INTRODUCTION

The story of insurance is probably as old as the story of mankind. Tendency of a human being to secure themselves against loss and disaster has been from the starting of world. They sought to avert the evil consequences of fire and flood and loss of life and were willing to make some sort of sacrifice in order to achieve security. Though the concept of insurance is largely a development of the recent past, particularly after the industrial era – past few centuries – yet its beginnings date back almost 6000 years as per records.

Functions of insurance:
 Provide Protection: The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others.  Collective bearing of risk: Insurance is an instrument to share the financial loss of few among many others. Insurance is a mean by which few losses are shared among larger number of people. All the insured contribute the premiums towards a fund and out of which the persons exposed to a particular risk is paid.  Assessment of risk: Insurance determines the probable volume of risk by evaluating various factors that give rise to risk. Risk is the basis for determining the premium rate also.  Provide certainty: Insurance is a device, which helps to change from uncertainty to certainty. Insurance is device whereby the uncertain risks may be made more certain.  Small capital to cover larger risk: Insurance relieves the businessmen from security investments, by paying small amount of premium against larger risks and uncertainty.  Contributes towards the development of industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery.  Means of savings and investment: Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing income-tax exemptions also, people invest in insurance.

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 Source of earning foreign exchange: Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various other ways.  Risk free trade: Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover. Insurance is divided into two basic zones:  General Insurance  Life insurance

GENERAL INSURANCE
Insurance of the non life assets are called general insurance, this includes loss of asset against water, fire, earthquake etc. With the opening up of the Indian Market in Insurance sector for private players, in General Insurance the monopoly of the general Insurance public sector‘s companies has been broken. With the entrance of the new private player market innovative technique has been introduced to capture the market. In general Insurance around 17% of the market has been captured by the private players. General Insurance is a sector which alone has many type of insurance coverage in it like Fire Insurance, Marine Insurance, motor Insurance, Liability Insurance, Engineering Insurance etc.

The Non Life Insurers:
 National Insurance Co. Ltd  New Indian Assurance Co. Ltd  Oriental Insurance Co. Ltd  United India Insurance Co. Ltd  Tata AIG General Insurance Co. Ltd  Bajaj Allianz General Insurance Co. Ltd  IFFCO Tokio General Insurance Co. Ltd  ICICI Lombard General Insurance Co. Ltd  Reliance General Insurance Co. Ltd
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 Royal Sundaram Alliance Insurance Co. Ltd  Bharti Axa General Insurance  HDFC Chub

LIFE INSURANCE
Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a premium paid undertakes to pay a fixed sum of money on the death of the insured or on the expiry of a specified period of time, whichever is earlier. In case of life insurance, the payment for life insurance policy is certain. The Event insured against is sure to happen only the time of its happening is not known. So life insurance is known as ‗Life Assurance‘. The subject matter of insurance is life of human being. Life insurance provides risk coverage to the life of a person. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy.

Roles of Life Insurance
 Life insurance as an investment: Insurance products yield more than any other investment instruments and it also provides added incentives or bonus offered by insurance companies.  Life insurance as risk cover: Insurance is all about risk cover and protection of life. Insurance provides a unique sense of security that no other form of invest can provide.  Life insurance as tax planning: mechanism too. Insurance serves as an excellent tax saving

Importance of Life Insurance
 Protection against untimely death: Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death. The dependents or family members get a fixed sum of money in case of death of the assured.  Saving for old age: After retirement the earning capacity of a person reduces. Life insurance enables a person to enjoy peace of mind and a sense of security in his/her old age.  Promotion of savings: Life insurance encourages people to save money compulsorily. When life policy is taken, the assured is to pay premiums regularly to
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 Social Security: Life insurance is important for the society as a whole also. After this many insurance companies had been started in India. Indian people were not being insured by these companies. the policyholder gets the surrendered value only after the expiry of duration of the policy. Second company was Bharat insurance company came in 1896.  Tax Benefit: Under the Income Tax Act. These acts consist of premium rates tables and periodical valuations of companies. To regulate Indian insurance business first insurance act came in 1912 as life insurance company act and provident fund act. In case of surrender of policy. So the insurance act came in 1938 to governing life and non life insurance companies and to provide strict state control. First Indian life insurance company came as Bombay mutual life insurance assurance.keep the policy in force and he cannot get back the premiums. premium paid is allowed as a deduction from the total income under section 80C. But these companies were looking after only the needs of European community established in India. It helps a person to make financial base for future. INDIAN INSURANCE INDUSTRY HISTORY: Life insurance came to India from England in 1818 when oriental life insurance company started in Calcutta by Europeans.  Credit worthiness: Life insurance policy can be used as a security to raise loans. national Indian and national insurance in Calcutta and the co-operative assurance in Lahore were established in 1906. In 1956 life insurance corporation of India (LIC) was created to spreading life insurance much more Page 4 of 77 . Life insurance is an important tool for the mobilization and investment of small savings. only surrender value can be returned to him. In the first two decade of 20th century many life insurance companies were started. It improves the credit worthiness of business. Life insurance enables a person to provide for education and marriage of children and for construction of house. In 1956 the life insurance business in India was nationalized. After this the united India in Madras.  Initiates investments: Life Insurance Corporation encourages and mobilizes the public savings and channelizes the same in various investments for the economic development of the country.

2000. In that year LIC had 5 zonal offices. Page 5 of 77 .  Handling disputes between insurers and insurance intermediaries.  Promoting efficiency in the conduct of insurance business. Changing perception of Indian customers: Indian Insurance consumers are like Indian Voters. The key objectives of the IRDA include promotion of competition so as to enhance customer satisfaction through increased consumer choice and lower premiums. In 1957 the business of LIC of sum assured of 200crores. 1938 and has from 2000 onwards framed various regulations ranging from registration of companies for carrying on insurance business to protection of policyholders‘ interests. while ensuring the financial security of the insurance market. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY: In 1999. The IRDA opened up the market in August 2000 with the invitation for application for registrations. they are soft but when time is right and ripe. Foreign companies were allowed ownership of up to 26%.  Specifying the percentage of business to be written by insurers in rural sectors.  Regulating the investment of funds by insurance companies. The Authority has the power to frame regulations under Section 114A of the Insurance Act. The IRDA was incorporated as a statutory body in April. the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. 33 divisional offices and 212 branch offices. qualifications and training for insurance intermediaries and agents.widely particularly in rural areas. they demand and seek necessary changes.  Establishing guidelines for the operations of insurers and brokers. De-tariff of many Insurance Products are the reflection of changing aspirations and growing demand of Indian consumers. Role of IRDA:  Protecting the interests of policyholders. and 7000crores in 1986. 1000crores in 1970.  Specifying the code of conduct.

There are not ready to accept any product. which is putting huge pressures on Insurance companies (Read Risk Under-writers) and Brokers to respond. They have become more sensitive. The Indian customer‘s forms the pivot of each company‘s strategy. All that got changed with passage of IRDA act in 1999. With the introduction of the unit linked insurance policies these companies are investing the money in different investment instruments Page 6 of 77 . Now Indian customers are aware of insurance industry and insurance products provided by companies. A case in point is ULIP Product / Group Life and Credit Life in Life Insurance segment and Travel / Family Floater Health and Liability Insurance in the Non-life segment are new age Avatar. New insurance companies have come into existence leading to open competition and hence better products for customers. no matter even if that is coming from the market leader. They would not accept any type of insurance product unless it fulfills their requirements and needs. So today‘s customers wants good return from the insurance companies.I. should that product is not serving the purpose. Previously there was a monopoly business for Life Insurance Corporation of India (L. Everyone is trying to capture the fresh market here and penetrate it with aggressive marketing strategies. But after the introduction of private life insurance companies there is a great competition in Indian market now. Insurance Product was underwritten and was practically forced onto consumers on a ―Take-it-As-it-basis‖. still holds 71.C. Today life-insurance is not only limited up to just life risk cover and maturity period bonuses but changed to greater return from the investments.I. but now customers look at insurance products as an investment as well as life cover. Changing face of Indian insurance industry: After the Insurance Regulatory and Development Authority Act have been passed there has been establishment of many private insurance companies in India. In historic day‘s customers looking at insurance products as a life cover which can provide security against any unacceptable events.For historical years.4% of the market share in 2006. The new products are constantly being demanded by Indian consumers. Another good reason why we are seeing quick changes in the buying behavior of Insurance from mere Investment to risk mitigation is the cost of Replacement of Goods (ROG) or Cost of Services (COS).C. L. that is given to them. Customers are looking at Insurance for covering Pure Risk now which I have covered in my next section.) who was the only life-insurance company for the people till 2000. Indian consumers were at receiving end. Indian customers have become very sensitive to Coverage / Premium as well as the Products (read Risk Solution).

each of which are making strides in raising awareness levels. meeting daily financial needs of life. To tap the Indian market there has been tie-ups between the major Indian companies with other International insurance companies to start up their business. The government of India has set up rules that no foreign insurance company can set up their business individually here and they have to tie up with an Indian company and this foreign insurance company can have an investment of only 24% of the total start-up investment. Indian insurance industry can be featured by:  Low market penetration. customer focused service and professional advice Page 7 of 77 . marriage. In India only 25% of the population has life insurance. pension solutions after retirement. the Indian life insurance industry has more than a dozen private players.  Ever growing middle class component in population. So Indian life-insurance market is the target market of all the companies who either want to extend or diversify their business. introducing innovative products and increasing the penetration of life insurance in the vastly underinsured country. Today. These companies have every aspects and needs of our life covered along with the deathbenefit. These life-insurance companies have every kind of policies suiting every need right from financial needs of.like shares. government and other securities.  Rebate from government in the form of tax incentives to be insured. A wide range of products.  Growth of customer‘s interest with an increasing demand for better insurance products. People are demanding for higher returns with the life risk cover and private companies are giving 30-40% average growth per annum. his education. giving birth and rearing up a child. The success of their effort is that they have captured over 28% of premium income in five years. The biggest beneficiary of the competition among life insurers has been the customer. debentures. bonds. Several of private insurers have introduced attractive products to meet the needs of their target customers and in line with their business objectives.  Application of information technology for business.

 Cost effective operations. Penetration of life insurance is beginning to cut across socioeconomic classes and attract people who have never purchased insurance before.  Newer products and services. 4. ICICI Prudential Life Insurance Metlife India Insurance Co. 2.has become the mainstay of the industry. industry has seen the entry and growth of unit linked products. 8. Page 8 of 77 . 7. The number of companies in Insurance particularly in Life Insurance has changed drastically now the number is in 18. and realistic and sustain so people in better position to understand the risk and benefits of the product and they are accepting these innovative products. 9. List of them are mentioned as below: 1. Ltd. Now products are priced. 5. So it is clear that the face of life insurance in India is changing. Apart from the traditional term and saving insurance policies. This provides market linked returns and is among the most flexible policies available today for investment.  Restructuring of the public sector.  Competition and quality consciousness. Whatever the developments. 6. Life insurance is also now being regarded as a versatile financial planning tool. 11. 10. 13. 3. and the Indian customer‘s forms the pivot of each company‘s strategy. the future and the opportunities in this industry will surely be exciting. 12. flexible.  Greater concern for the customers. TATA AIG Life Insurance Max New York Life Insurance AVIVA Life Insurance Bharti AXA Life Insurance Kotak Mahindra Life Insurance Reliance Life Insurance SBI Life Insurance HDFC Standard Life Insurance Birla Sun Life Insurance Sahara Life Insurance ING Vysya Life Insurance Possibilities for insurance companies in India:  Further deregulation of the market. but with the changes come a host of challenges and it is only the credible players with a long term vision and a robust business strategy that will survive.

appearance of new risk.7 as non life insurance premium. Low growth rates in developed markets. technological improvement has resulted in pressures on a few economic parameters.  Convergence of financial services. and unconventional and innovative ideas on customer services. Consolidation of domestic insurance markets. Lot of mergers and acquisition are taking place in the insurance world. The development of global insurance industry over the past few years was influenced by booming stock markets which enabled considerable capital gains to be made in non life business. insurance companies face a dynamic global environment. The global insurance industry is growing at rapid pace. new types of covers to match with new risk situations.7 billion premium worldwide according to the global development of premium volume in 144 countries in 2005. and the uncertain economic conditions in the developing world are exerting pressure on insurer‘s resources and testing their ability to survive. The world insurance industry is at peak of its globalization process. insurers increasingly are pressured by the demands of their clients. Insurance companies have collected $2443. Now the existing insurers are facing difficulties from nontraditional competitors those are entering the retail market with new approaches and through new channels. Most of the markets are undergoing globalization. GLOBAL INSURANCE INDUSTRY Globally. and UK was having 10% of global share. Global insurance market is increasing by an average of six percent per year since 1990. The stock market boom of the past few years led to demand for unit linked insurance products. changing customers needs.3 has been generated as life insurance premium and $922. resulting in decrease in insurance policies prices. $1521. The rapidity in the industry. Dramatic changes are taking place owing to the internationalization of activities. Influence on Indian Insurance Industry: In this era of globalization. The US accounted for 35% of global life and non life premium.  Technology driven shift in product design. while demand did not develop at the same pace. Page 9 of 77 . Japan had global share of 21%. Increase in insurers equity capital increased underwriting capacity.  Actual operations and distribution.

