SUMMER INTERNSHIP REPORT

Conducted at
AU Small Finance Bank

AN EXPERIENCE CUM RESEARCH-BASED PROJECT

Submitted to
Malaviya National Institute of Technology, Jaipur
In the partial fulfillment of the requirement for the award of
Degree of Master of Business Administration
Session 2022-24
Submitted by
VASHU NAYEK
2022PBM2021

DEPARTMENT OF MANAGEMENT STUDIES

MALAVIYA NATIONAL INSTITUTE OF TECHNOLOGY
JAIPUR
RAJASTHAN-302017
i
SL.N
O Name of Topic Page No.
1. Title Page i
2. Table of Contents ii-iii
3. Declaration iv
4. Summer Project Certificate v
5. Acknowledgment vi
6.. Executive summary vii
Aim and Establishment of the Company
 Establishment of AU small finance bank
 Mission & vision statement
 Position in the banking industry
 Types of financial products & services being offered.
 Pestle & SWOT analysis
7. Achievements of AU small finance bank 1-6
The organizational structure of AU small finance bank
 Respective departments and their functions
 Organizational chart
8.  Key personnel 6-11
9.  SWOT & PESTLE Analysis 12-20
AU small finance as a part of the Insurance Industry
 Insurance industry overview
 How the industry works
 History of AU small finance in insurance
10. Partners of AU small finance 21-37
Work experiences and responsibilities undertaken.
 Data Management, Validation, & analysis
 Data structure (CIF ID, Verticals, Partners, Policy number,
Products, Customer name, Insured name)
 Their importance
 Process Undertaken
11.  Norms of AU and IRDAI regarding data 38-41
12. Introduction of Project 42-43
 Problem Statement- Low insurance penetration in Indian
market
 Criteria of sample selection

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  Review of data collection methods
 Analysis method (Making visualizations of data and making
inferences form those visualizations about the data)
Presentation and analysis of data
 Questionnaire
 The data collected.
11.  Inferences made 44-45
Discussion of result and conclusion
 Conclusion of the research project
 Actions currently being undertaken to resolve the problem
discussed.
 Probable solutions or suggestions to resolve the problem.
13.  Feedback on the internship 46-54

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 Declaration

I, Vashu Nayek declare that this internship report titled "An Empirical Research on Insurance
Penetration in India" was prepared during my internship at Au Small Finance Bank. The
report is an original work and has not been submitted elsewhere for academic or professional
purposes. I affirm the accuracy and reliability of the information and data presented in this
report. I conducted thorough research, analyzed relevant literature, and utilized appropriate
methodologies to ensure the credibility of the findings.
I acknowledge and attribute all references, sources, and materials used in this report through
proper citations. The content, analysis, and conclusions presented are my own and do not
necessarily reflect the views of Au Small Finance Bank or any other associated organization
or individual. I express gratitude to Mr. Sukesh Sethi and Mr. Kailash Chand who provided
guidance and support during my internship. Their contributions have greatly enriched my
understanding of the subject.

I confirm compliance with ethical guidelines and professional standards throughout the
internship and report writing process. Confidentiality was maintained, and I upheld academic
and professional integrity.

Vashu Nayek,
Date:

iv
Internship Certificate

v
 ACKNOWLEDGEMENT

I feel overjoyed in all the humbleness and gratefulness to acknowledge my depth to all those
who helped me to put these ideas, well above the level of simplicity, into something concrete
and helped me in presenting this Internship report.

First, I would like to express my special thanks and gratitude to my mentor, Mr. Sukesh Sethi
(Manager Bancassurance Operations, AUSFB) sir as well as Mr. Kailash Sir (Deputy
Manager Bancassurance Operations, AUSFB) who gave me the golden opportunity to
understand and gain experience of Insurance industry, Customer Data Analytics, Insurance
Reconciliation in the Insurance Operations Department under their supervision and have the
wonderful insights of the same, which also helped me in enhancing my knowledge in the
field of project implementation. This project wouldn’t have been completed without their
constant support and guidance.

I would also like to thank my fellow interns who kept me on edge with this internship and
helped me in gathering different information and guiding me from time to time in making the
internship period a memorable one.

Any attempt, at any level, can’t be satisfactorily completed without the moral and emotional
support of my parents, friends, and faculty.

Thanking you,
Vashu Nayek

2022PBM5021

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 EXECUTIVE SUMMARY

The insurance sector is at a boom with a 14% annual growth rate over the last decade it has
immense growth opportunities and possibilities considering the Indian GDP has reached a
milestone of a whopping $3.75Trillion with only 4.2% insurance penetration which is
approximately 3% lower than the global average. That basically means that the Insurance
industry is under participating in India’s GDP by $112 billion approximately. In this project, I
have explored the same low Insurance penetration problem and what actions are being taken
or need to be taken to secure the financial, health, and life security of the 1.4 billion Indian
Nationals.
I learned about the insurance sector, what are the different types of insurance, how the
industry works, what are its core principles. I got to know about the integrities of insurance
and how the clauses are framed. Further, I got the opportunity to work with Insurance
customer data where I did data validation and the analysis with CIF ID as the pivot of that
analysis. I learned about Insurance reconciliation how it’s done the norms that need to be
followed regarding data and insurance reconciliation.
I feel grateful to my mentor Mr. Sukesh Sethi who provided me with the opportunity to be a
part of AU small finance bank during my internship period moreover he monitored my
growth there and made sure that I grow in all possible ways that were available at his
dispense.

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CHAPTER-1
INTRODUCTION OF BANK

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 INTRODUCTION OF BANK

1.1 About

Name of the organization AU Small Finance Bank

Address of the organization Mahal Road, Jagatpura, Regional office
Jaipur, Rajasthan 302022
Telephone no. 1800 1200 1200
Founder Sanjay Agarwal

COMPANY’S HISTORY
AU Small Finance Bank is redefining what a bank should be. They enable a convenient
banking experience and uncomplicated banking for customers. The dream started two
decades ago by Mr. Sanjay Agarwal, a merit holder Charted Accountant, and a first-
generation entrepreneur, along with his proficient team. Together, the dexterous team
embarked on a journey of excellence while enriching lives along the way. What started off as
a dream to be one of the fastest growing NBFCs, AU Financiers is now AU SMALL
FINANCE BANK.
Throughout its journey, it has focused on solutions, completely based on our customer’s
needs. This transformation, from being a finance company to a bank, which provides a place
for safekeeping, reflects many things that.
AU stands for:
Inclusiveness Progress for all Simplicity
Action and Urgency
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 These are not just words. In fact, they are the very pillars on which AU Small Finance Bank
would be serving its customers, the most important member of the AU family. As AU grows,
they continue to be farsighted, aligning the interest of our community at large. After the
announcement during Union Budget for the year 2014-15, RBI issued the guidelines of the
Small Finance Bank in November 2014.
72 entities from across segments applied 3 for the license while only 10 of these were
provided the license on 24th November 2014. AU Small Finance bagged the license for an
SFB (Small finance bank) after that AU Financers commenced its journey as an SFB on 19 th
April 2017. In the same year, it got the scheduled bank status on 1st November and became a
Fortune India 500 Company. AU Financiers was the only asset based NBFC to get this
coveted license. AU started in year 1996, as erstwhile Au Financiers (India) Limited.
For the last two decades, AU Bank has been relentlessly working in the underbanked and
unbanked areas and helped more than 2 million of customers and disbursed more than Rs.
3716 Crores in Q42023 pan India. Now AU Bank has a network of over 563 branches across
24 states in India.AU Small Finance Bank also got listed on National Stock Exchange and
Bombay Stock Exchange on 10Th July 2017 the same year it started as a small finance bank
and got the status of being a scheduled bank.
AU Bank offers a complete gamut of assets & liability products viz. Saving Accounts,
Current Accounts, Lockers, ATMs, Fixed Deposits, Recurring deposits, and all kinds of
asset-backed loan products such as Vehicle Finance, MSME loans, and SME loans. AU
SMALL FINANCE BANK proposes to reinvent and banking through Aadhar-linked
biometric account opening, minimal paperwork/forms, the concept of making every customer
an AUSFB customer and not a branch customer, and extended banking hours & tailormade
solutions. AU Small Finance Bank Limited (AU Bank) is a small finance bank with
operations across its 1000+ touch points including 563 bank branches 106 asset centers 30+
offices 300+ ATMs across 27 states in India and a team of 23486+ employees. AU Small
Finance Bank Limited was originally incorporated as L.N. Finco Gems Private Limited on 10
January 1996 as a private limited company under the Companies Act 1956 with the ROC
(Registrar of Companies).
In the year 2000, the company received a certificate of registration under section 45 IA of the
RBI Act from the RBI to carry on the business of non-banking financial institutions without
accepting public deposits.
Pursuant to the change of name of the company to Au Financiers (India) Private Limited to
reflect the diversified finance business a fresh certificate of incorporation was issued by the
ROC (Registrar of Companies) on May 24, 2005. In 2005 the company became a commercial
associate of HDFC Bank for carrying on the business of financing commercial vehicles.
In 2006 the company expanded its operations into Maharashtra. In 2008 the company
obtained an investment of Rs 20 crore from India Business Excellence Fund and India
Business Excellence Fund-1. In 2009 the company forayed into Gujarat.

