1

EMERGING TRENDS IN INSURANCE SECTOR

A Project Submitted to
University of Mumbai for partial completion of the
degree of Master in Commerce

Under the Faculty of

Commerce

By

Ms. Isha Santosh Mate

(RollNo.08)

Under the Guidance of

Prof. Kesar Lalchandani

Laxman Devram Sonawane

College

Opp.Fire Station, Near DurgadiKilla, Bhiwandi-Murbad Road,

Wadeghar, Kalyan (W)- 421301,
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Laxman Devram Sonawane College

Opp.Fire Station, Near DurgadiKilla, Bhiwandi-Murbad Road, Wadeghar,
Kalyan (W)-421301,

Certificate
This is to certify that Ms. Isha Santosh Mate has worked and duly
completed his Project Work for the degree of Master in Commerce
under the Faculty of Commerce in the subject of Advanced
Accountancy and his project is entitled, “Emerging Trends in
Insurance Sector” under my supervision. I further certify that the
entire work has been done by the learner under my guidance and
that no part of it has been submitted previously for any Degree or
Diploma of any University.

It is his own work and facts reported by his personal findings and investigations.

External Examiner Internal Guide

Prof. Kesar Lalchandani

Date of submission: - 2023

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Declaration by
learner

I the undersigned Ms. Isha Santosh Mate by, declare that the work
embodied in this project work titled “Emerging Trends in Insurance
Sector” forms my own contribution to the research work carried out
under the guidance of Prof. Kesar Lalchandani is a result of my own
research work and has not been previously submitted to any other
University for any other Degree/Diploma to this or any other
University.

Wherever reference has been made to previous works of others, it has

been clearly indicated as such and included in the bibliography.

I, here by further declare that all information of this document has

been obtained and presented in accordance with academic rules and
ethical conduct.

Ms. Isha Santosh Mate

Certified by
Prof. Kesar Lalchandani
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Acknowledgment

To list who all have helped me is difficult because they are so numerous and the
depth is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the University of Mumbai for giving me chance to do
this project.

I would like to thank my Principal, Prof. Annie Antony for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator Prof. Kesar Lalchandani, for her
moral support and guidance.

I would also like to express my sincere gratitude towards my project guide Prof.
Kesar Lalchandani whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and
magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my Parents and Peers who
supported me throughout my project.
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INDEX

CHAPTER PAGE
NAME NO
NO

INTRODUCTION 7-13

1
1.1 Introduction to insurance

1.2 Definition of insurance

1.3 Pre liberalization of insurance

1.4 Post liberalization of insurance

14-25

2 Trends in insurance sectors

2.1 Indian Insurance in 21 Century

2.2 Emerging trend in Indian Insurance Sector

2.3 Growth of Insurance Sector

2.4 Present Scenario of Insurance Sector in India

2.5 Technology Trend in Insurance Sector

2.6 Globalization of Life Insurance Market

Impact of Budget on Insurance Sector 26-28

3.1 Impact of Budget 2004

4 Private V/S Public Insurance Sector 29-34

4.1 Comparison Between private and public

Insurance Sector In India
5 Company Analysis of LIC & ICICI Prudential 35-43

5.1 Mission Statement of LIC

5.2 Vision of LIC & ICICI Prudential
5.3 Goal of LIC & ICICI Prudential
5.4 Organizational Structure of LIC and ICICI Prudential
5.5 Market Share of LIC & ICICI Prudential

Product Offered by LIC & ICICI Prudential 44-54

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6
6.1 Product Offered by LIC & ICICI Prudential
6.2 New Products by LIC & ICICI Prudential
55-59
7 Innovation Strategy & IT in LIC & ICICI Prudential
7.1 Innovation Strategy in LIC & ICICI Prudential
7.2 IT in LIC & ICICI Prudential
60-65
8 Emerging Trend in LIC & ICICI Prudential
8.1 Emerging Trend in LIC & ICICI Prudential
9 Impact of Financial Crisis on LIC 66-74

9.1 Impact of Financial Crisis on LIC

10 INDIAN INSURANCE INDUSTRY: Reaching out to 70
Exponential Growth

11 Data Analytics in Insurance Industry 76

12 CONCLISION 82

13 Bibliography 83
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Chapter 1
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Introduction to Insurance

Insurance is nothing but a system of spreading the risk of one onto the shoulders of many. While
it becomes somewhat impossible for a man to bear by himself 100% loss to his own property or
interest arising out of an unforeseen contingency, insurance is a method or process which
distributes the burden of the loss on a number of persons within the group formed for this
particular purpose.

Basic Human trait is to be averse to the idea of risk taking. Insurance, whether life or non-life,
provides people with a reasonable degree of security and assurance that they will be protected in
the event of a calamity or failure of any sort.

Insurance may be described as a social device to reduce or eliminate risk of loss to life and
property. Under the plan of insurance, a large number of people associate themselves by sharing
risks attached to individuals. The risks, which can be insured against, include fire, the perils of
sea, death and accidents and burglary. Any risk contingent upon these, may be insured against at
a premium commensurate with the risk involved. Thus collective bearing of risk is insurance.

Insurance Indemnifies Assets & Income

Every Asset has a value and generates Income to its Owner. There is a normally expected Life-
time for the Asset during which time it is expected to perform. If the Asset gets lost earlier,
being destroyed or made Non-functional through an Accident or other unfortunate event the
Owner is Prejudiced. Insurance helps to reduce CONSEQUENCES of such Adverse
Circumstances which are called Risks

Insurance is the science of spreading of the risk

It is the system of spreading the losses of an Individual over a group of Individuals

Insurance is a Method of sharing of financial losses

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of a few from a common fund formed out of Contribution of the many who are equally exposed
to the same loss What is uncertainty for an Individual becomes a certainty for a Group. This is
the basis of All Insurance Operations. Thus insurance convert uncertainties to certainty

DEFINITIONS

The definition of insurance can be made from two points:

Functional definition.

Contractual definition.

Functional definition

Insurance is a co-operative device to spread the loss caused by a particular risk over a number of
persons who are exposed to it and who agree to insure themselves against the risk.

General Definition

Insurance has been defined to be that in which a sum of money as a premium is paid in
consideration of the insurer's incurring the risk of paying a large sum upon a given contingency.

In the words of John Magee, "Insurance is a plan by themselves which large number of people
associate and transfer to the shoulders of all, risks that attach to individuals."

Fundamental Definition

In the words of D.S. Hansell, "Insurance accumulated contributions ofall parties participating in
the scheme."

Contractual Definition

In the words of justice Tindall, "Insurance is a contract in which a sum of money is paid to the
assured as consideration of insurer's incurring

the risk of paying a large sum upon a given contingency."

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Working of Insurance

Pre-Liberalization Scenario

Indian History: Time to turn the clock back-and open up insurance

Fifty years ago, India had a bustling, if somewhat chaotic, entirely private insurance industry.
The year after Independence, 209 life Insurance companies were doing business worth Rs712.76
crore (which grew to an amazing Rs 295,758 crore in 1995-96). Foreign insurers had a large
market share 40 per cent for general insurance but there were also plenty of Indian
companies, many
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promoted by business houses like the Tatas and Dalmias. The first Indian-owned life insurance
company, the Bombay Mutual Life Assurance Society, was set up in 1870 by six friends. It
Insured Indian lives at the normal rates instead of charging a premium of 15 to 20 percent as
foreign insurers did. Its general insurance counterpart, Indian Mercantile Insurance Company
Ltd., opened in Bombay in 1907.

A plethora of insufficiently regulated players was a sure recipe for abuse, especially because
there was no separation between business houses and the insurance companies they promoted.
The Insurance Act, 1938, introduced state controls on insurance, including mandatory
investments in approved securities, but regulation remained ineffective. In 1949, Purshottamdas
Thakurdas, chairman of the Oriental Assurance Company, admitted: "We cannot deny that,
today, there is a tendency on the part of insurance companies in general to make illicit gains.
Can we overlook the cutthroat competition for acquiring business? And still worse is the
dishonest practice of adjusting of accounts." After a 1951 inquiry, thegovernment was dismayed
that companies had high expense and premium rates, were speculating in shares, and giving
loans regardless of security. No wonder that between 1945 and 1955, 25 insurers went into
liquidation and 25 transferred their business to other companies.

This reckless record stoked the pro-nationalization fires. The 1956 life insurance Nationalization
was a top-secret intrigue; for fear that unscrupulous insurers would siphon funds off if warned.
The government resolved to first take over the management of life insurance companies by
ordinance, then their ownership. The then finance minister C.D. Deshmukh later wrote: 'Seth
Ramakrishna Dalmia's extraction of Rs.225 crore (misappropriation by the Bharat Insurance
Company) was a heaven-sent opportunity. We were ready to nationalize, with every detail
worked out." On 19 January 1956, the news was announced on the radio, though even the
director- general of AIR was not shown the speech. The next morning, at 9 am, while executives
were frantically seeking details over the trunk telephone, says Deshmukh in his autobiography,
our officers walked into the respective insurance offices, showed their authority and then took
over the business. believe this will be regarded as one of the best kept secrets of the Government
of India in all times to come." The ordinance transferred control of 245 insurers to the
government. LIC, established eight months later, took over their ownership. General Insurance
had its turn in 1972, when 107 insurers were amalgamated into four companies headquartered in
the four metros, with GIC as a holding company. Nationalization brought some benefits.
Insurancespread from an urban-
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oriented, high-end business to a mass one. Today, 48 per cent Of LIC's new business is rural.
Net premium income in general insurance grew from Rs222 crore in 1973 to Rs 5,956 crore in
1995-
96. Yet, rigid controls hamper operational flexibility and initiative so both customers service and
work culture today are dismal. The frontier spirit of the early insurers has been lost. Insurance
companies have also been timid in managing their investment portfolios. Competition between
the four GIC subsidiaries remains illusory. If Nationalization ever had a purpose, it has been
served. It's now time to turn back the clock in some respects, and open up the sector again. The
government already intends to insist on large minimum capital requirements, a strong regulator,
and a healthy distance between insurers and industry. To ensure that history doesn't repeat itself .