Life Insurance Penetration as a % of GDP United Kingdom Japan Korea United States Malaysia India China Brazil 8.  It is a highly specialized technical business and customer is the most concern people in this business.0 1. profits improve. Business of insurance with its unique features has a special place in Indian economy.3 4. allowing a lowering of the rates of the premium to be charged and in turn. This shows the attraction that the Indian market holds for foreign insurers who have been putting pressure on developing countries as well as on India to open up its market.3 7. the probabilities become more predictable. When there is a bigger base.  The high volumes in the insurance business help spread risk wider. Page 10 of 77 .3 INSURANCE AND ECONOMY  Indian economy is growing in reference to global market. raising profits.1 3. This explains the current scenario of mergers. acquisitions.India has a rapidly growing middle class and this section can afford to buy insurance products. and with system wide risks balanced out.6 3. and globalization of insurance.9 8.8 1. therefore this business is able to spur the growth of infrastructure and act as a catalyst in the overall development of Indian economy.

There is thus a mutually beneficial interaction between insurance and economic growth. We live only by knowing something about the future. it is non-quantifiable risk that leads to profit. arise from the fact that we know so little. The average rate of growth of the economy in the last three years was 8. As the economy grows. facilitate investment. In the case of insurable risks. Risk is inherent in all economic activities. and a world of uncertainty. the demand for life insurance increases. but also for savings and for providing security. and protect economic entities against external risk. The economy has moved on to a higher growth path. Insurance firms help to spread the potentially financial consequences of risk among the large number of entities. it would completely negate entrepreneurship.  Insurance play a crucial role in the commercial lives of nations and act as the lubricants of economic activities. Insurance and economic growth mutually influences each other. Insurance is a type of savings. as the economy widens the demand for new types of insurance products emerges. This strong growth will bring about significant changes in the insurance industry. Page 11 of 77 . As the assets of people and of business enterprises increase in the growth process. The real management challenges are uninsurable risks. the demand for general insurance also increases. It can be serving as an essential service which a welfare state must make available to its people. Insurance is not only important for tax benefits. while the problems of life or of conduct at least. Insurance is no longer confined to product markets. According to him. support and encourage external trade. they also cover service industries. A welldeveloped insurance sector promotes economic growth by encouraging risk-taking.1 per cent. Without some kind of cover against risk. It is equally true that growth itself is facilitated by insurance. some of these activities will not be carried out at all. In fact. If that were possible. He wrote ―It is a world of change in which we live. Professor Frank Knight in his celebrated book ―Risk Uncertainty and Profit‖ emphasized that profit is a consequence of uncertainty. He made a distinction between quantifiable risk and nonquantifiable risk. it is important to note that not all activities can be insured. the living standards of people increase. To some extent this is also compounded by certain attitudes to life. risk is avoided at a cost. Also insurance and more particularly life insurance is a mobilizer of long term savings and life insurance companies are thus able to support infrastructure projects which require long term funds. As a consequence. This is as true of business as of other spheres of activity‖. The low income levels of the vast majority of population have been one of the factors inhibiting a faster growth of insurance in India. to mobilize and distribute savings for productive use. At this point.

and 2. Through Underwriting.FUNCTIONING OF INSURANCE INDUSTRY Insurer’s Business Model: Profit = Earned Premium + Investment Income – Incurred Loss – Underwriting expenses Insurers make money in two ways: 1. By investing the premiums they collect from insured. Page 12 of 77 . the processes by which insurers select the risks to insure and decide how much in premiums to charge for accepting those risks.

―Float‖ or available reserve is the amount of money. Finally. skilful and careful management of funds. In managing the claims-handling function.The most difficult aspect of the insurance business is the underwriting of policies. at hand at any given moment that an insurer has collected in insurance premiums but has not been paid out in claims. A combined ratio of less than 100 percent indicates underwriting profitability. Actuarial science uses statistics and probability to analyze the risks associated with the range of perils covered. and have traditionally viewed as secondary to underwriting. administrative handling expenses. This tendency to swing between profitable and unprofitable periods over time is commonly known as the "underwriting" or insurance cycle. insurers predict the likelihood that a claim will be made against their policies and price products accordingly. and claims overpayment leakages. the ―float‖ method is difficult to carry out in an economically depressed period. insurers seek to balance the elements of customer satisfaction. Investment income is a large component of insurance revenues. An insurer's underwriting performance is measured in its combined ratio. Bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards. Naturally. Upon termination of a given policy. In the past risk management was the most important part of business. The loss ratio (incurred losses and loss-adjustment expenses divided by net earned premium) is added to the expense ratio (underwriting expenses divided by net premium written) to determine the company's combined ratio. The combined ratio is a reflection of the company's overall underwriting profitability. Insurance is a business of large Page 13 of 77 . claims and loss handling is the materialized utility of insurance. the amount of premium collected and the investment gains thereon minus the amount paid out in claims is the insurer's underwriting profit on that policy. Investment Management: Investment operations are often considered incidental to the business of insurance. Insurance companies also earn investment profits on ―float‖. and these scientific principles are used to determine an insurer's overall exposure. So a poor economy generally means high insurance premiums. Data is analyzed to fairly accurately project the rate of future claims based on a given risk. whereas today the focus has shifted to fund management. To this end. Using a wide assortment of data. insurers use actuarial science to quantify the risks they are willing to assume and the premium they will charge to assume them. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest on them until claims are paid out. while anything over 100 indicates an underwriting loss.

the difference between revenue and the expenses is known as operating surplus. loans to several public utilities and service providers in state government. there are ideally six requirement of an insurable risk: Page 14 of 77 . Insurance companies are among the largest institutional investors in the world.  Revenue = Premium  Expenses = (Sum of Claims + Commission payable on procurement of business + Operating expenses)  Operating Surplus = (Revenue – Expenses) Net investment income includes income from trading in and holding stock market securities including government securities. Returns on investments influence the premium rates and bonuses and hence investment income will continue to be an important component of insurance company profits.From the view point of the insurer. special deposits with the central government. These funds arise out of policyholder funds in the case of life insurance. Time lag between the procurement of premium and the payment of claim provides an interval during which the funds can be deployed to generate income. not all pure risk is insurable . In the case of insurance.certain requirements usually must be fulfilled before a pure risk can be privately insured .  To pay the expenses of the management  To pay agency commission  To pay for the claims  Surplus money will be invested in govt. securities Requirements of an insurance risk Insurance normally insure only pure risks . Assets managed by insurance companies are estimated to account for over 40% of the world‘s top ten asset managers. In non life insurance the benefits are indirect and mostly by the creation of an investment portfolio.However. Insurance premium collected is converted in a pool of fund then divided in to four expenses. In life insurance. and technical and free reserves in the non-life segments. Investment income has to compensate for underwriting results which are increasingly under pressure.numbers and generates huge amount of funds over time. benefits from insurance profits accrue directly to policy holders when it is passed on to him in the form of a bonus.

 There must be a large number of exposure units  The loss must be accidental and unintentional  The loss must be determinable and measurable  The loss should not be catastrophic  The chance of loss must be calculable  The premium must be economically feasible Page 15 of 77 .

while insurance is a technique for handling an already existing pure risk . not risk reduction .In contract.In contract . Both parties win if the loss does occur .the risk of fire is already present and is transferred to the insurer by a contract.if you bet Rs 300 on a horse . because the winner‘s gain comes at the expense of the loser .insurance contracts restore the insured‘s financially in whole or in part if a loss occurs. Insurance and Gambling compared Insurance is often erroneously confused with gambling .An insurance contract. not reduced. hedging typically involves only risk transfer .However. because neither the insurer nor the insured is placed in a position where the gain of the winner comes at the expense of the loser. In contract. 2. because the relative variation of actual loss from expected loss will decline . A second difference between insurance and hedging is that insurance and hedging is that insurance can reduce the objective risk of an insurer by application of the law of large numbers.thus.such as protection against a decline in the price agriculture products and raw materials. The second difference between insurance and gambling is that gambling is socially unproductive.There are two important differences between them .The risk of adverse price fluctuation is transferred because of superior knowledge of market conditions . First.Comparison of Insurance with other Similar Factors 1.but if you pay Rs 300 to an insurer for fire insurance .The risk is transferred. and prediction of loss generally is not based on the law of large numbers. Page 16 of 77 . consistent gambling transaction generally never restore the losers to their former financial position . and no new risk is created. many insurance transactions reduce objective risk. is not the same thing as hedging . As the number of exposure units increases. The insurer and the insured have a common interest in the prevention of a loss. the insurer‘s prediction of future losses improves. however.thus .Although both technique are similar in that risk is transferred by a contract. because the requirement of an insurable risk generally can be met . Insurance and Hedging compared The concept of hedging is to transferring the risk to the speculator through purchase of future contracts .a new speculative technique is created . hedging is a technique for handling risks that are typically uninsurable . there are some important difference between them. insurance is always socially productive.Moreover. an insurance transaction involves the transfer of insurable risks. No new risk is created by the transaction. gambling creates a new speculative risk .First .

risk cover comes to an end. loan or paid up values are in such policies. cooperatives etc it also provides insurance coverage for people in certain approved occupations at the lowest possible premium cost.  Joint life insurance policies: These policies are similar to endowment policies in maturity benefits and risk cover. The investment is denoted as units and represented by the value called as net asset value (NAV).  Money back policies: This type of policy is for periodic payments of partial survival benefits during the term of the policy as long as the policy holder is alive.  Unit linked insurance plan: ULIP is a kind of insurance plan which provides life cover as well as return on premium paid over a certain period of time. Page 17 of 77 .  Pension plan: a pension plan or annuity is an investment over a certain number of years but does not provide any life insurance cover. It offers a guaranteed income either for a life or certain period.  Whole life insurance policies: This type of policy runs as long as the policyholder is alive and is covered for the entire life of the policyholder. but joint life policies cover two lives simultaneously such as married couples. No surrender.  Term life insurance policies: This type of insurance covers risk only during the selected term period. Sum assured is payable on the first death and again on the death of survival during the term of the policy. In this policy the insured amount and the bonus is payable only to nominee on the death of policy holder. If the policy holder survives the term. These types of policies are for those people who are unable to pay larger premium required for endowment and whole life policies.  Group insurance: This type of insurance offers life insurance protection under group policies to various groups such as employers employees. professionals. and at the end of the maturity sum assured is paid back to policyholder with the bonuses during the term of the policy.Various types of life insurance policies:  Endowment policies: This type of policy covers risk for a specified period.