3
In 2010 the company received a fresh certificate of registration under section 45 IA of the
RBI Act from the RBI pursuant to which RBI classified the company as NBFC- ND-AFC.
During the year the company obtained investments of Rs 35 crore Rs 6 crore and Rs 14 crore
from IFC IBE Fund and IBE Fund-I respectively. Also, during the year, the company attained
the status of 'Systemically Important Non-Deposit Taking Asset Finance Company’.
In 2011 AuHFL was established as a subsidiary of the company to provide housing finance
services. In 2012 the company obtained investments of Rs 150 crore and Rs 33.04 crore from
Redwood and IFC respectively. During the year the company received an upgrade of credit
rating from CRISIL BBB+ / Stable to CRISIL A / Stable for long-term bank facilities by
CRISIL Ratings. During the year Au Insurance Broking Services Private Limited was
established as a subsidiary of the company to provide insurance and broking services.
The company was converted into a public limited company by way of a special resolution
passed by Shareholders at the EGM held on January 10, 2013, and the name of the company
was changed to Au Financiers (India) Limited'. A fresh certificate of incorporation
consequent upon conversion to a public limited company was issued by the RoC on 11
January 2013. The company was granted the in-principal approval to establish a Small
Finance Bank (SFB) by the RBI pursuant to its letter dated 7 October 2015. During the year
2015, the company received an upgrade of credit rating to CARE A+ for long-term banking
facilities by CARE Ratings.
During the year 2016, the company received an upgrade in long-term rating of CRISIL A/
Watch Positive by CRISIL Ratings. Pursuant to RBI approval dated April 6, 2016, the
company divested its shareholding in AuHFL which was the erstwhile subsidiary company.
Pursuant to RBI approval dated May 18, 2016, the company divested its entire shareholding
in IML. Pursuant to RBI approval dated September 6, 2016, the company divested 29.53% of
the total shareholding of M Power Micro
Finance Private Limited. The company divested its entire shareholding in Au Insurance
Broking Services Private Limited (AuIBSPL) erstwhile associate company. The RBI granted
the final approval to the company to establish an SFB in its letter dated 20 December 2016.
The name of the company was changed to AU Small Finance Bank Limited, and a fresh
certificate of incorporation was issued by the RoC on 13 April 2017.
The company commenced operations as a Small Finance Bank in April 2017.AU Bank's IPO
received an overwhelming response in June 2017 with an oversubscription of about 54 times.
On 4 October 2017, AU Small Finance Bank announced that it entered into an agreement
with Aditya Birla Health Insurance Company (ABHICL) for Health Insurance Products as
Corporate Agent. On 28 October 2017, AU Small Finance Bank announced that it has signed
a Memorandum of Understanding (MOU) with the Small Industries Development Bank of
India (SIDBI) to provide an impetus to funding MSMEs. Under AU SIDBI Joint Financing
Program both financial institutes have decided to work together in the areas of joint financing
of projects relating to MSMEs in the manufacturing and service sectors.

4
They will adopt a common approach towards project identification appraisal monitoring
follow-up and client servicing. The appraisal of the proposal shall be done jointly by AU
Bank and SIDBI. Both financial institutes would earmark a corpus of Rs 100 crore for
lending under this MOU for FY 2018.
The corpus for the subsequent years would be decided after mutual consultation and seeing
the progress made during FY 2018. The 3-year-long agreement will focus on timely and
adequate credit availability to Medium Scale Enterprise (MSE) units and efforts will be made
for augmenting credit flow to MSE. AU Small Finance Bank received Scheduled
Commercial bank status from the Reserve Bank of India (RBI) in November 2017.
On 3 November 2017, AU Small Finance Bank announced that the Reserve Bank of India
has granted approval to SBI Mutual Fund to acquire a shareholding of up to 10% through its
various schemes in AU Small Finance Bank. On 28 November 2017, AU Small Finance
Bank announced that it has commenced offering mutual fund distribution for its customers.
The bank has partnered with 11 reputed mutual fund houses (AMC) for starting this product
segment.
On 19 December 2017, AU Small Finance Bank announced that it has entered into the
Business Correspondent Agreement with M/S Sahaj EVillage Limited for providing bank and
financial services using the Business Correspondent model. On 12 January 2018, AU Small
Finance Bank announced the launch of a home loan product for its customers. AU Small
Finance Bank opened 71 new unbanked rural banking outlets in March 2018. On 6 March
2018, AU Small Finance Bank announced that the bank has tied up with Aurionpro Solutions
to enhance its digital banking offering corporate internet banking and a cash management
platform for SME MSMEs and corporate customers. On 3 April 2018, AU Small Finance
Bank announced that it has entered into an agreement with Future Generali India Life
Insurance Company Limited (FGLI) to act as a corporate agent for the life insurance
business. This tie-up shall be mutually beneficial for the bank and FGLI in terms of business
market penetration and reach. The Board of Directors of AU Small Finance Bank at its
meeting held on 19 May 2018 approved the issuance of 43.30 lacks fully paid-up equity
shares of the bank and the issuance of 1.01 crore convertible warrants carrying an option to
subscribe to an equivalent number of equity shares on preferential basis to Camas
Investments Pvt Ltd. an indirect wholly owned subsidiary of Temasek Holdings (Private)
Limited at total subscription amount of Rs 1000 crore.
The entire consideration payable for the issuance of equity shares shall become payable on
or before the date of allotment of equity shares. An amount equivalent to at least 25% of the
subscription consideration payable towards convertible warrants shall become payable on or
before the date of allotment of the convertible warrants and the balance 75% of the
subscription consideration payable towards convertible warrants shall be paid at the time of
exercise of the convertible warrants by Camas Investments Pte. Ltd.
Under the preferential allotment, the issue price of equity shares is Rs 692.77 per share and
the issue price of the convertible warrant is Rs 692.77 per convertible warrant. Camas
Investments shall be entitled to exercise any or all the convertible warrants in one or multiple
5
tranches within 18 months from the date of allotment of convertible warrants. On 30 May
2018, AU Small Finance Bank announced that it has been issued a Certificate of Registration
under the Securities Exchange Board of India (Bankers to an issue) Regulations 1994 by the
Securities Exchange Board of India.

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1.2 BOARD OF DIRECTORS

Name Designation

Mr. Raj Vikash Sharma Part-time Chairman &

Independent
Director

Mr. Sanjay Agarwal MD & CEO

Mr. Uttam Tibrewal Executive Director

Ms. Kavita Venugopal Independent Director

Ms. Malini Thadani Independent Director

7
Professor M S Sriram Independent Director

Mr. Pushpinder Singh Independent Director

Mr. V.G. Kannan Independent Director

Mr. H.R. Khan Independent Director

Mr. Kamlesh Shivji Independent Director

Vikamsey

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1.3 AWARDS:

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10
1.4 VISION & MISSION

VISION

To be the world’s most trusted retail bank and

coveted employer that is admired as the epitome of financial inclusion and economic
success, where ordinary people do extraordinary things to transform society at large,
thereby guaranteeing Trust, Confidence, and Customer Delight.

MISSION

To build one of India’s largest retail franchises that is admired for:

 Making every customer feel supreme while being served.