Post Liberalization Scenario

While no aspect of the reform process in India has gone smoothly since its inception in 1991, no
individual initiative has stirred the proverbial homets' nest as much as the proposal to liberalize
the country's insurance industry. However, the political debate that followed the submission of
the report by the Malhotra Committee has presumably come to an end with the ratification of the
Insurance Regulatory Authority (IRA) Bill both by the central Cabinet and the standing
committee on finance. This section traces the evolution of the life insurance companies in the
US from firms underwriting plain vanilla insurance contracts to those selling sophisticated
investment contracts bundled with insurance products. In this context, it brings into focus the
importance of portfolio management in the insurance business and the nature and impact of
portfolio related regulations on the asset quality of the insurance companies. It also provides a
rationale for the increased autornatisation of insurance companies, and the increased emphasis
on agent-independent marketing strategies for their products. If politicized, regulations have
potential to adversely affect the pricing of risks, especially in the non-life industry, and hence
the viability of the insurance companies. Finally, the backdrop of US experience provides some
pointers for indianpolicymakers.
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Chapter 2
Trends in Insurance Sector
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INDIAN INSURANCE IN 21ST CENTURY:

2000: IRDA starts giving licenses to private insurers: ICICI prudential and HDFC Standard Life
insurance first private insurers to sell a policy 2001: Royal Sundaram Alliance first non life
insurer to sell a policy 2002: Banks allowed selling insurance plans. As TPAS enter the scene,
insurers start setting non-life claims in the cashless mode

2007: First Online Insurance portal, https:/// set up by an Indian Insurance Broker, Bonsai
Insurance Broking Pvt Ltd.

The Government of India liberalized the insurance sector in March 2000 with 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.

Minimum capital requirement for direct life and Non-life Insurance company is INR1000
million and that for reinsurance company is INR 2000 million. In the 2004-05 budgets, the
Government proposed for increasing the foreign equity stake to 49%, this is yet to be effected.
Under the current guidelines, there is a 26 percent equity cap for foreign partners in direct
insurance and reinsurance Company.

Emerging Trend in Indian Insurance Sector

Market by 2015, particularly in countries like India and China. The IRDA is the major body,
which is providing better opportunities for the private player in India, GIC & LIC's monopoly
market approach is no more prevalent in India. The new market scenario for insurance is
growing: no doubt it is a flying bird.
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Change is the eternal law of nature. Everything is changing according to the need of the time.
Economic growth and social development in present scenario is due to sudden change in
industrial policy and economic planning. Globalization has been the basic mantra after 1991, so
every one thinks of being global. Liberalization, privatization and globalization is the basic
concept of success in all aspect of development. Competition is tough now due to globalization.
Business has positioned the entire economy, and industrialists think about making things global.
There are no stringent rules or regulations for making any business house or industry.
Government gives more emphasis on export and entrepreneurship. This is a changing world.
Everyone has to compete for better success. Marketing is the major concept for developing any
type of business. After globalization, marketing has taken a new dimension and it is the most
challenging task now. The new horizon of marketing in the field of finance and insurance in
present scenario is a good sign of development.

Globalization "The Dynamic Force"

Many people consider globalization nothing new societies have been interconnected for years.
The world has never experienced globalization at this level of intensity before, or the speed at
which it is transforming and integrating societies.

Herman E. Daly, an analyst of Global Policy Forum, characterizes globalization as, "Global
integration of many former national economies into global economy, mainly by free trade and
free mobility, but also by easy or uncontrolled economic purposes." He further clarifies that
globalization is not internationalization globalization brings about a single, integrated, global
economy, while internationalization is a federation of nations cooperating as sovereign units to
advance the national interest of all members. Though globalization has become a broad heading
for a multitude of global interactions, ranging from the expansion of cultural influences across
borders to the enlargement of economic and business relations throughout the world, it has
different dynamic force for different person. For the economist, globalization is essentially the
emergence of a global market. For a historian, it is an epoch dominated by global capitalism.
Sociologists see globalization as the celebration of diversity and the convergence of social
preferences in matters of life style and social values. To the political scientist, it represents the
gradual erosion of state sovereignty. But discipline specific studies explain only a part of the
phenomenon. From a multi-disciplinary angle, globalization may be treated as a phenomenon, a
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philosophy and a process, which affects human beings as profoundly as any previous event.
Several factors have been responsible for this phenomenon. This study confines its attention to
four growth-enhancing facets of globalization that have been among its key drivers, namely
trade, finance, communication and transport.

MNCS-"The New Path Maker"

After globalization, so many MNCs are the major path maker for economic growth. The world-
class MNCs constantly pursued their strategy of gaining access to every promising market world
over, which had sound growth potentialities, in order to expand their network and control over
the respective local economies. The consequence was that some of the markets, particularly in
developing countries like China and India, adopted some sort of self- protectionist mechanisms
by imposing certain deliberate politico-legal restrictions in order to restrict the entry of capital
goods of these MNCs into their markets.

Insurance being an integral part of financial service could not claim immunity to the impact of
the globalization process and opened up to private and global players world over, including
India. So many MNCs are now entering into the insurance sector which is now a booming
sector.

New Horizons of Insurance Market after Globalization

After 1970, insurance sector has become more prosperous. For a long time, the two most
important insurance players were LIC & GIC. Now so many MNCs have entered into the same
sector like Bajaj Allianz, Aviva, Birla Sunlife, ICICI Prudential, etc. Insurance is now acting on
two dimensions, i.e., the element of investment and the element of protection. The Economic
Value Addition (EVA) has taken the major concern of the same business.
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Marketing after globalization has become: -

⚫ More customer oriented

⚫ Mostly better service oriented

⚫ More competitive

Better satisfaction, more value addition and strategic developmentcan help any insurance sector
to sustain in the present era.

New Market Scenario & Insurance

Insurance market in present scenario though is a booming sector, but the market has changed
from simpler to complex, less challenging to more challenging. Going domestic to international
is a very difficult task. Understanding market synergy and cognisation of perception of customer
in the insurance field is very difficult. The Regulatory Board like 'IRDA' is playing a very
crucial role for the benefit of the insurance holder. The premium and interest rate can't be
violated for better profit and development. The market is becoming tougher gradually.

Globalization of Insurance Market

Historically, insurance has been an integral part of financial services system and recognized as a
corner-stone of a country's financial health and symbol of progress. Insurance provides for the
financial security of citizens and their families. It offers valuable investment advice and serves
as an effective step towards both individual and national financial stability.

After the terrorist attack on the World Trade Center in September 2001, the momentum of
growth of world economy suffered some temporary setback. According to 3rd Annual
Globalization Index Report of World Watch Institute, the growth rate fell sharply from 4% in
2000 to 1.3% in 2001. But the world had become stabilized after that and the economic growth
was back with entry of so many MNCS and insurances.
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Triggered by the sound fundamentals in global economy and internationalization of world

markets, several countries turned towards free market regimes in banking and insurance, putting
an end to several decade-old state-owned controlled markets. The insurance market in China &
India is brighter. The leading reinsurance company like Swiss Re & Munich Re has projected
20- 25% growth in life and health insurance market by 2015, particularly in countries like India
& China.

Present Scenario of the Insurance Sector in India

As per the findings of a survey carried out in 2003-04, the Indian insurance market ranked 5th in
the Asian continent after Japan, South Korea, China & Taiwan, and 19th
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In India, the process of liberalization and opening of insurance sector to private and foreign
players started taking shape as part of the series of financial and economic reforms brought in by
the Government in the late 1990s, in accordance with the recommendations made by R. N.
Malhotra Committee constituted by the Government in April 1993. By amending the relevant
provisions of the Insurance Act, 1938, and passing the IRDA Act, 1999, by an Act of
Parliament, Insurance Regulatory and Development Authority (IRDA) was established in the
year 2000, which marked the opening act of the insurance sector to private participation and
foreign investment.

GDP & Insurance

Though potentially insurance is more than Rs. 500 Billion business in India, and together with
banking, it adds slightly more than 7.5% to the GDP, of the country, the gross premium
collection has been hardly 2% of the GDP, not withstanding its growth between 15-20%
annually, during the decade preceding the opening up of insurance market for private and
foreign players in the year 2000. As the insurance premium database of various developed and
developing countries for the year 1999 indicates, the per capita premium of India was just
around $ 8 as against the same having been very high in the developed countries. In other words,
and in terms of percentage of GDP, it was 14% for Japan, 12% for Korea and 9% for UK as
against the same staggering below 2% for India for the fiscal year 2000-2001.

In the new economic reality in globalization, insurance companies in 21st century face a
dynamic global business environment. Radical changes are taking place owing to the
internationalization of activities. The appearance of new risks, new types of cover to match with
new risk situation, unconventional and innovative ideas on customer service, low growth rates in
developed markets, changing customer needs and the uncertain economic conditions in the
developing world are exerting pressure on insurer's resources while testing their ability to
survive. The existing insurers are facing difficulties from non-traditional competitors that are
entering the retail market with new approaches and through new channels. The basic premise of
globalization is opening up of new service markets to provide the developing countries with new
opportunities for the expansion of trade and economic growth.

