A Project on

ANALYSIS OF FACTORS, AFFECTING THE INSURANCE SECTOR

FOR

AVIVA LIFE INSURANCE LTD COMPANY

Bachelor of Commerce

(Banking & Insurance)

Semester VI
2015-16
Submitted

In Partial Fulfilment of the requirements

For the Award of the Degree of Bachelor of

Commerce – Banking & Insurance

BY

RADHIKA V.SHAH

Project Guide

PROF.Kishor Chauhan
Smt. Sushiladevi Deshmukh College of Arts, Commerce and Science.

1
Sector 4, AIROLI, NAVI MUMBAI- 400708

2
 ACKNOWLEDGEMENT

On the Event of completion of my project “analysis of factor affecting the

insurance sector” Undertaken in “AVIVA Life Insurance””. I take the

opportunity to express my deep sense of gratitude towards all those

people without whose guidance, inspiration and timely help, this project

would have never seen the light of day.

Any accomplishment requires the effort of many people and this project

is not different. I find great pleasure in expressing my deepest sense of

gratitude towards my Project guide Prof.Mr.Kishor Chauhan whose

guidance and inspiration right from the conceptualization to the finishing

stages proved to be very essential and valuable in the completion of the

project.

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 Declaration

I Sonu Lalan. Sharma - student of T.Y.B.com – Banking & Insurance

Semester VI (2015 – 2016) hereby declare that I have completed this project.

The information submitted is true & original to the best of knowledge.

Signature of Student

Sonu Sharma

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 RESEARCH METHODOLOGY

Objectives of the research:

To study Credit Rating Agencies in India

Secondary Data:
The secondary data has been collected from various reference
books and websites which have been mentioned in the bibliography
at the end of the project

Limitations of the Research:

Problems of selection of right information available from various
sources

Scope of the Research:

The main objective of the project is to get to know about Credit
Rating Agencies in India and importance from the investor’s point of
view.
Credit Rating is an objective assessment of a borrower’s credit
quality in terms of business and financial risks.

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 EXECUTIVE SUMMARY
The product titled “analysis of factor affecting the insurance sector”
Undertaken in “AVIVA Life Insurance”
AVIVA is a: -
 UK based 5th largest life insurance group.
 Having about : -
• 40 million customer base.
• $377 billion of assets under management.
 AVIVA has a joint venture with DABUR in India.
 In this venture: -
• AVIVA holds 26% stake.
• DABUR holds 74% stake.
Monopoly of LIC has been to make Indian insurance to change it face and pace
to tap the market to make the new challenges in it. Insurance in India is not
about India only: it is the private sector for all players. The name you would
seen in Indian insurance market is something like Bajaj (Indian company) +
Allianz (foreign player), TATA (Indian company) + Aig (foreign player), so
many like them. Companies now are tapping so many ways to capture the
market hence adopting different way to hold large portion of market. My project
was to understand the different factors which effects the insurance market to
increase their market share and along with meeting their own target to achieve
the position of No:1in the respective field. My summer training helped me a lot
to complete my project in order to learn a lot of things of corporate. As a project
trainee the first task was given to me was to understand the basic behaviour of
the consumer in order to manipulate the market according to our target
competition.
For this we developed questionnaires.

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 INDEX

SR.NO TOPIC PAGE NO.

1 COMPANY FPROFILE: 8
PARTNERS,MANAGEMENT CIRCLE

2 PRODUCTS 19

3 WHAT IS INSURANCE 21

4 FUNCTION OF INSURANCE 23

5 ROLE AND IMPORTANCE OF 25

INSURANCE

6 NO OF INSURANCE COMPANIES IN 30
INDIA

7 INSURANCE REGULATORY AND 37

DEVELOPMENT AUTHORITY (IRDA)

8 MARKET SHARE OF LIFE 41

INSURANCE COMPANIES IN INDIA

9 RESEARCH REPORT 43

10 CONCLUSION 58

11 LIMITATIONS,SUGGESTIONS 60

12 BIBLIOGRAPHY 61

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 CHAPTER 1

COMPANY PROFILE : AVIVA LIFE

INSURANCE LTD.

Aviva Life insurance co. India Ltd.

Introduction of company
Aviva India is an Indian life assurance firm, and a joint venture between Aviva
plc, a British assurance company, and Dabur Group, an Indian conglomerate.
Aviva began operations in July 2002 as a joint venture with Dabur Group, one
of India’s oldest business houses. As per the Indian insurance sector regulations,
Aviva plc has a 26% stake and Dabur has a 74% stake in the JV partnership.
Type: Private
Investment
Industry:
Insurance
Head quarts: Gurgaon, Haryana

Mr. T.R. Ramachandran (Managing

Key people:
Director & Chief Executive Officer)

Protection, Investment, Savings &

Products:
Retirement policies

Operations
Aviva India employs close to 3700 people, over 20,000 Financial Advisers with
135 branches across the country. Aviva has also partnered with more than 70
insurance brokers.
Aviva has a balanced distribution network through Banc assurance, Direct Sales
Force and online products. This includes a direct sales force of more than
20,000 financial planning advisers, in 99 branches across the country and
multiple banc assurance partnerships with private sector banks, co-operatives
and regional rural banks. Through its distribution setup and partnerships, Aviva
reaches customers in over 1000 towns and cities across India.
Aviva has been focusing on the Online Platform in recent years, and a number
of products, including Aviva i-Life, Aviva Health Secure and Aviva i-Shield
were launched recently. This is in line with the company’s strategy to focus on
8
 newer formats and products that are easier for customers to understand and buy.

Corporate social responsibility

Aviva India is involved with education of underprivileged children, under the

Street to School programme, the international corporate social responsibility
programme of Aviva plc. Within India, it works with NGOs in various parts of
India to enable education for street and slum children, and helps them with
funds for setting up and running outreach centres.
Aviva India also conducts the Aviva Great Wall of Education in various cities
each year, which collects books for underprivileged children. Over the last three
years, the Aviva Great Wall of Education has collected more than 2 million
books, which have been given to more than 500,000 underprivileged children
across the country. The Aviva Great Wall of Education collected over 1.1
million books in 2011 alone. The Aviva Great Wall of Education was also listed
in the Limca Book of Records for being the ‘largest wall of books’ for its debut
year. It has received multiple awards, including the Bronze award at the
inaugural CRY Child Rights Champion Award, 'Highly Commended Award' at
the TVE Corporate Sustainability Awards given at BAFTA, London, Gold at
Spikes Asia 2010, a Bronze at Effies 2010 and a Silver at the Effies in 2011. It
also won an Indy’s award in the ‘Community and Social Welfare’ category in
2011, and was awarded ‘Out of the box PR idea’ award at India PR & Corporate
Communications Awards in 2012.
Aviva India employees volunteer time to conduct workshops with children
enrolled with its partner NGOs as well.

AVIVA is a: -
 UK based 5th largest life insurance group.
 Having about : -
 40 million customer base.
 $377 billion of assets under management.
 AVIVA has a joint venture with DABUR. In this venture: -
 AVIVA holds 26% stake.

9
 DABUR holds 74% stake.

STAKE In Company

AVIVA
26%

DABUR
74%

With a strong sales force of over 28,000 financial planning Advisers (FPAs),
AVIVA has initiated an innovative and differentiated sales approach to the
business. 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 FPA’s for a need based analysis of the customer’s long-
term savings and insurance needs. Depending on the life stage and earnings of
the customer, the FHC assesses and recommends the right insurance product for
them.

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 DABUR GROUP & AVIVA GROUP

Dabur group: Dabur (Dabur India Ltd.) (Devanagari: डाबर, derived from
Daktar Burman) is India's largest Ayurvedic medicine & related products
manufacturer. Dabur was founded in 1884 by Dr. SK Burman, a physician in
West Bengal, to produce and dispense Ayurvedic medicines. German company
Fresenius SE bought a 73.27% equity stake in Dabur Pharma in June 2008 at
Rs76.50 a share. The German company had also purchased another 17.62%
shares from the market through an open offer at the same price. Dr. Burman
designed Ayurvedic medication for diseases such as cholera and malaria. The
Dabur name is derived from the Devanagri rendition of Daktar Burman.

