CHAPTER-1: INTRODUCTION

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 INTRODUCTION

The insurance industry plays a number of important roles in India’s booming economy.
Insurance is necessary to protect enterprises against risks such as business failure, and
fire and natural disasters. Individuals require insurance services in such areas as health
care, life, property and pension. The insurance industry also provides crucial financial
intermediary services, transferring funds from the insured to capital investment, a critical
need for India's continued economic expansion.

A Chinese proverb says, “Wealth never survives three generations”. With the
accumulation of wealth, need for its management arises. This should not lead to the
conclusion that only wealthy people invest their money. Need for investment arises out of
several reasons. “Uncertainty of future” is one of the primary causes that trigger
investment. Investment alone will not solve the problem of uncertainty. A prudent
approach in managing one’s investment is equally important. The task of managing
investment is indeed a complex one for many individual investors. These individuals seek
the help of an investment manager for better management of their wealth.

In the past, there was a great deal of investment in banks, which was considered to be
safe and risk-free. Investors were content with returns on their investment in bank
deposits, were very conservative and had only a few options at that point of time. But the
situation has changed drastically now. There are many investment avenues and a wide
variety of choices are open to the investors these days. Investors can choose a particular
investment on the basis of their risk and return objectives.

Each investor is a client who has unique parameters: return goals and objectives, time
horizon, liquidity constraints, a distinctive tax status, and most importantly, personal risk
tolerances. Investment strategies keep changing from time to time. The best strategy of
the 1990s was that of buy and hold. Only those who held substantial portion in a single
company’s shares were found to be reaping good returns. But in the long run, exposure to
a single asset does not seem to be desirable as the returns stabilize over a period of time

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and growth prospects decline. As per the well known adage “Do not put all the eggs in
one basket”, allocating the money available for investment among different avenues
gained importance.These days it’s about prioritizing your need and then making a
decision as to its final purchase. This is important as the financial products hitting the
market are on the higher side and all these products seem to entice you into buying one.
Decisions regarding its final purchase have to be made keeping in mind the pros and cons
of the product so that one doesn’t end up choosing a wrong product. If higher return is
one’s need then investment should be in the areas of equity and mutual funds but when
security and ensuring your future is concerned it’s about investing in Life Insurance, and
that’s the industry that I m involved during my summers internship. So it would be wise
enough to know in simple word as to what insurance is and the purpose that it solves..?
Insurance is a promise of reimbursement in the case of loss, paid to people or companies
so concerned about hazards that they have made prepayments to an insurance company.
Insurance, in law and economics, is a form of risk management primarily used to hedge
against the risk of potential financial loss. Ideally, insurance is defined as the equitable
transfer of the risk of a potential loss, from one entity to another, in exchange for a
reasonable fee.

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About Prudential Life

Prudential is the one of the major insurance companies in the world with United
Kingdom as its home country. Established in the year 1848, they started with mutual
assurance and loan association but now they are an international financial service
company with wide range of product portfolio to their credit including banking,
insurance, retail investment and find management. Prudential was one of the few
companies to world to work on industrial insurance and grew very rapidly and insured
one third of Britain by early 1930’s. They still continue to lead in term of market share in
U.K in pension and annuity plans.

ICICI prudential Life Insurance offers a range of innovative, customer centric products
that meet the needs of customers at every life stage. Its products can be enhanced with up
to 5 riders, to create a customized solution for each policyholder.

Saving solutions
ICICI Prudential offers a variety of policies that give you the benefits of protection and
the opportunity to save for important assets or events, like a home, a car or a wedding.

• Invest shield life

A regular premium unit-linked insurance plan with an assurance of Capital Guarantee
and the facility of extended insurance cover.

• Invest shield cash

A regular premium unit-linked insurance plan with an assurance of Capital Guarantee
along with flexible liquidity options.

o Invest shield Gold

A unit-linked insurance plan with an assurance of Capital Guarantee, which offers you

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the benefit of a limited premium payment and coverage term.

o Premier Life
A market linked insurance plans that meet your Investment and Protection needs.

o Life Time
Complete market-linked insurance plans that adapt itself to your changing protection and
investment needs, throughout a lifetime.

o Secure Plus
An insurance plan that gives added protection savings and multiple options, all in one!

o Cash Plus
An insurance plan that gives added protection savings, multiple options, plus the power
of liquidity.

o Save and Protect

A traditional endowment savings plan that offers both high returns and protection.

o Cash-back
An endowment savings plan that allows you to get back substantial survival benefits.

Protection solutions

o Life Guard

ICICI Prudential Life Insurance offers Life Guard - a set of pure protection plans. Choose
from amongst three different product structures to insure your life and provide total
security to your family, at a very affordable cost.

child Plans

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 o Smart Kid Education Plan

As a responsible parent, you will always strive to ensure a hassle-free, successful life for
your child. However, life is full of uncertainties and even the best-laid plans can go
wrong. Here’s how you can give your child a 100% safe and assured tomorrow, whatever
the uncertainties. Smart Kid is especially designed to provide flexibility and safeguard
your child’s future education and lifestyle, taking all possibilities into account

Retirement solution

• Forever Life
A regular premium pension plan that helps you save for your retirement while providing
one with Life Insurance protection.

• Secure plus pension

A regular premium pension plan that gives you the flexibility to choose between 3 levels
of sum assured for the same level of total annual contribution

• Life time pension

A regular premium linked pension plan that gives you the freedom to choose the amount
of premium, and invest in market-linked funds, to generate potentially higher returns.

o Golden years
A flexible unit-linked retirement solution that offers flexibility during the accumulation
as well as payout phase.

Below listed are popular products that are being offered by ICICI Prudential. Based on
the analyses which have been done later in this report, I have tried to position the
products based on the age, living standard, a good investment option and the amount of
risk involved.

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Life Time: A tailor made product

A tailor made product to suit one’s requirement. When one makes an investment what are
the things that come to our mind:

o Flexibility
o Security
o Withdrawal
o High returns
o Tax benefit
o Life time insurance cover
o
Life Time is one product that covers all your present and future needs. It has all the
benefits that are listed above. Obviously one would like to go in for a product that offers
you a list of benefits than a product that offers you feature.

Protection:
o Choose a specified level of protection (available only with Life Time).
o Flexibility to increase or decrease your sum assured.
o Add-on riders to protect you against any eventuality.

Savings:
o Flexibility to increase or decrease your contribution.

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 o Facility of Premium Holiday, wherein the policy continues even if there is a
temporary break in the payment of annual contribution.
o Facility to top-up your investment any time you have surplus funds.
o Additional allocation of units on a periodic basis.
o Loans against the policy.

Investment:
o Choose from among four funds, based on your investment objective and risk
appetite.
o Choice to switch between investments options (4 free switches every policy year).
o Tax benefit under section 80C up to a limit of Rs 1, 00,000.
o Minimum investment Rs.1, 500 monthly or Rs.18, 000 annually.
This investment is basically for all and every one who looks for a basket of benefits
rather than a handful of features. It’s been more than 3 and half years since the launch of
this product. It has reaped far higher benefits than the company must have planned for.
This product just need to be explained to a prospect and things themselves take shape. It
suits the need of the young, middle aged, old age individuals less then 65 years.
Launched after the endowment policies of LIC it has proved to be immensely successful.

2. Golden Years: Retirement Solution

Why Retirement Planning?
Increasing Life Expectancy
Main Objective of this investment is retire from work and not from life. At IPRU we
believe in an individual being independent in his/her financial needs even at the old age.
The cost of holiday that you have planned today would be at least 8 times 20 years from
now. Then there is an age in which you work hard for your family needs and when its
time you want something of your own, its time for you to retire. We at ICICI Prudential
concentrate on life after work, making your life a pleasant experience to live.
How many times one thinks of retirement planning at an early stage in the life. The
attitude generally exhibited is “I am too young to plan for retirement”. The there are

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also those sets of people who believe that slow and steady is the more smarter way to
make an investment rather than making a huge investment at one go. Golden Years is a
retirement plan that offers one following benefits:

o You can choose to pay your premiums for a limited term of 3, 5, 7 or 10 years.
o The policyholder can choose a Sum assured multiple at inception. The minimum
is 5 times and a maximum is 15 times of the annual contribution.
o You can choose a vesting age between 45 to 75
o Payouts can be done in any two of the three options. Lump sum Payment
o Structured benefit payments (A new and unique feature) and annuity payments.
This investment is good for individuals who are young executives and Business Men who
are in a position to pay a good sum for some time. They can choose a vesting age
between 45 to 75 and can take any option of getting money in return. These options may
range from one time redemption or life time annuity. IPRU also offers the option of
purchase price, this option indicates that if there is any other company in this sector that
gives an individual a higher amount of annuity then the company would transfer your
fund with that company.

