source: . the future and the opportunities in this industry will surely be exciting.HDFC standard life. Major international insurers are. Bajaj Allianz.

The stock market boom of the past few years led to demand for unit linked insurance products. • Competition and quality consciousness. • Consolidation of domestic insurance markets. 3. The global insurance industry is growing at rapid pace. Increase in insurers equity capital increased underwriting capacity. • Actual operations and distribution. The development of global insurance industry over the past few years was influenced by booming stock markets which enabled considerable capital gains to be made in non life business. insurers increasingly are pressured by the demands of their clients. resulting in decrease in insurance policies prices. • Technology driven shift in product design. Global insurance industry Globally. while demand did not develop at the same pace. Lot of mergers and 20 . • Cost effective operations. • Newer products and services. • Convergence of financial services. • Restructuring of the public sector. Most of the markets are undergoing globalization.• Greater concern for the customers.

7 billion premium world wide according to the global development of premium volume in 144 countries in 2005. Low growth rates in developed markets.7 as non life insurance premium. and UK was having 10% of global share. changing customers needs. 21 . new types of covers to match with new risk situations. Insurance companies have collected $2443. Influence on Indian insurance industry: In this era of globalization.acquisition are taking place in the insurance world. The rapidity in the industry. technological improvement has resulted in pressures on a few economic parameters. insurance companies face a dynamic global environment. appearance of new risk. Global insurance market is increasing by an average of six percent per year since 1990. The US accounted for 35% of global life and non life premium. and the uncertain economic conditions in the developing world are exerting pressure on insurer’s resources and testing their ability to survive. $1521. Japan had global share of 21%. The world insurance industry is at peak of its globalization process. and unconventional and innovative ideas on customer services. Dramatic changes are taking place owing to the internationalization of activities. Now the existing insurers are facing difficulties from non-traditional competitors those are entering the retail market with new approaches and through new channels.3 has been generated as life insurance premium and $922.

India has a rapidly growing middle class and this section can afford to buy insurance products.3% 4.3% 4.8% 1. the processes by which insurers select the risks to insure and decide 22 .com 8.indianinsuranceresearch. Functioning of insurance industry: Insurer’s business model: Profit = earned premium + investment income .incurred loss underwriting expenses Insurers make money in two ways: (1) through underwriting.6% 3.9% 8. This shows the attraction that the Indian market holds for foreign insurers who have been putting pressure on developing countries as well as on India to open up its market.3% 7. Life insurance penetration as a % of GDP United kingdom Japan Korea United states Malaysia India China Brazil Source: www.0% 1.1% 3.

at hand at any given moment that an insurer has collected in insurance premiums but has 23 . Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered. The most difficult aspect of the insurance business is the underwriting of policies. Using a wide assortment of data. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. An insurer's underwriting performance is measured in its combined ratio. insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Data is analyzed to fairly accurately project the rate of future claims based on a given risk.how much in premiums to charge for accepting those risks and (2) by investing the premiums they collect from insured. the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Upon termination of a given policy. while anything over 100 indicates an underwriting loss. A combined ratio of less than 100 percent indicates underwriting profitability. and these scientific principles are used to determine an insurer's overall exposure. To this end. insurers predict the likelihood that a claim will be made against their policies and price products accordingly. “Float” or available reserve is the amount of money. Insurance companies also earn investment profits on “float”.

whereas today the focus has shifted to fund management. the “float” method is difficult to carry out in an economically depressed period. and technical and free reserves in the non-life segments. So a poor economy generally means high insurance premiums. Investment management: Investment operations are often considered incidental to the business of insurance. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. administrative handling expenses. and claims overpayment leakages. In managing the claims-handling function. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. skilful and careful management of funds. Finally. Time lag between the procurement of premium and the payment of 24 . In the past risk management was the most important part of business. and have traditionally viewed as secondary to underwriting.not been paid out in claims. Insurance is a business of large numbers and generates huge amount of funds over time. Investment income is a large component of insurance revenues. . claims and loss handling is the materialized utility of insurance. These funds arise out of policyholder funds in the case of life insurance. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. Naturally. insurers seek to balance the elements of customer satisfaction.

benefits from insurance profits accrue directly to policy holders when it is passed on to him in the form of a bonus. Net investment income includes income from trading in and holding stock market securities including government securities. the difference between revenue and the expenses is known as operating surplus. Insurance premium collected is converted in a pool of fund then divided in to four expenses. Revenue =premium. loans to several public utilities and service providers in state government. Insurance companies are among the largest institutional investors in the world. Expenses =sum of claims + commission payable on procurement of business + operating expenses. In the case of insurance.claim provides an interval during which the funds can be deployed to generate income. Investment income has to compensate for underwriting results which are increasingly under pressure. In non life insurance the benefits are indirect and mostly by the creation of an investment portfolio. Assets managed by insurance companies are estimated to account for over 40% of the world’s top ten asset managers. Operating surplus =revenue-expenses. special deposits with the central government. 25 . In life insurance. Returns on investments influence the premium rates and bonuses and hence investment income will continue to be an important component of insurance company profits.

securities. • Surplus money will be invested in govt.However.From the view point of the insurer.certain requirements usually must be fulfilled before a pure risk can be privately insured .• To pay the expenses of the management. • The loss should not be catastrophic. • The loss must be determinable and measurable. there are ideally six requirement of an insurable risk • There must be a large number of exposure units • The loss must be accidental and unintentional. • To pay for the claims. Requirements of an insurance risk Insurance normally insure only pure risks . • The premium must be economically feasible 26 . • The chance of loss must be calculable. • To pay agency commission. not all pure risk is insurable .

Both parties win if the loss does occur . because the winner’s gain comes at the expense of the loser .while insurance is a technique for handling an already existing pure risk .the risk of fire is already present and is transferred to the insurer by a contract. The insurer and the insured have a common interest in the prevention of a loss.Comparison of Insurance with other Similar Factors (1)Insurance and gambling compared Insurance is often erroneously confused with gambling .but if you pay Rs 300 to an insurer for fire insurance .In contract .Moreover.a new speculative technique is created .thus .if you bet Rs 300 on a horse . No new risk is created by the transaction.There are two important differences between them .First .In contract. The second difference between insurance and gambling is that gambling is socially unproductive. because neither the insurer nor the insured is placed in a position where the gain of the winner comes at the expense of the loser. insurance is always socially productive.insurance contracts restore the insured’s financially in whole or in part if a loss occurs (2)Insurance and hedging compared 27 .gambling creates a new speculative risk . consistent gambling transaction generally never restore the losers to their former financial position .

the insurer’s prediction of future losses improves. and at the end of the maturity sum assured is 28 .Although both technique are similar in that risk is transferred by a contract. hedging typically involves only risk transfer .An insurance contract. there are some important difference between them. many insurance transactions reduce objective risk. First. Various types of life insurance policies:• Endowment policies: This type of policy covers risk for a specified period.The risk is transferred. not risk reduction . because the relative variation of actual loss from expected loss will decline . and no new risk is created. hedging is a technique for handling risks that are typically uninsurable . because the requirement of an insurable risk generally can be met . not reduced.The risk of adverse price fluctuation is transferred because of superior knowledge of market conditions . As the number of exposure units increases. however. In contract.However.The concept of hedging is to transferring the risk to the speculator through purchase of future contracts . is not the same thing as hedging . and prediction of loss generally is not based on the law of large numbers.such as protection against a decline in the price agriculture products and raw materials. A second difference between insurance and hedging is that insurance and hedging is that insurance can reduce the objective risk of an insurer by application of the law of large numbers. an insurance transaction involves the transfer of insurable risks.thus.