The rapidly changing economic scene, the political attitude, social values and structures, cultural
patterns, developments in IT have transformed lifestyles in urban and rural areas. Developments
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in other parts of the world, which are witnessing sweeping changes in terms of convergence of
financial and insurance markets through banc assurance, replacement of reinsurance contracts by
financial instruments, sale of insurance through mergers and acquisitions will also have their
impact on Indian Insurance Industry.During the long monopoly regime, the government
attempted minor changes in the procedures without going into the root cause. The deregulation
requires comprehensive changes in the character and basic policies of the industry.

Till the year 2000, the insurance industry was a government monopoly and is now experiencing
cut-throat competition because a number of players have entered into the Indian market in the
form of Joint ventures with Indian private sector partners.

Consequently, Indian Insurance Industry has closely integrated with world economy thereby
making crucial for insurance companies

to operate outside national boundaries.

India Insurance sector after globalization has brighter future. The economic status of people is
changing. So many new government policies and economic reforms are impetus for insurance
sector. The firmament of economic growth is vast and never ending but the insurance as a bird
have to fly. No doubt insurance market after globalization is "A flying bird"!
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Internet:

Today, the internet has completely changed the service delivery process. Internet is today used
to even sell insurance policies. Internet is, in fact, proving to be one of the widely used
distribution networks for selling insurance policies. Also internet is used for sending premium
notices to policy holders through e-mails

Companies like LIC (www.licindia.com). ICICI (www.iciciprudential.com) all have websites

from which people can get the information about their products, prices, various schemes, and
lots of other information. People can also purchase the product through this website.
 23

Electronic Clearance Service (ECS):

Almost all the big organizations today provide the ECS facility to its customers. A policy holder
having an account in any bank which is a member of the local clearing house can opt for ECS
debit to pay premiums. The advantage here is that once the option is exercised, the policy holder
need not visit a branch for paying the premium or collecting the receipts. On the day indicated
by the policy holder, the premium amount will be directly debited to the bank account of the
policyholder and the receipt will be issued by the designated branch office.

Call Centres and SMS services:

Almost all the insurance companies have their own call centres which cater to the phone based
queries of the policyholders. This service is 24x7 and they have the Interactive Voice Response
(IVR) systems at all the branches

Globalization of Life Insurance Market SOME GENERAL INFORMATION ABOUT LIFE

INSURANCE IN INDIA
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The Life Insurance market in India is an underdeveloped market that was only tapped by the
state owned LIC till the entry of private insurers. The penetration of life insurance products was
19 percent of the total 400 million of the insurable population. The state owned LIC sold
insurance as a tax instrument, not as a product giving protection. Most customers were under-
insured with no flexibility or transparency in the products. With the entry of the private insurers
the rules of the game have changed.

The 12 private insurers in the life insurance market have already grabbed nearly 9 percent of the
market in terms of premium income. The new business premium of the 12 private players
hastripled to Rs 1000 crore in 2002-03 over last year. Meanwhile, state owned LIC's new
premium business has fallen.

Innovative products, smart marketing and aggressive distribution. That's the triple whammy
combination that has enabled fledgling private insurance companies to sign up Indian customers
faster than anyone ever expected. Indians, who have 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.

The growing popularity of the private insurers shows in other ways. They are coining money in
new niches that they have introduced. The state owned companies still dominate segments like
endowments and money back policies. But in the annuity or pension products business, the
private insurers have already wrested over 33 percent of the market. And in the popular unit-
linked insurance schemes they have a virtual monopoly, with over 90 percent of the customers.

The private insurers also seem to be scoring big in other ways- they are persuading people to
take out bigger policies. For instance, the average size of a life insurance policy before
privatisation was around Rs 50,000. That has risen to about Rs 80,000. But the private insurers
are ahead in this game and the average size of their policies is around Rs 1.1 lakh to Rs 1.2 lakh-
way bigger than the industry average.
 25

Buoyed by their quicker than expected success, nearly all private insurers are fast-forwarding
the second phase of their expansion plans. No doubt the aggressive stance of private insurers is
already paying rich dividends. But a rejuvenated LIC is also trying to fight back to woo new
customers

Market share of Private Sector Life Insurance Companies

 26

Chapter 3
Impact of Budget on Insurance Sector
 27

IMPACT OF BUDGET 2004

The finance minister's reform to strengthen risk management in banking The Finance Bill has
some brilliant promises to offer and yet there are adverse to the financial service sector.

The decision to permit 49 per cent foreign direct investment (FDI) in insurance is welcome. The
industry will agree that there is an acute need for it to grow and to write more business. If one
were to analyze the growth of some new private sector insurance players the underlying strength
seems to be their ability to get more capital and meet the solvency requirement perform, write
more business and grow faster. Let's not forget that these insurance companies will be able to tap
the capital market in two to three years.

The best performer in the sector have also expanded their capital to about Rs. 700 to 800 crore.
A look at the non performers suggests that they do not have adequate capital to grow. Hence the
increase in the FDI limit would help. More importantly, this will give greater control to the
foreign partners in areas of management control and governance. They will now be more willing
to bring in their expertise in product development, technology, and implement best practices.

The striking future of the Finance Bill is that the government has accepted defined contribution
as the way forward for pension reforms, particularly for new government employees.

One could have expected some clarity on the subject of multiple regulators for pension. Though
there be some benefits having a separate pension regulator, one supposes that there would be a
strong case for just one regulator both the pension and insurance sectors. The government must
examine the confusion that may arise on account of having multiple regulators.

Banking and insurance companies are significant players in the securities market today. Midsize
public sector banks may have made a turnover of about Rs. 40,000 crore on securities trade and
larger banks would have made two to three times the number. The transaction tax of a 0.15 per
cent would certainly eat away a good part of banks' profits.
 28

Likewise, all services rendered by banks (except the fund based assistances) would attract
service tax. Banks would be able to conveniently pass on some of these costs to the customers.
So, each time an individual goes and gets a demand draft or pay order, they will end up paying
much more than the existing rates. However, if competition becomes acute, banks would have to
bear it, which is bad news for the banking companies.
 29

Chapter 4
Private v/s Public Insurance Sector
 30

PRIVATE V/S PUBLIC INSURANCE SECTOR

Private players in the life insurance business are growing at a scorching pace. Within three years
of their inception, they have. seized about 14 per cent of the market.

Compare this to new generation private-sector banks, which took nine years for 20 per cent
share in the Indian banking industry. Andafter seven years in the industry, in 2000, private
mutual funds accounted for just 9 per cent of a market that had been dominated by the Unit Trust
of India.

There's another dimension to the insurance numbers game. While the private insurance
companies have attained 13 to 14 per cent share of the overall insurance market, their share in
the key metros (Mumbai and Delhi) is as high as 30 to 40 per cent.

"We have to struggle to complete a deal in the metros now, because policyholders are comparing
products and asking for better deals," says S B Mathur, chairman of the Life Insurance
Corporation of India.

Private insurance companies are essentially joint ventures with global insurance companies
holding a maximum of 26 per cent stake. The foreign partners are investing heavily in the Indian
market and, thereby, driving sales, because they see India emerging as one of the biggest
markets in the Asian region.

"India will become the biggest market for us in the next three to four years," predicts Dan
Bardin, Prudential Corporation Asia managing director south Asia and greater China.
 31

Private players have certainly done their bit to increase the penetration levels of insurance,
mainly by creating alternative distribution channels-such as associations with banks, brokers and
corporate agents.

"Our bancassurance channel-with tie-ups with four banks- contributes almost 70 per cent of our
total sales," says Aviva CEO Stuart Purdy.

OM Kotak Mahindra Life, which is ranked eighth among private players, is also leaning towards
alternative distribution channels that will contribute to 45 per cent of total sales, in line with the
contribution from its tied agency force.

In sharp contrast, most of the LIC's policies continue to be sold through its tied-agency network.
The state life corporation acknowledges that it is unable to maintain its lead in some metros:
penetration by the private-sector insurers has come of age and they are giving the LIC a run for
its money.

The multi-channel approach adopted by private insurance companies has proved to be a boon in
terms of costing and their ability to capture business. Earlier, most private insurance companies
focused their energies on the top 20 cities. Today they are moving to smaller cities.

"The potential in smaller cities is increasing and companies are moving to smaller cities and
towns because these are increasingly becoming more prosperous with a rise in agricultural
income. With the increase in buying power, this has fuelled growth opportunities for us," says
Max New York Life CEO Anuroop Tony Singh.

AMP Sanmar, another private player, has tied up with various chit funds and transport finance
companies in the country, where it is selling life policies on the back of fixed deposits and
bonds. A senior company official cites the example of Vijaywada where a significant portion of
the income is derived from farming activities.
 32

"The rural populace is managing their money well and no longer keeping it under their beds.
They have mobile phones and have opened bank accounts. They are not very different from their
urban counterparts when it comes to purchasing life insurance covers," he points out.

And that's making the private sector optimistic about its future in the Indian insurance market.
"We (private insurers] are becoming an alternative to LIC. If a customer has already bought an
LIC plan, his second policy is likely to be bought by the private insurance sector on account of
various reasons-more specifically flexibility and transparency," says OM Kotak Mahindra Life
CEO Shivaji Dam.

Perhaps this partly explains why the LIC has increased its advertising spend multifold since the
insurance sector was privatized. Its ad spend more than doubled to Rs 81 crore (Rs 810 million)
in fiscal 2003, against Rs 37 crore (Rs 370 million) in 1999-2000, prior to the industry being
privatized.

Of course, the private insurance sector has also been steadily increasing its ad spend, from Rs 29
crore (Rs 290 million) in fiscal 2001 when the industry opened up, to Rs 92 crore (Rs 920
million) the following year. In fiscal 2003, private insurers spent Rs 143 crore (Rs 1.43 billion)
on advertising.But it's not the increased spend on advertising alone that has helped private
players in grabbing market share. One of the key differential factors responsible for their
growing market is the 150,000-odd life insurance advisors of the private insurance companies.