3. Smart Kid: A Child Education Plan

It is a plan that provides benefits to a child along with life risk cover on the parent’s life.
There are different options under this plan like endowment as well as ULIP.
Educational Benefits:
Payments are done at the key educational milestones. You can also decide when you
want this money- either during schooling, undergraduate
Peace of Mind:

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In case of an unfortunate event, Smart Kid immediately pays the Sum Assured and pays
all future premiums. So the savings benefit for your child continue

Annual Allowance:
For a nominal extra amount, Smart Kid would ensure that in your absence, a fixed annual
sum is provided for the child’s education and overall development. Five withdrawals are
available throughout the term of the product.

4. Life Link Super:

5 years closed ended NFO launched on 13th March with Rs.10 as the value of unit. The
main purpose of launching this new product was capturing the single premium segment.
This market has been growing very rapidly because of the upsurge in Mutual Fund
market. People are willing to invest a single time and ready to relax for life as what you
get with high return is the life insurance cover which continues till the age of 70 years.
Some features of this product are given below

Minimum investment 25,000 for age 0-44 yrs and for 45 to 65 yrs minimum investment
is 50,000.
• Sum Assured-125% or 500%.
• Life Insurance cover till the age of 70 Years.
• Partial withdrawal after 3 years.
• Tax benefits u/s 80 C.
• No charge for investment greater than Rs 5, 00, 000.
It was after a while that company launched a new product in the market. This product
was so simple to understand that it took Just 55 days from its idea inception to the
product being launched in the market. Usually it takes around 5 to 6 months for any
product to get the approval of IRDA. This product made quite an entry into the market
collecting a swash buckling Rs 120 crores in the month of March 2007.
A good investment for anybody between the age of 0 to 60 years and Life Insurance
cover along with the return continuing till the age of 70 years.

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 Here is a list of the insurance policies being undertaken by different Life
Insurance Companies, public as well as private.

Name of the Endowment plan Term plan Pension Child plan

company
LIC Bhavishya jeevan, Bima sandesh, Bima nivesh, Jeevan kishore,
Jeevan mitra, New bimakiran New jeevan dhara Komal jeevan
Jeevan shree,
Asha deep,
Money back plan
ICICI Pru Cash-back-plan Life guard Life time pension, Smart kid
(15,20yrterm) Golden years,
Forever life

HDFC Money back Term assurance Retirement Solution Children’s plan

standard life plan
BAJAJ Cash care Term care, Swarna vishranthi
Allianz Risk care

Above listed are the plans of some companies which are in competition with
ICICI Pru. Though ICICI Pru has a direct competition with all the companies in the
industry, but then there are companies which are close to eating the share of each other.
So the above listed companies are in tough fight to be the number 2 in the insurance
industry. Though ICICI Pru occupies the second slot for the last five years, but its Bajaj
Allianz and HDFC Standard life that are catching ICICI Pru very fast.
So ICICI Pru will have to keep innovating in the product that they provide along
with keeping customer service as their priority. After all it’s the world where customer is
the undisputed KING.

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 Sales and Distribution Network at ICICI Prudential’s

Through out the world, the agent has played a vital role in insurance selling and
Indian insurance market is no exception to this. Although the Indian insurance market has
witnessed a steady and phenomenal growth in terms of the policies sold, it is unfortunate
that the real spread of insurance awareness has not been achieved. With the arrival of new
distribution channels into the industry, one hopes that people would assimilate the real
benefits of insurance sooner or later.

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Distribution plays a key role for the success of any product and service. More than
anything else it is instrumental in giving a visibility to the product or the service. In this
regard the person in-charge of the distribution plays a very vital role especially when the
product that is up for offering is non-tangible like the customer service. As in the field of
insurance it is the service that ICICI Prudential is offering because what you get is a
security and not a tangible product.

Historically, distribution of the insurance policies in India has been totally agent based
and one has to commend his/her role in having done it successfully over the years. But
the change in time, calls for the change in the strategy and that’s where other distribution
system have started playing an important role.

ICICI Prudential sells its policies through a number of channel partners which are listed
below:

(1)…Tied agency model

Tied Agency is the largest distribution channel of ICICI Prudential, comprising a large
advisor force that targets various customer segments. The strength of tied agency lies in
an aggressive strategy of expanding and procuring quality business. With focus on sales
& people development, tied agency has emerged as a robust, predictable and sustainable
business model. In this model it is the agents (preferably called as advisors) who are at
the rock bottom. At the second stage is a Unit Manager who handles around 18-24
advisors. Then there are Sales Managers who manages around 12-15 Unit Managers and
1-2 local agencies. After that it’s the Area Sales Manager who manages the work of 8-10
Sales Manager and 3-4 national agency along with 1-2 local agencies. Then there is a
Center Manager who manages the work of Area Sales Managers and the chain goes on
and stops at the door steps of the Mrs. SHIKHA SHARMA, CEO ICICI Prudential’s.

(2)…Alternative distribution channels

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(A)…Bancassurance
India has an extensive bank network established over the years. What Insurance
companies have to do is to just take advantage of the customers' long-standing trust and
relationships with banks. In this case there is a mutual benefit to both the company as
well as the bank, in terms of selling varies financial product to the customer. Insurance
company sees Bancassurance as a tool for increasing their market penetration.

Banks have presence in rural market as well so selling insurance product can
easily be done using this medium. ICICI Prudential has collaboration with some
nationalized banks, helping them reaching greater heights in terms of the policies
collected. Some of the banks are ICICI Bank, Federal Bank, Bank of India, Lord Krishna
Bank to name a few. These banks are allotted with one FSC (financial service consultant)
and then it becomes his responsibility to get the business from that particular bank. For
every policy that comes from the side of the bank, it is offered a referral fee (just like
commission). This is as such not a new concept as most of the banks have already tied up
with different insurance companies.

(B)…Corporate agency
Corporate agency is an agent who just deals in the product of one particular
company. For example BLUE-CHIP which only offers ICICI Prudential insurance
policies.

(C)…Brokers
A broker is one who deals from anything to everything in the financial market,
which company the product is from it generally doesn’t matter to him as long as the
business keeps coming in. for example BAJAJ CAPITAL, who deals in all kind of
mutual funds, all kinds of product from the insurance companies, post office schemes,
fixed deposits, bonds, equity IPO market. You name any financial product and they
would be more than willing to help. They now have greater reach in the market along
with the infrastructure that helps them grow from strength to strength.

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(3)…Group insurance
This is the distribution channel that has a greatest potential of all the channels. In
Group Insurance, Company insures the group as a whole rather than individual. These
plans are based on a condition that there should be at least 50 people and that too from
the same company. The company offers term plans and super annulation’s plans.

(4)…Mortgage Reducing Term Assurance (MRTA)

In this distribution channel of Insurance it is given along with a home loan and the
payment for the insurance is added in the premium that has to be paid to the mortgage
company. ICICI Pru is the current market leader in this distribution network catering to
26% business from this network. This is one innovative channel that has been adopted by
the insurance companies especially in an arena where the number of people taking
various kinds of loan has been on an increasing trend. Though I-Pru has the market share
of 26%, but its far from boasting off as the revenue break up of the various distribution
channel is very paltry. The loan seeker also doesn’t mind paying an increased amount of
premium when at a time insurance companies are covering the risk of the life of the
person who applied for the loan. This type of insurance gives a person an assurance that
in case of unfavorable circumstances the family doesn’t have to go through an emotional
stigma.