are helpful to insurance companies. So an insurance agent can play an important role to create a good image of company. The distributors have to become trusted financial advisors for the clients and trusted business associates for the insurance Companies. they are selling their products through their parent bank. Many insurance companies are selling their products through banks. Perceptions about the public sector companies are also cemented in his mind.  Building personal credibility with the clients. The public and private sector insurance companies have their branches in almost all parts of the country and have attracted local people to become their agents. The public sector banks. Different distribution channels in India: A multi-channel strategy is better suited for the Indian market. especially the public sector banks. these conditions will play a major role in shaping the distribution channels and their effectiveness. It is the distributor who makes the difference in terms of the quality of advice for choice of product. In today's scenario. The Touch point with the ultimate customer is the distributor or the producer and the role played by them in insurance markets is critical. Companies which are bank owned. This channel of selling insurance is known as Bank assurance. Indian insurance market is a combination of multiple markets. To the average customer. the product. and also know his competitor's products to be an effective salesman who can sell his company. Page 18 of 77 .  Banks: Banks in India are all pervasive.DISTRIBUTION OF INSURANCE PRODUCTS Insurance has to be sold the world over. every new company is the same. with their distinct cultural and social ethics. with their vast branch networks. Apart from geographical spread the socio-cultural and economic segmentation of the market is very wide. exhibiting different traits and needs. insurance companies must move from selling insurance to marketing an essential financial product. Different multi-distribution channels in India are as follows:  Agents: Agents are the primary channel for distribution of insurance. Today's insurance agent has to know which product will appeal to the customer. Each of the markets requires a different approach. and himself to the customer. Challenges for insurance companies and intermediaries in India Building faith about company in the mind of clients. In the Indian market. servicing of policy post sale and settlement of claims.

Insurance industry. Union Bank. Corporate agents have become a major force to reckon with in distributing insurance products. They are taking some underwriting charges from the insurance companies to sell their insurance products. Allahabad Bank. South Indian Bank. Khaitan‘s Williamson major and bridge foundation for selling rural policies. Citibank. These financial institutions are known as brokers. Page 19 of 77 . Karnataka Bank. Insurance companies‘ tie-up with business houses in other industries to sell insurance either to their employees or their customers. This can be as direct marketing. Such asBajaj Allianz tied up with Maruti Udyog and Ford for auto insurance and Tata AIG life has tied up with Tata tea. J&K Bank Deutsche Bank. Andhra Bank Vysya Bank ABN Amro Bank.INSURANCE COMPANY ICICI Prudential ASSOCIATE BANKS ICICI Bank.  Corporate agents: Corporate agency is a cross selling type of channel. Federal Bank. Punjab and Maharashtra Cooperative Bank Panjab National Bank. Rajasthan. Bank of India.  Internet: In this technological world internet is also a channel of selling insurance. Canara Bank HDFC Bank. Indian Bank State Bank of India Bank of Met Life Birla Sun Life ING Vysya Bank Aviva Life Insurance HDFC Standard Life SBI Life  Brokers: Now a day‘s different financial institution are selling insurance. Citibank. during the past 2 years has witnessed a number of such strategic tie-ups and alliances.

"Every family in every village in the country should feel safe and secure". insurance companies are being forced to adopt a strictly professional approach in marketing. In the competitive market. Insurance corporations formulate and revise these policies from time to time to ensure that the performance of the managers is best for the organization. and flexibility. Page 20 of 77 .  The importance of relationship. Financial.  Value addition.  Customer satisfaction research. Consumers are increasingly more aware and are actively managing their financial affairs.  Positioning. marketing and human resource polices of the corporations influence the unit mangers to make decisions.  Effective pricing. Some of the important marketing elements are Marketing mix. The insurance companies face the challenge of changing the uninspiring public image of the industry.EFFECTIVE MARKETING STRATEGIES FOR INSURANCE PRODUCTS Now the Indian consumer is knowledgeable and sensitive. the insurance managers need to understand more about the details that go into the introduction of insurance products to make it attractive in this competitive market.  Segmentation. commitment.  Insuring service quality. creativity. In view of this. Performance of insurance company depends on the effectiveness of such policies. People are increasingly looking not just at products.  Branding. So now days an insurance manager requires leadership. but at integrated financial solutions that can offer stability of returns along with total protection. This vision alone will help to bring the new ideas to the insurance manager.

And other approach is focusing on customer‘s needs. which involve a heavy investment in developing relationships with policyholders.  Social and political features of the country. Then insurance companies provide some tangible attributes in their product to differentiate from competitors. An insurance product can be classified into three phases: Core product: In insurance industry the core product is the policy that provides protection to the customers. Under this approach customer can expect a range of products and service offered to him. and convenient and quick claim handling. the effort should be tie clients to the company by customized combination of coverage. easy payment plans.  Growth in population. risk management advice. The following factors influence the market and demand of product Government policies.The growth of insurance sector is governed largely by factors external to it.  The aversion to risk.  Level of insurance awareness. such as Brand  Some additional features in existing product  By providing instruction manual with the policy Page 21 of 77 .  Income wise distribution of the population. Third approach is market segmentation under which the population can be divided into several homogeneous products and groups.  Changing age profile. Different companies adopt different approaches in their marketing strategies.  The pricing of the policies.  Growth scenario in the world. Expected product: Because of competition customers start to expect more from an insurance product. One approach is focus upon product quality which can give confidence in the mind of customers that they are offered by best featured products.  The economic climate of the country.

company‘s market share. But the most important gift of privatization is the introduction of customer-oriented services. and materials at each level of the organization provides measures of efficiency of a unit as well as the organization.  Payment option convenient to customers. machines. Relying on an external agency can be risky due to the questionable loyalty of the agents. Efforts of the company as a whole and that of the divisions and branches are assessed to measure the effectiveness. but also professional techniques and technologies. Insurance companies can take this job on their own or assign it to an external agency. There are marketing strategies more for survival than growth.Augmented product: An insurance company can provide different types of services to differentiate their products Post sales services.  Branches in different places for customers.  Customer complaint management. Investment control and expense control are dealt separately and the effectiveness of management‘s‘ decisions at various levels is to be assessed separately.  Penetration into and exploitation of markets: Market penetration or exploitation of a company can be identified with the growth in number of policies in each type of insurance. The present scene in India is such that everyone is trying to put in the best efforts. Well trained. growth rate in earnings or turnover. Success of an insurance company depends on four important functions:  Identification of markets: Identification of markets means need to understand the trends in culture and businesses constantly. because the opening up of the sector has not brought in only foreign players.  Control over investment and operating costs: Control over resources such as men. Page 22 of 77 . Utmost care is being taken to maximize customer satisfaction. The quality of assessing the risk and estimation of losses has the largest claim on the performance of an insurance company. through conducting research and analysis. The entry of private players and their foreign partners has given domestic players a tough time. experienced and expert hands are needed for the operations.  Assessment of risks (of the insured and the insurance corporation) and estimation of losses: Efficiency of actuaries and assessors of the insurance policies in fixing premiums and settling claims is foremost an important area for achieving overall efficiency in operations. increase in number of branches and divisions etc.

Page 23 of 77 . Attributes to develop marketing strategies:  Channel data: .  Identifying high opportunity areas.  Estimating potential for specific products within local markets. Effective Strategies for Insurance Agents:  Learn how to construct a mental image for success. value of annuities.  Consumption data: .  Learn how to convert a new lead into sales.Useful to know future buying preferences. and with which company the current policy is held.  Measuring agency performance relative to market potential.  Learn how to act when you meet a client for the first time.  Consumer attitudes.  Learn how to get and set more appointments. learning about products and purchase channels.  Learn how the order in which you explain the types of policies can double your income.  Take Easy steps to avoid delays in issuing policies.Useful to evaluate annual premiums.  Optimizing your agency network against market potential.  Learn how to find a proper perspective and how to turn off all the signals that cause people not to buy from you.To find best prospects:  Allocating marketing strategies against market potential. number of annuities owned.

G . such as business management and finance no matter for households. investment is the amount purchased per unit time of goods which are not consumed but are to be used for future production. Thus investment is everything that remains of total expenditure after consumption. The basic meaning of the term being an asset held to have some recurring or capital gains. and net exports are subtracted (i. which may then be used to buy a real asset. Investment is involved in many areas of the economy. The third case describes a lender. The term "investment" is used differently in economics and in finance. As time passes. Page 24 of 77 . the individual becomes an entrepreneur using the resource to produce goods and services for others in the hope of a profitable sale. and refers to the act of putting things (money or other claims to resources) into others' pockets. meaning garment. or governments. An asset is usually purchased. Examples include railroad or factory construction. It is related to saving or deferring consumption. In measure national income and output gross investment (represented by the variable I) is also a component of Gross domestic product (GDP). such as money that is put into a bank or the market. or equivalently a deposit is made in a bank. income dividends. It is an asset that is expected to give returns without any work on the asset per se. In each case. Economists refer to a real investment (such as a machine or a house). I = GDP C . firms. where C is consumption.e. In economics or macroeconomics In economic theory or in macroeconomics. given in the formula GDP = C + I + G + NX. in hopes of getting a future return or interest from it. or appreciation capital gains of the value of the instrument. Investment in human capital includes costs of additional schooling or on-the-job training. such as a pension fund. The word originates in the Latin "vestis". Inventory investment refers to the accumulation of goods inventories it can be positive or negative. government spending. while financial economists refer to a financial asset. investment is the commitment of money or capital to the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest. the value of the asset and liability also change. after some in the second. and accounts for that asset by recording an equivalent liability. and NX is net exports. An investment involves the choice by an individual or an organization. More specifically. the consumer obtains a durable asset or investment.NX). G is government spending.INVESTMENT Investment is putting money into something with the hope of profit. and it can be intended or unintended. and the fourth describes an investor in a share of the business. and both prices and interest rates change.

Investment related to business of a firm . Business firms or organizations raise funds from investors in the form of equites. Net fixed investment is the value of the net increase in the capital stock per year. goodwill). Page 25 of 77 . firms. or governments. Putting money into something with the hope of profit. or financial (see below). Net investment deducts depreciation from gross investment. Assets are used to produce streams of revenue that often are associated with particular costs or outflows. these are often marketable securities such as a company stock (an equity investment) or bonds (a debt investment). In terms of financial assets. the manager must determine whether the net present value of the investment to the enterprise is positive using the marginal cost of capital that is associated with the particular area of business. The time dimension of investment makes it a flow. An investment involves the choice by an individual or an organization. the interest rate represents an opportunity cost of investing those funds rather than lending out that amount of money for interest. More specifically investment is the commitment of money or capital to the purchase of financial instruments or other assets so as to gain profitable returns in the form of interest. while at others it may be for the purpose of gaining access to more assets by establishing control or influence over the operation of a second company (the investee). r). At times. debts (collectively known as the capital structure) and further reinvest it into various investment schemes by carefully analyzing the returns in order to meet out their obligations relating to purchase of assets which provides them long term benefits.business management The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: Managers determine the investment value of the assets that a business enterprise has within its control or possession. Fixed investment. as expenditure over a period of time ("per year"). An increase in income encourages higher investment. By contrast. Even if a firm chooses to use its own funds in an investment. These assets may be physical (such as buildings or machinery). Income (dividends) or appreciation (capital gains) of the value of the instrument It is related to saving or deferring consumption. Investment is often modeled as a function of Income and Interest rates. given by the relation I = f(Y. accumulated net investment to a point in time (such as December 31). Investment is involved in many areas of the economy. All together. whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. is not capital.Non-residential fixed investment (such as new factories) and residential investment (new houses) combine with inventory investment to make up. the goal of the investment is to produce future cash flows. capital is a stock— that is. software. intangible (such as patents. such as business management and finance no matter for households.

