Summer Project in S.i.p., by Ajeet Samrik, IMRT, Lucknow

SUMMER INTERNSHIP PROJECT REPORT ON
“DIFFERENT ASPECTS OF INSURANCE PRODUCTS

AND MUTUAL FUNDS AND THEIR EFFECT ON THE
BUYING BEHAVIOUR OF INVESTORS”
FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF POST GRADUATE DIPLOMA IN
MANAGEMENT
UNDER THE GUIDANCE OF: UNDER THE SUPERVISION

OF:
MR.ANURAG SINGH MR. DEVANSHU
DHAWAN
SUBMITTED BY:
AJEET KUMAR
PGDM 2008-2010
INSTITUTE OF MANAGEMENT RESEARCH AND

TECHNOLOGY
(APPROVED BYAICTE, MINISTRY OF HRD, GOVT.OF INDIA)

TECHNOLOGY 1
VIPUL KHAND-6, GOMTI NAGAR, LUCKNOW
CERTIFICATE
This is to certify that the project work done on “DIFFERENT

ASPECTS OF INSURANCE PRODUCTS AND MUTUAL
FUNDS AND THEIR EFFECT ON THE BUYING
BEHAVIOUR OF INVESTORS ” is a bonafide work carried
out by Mr.
---------------------------------------under my supervision and
guidance. The project report is submitted towards the partial
fulfillment of 2-year, full time Post Graduate Diploma in
Management.
This work has not been submitted anywhere else for any
other degree/diploma. The original work was carried during
------------to----------------- in STANDARD CHARTERED
BANK.
Name & sign of company guide Name & sign of faculty

guide

TECHNOLOGY 2
Student’s Name & sign
Roll no.
ACKNOWLEDGEMENT
With great zeal, I present my individual summer training Report

in PGDM (Third semester) on BUYING BEHAVIOUR OF
INVESTORS FOR FINANCIAL PRODUCTS LIKE INSURANCE
POLICY AND MUTUAL FUNDS.
I convey my deepest gratitude to Mr.Vivek Sinha Branch

Manager, Mr.Vipul Srivastva(R.M.) , Mr. Company guide
Devanshu Dhawan and all other staff members of STANDARN
CHARTERED BANK who have been very co-operative and helpful
in providing vital information for my project. Also a grateful
thanks to Mr.Baghha Sir and Mr.Anupam Srivastva for their
contribution to make me understand how interact with
customers and how to sale the financial products.
Really I am too much oblige with Mr.Devanshu Dhawan Sir who

inspired me and direct me how handle the customers also how
to sale the financial products.

TECHNOLOGY 3
By working at STANDARD CHARTERED BANK, I am studying
different schemes of INSURANCE PRODUCTS , MUTUAL FUND,
knowing the criteria of making investment, interacting with
professional departmental heads and by preparing this report, it
has added a practical touch to my theoretical knowledge.
I avail this opportunity to convey my sincere thanks to

Mr.Devashish Bose, the director of IMRT BUSINESS SCHOOL. I
am thankful to Anurag Singh , my project guide for
recommending me the necessary information for the report. His
instilling support and enthusiasm, expert guidance and insight
have lent my project a unique touch. I also express my sincere
gratitude to Mr. Sanjeev Bansal, secretary of I.M.R.T., LUCKNOW
for providing us an opportunity to interact with professional
peoples in the real corporate world. I forward my gratitude for
the compulsion of this most wonderful aspect of our PGDM
curriculum without which knowledge of management is
incomplete and futile. At last I am also thankful to my family
member and friends who had given me their constructive
advice, educative suggestions, encouragement and co-operation
to prepare this report.
DECLARATION
I AJEET KUMAR, student of PGDM (M.B.A.), Semester III of

INSTITUTE OF MANAGEMENT OF RESEARCH AND TECHNOLOGY,
hereby declare that the project work presented in this report is
my own work and has been carried out under the supervisor of
Mr.Devanshu Dhawan (Relationship Manager of STANDARD
CHARTERED BANK, LUCKNOW).

TECHNOLOGY 4
My report is submitted as a part of study curriculum and as a
partial fulfillment of the POST GRADUTE DIPLOMA IN
MANAGEMENT equivalent to M.B.A. (Masters of Business
Administration).
I am also declaring that I am submitting this report on the

training undertaken at STANDARD CHARTERED BANK regarding
the General Study and cross selling of Bajaj Allianz Insurance
products and Mutual Funds at LUCKNOW Branch and studying
the people’s perception regarding the investment in mutual
fund.
I guarantee that this project report has not been submitted for
the awards to any other management colleges for diploma or
any other such prizes.
Date:
Place: LUCKNOW
(AJEET KUMAR)
PREFACE

TECHNOLOGY 5
The PGDM program is well structured and integrated course of business studies.
The main objective of practical training at PGDM level is to develop skill
in student by supplement to the theoretical study of business management
in general. Industrial training helps to gain real life knowledge about the
industrial environment and business practices. The PGDM program
provides student with a fundamental knowledge of business and
organizational functions and activities, as well as an exposure to strategic
thinking of management.
In every professional course, training is an important factor. Professors give us
theoretical knowledge of various subjects in the college but we are practically
exposed of such subjects when we get the training in the organization. It is only
the training through which I come to know that what an industry is and how it
works. I can learn about various departmental operations being performed in the
industry, which would, in return, help me in the future when I will enter the
practical field.
Training is an integral part of PGDM and each and every student has to undergo
the training for 2 months in a company and then prepare a project report on the
same after the completion of training.
During this whole training in Standard Chartered Bank , I got a lot of experience
and came to know about the management practices in real that how it differs
from those of theoretical knowledge and the practically in the real life.
In todays globalize world, where cutthroat competition is prevailing in the

market, theoretical knowledge is not sufficient. Beside this one need to have
practical knowledge, which would help an individual in his/her carrier activities
and it is true that “Experience is best Teacher”.

TECHNOLOGY 6
TABLE OF COTENTS PAGE
NO.
1. Executive summary ………………………………….. 7
2. Introduction of Industry………………………………. 8-
10
3. Abstract…………………………………………………. 11 –
12
4. Insurance………………………………………………… 13 –
26
5. Mutual Fund……………………………………………... 27--

46
6. The Emerging market for Mutual Funds
And Insurance ……………………………………………

47
7. Bajaj Allianz Life Insurance co. Ltd……………………. 48

—49
8. Analysis of Questionnaire………………………………..
50---75

TECHNOLOGY 7
9. Literature Review…………………………………………
76--84
10. Objective of Project………………………………………

85--86
11. Conclusion…………………………………………………
87
12. Suggestion………………………………………………….
88
13. Limitation of Study………………………………………

89
14. Over All experience During Summer training…………

90--93
15. Bibliography………………………………………………
94--96
16. Appendices………………………………………………
97--101
EXECUTIVE SUMMARY
A mutual fund is a financial intermediary set up as a trust that pools the savings
of a number of investors who share a common financial goal. There are various
advantages of mutual funds like availability of various schemes and flexibility,

TECHNOLOGY 8
diversification benefits, low transaction costs, liquidity, professional
management, tax benefit and well regulation of it. There are certain
disadvantages as well like risk associated, charges involved, and lack of
knowledge in common man etc. It can be classified into various types depending
on various ways of categorization like term of the fund, investment objective,
and types of investors, management style and load.
The function of insurance is to safeguard against misfortunes in the way

contributions of the many pay for the losses of the unfortunate few. It can be
divided into social and private insurance. Private insurance is categorized into
life and non-life branch which is further subdivided into life and health
insurance.
The Standard Chartered Group is a result of merger of two banks in 1969, the
Standard Bank of British South Africa founded in 1863 and Chartered Bank of
India, Australia and China, founded in1853. The Indian operations of Chartered
Bank originated in Kolkata on April 12, 1858 but now, the head quarters is in
Mumbai.
A study called Dhoni effect says that the semi-urban cities including Lucknow
would prove to be a very potential market in the near future and this process has
already started. So the project “A survey on different aspects of an insurance
product affecting the buying behavior of an investor and Cross Selling of mutual
fund and insurance” which was given to me by Standard Chartered Bank has lots
of importance attached to it. A questionnaire was developed to carry out the
study which contains all the aspect which investor looks before investing. The
questionnaire was developed with the help of my industry guide and some of the
staff of the bank.
I took responses of around 120 persons and then with the help of SPSS tried to
analyze between different attributes. And the analysis is still in progress......

TECHNOLOGY 9
INTRODUCTION
STANDARD CHARTERED BANK
Listed on both the London Stock Exchange and the Hong Kong Stock Exchange,
Standard Chartered’s market capitalization consistently places it among the top
25 in the FTSE 100. Their history goes back over 150 years and they operate in
many of the world’s fastest-growing markets. Through a global network of over
1,700 branches (including subsidiaries, associates and joint ventures) they are
part of the community in more than 70 countries across Asia Pacific, South Asia,
the Middle East, Africa, Europe and the Americas. Standard Chartered is leading
the way in Asia, Africa and the Middle East. The bank head quarters are situated
in London with UK as a base country. But around 90% of the total businesses of
Standard Chartered Bank are registered from:
 Asia Pacific Region including Australia, China, India, Japan, North

Korea, South Korea, Malaysia, Philippines, Singapore and Hongkong.
 South Asia Region including Bangladesh, Pakistan, Sri Lanka and Nepal
 Middle-East comprising of Lebanon and UAE (Dubai).
 Africa including Ghana, Kenya and South Africa
The Standard Chartered Group was formed in 1969 through a merger of two
banks, the Standard Bank of British South Africa founded in 1863 and the
Chartered Bank of India, Australia and China, founded in 1853.
The Chartered Bank
This bank was founded by James Wilson following the grant of a Royal Charter
by Queen Victoria in 1853. It started with its first branches in Mumbai