Revenue break-up of various distribution channel

Once we have discussed about various distribution channels. It’s important to know
which of these channels gives the maximum revenue to the company and which one
offers an opportunity to tap in the near future. Graph below outlines the percentage of the
total revenue from various channels. The total revenue for the organization for period
ending Feb 2006 was 1956.039 crores, and of the total revenue tied agency contributed
around 1370 crore, then was the business from the alternative distributors including

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corporate agents and brokers which accounted for Rs 548 crores. The last is the group
insurance which contributes a meager Rs 40 crores.

Amount of Business brought by different Channels of Distribution

Total revenue = 1956.049 cores

Tied Agency
2%
28%
Alternative distribution
Channel
70% Group Business

Going by the revenue figures from various distribution channels, one can easily figure out
a channel which has the highest potential. The company needs to concentrate on various
group plans which have the highest potential. ICICI collects a paltry 2% of the revenue
from group insurance, this figure when compared with foreign countries looks very
meager as figure shoots up to as high as 25% - 30%. The most important point to
consider while taking group plan into consideration is the area which forms the major

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source of revenue, super annuation funds. Which ever company taking this insurance
from an insurance company has an option of shifting their funds with that company
which provides higher returns at the end of certain period. The insurance companies are
under an obligation to do this without any delay. So as this fund is transferable, the
companies have to be competent enough to provide the best returns.

Second distribution channel that needs to be looked at is MRTA, which is the new
innovative distribution channel; this presents an opportunity when the number of loan
seeker has been on the up-trend. Although the revenue from this channel has very thin,
however from another end this also presents an opportunity to reap return from the most
potential of the distribution channel. As of now the company is only giving this insurance
along with ICICI Bank loans. Going forward the company should concentrate on tapping
the market of various banks as they have with Bancassurance, and thus catering to them
as well.

Selection Consideration - how do we finally decide upon a

distributor?

o Market segment - The distributor must be familiar with your target consumer
and segment.
o Changes during the Product Life Cycle - Different channels can be exploited
at different points in the PLC
o Producer - distributor fit - Is there a match between the policies, strategies and
image and look for 'synergy'.
o Qualification assessments - Establish the experience the track record of your
intermediary.
How much Training and Support will your distributor require

INDUSTRY: PROFILE

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Insurance is a colossal sector in India that is growing at a speedy rate of 15-20%. The
insurance sector is approximately 450 billion yet 95 percent of the population in India is
not insured. This gives you a peek into the huge growth opportunity that exists for this
segment. The insurance business is based on customer’s trust & confidence as it deals
with the finances of the customer. The basis for a well-planned and well-executed
marketing strategy is effective market segmentation. Insurance is broadly segmented into
individuals, institutions, industry, and trade customers. Most industry player’s offer
specialized services to cater to the needs of these segments. Some marketers target niche
markets and offer customized services.

Though the history of insurance dates back to 1818 with the establishment of the Oriental
Life Insurance Company in Calcutta, and then when LIC was established in the year
1956. For private life insurance sector in particular things started taking shape after the
recommendation of Malhotra committee which put forward a proposal for the
establishment of the regulatory body and also encaouraged to set up unit linked insurance
pension plan. It was after his recommendation that IRDA (insurance regulatory and
development authority) was established in April 2000. After that in the year 2001 the
sector was finally opened for private players and foreign private players were allowed to
have 26% share in the Indian company. Better services, individual attention and pure
transparency have given the private sector an upper hand. But with a huge unorganized
market in India yet to tap, the insurance companies in India have a voluminous market to
explore.

With an annual growth rate of 15-20% and the largest number of life insurance policies in
force, the potential of the Indian insurance industry is huge. Total value of the Indian
insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to
government sources, the insurance and banking services' contribution to the country's
gross domestic product (GDP) is 7% out of which the gross premium collection forms a
significant part. The funds available with the state-owned Life Insurance Corporation
(LIC) for investments are 8% of GDP.

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Till date, only 11% of the total insurable population of India is covered under various
life insurance schemes, the penetration rates of health and other non-life insurances in
India is also well below the international level. These facts indicate the of immense
growth potential of the insurance sector.

The above data clearly bring forth a perspective of world view of the penetration rate in
insurance. Penetration rate gives an overview about the %age of people covered in
insurance who are insurable. Though the above data is of period ending 3 year back,
however it brings an opportunity for life insurance companies to make revenues with
such large numbers of individual to be covered.

The year 1999 saw a revolution in the Indian insurance sector, as major structural
changes took place with the ending of government monopoly and the passage of the
Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry
restrictions for private players and allowing foreign players to enter the market with some
limits on direct foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity in an insurance
company, a proposal to increase this limit to 49% is pending with the government. Since
opening up of the insurance sector in 2001, foreign investments of Rs. 8.7 billion have
poured into the Indian market and 21 private companies have been granted licenses.

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 Private and foreign players entered the Indian insurance market in 1999 after the
reforms were initiated. Innovative products, smart marketing, and aggressive distribution
have enabled fledgling private insurance companies to sign up Indian customers faster
than anyone expected. Their entry ushered in new competition and improved the service
quality offered to the customer. With awareness increasing, customer expectations also
increased. New distribution channels and innovative promotional strategies also evolved
because of the increased competition. All these led to the development of the insurance
industry and expanded the market in India. Indians, who had always seen life insurance
as a tax saving device, are now suddenly turning to the private sector and snapping up the
new innovative products on offer.

Below is the list of Players in Life Insurance Industry:

o Birla Sun-Life Insurance Company Limited

o Allianz Bajaj Life Insurance Company Limited
o HDFC Standard Life Insurance Company Limited
o ICICI Prudential Life Insurance Company Limited
o ING Vysya Life Insurance Company Limited
o Max New York Life Insurance Company Limited
o MetLife Insurance Company Limited
o OM Kotak Mahindra Life Insurance Company Limited
o SBI Life Insurance Company Limited
o TATA AIG Life Insurance Company Limited
o Reliance Life Insurance Company Limited
o AVIVA Life Insurance Company Limited
o SAHARA Life Insurance Company Limited
o LIFE Insurance Corporation of India
The life insurance industry in India grew by an impressive 36%, with premium income
from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff

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competition from private insurers. Increase in sales for the biggest private insurance
player has also been phenomenal with a 100% increase year on year basis.

Though the total volume of LIC's business increased in the last fiscal year (2004-
2005) compared to the previous one, its market share came down from 87.04 to 78.07%.
The 14 private insurers increased their market share from about 13% to about 22% in a
year's time. Initial few months of the year 2006 also speak of the growing share of the
private insurers. The share of LIC for this period has further come down to 75 percent,
while the private players have grabbed over 24%.

With a large population and untapped market, insurance happens to be a big opportunity
in India. The insurance business is growing at an annual rate of 21.9 per cent. Together
with banking services, it accounts for about 7.1 percent to the country’s GDP. However,
insurance penetration in the country is poor. Insurance penetration or premium volume as
a share of a country’s GDP, for the year 2004-05 is at 2.53 per cent for Life insurance.
The level of penetration tends to rise as income increases, particularly in life insurance.
India with about 200 million middle class households shows a potential for insurance
industry. Saturation of markets in many developed economies has made the Indian
market even more attractive for global insurance majors. The insurance sector was
opened up for private participation five years ago and the private players are active in the
liberalized environment. The insurance market have witnessed dynamic changes which
includes presence of a fair number of insurers both life and non-life segment. Most of the
private insurance companies have formed joint venture partnering well with recognized
foreign players across the globe. The Indian Insurance market accounts only for 0.60% of
global Insurance market. Consumer awareness has improved. Competition has brought
more products and better customer servicing. It has had a positive impact on the economy
in terms of income generation and employment growth.

Role of the Regulatory Body “IRDA”

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Insurance is a federal subject in India. The primary legislation that deals with insurance
business in India is: Insurance Act, 1938, and Insurance Regulatory & Development
Authority Act, 1999.