• Joint life insurance policies: These policies are similar to endowment policies in maturity benefits and risk cover. professionals. No surrender. but joint life policies cover two lives simultaneously such as married 29 . These types of policies are for those people who are unable to pay larger premium required for endowment and whole life policies. loan or paid up values are in such policies.paid back to policyholder with the bonuses during the term of the policy. • Whole life insurance policies: This type of policy runs as long as the policyholder is alive and is covered for the entire life of the policyholder. In this policy the insured amount and the bonus is payable only to nominee on the death of policy holder. risk cover comes to an end. If the policy holder survives the term. • Term life insurance policies: This type of insurance covers risk only during the selected term period. co-operatives etc it also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost. • Money back policies: This type of policy is for periodic payments of partial survival benefits during the term of the policy as long as the policy holder is alive. • Group insurance: This type of insurance offers life insurance protection under group policies to various groups such as employers-employees.

This explains 30 . Sum assured is payable on the first death and again on the death of survival during the term of the policy. The investment is denoted as units and represented by the value called as net asset value (NAV). therefore this business is able to spur the growth of infrastructure and act as a catalyst in the overall development of Indian economy. • It is a highly specialized technical business and customer is the most concern people in this business. • The high volumes in the insurance business help spread risk wider. 5. When there is a bigger base. profits improve. raising profits. allowing a lowering of the rates of the premium to be charged and in turn. • Unit linked insurance plan: ULIP is a kind of insurance plan which provides life cover as well as return on premium paid over a certain period of time. Insurance and economy • Indian economy is growing in reference to global market. the probabilities become more predictable. and with system wide risks balanced out.couples. It offers a guaranteed income either for a life or certain period. • Pension plan: a pension plan or annuity is an investment over a certain number of years but does not provide any life insurance cover. Business of insurance with its unique features has a special place in Indian economy.

and protect economic entities against external risk. the demand for life insurance increases. In fact.the current scenario of mergers. As a consequence. acquisitions. Insurance firms help to spread the potentially financial consequences of risk among the large number of entities. to mobilize and distribute savings for productive use. As the assets of people and of business enterprises increase in the growth process. facilitate investment. Insurance is no longer confined to product markets. Insurance is not only important for tax benefits. It is equally true that growth itself is facilitated by insurance. It can be serving as an essential service which a welfare state must make available to its people. As the economy grows. support and encourage external trade. but also for savings and for providing security. the demand for general insurance also increases. Insurance and economic growth mutually influences each other. and globalization of insurance. the living standards of people increase. • Insurance is a type of savings. some of these activities will not be carried out at all. as the economy widens the demand for new types of insurance products emerges. A well-developed insurance sector promotes economic growth by encouraging risk-taking. Risk is inherent in all economic activities. they also cover service industries. Without some kind of cover against risk. Also insurance and more particularly life insurance is a mobilizer of long term savings and life 31 . • Insurance play a crucial role in the commercial lives of nations and act as the lubricants of economic activities.

The real management challenges are uninsurable risks. and a world of uncertainty. it would completely negate Professor Frank Knight in his celebrated book entrepreneurship. factors inhibiting a faster growth of insurance in India. it is important to note that not all activities can be insured. while the problems of life or of conduct at least. risk is avoided at a 32 . There is thus a mutually beneficial interaction between insurance and economic growth.1 per cent. We live only by knowing something about the future. He made a distinction between quantifiable risk and non-quantifiable risk.insurance companies are thus able to support infrastructure projects which require long term funds. The low To some The income levels of the vast majority of population have been one of the extent this is also compounded by certain attitudes to life. He wrote “It is a world of change in which we live. it is non-quantifiable risk that leads to profit. At this point. In the case of insurable risks. cost. If that were possible. This is as true of business as of other spheres of activity”. According to him. “Risk Uncertainty and Profit” emphasized that profit is a consequence of uncertainty. This strong growth will bring about significant changes in the insurance industry. arise from the fact that we know so little. economy has moved on to a higher growth path. The average rate of growth of the economy in the last three years was 8.

People can take their help if they want to reduce their risks and increase their profits. There are even many investment brokers and investment analysts to help people with the process of investment. COMPANY PROFILE There are many companies and advisors to guide people regarding the selection of a particular investment option. About the Tata Group: 33 . They analyze the market situation and refer a suitable investment option for people.6 .

Tata Motors and Tata Tea — have a combined market capitalization that is the highest among Indian business houses in the private sector. and a shareholder base of over 2. excellence. The Group's 27 publicly listed enterprises — among them stand out names such as Tata Steel. energy. 2008. AIG companies serve commercial. engineering.8 billion as on January 10. the equivalent of about 3. continue to guide and drive the business decisions of Tata companies. Tata companies together employ some 289. The Group and its enterprises have been steadfast and distinctive in their adherence to business ethics and their commitment to corporate social responsibility.9 million. Tata Consultancy Services. (AIG). as well as the stock exchanges in Paris. and a market capitalization of $72. AIG's common stock is listed on the New York Stock Exchange. This approach remains enshrined in the Group's ethos to this day.994 crore). Consequently. Switzerland and Tokyo. (AIG) American International Group. Inc. and chemicals. The Tata family of companies shares a set of five core values: integrity.8 billion (Rs129. This is a legacy that has earned the Group the trust of many millions of stakeholders in a measure few business houses anywhere in the world can match. consumer products. and its companies export products and services to 80 countries. a period when India had just set out on the road to gaining independence from British rule.2 per cent of the country's GDP. understanding. is the leading international insurance organization with operations in more than 130 countries and jurisdictions. unity and responsibility. AIG companies are leading providers of retirement services. a world leader in insurance and financial services. In addition. with revenues in 2006-07 of $28. The Tata Group has operations in more than 85 countries across six continents. materials. About American International Group. These values. Jamsetji Tata and those who followed him aligned business opportunities with the objective of nation building.500 people. institutional and individual customers through the most extensive worldwide property-casualty and life insurance networks of any insurer. The Tata Group is one of India's largest and most respected business conglomerates. The Group was founded by Jamsetji Tata in the mid 19th century. which have been part of the Group's beliefs and convictions from its earliest days. services.The Tata Group comprises 98 operating companies in seven business sectors: information systems and communications. Inc. 34 . financial services and asset management around the world.