TECHNOLOGY 10
(Bombay), Calcutta and Shanghai in 1858, followed by Hong Kong and
Singapore in 1859. Their traditional business was in cotton from Mumbai
Mr. Peter Sands, CEO Standard
(Bombay), indigo and tea from Calcutta, rice in Burma, sugar from Java, tobacco
Chartered Bank
from Sumatra, hemp in Manila and silk from Yokohama. It played a major role
in the development of trade with the East which followed the opening of the
Suez Canal in 1869 and the extension of the telegraph to China in 1871.
The Standard Bank
It was founded in the Cape Province of South Africa in 1862 by John Paterson.
The bank commenced business in Port Elizabeth, South Africa, in January 1863.
It was prominent in financing the development of the diamond fields of
Kimberley from 1867 and later extended its network further north to the new
town of Johannesburg when gold was discovered there in 1885. It expanded in
Southern, Central and Eastern Africa and by 1953 had 600 offices. In 1965, it
merged with the Bank of West Africa expanding its operations into Cameroon,
Gambia, Ghana, Nigeria and Sierra Leone.
In 1969, Chartered and Standard decided to undergo a friendly merger. All was
going well until 1986, when a hostile takeover bid was made for the Group by
Lloyds Bank of the United Kingdom. When the bid was defeated, Standard
Chartered entered a period of change. Provisions had to be made against third
world debt exposure and loans to corporations and entrepreneurs who could not
meet their commitments. Standard Chartered began a series of divestments
notably in the United States and South Africa, and also entered into a number of
asset sales.
From the early 1990s, Standard Chartered has focused on developing its strong
franchises in Asia, the Middle
East and Africa using its operations in the United

TECHNOLOGY 11
Kingdom and North America to provide
customers with a bridge between these
markets. Secondly, it would focus on
consumer, corporate and institutional
banking and on the provision of treasury
services - areas in which the Group had
particular strength and expertise.
They acquired Grindlays Bank from the ANZ Group and the Chase Consumer
Banking operations in Hong Kong in 2000 in the new millennium. Their
business includes Personal Banking, SME Banking, Wholesale Banking, Islamic
Banking and Private Banking. The CEO is Mr. Peter Sands.
Share Price as on April 18, 2009
Last Price Change Open Day High 52-Week High
3.00 (0.30%) 1011.00 1037.00 1903.00
Volume Previous Close Day Low 52-Week Low

1004.00
8,302,831 1001.00 970.00 554.00
Standard Chartered Bank India, The Indian operations of Chartered Bank

originated in Kolkata on April 12, 1858. During that time Kolkata was the most
important commercial city and was the hub of jute and indigo trades. With the
opening of the Suez Canal in 1869 and the growth of
cotton trade, Bombay replaced Kolkata as the main
commercial center. Hence Standard Chartered shifted its
main operations to Bombay. So the Head Quarters of
Standard Chartered Bank India Ltd. are now in Mumbai
with Kolkata branch as a key associate. Today the Bank's

TECHNOLOGY 12
branches and sub-branches in India are directed and administered from Bombay
with Kolkata remaining an important trading and banking centre.Today the reign
of standard chartered bank has expanded to the length and breadth of the country
including multiple branches in all major cities like Chennai, New Delhi,
Kolkatta, Mumbai, Guragon, Noida,
Pune, Hyderabad, Bangalore e.t.c.
MR NEERAJ SWAROOP, CEO-India, Standard Chartered Bank

ABSTRACT
of a number of investors who share a common financial goal. There are various
advantages of mutual funds like Availability of various schemes and flexibility,
Diversification Benefits, Low Transaction Costs, Liquidity, Professional
management, Tax benefit and well regulation of it.
There are certain disadvantages as well like risk associated, charges involved,
lack of knowledge in common man etc. It can be classified into various types
depending on various ways of categorization like term of the fund, investment
objective, types of investors, management style and load.
The function of insurance is to safeguard against misfortunes in the way

contributions of the many pay for the losses of the unfortunate few. It can be
divided into social and private insurance. Private insurance is categorized into
life and non-life branch which is further subdivided into life and health
insurance.

TECHNOLOGY 13
The Standard Chartered Group is a result of a merger of two banks in 1969, the
Standard Bank of British South Africa founded in 1863 and the Chartered Bank
of India, Australia and China, founded in 1853. The Indian operations of
Chartered Bank originated in Kolkata on April 12, 1858 but now, the Head
Quarters India are in Mumbai.
A study called Dhoni Effect says that the semi urban cities including Lucknow
would prove to be a very potential market in the near future and this process has
already started. So the project “Cross Selling of Mutual Funds and Insurance”
which was given to me by Standard Chartered Bank has lots of importance
attached to it.
Till now I have mainly worked on two parts of my project that is “Cross Selling
of Mutual Funds and Insurance” and “Understanding the different aspects of an
insurance product which affects the buying behavior of an investor”. For these I
have met various important people, visited various clients as well as villages and
markets. A questionnaire was developed for the same after contacting various
faculty members including my faculty guide for SIP, the branch manager and the
company guide. Statistical tool named factor analysis is being used to analyze
the responses for the questions in the questionnaire given by various respondents.
For comparative analysis of different products of various companies, I have

visited 3-4 banks as a customer and collected information from them. I have also
searched for the secondary data by surfing net. The work is still on progress. I
plan to start with the fourth part of the project that is providing financial planning
to the customers coming week.
I have learnt a lot while doing this project. It is the mistakes which I did taught
me more. I developed the skill of communicating with the customers and in the
corporate world as well. I am getting a real life experience of corporate world
which would prove to be very useful for me in the future. I am learning

TECHNOLOGY 14
everywhere… the office, during communicating with customers, in the campus,
during my trips and the process is still in progress.
INSURANCE:
Introduction
Since time immemorial human beings have always been in search of security.
The story of the evolution of mankind is, in fact, a saga of continuous pursuit of
a secured life. This urge for protection led to the concept of insurance. The
Greeks and the Romans were the first to introduce health and life insurance in
600 A.D. through the establishment of guilds entitled as ‘benevolent societies’
which looked after the families and paid funeral expenses to members upon
death. In the modern society the evolution of insurance business started off with

TECHNOLOGY 15
the marine business in England during the late 1680’s under the initiative of
Edward Lloyd.
The life insurance business in India commenced with the formation of the Life
Insurance Corporation of India (LICI) on September 1, 1956 and later
rejuvenated by the establishment of a newly formed governing body in 1999,
entitled as, “Insurance Regulatory and Development Authority (IRDA)”. The
IRDA was entrusted to look after the growth of the life insurance and general
insurance business in India (chakraborty, 2007). The statutory body even
emphasized upon the liberalization of the country’s insurance sector to private
players in India (both Indian and foreign) in order to infuse fresh capital and
become more competitive. This opened the flood gates of opportunity for the
private players in india to diversify themselves into the insurance business either
through joint ventures or as a stand-alone player. This has even lured several
banks and financial institutions to start off their insurance business in order to
capitalize on the opportunities that are generated on moving first in the indian
insurance market.
At the beginning of 2008, there were 18 registered life insurance companies in

India with one public- sector player and 17 private insurers with the retail giant
pantaloons and IDBI bank coming into the picture, the number of private life
insurers operating in india has risen to 17, with more proposals being in the
pipeline.
India at the privilege of having some of the global insurance giants, such as the
US-based AIG and New York Life, UK-based Prudential and Aviva, Germany’s
largest insurer Allianz and France-based AXA, vying against each other to
capitalize on the largely untapped insurance market in India. The presence of
these foreign insurance giants in India has bought a revolutionary change in
terms of developing innovative products, smart marketing concepts apart from

TECHNOLOGY 16
the aggressive selling and distribution strategies but these could not completely
eradicate the continued domination of LICI in the Indian market although its
market share took a beating. Nevertheless, the challengers in the sector
multiplied with the rising presence of the private players in the Indian insurance
market further fuelled by the impact of globalization and liberalization.
Definition of insurance …
a) in legal terms
From legal perspective, insurance is a contract, by which one party, the policy
owner, pays a stipulated consideration called the premium to the other party
called the insurer, in return for which the insurer agrees to pay a defined amount
of money or provide a defined service if a covered event occurs during the policy
term. The person whose life, health, or property is the object of the insurance
policy is referred to as the insured. In most instances the insured is also the
policy owner- the person who exercises contractual rights under the policy.
Under life insurance policies, the person to whom the payment is made on the
insured’s death is the beneficiary.
(Quoted from Kenneth Black,Jr., Harold D. Skipper, Jr., Life & Health
Insurance, Thirteenth Edition, page no. 20)
b) In economic terms, Insurance, in economics, is a form of risk

management primarily used to hedge against the risk of a contingent loss.
Insurance is defined as the equitable transfer of the risk of a loss, from
one entity to another, in exchange for a premium, and can be thought of
as a guaranteed small loss to prevent a large, possibly devastating loss.
An insurer is a company selling the insurance; an insured is the person or
entity buying the insurance. The insurance rate is a factor used to
determine the amount to be charged for a certain amount of insurance

TECHNOLOGY 17
coverage, called the premium. Risk management, the practice of
appraising and controlling risk, has evolved as a discrete field of study
and practice.
(Quoted from http://en.wikipedia.org/wiki/Insurance )
FUNDAMENTAL PRINCIPLES OF INSURANCE
Some useful terms in Insurances:
1) INDEMNITY :-A contract of insurance contained in a fire, marine,

burglary or any other policy (excepting life assurance and personal
accident and sickness insurance) is a contract of indemnity. This means
that the insured, in case of loss against which the policy has been issued,
shall be paid the actual amount of loss not exceeding the amount of the
policy, i.e. he shall be fully indemnified. The object of every contract of
insurance is to place the insured in the same financial position, as nearly
as possible, after the loss, as if he loss had not taken place at all. It would
be against public policy to allow an insured to make a profit out of his
loss or damage.
2) UTMOST GOOD FAITH:-Since insurance shifts risk from one party to
another, it is essential that there must be utmost good faith and mutual
confidence between the insured and the insurer. In a contract of insurance
the insured knows more about the subject matter of the contract than the
insurer. Consequently, he is duty bound to disclose accurately all material
facts and nothing should be withheld or concealed. Any fact is material,
which goes to the root of the contract of insurance and has a bearing on
the risk involved. It is only when the insurer knows the whole truth that
he is in a position to judge (a) whether he should accept the risk and (b)
what premium he should charge.