Insurance Industry has ombudsmen in 12 cities. Each ombudsman is empowered to

redress customer grievances in respect of insurance contracts on personal lines where the
insured amount is less than Rs. 20 lacks, in accordance with the Ombudsmen Scheme

Insurance Regulatory & Development Authority (IRDA)

IRDA was constituted by an act of parliament. The Authority is a ten member team
consisting of:
(a) A Chairman
(b) Five whole-time members
(c) Four part-time members
(1) The Authority shall have the duty to regulate, promote and ensure orderly growth of
the insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the
powers and functions of the Authority shall include, -
(a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend
or cancel such registration;

(b) Protection of the interests of the policy holders in matters concerning assigning of
policy, nomination by policy holders, insurable interest, settlement of insurance claim,
surrender value of policy and other terms and conditions of contracts of insurance;
(c) specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents;

(d) Promoting efficiency in the conduct of insurance business;

(e) Promoting and regulating professional organizations connected with the insurance and
re-insurance business;

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(f) Levying fees and other charges for carrying out the purposes of this Act;
(g) Calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries
and other organizations connected with the insurance business;

(h) Specifying the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries;
(I) Regulating investment of funds by insurance companies;
(j) Regulating maintenance of margin of solvency;
(k) Adjudication of disputes between insurers and intermediaries or insurance
intermediaries;
(l) specifying the percentage of life insurance business and general insurance business to
be undertaken by the insurer in the rural or social sector; and

History of the Company:-

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ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse and prudential plc, a leading international financial
services group headquartered in the United Kingdom. ICICI Prudential was amongst the
first private sector insurance companies to begin operations in December 2000 after
receiving approval from Insurance Regulatory Development Authority (IRDA).

Since its inception ICICI Prudential has continuously focused on identifying and
delivering what the customer wants – be it in product range, distribution or service. It has
strived to introduce new, customer-centric products, offer superior service and implement
world-class risk and investment strategies. Over the past four years, the company has
become the leading private life insurer and has pioneered many initiatives, such as the
introduction of child plans, retirement solutions and unit linked plans.

Recent performance of the company has been very encouraging. The company has grown
at a rate of 148% on a CAGR basis over the past three financial years. It has emerged as
the only private life insurer to cross a number of milestones with amazing regularity, with
the time taken to add on every additional 100,000 policies continuously decreasing.
Possibly the most significant achievement in recent times is that ICICI Prudential crossed
the 1 million policy milestone in mid-September 2004, the first amongst private insurers
to cross this mark. In the period April-December 2004, the company garnered Rs 860
crore of new business premiums for a total sum assured of over Rs 7,360 crore and wrote
nearly 345,000 policies. With 7 banc assurance tie-ups, 50,000 life insurance advisors,
and offices in 70 locations, the company has spread its reach across the country.

ICICI Prudential's equity base is the highest in the insurance sector, standing at Rs. 9.25
billion with ICICI Bank and Prudential plc holding 74% and 26% stake respectively.
Today, ICICI Prudential has emerged as the No. 1 private life insurer in the country, with
a wide range of flexible products that meet the needs of the Indian customer at every step
in life. Along with a multi-product, multi-channel distribution capability, it offers its
employees’ the right infrastructure support and robust training and development
programs to accelerate their career on the fast track.

24
VISION AND MISSION

25
VISION

To be the leading provider of financial services in India and a major

global bank.
To be the preferred brand for total financial and banking solutions for both
corporates and individuals
To be the dominant Life, Health and Pensions player built on trust by world-
class people and service.
This we hope to achieve by:
• Understanding the needs of customers and offering them superior

products and service .

• Leveraging technology to service customers quickly, efficiently and

conveniently .
• Developing and implementing superior risk management and

investment strategies to offer sustainable and stable returns to our

policyholders .
• Providing an enabling environment to foster growth and learning for our
employees .

And above all, building transparency in all our dealings.

The success of the company will be founded in its unflinching commitment
to 5 core values -- Integrity, Customer First, Boundaryless, Ownership and
Passion. Each of the values describe what the company stands for, the
qualities of our people and the way we work.

We do believe that we are on the threshold of an exciting new opportunity,

where we can play a significant role in redefining and reshaping the sector.
Given the quality of our parentage and the commitment of our team, there

26
are no limits to our growth.

MISSION

We will leverage our people, technology, speed and financial capital to:
• be the banker of first choice for our customers by delivering high quality, world-
class products and services.

• expand the frontiers of our business globally.

• play a proactive role in the full realisation of India’s potential.

• maintain a healthy financial profile and diversify our earnings across businesses
and geographies.

• maintain high standards of governance and ethics.

• contribute positively to the various countries and markets in which we operate.

• create value for our stakeholders

• Provide the social facilities to the society

27
 COMPANY PROFILE

Company briefing: ICICI prudential Life Insurance Company Ltd

Corporate Profile
ICICI Prudential Life Insurance Company is a joint venture between ICICI, a
premier financial powerhouse and Prudential plc, a leading international financial
services group headquartered in the United Kingdom. It was established in 2000 with
a commitment to expand and reshape the life insurance industry in India. The company
was amongst the first private sector insurance companies to begin operations after
receiving approval from Insurance Regulatory Development Authority (IRDA), and in
the time since, has taken several steps towards realization of its goals .

ICICI India’s premier financial institution stands for strength and security. Prudential is
one of the world’s foremost life insurance companies . In 1923 , Prudential has
paid billions in insurance claims – including 324 passengers on the TITANIC . And
that’s just the tip of the iceberg ! Prudential’s first life agency was first
established in India , backed by over US$ 250 billion in funds under management
worldwide , with over 150 years of listening in the UK , US and Asia .

ICICI Prudential's equity base stands at Rs. 11.85 billion with ICICI Bank and Prudential
plc holding 74% and 26% stake respectively. In the financial year ended March 31, 2005,
the company garnered Rs1584 crore of new business premium for a total sum assured of
Rs13, 780 crore and wrote nearly 615,000 policies. The company has a network of about
75000 advisors; as well as 7 Bancassurance and 292 corporate agent tie-ups. Through its
wide network of highly competent life insurance Agent Advisors and flexible products
and solutions, ICICI Prudential is committed to creating a partnership for life with its
customers in India. For the past four years, ICICI Prudential has retained its position as

28
the No. 1 private life insurer in the country, with a wide range of flexible products that
meet the needs of the Indian customer at every step in life. In line with its values of
financial responsibility, ICICI Prudential has adopted prudent financial practices to
ensure safety of policyholder's funds. It invests only in debt instruments and meets both
Indian and international disclosure norms.

Some briefing about two different companies

About ICICI

The Industrial Credit and Investment Corporation of India (ICICI) was

incorporated at the initiative of the World Bank, the government of India and the
representative of India industry. With the objective of creating a development financial
institution for providing medium and long term project financing to Indian businesses.
Initially it was set up to give credit but with the passage of time it started foraying in
different businesses like setting up of asset management companies, banking, securities
division, capital services and personal financial services. Its banking division of ICICI
Bank was the first Indian banking firm to get listed on the NYSE.

29
 ACHIEVEMENTS AND AWARDS

ACHIEVEMENTS

 The Company issued in excess of 4,30,000 policies – in the year ended March 31st
2004
 Total sum assured of over Rs. 8000 crores
 A premium income in excess of Rs. 980 crores
 In terms of distribution strength, the company has about 30,000 advisors & some
12 Banc assurance tie-ups

AWARDS

(1}India's Most Customer Responsive Insurance Company

Avaya Global Connect - Economic Times

Customer Responsiveness Awards

30
(2)

Most Trusted Private Life Insurer

The Economic Times - A C Nielsen Survey of Most Trusted Brands – 2003, 2004 and
2005

(3)

Institute of Marketing & Management

IMM Award for Excellence

(4)

31
 Best Life Insurer 2003
Outlook Money Awards 2003 & 2004

(5)

Organization with Innovative HR Practices

Indira Group of Institutes

Organization with Innovative HR Practices

Asia-Pacific H R Congress Awards for HR Excellence

Super brand 2003-04

32
(6)

Silver Effie for Effectiveness of the ‘Retire from Work not life’ advertising campaign

Effie’s 2003

33
 BOARD OF DIRECTORS

The ICICI Prudential Life Insurance Company Limited Board comprises reputed people
from the finance industry both from India and abroad.