Inventory investment refers to the accumulation of goods inventories it can be positive or negative. Thus investment is everything that remains of total expenditure after consumption. the interest rate represents an opportunity cost of investing those funds rather than lending out that amount of money for interest. r). Net investment deducts depreciation from gross investment. after some. given by the relation I = f(Y. and refers to the act of putting things (money or other claims to resources) into others' pocket. The word originates in the Latin "vestis". government spending. as expenditure over a period of time ("per year"). Even if a firm chooses to use its own funds in an investment. and NX is net exports. where C is consumption.G .e. By contrast. In each case. whereas a higher interest rate may discourage investment as it becomes more costly to borrow money. and accounts for that asset by recording an equivalent liability. such as money that is put into a bank or the market. On the second. G is government spending. in hopes of getting a future return or interest from it. Investment in human capital includes costs of additional schooling or on-the-job training. which may then be used to buy a real asset. Investment related to business of a firm . An increase in income encourages higher investment.business management Page 26 of 77 . The time dimension of investment makes it a flow. In measure of national income and output.C . Fixed investment. The term "investment" is used differently in economics and in finance. The basic meaning of the term being an asset held to have some recurring or capital gains. It is an asset that is expected to give returns without any work on the asset per se.such as a pension fund. accumulated net investment to a point in time Investment is often modeled as a function of Income and Interest rates. given in the formula GDP = C + I + G + NX. and both prices and interest rates change. the value of the asset and liability also change. Non-residential fixed investment (such as new factories) and residential investment (new houses) combine with inventory investment to make up I. is not capital. or equivalently a deposit is made in a bank. I = GDP . gross investment (represented by the variable I) is also a component of Gross domestic product (GDP). Examples include railroad or factory construction. The third case describes a lender. An asset is usually purchased. the consumer obtains a durable asset or investment. and it can be intended or unintended. meaning garment. In economic theory or in macroeconomics investment is the amount purchased per unit time of goods which are not consumed but are to be used for future production. and net exports are subtracted (i. Economists refer to a real investment (such as a machine or a house).NX). while financial economists refer to a financial asset. and the fourth describes an investor in a share of the business. Net fixed investment is the value of the net increase in the capital stock per year. capital is a stock— that is. As time passes. the individual becomes an entrepreneur using the resource to produce goods and services for others in the hope of a profitable sale.

the goal of the investment is to produce future cash flows. Page 27 of 77 . collective investment schemes. debts(collectively known as the capital structure)and further reinvest it into various investment schemes by carefully analysing the returns in order to meet out their obligations relating to purchase of assets which provides them long term benefits. or strictly speaking. These assets may be physical (such as buildings or machinery). since their cash flows are closely related to (or derived from) those of specific securities. investment is the commitment of funds by buying securities or other monetary or paper (financial) assets in the money markets or capital markets. insurance companies. while at others it may be for the purpose of gaining access to more assets by establishing control or influence over the operation of a second company (the investee). securities or investments. each of whom receives a claim on the intermediary. In terms of financial assets. All together. Returns on investments will follow the risk-return spectrum. Assets are used to produce streams of revenue that often are associated with particular costs or outflows. At times. or in fairly liquid real assets. Investments are often made indirectly through intermediaries. such as gold or collectibles. pension funds. Valuation is the method for assessing whether a potential investment is worth its price. These financial assets are then expected to provide income or positive future cash flows.The investment decision (also known as capital budgeting) is one of the fundamental decisions of business management: Managers determine the investment value of the assets that a business enterprise has within its control or possession. Nevertheless. such as banks. they are often studied as or treated as investments. Business firms or organizations raise funds from investors in the form of equites. these are often marketable securities such as a company stock (an equity investment) or bonds (a debt investment). software. other equity investment. or financial (see below). Trades in contingent claims or derivative securities do not necessarily have future positive expected cash flows. and bonds (including bonds denominated in foreign currencies). mutual funds. goodwill). an intermediary generally makes an investment using money from many individuals. intangible (such as patents. and may increase or decrease in value yielding the investor capital gains or losses. the manager must determine whether the net present value of the investment to the enterprise is positive using the marginal cost of capital that is associated with the particular area of business. Types of financial investments include shares. and so are not considered assets. Though their legal and procedural details differ. and investment clubs. In finance In finance.

This distinction is important. retail space. Types of Investment Investment refers to the concept of deferred consumption. Residential real estate Investment in residential real estate is the most common form of real estate investment measured by number of participants because it includes property purchased as a primary residence. office buildings. Due to the higher risk of commercial real estate. In many cases the buyer does not have the full purchase price for a property and must engage a lender such as a bank. put in a collective investment scheme or used to buy any asset where there is an element of capital risk is deemed an investment. investment money is used to purchase property for the purpose of holding. reselling or leasing for income and there is an element of capital risk. Investing. residential real estate is the least risky. which involves purchasing giving loan r keeping funds in a bank account with the aim of generating future returns on investment. finance company or private lender. money used to purchase shares. if its value can fluctuate then it is investment. hotels and motels. as investment risk can cause a capital loss when an investment is sold. Commercial real estate Commercial real estate consists of multifamily apartments. Page 28 of 77 . warehouses. Against other types of real estate. Whether an asset is a saving(s) or an investment depends on where the money is invested: if it is cash then it is savings. Saving within personal finance refers to money put aside. and other commercial properties. loan-to-value ratios allowed by banks and other lenders are lower and often fall in the range of 50-70% Investment. unlike saving where the more limited risk is cash devaluing due to inflation. which confuses this distinction.Within personal finance. normally on a regular basis. but usually they will fall into the range of 70-90% of the purchase price. Different countries have their individual normal lending levels. In many instances the terms saving and investment are used interchangeably. For example many deposit accounts are labeled as investment accounts by banks for marketing purposes. Real estate as the instrument of investment In real estate.

the returns are also generally lower than other securities.  Mutual funds: This is a collection of stocks and bonds and involves paying a professional manager to select specific securities for you. However. Stocks are more volatile and riskier than bonds.  Derivatives: These are financial contracts the values of which are derived from the value of the underlying assets. certificates of deposit (CDs) and treasury bills.  Stocks: Buying stocks (also called equities) makes you a part-owner of the business and entitles you to a share of the generated by the company. It is a safer and more 'risk-free' investment tool than equities. Page 29 of 77 . such as equities. The prime advantage of this investment is that you do not have to bother with tracking the investment. commodities and on which they are based. There may be stock. These investments pay a low rate of interest and are risky options in periods of inflation.  This form of investment provides returns in the form of fixed periodic payments and possible capital appreciation at maturity.or index-based mutual funds. options and swaps.  Commodities: The items that are traded on the commodities market are agricultural and industrial commodities. Derivatives are used to minimize the risk of loss resulting from fluctuations in the value of the underlying (hedging). Derivatives can be in the form of futures.Types of InvestmentsThe various types of investment are:  Cash investments: These include savings bank accounts.

It is important to note that volatility also affects the premium. Their information is sourced through a wide network of contacts and is not available from traditional and data providers. A common example of an insurance premium comes from auto insurance. If a fixed-income security (bond) is purchased at a premium. existing interest rates are lower than the coupon rate. an insured. theft and other potential problems. 2. 3. A vehicle owner can insure the value of his or her vehicle against loss resulting from accident. The difference between the higher price paid for a fixed-income security and the security's face amount at issue.The total cost of an option. is the person or entity buying the insurance policy. 2. The premium is paid by the insured party to the insurer. in exchange for payment.Further ResourcesAdhere to trusted wealth management practices from top firms like Gain Free access to reports previously only available to Governments and select these reports are part of the Intelligence Newsletter that focuses on Conflicts many other topics. and primarily compensates the insurer for bearing the risk of a payout should the insurance agreement's coverage be required. uncertain loss. from one entity to another. or policyholder. The insurance rate is a factor used to determine the amount to be charged for a certain amount of insurance coverage. In law and economics insurance is a form of risk management primarily used to hedge against the risk of a contingent. An insurer is a company selling the insurance. The specified amount of payment required periodically by an insurer to provide coverage under a given insurance plan for a defined period of time. Premium1. called Page 30 of 77 . Investors pay a premium for an investment that will return an amount greater than existing interest rates. What Does Premium Mean? 1. The premium of an option is basically the sum of the option's intrinsic and time value. The owner usually pays a fixed premium amount in exchange for the insurance company's guarantee to cover any economic losses incurred under the scope of the agreement. Insurance is defined as the equitable transfer of the risk of a loss. 3.

Accidental loss. and worker injuries may all easily meet this criterion. automobile accidents. Large loss. which is famous for insuring the life or health of actors. allowing insurers to benefit from the law of large numbers in which predicted losses are similar to the actual losses. place and cause of a loss should be clear enough that a reasonable person. Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. 3. Exceptions include Lloyd's of London. 4. The loss takes place at a known time. with sufficient information. Other types of losses may only be definite in theory. Events that contain speculative elements. Occupational disease. but individual entities can also self-insure through saving money for possible future losses InsurabilityRisk which can be insured by private companies typically share seven common characteristics: 1. Risk management the practice of appraising and controlling risk. Ideally. sports figures and other famous individuals. 2. In order to be insurable. for instance. has evolved as a discrete field of study and practice. with the fee being dependent upon the frequency and severity of the event occurring. adjusting losses. Definite loss. plus the cost of issuing and administering the policy. However. The loss should be pure. The insured receives a contract called the insurance policy. which details the conditions and circumstances under which the insured will be financially compensated. Since insurance operates through pooling resources. Insurance premiums need to cover both the expected cost of losses. all exposures will have particular differences. and supplying the Page 31 of 77 . The event that constitutes the trigger of a claim should be fortuitous. in a known place. and from a known cause. are generally not considered insurable. Fire. the time. place or cause is identifiable. could objectively verify all three elements. The insured entities are therefore protected from risk for a fee. The size of the loss must be meaningful from the perspective of the insured. the majority of insurance policies are provided for individual members of large classes. the risk insured against must meet certain characteristics in order to be an insurable risk Insurance is a commercial enterprise and a major part of the financial services industry. 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. which may lead to different premium rates. such as ordinary business risks or even purchasing a lottery ticket. or at least outside the control of the beneficiary of the insurance. may involve prolonged exposure to injurious conditions where no specific time. The classic example is death of an insured person on a life insurance policy. Large number of similar exposure units.the premium. in the sense that it results from an event for which there is only the opportunity for cost.

or the cost of the event so large. or are insured by a single insurer who syndicates the risk into the reinsurance market. Calculable loss. that the resulting premium is large relative to the amount of protection offered. Probability of loss is generally an empirical exercise. Page 32 of 77 . LegalWhen a company insures an individual entity. What that "stake" is will be determined by the kind of insurance involved and the nature of the property ownership or relationship between the persons. the transaction may have the form of insurance. Limited risk of catastrophically large losses.. if not formally calculable: the probability of loss. while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim. insurers may prefer to limit their exposure to a loss from a single event to some small portion of their capital base. 3. even if on offer. If the likelihood of an insured event is so high. according to some method. Indemnity – the insurance company indemnifies.capital needed to reasonably assure that the insurer will be able to pay claims. Capital constrains insurers' ability to sell earthquake insurance as well as wind insurance in hurricane zones. it is not likely that the insurance will be purchased. but not the substance. Insurable interest must exist whether property insurance or insurance on a person is involved. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer's capital constraint. and the attendant cost. the insured in the case of certain losses only up to the insured's interest. In the U.S. as the accounting profession formally recognizes in financial accounting standards. Several commonly cited legal principles of insurance include 1. If there is no such chance of loss. flood risk is insured by the federal government. Insurable losses are ideally independent and non-catastrophic. 4. or compensates. 2. For small losses these latter costs may be several times the size of the expected cost of losses. Affordable premium. meaning that the losses do not happen all at once and individual losses are not severe enough to bankrupt the insurer. Contribution – insurers which have similar obligations to the insured contribute in the indemnification. 5. Insurable interest– the insured typically must directly suffer from the loss. Further. there are basic legal requirements. Utmost good faith – the insured and the insurer are bound by a good faith bond of honesty and fairness. 6. the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. 7. The concept requires that the insured have a "stake" in the loss or damage to the life or property insured. Material facts must be disclosed. Such properties are generally shared among several insurers. There are two elements that must be at least estimable. There is hardly any point in paying such costs unless the protection offered has real value to a buyer.