TECHNOLOGY 18
If that were so, the insured might be tempted to bring about the event
insured against in order to get money.
3) Insurable Interest - A contract of insurance affected without insurable
interest is void. It means that the insured must have an actual pecuniary
interest and not a mere anxiety or sentimental interest in the subject
matter of the insurance. The insured must be so situated with regard to
the thing insured that he would have benefit by its existence and loss
from its destruction. The owner of a ship run a risk of losing his ship, the
charterer of the ship runs a risk of losing his freight and the owner of the
cargo incurs the risk of losing his goods and profit. So, all these persons
have something at stake and all of them have insurable interest. It is the
existence of insurable interest in a contract of insurance, which
distinguishes it from a mere watering agreement.
4) Causa Proxima - The rule of causa proxima means that the cause of the loss
must be proximate or immediate and not remote. If the proximate cause of the
loss is a peril insured against, the insured can recover. When a loss has been
brought about by two or more causes, the question arises as to which is the causa
proxima, although the result could not have happened without the remote cause.
But if the loss is brought about by any cause attributable to the misconduct of the
insured, the insurer is not liable.
5) Risk - In a contract of insurance the insurer undertakes to protect the insured

from a specified loss and the insurer receive a premium for running the risk of
such loss. Thus, risk must attach to a policy.
· Mitigation of Loss - In the event of some mishap to the insured property, the
insured must take all necessary steps to mitigate or minimize the loss, just as any
prudent person would do in those circumstances. If he does not do so, the insurer
can avoid the payment of loss attributable to his negligence. But it must be

TECHNOLOGY 19
remembered that though the insured is bound to do his best for his insurer, he is,
not bound to do so at the risk of his life.
· Subrogation - The doctrine of subrogation is a corollary to the principle of

indemnity and applies only to fire and marine insurance. According to it, when
an insured has received full indemnity in respect of his loss, all rights and
remedies which he has against third person will pass on to the insurer and will be
exercised for his benefit until he (the insurer) recoups the amount he has paid
under the policy. It must be clarified here that the insurer's right of subrogation
arises only when he has paid for the loss for which he is liable under the policy
and this right extend only to the rights and remedies available to the insured in
respect of the thing to which the contract of insurance relates.
· Contribution - Where there are two or more insurance on one risk, the
principle of contribution comes into play. The aim of contribution is to distribute
the actual amount of loss among the different insurers who are liable for the
same risk under different policies in respect of the same subject matter. Any one
insurer may pay to the insured the full amount of the loss covered by the policy
and then become entitled to contribution from his co-insurers in proportion to the
amount which each has undertaken to pay in case of loss of the same subject-
matter.
In other words, the right of contribution arises when (I) there are different
policies which relate to the same subject-matter (ii) the policies cover the same
peril which caused the loss, and (iii) all the policies are in force at the time of the
loss, and (iv) one of the insurers has paid to the insured more than his share of
the loss.
TERMS OF POLICY

TECHNOLOGY 20
Terms of policy mean the duration for which the policy will cover the risk.
Except in case of life insurance, a contract of insurance is from year to year only
and the insurance automatically comes to an end after the expiry of the years
unless, of course, it is renewed.
RE-INSURANCE & DOUBLE INSURANCE
Every insurer has a limit to the risk he can undertake. If a profitable proposal
comes his way he may insure it even if the risk involved is beyond his capacity.
Then, in order to safeguard his own interest, he may insure the same risk, either
wholly or partially, with other insurers, thereby spreading the risk. This is called
-re-insurance. Re-insurance can be resorted to in all kinds of insurance and a
contract of re-insurance is also a contract of indemnity. The re-insurers are liable
to pay the amount to the original insurer only if the latter has paid to the insured.
Re-insurance is subject to all the conditions in the original policy and the re-
insurer is entitled to all the benefits, which the original insurer enjoys under the
policy.
When the insured insures the same risk with two or more independent insurers,
and the total sum insured exceeds the value of the subject matter, the insured is,
said to be over insured by double insurance. Both double insurance and over-
insurance are perfectly lawful, unless the policy otherwise provides. A man may
insure with as many insurers as he pleases and up to the full value of his interest
with each one of them. If a loss occurs, he may claim payment from the insurers
in such order as he thinks fit; but in no case he shall be entitled to recover more
than his loss, because a contract of insurance is a contract of indemnity only.
(All the above fundamental principles have been quoted from

http://www.helplinelaw.com/docs/insurance/1.php)

TECHNOLOGY 21
CLASSIFICATION OF INSURANCE

TECHNOLOGY 22
TECHNOLOGY 23
Social insurance vs Private insurance
Social insurance focuses on social equity through income redistribution where as

private insurance emphasizes on individual equity i.e. each insured’s premiums
reflect the expected value of his or her losses. In social insurance schemes
participation is compulsory and financing relies on government-mandated
premiums.
Life vs Non-life insurance
The private insurance has been divided into life insurance i.e. insurance on the
person and non-life insurance or property or casualty insurance or general
insurance i.e. insurance to protect property.
The life branch includes insurance that pays benefits on a person’s:
1. Death- called life insurance or life assurance
2. Living a certain length of time-called endowments, annuities and

pensions
3. Incapacity-called disability and long term care insurance
4. Injury or incurring a disease-called health insurance, accident insurance,

and medical expense insurance
Types of life and health insurance
The first two of the above mentioned points collectively deal with life insurance
while the last two with health insurance.
Under life insurance, the policy that gives coverage for the whole life is called
whole life insurance while the one which that covers a set time period, such as
five or ten years is called the term life insurance or endowment insurance.

TECHNOLOGY 24
A “term insurance” promises to pay the benefits only on the mishappening as
death of the insured during policy term while an “endowment insurance” pays
the benefits during the policy term as well as on the death of the insured during
the policy term.
Under health insurance, payment provoked because physical or mental

incapacity prevents the insured from being able to work is called disability
income insurance. If the incapacity prohibits the insured’s activities of daily
living, it is called long-term care insurance. If the insured incurs hospital,
physician, or other health care expenses, it is called medical expense insurance.
Indian Insurance Market Today
Insurance is one of the booming sectors among premium sectors, which is a US$
41-billion industry in India. India is the fifth largest life insurance market in the
emerging insurance economies globally and is growing at 32-34 per cent
annually. The players are bringing out newer products to attract more customers
into their kitty with increasing competitiveness amongst them. The total number
of life insurance companies operating in India is currently 22.
Foreign direct investment (FDI) up to 26 per cent is permitted under the

automatic route subject to obtain a licence from the official regulator, Insurance
Regulatory and Development Authority (IRDA).
3.6 billion US$ was the total premium collected by the public sector during April
2008-February 2009 showing the growth of over 6 per cent compared with the
previous year. The four public sector general insurers—United India Insurance
Company, National Insurance Company, New India Assurance and Oriental
Insurance Company—have been holding on to their combined market share of
59.4 per cent during April 2008-February 2009.

TECHNOLOGY 25
The retail segments such as motor and home insurances, especially of private
sector, have been impacted the most by the detariffing regulation. The detariffing
regulation Public sector insurance companies have, however, grown with
addition in corporate clients during the period. Presently, there are at least 18
third party agents (TPAs) having a tie up with the four PSU insurers. Insurers
have also begun setting up their own TPA mechanism to rectify the current
weaknesses.
Total revenue of 21 private sector general insurers together was US$ 478.3
million (16 per cent) during April 2008-February 2009.
According to IRDA data, for the April-January 2009 period, the private sector
life insurance segment has recorded 13.22 per cent growth in first year premium
and 20.36 per cent increase in number of policies.
Premium payments from pension policies have grown by 16 per cent for the 10
months ended December 2008 compared with a year earlier. Pension plans acted
as the main contributor to the total sales of ICICI Prudential Life Insurance, the
country’s largest private insurer for 2008-09, to around 33 percent. 22 per cent of
the total premiums received by Reliance Life Insurance over the past two years
have also come from pension plans.
Banc assurance
Banc assurance simply means selling of insurance products by banks. In India,

the bank branch network encompasses nearly 75,000 branches inclusive of PSU
and private banks.
Health Insurance

TECHNOLOGY 26
Bharti AXA General Insurance has launched a health insurance policy called
‘Smart Health’.
Tata AIG has launched a health product called ‘Hospicashback’ in 2009. The
product offers a guaranteed return of premium irrespective of the claims of the
customers besides paying customers fixed benefits for expenses such as hospital
and ambulance charges.
Tata-AIG has also brought out a wellness product called ‘Well assurance’ to tap
into the health insurance market. The product offers a bouquet of personal
accident cover, health check-ups and spa treatments. The company, which has
around 2,000 agents at present, plans to have close to 3,500-4,000 agents by
March 2010.
Weather based Crop Insurance Scheme (WBCIS)
During the Rabi 2008-09 season, this scheme was again implemented in 10 states
namely Haryana, Bihar, Rajasthan, Jharkhand, Karnnataka, Tamilnadu, Kerala,
West Bengal, Chhattisgarh and Himachal Pradesh. The scheme aims to mitigate
the hardship of the insured farmers against the possibility of financial loss
anticipated crop loss on account of anticipated crop loss resulting from incidence
of adverse conditions of weather parameters like rainfall, temperature, frost,
humidity, etc.
Policy Initiatives
From June 2009, non-life insurance companies can neither arbitrarily increase
the premium while renewing cover, nor can they reject the renewal of existing
health insurance policies on the premise that claims had been made in the
previous years. The grounds for such rejection have been made rare and
exceptional, according to an IRDA circular.

TECHNOLOGY 27
The Road Ahead
“The insurance regulator has said it sees consolidation in the insurance industry
in 2009. The regulator is also concerned over the finances of non-life companies
and is talking to ICAI to assess the audit framework for all insurers in the wake
of the Satyam scandal.”
“Speaking to ET, IRDA chairman J Hari Narayan said the phase of consolidation
is set to begin and the regulator will soon come out with guidelines for mergers
and acquisitions in the insurance industry.”
(Quoted from: Vidyalaxmi & Preeti Kulkarni, ET Bureau, IRDA sees 2009 as
year of consolidation for insurance industry, 26 Jan 2009,
http://economictimes.indiatimes.com/News_by_Industry/Insurance_Ind_consolid
ation_in_09/articleshow/4031469.cms)
According to Mr. J Hari Narayan, in the life industry, even eight years after
opening up, only one company has made profit though the industry is doing
good. Most non-life companies continue to make an underwriting loss, which
means that their claims payout is in excess of premium collection.
Life Insurance in India is a US$ 35 billion industry with US$ 24 billion

accounting for First Year Premium (inclusive of Single Premium) and Non-Life
Insurance - US$ 5.6-billion industry with motor and health segments accounting
for 56 per cent of total business.
According to the Investment Commission of India, the Indian insurance market

is expected to be around US$ 52 billion by 2010. The compound annual growth
rate (CAGR) is expected to be over 30 per cent per annum. The total investment
opportunity is estimated to be US$ 14 billion-US$ 15 billion.