"The private insurance agents sell better than their counterparts at the LIC. Life insurance
advisors of private sector insurance companies adopt the need-based selling approach, unlike the
LIC's agency force that pushes the number of policies," says Dam.

This also gets reflected in the average sum assured by private insurance companies being higher
than that of the LIC. Policies sold by the private players tend to be of a higher value.
 33

For instance, Birla Sun Life's average premium stands at Rs 24,500, while that of OM Kotak
Mahindra Life is equally high at Rs 20,400. Against this is the LIC's average premium of Rs
3,200.

Of course, there's also a difference in the target client of the private and the state-run insurance
companies. While the private players are targeting the upper middle-class and high net-worth
individuals, the LIC aims for the masses through its 2,048 branches spread across semi-rural and
rural towns.

Meanwhile, private insurance companies are capitalizing on global relationships. "Business

deals are often a call away since we capitalize on AIG's global relationship with multinational
companies such as GE and Kodak," says Tata AIG Life lan Watts.

OM Kotak has gone a step further and tied up with Swiss Life International so that it can
capitalize on the latter's relationship with 300 multinational subsidiaries and affiliates.

But it's not as if LIC has lost out on group insurance. The insurance major's group business
reached new heights in fiscal 2004, recording a 119 per cent growth in new premium income
and 50 per cent increase in the number of lives covered.

Still, new business income for private companies has grown at 146 per cent in fiscal 2004,
compared to the 18 per cent average industry growth in new premium income for the same
period.

"The key in product sales lies in offering unbundled and transparent products that give customer
value," points out Dam.

The biggest draw in insurance in fiscal 2004 was unit-linked plans. Ninety-five per cent of the
policies sold by Birla Sun Life and over 80 per cent of the 436,000 policies sold by ICICI
Prudential were unit- linked plans.
 34

And even though the LIC was late (January 2004) in pushing its unit- linked product "Bima
Plus", it managed to mop up a premium income of Rs 373 crore (Rs billion) with the sale of just
under 1.7-lakh unit- linked policies, the highest sales figure in the industry.

The advantage with unit-linked plans is that they offer policyholders transparency in terms of
costs, annual returns and bonus calculations. With many companies guaranteeing the capital
investment (some like Birla Sun Life even guarantee 3 per cent assured returns on its unit-linked
plans), the interest in unit-linked plans only increased.

And the switch from traditional products to unit-linked plans gained momentum as the Sensex
climbed higher: the returns on such policies are linked to the equity market.

"The stock market has helped to a certain extent and has contributed to our growth and
performance," agrees Birla Sun Life CEO NaniJaveri. Aviva has shown a compounded
aggregate growth rate of 36 percent since the inception of its fund. Returns on OM Kotak's
balanced and growth funds stand at 31.79 to 43.25 percent respectively.

Dam claims that OM Kotak has sold several policies of Rs 25-50 lakh (Rs 2.5-5 million) since
the "savvy investor thinks it best to invest in unit-linked products." He adds: "Growth is coming
faster in insurance companies with unit-linked plans."
 35

Chapter 5
Company Profile of LIC & ICICI Prudential
 36

COMPANY PROFILE

Life Insurance Corporation of India was created on 1st September, 1956, with the objective of
spreading life insurance much more widely and in particular to the rural areas with a view to
reach all insurable persons in the country, providing them adequate financial cover at a
reasonable cost. LIC had 5 zonal offices, 33 divisional offices and 212 branch offices, apart from
its corporate office in the year 1956. Since life insurance contracts are long term contracts and
during the currency of the policy it requires a variety of services need was felt in the later years
to expand the operations and place a branch office at each district headquarter. Re- organization
of LIC took place and large numbers of new branch offices were opened. As a result of re-
organisation servicing functions were transferred to the branches, and branches were made
accounting units. It worked wonders with the performance of the corporation. It may be seen
that from about 200.00 crores of New Business in 1957 the corporation crossed 1000.00 crores
only in the year 1969-70, and it took another 10 years for LIC to cross 2000.00 crore mark of
new business. But with re- organisation happening in the early eighties, by 1985-86 LIC had
already crossed 7000.00 crore Sum Assured on new policies.

Today LIC functions with 2048 fully computerized branch offices, 100 divisional offices, 7
zonal offices and the Corporate office. LIC's Wide Area Network covers 100 divisional
offices and
 37

connects all the branches through a Metro Area Network. LIC has tied up with some Banks and
Service providers to offer on-line premium collection facility in selected cities. LIC's ECS and
ATM premium payment facility is an addition to customer convenience. Apart from on-line
Kiosks and IVRS, Info Centres have been commissioned at Mumbai. Ahmedabad, Bangalore,
Chennai, Hyderabad, Kolkata, New Delhi, Pune and many other cities. With a vision of
providing easy access to its policyholders, LIC has launched its SATELLITE SAMPARK
offices. The satellite offices are smaller, leaner and closer to the customer. The digitalized
records of the satellite offices will facilitate anywhere servicing and many other conveniences in
the future.

LIC continues to be the dominant life insurer even in the liberalized scenario of Indian insurance
and is moving fast on a new growth trajectory surpassing its own past records. LIC has issued
over one crore policies during the current year. It has crossed the milestone ofissuing
1,01,32,955 new policies by 15th Oct, 2005, posting a healthy growth rate of 16.67% over the
corresponding period of the previous year.

From then to now, LIC has crossed many milestones and has set unprecedented performance
records in various aspects of life insurance business. The same motives which inspired our
forefathers to bring insurance into existence in this country inspire us at LIC to take this
message of protection to light the lamps of security in as many homes as possible and to help the
people in providing security to their families

Life Insurance Corporation of India is a wholly owned undertaking of the Government of India.
Life Insurance Corporation of India was established by an Act of Parliament on 1st September,
1956. Its Central Office is located in Mumbai. It also has seven zonal offices each located in
Mumbai(Western Zone), New Delhi (Northern Zone), Kanpur (North- Central Zone), Bhopal
(Central Zone), Chennai (Southern Zone), Hyderabad (South-Central Zone), and Kolkotta
(Eastern Zone). It has a network of over 2000(2048) branches and more than nine lakh agents.

Over 47 years, LIC has become a household name for providing security for a lifetime and is
synonymous to life insurance in India. LIC ranks No.1 in the list of top 500 companies on the
 38

basis of Net Worth (Rs. 15, 47, 951 million) as well as Net Profit(2,66,277 million)- Dun &
Bradstreet (India 500)

Mission

"Explore and enhance the quality of life of people through financial security by providing
products and services of aspired attributes with competitive returns, and by rendering
resources for economic development."

Vision

"A trans-nationally competitive financial conglomerate of significance to societies and Pride of

India."

Goals

● Promote within the Corporation greater awareness of thechanging environment and the need
to align the corporatepolicy to the emerging situation.

● Help fashioning, within the constraints, its policies, programmes, practices and products to
meet the expectations of the Public. Help the public to appreciate the performance and the
limitations of LIC.
 39

Company profile of ICICI PRUDENTIAL

The company assigned to me is ICICI Prudential Life Insurance Company. It is in to selling life
insurance products. 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). At present it is growing at
a tremendous pace. Now we can say there is no close competitor to ICICI Prudential.

ICICI Prudential's equity base stands at Rs. 9.25 billion with ICICI Bank and Prudential PLC
holding 74% and 26% stake respectively. In the financial year ended March 31, 2005, the
company garnered Rs. 1,584 crores of new business premium for a total sum assured of Rs.
13,780 crores
 40

and wrote nearly 6,15,000 policies. The company has a network of about 56,000 advisors as well
as 7-bank assurance and 150 corporate agent tie-ups.

For the past five years, ICICI Prudential has retained its position as No. 1 private life insurance
in the country, with a wide range of flexible products that meet the needs of Indian customer at
every step in life.

The company mainly depends on advisors. The advisors are considered as the brand
ambassadors of the company or the working partner who doesn't have to invest to get returns but
just work with the company to make money. Advisors main job is to sell policy and in return the
advisors get huge return like high commission, rewards, recognition etc. He is, for all purposes,
an authorized salesman for insurance.

Advisors can become the Unit Manager of the company if they pass the pinnacle program. ICICI
Prudential has recruited and trained about 56,000 insurance advisors to interface with and advise
customers. Further, it leverages its state-of-the-art IT infrastructure to provide superior quality of
service to customers.

Manager will get a fixed salary and the commission on the policies sold by his advisor and the
commission of the policies which he has already sold. Tiger team manager is one who gets to
sell the policy and get commission, train the advisors about the product and he is also a paid up
employee of the company.

ICICI GROUP
 41

VISION

To be the dominant Life, Health and Pensions player built on trust by world-class people and
service 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 andinvestment strategies to offer

sustainable and stable returns toour policyholders

● Providing an enabling environment to foster growth andlaming for our employees .

● And above all, building transparency in all our dealings

VALUES

Very member of the ICICI Prudential team is committed to 5 core values: Integrity, Customer
First, Boundaryless, Ownership, and Passion. These values shine forth in all we do, and have
become the keystones of our success.
42
43
 44

Chapter 6
Product Offered By LIC & ICICI Prudential
 45

Product offered by LIC

Insurance Plan

As individuals it is inherent to differ. Each individual's insurance needs and requirements are
different from that of the others. LIC insurance plans are policies that talk to you individually
and give you the most suitable option that can fit customer requirements.