 Aspiring that no Indian is deprived of banking.
 Bias for action, dynamism, detail orientation, and product-process innovation
 Globally respected standards of integrity, governance, and ethics
 Being an equal opportunity employer, providing a collaborative and rewarding platform to
all its employees

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Products:

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 1.5 SWOT ANALYSIS

Strengths of AU Bank

Strengths are the positive points of the organization that help it to grow its position in the market
and lead to the company’s success. Here are the strengths of AU Bank:
 Healthy Customer Base: In 2017, AU Bank had a total of 280,349 active loan accounts and has
been growing ever since. It has also listened to its customers’ financial needs and built strong
relationships with them through one-on-one contact.
 Broad Range of Portfolio: One biggest strength that AU Bank has is that it offers a wide range
of financial and consulting services to its customers ranging from investment banking, asset
management, private banking, and insurance, which give it an edge over other Small Finance
Banks.
 Talent Management: AU Bank has a highly skilled workforce. This is due to their excellent
training and learning programs. Human resources are an integral part of the success of AU Small
Finance Bank in the consumer financial services industry.
 Strong Brand Recognition: AU Bank’s products and services have been highly recognized in the
consumer financial services industry for the last 25+ years. This allowed the company to charge a
premium compared to its competitors in the consumer financial services industry.
 Government Support: In November 2017, the Reserve Bank of India added the bank to its list of
commercial banks, reducing the cost of short-term funding and improving the ability of banks to
serve, further enhancing the bank’s growth prospects.
 Limited Competitive Overlap: AU Bank has little geographical overlap with other small financial
banks, limiting competition among existing players.

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 WEAKNESS:
The weaknesses are the negative points on which the brand must improve upon. For AU Bank, the
following are its weaknesses:
 worth billions of dollars. AU Bank is mainly focused on the Indian market, which needs to
increase its reach outside the Indian market as well making it gain more customers.
 Not in Country’s Leading: Due to its majority of income coming from loans, retail, and personal
banking only, it somehow lags in presence in India and other continents compared to leading Indian
banks.
 Declining Market Share: This is due to the consumer financial services industry growing at a
faster rate than the company. In such a scenario, AU Bank needs to carefully analyze various trends
within the financial sector to understand what to do to drive future growth.
 Concentration Risk: AU Bank has significant exposure in the four major states that make up about
90% of its loan portfolio.
 High Cost to Replace Existing Professionals: Few employees are responsible for the knowledge
base of AU Bank, and their replacement will take up a lot of time and money for the company.
 Rising Interest Risk: As the company is primarily wholesale-funded, rising interest rates can
negatively impact borrowing costs and thus profitability.

OPPORTUNITY:
Opportunities are external elements that are in favor of the company and the firm can use it to its
advantage to grow. The opportunities of AU Bank are given below.
 Advancements in Technology in the Banking Sector: The banking industry has always
functioned based on technology. AU Bank is known for its best-in-class user-friendly digital
banking offerings. Thus, AU Bank should continue to adopt the latest technological
advances. To draw future generations, they should focus on putting out newer banking and
financial services using Digital marketing skills.
 Wait a minute. You might be thinking what are digital marketing skills? Well, digital
marketing skills include various subparts of digital marketing such as website building,
SEO, social media marketing, e-commerce, online reputation, and many more. These
courses can get you up to speed in as little as 5 days in a range of digital skills and
expertise.
 Growth Potential: AU Bank operates in under-penetrated sectors such as vehicle finance,
MSME, and small enterprise finances which offers it strong growth potential.
 Product Growth Potential: The bank is yet to launch several other major lending banking
products and hence has greater growth potential.
 Expanding the Customer Base in Upper Segments: As customers must move from
unorganized operators in the financial sector to licensed players, AU Small Finance Bank
can enter the entry-level market.

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 THREATS:
Threats are external elements that could be detrimental to the growth of the company. Threats can
be managed but not controlled. The threats of AU Bank are.
 Changing Demographics: The baby boomer generation has retired, and the new generation is
having a hard time replacing purchasing power. This may increase the profits of AU Bank in the
short term, but younger people are less loyal to brands and more open to experimentation, resulting
in lower profit margins in the long run.
 Shortage of Skilled Human Resources: Given the high turnover rate of employees and the
increasing reliance on innovative solutions, AU Bank may face challenges in this sector soon.
 Dynamic Competition: New technologies developed by competitors and the market can pose a
serious threat to the industry in the medium to long term. The competition is expected to intensify,
especially around liabilities, as the target profile of customers of small finance banks is like that of
the existing banks.
 Retention of Key Management Personnel: Developing and retaining key executives can be
difficult as multiple new banks, fintech companies, and existing banks are competing for the same
talent pool.
 Regulatory Requirements: After transforming into a small bank, AU Bank must meet several
regulatory requirements such as CRR, SLR, and higher priority sector lending, which may
negatively impact its operating performance during the initial three years of operation.

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1.6 PESTLE ANALYSIS

What is PESTEL Analysis and Why PESTEL Analysis is Important?

PESTEL Analysis is a strategic management tool that AU Small Finance Bank strategy makers can
use to make better decisions. PESTEL stands for – Political, Social, Economic, Technological,
Environmental, and Legal factors that impact the macro environment of the company that it
operates.

AU Small Finance Bank operates in a dynamic environment where it is influenced by – the

increasing regulatory framework for environmental factors, increasing environmental activism
among consumers, government decisions, consumer spending behavior, technological changes,
regulatory framework, collective social trends, and ever-evolving legal system.

POLITICAL FACTOR

What are the Political Factors in PESTEL Analysis?

Political factors are often related to the level of intervention and nature of intervention of the local
and national government in the business and economic environment. Government policies and
governance system play a huge role in the nature and objectives of the policies.

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Armed Conflict – There are no imminent threats to India from the disruption in the business
environment because of military policies, terrorist threats, and other political instability. AU Small
Finance Bank has experience in handling operations in difficult circumstances.

- Regulatory Practices – AU Small Finance Bank must manage diverse regulations in the various
markets it is present. Over the last few years, India and other emerging economies have changed
regulations regarding not only market entry but also how companies in Consumer Financial
Services can operate in the local market.

- Government of India has come under increasing global pressure to adhere to World Trade
Organization’s regulations on the Consumer Financial Services industry.

- Other stakeholders such as non-government organizations, protest & pressure groups, and
activist movements play critical roles in policymaking in India. AU Small Finance Bank should
closely collaborate with these organizations so that it can contribute better to the community goals
as well as corporate goals.

- Governance System – The present governance system in India has served its purpose for a long
time and I don’t think much will change in the process even though it may throw up leaders that can
lead to divergent policymaking from the historical norm. AU Small Finance Bank must keep a close
eye on the industry-wide government priorities to predict trends.

- Importance of local governments in India – Unlike in most other countries, local governments
play a critical role in policymaking and regulations in India. AU Small Finance Bank must closely
follow the states and territories it has a presence rather than devising nationwide policies in India.

ECONOMICAL FACTOR:

What are Economic Factors?

Economic factors include – interest rate, taxation rate, the economic performance of India,
consumer disposable income, exchange rate, inflation rate, labor market conditions, the stage of the
economy of India, etc.

Government intervention in the financial sector and in particular Consumer Financial Services
industry can impact the fortunes of the AU Small Finance Bank in India.

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- Economic Performance of India – I believe the economic performance of India soon 5-10 years
will remain stable given – government expenditure, stable demand because of disposable income,
and increasing investment into new industries.

- Skill level of workforce in Indian market – The skill level of human resources in India is
moderate to high in the financial sector. AU Small Finance Bank can leverage it to not only
improve services in India but also can leverage the skilled workforce to create global opportunities.

- Inflation rate – The easy liquidity in the market posts the great recession of 2018 and covid
thereafter has led to increasing inflation in the Indian economy.

- Increasing liberalization of the trade policy of India can help AU Small Finance Bank to invest
further into the regions which are so far off-limits to the firm.

- Efficiency of financial markets in India – AU Small Finance Bank can access vibrant financial
markets and easy availability of liquidity in the equity market of India to expand further globally.

SOCIAL FACTOR:

What are Social Factors?

Each society and culture have its own way of doing business. These social factors can not only help
companies like Au small finance bank to better understand the way of doing business but also in
understanding the customer preferences in the financial sector of India. Social factors include –
health & safety attitudes, traditions, gender roles, attitudes towards certain products and services,
acceptance of entrepreneurial spirit, culture, societal roles and norms, demographics, and leisure
interests.

Demographics – For the Financial products, AU Small Finance Bank has demographics on its side.
India is a young country and growing. AU Small Finance Bank can use this trend to cater to various
segments of the population.

- Power structure – There is an increasing trend of income inequality in India. This has altered the
power structure that has been persistent in society for over the last 6-7 decades.

- Gender roles – Gender roles are evolving in India. AU Small Finance Bank can test various
concepts to cater to and support these evolving gender roles in Indian society.