TECHNOLOGY 28
Further, according to a report 'Booming Insurance Market in India (2008-2011)’
by Research and Markets, total life insurance premium in India is projected to
grow US$ 253.2 billion by 2010-11. Total non-life insurance premium is
expected to increase at a CAGR of 25 per cent for the period spanning from
2008-09 to 2010-11.
According to Mr. Milind Chalisgaonkar, CEO, Bharti AXA “The General

Insurance market in India is under-penetrated; the current penetration level is at
0.6% which is way below the Asian average of 2%. Hence, there is still a lot of
scope for players to grow. Segments like Health Insurance are still growing very
strongly.”
According to him, the General Insurance industry is looking at a healthy growth

rate of 12-13% this year.
SOME INTERESTING NEWS ABOUT INSURANCE INDUSTRY
1. “Drug sales in India grew nearly 18% in March 2009 due to increasing
penetration of health insurance, favorable regulatory environment and
government support.”
(Quoted from: http://www.rncos.com/Blog/2009/05/Drug-Sales-in-India-Surge-

18-in-March.html)
2. According to online news indiainfoline ”We expect the industry to yield a

positive top line growth, somewhere in the range of 10-15% over the
previous year” says Mr. Kapil Mehta, MD & CEO, DLF Pramerica Life
Insurance Co. Ltd.

TECHNOLOGY 29
(Quoted from: May 11, 2009, Mr. Kapil Mehta, MD & CEO, DLF Pramerica
Life Insurance Co. Ltd, May 08, 2009,
http://www.indiainfoline.com/news/showleader.asp?storyId=762&lmn=1)
3. “Through the bulk deal window, Life Insurance Corporation of India

(LIC), ICICI Prudential, Birla Sun Life and Bajaj Allianz have been net
buyers to the tune of Rs 267.53 crore on the Bombay Stock Exchange
(BSE) and the National Stock Exchange (NSE)” according to Business
Standard, Monday May 11, 2009.
In the last six months, there was huge opportunity for insurance companies as
foreign institutional investors (FII) were selling and mutual funds were not in a
position to buy.
Insurers said that their appetite matched with the stocks sold by others. During
June-November 2008, insurers were net sellers in this segment as valuations
were high. They sold shares worth Rs 28.64 crore during the period.
(Quoted from: Shilpy Sinha & Swapnil Mayekar, Insurers up exposure to

companies via bulk deals, Business Standard, Mumbai, May 11, 2009,
http://www.business-standard.com/india/news/insurersexposure-to-companies-
via-bulk-deals/357640/)
4. “The general insurance sector managed to register a 9% growth in

premium income during 2008-09 in contrast to a 12.63% growth during
2007-08 — a year when the economy
was witnessing a steady growth. By contrast, the life insurance sector has
witnessed a fall in premium income by about 6% during 2008-09 against the
previous year”

TECHNOLOGY 30
( Quoted from: General insurers' see 9% growth in premium income, life cos dip
6%, ET Bureau, 4 May 2009, http://economictimes.indiatimes.com/Personal-
Finance/Insurance/Insurance-news/General-insurers-see-9-growth-in-premium-
income-life-cos-dip-6/articleshow/4480333.cms)
5. “An insurance cover for job loss does grab attention in current times”
“ICICI Lombard has recently come with a policy in which payment of equated
monthly installments in the event of a layoff is present as a compulsory rider.
Called Secure Mind, this is a benefit policy, which means that the entire insured
amount is paid, if the insurer accepts the claim”
( Quoted from: Tinesh Bhasin, Unemployment Insurance, Business Standard,

April 19, 2009, http://www.business-standard.com/india/news/unemployment-
insurance/355502/ )
MUTUAL FUNDS
of a number of investors who share a common financial goal.

TECHNOLOGY 31
Investment companies can be of two kinds…closed end and open end.
Closed end investment companies have a limited investment horizon. In these the
investors invest money for a s
pecified time period. The investment company manages the investment for a
fixed period of time and then at the end of the duration, the investments are
liquidated and the clients get their funds back along with the returns.
They are called closed-end mutual funds in USA and investment trusts in UK.
Open end investment companies have an unlimited investment horizon. Their

investible funds and portfolio size keeps on changing because they regularly sell
and buy back their shares.
They are called mutual funds in US and unit trusts in UK.
All mutual funds in India are organized and set-up under the Indian trust act as
trusts except the Unit Trust of India.

TECHNOLOGY 32
INVESTMENT
COMPANIES
CLOSE-END OPEN-END
(US) (UK)
(US) (UK)
CLOSED-END INVESTMENT
MUTUAL FUNDS UNIT TRUSTS
MUTUAL FUNDS TRUSTS
Mutual fund operations flow chart

TECHNOLOGY 33
INVESTORSpool
INVESTORS pooltheir
their FUNDMANAGERS
FUND MANAGERSinvest
invest
moneywith
money with in
in
RETURNS
RETURNS SECURITIES
SECURITIES
Passedback
Passed backto
to generate
generate
HISTORY OF MUTUAL FUNDS

TECHNOLOGY 34
TECHNOLOGY 35
MUTUAL FUND INDUSTY IN INDIA
Milestones
1964 India’s first mutual fund, US 64 launched by Unit Trust of India.
1987 End of monopoly- UTI’s stranglehold ends as the public sector banks the
mutual fund’s bangdown.
1988 Other financial institutions jump into the fray with the launch of LIC
Mutual Fund
1993 Threat of competition-The industry is thrown open to the private Sector,

Kothari Pioneer Mutual Fund sets a hot pace.
1994 Foreign Mutual Funds arrive.
1997 Mutual Funds in troubled waters CRB Mutual Funds closes up.
2000 Shakeout Imminent.
2001 UTI Crisis
2003 UTI splits up into UTI1 and UTI2
As of August, 2004 more than 75% of the total assets under management were
managed by the private sector mutual funds. This proves the increasing trend of
private sector mutual funds in the market.

TECHNOLOGY 36
United States of America leads in terms of size of mutual fund industry in
the world. The reasons being…
1. Absence of barriers to entry into the US mutual fund industry
2. Presence of multiple distribution channels that make mutual funds easily

accessible to investors
3. Many Americans using retirement saving and education saving as

important investment objectives
ADVANTAGES OF MUTUAL FUNDS
• Availability of various schemes and flexibility
Mutual funds provide various schemes to the investors which allow them to
choose among various options. So they can choose between regular income
schemes and growth schemes, between schemes that invest in the money market
and those which invest in the stock market.
• Diversification Benefits:
Since the corpus of a mutual fund is substantially big as compared to individual

investments, optimal diversification becomes possible.
• Low Transaction Costs:
The transactions of a mutual fund generally being very large attract lower
brokerage commissions (as a percentage of the value of the transaction).
• Liquidity
A mutual fund generally stands ready to buy and sell its unit on a regular basis.
Thus it is easier to liquidate holdings in a mutual fund as compared to direct
investment in securities.

TECHNOLOGY 37
• Professional management
To manage a portfolio needs continuous monitoring of various securities and the

innumerable economic and non-economic variables that may affect the
portfolio’s performance. This requires a lot of time and effort on the investors’
side along with in-depth knowledge of the functioning of the financial markets.
Mutual funds are managed by experienced and knowledgeable professionals
whose time is solely devoted to tracking and updating the portfolio. This saves
the time and effort of the investors.
• Tax benefit
In india, no tax is charged on the dividend gained by an investor. So mutual

funds become an important source of gaining returns without paying any tax on
them.
• Well regulated
All the mutual funds are registered with SEBI and they function within the
provisions of strict regulations designed to protect the interest of investors. The
operations of mutual funds are regularly monitored by SEBI.
DISADVANTAGES
• An investor does not normally know about which type of mutual fund to
invest in.
• There is always the risk of the fund manager not performing well if he is
not very knowledgeable.

TECHNOLOGY 38
• The fund manager may tend to work only towards short term profits in
order to meet his targets and thereby the investor losing long term profits
• The management fees charged tends to decrease the return of the

investor.
• In a security, the investor can decide upon how much earning to

withdraw in a particular period according to his need. But here the profits
gained in a particular year are totally decided by the mutual fund.
FACTORS AFFECTING GROWTH OF MUTUAL FUND INDUSTRY
1. Investor base
The presence of an investor acts as a catalyst for the mutual funds to grow.
Different investors come up with different requirements which encourage the
companies to come up with different mutual fund schemes. This thereby helps in
the evolution of the industry as a whole.
2. Returns on market
The returns generated by a mutual fund are generally reflective of the market
returns. So higher market returns lead to higher returns on mutual funds thereby
helping to boost up the industry as a whole.
3. Investment avenues
Presence of certain investment avenues like money market instruments,

investments in real estate, securitized debt, derivatives etc makes mutual
fund more attractive than direct investments.

TECHNOLOGY 39
TYPES OF MUTUAL FUNDS
Mutual funds can be classified on the basis of:
Term of the fund Open-ended and close-ended
Investment Growth funds, income funds, balanced funds, specialized funds

objective etc
Types of investors Offshore funds, pension funds etc
Management style Managed funds, index funds
Load Load funds, no load funds etc
Classification based on the:
1. Term of the fund
An open-ended fund is required to redeem its shares any time the investors wish
to liquidate their holdings and also it remains open for issue. So a relatively
higher portion of its assets needs to highly liquid. Examples are- Alliance-95,
Birla Advantage, Canganga, Unit Scheme 64 etc
The shares of a close-ended fund generally quote at a discount for which

investments in less marketable securities are partly responsible. It can issue
shares of mutual fund only in the beginning, and cannot redeem them or reissue

TECHNOLOGY 40
them till the end of their maturity. Examples are- UTI Master Equity Plan 98,
Reliance FTS dividend, BOB EISS-9S, ICICI Power etc.
However nowadays this difference between the open-ended and close-ended

funds is becoming blurred as in many countries it is being permitted to redeem
close-ended shares before their maturity and in certain cases, these redeemed
shares are even being reissued.
New types of funds emerging in the market are:
Interval fund is basically an open-ended fund with redemptions allowed only

after certain pre-specified intervals. An extended-payment fund allows an open-
ended fund more days for making payment to the investors on redemption of
shares. Both these kinds of funds can manage their liquidity better than ordinary
mutual funds.
2. Investment objective
Growth fund
Some investors look for growth for their capital for which growth fund is the best
option. The objective of a growth fund is to provide capital appreciation over the
medium to long term. Therefore a major portion of these funds is invested in
equities. Examples are- alliance basic industries, reliance growth, Tata, GSF-G
etc.
Income fund
For the investors who are seeking regular income rather than capital
appreciation, income fund is the best solution as it provides regular and steady
income to investors. These funds or schemes generally invest in fixed incomes
such as bonds and corporate debentures. These are suitable for old and retired

TECHNOLOGY 41
people who need capital stability and regular income. Examples are- Birla
Income Plus-D, Chola Freedom Income-D, HDFC Income, etc.
Balanced fund
The aim of these funds is to provide income as well as growth to the investors by
periodically distributing a part of the income and capital appreciation to the
investors or reinvesting (in case of reinvestment scheme) such income and
capital appreciation to enhance the asset value of the fund. The investment is
done in the proportion as indicated in the offer document. Examples are-
DSPML Balanced-G, HDFC Balanced-G, JM Balanced-G, etc
Specialized fund
These funds invest in particular industries, instruments, sectors or markets.