Dabur’s Ayurvedic Specialities Division has over 260 medicines for treating a
range of ailments and body conditions, from common cold to chronic paralysis.
Dabur International, a fully owned subsidiary of Dabur India formerly held
shares in the UAE based Weikfield International, which it disposed of on 25
June 2012.[6]

Founded in 1884. Dabur is one of India’s oldest & largest groups of companies
with a consolidated annual turnover in excess of Rs 2,834 corers. A
professionally managed company, it is the country’s leading producer of
traditional healthcare products.
Corporate website: http://www.dabur.com

Aviva group: Aviva Health Insurance Ireland Limited is Aviva's health

insurance arm in Ireland. Founded in 2004 as Vivas Health, it quickly
established itself in the marketplace, and by 2007 had doubled in size every six
months, with a turnover run rate of €100 million per annum. It is the largest
insurer of previously uninsured people in Ireland. Aviva took a majority
shareholding (70%) in the company in 2008. Allied Irish Banks (AIB) own the
other 30%. The company has 110 employees, direct and outsourced, located in
Dublin and Cork. Aviva Health has attempted to influence regulatory reform in

11
 the private health insurance market, in particular in its drive to alter the current
risk equalisation scheme.

Aviva Health offerings are geared towards people in their late 20s to early 30s
and families with children. Another key segment is elderly couples whose
children are all leaving the home. The company provides the widest choice of
hospitals and treatment centres in the Irish insurance market, education and
information, web-based administration and support, and places a strong
emphasis on primary care, preventative medicine and screening. The Aviva
Health customer base includes almost 1,200 corporate customers across all
industries in Ireland. With over 120,000 individual customers, the company is
already the largest insurer of previously uninsured, as well as the largest
destination for customers looking to switch their health insurance provider. The
company is also one of the largest insurers of teachers, nurses and non-
nationals. Principal corporate customer sectors include financial services,
pharmaceutical, public sector, information technology, hospitality,
manufacturing, construction and healthcare.

It is UK’s one of the largest insurers and one of Europe’s leading providers of
life and general insurance. Aviva is the world’s sixth largest insurance group
based on gross worldwide premiums for 2010 year .Aviva’s principal business
activities are long term savings, fund management and general insurance, with
worldwide total sales of $40.6 billion and operating profits of at $2.5 billion at
31 December ,2011. Aviva has 43 million customers base worldwide.

 Corporate website: http://www.aviva.com

12
 PARTNERS.

IndusInd Bank: - IndusInd Bank Limited is a Mumbai based Indian new

generation bank, established in 1994. The bank offers commercial, transactional
and electronic banking products and services. IndusInd Bank was inaugurated in
April 1994 by then Union Finance Minister Manmohan Singh. IndusInd Bank is
the first among the new-generation private banks in India.

The bank started its operations with a capital amount of Rs. 1 billion among
which Rs. 600 million was donated by the Indian Residents and Rs. 400 million
was raised by the Non-Resident Indians. The bank has specialized in retail
banking services and continuously upgrades its support systems by introducing
newer technologies. It is also working on expanding its network of branches all
across the country along with meeting the global benchmark. According to the
bank, its name is derived from the rich and vivid Indus Valley Civilisation.

IndusInd Bank has 638 branches, and 1238 ATMs spread across 392 geographic
locations of the country as on 30 September 2013. It also has a representative
office in London and another in Dubai. Mumbai has the maximum number of
bank branches followed by New Delhi and Chennai. The bank has also
proposed to double the branches count to 1200 by March 2017.

IndusInd Bank Ltd., is one of the leading new-generation private-sector banks

in India. It commenced operations in 1994 and had a net worth of Rs.866 corer
as of March 31, 2006. At present, the Bank has a network of 148 branches and
87 offsite ATMs spread over 118 geographical locations in 24 states and Union
Territories.

ii. Royal Bank of Scotland Group: - The Royal Bank of Scotland Group plc
(also known as RBS Group) is a British banking and insurance holding
company, based in Edinburgh, Scotland. The group operates a wide variety of
banking brands offering personal and business banking, private banking,
insurance and corporate finance through its offices located in Europe, North
America and Asia. In the UK and Ireland, its main subsidiary companies are
The Royal Bank of Scotland, National Westminster Bank, Ulster Bank and
Coutts The group issues banknotes in Scotland and Northern Ireland and, as of
2014, The Royal Bank of Scotland is the only bank in the UK which is still
printing the £1 notes.

13
Outside the UK, it owns Citizens Financial Group, the 8th largest bank in the
United States, and from 2004 to 2009 it was the second largest shareholder in
the Bank of China, itself the world's fifth largest bank by market capitalisation
in February 2008.

Before the 2008 collapse and the general financial crisis, RBS Group was very
briefly the largest bank in the world and for a period was the second largest
bank in the UK and Europe (fifth in stock market value), and the fifth largest in
the world by market capitalisation. Subsequently, with a slumping share price
and major loss of confidence, the bank fell sharply in the rankings, although in
2009 it was briefly the world's largest company by both assets (£1.9 trillion) and
liabilities (£1.8 trillion).] It received significant support from the UK
government, which, as of September 2013, holds and manages an 81% stake
through UK Financial Investments (UKFI), although its voting rights are
limited to 75% in order for the bank to retain its listing on the London Stock
Exchange.

The Group had a market capitalisation of approximately £20.4 billion as of 4

March 2014, making it the 26th largest company on the London Stock
Exchange. In addition to its primary share listing on the LSE, the company is
also listed on the New York Stock Exchange.

In 300 years, The Royal Bank of Scotland Group has grown to become one of
the largest financial services groups in the world. They operate around the globe
to provide banking services for individuals, businesses and institutions. Aviva's
relationship with RBS commenced in June 2002 when the bank was known as
ABN AMRO. The Bank introduces its customers to Aviva for insurance and
provides access to its affluent customer base across the country through its
operations in 31 branches at 22 locations.

iii. DBS: - DBS Bank Ltd (Chinese: 星展银行有限公司; pinyin: Xīngzhǎn

Yínháng Yǒuxìan Gōngsī) is a bank incorporated in Singapore. It was previously
known as The Development Bank of Singapore Limited, before the present
name was adopted in July 2003 to reflect its changing role as a regional bank.[3]

The bank was set up by Government of Singapore in June 1968 to take over the
industrial financing activities from the Economic Development Board. Today,
its branches numbering more than 100 can be found island-wide. DBS Bank is

14
the largest bank in South East Asia by assets and among the larger banks in
Asia. It has market-dominant positions in consumer banking, treasury and
markets, asset management, securities brokerage, equity and debt fund-raising
in Singapore and Hong Kong. The bank's strong capital position, as well as
"AA-" and "Aa1" credit ratings that are among the highest in the Asia-Pacific
region, earned it Global Finance's "Safest Bank in Asia" accolade for six
consecutive years, from 2009 to 2014.[4]

With operations in 17 markets, the bank has a regional network spanning more
than 250 branches and over 1,100 ATMs across 50 cities.[4]

DBS Bank India is a branch of DBS Bank Ltd., one of the largest financial
services groups in Asia. DBS has rapidly expanded its network to 12 branches
and 40 ATMs spread across the country in key locations. In the last 5 years,
DBS India has staff strength to over 800. Today, it is the first and the largest
Asian bank in India and is committed to building a universal banking franchise
in India with a significant presence across businesses, clients, products and
services.

15
iv. Cooperative and Regional Rural Banks

a. Rajasthan Gramin Bank :

Rajasthan Gramin Bank or simply know BRKGB sponsored by Govt of

Rajasthan & Bank of Baroda. It established under the RRB act, with holding 50
% shares of Government of India, 25% of govt. of Rajasthan and 25% of Bank
of Baroda. Head office of BRKGB, Citi Plaza, 1st Floor, Vaishali Nagar,
Ajmer-305004 (Raj.)

Ph.No.0145-2642621, 2640495, 2642580,

Website: www.brkgb.com

E-mail Address: brgbrrb@bankofbaroda.com

b. Vidharbha Kshetriya Gramin Bank :

Vidharbha Konkan Gramin Bank came into existence on 28th February, 2013
through amalgamation of erstwhile Wainganga Krishna Gramin Bank, Solapur
and Vidharbha Kshetriya Gramin Bank, Akola, Maharashtra State.
The objectives of the Bank are to improve the economy of the rural, semi-
urban/urban centers by providing financial and other support for agriculture,
trade, commerce, industry and other productive activities through extension of
timely and adequate credit and other facilities and create employment
opportunities in the villages and small towns; inculcating the habit of savings
amongst the rural poor through banking channels and complete the goal of
Financial Inclusion as envisaged by Government of India and Reserve Bank of
India.
The authorised capital of the Bank is Rs.1000 Lakhs and the paid up capital is
Rs.700 Lakhs. Governments of India, Government of Maharashtra and Bank of
India have contributed 50%, 15% and 35% shares respectively in the share
capital of the Bank

c. Prime Cooperative Bank:

Prime Co-operative Bank Ltd. known as a “Fully Equipped High Tech Banking
Super Market” in South Gujarat Area. Our slogan is “Your BANK FOR You”.

16
 There are so many products & services we have launched first in South Gajarat
Area. Therefore, we are trendsetter to others for our unique, extraordinary, high
tech, speedy services & products.