- Migration – The broader attitude towards migration is negative in India. This can impact AU
Small Finance Bank’s ability to bring international leaders and managers to manage operations in
the country.

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- Societal norms and hierarchy – the society of India is different from the home market of AU
Small Finance Bank. It should strive to build a local team that understands the societal norms and
attitudes better to serve the customers in India.

- Attitude towards health and safety – With increasing liberalization the attitude towards health
and safety are getting lax. AU Small Finance Bank needs to stay away from these attitudes as the
cost of failure is too high in India.

TECHNOLOGICAL FACTOR:

What are the Technological Factors in PESTEL Analysis?

Technology is fast disrupting various industries and Financial is no different. There are numerous
ways technological factors are impacting the AU Small Finance Bank & Consumer Financial
Services in India. Some of the technological factors are – supply chain disruption because of
technology, access to mobile phones driving empowerment, population access to technology, access
to greater information, rate of technology-driven change, innovation in product offerings,
innovation in customer services, etc.

Technology transfer and licensing issues for AU Small Finance Bank – In the Financial sector there
is no strong culture of technology transfer and companies often are reluctant to transfer or license
technologies for the fear of creating competitors out of collaborators.

- Developments and dissemination of mobile technology has transformed customer expectations

in the financial sector. AU Small Finance Bank must not only meet and manage these expectations
but also must innovate to stay ahead of the competition.

- Maturity of technology – The technology in the Consumer Financial Services sector is still not
reached maturity and most players are vying for new innovations that can enable them to garner
higher market share in India.

- Lowering the cost of production – The latest technology is fast lowering production and
servicing costs in the financial sector. AU Small Finance Bank must restructure its supply chain to
bring in more flexibility to meet both customer needs and cost structures.

- 5G and its potential – AU Small Finance Bank must keep a close eye on the development and
enhancement of user experience with increasing speed and access. This can completely transform
the customer user experience in the Consumer Financial Services industry.

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- Technological innovation is fast disrupting the supply chain as it is providing greater access to
information to not only supply chain partners but also to wider players in the financial industry.

ENVIROMENTAL FACTOR:

What are Environmental Factors in PESTEL Analysis?

Over the last decade sustainability and environmental factors are becoming critical for businesses.
Government and pressure groups are fast asking organizations to adhere to environmental
standards. Some of the environmental factors are – increasing focus on sustainability, safe disposal
of hazardous material, safe water treatment, laws regulating pollution, safe waste disposal,
insurance policies, limiting carbon footprints, climate change, etc.

Environmental Factors that Impact AU Small Finance Bank

-Waste management especially for units close to the urban cities has taken increasing importance
for players such as AU Small Finance Bank. India’s government has come up with strict norms for
waste management in urban areas.

- Renewable technology is also another interesting area for AU Small Finance Bank. It can
leverage the trends in this sector. India is providing subsidies to invest in the renewable sector.

- Customer activism – Greater awareness among customers has also put environmental factors at
the center of AU Small Finance Bank’s strategy. Customers expect AU Small Finance Bank to
adhere to not only legal standards but also to exceed them to become responsible stakeholders in the
community.

- Paris Climate Agreement has put real targets for the national government of India to adhere to.
This can result in greater scrutiny of environmental standards for AU Small Finance Bank in India.

- Recycling is fast emerging as a norm rather than a good thing to do in India economy. AU Small
Finance Bank must make plans to adhere to regulations and expectations in the financial sector.

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- Environmental norms are also altering the priorities of product innovation. In many cases,
products are designed based on environmental standards and expectations rather than catering to
traditional value propositions.

Legal Factors:
What are Legal Factors in PESTEL Analysis?

Legal plays an important role in the development of the Consumer Financial Services sector in any
economy. AU Small Finance Bank management must consider following legal factors before
entering international market – data protection laws, system of justice, discrimination laws,
intellectual property rights protection, time taken to deliver justice, biasedness toward home
players, copyrights law etc.

Legal Factors that Impact AU Small Finance Bank

- Business Laws – The business laws procedure that India follows. Are these norms consistent with
international institutions such as World Trading Organization, European Union etc.

- Data protection laws – Over the last decade data protection has emerged as critical part of not
only privacy issues but also intellectual property rights. AU Small Finance Bank must consider
whether India have a robust mechanism to protect against data breaches or not.

- Employment law in the India and how they are impacting the business model of the Consumer
Financial Services. Can these conditions be replicated or bettered in international market?

- Health and safety norms in the India and what AU Small Finance Bank needs to do to meet
those norms and what will be the cost of meeting those norms.

- Environment Laws and guides – The level of environmental laws in India and what AU Small
Finance Bank needs to do to meet those laws and regulations.

- Time takes for business cases in court – some countries even follow international norms but the
time for resolution often runs in years. AU Small Finance Bank must carefully consider the average
time of specific cases before entering an international market.

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 Insurance Industry

History of Insurance:
The history of insurance can be traced back to ancient times. In ancient Babylon, around 1750 BC,
the Code of Hammurabi included laws that regulated the repayment of loans and the liability of
shipping agents, factors, and charterers in case of loss or damage to cargo. These early laws
provided a form of insurance for merchants and helped spread the risks associated with trade.

In ancient Rome, burial societies were established to provide financial support to the families of
deceased members and to cover funeral expenses. The Roman jurist Ulpian also wrote about the
general average principle of marine insurance, which stated that if a seafarer had to throw the cargo
overboard to save the ship, the loss would be shared collectively by his colleagues.

During the Middle Ages, guilds and benevolent societies in Europe cared for the families of
deceased members and provided financial assistance in times of need. Friendly societies also
existed in England, where people donated money to a common fund that could be used for
emergencies.

Marine insurance in its modern form began to develop in Europe in the 14th century. Separate
insurance contracts were introduced in Genoa, Italy, in the 14th century, and insurance pools
backed by pledges of landed estates were also established. The first known insurance contract dates
to Genoa in 1347. These developments allowed insurance to be separated from other financial
transactions and created a more sophisticated insurance industry.

In the 17th century, insurance became more specialized and diverse. Various forms of insurance,
such as fire insurance, life insurance, and property insurance, emerged in London. Lloyds of
London, founded in the late 17th century, became a prominent insurance marketplace.

22
 Llyod’s coffee house was the first marine insurance company.

Insurance continued to evolve and expand in the modern era. Insurance companies were established
in different countries, and regulations were put in place to govern the industry. Insurance became an
important source of long-term finance for both the public and private sectors.

Overview of the sector:

Today, the insurance industry plays a crucial role in managing risks and providing financial
protection to individuals, businesses, and communities. It covers a wide range of risks, including
property damage, liability, health, and life. Insurance companies use actuarial science and statistical
analysis to assess risks and determine premiums. The industry continues to adapt to changing needs
and emerging risks in the modern world.

23
I. Introduction:
The Indian insurance sector has witnessed remarkable growth and is currently the 6th largest
insurance market globally. Over the last decade, it has shown an impressive annual growth rate of
14%. However, the non-life insurance segment experienced a comparatively lower growth rate of
5.8% in 2021.

II. Regulatory Framework:

The Insurance Regulatory and Development Authority of India (IRDAI) serves as the governing
body for the insurance sector in India. The sector's regulatory framework was established with the
enactment of the Insurance Act in 1938, providing guidelines for the functioning of insurance
companies and protecting the interests of policyholders.

III. Challenges and Initiatives:

Low Insurance Penetration:

India faces a significant challenge in terms of insurance penetration, with only 4.2% contribution to
the GDP, falling below the global average of 7%. This low penetration can be attributed to various
factors, including the lack of financial literacy and limited access to insurance services in rural
areas.
To address these challenges, the Indian government has undertaken several initiatives, such as:

Increasing the Foreign Direct Investment (FDI) limit in the insurance sector from 49% to 74% in
2021. This move aims to attract more capital, technology, and expertise into the sector, promoting
growth and innovation.
Infusing capital of 3000-5000 crores in state-run general insurance companies to enhance their
financial stability. This capital infusion helps protect these companies from insolvency and ensures
their ability to meet the regulatory solvency ratio of 1.5.
Reducing the minimum capital requirement for setting up an insurance firm from 100 crores to 20
crores. This step aims to encourage more players, especially smaller entities, to enter the insurance
market and foster competition.
Introducing the National Health Stack framework, a centralized health data system that enables
health insurers to improve underwriting, fraud detection, and claims processing. This framework
leverages technology to enhance efficiency and transparency in the health insurance sector.