Different types of specialized funds are:
Sectoral Fund…
Money market funds
These generally invest in short-term liquid assets like treasury bills, bankers
acceptances, negotiable certificates of deposit, repurchase agreements, certificate
of deposit (CDs) or commercial papers. The investors get better yield than saving
accounts in this. Examples are- Reliance liquid plan, IDBI-PRINCIPAL Money
Market Fund 1997, UTI Money market fund, BOB liquid fund.
Gilt FundThese funds invest in different types of long and medium term
government securities and highly rated corporate debt. These stick to high
quality- low risk debt, mainly government securities. Examples are FT India
Gilt-Investment Plan (G), DSP-ML Govt. Sec. Fund, Templeton India Govt. Sec.

TECHNOLOGY 42
PROFIT/LOSS CHART FOR VARIOUS LIFE INSURANCE
COMPANIES
Company FY 07-08 FY 08-09 MTM provisions
SBI +34 cr -26 cr 97 cr

HDFC Standard -243 cr -543 cr 1820 cr
Life
Reliance Life -768 cr -865 cr
Insurance
Birla Sun Life -437 cr -686 cr
Insurance
ICICI Prudential -1032 cr -577 cr
Bajaj Allianz profit
(Extracted from: Shilpy Sinha, Losses of Insurers Widen Further, Business

Standard, May 6, 2009, http://www.business-standard.com/india/news/losseslife-
insurers-widen-further/357172/)
“Foreign lender, Standard Chartered, has posted 25 per cent jump in its net
profits in the last fiscal year.
Net profit, during the period, jumped to Rs 1,706 crore as compared to Rs 1,364
crore in the last fiscal.
StanChart's total balance sheet, in FY 08, grew by 25 per cent to Rs 73,445 crore,
up 25 per cent, from Rs 58,891 crore in the year-ago period, the bank said in a
press release issued here today.”(Quoted from: stanchart FY 08 net profit up by
25 percent, mydigitalfc.com, financial chronicle, june 25, 2008,
http://www.mydigitalfc.com/2008/stanchart-fy-08-net-profit-25-cent)

TECHNOLOGY 43
“Standard Chartered reaped the benefits of a focus on Asia and a resilient loan
book on Tuesday as it weathered the financial crisis to report record first-quarter
profits, sending its shares to 2009 highs.
The UK-listed bank, which gets two thirds of its revenue from Asia, said
consumer banking income had risen, mortgages had performed well and its key
wholesale arm had had an "excellent" quarter”
(Quoted from: UPDATE 2- Stanchart Weathers crisis in record Q1, REUTERS,

May 5, 2009,
http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSL
5944160200905
STRUCTURED PRODUCT
A structured product is a financial instrument designed to meet specific investor

needs by incorporating special, non-standard features, including capital
protection, warrant and traditional loan gearing, exposure to overseas equities,
commodity and share index style investment. Such products can help an
investor to take advantage of upward market trends as well as falling or
lackluster markets.
Considering that these investments are made in highly liquid securities and are
required to be held (i.e. locked for a defined time period, the service provider can
provide a suitable securities lending facility against such investments. This will
help the client to get additional returns on such investments.
A few innovative structured products:
COVERED LOAN PRODUCT

TECHNOLOGY 44
In this product, the protection is available to the client for the amount borrowed
and invested in equities (cash) market. The client can borrow a specified amount
for a period of say 1 to 5 years, from a service provider. The borrowed amount is
fully invested in a few highly liquid equity stocks. For this purpose, investments
are permitted only in the top 100 stocks (ranked in terms of market cap) listed in
the Primary Market Stock Exchange.
In order to protect against the fall in the price of such invested stocks and thus
the portfolio, the service provider will cover with a “put option” for the same
stocks in the same proportion and the value as that of the cash market exposure,
with the option period coinciding with the loan period. Thus in the event of fall
in the price of cash market portfolio on the maturity date, the client can exercise
a put option. In such an event, his loss will be limited to the extent of option
premium, interest on loan for the selected tenure besides charges payable to the
service provider and the upfront and trail commission payable to the financial
advisors.
On the other hand, if the cash market portfolio value of the equity stocks actually
goes up on the maturity date, the client will profit from the strategy and the
option will be allowed to lapse.
CAPITAL SHIELD
Product Capital Shield
Fund Manager Bajaj Alliance
Maturity Period 5 years
Minimum Investment 5 lacs
Entry load 2% for amount<5 lac and 1% above it

TECHNOLOGY 45
Objective Capital guarantee and extra returns
This is a product in which the client is to pay minimum of 5 lacs for 5 years. For
the amount of less than 5 lacs the entry load is 1% and for more than 5 lacs the
load is 2%. The investor is given full capital guarantee on the maturity of the
product. 80% of this amount is invested in government securities and the
remaining 20% in in stocks. The investor is also given around 15% of total return
in the end. No capital guarantee after 45 years.
Implications of the product: Actually as we know that government securities

give guaranteed return, so this 80% of the investors capital becomes more than
100% in 5 years thus capital shield. The fund manager has the authority to trade
with 12 times of the cash it has in the stocks. This 20% amount is subjected to
the risk of market conditions depending upon which the investor gets returns.
Apart from the 1% or 2% entry load, the charges related to every product like
mortality rate and fund management charges are also cut which is nominal for
every product. The fund management charges are about 2.75% pa and the
mortality rate around 2% pa. The mortality rate increases with the increase in age
of the investor and it is more the investors whose age crosses the age of 45.
Why these products are attractive?

As seen above, some of the products require limited initial investment from the
investor. In case the investor desires, he can borrow from the bank/ service
provider to take exposure in such attractive products. Besides the capital
protection offered by the bank greatly helps investors to test the sophisticated
and diversified product in a gradual way before moving to more risky products.
During the recent market turmoil, we have seen several investors getting severely
affected due to their exposure to various leveraged products such as margin
lending or pure derivative products. These products necessitate maintenance of
periodical margins besides constantly tracking the market movements. On the

TECHNOLOGY 46
contrary, some of the structured products help investors to have exposure to
diversified products with medium term perspective, besides participating in the
upside potential offered by these products, without spending too much time to
track the daily market movements.
Thus more than ever before, the recent market developments have demonstrated
that a diversified portfolio is the primary tool in portfolio risk management and
structured products with varied risk profile will be handy to meet the needs of
various client profiles.
Structured products in India
According to one report, the structured product industry in india is estimated to

be worth over Rs 10,000 Cr. A few leading global banks and a few mutual funds
are reported to be the leading players in this field. It has been reported that
several High Net Worth individuals have invested in structured products to
protect their profits made during the Bull Run in the equity market. Further some
of the investors with lesser risk appetite have also invested in such products as
the products were supposed to guarantee the return of the capital invested.
However it has been reported in the media that substantial part of money raised
have been invested in unsecured debentures issued by Non-Banking Finance
Company (NBFC). With the NBFC’s being the counter party in such transactions
having taken hit in the recent past, the matter of guarantee has been the focus of
attention these days. Thus though structured products are in nascent stage in
India, due to these developments, brokers are reportedly unable to push these
products to their clientele.
It is hoped that despite the initial teething problems faced in the Indian market,
one can see launch of several new structured products to capture various market
opportunities. If banks in India also package suitable structured products having

TECHNOLOGY 47
exposure to global indices, it will provide good opportunity to Indian investors to
diversify their portfolio across various asset classes with limited investment.
I got this in conceptual details with help of company guide during
Matrix training
Mr Rajat Handa- has 80% of work experience with HSBC
Normally 10%-20% of the total sale of a bank is equity and remaining 80% is
debt. The period from 2000-20001 was known as “dead party”. Same cycle has
been repeated in last 6-7 months.
Equity holders are the owners of the firm and they get the profit of the firm in the
end after distributing to all shareholders.
Debt is a kind of loan or borrowing. It has three components viz principal,

maturity, interest (coupon)
STRIPS (Specially Traded Registered Interest And Principal Security)- These

are debt instruments not prevalent in india. The whole bond is divided into
separate small strips which are traded individually.
Zero coupon bond or discount bond or deep discount bond- If the bond is
providing with no coupon or interest then why should an investor invest into
such a bond? The answer is such bonds are sold at discounts and at the time of
maturity, they get the face value of the bond i.e. the benefit to the customer is the
principle.
Floating rate bonds are based on some benchmarks. For e.g. MIBOR, GOI 10
year yield
The extendible bonds are same as floating rate bonds.

TECHNOLOGY 48
Call option- It is the right of the issuer to give back the money prematurely.
Put option- It is the reverse of the call option i.e. right of an investor to take
back the money prematurely.
Tata capital debentures which were sold recently in standard chartered bank were
non convertible bonds. They had call option after 36 months.
We have UP state electricity bonds.
Government Securities or G Secs
Gilt fund- They gave more than 10% return in the first week of January 2009. In
a single month they even gave more than 20% return. But again they can give
very low returns also at times.
So gilt funds as well as equity are risky and both can give double digit returns.
In an auction, if it is yield based, the person who demands the lowest yield build
gets the bond and in the price based auction, the one who offers highest price
gets the bond.
SGL or Subsidiary General Ledger- This is similar to D-Mat accounts.
CSGL account- Constituent SGL account
The maximum time for G-secs is 30 years and minimum time is 2 years. 60% to
70% of debt market is owned by G-secs.
The time limit for corporate debts is 1 to 12 years. It has only 4% of market
share. There can be liquidity problem in selling a corporate bond.
Credit Rating Agencies- CRISIL, ICRA, CARE, FITCH
Mutual funds can invest in unrated bonds but not in low rated bonds.