Children plan

KomalJeevan - Plan No. 159 . Children Deferred - Plan.no.41

⚫ Jeevan Kishore - Plan no.102

⚫ JeevanChhaya - Plan no.103

⚫ Marriage Endowment/Educational Annuity-Plan No. 90

Jeevan Anurag - Plan no.168

Endowment Policy

⚫ Endowment with Profits - Plan no.14 Limited Payment Endowment

with Profits - Plan no.48

⚫ JeevanMitra - Plan no.88

⚫ New JanaRaksha Policy - Plan no.91 ⚫JeevanAnand Plan no. 149

⚫ JeevanMitra Triple Cover - Plan

no.133 Group Insurance Policy

Group Insurance Scheme is life insurance protection to groups of people. This scheme is ideal
for employers, associations, societies

etc. and allows you to enjoy group benefits at really low costs.
 46

⚫ JanashreeBimaYojana

⚫ Group Insurance Scheme in lieu of EDLI ⚫ Group (Term) Insurance Scheme

⚫ Group Savings Linked Insurance

Scheme Group Superannuation Scheme

Group Mortgage Redemption Assurance Scheme

Joint Life Policy

JeevanSaathi - Plan no.89

Money Back Policy

Money Back with Profit - Plan no.75 ⚫ New Money Back - Plan no.93

⚫ JeevanSurabhi 15 yrs - Plan.no.106

⚫ JeevanSurabhi 20 yrs - Plan

no.107 JeevanSurabhi 25 yrs - Plan

no.108 JeevanBharati Plan No 160

JeevanSamriddhi Plan No 154, 155, 156 157 BimaBachat- Plan no.175

Pension Plans or Annuities

Pension Plans are Individual Plans that gaze into your future and foresee financial stability
during your old age. These policies are most suited for senior citizens and those planning a
secure future, so that you never give up on the best things in life.

⚫ New JeevanDhara - Plan. no.148

⚫ New Jeevan Suraksha Plan no. 147

⚫ JeevanAkshay II Plan no. 163

 47

⚫ JeevanNidhi Plan no. 169

JeevanAkshay V Plan no. 183

Special Plans

LIC's Special Plans are not plans but opportunities that knock on your door once in a lifetime.
These plans are a perfect blend of insurance, investment and a lifetime of happiness!

⚫ Term Assurance - Plan no.43

• Mortgage Redemption - Plan no.52 ⚫JeevanAadhar - Plan no.114

⚫ Market Plus-Plan No 181 ⚫JeevanVishwas Plan No. 136

⚫ JeevanSaral Plan No. 165

JeevanPramukh Plan No.

167

⚫ BimaNivesh 2005 Plan No 171

⚫ Money Plus-Plan No 180

Term Policy

Convertible Term Assurance - Plan no.58

.New Bima Kiran

⚫ Term Assurance

• Anmol Jeevan I Plan No- 164

. AmulyaJeevan-Plan No-177

Unit Plans

Unit plans are investment plans for those who realise the worth of hard-earned money. These
plans help you see your savings yield rich benefits and help you save tax even if you don't have
consistent income.
 48

⚫ Market plus

. Profit plus

. Fortune plus

. Money plus

⚫ Child fortune plus

LIC has Introduce a New Product

JEEVAN AASTHA PLAN

Life Insurance Corporation of India (LIC) has launched its close- ended single premium product,
JeevanAastha, which offers

guaranteed benefits to customers. "The plan has a maximum shelf life of 45 days and offers five
and tenyear maturities to customers.

The scheme has fixed the minimum age at entry as 13 years whichwould enable parents to make
provisions for higher education of theirchildren," Vijayan said.

Similarly, the maximum age at entry has been fixed as 60 years. Theplan offers guaranteed
addition of Rs100 for every thousand of maturity sum assured for 10 years term and Rs90 per
annum for

policies with five year term.

"The policy holder can also avail the benefits of tax exemption andhas the options of
surrendering the policy or to raise loan under the policy," the Chairman said

Features

LIC's JeevanAastha is a single premium assurance plan which offers guaranteed benefits on
death and maturity. The Plan is close ended and would be available for a maximum period of 45
days from the date of its launch i.e. 08.12.2008
 49

Eligibility conditions and other restrictions

a) Minimum Entry Age: 13 years (completed)

b) b) Maximum Entry Age: 60 years (nearest birthday)
c) c) Minimum Basic Sum Assured: Rs.1,50,000
d) d) Maximum Basic Sum Assured: No Limit The basic sum assured shall be available in
multiples of Rs. 30,000.
e) e) Policy Term: 5 or 10 years
f) f) Premium payment mode: Single premium only
g) Premium rates
h) Specimen Single Premium rates per Rs. 1000 Basic Sum Assured for
i) some of the ages are as under:

Products Offered By ICICI Prudential

ICICI Prudential has a wide array of insurance plans that have been designed with the philosophy
that different individuals are bound to have differing insurance needs.

The ideal insurance plan is one that addresses the exact insurance needs of the individual that
will depend on the age and life stage of the individual apart from a host of other factors.

Life Insurance Plans

Under Life insurance plans, ICICI Prudential offers plans under

the following

. Education Insurance Plans.

 50

⚫ Wealth Creation Plans

• Premium Guarantee plans

• Protection Plans

Pension & Retirement Solutions:

The primary objective of a pension plan is to help you provide for your financial needs in your
post retirement years. You will find a Pension Planning Calculator on the site, meant to make
your pension plan review as simple as possible. The calculator is the first step in your Pension
Plan scheme, there are othe steps towards getting the Indian pension policy you need.

⚫ Life Stage Pension

⚫ Life Time Super Pension.

⚫ Life Link Super Pension

⚫ Forever Life

Health Product

Suite

Under Health Product Suite, ICICI Prudential offers plans under the following major need
categories:

Hospitalisation Plans

⚫ Medi Assure

⚫ Hospital Care

⚫ Critical Ill nessl Pans

⚫ Crisis Cover

⚫ Cancer Products

⚫ Cancer Care

⚫ Diabetes Products
 51

. Diabetes Care Active

• Diabetes Assure

Retirement Solutions

ICICI PRUDENTIAL Provide a wide range of retirement plans and they are as follows

⚫ Life Stage Pension

⚫ Life Time Super Pension

⚫ Life Link Super Pension

• Forever Life

Immediate

Annuity Group

Plans

ICICI Prudential offers a suite of group insurance plans that are as follows:

⚫ Group superannuation

⚫ Group gratuity period . Annuity solution plan

⚫ Group term insurance plan ⚫ Group term insurance in lieu of EDL

Group Plans

⚫ ICICI Prusuraksha

⚫ ICICI prusurakshakavach

ICICI Introduced a New Product

Wealth Advantage (a single-premium unit-linked insurance

policy (Ulip):

This plan provides insurance cover to investors till the age of 70 years. ICICI Prudential's new
plan is a single-premium policy bundled with additional benefits such as option to withdraw
 52

money systematically after six years of taking the policy, thereby increasing the liquidity of
investment. Minimum investment amount in this policy is Rs 25,000.

ICICI Prudential Life Wealth Advantage plan allows consumers to stay invested in the plan for
as long as they live, even beyond the age of 70 years, thereby ensuring long-term coverage. It
also offers the flexibility to increase or decrease the sum assured in accordance with the
individual's protection needs.

Key benefits of Wealth Advantage:

. Single premium plan with a whole life investment advantage.

⚫ Life cover upto the age of 70 years.

⚫ Two options of Sum Assured (125% or 500% of premium) to provide complete protection

⚫ Option to withdraw money systematically through Automatic Withdrawal Plan, from the 6th
policy year onwards

⚫ Higher allocation of premium to ensure wealth

maximization LIC New Jeevan Suraksha VS ICICI Prudential

Forever life

LIC's New Jeevan Suraksha I offers cool comfort to serve the young. the middle aged and the
old which has also the security and safety backing of Government of India. It is an ideal solution
for people as it not only offers retirement benefits but also takes care of our protection needs
(with term rider option). To combat the increase in longevity, this plan provides regular
guaranteed

income at old age and helps in planning to meet requirements for current and future needs. This
plan provides a lot of flexibility in terms of various pension options for you to choose from.
Additionally you can also opt for an insurance cover during the deferment period by taking the
 53

Term Rider add on. At the end of the deferment period when the premium ceases, this policy
can, at your option, pay you a lumpsumamountand a suitable pension for your ifetime.

The similar product marketed by ICICI Prudential Life Insurance Company is Forever Life, a
comprehensive retirement solution that is developed keeping in mind your capabilities and needs
with respect to your retirement planning. The salient features of this plan are as Under:

A deferment pension plan to build up your retirement benefits.

(i) It provides regular income for life, after a stipulated date.

(ii) The amount you receive depends on the premium you pay till the Stipulated date and the
option you choose.

(iii) It also offers life cover during the deferment period.

(iv) Postponement of retirement age.

(v) Health cover till age 65 through add-on benefits, not only while

Paying premium, but also while receiving pension

TED RADIO HOUR

The table below shows the summarised comparison of LIC's New Jeevan Suraksha-I vs. ICICI's
Forever Life.
54
 55

Chapter 7
Innovation Strategy and IT in LIC & ICICI Prudential
 56

INNOVATION STARTEGY IN LIC

LIC has realised the importance of personal involvement and has included it in the
training program itself. Once the Agent is recruited he needs to undergo a compulsory
training program designed by LIC. The Training Program also explains them the
importance of thesmallest of the customer .i.e. customer who is just seeking general
information. The Agents and Employees are trained to Apologise to its customers even if
they are not at fault. "SO IT DOSENT TAKE MUCH OF TIME FOR THE HANDS OF
THE LIC LOGO TO COME CLOSER FOR APOLOGY"

LIC has established elaborate Grievance Redressal Machinery at different level as per
the customer requirement. There are Complaint cells which are specially set up to listen
up to each and every customer's problems. LIC gas also set up Policyholder Councils and
Zonal Advisory Boards to understand the problems of their customer situated in any part
of the city. Offers a Fair Fix to Problem:

Customers want wrong to be set right and expects service contact employee to be skilled,
empowered and interested in setting things right.