The loss should be pure. Insurance is a commercial enterprise and a major part of the financial services industry. the insurer may sue those liable for insured's loss. The loss takes place at a known time. all exposures will have particular differences. and worker injuries may all easily meet this criterion. place and cause of a loss should be clear enough that a reasonable person. with sufficient information. and supplying the capital needed to reasonably assure that the insurer will be able to pay claims. Fire. Insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that some may incur. Definite loss. 11. plus the cost of issuing and administering the policy. Co-proximal. place or cause is identifiable. are generally not considered insurable. for instance. the majority of insurance policies are provided for individual members of large classes. 10. adjusting losses. Events that contain speculative elements. for example. For small losses these latter costs may be several times the size of the expected cost of Page 33 of 77 . Accidental loss. Subrogation – the insurance company acquires legal rights to pursue recoveries on behalf of the insured. InsurabilityRisk which can be insured by private companies typically share seven common characteristics 8. or proximate cause – the cause of loss (the peril) must be covered under the insuring agreement of the policy. Large loss. Since insurance operates through pooling resources. the risk insured against must meet certain characteristics in order to be an insurable risk. such as ordinary business risks or even purchasing a lottery ticket. Large number of similar exposure units. but individual entities can also self-insure through saving money for possible future losses. Insurance premiums need to cover both the expected cost of losses.5. sports figures and other famous individuals. and the dominant cause must not be excluded 7. which may lead to different premium rates. in a known place. The classic example is death of an insured person on a life insurance policy. and from a known cause. However. Occupational disease. Ideally. or at least outside the control of the beneficiary of the insurance. the time. Other types of losses may only be definite in theory. automobile accidents. which is famous for insuring the life or health of actors. may involve prolonged exposure to injurious conditions where no specific time. allowing insurers to benefit from the law of large numbers in which predicted losses are similar to the actual losses. The insured entities are therefore protected from risk for a fee. The event that constitutes the trigger of a claim should be fortuitous. 6. in the sense that it results from an event for which there is only the opportunity for cost. could objectively verify all three elements. The size of the loss must be meaningful from the perspective of the insured. In order to be insurable. with the fee being dependent upon the frequency and severity of the event occurring. Exceptions include Lloyd's of London. 9.

as the accounting profession formally recognizes in financial accounting standards. In the U. In commercial fire insurance it is possible to find single properties whose total exposed value is well in excess of any individual insurer's capital constraint. Further. the transaction may have the form of insurance. 14. a visitor to your home slips on a floor that you left wet and sues you for $10. Such properties are generally shared among several insurers. Probability of loss is generally an empirical exercise. The difference is significant on paper. life insurance is generally not considered to be indemnity insurance. flood risk is insured by the federal government. an "indemnity" policy. or to be reinstated to the position that one was in. the premium cannot be so large that there is not a reasonable chance of a significant loss to the insurer. to the extent possible. but rarely material in practice.000 and wins. An "indemnity" policy will never pay claims until the insured has paid out of pocket to some third party. but not the substance. or the cost of the event so large. but rather "contingent" insurance (i. Capital constrains insurers' ability to sell earthquake insurance as well as wind insurance in hurricane zones. a claim arises on the occurrence of a specified event). prior to the happening of a specified event or peril.. If there is no such chance of loss. If the likelihood of an insured event is so high. There is hardly any point in paying such costs unless the protection offered has real value to a buyer. or are insured by a single insurer who syndicates the risk into the reinsurance market. that the resulting premium is large relative to the amount of protection offered. Limited risk of catastrophically large losses. it is not likely that the insurance will be purchased. for example.S. a "pay on behalf" or "on behalf of"] policy. Under an "indemnity" policy the homeowner Page 34 of 77 . Accordingly. while cost has more to do with the ability of a reasonable person in possession of a copy of the insurance policy and a proof of loss associated with a claim presented under that policy to make a reasonably definite and objective evaluation of the amount of the loss recoverable as a result of the claim. Insurable losses are ideally independent and non-catastrophic. insurers may prefer to limit their exposure to a loss from a single event to some small portion of their capital base. There are two elements that must be at least estimable. if not formally calculable: the probability of loss. and the attendant cost. and 2. There are generally two types of insurance contracts that seek to indemnify an insured: 1. even if on offer.losses. 12. meaning that the losses do not happen all at once and individual losses are not severe enough to bankrupt the insurer. 13. Calculable loss.e. Indemnification To "indemnify" means to make whole again. Affordable premium..

a "pay on behalf" policy. the coverage entitles the policyholder to make a claim against the insurer for the covered amount of loss as specified by the policy. etc. at a minimum. The fee paid by the insured to the insurer for assuming the risk is called the premium. Insurance premiums from many insureds are used to fund accounts reserved for later payment of claims — in theory for a relatively few claimants — and for overhead costs. Generally.particularly to prevent disaster losses such as hurricanes . When insured parties experience a loss for a specified peril. Page 35 of 77 . on the other it can help societies and individuals prepare for catastrophes and mitigate the effects of catastrophes on both households and societies. An insured is thus said to be "indemnified" against the loss covered in the policy. the beneficiaries). An entity seeking to transfer risk (an individual. and exclusions (events not covered). and preventive steps by the insurance company. Under the same situation.e. Insurance can influence the probability of losses through moral hazard. the particular loss event covered.000 to pay for the visitor's fall and then would be "indemnified" by the insurance carrier for the out of pocket costs (the $10. the insurance carrier would pay the claim and the insured (the homeowner in the above example) would not be out of pocket for anything. Insurance scholars have typically used moral hazard to refer to the increased loss due to unintentional carelessness and moral hazard to refer to increased risk due to intentional carelessness or indifference.] Insurers attempt to address carelessness through inspections. insurance fraud. the following elements: identification of participating parties (the insurer. While in theory insurers could encourage investment in loss reduction. an insurance contract includes. the insuring party. the insured. EffectsInsurance can have various effects on society through the way that it changes who bears the cost of losses and damage. So long as an insurer maintains adequate funds set aside for anticipated losses (called reserves). by means of a contract. the period of coverage.) becomes the 'insured' party once risk is assumed by an 'insurer'. and possible discounts for loss mitigation efforts. Most modern liability insurance is written on the basis of "pay on behalf" language.would have to come up with the $10. some commentators have argued that in practice insurers had historically not aggressively pursued loss control measures .because of concerns over rate reductions and legal battles. On one hand it can increase fraud. the premium. policy provisions requiring certain types of maintenance. the amount of coverage (i. the remaining margin is an insurer's profit. such as through building codes. However..000). since about 1996 insurers began to take a more active role in loss mitigation. the amount to be paid to the insured or beneficiary in the event of a loss). corporation. or association of any type. called an insurance policy.

At the most basic level. and comparing these prior losses to the premium collected in order to assess rate adequacy. A combined ratio of less than 100 percent indicates underwriting profitability. After producing rates. and expense loads are also used. Insurers make money in two ways: 1. However. A company with a combined ratio over 100% may nevertheless remain profitable due to investment earnings. which uses statistics and probability to approximate the rate of future claims based on a given risk. initial ratemaking involves looking at the frequency and severity of insured perils and the expected average payout resulting from these perils. more complex multivariate analyses through generalized linear modeling are sometimes used when multiple characteristics are involved and a univariate analysis could produce confounded results. Rating for different risk characteristics involves at the most basic level comparing the losses with "loss relativities" . The most complicated aspect of the insurance business is the actuarial science of ratemaking (price-setting) of policies. bring the loss data to present value. is the insurer's underwriting profit on that policy. the insurer will use discretion to reject or accept risks through the underwriting process. and to also offer a competitive price which consumers will accept. Insurance companies earn investment profits on "float". minus the amount paid out in claims. the process by which insurers select the risks to insure and decide how much in premiums to carge for accepting those risks. Float. or available reserve. Profit can be reduced to a simple equation: Profit = investment income . An insurer's underwriting performance is measured in its combined ratio which is the ratio of losses and expenses to earned premiums. Other statistical methods may be used in assessing the probability of future losses. the amount of premium collected and the investment gains thereon. Page 36 of 77 .incurred loss underwriting expenses. Upon termination of a given policy. Through underwriting. By the premiums they collect from insured parties. is the amount of money on hand at any given moment that an insurer has collected in insurance premiums but has not paid out in claims. Insurers start investing insurance premiums as soon as they are collected and continue to earn interest or other income on them until claims are paid out. while anything over 100 indicates an underwriting loss.Insurers' business model The business model is to collect more in premium and investment income than is paid out in losses. 2. Thereafter an insurance company will collect historical loss data.a policy with twice as money policies would therefore be charged twice as much.

the reasonable monetary value of the claim. For policies that are complicated. which covers the cost of a public adjuster in the case of a claim. The insurer may require that the claim be filed on its own proprietary forms. where claims may be complex. The adjuster undertakes an investigation of each claim. but this opinion is not universally held. Incoming claims are classified based on severity and are assigned to adjusters whose settlement authority varies with their knowledge and experience. or insurance. usually in close cooperation with the insured. The adjuster must obtain legal counsel for the insured (either inside "house" counsel or outside "panel" counsel). as the result of float. and authorizes payment.3 billion in the five years ending 2003.4 billion. This tendency to swing between profitable and unprofitable periods over time is commonly known as the underwriting. determines if coverage is available under the terms of the insurance contract. so a poor economy generally means high insurance premiums. called loss recovery insurance. the plaintiff. it is the actual "product" paid for. Page 37 of 77 . The policyholder may hire their own public adjuster to negotiate the settlement with the insurance company on their behalf. do not believe that it is forever possible to sustain a profit from float without an underwriting profit as well. or may accept claims on a standard industry form. Claims may be filed by insureds directly with the insurer or through brokers or agents. In the United States. and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by the judge. and if so. cycle ClaimsClaims and loss handling is the materialized utility of insurance. Naturally. But overall profit for the same period was $68. Some insurance industry insiders. most notably Hank Greenberg. Insurance company claims departments employ a large number of claims adjusters supported by a staff of records management and data entry clerks. the float method is difficult to carry out in an economically-depressed period. monitor litigation that may take years to complete. Cause insurers to shift away from investments and to toughen up their underwriting standards. the insured may take out a separate insurance policy add on.The Association of British Insurers (gathering 400 insurance companies and 94% of UK insurance services) has almost 20% of the investments in the London Stock Exchange. such as those produced by ACORD. who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a deep pocket. the underwriting loss of property and casualty insurance companies was $142. Adjusting liability insurance claims is particularly difficult because there is a third party involved.