travel. Maruti Suzuki (49th). The Tata Group holds 74 per cent stake in the insurance venture with AIG holding the balance 26 percent. offers complete range of general insurance for motor.S. The products offered to individuals are variations of term life with or without a savings element. Inc (AIG) is the leading U. 2001. while companies in industrialized markets are trusted less. HPCL. Tata-AIG Life Insurance Company is a joint venture between the Tata Group (74% equity stake) and American International Group Inc. Microsoft (30th). Wipro. TATA AIG (29th). & ITC (96th). Nokia (45th). Tata AIG General combines the Tata Group’s pre-eminent leadership position in India and AIG’s global presence as the world’s leading international insurance and financial services organization. Tata is one of the oldest and leading business groups of India. According to The Economic Times. Tata Group has had a long association with India's insurance sector being the largest insurance company in India prior to the nationalization.g. based international insurance and financial services organization. The company offers a broad range of life insurance products to individuals and groups. Tata-AIG Life has been in operation since April 2001 (incorporated on 35 . (AIG). Reliance. home. (AIG) (26% equity stake). and Bharti Airtel. BPCL. Google (23rd). e. The list is made on the basis of admiration. Hindustan Unilever (70th). property and casualty. (AIG). American International Group. The report revealed that corporate trust is higher in the emerging markets. which started its operations in India on January 22. They are at 11th position in the trust factor. endowment policies and money back policies. which is a joint venture between Tata Group and American International Group. Punjab National Bank. M&M. accident & health. energy. marine. INFOSYS (39th).About Tata Aig Life Insurance Company Ltd. Inc. liability as well as several specialized financial lines. Tatas are more reputed than Google. way ahead of Disney (21th). Inc. Microsoft (published on 11th May. Tata AIG Life Insurance Company Limited. offers a number of standard and custom-made life insurance policies. Other Indian companies that are in the list of top 200 are Canara Bank. Tata AIG General Insurance Company Limited (Tata AIG General) is a joint venture company. trust and good feeling that consumers have towards a company. formed by the Tata Group and American International Group. 2009 in The Economic Times).. Tata AIG General Insurance Company. L&T (47th).

trucks and automobiles that bear the Tata logo. the name Tata introduces immediate credibility in its micro insurance operations. it manufactures a large variety of goods that are highly visible to low-income households. Rural India comprises of over 650 000 villages with over half of them having a population of less than 500. it was evident that the main partners would need to be NGOs. While the company itself is relatively new. financial services. but it did not have a strategic banking alliance with domestic banks or branch presence in smaller towns that could enable it to promote micro insurance sales. 2000). Substantial parts of the group’s profits go into a trust and several social organizations across the country receive grants and assistance from these trusts. the Tata brand is very well respected across the socioeconomic classes.7 Although Tata is the largest shareholder in Tata-AIG. AIG is the one of the world’s largest insurers. Established in 1868. information technology and telecommunications. Having been around for over a century. The Tata Group is one of the oldest and largest industrial conglomerates in India. and with revenues close to 1. Fortunately. its micro insurance strategy had to be developed around other partner organizations to enable the insurer to penetrate rural areas. hotels. Even the state relies on NGOs to provide services to remote and poorly connected locations. Agents selling micro insurance products are able to assure potential clients that such a large conglomerate would have little interest in stealing their miniscule (in relative terms) premiums. Tata-AIG was among the few private sector insurance players to have a well-known. the Tata group is widely known in Indian households. reputable local brand. For Tata-AIG’s rural programme. Aside from its massive pool of inhouse technical capacity. like consumer goods. AIG manages the company with strategic guidance from AIG’s Hong Kong office. chemicals. 36 . With over 80 companies. it has experience working on micro insurance in Uganda. Tata has the reputation of having contributed to community development over the years. consumer products. As a result. The link with Tata helped to create a climate in which many NGOs were favorably disposed towards Tata-AIG. Most importantly.8% of the country’s GDP.Aug 23. it has interests in engineering.

He gave it space to think creatively about how the sustainable promotion and servicing of micro insurance products might work. but instead saw micro insurance as a marketing opportunity. but required new products and distribution mechanisms. Tata-AIG was able to strengthen its relationship with the regulator. This was especially significant in India where many multinational corporations have faced significant difficulties in entering the India market. Core Values: 37 . Most obviously. The CEO has been supportive of the micro insurance programme for a variety of reasons. Its micro insurance programme has generated considerable publicity for Tata-AIG because it is innovative. Although micro insurance would not make much profit (if any) initially. the choice of Tata. In particular. That said. The micro insurance activities helped promote a positive image of Tata-AIG. With India’s high growth rate. rather than purely as a cost of doing business in India. The importance of micro insurance is reflected in the organizational chart. Tata-AIG embraced micro insurance as an opportunity. it helps get Tata-AIG’s brand name out into the market place. made it an invaluable partnership. By engaging so positively with micro insurance. the CEO.Although AIG was forced to find a local partner to get a license to do business in India. Much of the media in India is hostile or at least suspicious of the multinational corporations. research by the National Council of Applied Economic Research has predicted rising levels of overall wealth in both the rural and urban areas of India. The CEO had the foresight to recognize that micro insurance was not simply a matter of selling existing policies cheaply. The IRDA is very concerned with the promotion of micro insurance. many insurers have simply seen the obligations as a cost of doing business in India. with its excellent reputation in the development community. Tata-AIG could have responded in this way. They have responded to the obligations by essentially selling only the required quantity of policies. the de facto micro insurance division. and there are reports that those have been poorly serviced. Crucially the CEO approved of the distribution of resources towards micro insurance and the hiring of a specialized micro insurance team. it is possible that today’s micro insurance policyholder will be tomorrow’s high value client. envisioned a need for a separate rural and social strategy and created a separate department. the insurer is compelled to meet the rural and social sector obligations. Ian Watts.

This thinking would be fostered. integrated and synergized global entity providing horizontal and vertical reach and infrastructure to all our partners worldwide Consistently achieved customer delight by focusing on value adding activities throughout our value chain • • 38 . Unity: We must work cohesively with our colleagues. encouraged and recognized for enhancing business.Integrity: We must always conduct our business with fairness. Entrepreneurship: we would encourage innovative ideas for individual and organizational development. We would take delight in stretching our goals and each of us would have a sense of ownership and responsibility for all our business dealings. to achieve the highest standards in our daily work and in the quality of the goods and services we offer. uncompromisingly. Vivid Description of Vision: • Achieved aggressive and profitable growth of our 5 core businesses and initiated new businesses Become a cohesive. so that we can at all times stand public scrutiny. We will never undermine the heritage of trust that comes with the Tata brand. Mission: To be a competitive value provider in international business for Group companies and all our partners. We must strive. We will aim for nimble. flexible and customized responses at all times to all our stakeholders. Agility: We will encourage an organizational culture and structures that has capacity for change. We would endeavor to achieve 'best in class' status in all our processes and results. Vision: Become a globally networked enterprise seizing opportunities worldwide to generate USD 25 million annual profits by. leveraging synergies and building strong networks based on collaboration and mutual cooperation. Excellence: All our activities must be driven by a passion for excellence. honesty and transparency. customers and partners around the world. Flexibility and adaptability will be critical to our operations.