This is the main reason why LIC conducts training programs for the newly recruited
Agents as well as the other Employees. In any kind of breakdown situations LIC try to
offer a rational explanation and demonstrate sensitivity and concern to the customer
rather than defending themselves.
 57

. Offers Some Compensation for the Inconvenience:

Compensation here wouldn't mean of just monetary compensation or some extreme

measures like firing the Branch Manager Etc; but it is just to make-up for the loss of
customer satisfaction. It could be like "it's on us": "free service" etc. The service provider
should plan certain compensation policies in advance for various types of situations and
deliver it as and when the situation is faced.

. Keep the Promises:

It basically means that the Company should keep the promises made to the Customer
before or at the time of service provision i.e. the Company should fulfill its
commitments. LIC makes sure that none of the Agents provide any kind of wrong
information or false promises to its customers which mislead them. LIC ask their Agents
to give reasonable commitments so that they could be fulfilled by the Company or the
Agent on behalf of the Company.

Follow Up:

This is the most important step in Service Recovery as it ensures that whether the
implemented Service Recovery was Satisfactory or not. It would include Internal and
External Follow-up. Internal Follow-up would be to ensure that the solutions they put in
motion are actually

executed and the External part would be to get feedback from the customer whether he is
satisfy

Complaint Handling

In a vast Organization like LIC, catering to the various needs and aspirations of millions of
policyholders, grievances of customers do arise occasionally. In order to redress these
grievances LIC has established elaborate Grievance Redressal Machinery
 58

INNOVATION STRATEGY IN ICICI

An innovation refers to any good, service, or idea. That is perceived by someone as new.
The idea may have long history, but it is an innovation to the person who sees it as new.
Innovation takes time to spread through the special system. The consumer adoption process
focuses on the mental process through which an individual passes from first hearing about an
innovation to final adoption. Adopters of new products have moved through the following
five stages.

1. Awarness: The consumer becomes aware of the innovation but lacks information about it.
2. Intrest: The consumer is stimulated to see the information about the innovation. 3.
Evaluation: The Consumer considers whether to try the innovation or not.

4. Trial: The consumer tries the innovation to improve his estimate of its value.

s. Adoption: The consumer decides to make full and regularuse of the innovation

IT in LIC

In today's world, IT is a must for any industry to keep pace with the customer's changing
expectations. This is especially relevant in the service industry. The insurance sector has to
ensure that the technology it chooses does not lag behind where customerexpectations are
concerned.

LIC has more than 16 crore policy holders. So it has to induct the best IT products available
and use them to cater to the needs of the customers and deliver anywhere any time service on
demand and to add value to its new products. The trust and the goodwill of the customer
gained in the last 50 years have to be consolidated by making all activities more customer-
focused.
 59

For instance, LIC has a corporate Web site to provide information on products, services,
policy status, grievances and premium calculator. Other facilities include touch-screen
information kiosks at central locations to provide 24 x 7 inquiry services to customers.

IT in ICICI Prudential

The Information technology function at ICICI Prudential is committed to enable a business

through the use of technology. It is segmented into 4 groups to enable highest level of
delivery of customer. Life Asia Solution Group that provide flexibility in designing better
product offering to end user, the solution group- Web that provide real time information to
customer and is responsible for customer relationship management, IT Architecture &
corporate solution group is in charge of developing and marinating a blue print for the IT
architecture for the enterprise as whole. This team work as an in house R&D solution group,
exploring new technological initiatives and also caters to information needs of corporate
function in the organization. IT infrastructure group is responsible for providing hardware,
software, network service to the whole organization. This group run at Digital nervous
system of the enterprise at the highest level of efficiency and provide robust, scalable and
highly available platform for development business application.
 60

Chapter 8
Emerging Trend in LIC & ICICI Prudential
 61

EMERGING TREND IN Life Insurance

Corporation

With the emergence of competition, LIC has implemented strategic moves for business
growth, as well as ensured quality improvement in service standards. As on today, they have
been providing service to around 12 crore policy holders and their track has been well
acknowledged as reflected through continual upgradation of service standards culminating
into a world class performance in the area of claim settlement operations

It is well acknowledged that LIC has been able to provide appropriate IT support in
furtherance of prompt service to their valued policy holders. The complex task of conversion
of computerization of all the branches with their conversion as Front Line offices has been
completed in aphase manner. In addition to this, the launching of the IVRS facility. MAN
and Wide Area Network operations has helped the co-operation improve its servicing.

LIC's strength lies in:

a. Wide network of branches covering rural areas.

b. A large and well-spread agency organization.

e. An acknowledged record of performance. d. Adequate yield with high risk cover being
offered keeping the policy holders satisfied in the existing in the economic scenario.

e. Well accepted brand equity throughout the country. In addition to this, LIC has an established
and well administered Grievance Redressal Mechanism and with Ombudsman intervention, the
customers appear to be well attended. However, this mechanism has to be restructured keeping
in view the additional legal provisions laid down by the regulator as expounded in the IRDA act.
. Futuristic Approach
 62

Till today, LIC enjoyed a monopoly. It is now that reality exists in the are of marketing (i.e.
sales and after sales service operations). It will now have to follow a multi-faceted strategy
towards customer retention and also expanding to a new clientele. With the new face of the
market, relationship management seems to be the new mantra. At the nucleus of this
approach is the concept of Customer Relationship management. The need is to have a
comprehensive review of the business keeping in view customer expectations .

Customer Orientation

LIC, to be in the reckoning, has to have an efficient feed-back system, so as to understand

what the customer desires in terms of product design, service procedures, relationship
convinience, accessibility, responses in terms of personalized service, attendance, core and
complimentary on an individual basis. The new players in the market like ICICI, HDFC etc.
will definitely be very aggressive in the open market. LIC has to go ahead with their former
customers, existing customer, in a very gentle and courteous manner, reassuring them of
their better services with persona, attention.

ADVERTISING TRNED IN LIC

News Papers and Magazines

LIC give ads in the news papers and magazines round the year to continue its brand image
and also when new products are introduced. Normally its ads are published in Times of
India.

Television
Companies like LIC, advertise on television to make people aware of their products and
services

. Gifts
 63

LIC provides diaries, pens, booklets, etc to its customers

. Hoardings

LIC put its hoardings where there is a mass flow of people

especially outside the railway station or at the backside of the bus.

Advertisement At KumbhMela

LIC has also advertised about its products and the corporation even in the kumbhmela

. Advertisement On Radio satellite channel

Advertisement about LIC are frequently been telecast on radio and satellite channel.

EMERGING TREND IN ICICI PRUDENTIAL

In a significant move, ICICI Prudential Life Insurance - a joint venture between the ICICI
group and Prudential Plc of the UK-has expanded its marketing platform for promoting life
insurance products to 1,500 banks branches from 642 branches through its existing
bancassurance tie-up with seven banks.

With this, ICICI Prudential has increased the number of bank branches (under banc
assurance tie-ups) by about 130 per cent. In fiscal 2002-2003, the number of bank branches
networked by the company grew by 270 per cent to 642 branches. Of these, 338 branches
were from four new banc assurance relationships which it had forged with Allahabad Bank,
South Indian Bank (SIB), Federal Bank and Lord Krishna Bank. The remaining expansion is
from earlier relationships, notably ICICI Bank and Bank of India (Bol). ICICI Prudential
chief-marketing Saugata Gupta told FE.

On the company's new plans, Mr. Gupta said: "The greatest expansion has come from Bol
and Allahabad Bank. In addition, ICICI Bank, SIB and Federal Bank have also increased the
number of branches."
 64

Further, Mr Gupta informed that after having released advertising campaign through print,
outdoor and radio, the company has also recently released a new advertising campaign
through the electronic media on "Smart Kid' Insurance Policy. This policy is positioned as -
Child's plan that leaves nothing to chance.

According to Mr Gupta: "Last fiscal, Rs 102 crore of premium came through alternate
distribution channels which comprises of bancassurance channel. This channel is serviced by
430 financial service consultants. There are 80 active corporate agents, and 22,000 life
insurance advisors, at present."

ICICI Prudential has garnered Rs 364 crore as the new business premium income in fiscal
2002-03. In fact, in the first quarter of this fiscal, the company has issued around 51,000
policies, Rs 70 crore in new business premium income which accounts for a growth of 132
per cent over last year's first quarter. It has also crossed Rs 10,000 crore sum assured mark.

As for emerging trends, Mr Gupta explained that private participation in insurance as a tax
saving tool for comprehensive financial solution, and, product pushing for need-based
solutions required for personal financial review is fast emerging.

The Company recently tied up with the Forbes Six Sigma rated Dabbawalla organization in
Mumbai for a direct marketing exercise. In a Unique effort to create awareness about a tax
saving product, the company attached a creative of a bitten apple to Mumbai's ubiquitous
lunchboxes. It worked wonderfully with Mumbai's office- goers and one that translated into
substantial business for the company

ADVERTISING TREND IN ICICI

Radio:

ICICI Prudential advertises on 92.5 red Fm

. Television
 65

ICICI Prudential has been advertising in outdoor, TV and press. The company launched a
corporate television campaign SaatPhere which took the emotions and thoughts of initial
Sindoor corporate film a few steps further. Tie-UP with DABBAWALA

ICICI Prudential tie-up with the Dabbawalla Organization in Mumbai for a direct marketing
exercise, to talk to the customer through a non-cluttered route, and thereby have a higher
impact.