TECHNOLOGY 49
Yield spread- It is the difference between G-sec yield and corporate rate bond
yield. Higher the yield spread, higher the coupon rate of corporate bond, lower
the rating of the corporate bond. For e.g. A BBB rated company will have to
offer more yield than AAA rated company.
I have to have at least credit rate of 2 to come up with a bond.
Money Market Debt Instruments
1. Treasury bills
2. Commercial paper
These instruments mature in less than a year.
Money market risk- There is negligible money market risk because there is no
default risk.
On 1st may it was said that all liquid funds need to have their average maturity
down to 3 months.
Liquid fund- you should have 10% mark to mark. (25% DDT)
Liquid Plus Scheme- It tweaks liquid fund returns. (Increases returns by 4%-5%
and sell as debt where tax is half of liquid fund, around 12.5%) Its nomenclature
was changed to “money manager” by government.
Commercial paper- In this the stamp duty is the least. 90 day CP, return is as
high as 1.5%.
Certificate deposits- The issue of certificate deposit (CD) is like a FD. It cannot
be prematurely encashed but can be transferred. There is a benefit of banks. Its
maturity is less than a year. The minimum maturity period is 7 days. 1 lakh is
usually the base amount.

TECHNOLOGY 50
Negotiable instrument
The interest rate is slightly higher than F.D.
Repo- right now its value is 5% (huge fall from 9%)
Reverse repo- 3.8%
Mutual funds can lend money in the market.
CBLO- It is a part of mutual fund portfolio (5% nowadays) Collaterized

Borrowing and Lending Obligation. It is regulated by CCIL, and is similar to
repo. Repo is regularized by RBI. Mutual funds one of the largest lenders in
CBLO. The maximum time limit is 1 year. Market practice is not more than 90
days. You can prematurely demand back or return back.
Treasury bills are discounted bonds.Indices and benchmarks
Equity- sensex and nifty
Debt- There are 3 indices CRISIL Comp BEX (for long term bond funds)
Liquid FEX (for liquid bonds)
STBEX (for short term funds)
Bond valuation-
P0= CF/ (1+r) ^1 + CF2/ (1+r) ^2 + ….. + CFn/ (1+r) ^n
P0=price at time 0
CF1= cash flow expected at time t
R= d/c rate (reflecting asset’s risk)
n= no. of discounting periods

TECHNOLOGY 51
All starting terms will have coupon got every year e.g. Rs 100. On maturity,
principle + coupon
RTT- Risk tolerance test
Longer the maturity period, lower is the present value of the bond.
Do not sell a long maturity bond to a risk averse customer.
The document which will give you average maturity of a mutual fund is fact
sheet. The gilt fund maturity is more than 9 years. Lower coupon bond is more
sensitive to interest rates.Longer term bonds are more sensitive to changes in
interest rates.
Yield to maturity (YTM) is similar to IIR
Yield curve: x axis-time to maturity
Y axis- yield
If YC is flat or downward sloping, it may lead to recession. FIIS look into y-

curve before investing.
Risks related to equity
1. Market risk
2. Company specific risk
3. Default risk
Risks related to debt
1. Default or credit risk

TECHNOLOGY 52
2. Interest rate risk measured by duration (higher the rating lower is the
risk)
3. Reinvestment risk
4. Liquidity risk
Duration- ZCB’s (zero coupon bond)
The relationship between weighted average maturity vis a vis price of the bond.
Duration is interest rate risk. Because the price of a bond with name more
duration will fluctuate more.If 1% increase in yield and duration is 5, the price
decreases by
5%.This is why the gilt funds have either very high (jumped) interest rates or
extremely low interests.
Gilt funds are the riskiest when it comes to duration because it has highest
duration. Then corporate fund, then short term fund. The least risky is money
market funds.
How fund managers manage duration?
If they know interest rates going down, they increase the duration. But if these
rates start increasing, such long duration would punch back.
Debt fund taxation
Marginal rate of taxation can be without dividend or with dividend.
Long term rate of taxation-
Indexation - benefit of inflation.
Inflated or indexed cost price

TECHNOLOGY 53
• With indexation- 20% of indexed price
• Without indexation- you pay flat 10%
Monetary instruments
CRR +/- Cash Reserve Ratio
NDTL Net Demand and Term Liabilities: a percentage of NDTL is calculated

every fortnight Friday with RBI (around 5%)
RBI decreases CRR to encourage banks to lend more.
SLR +/- Statuary Liquidity Ratio- It is very similar to CRR. The banks need to
keep some fixed percentage of their assets with RBI in three forms- cash, gold,
unencumbered securities. Current SLR is 4%. Currently almost Rs 20 lakh Rs
lying with RBI as SLR. If RBI decreases SLR, too much supply of government
securities or gilt funds in the market.MSS & OMO- market stabilization scheme
& open market operations– MSS is the indirect way of borrowing.
THE EMERGING MARKET FOR MUTUAL FUNDS AND

INSURANCE
According to an Ernst and Young study, titled ‘The Dhoni Effect: Rise of Small
Town India’, 22 key urban towns (KUT) such as Chandigarh, Ahmedabad,
Jaipur, Lucknow, Indore or Pune have three-fourths or more of the affluence
levels of Mumbai. On growth potential, they do even better.
(Quoted from
http://www.blonnet.com/2008/03/20/stories/2008032052300500.htm)
This study suggests that Lucknow, being a semi-metro city is standing as a very
potential market in the present scenario. So insurance and mutual fund business

TECHNOLOGY 54
has also a very bright future in lucknow. Not only the city, the rural areas around
lucknow have also a huge potential to invest in such products
Standard Chartered Bank Lucknow at

Shahnajaf Road
BAJAJ ALLIANZ LIFE INSURANCE CO. LTD
1. Unit Link Plan
In this the customer has different investment options. He can invest his money in
equity fund or debt fund or bond fund or cash fund. The premium has to be paid
for 3 years. The investor can withdraw money after 3 years. In case of any
mishappening, the risk cover is up to 10 times the amount invested. There is a

TECHNOLOGY 55
tax rebate under section 18 and section 10 10(b). The minimum amount to be
invested is Rs 2000 and the age limit is 18 to 65 years.
2. Pension Plan (Future Secure Plan)
Under this plan, premium for 3 years is to be invested. The minimum premium is
of Rs 10,000. The vesting age i.e. the age from which the investor wants to get
the pension is under investor’s discretion which can be from 40 years of age to
60 years of age. The pension is gained lifelong. For example: if a client invests a
premium of 1 lakh for 3 years at the age of 31, 32, 33 respectively, then he will
get a pension of around Rs 30,000 per month from 45 years of age.
3. Traditional Plan
Under this we have 3 products
i. Invest Gain Plan
Under this plan, the investor can invest minimum of Rs 10,000 for 15 years. He
gets a guaranteed return of 3.25% of per 1000 Rs invested of the sum assured.
ii. Child Gain Plan
It is an Endowment Plan and 2 lives are insured in this, one the parent, another,
the child in whose name the policy is made. The categories are 21/21+/24/24+.
The maturity age for the plan 21 and 21+ is 21 years of age and 24 for 24 and
24+. The minimum and maximum age of entry of a child is 0 and 13 years. Thus
the minimum and maximum policy term for the plan 21 is 8 and 21 years and for
plan 24 is 11 and 24 years. The minimum and maximum age of entry of a CLA
i.e. Child Life Assured (parent) is 20 and 50 years of age. The minimum and

TECHNOLOGY 56
maximum sum assured are 1lac and 50 lacs of rupees. The minimum premium is
Rs 5000/- annually. The minimum payment term is 5 years.
There is an inbuilt FIB (Family Income Benefit) rider in this plan which means
that in case of any mishappening to the parent, the child is given 1% of the sum
assured every month till the end of tenure. The payouts start at the age of 18
years of the child.
Recent News of Bajaj Allianz
“In a move unprecedented in the Indian insurance industry, Bajaj Allianz has
decided to integrate key functions in its life and general insurance companies.”
Currently, the company has had to endure higher operating costs, as it has had to
invest twice over in rent, equipment and property to support both companies.
Also, processes are decentralized now, leading to a lot of redundancy. Though
both companies i.e. Bajaj Finserv (de-merged from Bajaj Auto) and German
insurer Allianz SE have the same parent, the present structure makes it difficult
to cross-sell products and increases the value per customer, as they are structured
as separate entities.
(Quoted from: Chandra Ranganathan, ET Bureau, Bajaj Allianz to integrate key

life & non-life ops, May 1, 2009,
http://economictimes.indiatimes.com/Insurance-news/Bajaj-Allianz-to-integrate-
key-life--non-life-ops/articleshow/4469930.cms)
“The Bajaj Group of companies, India’s largest manufacturer of two- and three-
wheeler vehicles, is planning to expand its financial business footprint. The
group, which is already operating in the insurance and asset finance space, has
not ruled out banking operations too”

TECHNOLOGY 57
(Quoted from: BS Reporter / Chennai, Business Standard, Bajaj eyes banking
space, to strengthen financial business, April 29, 2009, http://www.business-
standard.com/india/storypage.php?autono=356536)
ANALYSIS OF QUESTIONNAIRE
2. Which insurance company have you invested in?
a) Birla plus b) Max New York life
c) Bajaj Allianz d) LIC
Fig.1(a)

TECHNOLOGY 58
Fig.1(b)
From the response of 120 respondents we find that

82.33% investors prefer LIC as their first choice where
as 50% prefer Bajaj Allianz life insurance.
Fig.1(b) shows one or more option chosen by the

investors.

TECHNOLOGY 59
From this question we find that most of the people who
have taken LIC are either satisfied or they are very
satisfied while the people who took other insurance are
neither satisfied or dissatisfied or they are not at all
satisfied with the services provided by that insurance
company this is shown in the fig. given below.