So far bank has got 43 awards/certificate/appreciation from various

organisations. During current year FOUR more awards are added as under –
Bank is awarded by Surat District Co-op. Union for the overall performance of
the bank among co-operative banks registered in Surat District. And recently
Three more awards have been conferred on us by SCOBA. under following
category among large banks(Total Business 501-1000 crores) located in South
Gujarat(VapitoBharuch)
Total Business Continuity and growth Public Relations & Social Activities.
Profitability Management

d. Sutlej Gramin Bank:

Faridkot Bathinda Kshetriya Gramin Bank sponsored by Punjab & Sind
Bank was established on 22.03.1986 under RRB Act 1976 under sub section (1)
of section-3. The name of Bank has since been changed to Sutlej Gramin
Bank. The Bank has 30 branches. Its functional jurisdiction consists of 6
districts namely Bathinda, Mansa, Faridkot, Muktsar, Moga & Ludhiana,
The economy of the area of operation is mainly agrarian

17
 Management Team

Designation
Name

T R Ramachandran Chief Executive Officer &

Managing Director

Rishi Piparaiya Director, Marketing and

Bancassurance
Ravi Bhadani Company Secretary and Director -
Legal & Compliance
Munish Sharda Director, Direct Sales Force

Jyoti Chief Investment Officer & Director,

Vaswani Fund Management

Sanjeeb Appointed
Kumar Actuary
Anupam Tyagi Chief Risk Officer

Amit Director, HR

Malik
Snehil Gambhir Chief Operating Officer
Vijayalakshmi Natarajan Director, Operations

Jitendra Director,
Nayyar Finance

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 PRODUCTS:

i. Aviva Young Scholar Advantage: - An insurance cum investment plan to

help secure your child's education.
ii. Aviva Young Scholar Secure: - An insurance plan to secure important
milestones of your child's education.
iii. Aviva Family Income Builder: - A life insurance plan in which you pay for 12
years and get double of what you have paid every year for the next 12 years,
guaranteed
iv. Aviva Wealth Builder: - A Life Insurance Plan which gives back double the
total premium in a lump sum. Guaranteed
v. Aviva Live Smart Plan: - A Unit Linked Insurance Plan which gives you the
flexibility to make your own investment decisions for long terms growth
vi. Aviva Dhan Samruddhi: - A traditional life insurance plan that gives
guaranteed cash back every 5 years in addition to guaranteed maturity benefit,
to meet your short and long term needs.
vii. Aviva Dhan Vriddhi:- A traditional insurance plan that guarantees the
money you planned for
viii. Aviva Dhan Varsha: - An insurance plan that offers guaranteed additions to
help grow your wealth.
ix. Aviva Freedom Life Advantage: - A flexible life insurance plan that help you
meet any financial goals.
x. Aviva life Bond Advantage: - A life insurance plan that allows a lump sum
investment to help grow your wealth.
xi. Aviva life Shield Plus: - A plan that offers comprehensive protection for your
family at a nominal cost.
xii. Aviva life Shield Advantage: - Protect your family and also get your premium
back

19
xiii. Aviva life shield Platinum: - A versatile high protection plan to secure your
loved ones.
xiv. Aviva i-life: - An insurance plan that offers complete protection at a
click.
xv. Aviva Health Secure: - Aviva Health Secure gives complete protection
against critical illnesses at a nominal cost.
xvi. Aviva i-shield: - Aviva i-Shield is an online term insurance plan with
return of premium.
xvii. Aviva Health Plus: - A health-cum-savings insurance plan that gives
your premium back.
xviii. Aviva Amar Suraksha: - A plan to help you secure your family’s future.
xix. Aviva Jana Suraksha: - A plan to ensure that your child’s dreams are
protected at all times.
xx.Aviva Garmeen Suraksha: - A low cost solution to help you financially
protects your loved ones.
xxi. Aviva Anmol Suraksha: - A comprehensive fixed term plan with
protection cum savings.
xxii. Aviva Corporate life Plus: - Provides life cover for employees /
members of an organization to protect their families.
xxiii. Aviva Corporate Shield Plus: - Aviva Corporate Shield Plus is a term
insurance plan in lieu of the EDLI.
xxiv. Aviva Group Gratuity Advantage: - Provides financial security to
employees at the time of retirement along with life cover.

20
 What Is Insurance
Insurance: Insurance is the equitable transfer of the risk of a loss, from one
entity to another in exchange for payment. It is a form of risk management
primarily used to hedge against the risk of a contingent, uncertain loss.

An insurer, or insurance carrier, is a company selling the insurance; the

insured, or policyholder, is the person or entity buying the insurance policy. The
amount of money to be charged for a certain amount of insurance coverage is
called the premium. Risk management, the practice of appraising and
controlling risk, has evolved as a discrete field of study and practice.
The transaction involves the insured assuming a guaranteed and known
relatively small loss in the form of payment to the insurer in exchange for the
insurer's promise to compensate (indemnify) the insured in the case of a
financial (personal) loss. The insured receives a contract, called the insurance
policy, which details the conditions and circumstances under which the insured
will be financially compensated.
In other words, Insurance is defined as a co-operative device to spread the loss
caused by a particular risk over a number of persons who are exposed to it and
who agree to ensure themselves against that risk. Risk is uncertainty of a
financial loss. It should not be confused with the chance of loss which is the
probable number of losses out of a given number of exposures.
It should not be confused with peril which is defined as the cause of loss or with
hazard which is a condition that may increase the chance of loss.
Finally, risk must not be confused with loss itself which is the unintentional
decline in or disappearance of value arising from a contingency. Wherever there
is uncertainty with respect to a probable loss there is risk.
Every risk involves the loss of one or other kind. The function of insurance is to
spread the loss over a large number of persons who are agreed to co-operate
each other at the time of loss. The risk cannot be averted but loss occurring due
to a certain risk can be distributed amongst the agreed persons. They are agreed
to share the loss because the chances of loss, i.e. the time, amount, to a person
are not known.
Anybody of them may suffer loss to a given risk, so , the rest of the persons
who are agreed will share the loss. The larger the number of such persons the
easier the process of distribution of loss, In fact, the loss is shared by them by
payment of premium which is calculated on the probability of loss.
In olden time, the contribution by the persons was made at the time of loss. The
insurance is also defined as a social device to accumulate funds to meet the
21
uncertain losses arising through a certain risk to a person insured against the
risk.

Insurance is appropriate when you want to protect against a significant

monetary loss. Take life insurance as an example. If you are the primary
breadwinner in your home, the loss of income that your family would
experience as a result of our premature death is considered a significant loss and
hardship that you should protect them against. It would be very difficult for
your family to replace your income, so the monthly premiums ensure that if you
die, your income will be replaced by the insured amount. The same principle
applies to many other forms of insurance. If the potential loss will have a
detrimental effect on the person or entity, insurance makes sense. (For more
insight, see 15 Insurance Policies You Don't Need.)

Everyone that wants to protect themselves or someone else against financial

hardship should consider insurance. This may include:

 Protecting family after one's death from loss of income

 Ensuring debt repayment after death
 Covering contingent liabilities
 Protecting against the death of a key employee or person in your business
 Buying out a partner or co-shareholder after his or her death
 Protecting your business from business interruption and loss of income
 Protecting yourself against unforeseeable health expenses
 Protecting your home against theft, fire, flood and other hazards
 Protecting yourself against lawsuits
 Protecting yourself in the event of disability
 Protecting your car against theft or losses incurred because of accidents
 And many more

22
 Functions of Insurance

The functions of insurance can be studied into two parts (i) Primary Functions,
and (ii) Secondary Functions.

Primary Functions:

i. Insurance provides certainty: Insurance provides certainty of payment at the

uncertainty of loss. The uncertainty of loss can be reduced by better planning
and administration. But the insurance relieves the person from such difficult
task. Moreover, if the subject matters are not adequate, the self-provision may
prove costlier.
There are different types of uncertainty in a risk. The risk will occur or not,
when will occur how much loss will be there? In other words, there are
uncertainty of happening of time and amount of loss. Insurance removes all
these uncertainty and the assured is given certainty of payment of loss. The
insurer charges premium for providing the said uncertainty.

ii. Insurance provides protection: The main function of the insurance is to

provide protection against the probable chances of loss. The time and amount of
loss are uncertain and at the happening of risk, the person will suffer loss in
absence of insurance. The insurance guarantees the payment of loss and thus
protects the assured from sufferings. The insurance cannot check the happening
of risk but can provide for losses at the happening of the risk.

iii. Risk – sharing: The risk is uncertain and therefore, the loss arising from the
risk is also uncertain. When risk takes place, the loss is shared by all the persons
who are exposed to the risk. The risk-sharing in ancient times was done only at
a time of damage or death; but today, on the basis of probability of risk , the
share is obtained from each and every insured in the shape of premium without
which protection is not guaranteed by the insurer.

