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EXECUTIVE SUMMARY
All assets in this world have some economic value and some amount of risk carrying
with them. All assets have some expected life also and if it’s get lost or destroyed there
are many chances that owner will suffer some amount of loss which can be financial or
in any other form. So to protect the owner from suffering a huge amount of loss we can
assure these assets.
Insurance is a contract between the insurer and insured in return for a premium, the
insurance company promises to pay a specified amount to the insured on the
happening of a specific event.
India economy is growing at the rate of 5.4% with a significant rise in working
population and has a large potential for the development in the field of insurance sector.
A large amount of population in India is still uninsured. It is also estimated that the
sector will grow at a rate of 15-20% in next 10 years.
The project has been undertaken to know about different types of risk that can covered
by insurance policies and how to analyse and mange those risks as there are various
types of risk that a person can suffers in his life term.
The project talks about what are the various things that customer should consider
before buying an insurance policy and various steps that need to consider before
buying it.
Introduction
India is the second largest country in the world in the respect of population.
The GDP growth of India was 4.7% in year 2020.the insurance sector is
expected to grow at a very high rate in next 7-10 years and its contribution in
GDP is going to rise in a huge manner as a large amount of population is still
uninsured especially in urban areas.
What is Insurance?
Insurance is a contract between the insurance company (insurer) and the
policyholder (insured). In return for a consideration (the premium), the
insurance company promises to pay a specified amount to the insured on the
happening of a specific event. We all need insurance because it not only
transfer the risk but also have other benefits like tax saving.
The first Indian insurance company was formed in the year 1818 which was
oriental life insurance company and the Indian life assurance companies act
1912 was the first statutory measure to regulate life business which was
finally amended in the year 1938. In the year 1999 Insurance Regulatory and
Development Authority (IRDA) was constituted as an autonomous body to
regulate all the insurance companies in India which came in power in the year
April 2000. Under the current regulation a foreign companies cannot have
more than 26% of stake in joint venture.
Benefits of insurance
Investment option It is good investment option because insurer will not get the
insurance cover but also the in some amount of return.
Habits of saving It also develops the habits of saving certain amount of money
which can be helpful in future.
Employment An increase in the penetration of insurance is going to generate
generation more employment as insurance policies will require more
advisors.
Social benefits It is going to help in developing the infrastructure of the counrty.
Table 1.1
Risk
A person carries various types of risk in his life term and it can be classified in
many ways. But first we need to understand the meaning of risk. It is difficult
to give the exact definition of risk but it can be defined in the respect of
insurance sector as the possibilities of unfavourable event happing like death
or physical damage.
Market risk
Interest rate risk
Inflation risk
Political risk
Financial risk
Pure risk
Particular risk
These are the three risks which can be insured by having insurance policies
and the insured persons can transfer his risk to insurer.
It might be confusing for many that for what value they should buy an
insurance policies i.e. how they are worth for.
Step 2: this is its HLV, now take inflation in account and calculate how much
should be enough for his family in case of his death.
But we always need to keep in mind that HLV in not a onetime calculation
and it should get revised from time to time.
Now as there are many insurance policies in the market it becomes difficult to
decide which will be suited best for you. So it is always best for anyone to
take the polices which is best suited for them. Anyone can easily find out
which policies best suited for them by following these three steps:
Step 1: Identify your needs: you always need to understand you goals and
need after considers these factors:
marital status
future financial goals
number and age of dependants on you
employment status
income – which includes salary, business income and income
from other sources and investments
existing protection, savings and retirement provision
Step 2: Quantifying needs: Then you need quantify your needs and
then calculate suitable amounts that you need to save in future the
future.
Step 3: Priorities your needs: then you need to priorities you needs
based upon your requirements. It is important because you have only a
specific amount of money to invest and that money should be invested
in a best product mix.
Step 4: Compare: it is always best for you to compare the policies
which you are going to take with all the other similar polices in the
market.
So this how any individual can decide on what polices is best suited for
him and whether he should consider to by that specific insurance
policies or not.