TECHNOLOGY 60
4. Do you buy insurance for..........
a) Life cover b) Return

TECHNOLOGY 61
c) Tax benefit d) others.......
There is a mix response but maximum people buy

insurance for life cover and tax benefits.
5. Which kind of insurance would you go for?
a) Money back b) pension plan
c) child gain d) ULIP

TECHNOLOGY 62
From the given plans 46.8% have child plan, 42.6%
have pension plan, 46.8% have ULIP and 36.2% have
money gain. So there is not much to comment as
investors invest according to their needs.
6. Through whom do you buy insurance product?
a) Agent b) Broker
c) Bank assurance d) corporate agent

TECHNOLOGY 63
49% investors buy insurance from the agent of the
respective company. Only 30% of the total investors
buy through bank.
7. What would you opt if you have a choice?
a) High risk, high return b) Moderate risk,

moderate return
c) Low return but negligible risk d) Capital

preservation model

TECHNOLOGY 64
Around 42% prefer moderate risk, moderate return
and 35% go for capital preservation model. Most of
the investors don’t find suitable to invest their
money in high risk schemes.
8. For how long would you like to invest?(tenure)
a) 1-4yrs b) 4-7yrs
c) 7-10yrs d) more than 10yrs

TECHNOLOGY 65
TECHNOLOGY 66
This bar chart shows that the investors who invest in
high risk, high return generally are the short term
investors and investors who invest for their
preservation of capital are long term investors.

TECHNOLOGY 67
TECHNOLOGY 68
TECHNOLOGY 69
Investors who invest in money back and in Ulip are
short term investors i.e., they invest for 1-4 yrs term
whereas child gain and pension plan’s investors invest
for long term generally for more than 10 yrs.
The above 4 graph shows the cross analysis of tenure

and the plans.
9. You have opted this policy in persuasion of...
a) Self-awareness b) Relatives
c) Advisor d) other....

TECHNOLOGY 70
Advisor either bank advisor or CA of the investors are
the one who influence them for investment. But self
awareness is also their to protect the future of their
lives by taking insurance.
11. Which service you prefer the most?
a) Prompt claim settlement b) timely

receivables

TECHNOLOGY 71
c) Facilitating premium submission d)
facilitating premium submission
Most of the investors look for the premium facilitating

submission and prompt claim settlement as the most
important service that should be provided by any
company.
12. Do you keep track of various schemes of

investment from different companies?
a) Yes b) no

TECHNOLOGY 72
It was really the most unexpected thing that about
65% of investors are not aware what is going around
them. They are unaware of the new launches of
schemes. This shows the loyalty of the customers
for LIC.
13. Rank the aspects below of an insurance scheme

which you look into before investing into it in the
order of your preference: (type 1 in the box you feel
your preference is)

TECHNOLOGY 73
Least Less preferre More Most
preferre preferre d preferre preferre
d d d d

TECHNOLOGY 74
Return
Less
premium
term of
plan
High
benefit
term
Risk
associate
d
Charges
related
Your
advisor
perspecti
ve
Newspap
er article
or
financial
magazine
s
WOM

TECHNOLOGY 75
Riders
attached
with
scheme
Flexibility
Risk
cover
Entry age
Tax
benefit

TECHNOLOGY 76
The above graph shows the attributes chosen
by the given number of respondents.

TECHNOLOGY 77
Ranking of the attributes as preferred
ATTRIBUTES RATING
Return
Less premium
term of plan
High benefit
term
Risk associated
Charges related
Your advisor
perspective
Newspaper article or
financial magazines

TECHNOLOGY 78
Word of mouth
(i.e. common man’s view)
Riders associated with the scheme (i.e.

add on benefits associated with it)
Flexibility
(option to withdraw after 3 years)
Risk
Cover
Entry
Age
Tax
Benefit
LEAST PREFERRED
LESS PREFERRED
PREFERRED
MORE PREFERRED

TECHNOLOGY 79
MOST PREFERRED
KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling
Adequacy. .714
Bartlett's Test of Approx. Chi-Square 375.440

Sphericity df 78
Sig. .000
Bartlett’s test of sphericity is a test statistic used to examine the hypothesis that
the variables are uncorrelated in the population that is the correlation matrix is
the identity matrix. It’s value if greater than .5 suggests that the data is good for
factor analysis.
From the above table, .714 value of KMO suggests that the data is favourable
for doing factor analysis. I have 13 variables in my likert scale and the sample
size used for testing is 113. The significance value is 0 which is less than .05.
Thus it nullifies the hypothesis that the correlation matrix is the identity matrix.
Thus the variables used have some correlations among them , thus good model
for doing analysis has been proved.

TECHNOLOGY 80
Communalities
Initial Extraction
V1 1.000 .631
V2 1.000 .689
V3 1.000 .666
V4 1.000 .583
V5 1.000 .593
V6 1.000 .593
V7 1.000 .532
V8 1.000 .546
V9 1.000 .597
V10 1.000 .382
V11 1.000 .768
V12 1.000 .670
V13 1.000 .813
ExtractionMethod: Principal Component Analysis.
Communality is the extent of variance a variable shares with all the other
variables being considered. This is also the proportion of variance explained by
the common factors.
For e.g. In the above table, variable 1, that is return of the insurance scheme is
sharing 63.1% of variance with all other variables. Variable 2,that is less
premium time is sharing 68.9% variance with all other variables. V13 i.e. Tax
benefit shares the highest variance of 81.3% with all other variables.

TECHNOLOGY 81
T o t a l V a ri a n c e E x p la i n e d
I n it ia l E ig e n v a lu e s E x t r a c tio n S u m s o f S q u a r e d L o aRdointagtio
s n S u m s o f S q u a r e d L o a d in g s
C o m p o n e n tT o t a l % o f V a r ia n Cc eu m u la tiv e %T o ta l % o f V a r ia n Cc eu m u la t iv e %T o t a l % o f V a r ia n Cc eu m u la tiv e %
1 3 .5 5 3 2 7 .3 3 3 2 7 .3 3 3 3 .5 5 3 2 7 .3 3 3 2 7 . 3 3 3 2 .3 9 5 1 8 .4 2 6 1 8 .4 2 6
2 1 .8 4 2 1 4 .1 6 7 4 1 .5 0 0 1 .8 4 2 1 4 .1 6 7 4 1 . 5 0 0 2 .1 1 3 1 6 .2 5 7 3 4 .6 8 3
3 1 .4 7 4 1 1 .3 4 2 5 2 .8 4 2 1 .4 7 4 1 1 .3 4 2 5 2 . 8 4 2 1 .8 3 3 1 4 .0 9 8 4 8 .7 8 0
4 1 .1 9 2 9 .1 7 1 6 2 .0 1 3 1 .1 9 2 9 .1 7 1 6 2 . 0 1 3 1 .7 2 0 1 3 .2 3 3 6 2 .0 1 3
5 .8 8 8 6 .8 2 8 6 8 .8 4 1
6 .7 2 8 5 .5 9 7 7 4 .4 3 8
7 .6 6 4 5 .1 0 6 7 9 .5 4 3
8 .5 5 9 4 .2 9 9 8 3 .8 4 2
9 .5 3 3 4 .0 9 8 8 7 .9 4 0
10 .5 0 9 3 .9 1 9 9 1 .8 5 9
11 .4 1 1 3 .1 6 2 9 5 .0 2 1
12 .3 6 2 2 .7 8 3 9 7 .8 0 3
13 .2 8 6 2 .1 9 7 1 0 0 .0 0 0
E x t r a c t io n M e t h o d : P r in c ip a l C o m p o n e n t A n a ly s is .
The above table shows that 4 factors are having Eigen values greater than 1. The
total variance explained by each factor is its Eigen value. So the variables can be
divided into 4 factors. The total variance explained by these 4 factors is
62.013%. Factor (1) explains 18.43% of variance, factor (2) 16.26%, factor (3)
14% and factor (4) 13.2%.
The above screen plot shows that actually there are only two very prominent
factors which can be taken into consideration. But from the Eigen values shown
on the plot, it is very clear that 4actors have Eigen values more than 1. So we
will consider 4 factors.

TECHNOLOGY 82
Rotated Component Matrix a
Component
1 2 3 4
V1 .627 -.261 .280 .302
V2 .825 .022 .054 -.065
V3 .715 .367 -.097 .106
V4 .077 .046 .753 .086
V5 .118 .200 .707 .199
V6 .045 .524 .557 .079
V7 .246 .658 .195 -.024
V8 -.027 .723 .149 .015
V9 .493 .569 -.113 .132
V10 .550 .252 .119 .041
V11 .214 .009 .184 .829
V12 .365 .491 -.490 .234
V13 -.051 .089 .066 .893
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.
a. Rotation converged in 11 iterations.
Rotated component matrix shows the amount of variance of each variable

explained by each factor. The above table shows that factor 1 will include
variables 1, 2, 3, 10 i.e. Return, less premium term, high benefit term and
flexibility. We can name them collectively as “features less related to insurance
products”
Factor 2 would include variable 6, 7, 8 that is advisor’s view, different articles

view, word of mouth. We will name it as “others opinion”.
Factor 3 would include variable 4, 5, 9, 12 that is risk associated, charges related,

riders associated with the product, entry age. We can keep all these variables
under one umbrella of “features less known by people”.
Factor 4 would include variable 11, 13 i.e. risk cover, tax benefit. This factor can
certainly be named as “features best known for insurance by Indian market
FACTOR 1 FACTOR 2 FACTOR 3 FACTOR 4

TECHNOLOGY 83
features less others opinion features less features best
related to known by people known for
insurance insurance by
products” Indian market
Return advisor’s view risk associated risk cover
less premium term different articles charges related tax benefit

view
high benefit term word of mouth riders associated

with the product
Flexibility entry age
Regression Analysis:

TECHNOLOGY 84
Model Summary b
Adjusted Std. Error of

Model R R Square R Square the Estimate
1 .890 a .792 .785 .347
a. Predictors: (Constant), REGR factor score 4 for
analysis 1, REGR factor score 3 for analysis 1, REGR
factor score 2 for analysis 1, REGR factor score 1 for
analysis 1
b. Dependent Variable: Y
R, the multiple correlation coefficient, is the correlation between the observed

and predicted values of the dependent variable… here it is the buying behavior
of customers. The values of R for models produced by the regression procedure
range from 0 to 1. Larger values of R indicate stronger relationships… here it is .
89.
R squared is the proportion of variation in the dependent variable explained by

the regression model. The values of R squared range from 0 to 1. Small values
indicate that the model does not fit the data well. The sample R squared tends to
optimistically estimate how well the models fits the population. In the above
table the value of R square is .792 which suggests that 79.2% of variance in the
dependent variable i.e. the buying behavior is affected by the independent
variables i.e. different features of an insurance product.
Adjusted R squared attempts to correct R squared to more closely reflect the

goodness of fit of the model in the population. Here its value is .782 again
suggesting that 78.2% of variance in Y is explained by variance in all Xs.