Secondary functions:

Besides the above primary functions, the insurance works for the following
functions:

23
i. Prevention of loss: The insurance joins hands with those institutions which are
engaged in preventing the losses of the society because the reduction in loss
causes lesser payment to the assured and so more saving is possible which will
assist in reducing the premium. Lesser premium invites more business and
more business cause lesser share to the assured.
So again premium is reduced to, which will stimulate more business and more
protection to the masses. Therefore the insurance assist financially to the health
organisation, fire brigade, educational institutions and other organisations which
are engaged in preventing the losses of the masses from the death or damage.

ii. Provides capital: The insurance provides capital to society. The accumulated
funds are invested in productive channel. The dearth of capital of the society is
minimised to a greater extent with the help of investment of insurance. The
industry, the business and the individual are benefited by the investment and
loans of the insurers.

iii. Improves Efficiency: The insurance eliminates worries and miseries of losses
at death and destruction of property. The carefree person can devote his body
and soul together for better achievement. It improves not only his efficiency, but
the efficiencies of the masses are also advanced.

iv. Helps in economic progress: The insurance by protecting the society from
losses of huge damage, destruction and death, provides an initiative to work
hard for the betterment of the masses. The next factor of economic progress, the
capital is also immensely provided by the masses. The property, the valuable
assets, the man, the machine and the society cannot lose much at the disaster.

24
 Role and Importance of Insurance

The process of insurance has been evolved to safeguard the interests of people
from uncertainty by providing certainty of payment at a given contingency. The
insurance principle comes to be more and more used and useful in modern
affairs.
Not only does it the ends of individuals, or of special groups of individuals, it
tends to pervade and to transform our modern social order, too. The role and
importance of insurance, here has been discussed in three phases: (i) uses to
individual, (ii) uses to a special group of individuals, viz, to business or
industry, and (iii) uses to the society.

Uses to an individual:

i. Insurance provides security and safety: The insurance provides safety and
security against the loss on a particular event. In case of life insurance payment
is made when death occurs or the term of insurance is expired. The loss to the
family at a premature death and payment in old age are adequately provided by
insurance. In other words, security against premature death and old age
sufferings are provided by life insurance.

ii. Insurance protects Mortgaged Property: At the death of the owner of the
mortgaged property, the property is taken over by the lender of money and the
family will be deprived of the uses of the property. On the other hand, the
mortgagee wishes to get the property insured because at the damage or
destruction of the property he will lose his right to get the loan repaid.
The insurance will provide adequate amount to the dependents at the early death
of the property-owner to pay off the unpaid loans. Similarly, the mortgagee gets
adequate amount at the destruction of the property.

iii. Life insurance provides profitable Investment: Individuals unwilling or

unable to handle their own funds have been pleased to find an outlet for their
investment in life policies. Endowment policies, multipurpose policies, deferred
annuities are certain better form of investment.
The elements of investment i.e. regular saving, capital formation, and return of
the capital along with certain additional return are perfectly observed, in life
insurance.

25
 In India the insurance policies carry a special exemption from income-tax,
wealth tax, and gift tax and estate duty. An individual from his own capacity
cannot invest regularly with enough of security and profitability. The life
insurance fulfils all these requirements with a lower cost. The beneficiary of the
policy holder can get a regular income from the life insurer; if the insured
amount is left with him.

iv. Life Insurance encourages saving: The elements of protection and

investment are present only in case of life insurance. In property insurance, only
protection element exists. In most of the life policies elements of saving
predominates. These policies combine the programs of insurance and savings.

v. Life Insurance fulfils the needs of a person: The needs of a person are divided
into, (a) Family needs, (b) Old – age needs, (c) Readjustment needs, (d) Special
needs, (e) The clean-up needs.

(a) Family Needs: Death is certain, but the time is uncertain. So, there is
uncertainty of the time when the sufferings and financial stringencies may be
fall on the family. Moreover, every person is responsible to provide for the
family.
Therefore, the provision for children up to their reaching earning period and for
widow up to long life should be made. Any other provision except life insurance
will not adequately meet this financial requirement of the family. Whole life
policies are the better means of meeting such requirements.

(b) Old-age needs: The provision for old-age is required where the person is
surviving more than his earning period. The reduction of income in old-age is
serious to the person and his family.
If no other family member starts earning, they will be left with nothing and
if there is no property, it would be more piteous state. The life insurance
provides old age funds along with the protection of the family by issuing
various policies.

(c) Re-adjustment Needs: At the time of reduction in income whether by loss of

unemployment, disability, or death, adjustment in the standard of living of
family is required. The family members will have to be satisfied with meagre
income and they have to settle down to lower income and social obligations.
Before coming down to the lower standard and to be satisfied with that, they
require certain adjustment income so that the primary obstacles may be reduced
to minimum. The life insurance helps to accumulate adequate funds.

(d) Special Needs: There is certain special requirement of the family which is
fulfilled by the earning member of the family. If the member becomes disable to

26
 earn the income due to old age or death, those needs may remain unfulfilled and
the family will suffer.
 Need for Education
 Marriage
 Insurance needs for settlement of children

(e) Clean-up funds: After death, ritual ceremonies, payment of wealth taxes and
income taxes are certain requirements which decrease the amount of funds of
the family member. Insurance comes to help for meeting these requirements.
Multipurpose policy, education and marriage policies , capital redemption
policies are the better policies for the special needs.

Uses to business:

The insurance has been useful to the business society also. Some of the uses are
discussed below:

(i) Uncertainty of business losses is reduced: In the world of business, commerce

and industry a huge number of properties are employed. With a slight slackness
or negligence, the property may be turned into ashes. The accident may be fatal
not only to the individual or property but to the third party also. New
construction and new establishment are possible only with the help of insurance.

(ii) Business – efficiency is increased with insurance: When the owner of a

business is free from botheration of losses, he will certainly devote much time
to the business. The care free owner can work better for the maximisation of the
profit. The new as well as old businessmen are guaranteed payment of certain
amount with the insurance policies at the death of the person; at the damage,
destruction or disappearance of the property or goods.

(iii) Key Man Indemnification: Key man is that particular man whose capital,
expertise, experience, energy, ability to control, goodwill and dutifulness make
him the most valuable asset in the business and whose absence will reduce the
income of the employer tremendously and up to that time when such employee
is not substituted.
The death or disability of such valuable lives will, in many instances, prove a
more serious loss than that by fire or any hazard. The potential loss to be
suffered and the compensation to the dependents of such employee require an
adequate provision which is met by purchasing adequate life policies.
The amount of loss may be up to the amount of reduced profit, expenses
involved in appointing and training, of such persons and payment to the
27
 dependents of the man. The Term Insurance Policy or Convertible Term
Insurance Policy is more suitable in this case.

(iv) Enhancement of credit: The business can obtain loan by pledging the policy as
collateral for the loan. The insured persons are getting more loans due to
certainty of payment at their deaths. The amount of loan that can be obtained
with such pledging of policy, with interest thereon will not exceed the cash
value of the policy. In case of death, this value can be utilised for setting of the
loan along with the interest.
If the borrower is unwilling to repay the loan and interest, the lender can
surrender the policy and get the amount of loan and interest thereon repaid. The
redeemable debentures can be issued on the collateral of capital redemption
policies. The insurance properties are the best collateral and adequate loans are
granted by the lenders.

(v) Business Continuation: In any business particularly partnership business may

discontinue at the death of any partner although the surviving partners can
restart the business, but in both the cases the business and the partners will
suffer economically.
The insurance policies provide adequate funds at the time of death. Each partner
may be insured for the amount of his interest in the partnership and his
dependents may get that amount at the death of the partner.
With the help of property insurance, the property of the business is protected
against disasters and the chance of disclosure of the business due to the
tremendous waste or loss.

(vi) Welfare of Employees: The welfare of employees is the responsibility of the

employer. The former are working for the latter. Therefore the latter has to look
after the welfare of the former which can be provision for disability and
provision for old age.
These requirements are easily met by the life insurance, accident and sickness
benefit and pensions which are generally provided by group insurance. The
premium for group insurance is generally paid by the employer. This plan is the
cheapest form of insurance for employers to fulfil their responsibilities.
The employees will devote their maximum capacities to complete their jobs
when they are assured of the above benefits. The struggle and strife between
employees and employer can be minimised easily with the help of such
schemes.