24
Emphasizing the use of technology and enhancing consumer interaction to reduce costs, improve
operational efficiency, and support the overall development of the insurance ecosystem.
IV. Market Structure and Types of Insurance:
The Indian insurance market underwent a significant transformation in 2001 when the sector was
opened for private participation, breaking the monopoly of government-owned insurers such as Life
Insurance Corporation (LIC), United India Insurance, and Oriental Insurance. Currently, there are
57 insurance companies operating in India, including 25 life insurance companies, 33 non-life
insurance providers, and 7 standalone health insurance companies.

Types of Insurance:
Insurances are broadly classified into 3 classes which are represented by the diagram below-

Insurance

Life Health General

Insurance Insurance Insurance

Life Insurance:
Life insurance provides financial protection and benefits to policyholders and their beneficiaries in
the event of death, disability, or survival until maturity. It can be categorized into three main types:

25
 Life Insurance

Traditional
Unit Linked
Term Plans Endowment
Plans(ULIP)
Plans

a) Term Plans: Term insurance policies provide coverage for a specific term or period. If the
insured person passes away during the policy term, the nominee receives the sum assured.
However, if the insured survives the term, there is no maturity benefit.

b) Traditional Endowment Plans: These plans offer both insurance coverage and a savings
component. If the insured survives the policy term, they receive the maturity benefit. In the event of
the insured's death during the term, the nominee receives the sum assured.

c) Unit Linked Insurance Plans (ULIPs): ULIPs combine insurance coverage with investment
opportunities. A portion of the premium paid is allocated toward insurance coverage, while the
remaining amount is invested in various funds based on the policyholder's risk appetite. ULIPs have
a lock-in period, and the policyholder or nominee receives the maturity amount or death benefit,
respectively.

Health Insurance:
Health insurance provides coverage for medical expenses, hospitalization, and other healthcare-
related costs. In India, there are standalone health insurance companies as well as general insurance
companies offering health insurance plans. Some prominent health insurance providers in India
include Care Health Insurance Limited, Max Bupa Health Insurance, Aditya Birla Health Insurance
Company, Star Health and Allied Insurance, and Manipal Cigna Health Insurance Company.

General Insurance:
General insurance covers a wide range of non-life risks, including motor insurance, property
insurance, travel insurance, and liability insurance. It provides financial protection against
unforeseen events such as accidents, natural disasters, and theft. Further general insurances can be
of multiple types some of the most common ones are listed and discussed below:

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 General Insurance

Fire Insurance

Motor Insurance

Travel Insurance

Marine Insurance

House Insurance

Miscelenious Insurance

V. How the Insurance Industry Works:

The insurance industry operates on the principle of the law of large numbers, which means it pools
premiums from many policyholders to compensate the few who suffer a loss. Insurance companies
also invest in the collected premiums to generate returns for future use. Typically, a portion of the
premium (e.g., 50%) is allocated for compensation, a percentage (e.g., 20%) is allocated for
operational expenses, and the remaining amount (e.g., 30%) is invested.

Insurance companies themselves mitigate risks by getting insured through reinsurance

arrangements. In situations where a massive number of claims are filed simultaneously, insurance
companies can protect themselves by obtaining insurance coverage from entities like the General

27
Insurance Corporation of India (GICRE). This practice helps maintain the stability and financial
strength of insurance companies.

VI. The Seven Principles of Insurance:

Principle of Utmost Good Faith:

Both the insured and the insurer must act in good faith and provide clear and accurate information
regarding the terms and conditions of the insurance contract. Misrepresentation or withholding of
information can impact the validity of the contract.

Principle of Insurable Interest:

The insured must have a financial interest in the subject matter of the insurance contract. The
subject matter should result in financial gain for the insured if it remains undamaged or cause a
financial loss if it is damaged, destroyed, stolen, or lost.

Principle of Indemnity:
The principle of indemnity states that the insurance company will compensate the insured for the
actual amount of loss incurred, up to the sum assured or the agreed amount in the contract. It aims
to restore the insured to the same financial position they were in before the loss occurred.

Principle of Contribution:
This principle applies when multiple insurance policies cover the same subject matter. In the event
of a loss, each policy contributes proportionally to the total compensation, ensuring that no
policyholder benefits disproportionately from the loss.

Principle of Subrogation:
Subrogation allows the insurance company, after compensating the insured for a loss, to step into
the insured's shoes and pursue legal action against the responsible party to recover the amount paid.
Any additional amount recovered is given to the insured.

Principle of Proximate Cause:

The principle of proximate cause determines the primary cause of loss or damage. The insurance
company will pay compensation if the proximate cause is covered by the insurance policy. If the
loss is caused by an excluded event or a cause not covered by the policy, the insurer is not liable to
pay compensation.

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Principle of Loss Minimization:
The insured has a responsibility to take reasonable measures to minimize the loss or damage to the
insured property. This principle prevents policyholders from intentionally increasing the severity of
a loss to gain higher compensation.

VII. Conclusion:
The Indian insurance sector has made significant strides in recent years, offering a wide range of
insurance products to cater to various needs. The sector's growth is driven by technological
advancements, regulatory reforms, and increasing consumer awareness. Despite challenges such as
low insurance penetration and limited financial literacy, the government's initiatives, coupled with
the efforts of insurance companies, are working towards improving the sector's overall performance.

While the principles of insurance provide a framework for fair and efficient insurance operations, it
is essential for both insurers and policyholders to understand these principles to ensure
transparency, trust, and smooth claim settlements. As the Indian insurance sector continues to
evolve, it is expected to play a crucial role in the country's economic growth and financial well-
being of its citizens.

29
 AU Small finance bank in the insurance sector

As a corporate agent, AU Small Finance Bank has formed strategic tie-ups with eight reputable
insurance companies, namely-
Future General Insurance Company:

Future Generali India Insurance Company Limited is a collaborative

effort between the Generali Group, an esteemed global insurance
business with a rich history spanning 190 years and a controlling stake
of 74%, and the Future Group. Established in 2006, the company aims
to provide comprehensive insurance solutions to individuals and corporations, catering to their
diverse needs in retail, commercial, personal, and rural sectors. The primary objective is to assist
them in effectively managing and mitigating risks. Remarkably, FGII achieved break-even status
within just six years of operation, marking a significant milestone in the fiscal year 2013-2014.

Presently, FGII has solidified its position in the insurance industry with impressive statistics,
including assets under management of over Rs. 5,700 Crore in FY 2022, a Gross Written Premium
of Rs. 4,210.35 Crore, and a commendable claim settlement ratio of 93%. It has secured a place
among the top 10 private general insurance companies in India. Moreover, Future Generali has been
recognized as a 'Great Place to Work' certified company for four consecutive years (November
2022 - November 2023) by the esteemed Great Place to Work® Institute. The company takes pride
in receiving numerous accolades and honors, including the prestigious Golden Peacock Awards
2022 for Excellence in Corporate Governance and The Economic Times Best Brands Awards 2022.

30
ICICI Prudential Life Insurance Company:

ICICI Prudential Life Insurance Company Limited (ICICI

Prudential Life) is a prominent player in the Indian life insurance
sector, jointly promoted by ICICI Bank Limited and Prudential
Corporation Holdings Limited.

Since its establishment in 2001, ICICI Prudential Life has

consistently ranked among the top companies in the industry, with a strong focus on retail-weighted
received premiums (RWRP). As of March 31, 2023, the company's impressive Assets Under
Management (AUM) stood at `2,511.91 billion.

Operating on a customer-centric philosophy, ICICI Prudential Life offers a range of long-term

savings and protection products tailored to meet the evolving needs of its customers at different life
stages. The company has implemented various initiatives aimed at providing cost-effective
products, superior services, consistent fund performance, and hassle-free claim settlements.

In a significant achievement, ICICI Prudential Life became the first private life insurer to surpass
the `1 trillion mark in assets under management in 2015. Moreover, it holds the distinction of being
the first insurance company in India to be listed on both the National Stock Exchange (NSE) and
the Bombay Stock Exchange (BSE).

Over the years, ICICI Prudential Life has reached several milestones, including crossing the mark
of 5 million policies in 2008, achieving a profit of 2.58 billion in 2010, and surpassing 2.5 trillion in
assets under management in 2023. These accomplishments highlight the company's strong

31
performance and position in the market, earning it recognition and trust from customers and
industry peers alike.

HDFC Life Insurance Company:

HDFC Life Insurance Company Limited ('HDFC Life' /

‘Company’) operates as a joint venture between HDFC Ltd., a
prominent housing finance institution in India, and abide
(Mauritius Holdings) 2006 Limited, a global investment company.