Mr. K.V. Kamath, Chairman

Mr. Barry Stowe

Mrs. Kalpana Morparia

Mrs. Chanda Kochhar

Mr. HT Phong

Mr. M.P. Modi

Mr. R Narayanan

Mr. Keki Dadiseth

Ms. Shikha Sharma, Managing Director

Mr. N. S. Kannan, Executive Director

Mr. Bhargav Dasgupta, Executive Director

34
CHAPTER-2: PRODUCTS

35
 PRODUCTS

Life insurance product covers mainly the two basic requirement of an individual
(1)...Risk Coverage
(2)...Saving for Future
Risk in the above lines is used to cover the risk of death in case of the unfortunate
death of the policy holder. It provides a lump sum amount to the family for the absence of
the breadwinner. This is called as a Term Insurance or just covering the risk of death.
Here only the lump sum amount is available only in case of death and nothing on survival
or the maturity of the policy. The second is the accumulation of saving for a specific
purpose. Here the lump sum amount is available only if the insured survives a particular
period and nothing on the death of the insured. These two are also referred to as building
blocks in all life insurance product design. On the basis of these two requirements various
other products can thus be designed.
Each product of an insurance company offers something unique. Term insurance
covers just the risk of life and nothing is payable on survival, so the premium that is
charged is at its lowest and the time horizon for which it is available is also very high.
This is the most risky of the products that are offered by the company as for just a meager
premium, company covers the insurance of a very high amount. So before allotting the
policy to an individual the company has to carefully manage it’s under writing with
regards to the age at entry, amount of insurance, and term of the insurance. Endowment is
just like any other saving scheme which offers benefit just in case of survival and nothing
in case of death.
When term and pure endowment plans are mixed together, then the product so
formed is Endowment Assurance which guarantees sum assured plus certain vested

36
bonus / interim bonus on both the death and survival of the life assured. Again depending
on the term and sum assured this policy comes in various forms.
Products that are available in the market offers customer the flexibility of
choosing the sum assured, which in some policies is independent of the premium paid.
They can either increase or decrease the sum assured as and when required, but during
the continuance of the policy term. In case the customer wants to increase it, then the
company may go for underwriting of that individual (medical examination) for
sudden increase in the sum assured.
All insurance companies are very eager to sell ULIP plans which provide the
company a handsome profit. It is in these ULIP plans that initial charges are very high,
which directly goes into the pocket of the insurer for bearing the cost of distribution,
promotion and advertising. Some part of that charges also goes into the pocket of the
advisor, who sells the insurance plan. With the capital markets are at its record high some
advisor finds it easy to sell, as long as you have the customer who is ready to invest by
taking the risk of the market.

37
 MARKETING STRATEGY

MARKETING
Marketing deals with product. A product can be a good, service or an idea. Here as Icici
prudential life insurance is an insurance company so the product here is ‘SERVICE’.

MARKETING OBJECTIVES OF ICICI PRUDENTIAL LIFE INSURANCE:

The following are the marketing objectives of ICICI PRUDENTIAL LIFE INSURANCE

 Focus on the productivity of each consultant, corporate or individual, while stressing

on the quality of proposals
 Quick roll out of Products
 Efficiency of Operations
 Meet Social & Rural sector obligations
 Increase/improvement in all the key growth parameters

KEY GROWTH PARAMETERS:

 Number of Financial Consultants

 Number of Policies
 Gross Premium

38
 Productivity - policies per month per consultant
 Physical points of presence

39
 MARKETING MIX IN INSURANCE INDUSTRY (4 P’S)

1. PRODUCT:

An Insurance company sells services and therefore services are their product.
HDFC standard life insurance company faces a bigger challenge due to the unique nature
of services provided by them.

FUNCTIONALITY: ICICI prudential life insurance is one of the leading company

offering insurance services to the users. Apart from offering life insurance policies, they
also offer underwriting and consulting services along with it the assistance and advice of
the agent, the prestige of the company and the facilities of claims and compensation.
.
STRATEGIES: ICICI prudential life insurance uses various strategies to market their
services They try to offer same standardized services to all their customers e.g., a courier
services
They customize the service according to the needs of the customer: e.g., doctors,
consultants, etc.

BRAND: ICICI prudential life insurance also leverages on its brand name gained over
the years.
ICICI’s brand name helps in differentiating its service and expressing brands
superiority over rival brands.

40
It is natural that the customers expect a reasonable return for their investment and the
insurance company wants to maximize their profitability.
Hence, while deciding the product portfolio or the product-mix, the services or the
schemes should be motivational.

SERVICE (PRODUCT): ICICI prudential life insurance portfolio comprises solutions,

which meet various customer needs such as Protection, Pension, Savings, Investment,
and Health.
The company currently has 25 retail and 6 group products in its portfolio, along with five
optional rider benefits catering to the savings, investment, protection and retirement
needs of customers.

WARRANTY: These plans offer multiple advantages for the child, such as tax benefits
and long-term financial security. The plan is an affordable means to ensure a child’s
security and, apart from the parents, it can also be chosen by the grand parents or other
relatives of the child. However, its greatest strength is that company continues to make
savings on your behalf, in your absence. The savings can be directed 100% towards your
policy or 50% towards your policy and 50% will be available for the beneficiary’s regular
use until the original Maturity Date. The development of flexible products to suit
individual requirements is what will differentiate the ICICI prudential life insurance
from the other also-rans.

2. PRICING:

In the ICICI prudential life insurance the pricing decisions are concerned with:
i) The premium charged against the policies,
ii) Interest charged for defaulting the payment of premium and credit facility, and
iii) Commission charged for underwriting and consultancy activities.

With a view of influencing the target market or prospects the formulation of pricing
strategy becomes significant. In a developing country like India where the disposable

41
income in the hands of prospects is low, the pricing decision also governs the
transformation of potential policyholders into actual policyholders.

The strategies may be high or low pricing keeping in view the level or standard of
customers or the policyholders. The pricing in ICICI prudential life insurance is in the
form of premium rates.

The three main factors used for determining the premium rates under a life insurance plan
are mortality, expense and interest. The premium rates are revised if there are any
significant changes in any of these factors.

• Mortality (deaths in a particular area):

When deciding upon the pricing strategy the average rate of mortality is one of the main
considerations. The Mortality Charge will apply on the Sum at Risk (SAR = Sum
Assured less the Fund Value pertaining to regular premiums). It will be deducted by
monthly cancellation of units from the accumulation unit account. The Mortality Charge
shall remain guaranteed throughout the policy term.

• Expenses:
The cost of processing, commission to agents, reinsurance companies as well as
registration are all incorporated into the cost of installments and premium sum and forms
the integral part of the pricing strategy.

• Interest:
The rate of interest is one of the major factors which determines people’s willingness to
invest in insurance. People would not be willing to put their funds to invest in insurance
business if the interest rates provided by the banks or other financial instruments are
much greater than the perceived returns from the insurance premiums.

42
Price is a relevant differentiator only in two segments - pure term insurance and in pure
annuities. Here too, service delivery and financial strength will need to be present at a
minimum acceptable level for price to be a relevant differentiator.
In case of savings oriented products, long term returns generated will be more relevant
than just the price of the product.
A focus on generating good investment performance and keeping a tight control on costs
will help in generating good long-term maturity value for customers.
Norms have been laid down on all of these by IRDA and adhering to these while
delivering good returns will be a challenge.

3. PLACE:

The Place Mix has two important dimension/ facets --

i) ICICI PRUDENTIAL LIFE INSURANCE Managing the insurance personnel, and
ii) Locating a branch i.e., No. of branch of ICICI located at different places

4. PROMOTION:

The insurance services depend on effective promotional measures.

In a country like India, the rate of illiteracy is very high and the rural economy has
dominance in the national economy.

It is essential to have both personal and impersonal promotion strategies.

In promoting insurance business, the agents and the rural career agents play an important
role. Due attention should be given in selecting the promotional tools for agents and rural
career agents and even for the branch managers and front line staff. They also have to be
given proper training in order to create impulse buying.