and physical and communication infrastructure like vans and the Internet portal. Profit allocation and distribution: Tata-AIG is private company and all profits generated by the company go to its owners (shareholders). Tata-AIG bid for an assistance of £89 500 ($168 620) and committed matching funds to the tune of £104 000 ($195 520). a matching grant for which the private sector could bid based on innovative ideas to each the poor. In September 2002. capacity building. The two other models. primarily for its current microfinance clients. The exception to this is with endowment policies where regulations require that 90% of profits must be returned to policyholders. In this model. DfID put out the bidding process for its Financial Deepening Challenge Fund. The FDCF grant is being used for product development. the micro insurance team has been able to harness external funds. integral and responsible member of our environment and communities • • • • • • Resources: Besides company funds. Partnerships: Tata-AIG has NGO partnerships with over 50 NGOs. Over 40% of its 35 000 social sector policies were sold through the partner-agent model.• Achieved best partner status with Group Companies in international business on a sustained basis A strong global supply base for world class goods and services Become a learning and knowledge rich organization acknowledged as thought leaders in international business Institutionalized Tata Business Excellence Model and achieved best in class status Effective and responsive systems and processes that will underpin our business decisions to manage risks Become an exciting organization which attracts and retains best talent worldwide for global competitiveness Become a proactive. the business associate 39 . the NGO/MFI partner performs the sales and servicing functions.

model and the CRIG model. account for the remaining 60% of the new business and are described in more detail below. TATA-AIG organizational chart: 40 .

administrative agency regulations. The same state agency may also be charged with the enforcement of insurance regulations and statutes. State statutes often control premium rates. an insurer must obtain a license through a registration process. Administrative agency regulations are many and varied. and guard against the financial insolvency of insurers to protect insureds.7. This process is usually managed by the state administrative agency. To do business in a state. The agents own the records of the policies they sell. an administrative agency created by the state legislature devises rules to cover procedural details that are missing from the statutory framework. • Through branch • Through agency • Through financial institution • Through banks Independent agency system means of selling and servicing property and casualty insurance through agents who represent different companies. This requirement allows the 41 . Insurance companies must submit to the governing agency yearly financial reports regarding their economic stability. and court decisions. prevent unfair practices by insurers. In most states. Insurance is now governed by a blend of statutes. Agency business model In India insurance is sold through mainly four channels.

Insurance agencies: Insurance agency can be defined as a group of insurance agents or advisor. An advisor or agent works as a third party or intermediate between insurance company and customers. He has to recruit advisors as well as to give sales to the insurance company. • Make them aware of different insurance products.agency to anticipate potential insolvency and to protect the interests of insureds. Functions of agency manager: a person who governs a group of insurance advisors is known as agency manager. Success of an agency manager depends on the success of their advisors. Main work of insurance advisor or agent is to promote and sell different insurance products of company. These advisors are the strongest distribution channel for an insurance agency. • To recruit advisors. although many states make these declarations in statutes. Agency manager is like a creature of two wings. These agents or advisors create a distribution channel to sell the different insurance products. 42 . work of agency manager is to control the advisors in an efficient way. The administrative agency is also responsible for reviewing the competence and ethics of insurance company employees. Agency regulations may specify the types of insurance policies that are acceptable in the state. All the advisors in an agency work as a team.

• To get maximum and efficient work from their advisors. Unit for the operations is known as processing centre. Operation work of insurance agency (TATA AIG Life): Every industry has an operational department which supports the market division. and every policy has to be processed to head office. 43 . Back office has its own hierarchy which is connected to head office. Back office providers are those persons who take care of the operational part of the organization and front office providers are the people who brings sell to the organization. • To motivate them for efficient work. development of insurance products. planning services products and claims are taken care by the head office. distribution.• To give them training session. Front office partners (independent agents) Develop insurance products CUSTOMERS PARTNERS Fulfill and service product Claims Distribute product BUSINESS Plan and manage company Back office provider institutions Regulatory In the reference to the TATA AIG Life insurance.

the entry of a proposal is done in a sequential order starting with scrutiny. cashier entry approval. cashier entry.and processing centre within the city is known as mini processing centre. data entry and finally outwards. After scrutiny the operational staff enters it in TATA AIG Life website. After finishing all these operations policy issues from the head office of the state. inwards. proposal wise inwards. • How they make their advisors active. 8. Project proposed Agency business model of different insurance companiescompetitive strategies. which is done online. • How they handle the conflict in agency. 44 . • How they make their operational and sales department effective. Their strategies may be in the form of: • How they target their customers. Different agencies of different insurance companies are having some strategies to survive in the market. • How they promote their employees. Proposal forms come through front office and the verification of the proposal is done by manually which is known as scrutiny.

so it is very essential to a company to innovate their marketing strategies in terms of • Recruiting their advisors • To make their advisors active • Well educated and capable employee in the agency • Marketing of their products • Deployment of their products • Targeting the right and potential customers • Differentiating from other companies • Future plan of the company This study consists of to find out the marketing strategies of different insurance companies which are the competitors of TATA AIG Life insurance. Many other private companies are looking to enter in the Indian insurance market . This research requires the interview of branch managers of different insurance companies and find out their branches are working in terms of above mentioned factors. Conclusion of this project can give an idea of strategies of different companies which may be helpful to the company. They are introducing innovative marketing strategies to survive in the market. Methodology 45 . Project is about to penetrate the competitors of TATA AIG life.Objective of the project: . Now days all the insurance companies in India are trying to establish themselves in the competitive market.Main objective of the project is to find out the strategies of different insurance agencies and evaluate them.

Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by meeting with the branch and agency manager of different insurance agencies and branches in Calicut. Data collection has been done through by giving structured questioner. Research has been done after 27 branch managers or agency manager. This study will be based on judgment sampling and this research is skewed to organization level. This is an exploratory type of research. And this research needs further study also Research is a kind of pilot study.

Sample size has been taken by judgment sampling. Judgment sampling is a process in which the selection of a unit, from the population is based on the pre judgment. This research requires the survey of different insurance agencies in Calicut city. So research concentrates on the branch or agency manager of different insurance companies. So the selection of unit for this research has been judged by the researcher. Sample size for this research is 27.

• Time limitation • Research has been done only in Calicut. • Companies did not disclose their secrets data and strategies. • Possibility of Error in data collection. • Possibility of Error in analysis of data due to small sample size.


9. Distribution of insurance products
Insurance has to be sold the world over. The Touch point with the ultimate customer is the distributor or the producer and the role played by them in insurance markets is critical. It is the distributor who makes the difference in terms of the quality of advice for choice of product, servicing of policy post sale and settlement of claims. In the Indian market, with their distinct cultural and social ethics, these conditions will play a major role in shaping the distribution channels and their effectiveness. In today's scenario, insurance companies must move from selling insurance to marketing an essential financial product. The distributors have to become trusted financial advisors

for the clients and trusted business associates for the insurance Companies. Challenges for insurance companies and intermediaries in India• Building faith about company in the mind of clients. • Building personal credibility with the clients.