Uses to society:
Some of the uses of insurance to society are discussed in the following sections:

28
(i) Wealth of the society is protected: The loss of a particular wealth can be
protected with the insurance. Life insurance provides loss of human wealth. The
human material, if it is strong, educated and care free, will generate more
income.
Similarly, the loss of damage of property at fire, accident, etc. can be well
indemnified by the property insurance; cattle, crop, profit and machines are also
protected against their accidental and economic losses.
With the advancement of the society, the wealth or the property of the society
attracts more hazardous and, so new types of insurance are also inverted to
protect them against the possible losses.
Each and every member will have financial security against old age, death,
damage, destruction and disappearance of his wealth including the life wealth.
Through prevention of economic losses, instance protects the society against
degradation.
Through stabilization and expansion of business and industry, the economic
security is maximised. The present, future and potential human and property
resources are well-protected. The children are getting expertise education,
working classes are free from botheration and older people are guiding at ease.
The happiness and prosperity are observed everywhere with the help of
insurance.

(ii) Economic growth of the country: For the economic growth of the country,
insurance provides strong hand and mind, protection against the loss of property
and adequate capital to produce more wealth. The agriculture will experience
protection against losses of cattle, machines, tools and crop.
This sort of protection stimulates more production in agriculture, in industry,
the factory premises, machines, boilers and profit insurances provide more
confidence to start and operate the study welfare of employees create a
conductive atmosphere to work. Adequate capital from insurers accelerates the
production cycle.
Similarly in business, too, the property and human material are protected
against certain losses; capital and credit are expanded with the help of
insurance. Thus, the insurance meets all the requirements of the economic
growth of a country.

(iii) Reduction in Inflation: The insurance reduces the inflationary resources in two
ways. First, by extracting money in supply to the amount of premium collected
and secondly, by providing sufficient funds for production narrow down the
inflationary gap.
With reference to Indian context it has been observed that about 5.0 per cent of
the money in supply was collected in form of premium.
The share of premium contributed to the total investment of the country was
about 10.0 per cent. The main two causes of inflation, namely, increased money

29
 in supply and decreased production are properly controlled by insurance
business, Insurance Need and Selling.
Insurance Companies in India
In India there are so many insurance companies in public sector and private
sector:

Public Sector

Government of India Fully owns 1 company:

 Life Insurance Corporation of India

Private Sector

 AEGON Religare Life Insurance

 Aviva Life
 Shriram Life Insurance
 Bajaj Allianz Life Insurance
 Bharti AXA Life Insurance Co Ltd.
 Birla Sun Life Insurance
 Canara HSBC Oriental Bank of Commerce Life Insurance
 Star Union Dai-ichi Life Insurance
 DLF Pramerica Life Insurance
 Edelweiss Tokio Life Insurance Co. Ltd
 Future Generali Life Insurance Co Ltd
 HDFC Standard Life Insurance Company Limited
 ICICI Prudential
 IDBI Federal Life Insurance
 IndiaFirst Life Insurance Company
 ING Vysya Life Insurance
 Kotak Life Insurance
 Max Life Insurance
 PNB MetLife India Life Insurance
 Reliance Life Insurance Company Limited
 Sahara Life Insurance
 SBI Life Insurance Company Limited
 TATA AIG Life Insurance

30
Insurance sector and India

The insurance industry of India consists of 52 insurance companies of which 24

are in life insurance business and 28 are non-life insurers. Among the life
insurers, Life Insurance Corporation (LIC) is the sole public sector company.
Apart from that, among the non-life insurers there are six public sector insurers.
In addition to these, there is sole national re-insurer, namely, General Insurance
Corporation of India. Other stakeholders in Indian Insurance market include
agents (individual and corporate), brokers, surveyors and third party
administrators servicing health insurance claims.

Out of 28 non-life insurance companies, five private sector insurers are

registered to underwrite policies exclusively in health, personal accident and
travel insurance segments. They are Star Health and Allied Insurance Company
Ltd, Apollo Munich Health Insurance Company Ltd, Max Bupa Health
Insurance Company Ltd, Religare Health Insurance Company Ltd and Cigna
TTK Health Insurance Company Ltd. There are two more specialised insurers
belonging to public sector, namely, Export Credit Guarantee Corporation of
India for Credit Insurance and Agriculture Insurance Company Ltd for crop
insurance.

Market Size

India's life insurance sector is the biggest in the world with about 36 crore
policies which are expected to increase at a compound annual growth rate
(CAGR) of 12-15 per cent over the next five years. The insurance industry plans
to hike penetration levels to five per cent by 2020, and could top the US$ 1
trillion mark in the next seven years.

The total market size of India's insurance sector is projected to touch US$ 350-
400 billion by 2020 from US$ 66.4 billion in FY13.

The general insurance business in India is currently at Rs 77,000 crore (US$

12.41 billion) premium per annum industry and is growing at a healthy rate of
17 per cent.

The Rs 12,606 crore (US$ 2.03 billion) domestic health insurance business
accounts for about a quarter of the total non-life insurance business in the
country.

Investment corpus in India's pension sector is anticipated to cross US$ 1 trillion

by 2025, following the passage of the Pension Fund Regulatory and

31
Development Authority (PFRDA) Act 2013, according to a joint report by CII-
EY on Pensions Business in India.

Indian insurance companies are expected to spend Rs 117 billion (US$ 1.88
billion) on IT products and services in 2014, an increase of five per cent from
2013, as per Gartner Inc. Also, insurance companies in the country could spend
Rs 4.1 billion (US$ 66.11 million) on mobile devices in 2014, a rise of 35 per
cent from 2013.

Investments

Insurance sector of India needs capital infusion of Rs 50,000 crore (US$ 8.06
billion) to expand, maintain a healthy capital base and improve solvency
standards, according to Insurance Regulatory Development Authority (IRDA).

The following are some of the major investments and developments in the
Indian insurance sector.

 Life Insurance Corp of India (LIC) has earmarked a total of around Rs 1

trillion (US$ 16.12 billion) for investments in bonds, including non-
convertible debentures (NCDs), certificates of deposit (CDs), commercial
papers (CPs) and collateralized borrowing and lending obligations
(CBLOs), with primary focus on infrastructure and real estate in the year
to March 31, 2015.
 Aditya Birla Financial Services Group has signed an agreement to form a
health insurance joint venture (JV) with MMI Holdings of South Africa.
The two will enter into a formal JV in which the foreign partner will hold
a 26 per cent stake.
 South African financial services group Sanlam plans to increase stake in
its Indian JV Shriram Life Insurance from 26 per cent to 49 per cent.
 JLT Independent plans to develop India as a service hub for all countries
that are a part of South Asian Association for Regional Cooperation
(SAARC), according to Mr Sanjay Radhakrishnan, CEO, JLT
Independent.
 Kotak Mahindra Bank became the first bank to get the permission from
Reserve Bank of India (RBI) to set up a wholly-owned non-life insurance
company.

Government Initiatives

The Government of India has taken a number of initiatives to boost the

insurance industry. Some of them are as follows:

32
  The Reserve Bank of India (RBI) has allowed banks to become insurance
brokers, permitting them to sell policies of different insurance firms
subject to certain conditions.
 The select committee of the Rajya Sabha gave its approval, permitting 49
per cent composite foreign equity investment in insurance companies. A
broad agreement has also been achieved with the states on most of the
issues concerning the implementation of the single goods and services tax
(GST), which is scheduled to be rolled out from April 1, 2016.
 The Government of India plans to implement a Rs 1,900 crore (US$
306.41 million) e-governance project called ‘Panch Deep’ to automate
transactions of the Employees State Insurance Corporation (ESIC), said
Mr Bandaru Dattatreya, Union Minister for Labour and Employment with
Independent Charge, Government of India. Under the project, enterprise
resource planning (ERP) solution would be installed across the country
which will give a unique card to the employees and facilitate clearance of
third party bills.
 The Government of India plans to launch a new insurance scheme to
protect farmers and their incomes against production and price risks.
 Under the Pradhan Mantri Jan Dhan Yojana, it has been decided that even
those accounts which had been opened prior to August 28, 2014 and have
zero balance will get Rs 100,000 (US$ 1,612.55) insurance cover.

Road Ahead

India's insurable population is anticipated to touch 75 crore in 2020, with life

expectancy reaching 74 years. Furthermore, life insurance is projected to
comprise 35 per cent of total savings by the end of this decade, as against 26 per
cent in 2009-10.

The future looks interesting for the life insurance industry with several changes
in regulatory framework which will lead to further change in the way the
industry conducts its business and engages with its customers.

Demographic factors such as growing middle class, young insurable population

and growing awareness of the need for protection and retirement planning will
support the growth of Indian life insurance.