who help customers achieve peace of mind across the length and breadth of the country. retail banking and other financial services to individuals. As part of this balancing act. The Jammu and Kashmir Bank. automobile and home insurance. Private Limited and other private investors.000 Financial Advisors. MetLife has more than 55. MetLife is one of the fastest growing life insurance companies in the country. Affiliated companies.. Disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation COMPANY PROFILE MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife. Here are few highlights in our 140 years of history: 1868 – Metropolitan Life Insurance Company is established Page 38 of 77 . with over 140 years of experience and relationships with more than 90 of the top one hundred FORTUNE 500® companies. insurers seek to balance the elements of customer satisfaction. M. In managing the claims handling function. Inc. The MetLife companies offer life insurance. MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife. annuities. reinsurance and retirement and savings products and services to corporations and other institutions. as well as group insurance. MetLife is one of the fastest growing life insurance companies in the country. the condition of average may come into play to limit the insurance company's exposure. Pallonji and Co. administrative handling expenses. It serves its customers by offering a range of innovative products to individuals and group customers at more than 700 locations through its bank partners and company-owned offices. outside of India. fraudulent insurance practices are a major business risk that must be managed and overcome. Private Limited and other private investors.. Inc.. Inc. through its affiliates. It serves its customers by offering a range of innovative products to individuals and group customers at more than 600 locations through its bank partners and company-owned offices. The Jammu and Kashmir Bank. MetLife. Inc.000 Financial Advisors. Asia Pacific and Europe.If a claims adjuster suspects underinsurance. and was incorporated as a joint venture between MetLife International Holdings. who help customers achieve peace of mind across the length and breadth of the country. Inc. M. include the number one life insurer in the United States (based on life insurance inforce). Pallonji and Co. reaches more than 70 million customers in the Americas. MetLife has more than 50. and claims overpayment leakages. and was incorporated as a joint venture between MetLife International Holdings.

transforms the corporate headquarters into an administrative relief and support center for Titanic survivors and their families. listed on the New York Stock Exchange 2001 – Enters the banking sector with establishment of MetLife Bank.Becomes the first insurer in North America to surpass $1 trillion of life insurance in force 1992 – Establishes the first Latin American operation 2000 – Becomes a publicly owned stock company with MetLife. are established in Korea and Taiwan. S. a Joint Venture between Mr.1912 – In partnership with American Red Cross.. In 1994.J George in 1987 as a Proprietorship for doing Broking business in Cochin Stock Exchange.C. and expanding its distribution capabilities worldwide.J George and the Kerala State Industrial Development Corporation Ltd.C. awarding grants and investing over $1 billion in publicly traded stocks. the company came up with an IPO and the shares were listed in various Stock Exchanges in India in 1995 Page 39 of 77 .S. PARTNERS OF METLIFE: Geojit Securities was founded by Mr.A. 2002 – Acquires Aseguradora Hidalgo. In the following year. strengthening our leadership in the U. becoming the largest life insurer in Mexico.S. 2005 – Acquires Traveler‘s Life & Annuity and substantially all of Citigroup‘s international insurance business. Responds to 9/11 by paying claims immediately. 1991 . the business was taken over by Geojit Securities Ltd. 1930 – Helps thousands of farmers buy back their foreclosed farms and restores them to productivity during Great Depression 1931 – Provides financing for the construction of the Empire State Building and Rockefeller Center 1974 – Auto and home insurance are added to our product offerings 1989 – First operations outside of the U. Inc.

Jammu and Kashmir Bank Limited was incorporated on 1st October. The Bank has a host of customer friendly deposit and advances products meeting the varied needs and preferences of its customers.000 offering auditing and taxation services initially. It was declared as "A" Class Bank by RBI in 1976.1. Jammu & Kashmir Bank was defined as a govt. Visa enabled Debit Card with wide acceptability across the globe. Mangalore–headquartered Karnataka Bank. a leading private sector Bank having a network of 433 branches across 19 States and 2 Union Territories. it forayed into the Registrar and Share Transfer activities and subsequently into financial services. a group of Hyderabad-based practicing Chartered Accountants started Karvy Consultants Limited with a capital of Rs. All the 433 branches of the Bank are under the umbrella of core banking solution. The Bank was the first in the country as a State owned bank. is more than 84 years old. the Bank received the status of scheduled bank. Mutual Fund products of reputed companies. The Bank has an ambitious business turnover target of Rs. Life and General Insurance services. In the year 1971. Later. 1939 at in Kashmir (India). In 1982. customer centric progressive bank with a national presence. The Bank offers a plethora of technology driven products like Internet Banking facility. 1938 and commenced its business from 4th July. Today the bank has more than 500 branches across the country and has recently become a billion Dollar Company. Company as per the provision of Indian companies' act 1956. 35000 crores for the year 2008-09 with a branch expansion plan to reach the tally of 460 branches and additional ATMs to take the total to 180 by end-March 2009. driven by the highest standards of corporate governance and guided by sound ethical values. All along. The Bank is a technology savvy.50. Karvy's strong work ethic and professional background leveraged with Information Technology enabled it to deliver quality to the individual Page 40 of 77 . According to the extended Central laws of the state. Demat services.

Established in 1921, Mini Muthoottu with an illustrious history of banking behind them today operates from 75 branches in Kerala and 5 in Bangalore. All business concerns of Mini Muthoottu function under the strict guidelines set by the Department of Company Law Affairs and Reserve Bank of India. They also have a certificate of compliance with the requirements regarding prudential norms from the Reserve Bank of India. Mini Muthoottu, under the able leadership of its Chairman, Mr. Roy M Mathew, offers both the resources and capabilities like any national player coupled with individualized attention to its customers.

OBJECTIVES
The main of the present study of is accomplish the following objective.       Proper understanding and analysis of life insurance industry To know about brand awareness of MetLife India Insurance and customer‘s Derived opinion on that research. Conduct market survey on a sample selected from the entire population and According the market survey come know about how much potential of Insurance market in our city.

 And base on analysis of the result thus obtained make a report on that research.  Training aims at recruiting maximum number of Life Advisors and to Sell the maximum policies for the company and bring the business for the company ever is going at the particular point of time.  Along with it I will be gaining the thorough knowledge of insurance sector. This will give me in more confidence in marketing products given to me.  As the Kotak Life Insurance well reputed company in India it‘s great chance for me to observed different products launch by other competitor companies like ICICI prudential, Bajaj alliance ,LIC, Max New York life etc. In all, it is to understand the overall working of the Life insurance sector.  The objective behind the project is as follows:  To find the right candidate.  To about their family background, occupation, social relation, Qualification, Age.  Finalize candidates for the IRDA train
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Mission
―At MetLife India Insurance, we aim to help customers take important financial decisions at every stage in life by offering them a wide range of innovative life insurance products, to make them financially independent.‖

Vision & values
MetLife India Insurance has a deep rooted commitment to improve the quality of life of its customers, employees and stakeholders. We aim at improving the long term value in our mutual trust and benefits to serve the Indian customer. At MetLife India insurance the customers always come first.

Corporate Social Responsibility:
MetLife has always been committed to making a positive difference in the lives of the individuals and communities. Today, that commitment drives volunteer work and philanthropy across the globe. Working with non-profit organizations, MetLife supports programs that provide young people with the skills they need to succeed in life and create opportunities for people of all ages. MetLife‘s core values are personal responsibility, people count, partnership, integrity and honesty, innovation and financial strength. These values also shape the responsibility to the communities where the organization conducts its business.

PNB to enter strategic partnership with MetLife India29-Jul-11,
Punjab National Bank (PNB) and MetLife India, an affiliate of MetLife Inc., announced today that PNB will be inducted as a joint venture partner in the company. The Board of PNB, in its meeting held on 28th July, accepted the offer made by MetLife India for acquiring 30% stake in the company. The transaction is subject to approvals from IRDA, RBI and other regulatory bodies. PNB started the process in December last year when it invited expression of interest from insurance companies across the world. The Bank received responses from 26 Indian and international companies proposing different models. After evaluation of the various models, the Bank opted to participate in a brownfield venture by acquiring stake in an existing Indian life insurance company. Accordingly, RFP was issued to 10 Indian insurance companies who had proposed this model. Based on the technical evaluations, the Bank had shortlisted 3 life insurance companies. After evaluation of the financial bids of the three shortlisted companies, the Bank accepted the offer of MetLife India. MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife, Inc. and was incorporated as a joint venture between MetLife International Holdings, Inc., The Jammu and Kashmir Bank, M. Pallonji and Co. Private
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Limited and other private investors. MetLife is one of the fastest growing life insurance companies in the country. It serves its customers by offering a range of innovative products to individuals and group customers at more than 600 locations through its bank partners and company-owned offices. MetLife has more than 30,000 Financial Advisors, who help customers achieve peace of mind across the length and breadth of the country. PNB is the largest nationalized bank having a branch network of 5,290 branches and a customer base of over 60 million. The partnership with MetLife will provide PNB, insurance expertise and bancassurance capabilities that will be an asset to the bank as it pursues its growth strategy in India and seeks to expand its leadership in the Indian financial services market. This will further strengthen the company‘s position as a leader in the rapidly expanding bank distribution channel. Following the closing of the transaction, the company will rebrand itself as PNB MetLife to leverage the strengths of the two brands in the Indian market. On this occasion, Mr. K. R. Kamath, Chairman and Managing Director of the Bank informed that "We are happy that the process which has set a benchmark in the industry has helped us to find the best insurance partner for the Bank in MetLife. With 60% branches in the rural and semi – urban areas, PNB is uniquely positioned to take insurance to the deep pockets of India. This partnership has the potential to drive the company into the top tier of Indian life insurers and more than double its market share." Mr. Kamath also acknowledged the role of Boston Consulting Group for running the process which has been well acknowledged by the industry. William J. Toppeta, President International of MetLife expressed his pleasure at the tie up "Given its global significance, India is a strategic focus market for MetLife. We believe that the addition of an outstanding financial institution like PNB as a shareholder and partner will greatly enhance MetLife India''s ability to move into the top tier of life companies here. We value PNB and our current shareholders for their integrity, market knowledge, distribution power and financial strength. We look forward to a long and productive partnership for the mutual benefit of Indian consumers and our respective shareholders".

India) registers Rs 35.35 crore net profit for FY11
MetLife India Insurance Company Limited (MetLife) today announced that the company has posted a net profit of Rs 35.35 crore for the financial year ended March 31, 2011, for the first time since it has launched operations in the country. MetLife India posted a loss of Rs 274.82 crore at the net level in the previous financial year ended March 31, 2010. Improved operational efficiency coupled with planned sales helped the company register a profit. Further, persistency and robust risk management lead to reduced claims and dynamic product mix with a strong focus on traditional products.―I am glad that we have achieved a break-even an year ahead of our plan. This is a testimony to
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it will continue to restrain profits. Inc.69 from 1. As on March 31. Operating expenses declined 17..99 crore for the year ended March 31. reaches more than 70 million customers in the Americas.13 crore for the financial year ended March 31. However. traditional and group products. new business premium declined by 33. MetLife India‘s solvency ratio improved to 1. compared with rest of private players (Life) at less than 10%. and was incorporated as a joint venture between MetLife International Holdings.000 Financial Advisors. Further.65. As the company continue to achieve its planned sales along with the initiatives mentioned above. Inc. Post the new regulation that has come into effect from September 1.950. MetLife India has a well balanced portfolio of unit linked. Sales in the entire industry have been lower in September and October and growth seems to be flat over the previous year. through its affiliates. we have been rated as the no.84 crore compared to Rs 681. Pallonji and Co. MetLife India Insurance Company Limited (MetLife) is an affiliate of MetLife. who help customers achieve peace of mind across the length and breadth of the country.1 competitor by the industry players. Private Limited and other private investors. Rajesh RelanManaging Director & CEO. MetLife (India) while commenting on the performance. 2010. while delivering growth. MetLife. include the Page 44 of 77 . though the company has emerged as one of the highest mix of traditional products. 2011.16 crore in the corresponding financial year.49 per cent owing to the market conditions. and a balanced product mix will continue to help in that effort. M. 2011 compared to Rs 2..the promise we made to our shareholders 5 years back to make the company profitable. Inc. Renewal income has witnessed a 22% jump and grew to Rs 1801.63 crore in the previous financial year. The Jammu and Kashmir Bank.627. We have been able to balance our growth with profitability despite the uncertainty in the sector and this can be attributed to our healthy product mix and operational efficiency initiatives. MetLife is one of the fastest growing life insurance companies in the country.46 crore compared to Rs 5. It serves its customers by offering a range of innovative products to individuals and group customers at more than 700 locations through its bank partners and companyowned offices. the real trends are emerging gradually. which now comprise close to 50% of its product portfolio.615. 2010. The company registered flat total revenue at Rs 2. Affiliated companies.95 crore from 1474. ―We are in discussion with leading banks and other financial institutions to expand our distribution. In our employee benefits business. asset under management stood at Rs 7.63 Mr Relan also added. operating expenses as a percentage of gross premium has declined to 22% from 27% in the previous financial year. We will continue to maintain the growth momentum and endeavour to grow faster than the market to increase the size of our profits‖. MetLife has more than 55. MetLife‘s strategy of focusing on traditional plans has helped it deliver better margins. Asia Pacific and Europe. while we continue to improve the productivity and efficiency of our agency business.‖ said Mr.32 per cent to Rs 563. This provides us access to various customer segments having diverse needs and risk profiles and continues to give an edge for both growth and profitability.851. outside of India.