Seminars

ICICI Prudential regularly holds consumer awareness meets on the need for retirement
planning' in different cities such as Pune, Aurangabad, Coimbatore, Nagpur, Bangalore and
Mangalore.
 66

Chapter 9
Impact of financial Crisis on LIC
 67

Impact of the financial crisis on Life Insurance

Corporation

LIC is a public sector insurer and a domestic investor. As such, LIC are not directly affected
by the global financial crisis. However, the volatility in Indian financial market due to the
uncertainty in global markets may affect returns get on their investments. But LIC has an
indisputable record of prudently planning its investments and getting the maximum returns
on the policyholders' money. Will LIC continue to that in any type of scenario the ratio. Why
has the new business growth slowed? What will be the impact of the lower growth on
LIC'sperformance will

it affect the ratio? Total premium growth of LIC has always been quite stable, even when
there are periodical ups and downs in new premium income. Last year, LIC ended the year
with around 10% growth in First Premium income despite several odds. However, the
growth in total premium income was quite healthy, indicating better conservation ratio.

LIC overall expense ratio is the least in the industry. Last year, was only 11.94%, and it was
just 5.56%, excluding the commission. The surplus generated was a record high of Rs
16,598.65 crore, which enabled to give higher terminal bonus to their "with profit"
policyholders and to increase dividend to the government. Having said that, LIC agree that
there has been a decline in the new premium in the current financial year. One of the reasons
was that after withdrawal of their successful old plans, they did not immediately introduce
any new ULIP. Since then, they have launched new products and the response has been very
positive and encouraging.

Also, LIC had some issues with the union of development officers, which have been more or
less sorted out through series of consultations and discussions. In September, the figures
have started picking up.
 68

Private insurers are growing their market share by growing distribution. LIC is close to
saturation level in terms of distribution. How will you retain the market share?

It is not accurate to say that LIC has reached its saturation point in terms of distribution, as
they are expanding their reach and network. Other insurers are perhaps expanding very fast
and the effect is reflected in their balance sheets. LIC do have constraints of capital and any
growth has to be supported by internal accruals only.

Hence, LIC follow the policy of steady and profitable growth and distribute 95% of surplus
to their "with profit" policyholders. Such a practice makes our products better. And sure, this
will, in the long run, determine who becomes winner in the life insurance market in India
How do you propose to comply with IRDA's decision to cap single company exposure at
10% of a company's capital?

First of all new regulations are not only about equity exposure, but encompass several other
aspects too. Second, these norms are not just LIC-centric, but applicable to the whole
industry. LIC total assets of more than Rs 8-lakh crore are their legacy built on the basis of
earlier regulations and norms under the Insurance Act.

LIC have always followed applicable norms in their operations and they have an impeccable
track record of being a prudent investor, keeping in view the best interests of their
policyholders. New investment norms have several changes from the earlier one and we are
working on them and are in touch with IRDA where LIC have problems. Will the exposure
limit force LIC to divest in blue chips and invest in companies that have a lower credit
rating?

Emerging Trends

The researcher has gone through secondary data collected from various sources and
observed the following trends in health insurance sector of India: Promotion of e commerce
and Financial Inclusion: The Insurance Regulatory and Development Authority (IRDA) has
taken important measures through two committees to promote e-commerce and Financial
Inclusion.
 69

E insurance account: Two important initiatives i.e. e-insurance account and accidental
insurance cover for train passengers have shown positive impact on the growth of the sector.

Due to e-account service, clients are empowered to maintain their insurance policies easily
and efficiently. Digital Platform: Various economic reforms demonetization, Jan Dhan
accounts and Unified Payment

Interface (UPI) have created a strong digital platform in the economy where cashless
transactions are easily possible. This digital transformation has highly impacted on the value
proposition of financial service of insurance.

Increasing role of Technology: Recently, ‘Insurtech’ is creating buzz and transforming the
insurance industry. The role of technology has increased a lot. Robotic Process Automation
in Insurance sector is on rise. The scope of IoT in Indian insurance market has a huge scope
to assess customer risk. Artificial Intelligence, Big data is playing a big role in financial
service sector. Data analytics has helped to improve customer experience. Underwriting has
gone a huge change. Electronic underwriting technology is assisted by dig data.

Cost Reduction: It has become beneficial to the clients due to reducing costs and helped the
insurance companies to improve its productivity and customer satisfaction.

Micro Insurance: Indian Economy has realized the potential of ‘Micro Insurance’. The main
objective is shielding people with inadequate earnings against death, disease accidents of
family members. It is a mean of providing financial security and enable lower income
families to access modern healthcare. Drone Insurance products: IRADI has encouraged
insurance companies to launch cover related to Drone insurance products.
 70

Indian Insurance Industry: Reaching out to Exponential

Growth

Recent Industry Trends

a. Bancassurance is emerging as a major channel for distribution of insurance products-

Bancassurance means selling insurance product through banks. Banks and insurance company
come up in a partnership wherein the bank sells the tied insurance company's insurance products
to its clients Globally, bancassurance has emerged as an important channel for distribution of
insurance products. Various international studies have shown that a bancassurance strategy has
indeed saved costs of insurance companies in the long run.

In India, the concept of bancassurance was first introduced in 2000 when insurance sector was
opened for the private sector. Post 2010, bancassurance has emerged as a major channel for
distributing insurance products given their reach with retail customers. Driven by a large
captive customer base, banks' strong brand recognition, and growing branch network, banks
have been able to successfully sell insurance as an add-on product with other banking products.
In September 2015, the bancassurance model received a further push, with the insurance
regulator notifying a new framework for corporate agents, which allowed banks to tie up with
up to three insurers each in life, non-life and health insurance segments to increase the
penetration.

It is expected that this channel will emerge as a dominant distribution channel in next five to ten
years, Rapid increase in banking network and low cost of managing this channel are likely to
make bancassurance a powerful as well as popular channel. The share of banks in Individual
new business premium has increased from 39.0% in 2011-12 to 47.4% in 2014-15,
71
 72

b. Growing online channel is quickly emerging as a cost effective model for distribution of
insurance products

Insurance companies are also exploring other cost-effective modes of distribution such as the
'online channel'. As per estimates by BCG, the overall online market for insurance sector stands
at around 1% for both life and non- life segments. In life insurance, term plans are the most
bought product online, while in non-life, it is motor, health and travel insurance. The online
market has grown six to seven times in the past six to seven years. This channel is expected to
gain significant momentum in the coming years as insurance awareness grows among people.

c. Launch of new and innovative products with high levels of customization With the passing of
the Insurance Laws (Amendment) Bill 2015, the sector has witnessed a fresh inflow of capital,
and introduction of new and Innovative products. Post the approval of 49 per cent direct foreign
Investment in the sector new players have entered the market leading to more, new and
innovative product offerings for consumers to choose from. Further in a move towards providing
customized insurance, more number of life insurance to general insurance players are offering a
customized insurance plan based on certain fixed parameters and guidelines Amongst all the
insurance segments, health insurance has witnessed maximum innovation- Life stage based
plans, city based plans, and many new innovative products are being introduced by various
insurance companies to tap the health Insurance market.

d. Digital technologies are expected to transform insurance business- The role of technology has
brought about a major change in the sector. As per a recent report from Accenture, it is expected
that the next wave of technology-Internet of Things (IoT), platform-based ecosystems and
artificial intelligence will significantly change and transform the very nature of the insurance
industry. The emerging digital technologies- intelligent automation, liquid workforce, platform
economy, predictable disruption and digital trust are offering insurers an opportunity to shift
from their traditional business model to automated models which they can automatically assess
and price risk directly, individually and in real-time. This digital transformation in insurance
companies will involve continuous disruption to existing business models, products, services
and experiences enabled by data and technology.
 73

Digital services offer convenience, choice and comparison. Digital technologies can be rooted
across the core elements of the insurance value chain, right from product development to claim
settlement. Many Insurers are now using technology to track all its potential claims, thereby
speeding up claim verification. Moreover, these technologies enable insurers to leverage
historical data for predicting future patterns so as to gain a deeper understanding of the emerging
needs of their customers, partners and employees. This information can be used to build a
suitable digital strategy.

An effective digital strategy can allow insurers to reduce customer service Indian Insuranc...
slideshare.net maustry Recent Industry Trends -

Resurgent India

costs, increasing customer fulfilment and retention, while enhancing process efficiency. As a
part of their digital strategy, increasing number of insurance companies are developing mobile
applications to meet the growing demand for real time services among smartphone users. The
mobile applications also offer a significant potential for enhancing customer service experience
in the form of speedier sales closure, better access to policy details and making hassle-free
renewal payments. As per a recent EY global Digital Survey it was found that insurers who
developed a digital strategy were more successful than their competitors at reducing customer
service costs while increasing customer loyalty.

f. Regulatory reforms to promote a competitive environment in both the life and non-life
insurance sectors

The regulatory framework in the country aims at providing transparency, simplifying products
and services and creating a favorable business environment for all the stakeholders in the
insurance sector. However, the recurring changes in regulations continued to upset the business
models of many insurers during the last 10 years.
 74

Insurance Laws (Amendment) Act 2015: This regulation has had a favorable

impact on insurers in multiple ways- a) Increase in insurance FDI limits- The Insurance Laws
(Amendment) Bill was passed in March 2015, increasing the FDI limit to 49 per cent from 26
per cent. This move was aimed at bringing in more foreign capital, technical know-how and
exposure to global best practices for the Indian insurance industry. The increase in foreign
investment cap has already brought in nearly Rs. 15,000 crore into the domestic insurance sector
in the past year. Post the announcement, many global majors have evinced interest in raising
stake in their Indian subsidiaries. The list of foreign investors who have announced plans to
increase stakes in their ventures includes French insurer Axa, Japan's Nippon Life and Mitsui
Sumitomo Insurance, Bupa of United Kingdom and Dutch insurer Aegon, BNP Paribas Cardif,
IAG, Aviva, Standard Life, AIA, QBE and Fairfax have also announced plans to increase stakes
in their ventures.