ICICI prudential life insurance follows personal and impersonal promotion strategies like

43
-- Organization of conferences and seminar,
-- Competitions like 'Spell Bee-India Spells 2009’
-- Exhibitions,
-- Participation in fairs and festivals,
-- Rural wall paintings and
-- Publicity drive through the mobile
-- Publicity van units

That would be effective in creating the impulse buying and the rural prospects would be
easily transformed into actual policyholders.

To maintain the level of demand for product and to be activated considerably in the
market
ICICI has developed its market by using the above promotion strategies to make a
Greater awareness of insurance and the need to have it as a protection tool rather than as
a tax planning measure.

44
 COMPETITORS

TATA AIG

Tata AIG Life Insurance Company Ltd. and Tata AIG General Insurance Company Ltd.
(collectively "Tata AIG") are joint venture companies, formed from the Tata Group and
American International Group, Inc. (AIG). Tata AIG combines the strength and integrity
of the Tata Group with AIG's international expertise and financial strength. The Tata
Group holds 74 per cent stake in the two insurance ventures while AIG holds the balance
26 per cent stake.

Tata AIG Life Insurance Company Ltd. provides insurance solutions to individuals and
corporates. Tata AIG Life Insurance Company was licensed to operate in India on
February 12, 2001 and started operations on April 1, 2001. Tata AIG Life offers a broad
array of life insurance coverage to both individuals and groups, with various types of
add-ons and options available on basic life products to give consumers flexibility and
choice.
The non-life insurance arm, Tata AIG General Insurance Company, which started its
operations in India on January 22, 2001 offers the complete range of insurance for
automobile, home, personal accident, travel, energy, marine, property and casualty, as
well as several specialized financial lines.

THE AIG GROUP

45
American International Group, Inc. (AIG) is the world's leading international insurance
and financial services organization, with operations in approximately 130 countries and
jurisdictions.
AIG member companies serve commercial, institutional and individual customers
through the most extensive worldwide property-casualty and life insurance networks of
any insurer.
In the United States, AIG is the largest underwriter of commercial and industrial
insurance and is one of the top three life insurers. AIG's global businesses also include
financial services, retirement savings and asset management. AIG's financial services
businesses include aircraft leasing, financial products, trading and market making.
AIG's growing global consumer finance business is led in the United States by American
General Finance. AIG also has one of the largest U.S. retirement savings businesses
through AIG SunAmerica and AIG VALIC, and is a leader in asset management for the
individual and institutional markets, with specialized investment management capabilities
in equities, fixed income, alternative investments and real estate. AIG's common stock is
listed in the New York Stock Exchange, as well as the stock exchanges in London, Paris,
Switzerland and Tokyo.

Products:

1. CHILDREN PLANS

2. ADULT PLANS

3. RETIREMENT PLANS

4. LIFE PLANS

CHILDREN PLANS
a. ASSURE EDUCARE

46
 b. ASSURE CAREER BUILDER
c. MAHALIFE GOLD
d. ASSURE 21YEARS MONEY SAVER

ADULT PLANS
a. TATA AIG INVEST ASSURE
b. ASSURE LIFELINE
c. LIFEPLUS
d. ASSURE 21YEARS MONEY SAVER
e. ASSURE SECURITY AND GROWTH
f. TATA AIG HEALTH FIRST
g. MAHALIFE GOLD

RETIREMENT PLANS
a. ASSURE GOLDEN YEARS
b. MAHALIFE GOLD
c. NIRVANA
d. NIRVANA PLUS

BIRLA SUN

Birla Sun Life Insurance is the coming together of the Aditya Birla group and Sun Life
Financial of Canada to enter the Indian insurance sector. The Aditya Birla Group, a
multinational conglomerate has over 75 business units in India and overseas with
operations in Canada, USA, UK, Thailand, Indonesia, Philippines, Malaysia and Egypt to
name a few.

Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla
Group, one of the largest business houses in India and Sun Life Financial Inc., a leading

47
international financial services organization. The local knowledge of the Aditya Birla
Group, coupled with the expertise of Sun Life Financial Inc., offers a formidable for your
future.
Aditya Birla Group

The Aditya Birla Group is India's first truly multinational corporation. Global in vision,
rooted in Indian values, the Group is driven by a performance ethic pegged on value
creation for its multiple stakeholders. A US$ 7.59 billion conglomerate, with a market
capitalization of US$ 7 billion, it is anchored by an extraordinary force of 72,000
employees belonging to over 20 different nationalities. Over 30 per cent of its revenues
flow from its operations across the world. The Group's products and services offer
distinctive customer solutions. Its 66 state-of-the-art manufacturing units and sectoral
services span India, Thailand, Indonesia, Malaysia, Philippines, Egypt, Canada, Australia
and China.

A premium conglomerate, the Aditya Birla Group is a dominant player in all of the
sectors in which it operates. Such as viscose staple fibre, non-ferrous metals, cement,
viscose filament yarn, branded apparel, carbon black, chemicals, fertilisers, sponge iron,
insulators and financial services. It is:

 The world no. 1 in viscose staple fiber

 The world's largest single location palm oil producer
 Asia's largest integrated aluminum producer
 A globally competitive, fast-growing copper producer
 The world's third largest producer of insulators
 Globally, the fourth largest producer of carbon black
 The world's eighth largest producer of cement, and the largest in a single
geography
 India's premier branded garments player
 Among India's most energy efficient private sector fertilizer plants
 India's second largest producer of viscose filament yarn

48
  The no. 2 private sector insurance company, and the fourth largest asset
management company in India

The Group has also made successful forays into the IT and BPO sectors.
Sun Life Financial

Sun Life Financial is a leading international financial services organization. With a

history that dates back to 1871, Sun Life Financial has evolved from a single mutual life
insurance to one of the most highly rated insurance and wealth management institutions
in the world. Sun Life Financial knows its value lies in more than assets and history. It
also lies in the culture of integrity and the pursuit of excellence that have marked all of
the organization’s endeavors. Today, the Sun Life Financial Group of companies and
partners are represented globally in Canada, the United States, the Philippines, Japan,
Indonesia, India and Bermuda.

Boundless Expansion

In March of 2000, Sun Life Financial Services of Canada, Inc., Sun Life Financials
parent company, listed its shares on stock markets in Toronto, New York, London and
the Philippines. This new access to shareholder equity provides Sun Life Financial with
even greater opportunities to grow around the world.

Innovation
The Sun Life Financial group of companies around the world, offer innovative and
practical financial solutions to individuals and corporations.

Products:

1. PRIME LIFE

49
2. LIFE COMPANION
3. FLEXI LIFE LINE PLAN
4. FLEXI CASH FLOW MONEY BACK PLAN
5. FLEXI SAVE PLUS ENDOWMENT PLAN
6. FLEXI SECURELIFE RETIREMENT PLAN
7. CLASSIC LIFE
8. CLASSIC LIFE PREMIER
9. BIRLA SUN LIFE TERM PLAN
10. SINGLE PREMIUM BOND
11. PREMIUM BACK TERM PLAN
12. FLEXI LONG TERM SAVINGS
13. FLEXI ACCESS MONEY
14. WOMAN FIRST PLAN
15. MY CHILD PLAN
16.BIMA KAVACH YOJANA

50
 FUTURE SCOPE

This section brings forth the future of this industry with regards to Increase
in the FDI limit for foreign players in Life Insurance Industry. It also brings forth
an overview about the next big opportunity for Insurance in India, which is Rural
India.
FDI in Insurance Sector
The government of India is planning to increase the equity limit for foreign direct
investment from the current 26 per cent to 49 per cent in the insurance sector. Indian
insurance companies have been pushing for the FDI limit to be raised. The current paid-
up requirement of Rs 2 billion for life insurance companies have become difficult targets
to achieve for the companies. The companies feel that injection of additional foreign
equity would reduce their costs. The sector was liberalized for private players towards the
end of 1999. Currently, there are 14 insurance companies, including the key public sector
company Life Insurance Corporation in the life insurance sector
The Finance Minister has commended on the growth in the insurance sector, although in
this budget 2006-2007 there was no mention of the steps being taken for increasing FDI
in insurance sector. There is a dire need to attract more foreign capital in the sector.
However it seems that the Union Finance Ministry is looking at proposals to de-link the
FDI limit from the Insurance Act, when it is amended. This move would empower any
future government to increase the FDI limit through an executive order without taking the
issue to the Parliament.