Industry analysis:
The insurance is established a way long before and it is growing well
since then. The first insurance company was formed United States in
the year 1782 in South California. Since then various insurance
company are founded and today hundreds on insurance companies
are operating well.
Top five companies in world in 2013
Japan post
Insurance AXA
Allianz
Met life
Prudential Financial
1818 saw the advent of life insurance business in India with the establishment
of the Oriental Life Insurance Company in Calcutta but in 1968, the Insurance
Act was amended to regulate investments and set minimum solvency
margins. But actually grow in the insurance sector in India begun from the
year 2000 with the formation on IRDA. IRDA is a regulatory body to manage
working of all the insurance company in India.Foreign companies were
allowed ownership of up to 26% and invest in insurance policies in India. The
insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
Together with banking services, insurance services add about 7% to the
country’s GDP. Life insurance Company has acquired in India.With the entry
of new private players insurance sector has seen a huge growth in last five
years and it is expected to grow in future.
The various data which is represents the market share of top five insurance
companies in India
Sales
6.25%
6.02%
3.32%
2.14%
ICICI Prudential
SBI Life
HDFC Standard Bajaj Allianz
Lic
68.70%
Figure 1.1
Most of the Indian population are without life insurance cover and still a huge
amount of growth is possible in Indian environment. At presentpeople do not
prefer to invest their saving in insurance policies but it is expected to change
in future.
Company profile
The AXA group reported total revenue for the first half of 2013 of 37.8 billion.
AXA group has a strong, long standing history. The group can trace its roots
right back to the 18th century. After a successions of mergers, acquisitions
and name changes involving some of the leading insurance companies in the
UK and around the world, the name AXA was first introduced in 1985.
Today, 102 million clients in the world trust AXA and the AXA name. In 2003,
to provide a clearer vision of the transformation of its core business from
traditional insurance to the broader concept of financial protection, the AXA
group added the words financial protection as a base line to its logo.
BhartiEnterprises
Bharti Enterprises is a pioneer in telecom sector and the group is widening its
horizons by entering new business areas such as insurance and retail. Bharti
Enterprises has created a vantage position for itself in the global
telecommunications sector. BhartiAirtel Limited occupies good status in
mobile telephony in India while its brand 'Beetel' is the largest manufacturer
and exporter of world class telecom terminals.
Founder of Bharti Group is Sunil Mittal. In 1983, Sunil Mittal entered into an
agreement with Germany's Siemens to manufacture the company's push-
button telephone models for the Indian market. In 1986, Sunil Bharti Mittal
incorporated Bharti Telecom Limited (BTL) and his company became the first
in India to offer push-button telephones, establishing the basis of Bharti
Enterprises. This first-mover advantage allowed Sunil Mittal to expand his
manufacturing capacity elsewhere in the telecommunications market. By the
early 1990s, Sunil Mittal had also launched the country's first fax machines
and its first cordless telephones. In 1992, Sunil Mittal won a bid to build a
cellular phone network in Delhi. In 1995, Sunil Mittal incorporated the cellular
operations as Bharti Tele-Ventures and launched service in Delhi. In 1996,
cellular service was extended to Himachal Pradesh. In 1999, Bharti
Enterprises acquired control of JT Holdings, and extended cellular operations
to Karnataka and Andhra Pradesh. In 2000, Bharti acquired control of Skycell
Communications, in Chennai. In 2001, the company acquired control of Spice
Cell in Calcutta. Bharti Enterprises went public in 2002, and the company was
listed on Mumbai Stock Exchange and National Stock Exchange of India. In
2003, the cellular phone operations were rebranded under the single Airtel
brand.
Bharti Enterprises and AXA Asia Pacific Holdings Limited (AXA) signed an
agreement to establish a joint venture named Bharti AXA Life Insurance
Company Limited to carry on life insurance business in India.
August 26, 2005, New Delhi : Bharti Enterprises and AXA Asia Pacific
Holdings Limited (AXA) signed an agreement to establish a joint venture
named Bharti AXA Life Insurance Company Limited to carry on life insurance
business in India.