Exchange Rate Used: INR 1 = US$ 0.016 as on February 25, 2015

Insurance is a subject listed in the Union list in the Seventh Schedule to the
Constitution of India where only centre can legislate. The insurance sector has

33
gone through a number of phases by allowing private companies to solicit
insurance and also allowing foreign direct investment of up to 26%(as of 2013
there have been proposals to extend the FDI up to 49% to strengthen the
Insurance Market even further) the insurance sector has been a booming market.
However, the largest life-insurance company in India is still owned by the
government.
Insurance is a big and one of the most rapidly growing sectors in India. It’s the
prime reasons why leading market players are attracted to the Indian insurance
market for business expansion. The Confederation of Indian Industry indicates
that it has recorded instant and steady growth with a record growth rate of 32%
to 34%. India has the largest number of life insurance policies in the world
which is great news for the leading insurance companies in India. India’s state
owned life insurance corporation (LIC) leads the life insurance sectors in India.
The Indian Life Insurance industry is one on the strongest growing sectors in
the country. Currently a US$ 41-billion industry, India is the fifth largest life
insurance market and growing at a rapid pace of 32-34% annually. Today there
are 24 life insurance companies operating in India.
Despite all these facts and figures, around 80% of Indian population doesn’t
have life insurance coverage. Amongst these 80% people most of them don’t
have any kind of life coverage, while some of them do have some sort of health
insurance and other non-life insurance policies. People, who don’t have
insurance coverage in India, belong to socially and economically weaker strata
with lack of pension and social security systems. This is a great opportunity to
the insurers to expand their reach throughout all the strata of Indian society.

Break-up of non-life insurance market in India

Motor insurance forms the largest non-life segment at 47.1 per cent share in FY13.

34
Growth in life insurance premiums

Over FY03-FY13, life insurance premiums in India expanded at a CAGR of 16.5 per cent.

Insurance regulatory authority

The Insurance Regulatory Authority is a statutory government agency

established under the Insurance Act (Amendment) 2006, CAP 487  of the Laws
of Kenya to regulate, supervise and develop the insurance industry. It is
governed by a Board of Directors which is vested with the fiduciary
responsibility overseeing operations of the Authority and ensuring that they are
consistent with provisions of the Insurance Act.

The Authority is a precursor to the then Office of the Commissioner of

Insurance that came into existence with the enactment of the Insurance Act,
CAP 487 in 1986.  Prior to this, insurance regulation was based on the UK
legislation under the Companies Act 1960.

35
In executing our mandate, we adhere to the core principles of objectivity,
accountability and transparency in promoting not only compliance with the
Insurance Act and other legal requirements by insurance/reinsurance companies
and intermediaries but also sound business practices. We therefore practice
regulation and supervision that enables industry players to be innovative and
entrepreneural.  Bearing in mind industry differences in terms of size, extent
and complexity, necessitating changes in operating and investment decisions
helps cut down on compliance costs. Since in the long run, this has impacts on
productivity and growth of the insurance sector, the Authority deploys
significant resources in monitoring market behaviors, compliance and solvency
issues.

In line with the Insurance Act, the functions of IRA are to:

The Authority works collectively and individually with Industry players in

achieving the following fundamental insurance regulatory objectives:

(i)Ensure compliance by insurance/reinsurance companies and  intermediaries

with legal requirements and sound business practices
(ii)Promote voluntary compliance

(iii)Set clear objectives and standards of intervention for insurance/reinsurance

companies and  intermediaries or type of intervention;
(iv)Protect consumers and promote high degree of security for policyholders;
(v)Promote efficient, fair, safe and stable markets;
(vi)Maintain the confidence of consumers in the market;
(vii)Ensure insurance/reinsurance companies and  intermediaries remain
operationally viable and solvent and
(viii) Establish a transparent basis for timely, appropriate and consistent
supervisory intervention, including enforcement.

Insurance laws and regulations in India takes care of all matters related to
various insurance companies in the country. Much of the development and
growth of the insurance sector in India is due to the government's decision to
nationalize the insurance business and to allow private and foreign insurance
companies to establish their businesses here. In India, there is one regulatory
authority i.e. IRDA which oversees different functioning of the life insurance
companies in India and provide them with guidelines.

36
 Insurance Regulatory and Development Authority
(IRDA)

Insurance Regulatory and Development Authority of India (IRDA) is an

autonomous apex statutory body which regulates and develops the insurance
industry in India. It was constituted by a Parliament of India act called
Insurance Regulatory and Development Authority Act, 1999 and duly passed
by the Government of India.

The agency operates from its headquarters at Hyderabad, Telangana where it

shifted from Delhi in 2001.

IRDA batted for a hike in the foreign direct investment (FDI) limit to 49 per
cent in the insurance sector from the erstwhile 26 per cent. The FDI limit in
insurance sector was raised to 49% in July 2014.

Insurance Regulatory and Development Authority (IRDA) is the controlling

body, overseeing important aspects and functioning of various insurance
companies in India. Established by the government, it safeguards the interest of
the insurance policy holders of the country.

Some of IRDA's functions include:

i. To regulate, ensure and promote the orderly growth of the insurance business,
ii. To prescribe regulations on the investment of funds by insurance companies,
iii. To regulate the maintenance of the margin of solvency,
iv. To adjudicate the disputes between insurers and intermediaries,
v. To supervise the functioning of the Tariff Advisory Committee

Other supporting organisations which facilitate in the working of the industry:

37
1. Tariff Advisory Committee

Tariff Advisory Committee (TAC) in India - controls and regulates the rates,
advantages, terms and conditions that may be offered by insurers in respect of
Indian General Insurance Business relating to Fire, Marine (Hull), Motor, Engg.
and Workmen Compensation.

The main task of Tariff Advisory Committee is to regulate and control the rates,
benefits, terms and conditions offered by life insurance companies in India.

Tariff Advisory Committee has been designated by IRDA as the data

repository for the non-life insurance industry . The transaction level data on
Motor, Health and other lines are being collected for the Repository presently.

Contact Information:

Head Office:
Tariff Advisory Committee
Ador House, 1st/2nd Floor,
6, K.Dubash Marg,
Mumbai - 400 023
India

Phone: +91-22-2282 9551

Fax: +91-22-2285 2337
Email: tariff@vsnl.com
Website: http://www.tac.org.in/

2. Insurance Association of India

The Insurance Association of India was established according to the provisions

of the Insurance Act, 1938. It consists of all insurers conducting business in
India. The Insurance Regulatory and Development Authority has established
two councils of the Insurance Association of India, namely, the Life Insurance
Council and the General Insurance Council. Members and chairmen to
Executive Committee of both the councils are nominated by the Insurance

38
Regulatory and Development Authority. The Executive Committees of the
Councils are entrusted with the following functions:

a. To advise and assist insurers in setting up standards of conduct and sound

practice and in the matter of rendering efficient service to policy holders.
b. To advice the Authority in the matter of controlling the expenses of
insurers.
c. To inform the Authority of any insurer acting in a manner prejudicial to
the interests of policy holders.

All insurance companies in India are members of the Insurance

Association of India. It has two councils under its patronage, mainly
a. Life Insurance Council

b. General Insurance Council

3. Ombudsmen

Ombudsmen play important role in regulating and ensuring smooth functions of

the insurance companies. They are appointed to address all complaints relating
to settlements of claims. Anyone having a grievance against an insurance
company can approach Ombudsmen for redressal.

The Insurance Ombudsman scheme was created by Government of India for

individual policyholders to have their complaints settled out of the courts
system in a cost-effective, efficient and impartial way.
There are 12 Insurance Ombudsman in different locations and you can approach
the one having jurisdiction over the location of the insurance company office
that you have a complaint against.
 
You can approach the Ombudsman with complaint if:

 You have first approached your insurance company with the complaint
and
 They have not resolved it
 Not resolved it to your satisfaction or
 Not responded to it at all for 30 days
 Your complaint pertains to any policy you have taken in your capacity as
an individual and

39
  The value of the claim including expenses claimed is not above Rs 20
lakh

Your complaint to the Ombudsman can be about:

 Any partial or total repudiation of claims by an insurer

 Any dispute about premium paid or payable in terms of the policy
 Any dispute on the legal construction of the policies as far as it relates to
claims
 Delay in settlement of claims
 Non-issue of any insurance document to you after you pay your premium

The settlement process

Recommendation:

The Ombudsman will act as counsellor and mediator and

 Arrive at a fair recommendation based on the facts of the dispute

 If you accept this as a full and final settlement, the Ombudsman will
 Inform the company which should comply with the terms in 15 days

Award:

 If a settlement by recommendation does not work, the Ombudsman will:

 Pass an award within 3 months of receiving the complaint and which will
be
 A speaking award with the detailed reasoning
 Binding on the insurance company but
 Not binding on the policyholder
 The Ombudsman can also award an ex-gratia payment

Once the Award is passed

 You have to accept the award in writing and the insurance company has
to be informed of it within 30 days and
 The Insurance company has to comply with the award in 15 days after
that.

40
Market Share of Life Insurance Companies in India

Comparison of insurance companies on the basis of no. of policies sold.