Different distribution channels in India:A multi-channel strategy is better suited for the Indian market. Indian insurance market is a combination of multiple markets. Each of the markets requires a different approach. Apart from geographical spread the socio-cultural and economic segmentation of the market is very wide, exhibiting different traits and needs. Different multi-distribution channels in India are as follows

Agents: Agents are the primary channel for distribution of
insurance. The public and private sector insurance companies have their branches in almost all parts of the country and have attracted local people to become their agents. Today's insurance agent has to know which product will appeal to the customer, and also know his competitor's products to be an effective salesman who can sell his company, the product, and himself to the customer. To the average customer, every new company is the same. Perceptions about the public sector companies are also cemented in his mind. So an insurance

Federal bank. south Indian bank. INSURANCE COMPANY ICICI prudential ASSOCIATE BANKS ICICI bank. especially the public sector banks. Andhra bank Vysya bank 49 TATA AIG life Birla sun life ING Vysya bank . bank of Rajasthan.agent can play an important role to create a good image of company. with their vast branch networks. Allahabad bank. Companies which are bank owned. • Banks: Banks in India are all pervasive. Citibank. This channel of selling insurance is known as Banc assurance. The public sector banks. bank of India. Citibank. are helpful to insurance companies. they are selling their products through their parent bank. Many insurance companies are selling their products through banks. Punjab and Maharashtra cooperative bank State bank of India Deutsche bank.

These financial institutions are known as brokers. Indian bank Karnataka bank. Insurance companies’ tie-up with business houses in other industries to sell insurance either to their employees or their customers. This can be as direct marketing.Hindu Business Line. khaitan’s Williamson major and bridge foundation for selling rural policies. 50 . Corporate agents have become a major force to reckon with in distributing insurance products. 2007 • Brokers: Now a day’s different financial institution are selling insurance. canara bank Union bank. They are taking some underwriting charges from the insurance companies to sell their insurance products. Such as. j&k bank Source: . during the past 2 years has witnessed a number of such strategic tie-ups and alliances. Insurance industry.Aviva life insurance HDFC standard life Met life ABN amro bank. • Corporate agents: Corporate agency is a cross selling type of channel. • Internet: In this technological world internet is also a channel of selling insurance.Bajaj Allianz tied up with Maruti Udyog and Ford for auto insurance and Tata AIG life has tied up with Tata tea. January 08.

People are increasingly looking not just at products. Effective marketing strategies Now the Indian consumer is knowledgeable and sensitive. the insurance managers need to understand more about the details that go into the introduction of insurance products to make it attractive in this 51 .10. In view of this. but at integrated financial solutions that can offer stability of returns along with total protection. Consumers are increasingly more aware and are actively managing their financial affairs.

52 . • Value addition. Financial. Performance of insurance company depends on the effectiveness of such policies. • Segmentation. creativity.competitive market. The insurance companies face the challenge of changing the uninspiring public image of the industry. Some of the important marketing elements are• Marketing mix. • Customer satisfaction research. • The importance of relationship. "Every family in every village in the country should feel safe and secure". marketing and human resource polices of the corporations influence the unit mangers to make decisions. • Effective pricing. • Branding. Insurance corporations formulate and revise these policies from time to time to ensure that the performance of the managers is best for the organization. commitment. This vision alone will help to bring the new ideas to the insurance manager. • Insuring service quality. and flexibility. In the competitive market. • Positioning. insurance companies are being forced to adopt a strictly professional approach in marketing. So now days an insurance manager requires leadership.

• Growth in population. • The aversion to risk. the effort should be tie clients to the company by customized combination of coverage. 53 . which involve a heavy investment in developing relationships with policyholders. One approach is focus upon product quality which can give confidence in the mind of customers that they are offered by best featured products. The following factors influence the market and demand of product• Government policies. • The pricing of the policies. • Changing age profile. • Income wise distribution of the population. • Social and political features of the country. easy payment plans. • The economic climate of the country. and convenient and quick claim handling. And other approach is focusing on customer’s needs.The growth of insurance sector is governed largely by factors external to it. • Level of insurance awareness. Different companies adopt different approaches in their marketing strategies. Third approach is market segmentation under which the population can be divided into several homogeneous products and groups. • Growth scenario in the world. risk management advice. Under this approach customer can expect a range of products and service offered to him.

An insurance product can be classified in three phases: Core product: In insurance industry the core product is the policy that provides protection to the customers. The present scene in India is such that everyone is trying to put in the best 54 . • Customer complaint management. Expected product: Because of competition customers start to expect more from an insurance product. such as• Brand • Some additional features in existing product • By providing instruction manual with the policy. Then insurance companies provide some tangible attributes in their product to differentiate from competitors. but also professional techniques and technologies. because the opening up of the sector has not brought in only foreign players. The entry of private players and their foreign partners has given domestic players a tough time. Augmented product: • Post sales services. An insurance company can provide different types of services to differentiate their products• Branches in different places for customers. • Payment option convenient to customers.

55 . • Assessment of risks (of the insured and the insurance corporation) and estimation of losses: Efficiency of actuaries and assessors of the insurance policies in fixing premiums and settling claims is foremost an important area for achieving overall efficiency in operations. Well trained. Relying on an external agency can be risky due to the questionable loyalty of the agents. The quality of assessing the risk and estimation of losses has the largest claim on the performance of an insurance company. But the most important gift of privatization is the introduction of customer-oriented services. through Identification of markets means research and analysis. experienced and expert hands are needed for the operations. • Penetration into and exploitation of markets: Market penetration or exploitation of a company can be identified with the growth in number of policies in each type of insurance. need to understand the trends in culture and businesses conducting Insurance companies can take this job on their own or assign it to an external agency. Utmost care is being taken to maximize customer satisfaction. Success of an insurance company depends on four important functions:• Identification of markets: constantly. There are marketing strategies more for survival than growth.efforts.

• Estimating potential for specific products within local markets. Efforts of the company as a whole and that of the divisions and branches are assessed to measure the effectiveness. Investment control and expense control are dealt separately and the effectiveness of management’s’ decisions at various levels is to be assessed separately To find best prospects: • Allocating marketing strategies against market potential. increase in number of branches and divisions etc. 56 . • Identifying high opportunity areas. and materials at each level of the organization provides measures of efficiency of a unit as well as the organization.growth rate in earnings or turnover. company’s market share. • Optimizing your agency network against market potential. • Consumer attitudes. learning about products and purchase channels. • Control over investment and operating costs: Control over resources such as men. • Measuring agency performance relative to market potential. machines.Useful to know future buying preferences. Attributes to develop marketing strategies: • Channel data: .

Useful to evaluate annual premiums. • • Learn how to convert a new lead into sales. Learn how to get and set more appointments. and with which company the current policy is held. Take Easy steps to avoid delays in issuing policies. Learn how to find a proper perspective and how to turn off all the signals that cause people not to buy from you.• Consumption data: . Effective strategies for insurance agents: • • Learn how to construct a mental image for success. Learn how to act when you meet a client for the first time. value of annuities. • • • 57 . number of annuities owned. Learn how the order in which you explain the types of policies can double your income.

Competitors of Tata Aig life insurance ICICI prudential: ICICI prudential insurance is a joint venture of ICICI bank and prudential plc a leading financial service group in the UK. ICICI begin their operations in December 2000 after receiving approval from IRDA. over 270000 advisors and 21bancassurance partners. Total capital stands for Rs. 37. ICICI prudential is working on the base of five core values• Integrity • Customer first • Boundary less • Ownership • Passion Key features: 58 . ICICI Prudential was the first life insurer in India to receive a National Insurer Financial Strength rating of AAA from Fitch ratings.11. with ICICI Bank holding a stake of 74% and Prudential plc holding 26%.72 billion. Now ICICI prudential is having over 1000 offices.