Under the agreement AXA has a 26% equity interest in the joint venture, while
Bharti holds the balance. AXA, a global leader in insurance business, enabled
the company to have access to AXA’s global life insurance and asset
management expertise. Bharti brought its strong local market knowledge,
reputation and India-wide retail presence.
“The insurance sector in India provides a mega opportunity for private players
like BhartiAxa Despite the strong growth witnessed by the sector in the recent
years, nearly 80% of the Indian population is without life insurance coverage.
As one of India’s leading business conglomerates having an established
brand and a significant presence in the retail space, Bharti has inherent
advantages in being a part of this growth story. In AXA, Bharti has a global
leader as its partner, one that is known for its expertise and best practice
across the world. More importantly, this new venture also fits into our strategy
of taking on projects that make a difference to the society at large.
This joint venture is an opportunity for AXA to enter the Indian life insurance
market, one of the most attractive emerging insurance markets. India is a fast
growing economy and a huge market with more than 1.1 billion people. This
coupled with a large middle class and increasing income levels will drive
growth in the insurance market. Bharti is a well-established and financially
strong group whose capabilities and network will be of significant value to the
joint venture. The joint venture invested in the region of Rs. 500 crores (115
Million USD) over the first three to four years of operations, reflecting both
partners’ commitment to quickly establish a strong foothold in the Indian
market. The joint venture commenced business in the first half of 2006,
subject to IRDA, FIPB and other statutory approvals.
Company Products
BHARTI AXA offers a range of innovative, customer-centric products that
meet the needs of customers at every life stage. Its 20 products can be
enhanced with up to 6 riders, to create a customized solution for each
policyholder. Their products are of different categories like child plan, term
plans, savings & investment plan and health plan.
Child Plan: Child Plan is a plan specifically designed to take care of financial
needs of your child. Child plan provides with necessary funds that will take
care of child’s education, marriage etc.
Term Plan: A risk plan which provides comprehensive cover for your family in
the unfortunate event of untimely demise. A term life insurance plan provides
good cover at relatively nominal cost and has no survival benefits.
Investment Plan: Popularly known as ULIP, an investment plan invests part
of your savings in equity or debt market as per your preference..
Group plans: With Bharti AXA Life insurance products provide financial
security and protection to your loved ones. two group plans which are Bharti
AXA Life Shield and Bharti AXA Life Sanjeevani.
Health Plan: Slightly different from health insurance, health plan provides
cover for surgery costs, critical illness. A lump sum is paid irrespective of
actual hospital bill. Easy Health is Bharti AXA’s health plan.
• Bharti brought its strong local market knowledge, reputation and India.
Weakness
Threats
. The scope of the study is limited to only insurance & no other financial
instruments were considered .The study will help us to know the perception of
customers about insurance policies. The various risks involves in buying an
insurance policy and how to tackle it. It will also help us to get a basic
knowledge about need analysis calculation and its requirement.
Methodology:
Primary data:
Primary data is the one which is collected specifically for the purpose of the
project, and can be obtained from various people working in the organization.
For this study the primary data was collected from following sources.
Questionnaires
Discussion with manager.
Secondary data:
.Limitations
This project only talks about three risk analysis tools there are others
tools also which can be used.
The study had done only on 100 respondents.
Data analysis
Risk and Need analysis
As a customer you should always know your value in the market so that you
can take a police according to your exact value. Three various approaches
are used to determine the amount of life insurance to own:
HLV can be defined as the present value of the family’s share of the
deceased breadwinner’s future earnings. It can be calculated by the following
steps:
Examples: Assume that Raj, age 25 is married and has two children. He
earns Rs25000 annually and plans to retire at age of 65. Of this amount
Rs10000 is use for federal and state taxes, life and health insurance and his
personal needs. The remaining 15000 is used to support his family. What
should be value of insurance if discount rate is 6%?
Solution: Using the give discount rate the present value of Rs1 payable
annual for 40 years is Rs15.05
Needs approach
The second method for estimating the amount of life insurance to own is the
needs approach. The various family needs that must be met if the family head
will die are analysed. The most important family needs are following:-
Additional life
insurance needed
The first part of worksheet shows the amount needed to meet various cash
needs, income needs and special needs. The second part analyse your
present financial assets for meeting these needs and the final part determine
the amount of life insurance needed.