41
(Top Life Insurance Companies)

Number of Policies Up to Dec 2014 Life Insurance Companies

20404281 LIC
785938 ICICI Prudential
698109 Reliance Life
640483 Bajaj Allianz
589855 Birla Sun life
491927 SBI Life
405662 Max New York
397408 HDFC Standard
199275 Tata AIG
161910 ING Vysya
109614 Kotak Mahindra Old Mutual
100216 Aviva
100143 Future Generali Life
98904 Met Life
82037 Star Union Dai-ichi
73490 Shriram Life
69151 BhartiAxa Life
47322 AegonReligare
45833 IDBI Federal
44899 Canara HSBC OBC Life
43929 DLF Pramerica
38498 IndiaFirst
36228 Sahara Life
1968 Edelweiss Tokio

42
 RESEARCH REPORT

I did my research on different factors which affects the life insurance market
and investment market. This research report is totally depends on online survey
through surveymonkey.com. My respondents are mostly at the age group of
21year to 35year and both the gender of different group.

Objective of research
I. To know the interest of young generation towards life insurance.
II. To know the interest in life insurance among different income group.

Mission
Development of life insurance market among young generation, and making
insurance product according to preference group.

Research Mythology
Data sample is young generation people of age 21year to 35 year of different
income group and different educational qualification.

Population
All young generation people of age 21year to 35 year.

Scope
Development of insurance business and set the actual target segment.

43
 QUESTIONNAIRE
Survey on investment market and garment preference

1. Qualification
I. Under Graduate
II. Graduate
III. Postgraduate
IV. Professional education

2. Sex
I. Male
II. Female

3. Marital Status
I. Married
II. unmarried

4. Annual Income
I. 200000-400000
II. 400000-600000
III. 600000-800000
IV. 800000-1000000+

5. Occupation
I. Job
II. Business
III. Student
IV. Other

6. Your monthly savings are....

I. 10000-20000
II. 20000-40000
III. 40000-60000
IV. 60000-80000

7. Do you intend to invest in future?

I. Yes
II. No

8. Which types of garments you use?

I. Branded
II. Local
III. Not-specified

44
 9. Which one is your favorite brand?

………………………………………………………………………………..

10. Where do you want to invest?

I. Fixed Deposit
II. Life Insurance
III. General Insurance
IV. Ulips
V. Shares
VI. Mutual Fund
VII. Term Plan

www.surveymonkey.com/s.aspx?
PREVIEW_MODE=DO_NOT_USE_THIS_LINK_FOR_COLLECTION&sm=
pdK7u59WmTlW713j5f730Rh
Powered by SurveyMonkey
Check out our sample surveys and create your own now !

45
My survey report
ANNAUAL INCOME & INVESTMENT PREFERENCE

12

10
no if respondent

8
0
6 1
2
4 5
2 6
7
0
0 1 2 3 4
Ammual Income

Age Bar:- 21 year to 35 year

Index
CODE INVESTMENT
PREFERENCE
0 Not Interested
1 Fixed Deposit
2 Life Insurance
5 Share
6 Mutual Funds
7 Term Plane
Code Annual income
0 Not respondent
1 200000 - 400000
2 400000 – 600000
3 600000 – 800000
4 800000–1000000+

This survey report gives the relationship between annual income and investment
preference of respondent.
33.33% of total respondent are not interested on any investment proposal.
Most of the respondent are interested to invest on fixed deposit that is 33.33%
and 14.00% are interested on life insurance. Rest 20% respondent are interested
on all other investment policies.
On the basis of annual income those respondent whose income level is Rs
200000 – 400000 are mostly interested to investment rather than high income
group, they are equally interested to invest on fixed deposit and life insurance.
And the income group 400000 – 600000 is responds for fixed deposit and term
plan only.
If we target the people of annual income level 200000 – 400000 for life
insurance it is better for the insurance market.

46
GENDER & INVESTMENT PREFRENCE

18
16
14
No of respondent

12 0
10 1
8 16 15
2
6
4 5
2 5 6 6
2 1 3 2 3 3
0 1 7
0 1 2
Gender

Age Bar:- 21 year to 35 year

Index
CODE Gender
INVESTMENT
TYPE
0 Not Interested
1 Fixed Deposit
2 Life Insurance
5 Share
6 Mutual Funds
7 Term Plane
Code
0 Not respondent

1 Male

2 Female

This is the investment preference report according to gender.

Mostly male respondent are interested in investment, they are interested to
invest in all investment profile. Male respondent are mostly respond to invest in
fixed deposit i.e. 32%. They are also interested in life insurance and share as
well.

Female respondent have similar response for both fixed deposit and life
insurance that is 42.86% of female respondent.

47
So if our target people are female then we can target for both fixed deposit and
life insurance equally. If our target people are male then we can target for all
investment proposals but fixed deposit is mostly preferable then share and life
insurance.

48
INVESTMENT PLANNING IN FUTURE & INVESTMENT PREFRENCE
16
14
12
no. of respondent

10 0
8 1
14 2
6 12
5
4 7
5 6 5 6
2 3 7
2 1 2
0
0 1
investment planning

Age Bar;- 21 year – 35 year

Index
CODE INVESTMENT
TYPE Code Investment planning
0 Not Interested 0 No
1 Fixed Deposit 1 Yes
2 Life Insurance
5 Share
6 Mutual Funds
7 Term Plane

73.68% respondent have the plan to invest in future, but 33% of them don’t
have any idea that where have to invest. Most of them are interested to invest in
fixed deposit. Approx 14% and 12% respondent are prefer to invest in life
insurance and share respectively, some other are also interested in mutual funds
and term plane.
Three fields of investment marketing are mostly like by the respondent i.e fixed
deposit, life insurance and shares but the loved fixed deposit.
It is the great opportunity for the life insurance market to grow in this field.

49
MARITAL STATUS & INVESTMENT PREFRENCE

18
16
14
No. of responce

12
0
10
1
8 16 2
6 13
5
4 7 6 6
2 4 7
2 1 2 1 1 2 2
0
0 1 2
marrital status

Index
CODE INVESTMENT
Cod MARRITAL TYPE
e STATUS 0 Not Interested
0 Not 1 Fixed Deposit
respondent 2 Life Insurance
1 Married 5 Share
2 Unmarried 6 Mutual Funds
7 Term Plane

Half of the marred respondents are not interested to invest anywhere, some of
them are willing to invest but their first preference is fixed deposit then life
insurance and share as well as.
Unmarred respondent are interested to invest in all investment propositions but
34.78% of unmarred respondent are prefer to invest in fixed deposit, 15.22% are
in life insurance, 13% are in shares and rest 8.70% are equally interested in
mutual funds and term plans.
We can target unmarried people for fixed deposit but we also can target them
for life insurance.

50
MONTHLY SAVINGS & INVESTMENT PREFRENCE

12
10
No. of respondent

8 0
6 1
11 10 2
4 7 7 5
2 4 43 6
22 12 1 2 1 7
0
0 1 2 3 4
monthly saving

Index
CODE INVESTMENT TYPE Code Monthly saving
0 Not Interested 0 Not Respondent
1 Fixed Deposit 1 100000 – 200000
2 Life Insurance 2 200000 – 400000
5 Share 3 400000 – 600000
6 Mutual Funds 4 600000 – 800000
7 Term Plane

This is the survey among the people on the basis of their monthly savings and
their investment preference.
45.61% respondents are not responding their monthly savings but they are
responding their investment preference.
19.30% respondents are willing to invest on fixed deposit while they do not
want to respond on their savings. And 7% prefer to invest on life insurance.
3.5% respondents are also preferred to invest on shares & mutual funds.
Respondents with monthly savings Rs 10000 to 20000 are mostly interested on
different investment proposal, 12.30% respondents are preferred fixed deposit,
7% are on life insurance, 5.26% are on shares, 1.75% is on mutual funds and 3.5
% are on term plan.
In other group of monthly savings respondents are not much interested on
investment.

51
QUALIFICATION & INVESTMENT PREFRENCE

10
9
8
no of respondent

7
6 0
5 1
9 9
4 2
3 5
5 5
2 4 4 6
3 3
1 2 2 2 7
11 1 1 11 1 1 1
0
0 1 2 3 4
Qualification

Index
CODE INVESTMENT Cod Qualification
TYPE e
0 Not Interested 1 Undergraduate
1 Fixed Deposit
2 Graduate
2 Life Insurance
5 Share 3 Post Graduate
6 Mutual Funds 4 PROFESSIONAL
7 Term Plane EDUCATION

Most of the under-graduate respondents are interested in fixed deposit, while

graduate people are prefer in all plans. In most of the slots fixed deposit bar is
longer than other while Post graduate people (mostly MBAs) are not interested
in fixed deposit.
Its means most of the people are interested in fixed deposit and there second
preference is life insurance. So we can target every people for life insurance
without bothering about their qualification.