HDFC standard life insurance: HDFC Standard Life Insurance Company Ltd. 2007. It is a joint venture of Housing Development Finance Corporation Limited. 77. HDFC as on March 31. 2. India's leading housing finance institution and a Group Company of the Standard Life in UK. HDFC standard is having 1000 advisors in 11 towns. • Providing an enabling environment to foster growth and learning for employees.• Understanding the needs of customers and offering them superior products and service. • Leveraging technology to service customers quickly. is one of India's leading private insurance companies.000 lives year ending March 31. • Developing and implementing superior risk management and investment strategies to offer sustainable and stable returns to policyholders. 2007 was Rs. 856 crores and new business premium income was Rs. efficiently and conveniently. Gross premium income of the HDFC for the year ending March 31.624 crores. Key features: • Creating corporate agents through HDFC bank in India. • Creating agents to provide total financial consultancy. 2007 holds 81. The company has covered over 8. 1. 59 .9 per cent of equity venture. • Introducing low cost group schemes for companies and NGOs.

Reliance life insurance: Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the Reliance .Anil Dhirubhai Ambani Group. Aviva products are available in more than 2. Aviva has a sales force of over 30000 financial planning advisors. And country's leading producer of traditional healthcare products. stock broking. In accordance with the government regulations Aviva holds a 26 per cent stake in the joint venture and the Dabur group holds the balance 74 per cent share. and largest Group of companies. Aviva life insurance: Aviva is UK’s largest and the world’s fifth largest insurance Group. Aviva has 193 Branches in India (including rural branches) supporting its distribution network. Reliance Capital is one of India’s leading private sector financial services companies. proprietary investments. in terms of net worth. It is one of the leading providers of life and pensions products to Europe and has substantial businesses elsewhere around the world. Reliance Capital Limited (RCL) is a Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India under section 45IA of the Reserve Bank of India Act. Key features: 60 . Through its Banc assurance partner locations. life and general insurance. private equity and other activities in financial services.795 locations across India. Reliance Capital has interests in asset management and mutual funds. and ranks among the top 3 private sector financial services and banking companies. one of India's oldest. Aviva has a joint venture of Dabur. 1934.

the FHC assesses and recommends the right insurance product for them. Depending on the life stage and earnings of the customer. transparency and value for money. MetLife is one of the fastest growing life insurance companies in the country. Inc.000 Financial Advisors. It has approximately 70 million customers all over world.and The Jammu and Kashmir Bank. It offers a range of innovative products to individuals and group customers at more than 600 locations through its bank partners and company-owned offices. • Introduced the concept of Banc assurance in India. Pallonji and Co. MetLife is working on the base of six core values• Innovation • Long term relationship • Customer centered and result focused vision • Creating high performance organization 61 . • Products to provide customers flexibility. M. Inc. Private Limited and other private investors. • Differentiation in fund management operations. MetLife insurance: MetLife India Insurance Company Limited is an affiliate of MetLife.• Through the “Financial Health Check” (FHC) Aviva’s sales force has been able to establish its credibility in the market. The FHC is a free service administered by the FPAs for a need-based analysis of the customer’s long-term savings and insurance needs. and was incorporated as a joint venture between MetLife International Holdings. MetLife has more than 32.

907. • Knowledge. Key features: • Max New York Life has adopted prudent financial practices to ensure safety of policyholder's funds. • Caring. one of India's leading multibusiness corporations The Company's paid up capital is Rs.screening. • Integrity The Company practices a lot of importance on its selection process of insurance advisors which comprises four stages . a Fortune 100 company and Max India Limited. fairness and financial prudence • Partnering with internal and external customers Max New York life insurance: Max New York Life Insurance Company Ltd. is a joint venture between New York Life. • Investing significantly in its training programme and each agent is trained for 152 hours as opposed to the mandatory 100 hours 62 . psychometric test. career seminar and final interview. • Honesty. Max New York life is working on the base of six core values• Excellence.4 crore.• Working with integrity. 337 agent advisors have qualified for the Million Dollar Round Table (MDRT) membership in 2007 and Max New York Life has moved up to 21st rank in MDRT global list.

The company started its operations in December 2006. rural business. • Using a five-pronged strategy to pursue alternative channels of distribution which include the franchisee model. direct sales force involving group insurance and telemarketing opportunities. agri business and retail.stipulated by the IRDA before beginning to sell in the marketplace. Company is working on the base of five core values• Professionalism • Innovation • Team Spirit • Pragmatism • Integrity Key features: • Using multi-distribution. The joint venture company has a 74% stake from Bharti and 26% stake of Axa. • Adapting AXA's best practices as a sound platform for profitable growth. Bharti Axa life insurance: Bharti Axa life insurance is a joint venture between Bharti. banc assurance and corporate alliances. multi product platform techniques. Now company is having over 5200 employees across over 12 states in the country. 63 . and Axa world leader in financial protection and wealth management. one of India’s leading business groups with interests in telecom.

infrastructure and customer base. ING Vysya Life has a diversified distribution channels.ING Vysya Life is currently present in 246 cities and has a network of over 300 branches. serving over 5. the Alternate Channels business within ING Vysya Life is one of the fastest growing distribution channels.000 advisors. Corporate Agents and SMINCE. ING Vysya Bank.000 employees and over 51. The company currently has tie ups with 130 cooperative banks across the country.• Leveraging Bharti's local knowledge. • Retaining the best talent in India. While Tied Agency remains the strongest channel. ING Vysya Life has strengthened its position as the unparallel leader in the life insurance industry in cooperative banks tie ups.. ING Vysya life insurance: ING Vysya Life Insurance Company Limited a part of the ING group the world’s largest financial services provider entered in the private life insurance industry in India in September 2001. • Building long term value with business partners by enhancing the proposition to their customers. staffed by 7.5 lakh customers. ING Vysya is working on the base of five core values• Professionalism • Entrepreneurial • Trustworthy • Approachable 64 . The Alternate Channels division has Banc assurance. • Delivering high levels of shareholder return.

Alternate Channels and offering convenient channels of purchase to customers.4% 3. • Web-enabled IT systems for superior customer services and issuing policies on the internet.6% 65 . Company is having more than 45 branches across India.• Caring Birla sun life insurance: Birla Sun Life Insurance Company Limited (BSLI) is a joint venture between the Aditya Birla Group and the Sun Life Financial Services of Canada. • products to maintain leadership in product Use of multi distribution channels. • Working on operational Business Continuity Plan.Direct Sales Force.2% 1.3% 0. Key features: • Focus on unit linked insurance products supported with protection innovation. It started operations in March 2001 after receiving its registration license from IRDA in January 2001.0% 4.1% 2. • High degree of transparency in all business practices and procedures. Market share of different insurance companies: ICICI Prudential HDFC Standard TATA AIG Life Bajaj Allianz Aviva life insurance MetLife insurance 9.