Founded in the year 2000, HDFC Life has established itself as a leading provider of long-term life
insurance solutions in India. The company is listed on the stock exchange and offers a diverse range
of individual and group insurance products to meet various customer needs, including Protection,
Pension, Savings, Investment, Annuity, and Health. With a portfolio consisting of more than 60
products, HDFC Life caters to a wide spectrum of customer requirements.

HDFC Life has expanded its presence across the country, ensuring a broad reach through an
extensive network of branches and additional distribution touchpoints. The company has forged
numerous strategic partnerships and tie-ups, exceeding 300 distribution alliances. These
partnerships encompass banks, non-banking financial companies (NBFCs), microfinance
institutions (MFIs), small finance banks (SFBs), brokers, and various new ecosystem partners.
Additionally, HDFC Life benefits from a robust team of financial consultants who contribute to its
strong foundation.

32
The company's continuous growth and widespread distribution network have solidified HDFC
Life's position as a trusted provider of life insurance solutions in the Indian market.

Aditya Birla Health Insurance Company:

Aditya Birla Health Insurance Co. Limited

(ABHICL), a subsidiary of Aditya Birla Capital Ltd
(ABCL), operates as a joint venture between the
Aditya Birla Group and MMI Holdings of South
Africa. Established in 2015, ABHICL is primarily
engaged in the health insurance business. The
company is structured with Aditya Birla Capital Ltd
and Momentum Metropolitan Strategic Investments (Pty) Limited as majority and minority
shareholders, respectively, holding 51% and 49% shares.
ABHICL commenced its operations in October 2016, offering a range of health insurance products.
Its product portfolio includes unique offerings such as chronic care and incentivized wellness
programs. In the first quarter of FY22, ABHICL achieved a gross written premium (GWP) of Rs.
630 Crore and provided coverage to more than 22 million lives. The company has established a
nationwide distribution presence across over 2,800 cities through branches and partner offices. It
has also formed strategic partnerships with 14 bancassurance partners and employs over 68,000
direct selling agents.

With a focus on digital distribution channels, ABHICL has expanded its reach and diversified its
offerings. It has experienced a 28% growth in agency distribution, operating through 131 branch
locations. Bancassurance is available through 17,000+ branches, and the company has partnered
with 43 digital platforms to provide contextual bite-sized products, covering more than 6 million
lives.
ABCL, as the holding company for the financial services businesses of the Aditya Birla Group,
boasts a strong presence in protecting, investing, and financing solutions. Its subsidiaries operate
nationwide, with 1,094 branches and a network of more than 200,000 agents, channel partners, and

33
bank partnerships. With a workforce of over 33,500 employees, ABCL caters to the diverse needs
of its customers across various life stages.

As of June 30th, 2022, ABCL manages aggregate assets under management of over Rs. 3,550
billion and holds a consolidated lending book of approximately Rs. 699 billion. Its subsidiaries and
joint ventures serve an active customer base of over 39 million individuals, further solidifying its
position in the financial services industry.

Care Health Insurance Company:

Care Health Insurance Limited, formerly known as Religare

Health Insurance Company Limited, is an Indian health
insurance company that was established in July 2012. It
operates as a direct subsidiary of Religare Enterprises and is co-
promoted by Kedaara Capital. The company is headquartered in
Gurgaon, Haryana, and has a strong presence across India with
158 offices and over 8,500 employees.

Care Health Insurance is one of the five private sector insurers authorized by the Insurance
Regulatory and Development Authority of India (IRDAI) to underwrite policies exclusively in the
health, personal accident, and travel insurance segments. It offers a wide range of products in the
retail segment, including health insurance, top-up coverage, personal accident, maternity,
international travel insurance, and critical illness policies. Additionally, the company provides
group health insurance and group personal accident insurance for corporates, micro-insurance
products for the rural market, and a comprehensive set of wellness services.

The company has received several awards and recognitions for its excellence in the insurance
industry. It was honored as the "Best Health Insurance Company" at the ABP News-BFSI Awards
2017 and the Emerging Asia Insurance Awards 2019. Care Health Insurance has also been
recognized as the "Best Claims Service Provider of the Year" at the Insurance India Summit &
Awards 2018. Furthermore, it has received accolades for product innovation and quality, including

34
the "Editor's Choice Award for Best Product Innovation" at Finnoviti in 2017 and the "Best
Medical/Health Insurance Product Award" at the FICCI Healthcare Excellence Awards in 2015,
2018, and 2019.

Overall, Care Health Insurance Limited is a prominent player in the Indian health insurance market,
offering a wide range of innovative products and services while maintaining a strong focus on
customer satisfaction and claims settlement.

Chola MS General Insurance Company:

Cholamandalam MS General Insurance Company Ltd (Chola

MS) is an insurance firm based in India and a joint venture
between the Murugappa Group, an Indian conglomerate, and
the Mitsui Sumitomo Insurance Group, a Japanese insurance
company.

Chola MS offers a diverse range of insurance products to both individuals and corporate clients.
Their offerings include motor, health, accident, engineering, liability, marine, property, travel, and
rural insurance. In the fiscal year 2011-12, the company achieved a Gross Written Premium of Rs.
13,465 million. With 93 branches and a network of over 6,000 agents across the country, Chola MS
has a wide presence in the Indian insurance market.
The company's core values are "Trust, Transparency, and Technology," represented by its motto
'T3.' Chola MS was recognized as the best insurance company in India for "In-time Claims
Settlement for the year 2011-12" in the Rashtriya Swasthya Bima Yojana scheme, a government
initiative by the Ministry of Labor & Employment. They have also received the "Financial Insights
Innovation Award" for their mobile-enabled claims survey process at the Asian Insurance Congress
held in Singapore in 2011.

35
Chola MS operates under the leadership of V. Suryanarayanan, the managing director, and has a
dedicated team of around 704 employees.
In addition to their achievements, Chola MS has partnered with IndusInd Bank to offer insurance
solutions to both individuals and corporate customers.

Overall, Cholamandalam MS General Insurance Company has established itself as a reputable

insurance provider in India, known for its prompt claims settlement, innovative use of technology,
and commitment to customer satisfaction.
ICICI Lombard:
ICICI Lombard General Insurance Company Limited is one of
the leading general insurance companies in India. It offers a
wide range of insurance products and services, including general
insurance, reinsurance, insurance claims management and
investment management. With a Gross Written Premium (GWP)
of ₹217.71 billion in the fiscal year 2023, the company has established itself as a major player in
the insurance industry.
ICICI Lombard provides policy insurance and renewal through various channels, including
intermediaries and its website. The company offers diverse insurance products such as Car
Insurance, Health Insurance, International Travel Insurance, Overseas Student Travel Insurance,
Two-Wheeler Insurance, Home Insurance, and Weather insurance, catering to the diverse needs of
individuals and businesses.

Founded in 2001, ICICI Lombard is a joint venture between ICICI Bank, the second-largest bank in
India, and Fairfax Financial Holdings Limited, a financial services company based in Toronto.
Initially, ICICI Bank held a 64% stake in the venture, while Fairfax had a 36% stake. Over the
years, the company has grown to become the largest private-sector general insurance company in
India.
In 2016, ICICI Bank sold a 9.0% stake in ICICI Lombard to Fairfax Financial Holdings, resulting in
ICICI Bank and Fairfax owning approximately 64% and 35% stakes, respectively. The company
has expanded its presence and reach with 273 branches and 840 virtual offices across the country.

36
In 2019, ICICI Lombard entered a bancassurance partnership with Karur Vysya Bank to sell
insurance products. Furthermore, in August 2020, the company acquired Bharti Axa Insurance
General Insurance through a share swap deal, resulting in a combined annual premium of ₹16,447
crore.
Financially, ICICI Lombard has demonstrated strong performance. In fiscal 2023, its profit before
tax increased to ₹21.12 billion, and its profit after tax reached ₹17.29 billion. With a market share
of 8.30%, the company holds a prominent position in the general insurance market in India.
ICICI Lombard General Insurance Company Limited continues to innovate and provide
comprehensive insurance solutions to its customers, contributing to its success and position as a
trusted insurance provider in India.