52
ANNUAL INCOME, MONTHALY SAVING & INVESTMENT
PREFRENCE

10
9
8
7 0
6 1
5 2
9
4 5
7
3 6 6
5
2 4
7
1 22 2 2 2 2 2
1 1 1 1 1 1 1 1 1 1 1 1
0

Age Bar:- 21 year to 35 year

Index
Code
CODE Monthly
Annual saving
income
INVESTMENT
(lower TYPE
0) Not Interested
10 Not respondent
Fixed Deposit
21 200000-400000
Life Insurance
52 Share
400000-600000
6 Mutual Funds
3 600000-800000
7 Term Plane
4 800000-1000000
Code
(upper)
0 Not respondent

1 10000-20000
2 20000-40000
3 40000-60000
4 60000-80000
5 80000-100000

The table shows that most of the respondent who belongs to income group
200000 – 400000 and their monthly savings are 10000 – 20000 are interested in
different investment proposal, most of them are interested in fixed deposit and
then life insurance, share and mutual funds respectively. In other group of
respondent are not so much of interested in investment marketing.
So we can target on this group of people for life insurance. To target on this
group we have to formulate the insurance plan on the basis if these people.
Premiums should not as much that it is difficult to pay for them. It must be
53
optimal level, premium should not be very high and it gives good return on
investment.

54
GENDER, QUALIFICATION & INVESTMENT PREFRENCE

10
9
8
7 0
6 1
5 2
9 5
4
3 6 6
5 7
2
333 3 3
1 2 2 2 2
1 1 1 1 11 11 1 1 1 1 11
0

Index
CODE Qualification
INVESTMENT
TYPE
0 Not Interested
1 Fixed Deposit
2 Life Insurance
5 Share
6 Mutual Funds
7 Term Plane
Code Gender
Code (lower)
(upper)
0 Not
1 Undergraduate
respondent
2 Graduate
1 Male
3 Post Graduate
4 Professional 2 Female
education

This is the survey report on the basis of gender, qualification and their
investment preference.
We can see that most of the under graduate male respondents are likely to invest
in fixed deposit (15.79%). This might be the possibilities of lack of knowledge
about other investment propositions.
Graduate male respondents are equally interested to invest their money in
different fields of investment, fixed deposit, life insurance and shares (5.26%).

55
Male people are more interested on investment especially graduate people so we
can target them for any investment proposal. If our target people are females
then it is better that to target for life insurance.

56
ANNUAL INCOME, GENDER & INVETMENT PREFRENCE

6
0
no of respondent

5 1
2
4
5
7 7
3 6 6 6
7
2 4
3
1 2 2 2 2 2 2
11 11 1 1 1 1 1 1 11
0

Index
CODE Gender
INVESTMENT
TYPE
0 Not Interested
1 Fixed Deposit
2 Life Insurance
5 Share
6 Mutual Funds
7 Term Plane
Code
(upper Code Annual income
) (lower
0 Not )
respondent 0 Not respondent
1 Male 1 200000-400000
2 400000-600000
2 Female 3 600000-800000
4 800000-1000000

This survey is done on the basis of annual income, gender and there investment
preference.
The table shows that respondents are prefer to invest in fixed deposit and then
life insurance and shares.
Mostly 200000 to 600000 income group people are interested in investment
rather than high income group people.
Male people of lower income group should be targeted for fixed deposit and life
insurance, and female people of lower income group should be targeted for life

57
insurance. So we will target both male and female people of lower income
group for life insurance.
Higher income group people are not interested in life insurance they are mostly
interested on fixed deposit, share and mutual funds.

58
MARITAL STATUS, ANNUAL INCOME & INVESTMENT PREFRENCE

9
8
7
6 0
5 1
4 2
5
3
6
2 7
1
0

Index
Code Annual income CODE INVESTMENT
(upper) TYPE Code MARRITAL
0 Not respondent 0 Not Interested (lower STATUS
1 200000-400000 1 Fixed Deposit )
2 Life Insurance 0 Not
2 400000-600000 respondent
5 Share
3 600000-800000 6 Mutual Funds 1 Married

4 800000-1000000 7 Term Plane 2 Unmarried

This survey shows that married people of lower

income group (200000 – 400000) are interested on life insurance and the
income group (400000 - 600000) are interested on fixed deposit.
Unmarried people of income group (200000-400000) are mostly interested on
fixed deposit and then in life insurance while the other income group of
unmarried people are not interested on life insurance.
So if we target the married and unmarried people of lower income group it is
batter for the life insurance market.

QUALIFICATION, ANNUAL INCOME & INVESTMENT PREFRENCE

59
 7

6
6
5
0
4 1
4
2
3
3 3 3 5
2 6
22 2 2 2 2 2 2 7
1
11 1 1 1 1 1 1 1 11 11 111 1 11 11 1
0

Index
Code
CODE Qualification
Annual income
INVESTMENT
(upper) TYPE
00 Not
Notrespondent
Interested
11 Fixed Deposit
200000-400000
22 Life Insurance
400000-600000
5 Share
3 600000-800000
6 Mutual Funds
800000-1000000
74 Term Plane

Code
(lower)
1 Undergraduate
2 Graduate
3 Post Graduate

4 Professional
education

Undergraduate respondent of lower income or no income are willing to invest in

fixed deposit mostly, graduate people of lower income are mostly prefer life
insurance and then in fixed deposit while post-graduate people are not interested
in fixed deposit, they are mostly interested in life insurance, shares and mutual
funds.

60
If we were to target for life insurance, we have to target lower income group.
They are more willing to invest in life insurance in each slot of qualification.
Higher income group people are mostly interested on fixed deposit and mutual
funds.

61
GENDER, MARITAL STATUS & INVESTMENT PREFRENCE

14
12 1313
No of respondent

10
0
8 1
6 2
6 5
4
4 6
2 3 33 7
2 2 22
0 1 1 1 1
Gender & marital status

Age Bar:- 21 year to 35 year

Index
CODE INVESTMENT
TYPE Code (upper) Marital
0 Not Interested Code Gender
(lower status
1 Fixed Deposit ) 0 Not
2 Life Insurance 0 Not respondent
5 Share respondent 1 Married
6 Mutual Funds 1 male
2 Unmarried
7 Term Plane
2 Female
42% of married male respondent are not
interested in investment, and most of the rest people are interested in fixed
deposit.
Similarly most of the un-married male respondents are interested in fixed
deposit and than in share, life insurance, mutual funds and term plans.
Un-married female respondent are prefer to invest in fixed deposit and life
insurance as well as.
After analyzing these results we can say that fixed deposit and life insurance
market will be more grooming market. Unmarried male people are also
interested in share market.
Fixed deposit and insurance are the most preferred investment plan for every
group of respondent male/female/married/unmarried.
Insurance companies have to target on both gender of unmarried people, they
are more interested in investment then married people.

Conclusion
62
Analysis of findings
Most of the respondent are interested in fixed deposit and then in life insurance.
16% respondent (age 21-35year) are interested in life insurance. 95% of them
are of lower income group (200000-400000).
Higher income group people are not interested on life insurance. Females are
mostly interested on life insurance.
Lower income group and lower saving group respondent are mostly responds
for life insurance.
Married respondent are not very much interested on life insurance they are
interested on fixed deposit while unmarried respondent (15% of total
respondent) are mostly interested on life insurance.
If we look on the basis of qualification then mostly graduate respondent are
respond for life insurance.
Over all we can say that most of the lower income group (200000 - 400000)
respondent of graduation qualified, unmarried both male and female are
interested on investment in life insurance.

Analysis of objectives of study;

The object of research study is to know about the interest of young generation to
invest in life insurance sector and the result shows that they are interested in this
field, 16% of respondent are interested to invest in life insurance.
And second objective is to know the investment preference in life insurance of
different income group, I found that 95% of respondent who are interested in
life insurance are of lower income (200000 - 400000) group.

63
Future Scope of study;
This is the broad field of study, I tried to study a part of this vast field and I
found lots of result, these results are very useful for business development in
future.

Limitations & Constraints of Company

64
1> High Premium; annual premium of any insurance product in Aviva is very
high. Minimum annual premium of any product in Aviva is more than Rs 25000
when the premium term is very high such as more than 20 year. This is not
appropriate for lower income group.
2> Restricted target market; Aviva is restricted itself to target only in higher
income group people while here a broad market of lower income people for
insurance market.

Recommendations & Suggestions;

1> Annual premium should not be very high it should be appropriate for lower
income group.
2> Product line should be broad so that every customer could be investing in life
insurance as per their choice and income level.

References / Bibliography
65
www.avivaindia.com
www.surveymonkey.com
www.gmail.com
www.google.com
www.IRDA.COM
www.IRA.Com

66