and Passion.number one life insurer in the United States (based on life insurance in force). as well as group insurance. MANAGEMENT: We at MetLife India Insurance Company Limited work as a team and have a flat management structure. Ownership. National saving certificate. and have become the keystones of our success. They are not aware of the modern Unit Linked Insurance Plans which are offered by most of the Private sector players. Customer First. These private companies in order to beat the competition and to Page 45 of 77 . These values shine forth in all we do. Our top management has many years of experience which has helped guide the company into a position of leadership. Nowadays most of the modern Unit Linked Insurance Plans gives returns which are many times more than that of bank Fixed deposits. with over 140 years of experience and relationships with more than 90 of the top one hundred FORTUNE 500® companies. Post office deposits and Public provident fund. They are still under the perception that if they take Insurance they will get only 5-6% returns which is not true nowadays. annuities. LIMITATIONS Insurance does not give good returns – Still today people think that Insurance does not give good returns. Every member of the Metlife team is committed to 5 core values: Integrity. reinsurance and retirement and savings products and services to corporations and other institutions. The MetLife companies offer life insurance. After the privatization of the insurance sector many private giants have entered the insurance sector. Lack of awareness about the earning opportunity in the Insurance sector – People still today are not aware about the earning opportunity that the Insurance sector gives. Boundary less. automobile and home insurance. retail banking and other financial services to individuals.

tied agency has emerged as a robust. Metlife was a pioneer in offering life insurance solutions through banks and alliances.increase their Insurance Advisors to increase their reach to the customers are giving very high commission rates but people are not aware of that. The selection criteria for advisor are: Page 46 of 77 . The strength of tied agency lies in an aggressive strategy of expanding and procuring quality business. Increased competition – Today the competition in the Insurance sector has became very stiff. predictable and sustainable. B & A has emerged as a vital component of the company‘s sales and distribution strategy. Within a short span of two years. SALES DISTRIBUTION Tied Agency is the largest distribution channel of Metlife. With focus on sales & people development. Today each and every company is trying to increase their Insurance Advisors so that they can increase their reach in the market. The business philosophy at B&A is to leverage distribution synergies with our partners and add value to its customers as well as the partners. comprising a large advisor force that targets various customer segments. COMPANY STRATEGY: Now company applies the project ―turning point‖ and in this project to decide the selection criteria for ―life advisor‖ and life advisor is the basic requirement for sale the policy. This situation has created a scenario in which to recruit Life insurance Advisors and to sell life Insurance Policy has became very difficult. Currently there are 18 Life Insurance companies working in India including the LIC (life insurance Corporation of India). and with nearly a large number of partners. Flexibility. contributing to approximately one third of company‘s total business. adaptation and experimenting with new ideas are the hallmarks of this channel.

Minimum graduate Either 2 years experience or post graduate refresher. PRODUCTS: Child Plan    Met Bhavishya Met Junior Endowment Met Junior Moneyback Retirement   Met Pension-Par Saving     Met Sukh Met Suvidha Met Saral Met 100 Protection   Met Suraksha Met Suraksha TROP Rural    Met Vishwas Met Suvidha Rural Met Grameen Ashray Page 47 of 77 . Agent age > 30 for male LA. and >25 for female.  Agent income 5 lakhs     Agent stay in city belong > 5 years Family back ground strong.

Consumers are increasingly more aware and are actively managing their financial affairs. and flexibility. In view of this. "Every family in every village in the country should feel safe and secure". People are increasingly looking not just at products.Investment  Met Smart Platinum  Met Smart One  Met Easy Super Health      Met Health Care Met Health Cash Monthly Income    Met Monthly Income Plan Met Monthly Income Plan 15 Pay Met Monthly Income Plan 7 Pay MAJOR PLAYER OF INSURANCE IN INDIA The Life Insurance Corporation of India (LIC) is the largest life insurance company in India EFFECTIVE MARKETING STRATEGIES FOR INSURANCE PRODUCTS Now the Indian consumer is knowledgeable and sensitive. but at integrated financial solutions that can offer stability of returns along with total protection. the insurance managers need to understand more about the details that go into the introduction of insurance products to make it attractive in this competitive market. This vision alone will help to bring the new ideas to the insurance manager. creativity. Page 48 of 77 . commitment. So now days an insurance manager requires leadership.

insurance companies are being forced to adopt a strictly professional approach in marketing.  Segmentation. marketing and human resource polices of the corporations influence the unit mangers to make decisions.  The importance of relationship. Insurance corporations formulate and revise these policies from time to time to ensure that the performance of the managers is best for the organization. The growth of insurance sector is governed largely by factors external to it. Some of the important marketing elements are Marketing mix.  Branding. Performance of insurance company depends on the effectiveness of such policies.  Effective pricing.  Insuring service quality.  Growth in population. Page 49 of 77 .  Positioning.  Value addition. The insurance companies face the challenge of changing the uninspiring public image of the industry.Financial. In the competitive market.  Customer satisfaction research. The following factors influence the market and demand of product Government policies.

An insurance product can be classified into three phases: Core product: In insurance industry the core product is the policy that provides protection to the customers.  Income wise distribution of the population. Different companies adopt different approaches in their marketing strategies. and convenient and quick claim handling. One approach is focus upon product quality which can give confidence in the mind of customers that they are offered by best featured products.  Growth scenario in the world. risk management advice. easy payment plans. which involve a heavy investment in developing relationships with policyholders. such as- Page 50 of 77 . Changing age profile.  Level of insurance awareness. Then insurance companies provide some tangible attributes in their product to differentiate from competitors. And other approach is focusing on customer‘s needs.  The economic climate of the country.  Social and political features of the country.  The aversion to risk. Third approach is market segmentation under which the population can be divided into several homogeneous products and groups.  The pricing of the policies. the effort should be tie clients to the company by customized combination of coverage. Under this approach customer can expect a range of products and service offered to him. Expected product: Because of competition customers start to expect more from an insurance product.

Success of an insurance company depends on four important functions:  Identification of markets: Identification of markets means need to understand the trends in culture and businesses constantly. Insurance companies can take this job on their own or assign it to an external agency.  Customer complaint management. There are marketing strategies more for survival than growth. through conducting research and analysis. because the opening up of the sector has not brought in only foreign players. Page 51 of 77 . but also professional techniques and technologies.   Brand Some additional features in existing product By providing instruction manual with the policy Augmented product: An insurance company can provide different types of services to differentiate their products Post sales services. Utmost care is being taken to maximize customer satisfaction. The present scene in India is such that everyone is trying to put in the best efforts.  Payment option convenient to customers. But the most important gift of privatization is the introduction of customer-oriented services. Relying on an external agency can be risky due to the questionable loyalty of the agents.  Branches in different places for customers. The entry of private players and their foreign partners has given domestic players a tough time.

Page 52 of 77 .  Penetration into and exploitation of markets: Market penetration or exploitation of a company can be identified with the growth in number of policies in each type of insurance.  Estimating potential for specific products within local markets.  Measuring agency performance relative to market potential. Well trained.  Optimizing your agency network against market potential. experienced and expert hands are needed for the operations. increase in number of branches and divisions etc. To find best prospects:  Allocating marketing strategies against market potential. company‘s market share. growth rate in earnings or turnover.Useful to know future buying preferences.  Identifying high opportunity areas. learning about products and purchase channels. The quality of assessing the risk and estimation of losses has the largest claim on the performance of an insurance company. Attributes to develop marketing strategies:  Channel data: . Assessment of risks (of the insured and the insurance corporation) and estimation of losses: Efficiency of actuaries and assessors of the insurance policies in fixing premiums and settling claims is foremost an important area for achieving overall efficiency in operations. and materials at each level of the organization provide measures of efficiency of a unit as well as the organization. machines.  Control over investment and operating costs: Control over resources such as men. Efforts of the company as a whole and that of the divisions and branches are assessed to measure the effectiveness.

People are increasingly looking not just at products. "Every family in every village Page 53 of 77 .  Learn how to convert a new lead into sales.  Learn how to act when you meet a client for the first time. Consumers are increasingly more aware and are actively managing their financial affairs. number of annuities owned.  Learn how to get and set more appointments. but at integrated financial solutions that can offer stability of returns along with total protection.  Consumption data: .  Learn how the order in which you explain the types of policies can double your inc  MAJOR PLAYER OF INSURANCE IN INDIA The Life Insurance Corporation of India (LIC) is the largest life insurance company in India a EFFECTIVE MARKETING STRATEGIES FOR INSURANCE PRODUCTS Now the Indian consumer is knowledgeable and sensitive.  Learn how to find a proper perspective and how to turn off all the signals that cause people not to buy from you.Useful to evaluate annual premiums. So now a day an insurance manager requires leadership. commitment. Effective Strategies for Insurance Agents:  Learn how to construct a mental image for success. In view of this. and with which company the current policy is held. Consumer attitudes. the insurance managers need to understand more about the details that go into the introduction of insurance products to make it attractive in this competitive market. creativity and flexibility. value of annuities.

Value addition. Changing age profile. Performance of insurance company depends on the effectiveness of such policies. Some of the important marketing elements are         Marketing mix. The growth of insurance sector is governed largely by factors external to it. Segmentation. The insurance companies face the challenge of changing the uninspiring public image of the industry. Financial. In the competitive market. Branding. Positioning.in the country should feel safe and secure". Customer satisfaction research. Growth in population. Effective pricing. The following factors influence the market and demand of product   Government policies. Insurance corporations formulate and revise these policies from time to time to ensure that the performance of the managers is best for the organization. Page 54 of 77 . The importance of relationship. Insuring service quality. insurance companies are being forced to adopt a strictly professional approach in marketing. marketing and human resource polices of the corporations influence the unit mangers to make decisions. This vision alone will help to bring the new ideas to the insurance manager.

such as Brand  Some additional features in existing product  By providing instruction manual with the policy Page 55 of 77 . Expected product: Because of competition customers start to expect more from an insurance product. Under this approach customer can expect a range of products and service offered to him. easy payment plans. Different companies adopt different approaches in their marketing strategies. risk management advice. The economic climate of the country. And other approach is focusing on customer‘s needs. An insurance product can be classified into three phases: Core product: In insurance industry the core product is the policy that provides protection to the customers. Social and political features of the country. and convenient and quick claim handling. Growth scenario in the world.       Income wise distribution of the population. Level of insurance awareness. Then insurance companies provide some tangible attributes in their product to differentiate from competitors. which involve a heavy investment in developing relationships with policyholders. The aversion to risk. Third approach is market segmentation under which the population can be divided into several homogeneous products and groups. One approach is focus upon product quality which can give confidence in the mind of customers that they are offered by best featured products. The pricing of the policies. the effort should be tie clients to the company by customized combination of coverage.