b) Abolition of standard prescribed expense limits- The new law eased the regulation around
insurer's annual management expenses. The earlier law limited the insurer's ability to expand
into newer territories involving high set up costs. As per the new provisions IRDA has been
authorized to regulate management expenses of insurers, thereby bringing in more flexibility to
define expense limits.

c) Relaxed provisions for payout to agents -The new law has removed the restriction of
maximum payout to agents or any other intermediary. Under the new provisions, the regulator is
expected to regulate the commission at a product level, thereby ensuring meeting of product
margins.

d) Task of hiring agents assigned to insurers- The new regulation allows the regulator to frame
rules regarding the agent's eligibility, qualifications and other related aspects. In an attempt to
make the agent hiring process more consultative, the insurers have been permitted to appoint the
agents without any intervention from the regulator.

e) Withdrawal of requirement of deposit with the RBI- Insurers were earlier required to maintain
a deposit of USD 1.5 mn with the Reserve Bank of India. In the amended bill, this requirement
has been waived off, offering flexibility to new insurers with lower top-line to effectively deploy
this additional fund.
 75

Introduction to Data Analytics in Insurance

The technological landscape changes, and so the industries do. In today a

worldwide variety of insurance exists. Still, it is challenging for clients to
understand through which insurance company they should start their insurance
because many questions came into customers minds like:

Whether this company is safe or not?

Will this company give the best offer or not?

What is the reputation of this company in the market? And more. Similarly,
insurers can also not understand customer behavior, frauds, policy risk, and claim
surety, which is mandatory before giving policy to someone. It took years for
insurers to sell directly to their customers and issue policies online while
competing on price comparison websites. Many companies still have not achieved
it. With the prefiltration of data, the use of advanced math and financial theory to
analyze and understand the customer behavior and costs of risks have been the
stalwarts of the insurance industry. The analytics performed by actuaries are
critically important to an insurer’s continued profitability and stability.

Traditionally companies are just looking for what happened in the past with
Descriptive analytics. But now, the industry is demanding more such that what
will happen in the future (predictive analytics) and how actions can change the
outcome (Prescriptive analytics).

Big data makes the insurance industry a perfect sphere for data analytics to
construct basic patterns, get fundamental insights about the insurance business,
and manage the complex relations between agents and clients.
 76

Implementing Data analytics in the Insurance Industry

The digital transformation of insurance companies has been going on for years. It
has increased speed, efficiency, and accuracy across every branch of insurance
companies. Advanced data and predictive analytics systems help the insurance
industry to make data-driven business decisions. AI in Insurance has empowered
companies with high-level data and information that is leveraged into improved
insurance processes and new opportunities.

Let’s discuss an auto insurance example to understand the effect. A new level of
innovation is emerging in all product lines and business functions using advanced
data analytics. Rather than just focusing on internal data sources like loss histories,
auto insurance started work on behavior-based analytics and credit score from
credit bureaus into their analysis. Thus this analysis becomes evidence and
generates insights to know the people who are paying their bills on time are safe
drivers. It makes the traditional analytics advance and more productive in which
they check claim histories, demographic and physical data.

New sources of external (third-party) data, tools for underwriting risk, and
behavior- influencing data monitoring are the primary developments shaping up as
game- changers.

Why do we need data analytics in the insurance industry?

Data analytics create new capabilities that empower insurers to optimize every
function in the insurance value chain with the help of data-driven decision-making.

It can also analyze a customer’s risk and determine which client is trustworthy or
may give great loss.

It can also detect fraud, like through which the greatest frauds happened.

Customers can use data analytics to know which insurance company gives a
minimum price with suitable offers.
 77

Thus, both insurers and customers can make decisions according to data and their
understanding, increasing speed, efficiency, and accuracy across every branch of
insurance companies. Thus, help the insurance industry to make data-driven
business decisions. It empowers companies with high-level data and information
that is leveraged into improved insurance processes and new opportunities.

Life insurance undertaking for impaired life Customers

Life insurance companies do not underwrite customers who suffer serious

diseases; thus, doing so would require a long and expensive medical assessment
process.

End-User Value

A life reinsurer can use medical history and conditions to predict the risk of
underwriting a serious disease survivor accurately.

The insurer can identify which customers have good health prospects and directly
underwrite them without a further assessment, leading to more customers and
reduced medical costs.

As we can see above, clients with blood cancer have maximum chances of dying.

The person on stage 3 or 4 also has chances of dying soon. But we can compare
that the death rate decreases with time, so it will be safe to offer cancer patients.

Fraudulent Claim Modeling

Fraudulent claims are too expensive and inefficient to investigate every claim.
Moreover, investigating innocent customers could be a bad experience for the
insured, leading some to leave the business.

End-User Value

Accurate predictive models can be used to identify and prioritize likely fraudulent
activity.
 78

As shown in the dashboard, we know from which age group maximum frauds are
detected.

By using this particular incident and occupation, maximum frauds happened. It

helps in two folds.

Resources will be deployed where users see the greatest return on their investigative
investment.

Moreover, an insurer can optimize customer satisfaction by not challenging

innocent claims.
 79

Questionnaire
1) Does beneficiary have to pay tax on the proceeding of life insurance policy?

Ans: Generally, the benefits on the life insurance policy are tax free and the
beneficiary is not liable to pay any tax after the death of the policy holder. But if
you are changing your beneficiary for monetary gain or other purposes then the
beneficiary has to pay tax on it.

2) Is it possible to convert a part of term life insurance into permanent life

insurance?

Ans: Yes, it is possible to convert as far as you are having a convertible life
insurance policy. But there is a deadline that has to be taken care of, for converting
term life insurance into permanent life insurance. Also, your premium will rise
soon you convert your policy.

3) What is third party Insurance?

Ans: An insurance policy that covers the damage caused by another person or
party is known as third party Insurance. In this type of insurance, the insured is the
first party, insurance company is the second party while the damage done by
another is referred as thethird party. This type of Insurance policy is purchased for
vehicles, so that in case of theaccident they can claim it.

4) Is it advisable to replace the policy with another policy?

Ans: If it is not a long duration that you have bought the policy, then you can
replace the policy. But in other case it is not advisable as you will lose all the
benefits of the previous policy also the premium will go high as you go older.
Also, the two-year period of contestability will also begin again.
 80

5) What happens if you fail to make required premium payments?

Ans: Usually, Insurance Company gives a grace period of 10-15 days to the
insured if they fail to pay the premium before the due date. Further, if you fail to
pay a premium, then your policy will lapse. You can revive your policy by paying
the outstanding premium along with the interest, counted from the date the policy
got lapsed. Different Insurance Company has a different norm for reviving the
policy.

However, if your policy is in force for alonger period like say more than2-3
years,and if you fail to pay a premium, then insurance company will deduct the
premium amount from your accumulated funds, especially in permanent life
insurance. This will continue till there is an available fund after which your policy
will be terminated.

6) What is the Surrender Value?

Ans: Surrender Value is the amount when you stop paying the premium and
withdraw the entire amount. The policy ceases as soon as you withdraw the
money, and the insured will lose out all the returns on it.

7) What is ‘declaration page’ in insurance policy?

Ans: ‘Declaration page’ in insurance policy, bears all the information of the policy
holder like name, address, vehicle information, type of coverage and loss payee
information.

8) What is the contestable period’ in insurance policy?

Ans: ‘Contestable period’ is usually 1 or 2 years, during which the insurance

company holds all the right to investigate the policy and decide whether to pay or
not to pay to the insured.
 81

9) Is it possible to get the full payment on cancelling the new policy in free
look period?

Ans: ‘Free Look Period’ is a time-period where the insured can cancel their newly
bought policy in a specific period of time from the date of issuing the policy
without any penalties or surrender charges.

Yes, it is possible to get the full payment in free look period; you can cancel your
new policy in 15 days by returning the policy to the life Insurance company after
you receive all the documents related to the policy.

10) What is ‘group life’ insurance?

Ans: ‘Group life insurance’ is a single policy that covers an entire group. Such
policy is taken by an employer for thebigger organization to cover their employee,
as anindividual policy holder, it may cost more than a group policy.
 82

CONCLUSION

Competition will surely cause the market to grow beyond current rates, create a bigger "pie,"
and offer additional consumer choices through the introduction of new products, services,
and price options. Yet, at the same time, public and private sector companies will be working
together to ensure healthy growth and development of the sector. Challenges such as
developing a common industry code of conduct, contributing to a common catastrophe
reserve fund, and chalking out agreements between insurers to settle claims to the benefit of
the consumer will require concerted effort from both sectors.

The market is now in an evolving phase where one can expect a lotof actions in coming
days. The current impediments for foreign participation - like 26% equity cap on foreign
partner, ill defined regulatory role of IRDA (Insurance Regulatory development Authority-
the watchdog of the industry) in pension business etc.-are expected to be removed in near
future. The early- adopters will then have a clear advantage compared to laggards in gaining
the market share and market leadership. The will need to make sure right now that all their
infrastructure is in place so that they can reap the benefit of an "unlimited potential."
 83

Bibliography

⚫ Life-Insurance. by Mc GILL

⚫ Insurance Industry by ICEAL Publication

⚫ Insurance in India

⚫ Important Website

⚫ www.iciciprudential.com www.licindia.com

⚫ www.scribd.com

⚫ www.google.co.in/indian insurance industry.

Newspaper

○ Times of India

○ The economics times.