Tata AIG:

Tata AIG General Insurance Company Limited is a renowned

insurance company in India that operates as a joint venture
between the Tata Group and American International Group
(AIG). With over 21 years of experience since its establishment
in 2001, the company has built a strong reputation by
introducing innovative insurance products and services.
Tata AIG offers a wide range of general insurance covers under its Consumer Lines and
Commercial Lines business verticals. For individuals, the company provides home insurance, motor
insurance, travel insurance, health insurance, rural-agriculture insurance, and more. Under the
Commercial Lines vertical, Tata AIG offers property and business interruption insurance, directors
and officers liability insurance, professional and general liability insurance, and specialized
products like reps and warranties and environmental insurance. Each product offering is backed by
a team of professionals who provide expertise and support throughout the customer's relationship
with the company.
Tata AIG's core strengths lie in three product categories:
travel insurance, marine insurance, and liability insurance.
The company strives to become the preferred choice for
general insurance by expanding its penetration in the Indian
market through strategic partnerships with leading
businesses across various industries.
With an asset under management (AUM) of approximately
Rs. 21,539 crores as of December 2022, Tata AIG operates
with a workforce of about 8,607 employees across 213
branches in India. The company distributes its products through multiple channels, including a
network of over 71,000 licensed agents, a strong broking channel with 550+ licensed brokers, and
partnerships with banks, non-banking financial companies (NBFCs), housing finance companies
(HFCs), and other affinity partners. Tata AIG is also focused on enhancing its digital presence and
has initiated the "Go Digital" initiative to facilitate seamless online purchases of insurance products.

37
To ensure continuous learning and development, Tata AIG established the Tata AIG Academy in
2014. The academy aims to be a center of excellence in general insurance education, aligning
training programs with the strategic business goals of Tata AIG and empowering employees and
partners to succeed in a competitive environment.

Overall, Tata AIG General Insurance Company Limited has established itself as a leading player in
the Indian insurance industry, offering comprehensive insurance solutions and striving to be the
preferred choice for customers across various sectors.

Strategic ties helping AU small finance bank.

These tie-ups enable AU Small Finance Bank to offer a wide range of insurance products and
services to its customers, ensuring comprehensive coverage for various needs.

One of the key responsibilities of a corporate agent is to adhere to the guidelines provided by the
IRDAI. AU Small Finance Bank diligently complies with these guidelines, ensuring transparency
and fairness in its insurance operations. The Principal Officer, who represents the bank, is
responsible for overseeing all activities performed by the corporate agent in the insurance domain.

AU Small Finance Bank leverages its extensive consumer base to provide insurance offerings as
add-ons with loans and other banking services. This approach allows customers to conveniently
access insurance products while availing of other financial solutions from the bank. By integrating
insurance services seamlessly into its existing offerings, AU Small Finance Bank enhances
customer convenience and fosters long-term relationships.

To facilitate the selling of insurance products, AU Small Finance Bank designates specified persons
(SPs) who represent the bank as corporate agents. These SPs are well-versed in insurance products
and services and engage with customers to educate them about the benefits of insurance and
recommend suitable coverage options.

In return for their role as corporate agents, AU Small Finance Bank receives a commission from the
insurance companies for the insurance policies sold. This commission structure ensures that the
bank remains motivated to provide quality insurance solutions and excellent customer service.

38
 Work experience and responsibilities undertaken.

During my internship at AU Small Finance Bank, I had the privilege of

working in the insurance operations department as a data analyst intern,
where I actively participated in various tasks related to data management,
data validation, data analysis, and insurance reconciliation. These
experiences provided me with comprehensive insights into the intricacies of
the insurance industry and the crucial role that accurate data management
and analysis play in ensuring seamless operations and regulatory
compliance.

Data Management

Data management forms the foundation of efficient insurance operations.

As part of the insurance operations department, I was responsible for
managing and organizing vast amounts of data pertaining to the bank's
corporate agents and their insurance operations. This involved meticulously
collecting, classifying, and storing data according to various parameters
mandated by regulatory bodies like the Insurance Regulatory and
Development Authority of India (IRDAI). By meticulously organizing the data based on verticals,
partners, and business months, I facilitated efficient access and retrieval, enabling seamless
processing and resolution of future customer grievances.

Additionally, data management also involved ensuring data privacy and security. I gained a
comprehensive understanding of data protection regulations and best practices for maintaining
confidentiality.

Data Validation
Data validation is a critical step in maintaining data accuracy, consistency, and
reliability. During my internship, I actively engaged in data validation processes
to ensure the integrity and correctness of the collected data. This involved
thorough checks and cleaning operations to identify and rectify any
discrepancies or inaccuracies in the data.

One of the key aspects of data validation was verifying the consistency between customer names
and insured names. This crucial step involved meticulously comparing the data to ensure that the
names aligned perfectly. In cases where discrepancies were found, I sorted that data into different
forms the business was sorted differently, the insurances which were done for AU small finance

39
bank were sorted differently, and the data which had some issue or it was not available had to be
sorted and reverted for further inquiry on it and collaborated with relevant stakeholders to resolve
them, ensuring that the data accurately reflected the insured customers.

Moreover, data validation also encompassed validating the data for business entities. This involved
verifying that all necessary information was complete and accurate, ensuring seamless operations
and compliance with regulatory requirements. By conducting comprehensive data validation, I
contributed to maintaining a high standard of data quality, which is vital for effective decision-
making, risk assessment, and customer satisfaction.

Data Analysis

Data analysis plays a pivotal role in deriving meaningful insights and

extracting value from collected data. During my internship, I had the
opportunity to leverage various analytical techniques and tools to
uncover trends, patterns, and correlations within the insurance data.

One of the primary focuses of my analysis was customer identification. In the insurance domain,
each customer is assigned a unique Customer Identification Folder (CIF) that serves as a central
repository for their insurance policies. However, there were instances where CIF IDs were either
missing or not properly updated in the dataset. To address this issue, I employed analytical
approaches to determine the percentage of missing CIF IDs across different insurance products,
Verticals, partners, and transaction dates. By making inferences from the data, I gained valuable
insights into the potential causes of missing CIF IDs, such as documentation errors or system
glitches. These insights enabled me to propose corrective measures to improve data accuracy and
completeness, ensuring a robust customer identification system.

Furthermore, data analysis also involved identifying trends and patterns within the insurance data.
By employing statistical analysis, and visualization techniques, I discovered correlations between
customer demographics, policy attributes, and claim patterns. These insights helped me understand
how a corporate agent functions and how insurance is sold, and the data is kept tackling any future
customer grievances.

40
Insurance Reconciliation

Insurance reconciliation is a complex process that ensures accurate financial

transactions among various stakeholders involved in insurance operations.
During my internship, I gained practical experience and an understanding of
the reconciliation process, which is crucial for maintaining financial
integrity and compliance.

I learned about the two primary types of insurance reconciliation: retail insurance and group
insurance. In retail insurance, customers directly pay premiums to the insurance company,
bypassing the need for reconciliation at the corporate agent level. On the other hand, group
insurance involves creating a master policy for a specific group, such as employees of a company or
bank customers. Group Insurances are those where either an employer offers insurance to all his
employees or a corporate agent like AU small finance bank makes a group from its customers based
on the same requirements and insures them together that way the premium is less as insurance
primarily works on the law of large numbers. Under group insurance, premiums are deposited into
respective GL accounts, which are then reconciled and transferred to the insurance company after
meticulous verification.

It was crucial to ensure timely and accurate transfers even in cases where there were documentation
errors or customers did not meet the eligibility criteria. I gained insights into the commission
structures for corporate agents and the significance of maintaining accurate financial records to
facilitate smooth reconciliation processes. Additionally, I developed an understanding of the
importance of maintaining clear communication channels with insurance companies to address any
discrepancies or errors promptly.

Furthermore, I learned about the significance of insurance reconciliation for regulatory compliance.
Reconciliation processes help ensure that the premiums received from customers align with the
policies issued, mitigating the risk of fraud and non-compliance. This knowledge deepened my
understanding of the regulatory framework governing insurance operations and the critical role
played by reconciliation in maintaining transparency and accountability.

41
Overall Learning

My internship at AU Small Finance Bank's insurance operations department

provided me with extensive exposure to various aspects of data management,
validation, analysis, and reconciliation within the insurance domain. These
experiences equipped me with a robust skill set in organizing and sorting data,
ensuring data accuracy through validation, leveraging analytical techniques to
derive insights, and comprehending the complexities of insurance
reconciliation processes.

Moreover, I gained practical knowledge about regulatory requirements governing the insurance
industry, including the regulations imposed by IRDAI. This exposure deepened my understanding
of the importance of compliance and data privacy in the insurance sector.