Utmost care is being taken to maximize customer satisfaction. Success of an insurance company depends on four important functions:  Identification of markets: Identification of markets means need to understand the trends in culture and businesses constantly. Insurance companies can take this job on their own or assign it to an external agency. The entry of private players and their foreign partners has given domestic players a tough time. through conducting research and analysis. But the most important gift of privatization is the introduction of customer-oriented services. There are marketing strategies more for survival than growth. but also professional techniques and technologies.  Customer complaint management. The present scene in India is such that everyone is trying to put in the best efforts.  Branches in different places for customers. Relying on an external agency can be risky due to the questionable loyalty of the agents.  Payment option convenient to customers.  Assessment of risks (of the insured and the insurance corporation) and estimation of losses: Efficiency of actuaries and assessors of the insurance policies in fixing premiums and settling claims is foremost an important area for achieving Page 56 of 77 . because the opening up of the sector has not brought in only foreign players.Augmented product: An insurance company can provide different types of services to differentiate their products Post sales services.

company‘s market share. experienced and expert hands are needed for the operations.overall efficiency in operations. growth rate in earnings or turnover. machines. and materials at each level of the organization provides measures of efficiency of a unit as well as the organization.  Identifying high opportunity areas. Attributes to develop marketing strategies:  Channel data: . Investment control and expense control are dealt separately and the effectiveness of management‘s‘ decisions at various levels is to be assessed separately.  Optimizing your agency network against market potential. increase in number of branches and divisions etc.  Penetration into and exploitation of markets: Market penetration or exploitation of a company can be identified with the growth in number of policies in each type of insurance.  Measuring agency performance relative to market potential.  Estimating potential for specific products within local markets. Page 57 of 77 .  Control over investment and operating costs: Control over resources such as men.Useful to know future buying preferences.  Consumer attitudes. The quality of assessing the risk and estimation of losses has the largest claim on the performance of an insurance company. Efforts of the company as a whole and that of the divisions and branches are assessed to measure the effectiveness. learning about products and purchase channels. Well trained. To find best prospects:  Allocating marketing strategies against market potential.

 Learn how to get and set more appointments. number of annuities owned. and with which company the current policy is held. the data will reflect:- Page 58 of 77 . value of annuities. Learn how the order in which you explain the types of policies can double If we talk the growth of Insurance industry’s private players in recent years. Consumption data: .Useful to evaluate annual premiums. Effective Strategies for Insurance Agents:  Learn how to construct a mental image for success.  Learn how to convert a new lead into sales.  Learn how to act when you meet a client for the first time.  Learn how to find a proper perspective and how to turn off all the signals that cause people not to buy from you.

Structure of MetLife India Insurance Managing Director & Country Manage: Rajesh Relan Appointed Actuary: MSVS Phanesh Director.PNB Partnerships: Gaurav Sharma Page 59 of 77 . S. Products & Business Development: Balachander Sekhar Director .Legal & Risk and Company Secretary: KR Anil Kumar Director – Compliance & Internal Control: P.Marketing.Agency: Sameer Bansal Chief Financial Officer: Joydeep Mukherji Director . Sankaran Chief Operating Officer: KS Raghavan Director .

IT’S HIERARCHY IN METLIFE INDIA INSURANC: MANAGING DIRECTOR CEO SALES HEAD MARKETING HEAD HR & ADMIN. SALES MANAGER OPERATIONS FINANCIAL ADVISOR Page 60 of 77 . APPOINTED ACTUARY TRAINING HEAD CIO HIERARCHY OF METLIFE INSURANCE LIMITED (LUCKNOW BRANCH) REGIONAL MANAGER AREA MANAGER BRANCH OPERATIONS INCHARGE SALES MANAGER +OPERATION EXECUTIVE ASST.

In view of the major Consideration. Research always starts with a question or a problem. Its purpose is to find answers to questions through the Application of the scientific method.RESEARCH METHODOLOGY: INTRODUCTION: Research is an art of scientific investigation through search for new facts in Any branch of knowledge. We may also say that marketing research is of both types Problem solving And problem oriented. but is applied to All the phases and aspects. Page 61 of 77 . it Does not qualify as basic research. it tackles problems. Which seem to have immediate commercial potential. Marketing research is as systematic and objectives study of the problems Pertaining to the marketing of the goods and services. marketing research should be regarded as applied research. It is a moment from known to unknown. It is a systematic and intensive study directed towards a more Complete knowledge of the subject studied. As marketing does not address itself to basic or fundamental question. It may be emphasized That it is not restricted to any particular area of marketing. On the contrary.

this needed to collect for the first Time. the primary data. RESEARCH LIMITATIONS The research is confined to certain parts of Delhi and does not necessarily show a pattern applicable to all of country. which is the most popular and effective technique for Correct data collection. The survey was completed with the use of Questionnaires. The environmental changes are vital to be considered in order to assimilate the findings. analysis on one day or in one segment can change very quickly. (4) To know the preference towards the public sector and private sector banks. (2) To compare the level of perception and expectation of the services offered by the banks. (3) To know which service quality dimension the bank is performing well and in which dimension it needs improvement. Questionnaire for consumer: Page 62 of 77 . This type of information gathered through Survey technique. Data Collection Method For given project. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. In a rapidly changing industry.Research Objectives: (1) To find out the level of expectation and the level of perception of the customers from the services offered by the banks. were much significant.

a) b) c) d) Govt.QUESTIONNAIRE Q 1) Do you know about METLIFE INSURANCE POLICY? AnsYes No Q2) Do you have any life insurance policy? AnsYes No Q3) which company‘s life insurance policy do you have? Ans. undertaken Oldest insurance company Minimum premium Other facilities Q5) Do you know anything about METLIFE INDIA INSURANCE? Ans.YES NO Q6) which policy do you have in METLIFE INDIA INSURANCE? Ans.a) PROTECTION PLAN b) ULIP PLAN Page 63 of 77 .a) b) c) d) LIC METLIFE INDIA INSURANCE ICICI LIFE PRUDENTIAL OTHERS Q4) Why you have chosen LIC not others? Ans.

hence a sample was Page 64 of 77 .c) d) MONEY BACK PLAN OTHERS Q7) why you have chosen ULIP plan? Ans. In the project the market Research. which was ask to be studied was Lucknow Market but as it was possible To approach all the respondent s customer of the city.a) b) c) SHORT TERM PLAN TAX SAVING MAXIMUMRETURN Q8) In future which plan will you prefer except ULIP? Ans-a) Met Sukh b) c) MONEY BACK PLAN Met Suvidha Q9) Would you like to prefer METLIFE INDIA INSURANCE in future? AnsYES NO Sampling Sample is the small group taken under consideration from the total group. This small group represents the total group.

In it through the help of questionnaires we conducted the research and these are as below:- Statement 1:.Selected which represents the whole city.Do you know about MetLife India Insurance Company? YES___65% NO___35% Chart Title 70% 60% 50% 40% 30% 20% 10% 0% YES NO INTERPRETATION. Page 65 of 77 . in which we found that 65% (195 respondents) know about METLIFE INDIA INSURANCE COMPANY LIMITED and 35% ( 105 respondents) didn‘t know about ITC COMPANY LIMITED. The areas selected for the sample are present further in the appendix. Sample size of customer 300350 approx.We did survey on 300 people approx. was taken from MetLife India Insurance customer data basic Data analysis of consumer behavior: Data Analysis and Interpretation:.

85% NO.15% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% YES NO INTERPRETATION. Page 66 of 77 .Statement 2:.We found that 85% (165 respondents) of people have a life insurance policy and 15% (29 respondents) of people don‘t have any life insurance policy.Do you have any life insurance policy? YES.

Statement 3:. Page 67 of 77 .Which company’s life insurance policy do you have? 70% 60% 50% 40% 30% 20% 10% 0% LIC METLIFE ICICI PRUDENTIAL OTHERS INTERPRETATION.We found that only 10% people of the LI holder hold MetLife India Insurance plans.

3 0.1 0 government undertaken oldest insurance company minimum premium other facilities INTERPRETATION.4 0.5 0.why you chosen LIC not others? 0. Page 68 of 77 .6 0.We found that most of the people prefer the govt. undertaken Company.7 0.Statement 4:.2 0.

Page 69 of 77 .Did you know any think about METLIFE INDIA INSURANCE? 70% 60% 50% 40% 30% 20% 10% 0% YES NO INTERPRETATION.Statement 5:.We found that 40% people know about METLIFE INDIA INSURANCE.

In this analysis we found that mostly people preferred MET SUVIDHA plans (45% respondents).Statement 6:.Which policy do you have in METLIFE INDIA INSURANCE? 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Met Suvidha ulip plans money back plan others INTERPRETATION. Page 70 of 77 .

Page 71 of 77 .Statement 7:.Why have you chosen MET SUVIDHA plan? 70% 60% 50% 40% 30% 20% 10% 0% short term plan tax saving maximum return INTERPRETATION.In this analysis we found that ULIP plan is short term plan that’s why most of the people preferred this plan.

15 0.Statement 8:.In future which plan will you prefer except MET SUVIDHA PLAN? 0.4 0.35 0.45 0.05 0 Met Sukh money back plan ULIP INTERPRETATION.1 0.We found that most of the people (50%) preferred ULIP PLAN. Page 72 of 77 .25 0.3 0.5 0.2 0.

In this project survey we found that 45% people were prefers METLIFE INDIA INSURANCE.Would you like to prefer METLIFE INDIA INSURANCE in future? 60% 50% 40% 30% 20% 10% 0% yes no INTERPRETATION. Page 73 of 77 .Statement9:.

RECOMMENDATIONS:  Networking is needed to be made broad as the number of branches with MetLife India Insurance is only 75 and only14 states are touched by the company so. there is a huge untapped market available for MetLife. through advertisement and through walk-in interviews.  Making customers aware about their status of policy. Page 74 of 77 .  Marketing in terms of the media via advertisements on Television to small commercials on FM.  MetLife India Insurance must build its reputation by focusing on service quality.  Providing claims in time. has to be made because there were respondents who haven‘t even heard about MetLife India Insurance.  Awareness camp for sub-urban area should be focused. Better service quality may be in the form:  Issuing policy in time.  Most of them are underinsured.  State and Central Government employees should be targeted because of reasons like:  They don‘t have Life Insurance cover other than that provided by their respective employers and LIC.  They have a stable source of income and social security.  MetLife India Insurance recruits its advisors mainly through personal reference. Better service quality. They must also recruit them though placement agencies on trial basis. hoardings and signage etc.

it has been found that people have great awareness about various companies but a lot more has to be done. especially by smaller companies like MetLife India Insurance to establish their market presence. radio and TV ad campaigns over the years is beginning to have its impact now.CONCLUSIONS:  During the data collected. Page 75 of 77 . People in general have been influenced by the marketing activities of insurance companies. Here lies the opportunity for a relatively new comer like MetLife India Insurance. A high penetration of print. The general satisfaction levels among public with regards to policy and agents still requires improvement.   People are beginning to look beyond LIC for their insurance needs and are willing to trust private players with their hard earned money. LIC has never been known for prompt service or customer oriented methods but MetLife India Insurance can build its reputation based on these factors.   Another important trend was in terms of people viewing insurance as a tax saving and investment instrument as much as protective one.

com  www.brandonline.com Page 76 of 77 .metlife.com  www.com  www.iciciprulife.BIBLIOGRAPHY REFERENCES:  www.in  www.hdfcinsurance.licindia.businessindiaonline.com  www.maxnewyorklife.com  www.IRDA.com  www.co.

ANNEXURE Page 77 of 77 .

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