The growth of the Indian insurance sector is critical from the aspect of a social security
measure. Fresh Foreign Direct Investment (FDI) is required to fuel this and to ensure that
customers in India get access to world-class products, which the foreign partners bring

51
into India. The increase in FDI will give the Indian insurance industry the necessary
capital infusion required for its development. Many top management individuals are
hoping that the government keeps its promise of increasing the FDI and all political
parties look at the FDI limit in an overall perspective and encourage the growth of the
insurance industry in the country. In insurance the proposal is to raise FDI to only 49%,
so the majority control still remains with the Indian partners.
Insurance is a capital-intensive industry. It also has a long-gestation business. India’s
insurance industry needs capital, and a major source of capital would be from foreign
investors, who are now limited to 26 percent ownership. India needs to raise the cap on
Foreign Direct Investment (FDI) to attract capital for the industry.
Once the gates for FDI are opened up, the private insurance companies would not only
get fresh blood from its infusion but it can also look forward by working on the principle
of economies of scale. Except for Max New York Life no other Private Life Insurance
company has managed to breakeven. As has been discussed above that Insurance industry
is a capital intensive industry, needs very high cost to expand so later an organization
break even the better it is for them. As the cost incurred initially would help an
organization to remain profitable in the long run.

Rural Market: an Opportunity

Rural India seems to have an appetite for mobile phones, computers, and cars and to add
to it we have insurance. In India with the private players having entered into the
insurance industry, the expected explosion in job opportunities may not actually happen
but for them the catchments area is the opportunities in the rural India. In India the
insurance business can be said to be "a marathon, not a sprint". This is because of the
nature of the business being long term. With merely five years of the industry being
opened, not surprisingly, the new comers are making losses.

The public sector companies, notably the LIC, have gained in strength, thanks to the
deepening of the market consequent to the awareness created by the new companies.

52
However this does not deterred the private sector, which knows know that the race is a
marathon, not a sprint. However it seems that they if not anything, are only increasing
their spending, though only out of the capital. Today, there are 14 Life Insurance
companies in India excluding the PSU. If the Insurance companies go more and more
rural in search of business, there will be opportunities in the rural sector. Those who
understand rural India better will be in demand.

The rural consumer is now exhibiting an increasing propensity for insurance products. A
research conducted exhibited that the rural consumers are willing to dole out anything
between Rs 3,500 and Rs 29,000 as premium each year. In the insurance the awareness
level for life insurance is the highest in rural India, but the consumers are also aware
about motor, accidents and cattle insurance. In a study conducted by MART the results
showed that nearly one third said that they had purchased some kind of insurance with
the maximum penetration skewed in favor of life insurance. The study also pointed out
the private companies have huge task to play in creating awareness and credibility among
the rural populace. The perceived benefits of buying a life policy range from security of
income bulk return in future, daughter's marriage, children's education and good return on
savings, in that order, the study adds.
Insurance Regulatory and Development Authority (IRDA) have set stiff rural targets for
insurance companies. For the life sector, in the first year, 5 per cent of the total policies
written should come from the rural sector. This will go up to 15 per cent in five years.
Similarly are the targets for the non-life sector and these targets are also expected to go
up in some time to come. As of now companies are just concentrating on getting the
minimum business and then concentrate on more lucrative avenues. Selling rural plans to
suit the needs of villagers doesn’t help company in making its cash register ringing
compared to ULIP plans which is gain and gain for the organization.

Initially getting revenue from the rural areas is a challenge as there is a lack of
infrastructure in place. None of the Private Life insurance companies has had break-even
even though it’s more then 5years since coming into inception. It’s all because if the
initial cost being on the higher side. Setting up infrastructure in these rural villages only

53
put the pressure on the cost rather than helping in amassing revenue. And also for the fact
that it’s a service industry and involves continuous interaction between the advisor and
the policy holder. No point selling policies without proper infrastructure in place.

However with government determined to increase compulsory business from rural sector,
investment in infrastructure setup in rural areas is not far off. Someone rightly said about
the rural Life Insurance that it’s a marathon rather than a sprint. So have a long vision
rather that being short sighted.

54
CHAPTER-3: ORGANISATION STRUCTURE

55
 ORGANISATION STRUCTURE

Head Office
General Manager

Manager

Assistant Manager

Accountant

Assistant Accountant

Senior Clerk

Junior Clerk

Attenders

56
CHAPTER-4: SWOT ANALYSIS

57
 SWOT ANALYSIS

STRENGTHS OF ICICI PRU LIFE

o A strong backup by two giant organizations, ICICI is India’s premier financial

institution. And Prudential Life Insurance, which is UK’s largest and world’s
second largest Life Insurance organization
o ICICI Pru Life offers a wide range of insurance policies covering all types of
income groups.
o The organization offers maximum number of riders / Add On benefits along with
the insurance policies
o ICICI Pru offers triple cover in case of accidental death in mass surface public
transport.
o Only ICICI Pru Life offers major surgical benefit rider.
o Under savings plan or money back, ICICI Pru Life is the only company to offer
120 % as surgical benefit.
o In case of money back or savings plan, liquidity is maximized at ICICI Prudential
Life at an interval of 3 years for 15 years term.
o ICICI Pru offers accidental death, disability benefit and waiver of premium into
one rider.
o Most competitive premium rates of base plan and riders are that of ICICI pru Life.
o Under Term Assurance, ICICI Pru Life has no maximum limit on Sum Assured
which is not offered by any other existing insurer.

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 o Under single premium policies, in case of death, ICICI Pru Life offers a death
benefit of 25 % addition to the face amount.

WEAKNESSES OF ICICI PRU LIFE

o ICICI Pru Life does not offer a critical illness rider, i.e. the policy continues even
after claim to the full face amount. This rider is only offered by HDFC Standard
Life Insurance Company.
o Only Max New York Life offers COMA, Multiple Sclerosis in critical illness
rider.
o LIC charges Re. 1 per thousand for accidental death, disability benefit and waiver
of premium rider, but ICICI Pru Life charges Rs. 1.35 per thousand for the same.
o ICICI Pru Life does not offer competitive group insurance policies.
o ICICI Pru does not offer minimum S.A. of Rs. 50,000 as offered by LIC in case of
Term Assurance.

OPPORTUNITIES FOR ICICI PRU LIFE

o Change in business cycles contributes as an opportunity for the company because

it offers various policies suitable in different economic scenarios.
o Large size of untapped population is also an opportunity for ICICI Pru Life.
o Change in life style and perception in favor of Life insurance is another
opportunity for ICICI Pru Life.
o Increased awareness among people regarding benefits of life insurance also
contributes to the opportunities of the company.

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 o Continuous improvement in technology is an opportunity for the organization.
o Lower inflation rate is also an opportunity for ICICI Pru Life.

THREATS TO ICICI PRU LIFE

o Reducing interest rates for government securities also poses a threat to the
organization.
o Competition posed by the existing life insurers and new entrants is also a threat to
the company.
o A fast technological obsolescence is another threat posed by the organization.

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CHAPTER-5 :FINDINGS

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 FINDINGS

«80% of the respondents have bought a life insurance policy from ICICI Prudential
Life Insurance Company Ltd.

« ICICI Prudential’s ‘Life Time, Retirement Solutions and Smart Kid’ are the most
preferred policies among all types of policies of the company

« 63% of the respondents have a ‘High’ level of satisfaction for the policy service and
all of the respondents are satisfied with the existing features of their life insurance
policy

« Life Risk cover is the main criterion for buying a Life Insurance policy followed by
benefit of income tax rebate

« Majority of the respondents have implicit faith in Private Life Insurance companies
as they believe they are trustworthy

« 90% of the policy holders opined that the prices of policies of Private Life Insurance
companies are affordable

« The most important guidance/service expected from a Life Insurance advisor is the
thorough and detailed explanation of policy features
« All the respondents (100%) are aware of ICICI Prudential – their main source of

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awareness being Life Insurance advisors and advertisements

CHAPTER-6 RECOMMENDATIONS AND

CONCLUSIONS

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 RECOMMENDATIONS
&
CONCLUSIONS

RECOMMENDATION

• Company’s sale executives should have constant touch with the financial
advisor in customers to get the direct information about the latest market
development.
• The company should advertise more through print media and television
media. This can be costly for them, but it helps to increase the awareness
of the company.
• Company should open more branches in Delhi and other regions especially rural
areas.
• Product and policies of the company should me more customer centric and
flexible.