1% 0.2 32.1% 1.0 53 61.Reliance life insurance Birla sun life insurance Max new York life insurance Bharti AXA life insurance ING Vysya Kotak Mahindra 1.3% 0.7 Growth % 31831.9 80.8 10675.8 74.5 6595.7 8142.8 2756.0% 2.irdaindia.0 .1 4586.9% Source: .mill.4 15208.4 137.org Growth in premiums of different insurance companies:Companies Premium up to oct 07 (Rs.4 26498.2 3464.7 14717.) 20808.www.) ICICI Prudential HDFC Standard TATA AIG Life Bajaj Allianz Aviva life insurance MetLife insurance 66 Premium up to oct 06 (Rs.2 1162.7% 0.mill.

8 life insurance Bharti AXA life 258.0 SWOT analysis of insurance industry: 67 .6 22907.7 insurance ING Vysya Kotak Mahindra 3047.4 1.6 2086.7 3844.7 97.7 2172.6 86.7 3476.2 7595.4 6942.1 60.0 2803.Reliance life insurance Birla sun life insurance Max new York 8571.6 46.7 3720.1 205.

STRENG • • • Premium rates are increasing and so are commissions The variety of products are increasing Customers expects more services from their brokers • • • WEAKNE Companies are slow respond to changing needs Increasing trend of financial weakness among the companies More competitors for agencies to compete with banks & internet players OPPORTUNIT IES • • Ability to cross sell financial services barely being tapped Technology is improving to that point that paperless transactions are available Client’s increasing need for insurance consultant can open new ways to service the client and generate income • THREAT S Increasing cost and need for insurance might hit a point where a backlash will occur Increasing expenses and lower profit margins can hit smaller agencies and insurance companies • • 12. Questioner 68 .

Jhalawar NameCompanyDesignationContact no. Your designation while joining this company………………………. How many advisors do you have? (a) <250 (b) 250-400 (c) 400-550 (d) >550 5. On what basis do you recruit your advisor? (a) Through personal reference (b) Through advertisement (c) Through walk in interviews (d) Through placements agencies 6. When did you join your present company? (a) < 2 years (b) 2-5 years (c) 5-8 years (d) >8 years (d) >8 years 3.. With this assurance I expect accurate data from company to help me for my project. ………………………………………………………………………………. 4. How long you have been in insurance industry? (a) < 2 years (b) 2-5 years (c) 5-8 years 2. Engeneering College . It is assured from us that any information given by the company will not be disclosed by any means. Subel Road .- The following questionnaire is for the purpose of our research project as a part of our MBA curriculum on ‘Marketing Strategy of different Insurance companies’. How do you make them active? (a)By increasing incentives (b)By offering higher channel position 69 .Govt. ________________________________________________________________ 1.

Your mode of interaction with customers. On what products you are stressing more? (a) Term insurance (b) Unit linked products (c) Money back products (d) Endowment products 9. What is average total premium collection in your branch (in a month) 70 .(c)By awarding non-cash prizes (d)By giving training session 7. How do you differentiate your product from your competitors? (a) By advertising and promotional activities (b) By pricing of the product (c) Based on the deployment of funds (c) By providing better service quality 11. What is the basis of your product deployment? (a) Profit oriented (b) On customers need and demand (c) On channel feedback from market (d) By adding some additional benefits in current product 10. How many MBAs do you have in your agency? (a) None (b) 1-3 (c) 4-6 (d) more than 6 8. (a) Direct marketing (b) By telephonic contacts (creating database) (c) Through advertisement (d) Through online contacts 12. Which kind of strategies should an insurance company use to compete in the market (in your view)? (a) Better service quality (b) Accordingly change in the pricing of product (c) By increasing periodicity of interaction with advisors and customers (d) By providing extra benefits to advisors and customer 13.

(a) <2 Cr.

(b) 2-4 Cr.

(c) 4-5 Cr.

(d) >5 Cr.

14. Other useful activities which you do in agency (if any, please mention)……………………………………………………………………... ……………………………………………………………………………….. . ……………………………………………………………………………….. . 15. What are your future plans (please define)…………………………. ……………………………………………………………………………….. ………………………………………………………………………………..

13. Findings

Primary data has been collected by the survey of branch and agency manager of different insurance companies in Calicut. sample size for this research is 27.

Recruitment of advisors:- In insurance industry advisors play
most important role, and these advisors are recruited through different ways. Mainly four ways for recruiting the advisors are1. Through personal references. 2. Through advertisements. 3. Through walk in interviews. 4. Through placement agencies. Recruitment_Personalreference Respons e yes no Total Frequency 24 3 27 Percent 88.9 11.1 100.0

Recruitment_Advertisement Respons e yes no Total Frequency 10 17 27 Percent 37.0 63.0 100.0

Recruitment_Interviews Respons e yes no Total Frequency 12 15 27 Percent 44.4 55.6 100.0


Recruitment_Placementagencies Respons e No Frequency 27 Percent 100.0

So most of the companies are recruiting their advisors through personal reference and through advertisement, some companies are recruiting their advisors through walk in interviews also, but none company is recruiting their advisors through placement agencies.

Through placement agencies

Through walk in interviews


3. Active_Incentives Respons e yes no Total Frequency 7 20 27 Percent 25. some practices are1.0 Active_Noncashprizes Respons e yes no Total Frequency 10 17 27 Percent 37.2 77. By increasing incentives.9 74. 2.0 63.Making advisors active: To get efficient work from their advisors companies do some practices to make them active.0 74 . 4.8 100. By offering higher channel position.0 Active_Higherchannelposition Respons e yes no Total Frequency 6 21 27 Percent 22.1 100.0 100. By awarding them non cash prizes. By giving them training session.

some of the companies are increasing incentives and offering higher channel position to make their advisors active.0 So most of the companies are giving training session and awarding non cash prizes to make their advisors active. Type of products: Different insurance companies are having different categories of insurance products.9 48. 75 .Active_Trainingsession Respons e Yes No Total Frequency 14 13 27 Percent 51.1 100. Term insurance products. Some product categories are1.

7 100.3 100.5 100.0 Products_Moneyback Respons e yes no Total Frequency 1 26 27 Percent 3.4 92. 3. 4.5 81. Endowment products.2.3 3.6 100.7 96.0 Products_Unitlinked Respons e yes no Total Frequency 26 1 27 Percent 96.0 76 .0 Products_Endowment Respons e yes no Total Frequency 2 25 27 Percent 7. Products_Terminsurance Respons e yes no Total Frequency 5 22 27 Percent 18. Money back products. Unit linked products.

T Endowment products Basis of product deployment: . On customers need and demand. Productdeployment_Profitoriented Respon se Yes Unit linked products 6 77 Frequency Percent 22. By adding some additional benefits in current products.All insurance companies are deploying their products in various categories.So all the companies are promoting their unit linked products and some companies are promoting rest of the products including unit linked products. Some of the tactics Money back products are1. 4. On channel feedback from market. 2. 3.2 . Profit oriented.

5 81.1 25.0 So most of the companies are deploying their products based on the customers need and demand.9 100.0 Respon se yes no Total Frequency 20 7 27 Percent 74.6 100.5 100.0 Productdeployment_Marketfeedback Respon se yes no Total Frequency 2 25 27 Percent 7.0 Productdeployment_Additionalbenefits Respon se yes no Total Frequency 5 22 27 Percent 18.8 100.4 92.No Total 21 27 Productdeployment_Customersneed 77. 78 .