Capital retention approach
This method preserves the capital needed to provide income to the family.
This methods works in following step:
The first step is to prepare a personal balance sheet that lists all assets and
liabilities .Example
Assets
House 125000
Automobiles 15000
Personal and household property 45000
Securities and investment 28000
Checking account 2000
Individual and group life insurance 200000
Private pension death plan 20000
Total 435000
Liabilities
Mortgage 100000
Total 115000
Determining the Amount of income-Producing Capital
The next step is to determine the amount of income producing assets that can
provide income to the family. This step is performed as follows:
The final step involves a comparison of the income objective with other
sources of income such as Social security survivor benefits.Example
QUESTION NO. 1)
Businessman 54
Professional 35
Students 6
Housewife 5
Table no. 4.1
Occupation of respondent
6
5
Businessman
Professional Students
Housewife
35 54
Figure 4.1
Interpretation:
A Yes 92
B No 8
Table no. 4.2
Insurance Already
8
Yes No
92
Figure 4.2
Interpretation:
From above chart,we can infer that 92% respondents already have insurance
policies, whereas 8 % does not have insurance policies.
QUESTION NO. 3)
5
20
Print media
Electronic media Agents
Other
50 25
Figure 4.3
Interpretation:
From this chart we can say that majority of respondents are aware of
insurance policies through agents, followed by electronic media, then print
media.
QUESTION NO. 4)
2
10
24 Tax
Saving Protection
15 Pension
49 Investment
Figure 4.4
INTERPRETETION:
On the basis of above analysis,we can interpret that main reason for buying
insurance policies is because of security reasons as 49% of respondent
agreed with it.
QUESTION 5)
5
6 19 Range of products
Figure 4.5
INTERPRETETION:
The graph shows that 50 out of 100 respondents buy an insurance policy after
looking at the features of the product which is followed by 20 respondent who
looks at different range of products and 19 looks at good will of companies.
So the products with good features have more demand among customers.
QUESTION 6)
37
Yes
63 No
Figure 4.6
INTERPRETETION:
According to graph out of 100 respondent 63% agreed that they buy
insurance due to someone else influence not according to their requirement.
QUESTION 7)
33
Yes
No
67
Figure 4.7
INTERPRETETION:
24
Protection plan
Investment plans
Pension plan
10 57 children plan
Figure 4.8
INTERPRETETION:
On the basis of above analysis we can say that customers are more
interested in protection plan and children plan only. It shows that customers
do not think insurance as an investment opportunity.
QUESTION NO. 9)
Figure 4.9
INERPRETETION:
The graph shows out of 100 respondent 47 expect reasonable premium from
insurance companies. So it shows that people prefer to buy insurance policies
when the premium is low.
Question No. 10)
yes
12 no
can't say
19
Not did need analysis
Option Particular Response
a yes 20
b no 44
c can't say 3
Response
3
20
a yes b no
c can't say
44
Interpretation:
According to graph 20 out of 67 respondents who not did need analysis are
not satisfied with their insurance plan which is 27% and 19 out of 31
respondents who did need analysis are satisfied with their insurance plan
which is 61%. It shows that more percentage of people will satisfied with their
police if they will do need analysis.
Findings
Most of the respondent like to buy a protection plan polices which was
followed by child plan.
Contact number
Address
Q1) Occupation
a) Businessman [ ] b) Professional [
]
c) Students [ ] d) House
wife [ ]
Do u have Insurance?
a)Yes[ ] b) No[ ]
c) Agents [ ] d) Others [ ]
a) Tax [ ]
b) Saving [ ]
c) Protection [ ]
d) Pension [ ]
e) Investment [ ]
a) yes [ ] b) No[ ]
a) Yes[ ] b) No [ ]
a) yes [ ] b) no [ ]
c) can’t say [ ]
a) yes [ ] b) no [ ]
c) can’t say [ ]