In conclusion, my internship experience significantly contributed to my professional growth and

provided me with practical insights into the critical functions of data management, validation,
analysis, and insurance reconciliation. The hands-on experience and knowledge gained during this
period have laid a strong foundation for my future endeavors in the insurance industry.

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 Introduction to project

Problem statement:
The Indian insurance sector is in a decline when it comes to insurance penetration which is the
contribution of the insurance industry to the GDP of the country. Part of the reason for this is that
the GDP of India is constantly at a higher rate when compared to other developing economies of the
world, so the insurance industry also must catch this to contribute a significant portion to the GDP
of India. Before 2001 the insurance industry was made by only public sector unions of the
government like LIC, oriental group of Insurance, and United general insurance. In 2001 private
companies were allowed to enter the insurance sector this happened as a part of liberalization
privatization and globalization of the Indian economy which was initiated in 1991 and one by one
the sectors were opened for private players be they domestic or foreign players. Though it proved to
be good for the industry as in 2001 the insurance penetration was merely standing at 2.71 % it hit
5.6% in 2010 but significantly dropped down to 4.2% in 2019 as the GDP of India grew
exponentially. So, this project is centered on exploring the unleased potential of the insurance sector
and making the nation more secure in health and financial terms and making the GDP grow more
by contributing which is significant as the global insurance penetration stands at 7% and
considering the GDP of India hit 3.75 trillion in 2023 that means the insurance industry can still
under contribution by $117 billion approximately.
There are multiple reasons for this, some of which I recognized while researching for the project are
stated below:
 As the private players were only allowed 2 decades ago the industry is not matured as there
is a lack of capital in this industry when it comes to private players.
 The industry is still dominated by LIC (life insurance corporation of India) which holds 65%
of the market share.
 There is a lack of financial literacy in the Indian population especially when it comes to the
rural part of India. That means there are few no buyers of Insurance in those areas which in
turn increases the operating cost for the companies which rises the premium making the
insurance more expensive which further lowers the demand so it’s a constant loop thereon
which can only be solved by increasing the financial literacy of the people.
 LIC holds the major portion of the capital. LIC has that kind of Unclaimed matured
insurance, if it used only those then also it can run for decades from only that source as
capital.
 There can’t be any composite insurance company in India as per the rules of IRDAI. That’s
because of the low availability of capital.

43
Steps were taken to increase the penetration:
The government is constantly taking initiatives to back the insurance industry, but those initiatives
are often derived from ulterior motives, for example, the finance ministry infused a capital of 3000-
5000 crore in state-run general insurers to the health of general insurance firms, but the cause of that
infusion was that the companies were not able to maintain their solvency ratio to 1.5 as mandated
by the IRDAI. So, the government had to come to save the PSUs from bankruptcy.

Further, the minimum capital required to set up an insurance firm was purposed to be dropped from
100 Crore to 20 Crore, but that proposal was denied. Instead, the Foreign Direct Investment (FDI)
limit in the insurance sector was increased from 49% to 74% in 2021 this was done to attract more
foreign investment in the sector as the sector is capital intensive.
Government is also to take an initiative where insurance will be made mandatory to get fuel from
the fueling stations. That will surely force people to buy more motor insurance and that will
increase the insurance penetration.
Introduction of National Health Stack Framework that envisages Centralized health data allowing
health insurers to improve underwriting and helps in early fraud detection and eases the process of
claim processing for both the insurer and the insured. The idea of leveraging the technology to
increase consumer interaction will take this sector way forward and innovations like this will surely
support future ecosystem development. The optimized usage of data and analytics across the
functions for maximum efficiency and especially in the case of underwriting the claims.

44
2.5 RESEARCH METHODOLOGY

Sources of Data:

o Primary Data- Questionnaire

o Secondary Data- Articles, Learnings from the Internship, Industry Report, and Research papers

Universe:

Universe of the report are the Insurance industry workers and general public.

Sample size:

Sample size for the report is 100. I believe that this will give a perfect and meaningful result of
study.

Sampling Method:

Sampling method in the report is Convenience Sampling Method is used because it was quick and
reliable way to response.

Convenience sampling, which is a non-Probability sampling method and defined as a method

adopted by researchers where they collect market research data from a conveniently available pool
of response.

Research Design

The research design is Descriptive research because in the study, we are describing awareness level
of Insurance in the sample of the population considered.

Research Tools used.

Research tool used in the report is Questionnaire because it was an efficient way of obtaining the
responses from the respondents.

45
Survey Schedule Formulation

The report will give information about the study on the selection and evaluation criterions by which
a proposal is selected/rejected. For this, a questionnaire will be formed and filled by the universe of
the report.

Plan of Action

The duration of the research will be 2 months. During this research study, Questionnaire will be
prepared for the respondents to identify key factors that affect their investment pattern when it
comes to insurance and the behavior which drives it. A questionnaire is a reformulated written set
of questions to which respondents record their answers, usually within rather closely defined
alternatives. For the study Convenience Sampling is used. Time Frame for all activities of project
with optimum resources for implementation and outcome will be 60 days.

Data Analysis and Interpretation

The analysis and interpretation of data involves the analyzing of the collected data and
interpretation it with pictorial representation such as bar graphs, pie charts and others.

46
 The Responses and the Interpretation

1) What is your gender?

Particulars Respondent
Male 45
Female 15
Prefer not to say 0
Total sample size 60

Count of Gender

Prefer not to say

0

Female 15

Male 45

0 5 10 15 20 25 30 35 40 45 50

Count of Gender

47
2) What's your age?

Particulars Respondent
Below 18 Years 2
18-25 Years 46
25-34 Years 8
35-44 Years 4
Total sample size 60

Age

7% 3%
13% Below 18 years
18-25 years
25-34 years
35-44 years

77%

48
3) What's your occupation?
Particulars Respondent
Insurance Industry 12
workers
General Public 48
Total sample size 60

Occupation

20%

General Public
Insurance Industry worker

80%

49
4)Are you aware of the various types of insurance policies available in India?

Particulars Respondent
Yes 47
No 13
Total sample size 60

Understanding of the Insurance types

22%
Yes
No

78%

50
 Rating the understanding

21

11 11
9
8

1 2 3 4 5

Rating the understanding

Which Insurances do you have

40

35

30

25

20

15

10

0
Health Insurance Life Insurance Motor Insurance Others 01-09-2002

Which Insurances do you have

51
5)If yes, please mention the types of insurance policies you are aware of. (Select all that apply)?

Particulars Respondent
Health Insurance 44
Travel Insurance 39
House Insurance 38
Motor Insurance 40
Life Insurance 50
Others 9
Total sample 60

Others 9
Awarness about types of Insurance
Health Insurance 44

Travel Insurance 39

House Insurance 38

Motor Insurance 40

Life Insurance 50

0 10 20 30 40 50 60

Awarness about types of Insurance

52
6)On a scale of 1 to 5, how would you rate your understanding of insurance concepts and terms?

Particulars Respondent
1 9
2 11
3 21
4 11
5 8
Total sample 60

How would you rate your understanding

about concepts of insurance

21

11 11
9
8

1 2 3 4 5

How would you rate your understanding about concepts of insurance

53
7)What type of insurance do you have?

Particulars Respondent
Health Insurance 26
Life Insurance 36
Motor Insurance 23
Others 5
Total sample 60

What type of insurances do you have

6%
Health insurance
29%
26% Life Insurance
Motor Insurance
Others

40%

54
8)What are the main factors that deter you from purchasing insurance? (Select all that apply)

Particulars Respondent
Lack of awareness 30
about insurance
benefits
High insurance 24
premium cost
Lack of trust in 25
insurance companies
Limited understanding 28
of terms and
conditions
Others 3
Total sample 60

Factors detering form purchasing insurance

Others 3

Limited understanding of insurance terms 28

and conditions

Lack of trust in insurance companies 25

High insurance premium cost 24

Lack of awarness about insurance benefits 30

0 5 10 15 20 25 30 35

Factors detering form purchasing insurance

55
10)What measures do you think can improve insurance penetration in India? (Select all that
apply)
Particulars Respondent
Enhanced financial 36
literacy programs on
insurance
Simplification of 26
insurance policies and
terms
Affordable insurance 37
premium options
Strengthened 17
regulatory oversight in
the insurance sector
Incentives for 15
insurance purchase
Government subsidies 17
in insurance
Tax saving on 1
insurance
Total sample 60

What can improve insurance penetration in India

36 37

26

17 17
15

What can improve insurance penetration in India

56