By providing better service quality.8 85.0 On customer need 79 .B By adding extra benefits Differentiation strategies: To make their products different from their competitors companies are using some strategies which are. differentiation_promotionalactivities Respon se Yes No Total Frequency 4 23 27 Percent 14. By pricing of market the product.2 100.On channel feed back from 1. By advertisement and promotional activities. 4. 2. 3. Based on the deployment of the funds.

9 74.0 So most of the companies are giving better service quality and better pricing to differentiate their products from their competitors.9 100.0 37.0 100.0 differentiation_deploymentoffunds Respon se yes no Total Frequency 7 20 27 differentiation_service Percent 25.1 51.differentiation_pricing Respon se yes no Total Frequency 13 14 27 Percent 48.0 Respon se yes no Total Frequency 17 10 27 Percent 63. 80 .1 100.

By better service quality Mode of interaction: There are different types of way to interact with customers. Based on deployment of funds 2. Direct marketing. By creating database (telephonic contact). Through on line contacts. 4. Some of the important ways are1.0 37.0 By pricing of product 81 . Modeofinteraction_Direct Response Yes No Total Frequency 17 10 27 Percent 63.0 100. 3. Through advertisement.

0 Modeofinteraction_Advertisement Response yes no Total Frequency 1 26 27 Percent 3.6 44. 82 .3 100.3 100.0 So almost all the companies are interacting with customers through direct marketing and by telephonic contacts (creating database).0 Modeofinteraction_Onlinecontacts Response yes no Total Frequency 1 26 27 Percent 3.7 96.7 96.4 100.Modeofinteraction_Telephone Response yes no Total Frequency 15 12 27 Percent 55.

Strategies_Service Respons e Yes No Total Frequency 21 6 27 Percent 77. Better service quality. By increasing periodicity of interaction with advisors and customers. 2.Mod Through online contacts Strategy to compete in market: Most common strategies to compete in the market for insurance companies are1.8 22. 4.2 100. 3. Through advertisement Change in pricing of products.0 By telephonic contacts 83 . By providing extra benefits to advisors and customers.

6 100.1 88.4 92.Strategies_Pricing Response yes no Total Frequency 2 25 27 Strategies_Interaction Response yes no Total Frequency 7 20 27 Strategies_Extrabenefits Response Yes No Total Frequency 3 24 27 Percent 11.9 74. 84 .0 Percent 7.1 100.9 100.0 Percent 25.0 So most of the insurance companies think that providing better service quality is most suitable strategy to compete in the market.

1 18. Change in pricing 85 . Total By increasing periodicity of Premium Collection interaction Frequency 20 5 1 1 27 Percent 74. more than 5 cr. 2 to 4 cr.0 So most of the companies are collecting premium less than 2 crores.By providing extra benefits Premium collection:- Premium less than 2 cr.5 3. 4 to 5 cr. at an agency or branch level in a month.7 3.7 100.

Four to five crore Two to four crore 86 .More than 5 cr.

71%) 14 By giving them training session.Recruitment of advisors through personal reference and making them active:- Recrui Companies.65%) By awarding non cash prizes.78%) So companies are concentrating on training session and awarding non cash prizes to make their advisors active.5 (14.9 (26. recruiting their advisors through personal reference are doing practices to make them active in under mentioned numbers.47%) By giving higher channel position.6 (17. 87 .14 (41. By increasing incentives.

5 (33. 88 .4 (26.67%) By awarding non cash prizes.33%) By giving them training session.4 (26. awarding non cash prizes and training session.2 (13. recruiting their advisors through advertisement are concentrating on increasing incentive. By increasing incentives.33%) So companies.Recruitment of advisors through advertisement and making them active:- Recr Companies. recruiting their advisors through advertisement are doing practices to make them active in 5 under mentioned numbers.67%) By giving higher channel position.

52%) So companies.4 (23.3%) By giving higher channel position. By increasing incentives. 89 .Recruitment of advisors through walk in interviews and making them active:- Recrui 4 Companies. awarding non cash prizes and training session. recruiting their advisors through advertisement are concentrating on increasing incentive.52%) By awarding non cash prizes.6 (35.4 (23. recruiting their advisors through walk in interviews are doing practices to make them active in under mentioned numbers.3 (17.6%) By giving them training session.

Some companies are differentiating themselves providing better pricing of the product. Most of the companies are giving training session to advisors to make them active. Only one or two companies are providing higher channel position and increasing incentives to make them active. None of the company is recruiting their advisors through placement agencies. • Insurance companies have forgotten their traditional products. Now insurance companies are selling their products as an investment product not as life insurance products. 90 . • Most of the insurance companies are differentiating themselves from the competitors by providing better service quality. Companies are totally concentrating on selling ULIP products. through advertisement. • Those advisors who are recruited through personal references need more training session and company has to put effort to make them active. Insurance companies are not doing enough market researches to know the potential of the market.Conclusion • Insurance companies are recruiting their advisors mainly through personal reference. and through walk in interviews. • Insurance companies are deploying their products mostly based on customer needs and demands. • Most of the insurance companies have started recruiting agency manager and high posted people from professional colleges to improve efficiency of the insurance company. But some companies have started recruiting their advisors through placement agencies as a trial basis.

TATA AIG Life should promote their product features rather than promoting their brand name. Recommendations • TATA AIG Life should start recruiting advisors through placement agencies. Providing claims in time. TATA AIG Life should sell their products through head of the villages or through panchayat in villages. By practicing this TATA AIG Life will get more capable advisors who can work efficiently. People in villages • • • • • 91 . This can be done by putting kiosk in fairs and festival melas organizing in villages. Making customers aware about their status of policy. Inactive advisors kind of thing would not happen.• Branch managers of most of the companies think that providing better service quality is the best tool to compete in the market. 2. because most of the people are not happy with the service provide by TATA AIG bank. so it is necessary to change the mentality of the people that TATA AIG Life insurance is different from TATA AIG bank. Better service quality may be in the form1. TATA AIG Life can sell their products through charitable institutions. 3. Promote products as life insurance products not an as investment products. To increase awareness in rural market TATA AIG Life should do some activities in villages and small towns. 14. TATA AIG Life should also promote the term and endowment insurance products including ULIP products. Issuing policy in time. Because these are basic insurance products. Somewhat the brand name of TATA AIG is harming the TATA AIG Life insurance.

believe on the head and panchayat so selling insurance will be easier in villages. References Books Insurance in India Insurance distribution (ICFAI Publications) Insurance industry (ICFAI Publications) Magazines Business world Magazines on investment News papers The Hindu Business Line Internet IRDA website Google search Economic Times Websites of different insurance companies 92 . • TATA AIG Life can introduce some special policies for the farmers to tap the rural market. • 15. and pricing for these kinds of products should be less so farmers can easily afford to take policies. As TATA AIG Life is coming in general insurance so it can introduced products like cattle insurance and water pump insurance. It will also help to promote the products of TATA AIG Life insurance.

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