• Commission rates for the advisor should be increased.

• Bonuses should be provided to the customer within time.

• The company should offer higher margin to the dealers to motivate them.
• The company should offer higher margin to the dealers to motivate them.

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 • The company should increase its producr range and include some new and
innovative products.
• Company should keep pace wih the changing taste of customers.
• The company should go for strategy. more aggressive marketing.

CONCLUSIONS

There are many areas that company can look for an opportunity to make its cash register
ringing. This world presents the opportunity for those who have acumen for risk and also
for finding the right time to make innovation. After all it’s all about providing service
with a little differentiation and being a little creative. So below are the listed areas that
ICICI Pru needs to focus on to consolidate its second position in the insurance industry
and then start it from there to topple the public sector giant in insurance sector, the LIC.

1. GROUP INSURANCE
In this regard the group insurance business would be a dynamic form of enlarging the
scope. While this form of business has been showing trends over the years, it has still not
taken off in a desirable way. In most cases, it has been found that it has been a case of
harnessing the corporate associate of the insurance firms. But if group insurance is to be
promoted as a dynamic tool, one should look beyond the corporate relationships. There
should be a greater thrust in this area, and wherever required, the availability of
reinsurance should be ensured so that larger groups can be covered. This would be a very
viable form of spreading the domain of insurance in a market where the orientation of the
masses is not very high. Just to bring the facts on the table ICICI Pru gets only 2% of the
revenue from this segment where as when we compare this with the global insurance
which collects 25% of their revenue from this sector, ICICI Pru figure stands minimal.

2. UPSURGE IN SINGLE PREMIUM

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Another interesting feature that has been observed recently has been the sudden rise in
the quantum sales with regard to sales of the single premium policies, which are all
associated with the investment in the market. For example the business of the largest life
insurer in the country was around 25%. Similarly these figures of private players like
ICICI Pru have gone up rapidly. This presents a wonderful opportunity for the players
and come up the ranks in direct competition with the insurance major, LIC.
This presents an opportunity in the current scenario when equity markets are at high and
returns generated by the funds are very high. Single premium policy by the investor is
being seen as a good investment as they feel a sense of security along with the prospect
of higher returns. Another area that is worth thinking about is that this investment is good
for business class and people at the management level. So these kinds of policies are in
the market to counter Mutual Funds which sells like hot cakes. To get a share of pie this
segment, single premium policies were launched by the various Life Insurance
companies.

3.PENSION MARKET
One area where a great deal needs to be done is the pension and the annuity sector. It is
here that general psychology of the masses comes into play. For long the average Indian
has been interested in tangible benefits and that too getting then at the earliest. In this
situation the pension products are not very appealing unless they are attached to
employment condition. Thus there is a huge potential in this sector as all the jobs in this
world are not linked to pension for life. Insurers have an opportunity here to market this
product aggressively and they also have to be a very imaginative in their publicity
campaigns and thus capturing this segment of the market. In the long run, it would also
facilitate the older generation in their attempt o be a reduced burden on their young ones.

4. CUSTOMER RELATIONSHIP MANAGEMENT

CRM principally revolves around marketing. It involves integrating information gathered
from all distribution channels and analyzing the data with the help of information
technology to understand the consumer behavior. The continuous analysis and
improvement over a period should result in enhancing customer’s life time value with the

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firm. The insurance sector remains a very competitive market and those companies that
are able to best utilize their data and provide their customer with the most personalized
options will have the distinct competitive advantage. The insurers that come up to the top
will be those who leverage the appropriate technology solutions effectively in order to
foster customer loyalty, attract new customers and improve operational efficiency by
providing common information across their lines of business.
Relationship is the key to every business, more so in case instead of a tangible
product something intangible is being offered. A satisfied customer would in turn give
you more clients whereas an unsatisfied would harm the reputation of the organization
and in turn the business. The need of the hour for an advisor is to concentrate on few
individual rather than going berserk in search of new customers. If you just concentrate
on retention of the customer by providing him requisite service, he will not only give you
repeat business but also the much needed referrals and there by expanding your own
horizon and taking business to the higher level. Make an effort to be in touch with them
even if it involves going out of your own way. After all it’s because of him that you are in
this business.

5. MRTA (Mortgage Reducing Term Assurance)

In the age of fierce competition every organization has to keep innovating with the
channel it finally decides to distribute its policies through. MRTA deals with covering the
risk of payment of loan if the person who has taken the loan expires. Normally the
responsibility of paying the loan comes on the legal heirs of the property however MRTA
ensures that family doesn’t have to go through this trauma. At this point as the insurance
company will make good the payment to the loan company as at the initially the
insurance company adds a premium to the EMI, resultant is the MRTA EMI (EMI loan +
Life Insurance premium). The premium charged is very minimal however it gives
security to the family. This is a new avenue that company should concentrate on as the
number of family taking home loan, personal loan and car loan has been ever burgeoning.

6. CORPORATE CHANNEL

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Based on analysis there are people who would still like to go in for a channel rather that
approaching the company directly so here is an opportunity for ICICI Prudential to tap
on. There are also those sections of people that would lay some weight on the advice of
someone who is an expert player. People associate corporate agency as a person of sound
knowledge about business. Collaboration with schools and hospitals would go a long way
to help companies collect additional source of revenue.
Schools already have an infrastructure in place and getting associated with IPru
would not only give the organization greater access to the market but would also prove as
an additional source of revenue for the school. The target audience would be primarily
the students who will be admitted to the Nursery, Prep and KG classes. Insurance fund
can be added to the number of fund that these schools initially charge parents, this fund
would provide educational finance to the student in case of the unfortunate death of the
parents, and thus the studies of the potential students are not affected. Schools can thus be
made Corporate Individual Agent and thus can carry on business on behalf of the
company.

7. HEALTH INSURANCE
ICICI Prudential has been pioneer in launching a plan in health insurance segment
launching health assure plus. Though sometimes it is confused with mediclaim, but
unlike mediclaim it just doesn’t pay the sufferer the amount incurred at the hospital for
treatment but the amount that the person at the time of taking the policy sought for, which
most of the time is way higher than the amount spent for treatment.
This market has very high potential with people getting more and more health conscious
and getting them insured not only for life but also for health. Company has already
launched a product Cancer Life to cater to different types Cancer. This market demands
continuous innovation to cater to different needs of different individuals.

8. PRODUCT INNOVATION
With the demographic changes and changing life styles, the demand for insurance cover
has also evolved taking into consideration the needs of prospective policyholder for

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packaged products. There have been innovations in the types of products developed by
the insurers, which are relevant to the people of different age groups, and suit their
requirements. Continued innovations in product development has resulted in a wide range
of flexible products to meet the requirements for cover at different stages of life – today a
variety of products are available ranging from traditional to Unit linked providing
Protection towards child, endowment, capital guarantee, pension and group solutions.
In this industry change is the only word which is constant. Changing demand
requires continuous innovation by the company. Every company offers more or less the
same product, so the company which offers the maximum value with the least cost will
be the one which will be preferred over the other one.
More customers are buying products and services based on their true needs and not just
traditional money back policies. There are lots of saving and investment plans in the
market with the like of “LIFE LINK SUPER” that ICICI Pru recently launched in the
market. They are also the pioneer in launching a health assure plus plan targeting the
segment of health insurance. These health insurance plans work on the lines of life
insurance. So keep innovating in the product to stay ahead in the race of the

number one private insurance company in India.

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 BIBLIOGRAPHY

Websites
www.iciciprulife.com
www.irdaindia.org
www.indiainfoline.com
www.thehindubusinessline.com
www.theeconomictimes.com
www.indiainfoline.com
www.google.co.in

Journals
Business World
Business Today
Money Outlook
The Economic Times
Company’s Catalogs
Insurance chronicle, ICFAI Press

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