TECHNOLOGY 85
ANOVAb
Sum of
Model Squares df Mean Square F Sig.
1 Regression 50.350 4 12.587 104.771 .000 a
Residual 13.216 110 .120
Total 63.565 114
a. Predictors: (Constant), REGR factor score 4 for analysis 1, REGR factor score 3
for analysis 1, REGR factor score 2 for analysis 1, REGR factor score 1 for
analysis 1
b. Dependent Variable: Y
The sum of squares, degrees of freedom, and mean square are displayed for two
sources of variation, regression and residual.
The output for Regression displays information about the variation accounted for
by the model which is 50.35% in the above table. The output for Residual
displays information about the variation that is not accounted for by the model
which is 13.21% here. And the output for Total is the sum of the information for
Regression and Residual i.e. 63.565% here.
A model with a large regression sum of squares in comparison to the residual

sum of squares indicates that the model accounts for most of variation in the
dependent variable which is true here.
Very high residual sum of squares indicate that the model fails to explain a lot of
the variation in the dependent variable, and we may want to look for additional
factors that help account for a higher proportion of the variation in the dependent
variable.
If the significance value of the F statistic is small (smaller than say 0.05) then the
independent variables do a good job explaining the variation in the dependent
variable.

TECHNOLOGY 86
Coefficientsa
Unstandardized Standardized
Coefficients Coefficients
Model B Std. Error Beta t Sig.
1 (Constant) 3.217 .032 99.542 .000
REGR factor score
.435 .032 .583 13.407 .000
1 for analysis 1
REGR factor score
.378 .032 .506 11.649 .000
2 for analysis 1
REGR factor score
.240 .032 .322 7.405 .000
3 for analysis 1
REGR factor score
.227 .032 .304 6.986 .000
4 for analysis 1
a. Dependent Variable: Y
The unstandardized coefficients are the coefficients of the estimated regression

model. Often the independent variables are measures in different units. The
standardized coefficients or betas are an attempt to make the regression
coefficients more comparable. The t statistics can help us determine the relative
importance of each variable in the model. t values well below -2 and well above
+2 are good.
Let F1 be factor 1, F2 be factor 2….as got from the factor analysis. Then,
The regression equation of our model as deduced from the table is
Y= .583F1+.506F2+.322F3+.304F4+3.217 i.e.
Buying Behavior= .583“features less related to insurance products” + .

506“others opinion” + .322 “features less known by people” + .304 “features
best known for insurance by Indian market” + 3.217
This means any change in factor 1 will produce most impact on the buying
behavior of customers since its beta coefficient is the maximum.

TECHNOLOGY 87
LITERATURE REVIEW
Private Life Insurance Companies in India: Strategizing Ways to Overcome

the Product Selling Challenges
Sandeep Ray Chaudhary and Joy Chakraborty
The Icfai Journal of Risk & Insurance
This article deals with the in depth study of the different strategies adopted by
the private insurance companies in india to overcome the product selling
challenges in the Indian life insurance market. More and more players are trying
to catch hold of Indian insurance industry, it being the booming industry. But the
main challenge faced by the private insurance companies is the monopoly of LIC
still today. So they are continuously trying to find out innovative ways to attract
more and more customers by providing them with tailor made products.
Introduction
The life insurance industry in India had witnessed a significant surge in those
years that numerically raised the insurance players to 16, almost from the
scratch. The Indian life insurance sector had got the much needed boost that
reflected in a 15% to 16% annual business growth every year since the arrival of
the private players in the scene. The private players had even recorded a 26.6%
market share at the end of 2005-06 (chakraborty, 2007) despite the dominance of
Life Insurance Corporation of India (LICI). Their success could be attributed to
numerous factors including the innovation of highly customized products and
aggressive marketing strategies that they resorted to. Going by the preexisting
dominance of LICI I the Indian market, the private insurers had to tread through

TECHNOLOGY 88
a lot of challenges before finally establishing themselves in the Indian insurance
market. Apart from this, there were several other regulatory dilemmas that acted
as a hindrance in the way of the private insurers. The private life insurance
companies confronted several other obstacles pertaining to product-selling and
luring of investments owing to the rising competitiveness in the country’s
upcoming sector.
According to the paper, “insurance is not bought, it is always sold”. Because of

the intangible nature of the insurance products and lack of awareness among the
masses, an insurance agent has to endeavor a lot in explaining about the
product’s actual benefits before a customer finally buys it. Some of the
challenges faced by the insurance sellers are as follows:
a) Low Consumer Response
Due to the push-selling strategies and inappropriate call timings, the private
players were not able to capture the full attention of the customers. All the
private companies following the same aggressive marketing strategies like
telemarketing has raised the competition to a certain level for all of them result
into low customer response.
b) Lack of knowledge about insurance benefits
People in India perceive an insurance product as a tax saving or life coverage

device, they lack in the awareness about various other benefits of them.
c) Lack of the trust in private life insurance companies
The private organizations are often found to be involved in scams and fraudulent
activities that further strengthen the preconceived notions of indian customers
about the private companies. As a result people still believe in public
organizations like LICI.

TECHNOLOGY 89
d) Target oriented business environment
The intense rivalry among the private players has resulted into insurers giving
astronomical targets to their agents. So instead of customers need-based selling,
the agents pay more heed to number-game resulting into push-selling and
thereby customers’ low satisfaction.
e) Competition from Alternate channels of investment
Most of the insurance products have longer lock-in period and unattractive
interest rates. Thus people believe that government bonds, mutual funds fixed
deposits and post office savings carry a higher interest rate and flexible
investment periods. Indian people are more interested in quick and high returns
rather than security.
f) Ineffective distribution channels
Banks, corporate agents, referrals, channel partners and broking firms serve as
distribution channels for life insurance companies to reach out to the masses.
These are often found to be incompetent in terms of marketing aspect of the
insurance products of the customers. Many times they close down in the midway
because of improper delivery facilities.
g)Lack of skilled agents
Most of the agents of insurance companies lack in sound academic and financial
background which results into miscommunication with the customers about the
products and their benefits. They also lack in right kind of attitude that is
required for customer dealings and on-the job training programs.
h) Lack of penetration in rural areas

TECHNOLOGY 90
The rural areas of India are the maximum GDP contributing sector of the
country, which is often neglected by the private insurance companies because of
lack of infrastructural, transportation and distribution facilities. As a result it has
been again tapped by LICI.
i) Inadequate pay structure of the agents
The agents normally get very less amount of commissions on the basis of
number of policies sold by them; they handle a lot of pressure on the daily basis
because of the astronomical targets set by the insurers. This results into lack of
motivation in them and thus poor performance.
j)Trade barriers
Entry restrictions and operational barriers are the two trade barriers responsible
for the underperformance of country’s insurance sector. There are regulatory
dilemmas associated with the stake (26%) of a foreign insurance partner who is
entering into a joint venture with an Indian partner. An another barrier is the
mandatory investment of Rs 100 crore that an insurance company has to
maintain with the IRDA for obtaining the license to commence its operations in
india.
Strategies to overcome the challenges
a) Innovative products
Private companies have succeeded to some extent to break the preconceived

notion of people regarding insurance as only a tax-saving product. For this they
are coming up with different innovative products which are tailor-made for
customers according to their needs. The insurers focused on the financial
protection and long-term wealth creation and have four different types of
products in their kitty, commonly known as PIPS (Protection-Insurance-Pension-

TECHNOLOGY 91
Savings). They try to gauge the needs of the customers and their financial
capability before offering them the product which would suit their preference.
For e.g. many companies are nowadays coming up with structured products to
bring about innovation in their products.
b) Good relationship with customers
Today’s customer is insatiable in terms of rapid change in his preferences, their

demand of getting the service at any place, anytime, preoccupied with overload
of information etc. So to satisfy them an agent needs to maintain good
relationship with the customers and try build to gain their full trust. He/She needs
to give his/her customer the right kind of product after gauzing his/her needs and
avoid push-selling strategy.
c) Technology
Inspite of the growing use of new technology like internet and sms for
communicating with the customers which are cheaper and easier, it has not
gained much popularity among the customers. New technology challenges the
traditional methods of the insurers in terms of changing distribution channels,
facilitating customer-relationship management and enhancing customer services.
The issue of online claim processing through the web-based software has been a
topic of focus for the insurers, although the attempt to implement such cost-
effective system so far has been less than successful. The Knowledge-based
Expert System can been used more directly as a training tool for the salespeople.
With the help of it, the salespeople are able to match various products with the
needs of the customers and deal with more unusual and unique customer cases.
This would result into effective selling and reduced direct selling costs.
d) Agents

TECHNOLOGY 92
I. Skills
It is said that 80% of the revenue comes from the 20% of salespeople i.e. 80-20
rule. It means that the knowledge and skill of a salesperson plays very important
part in the final conversion of a call. So this 20% are those salespersons who
have a very good relationship with their customers. The more sincerity a
salesperson shows to his customer, the more likely would be his chances of
maintaining a high level of interaction with the customers. The relationship
quality between a salesperson and a customer is indirectly related to the intension
of the customer of doing business with him in future and his intension of giving
referrals. There are three broad dimensions of relationship selling that consists of
interaction intensity, mutual disclosure and co-operative intentions.
II. Selection Criteria
This stage is the foundation to get the right kind of salesperson needed to get
maximum benefits. The companies must have their vision clear so that they can
give right training to their salespersons. The selection criteria can be divided into
several general categories such as physical traits, individual behaviors,
psychological traits and aptitude. Training would make the agents more
responsive to the pre-sale, during-sale and after-sales service.
III) Training initiatives
The agents must be quick enough to adapt to the new technology like providing
their customers with user-friendly web pages that make online quotes,
underwriting, claims adjustments, etc so that the customers remain loyal to them.
Routine interaction with the customers via e-mails, telephone or personal
contacts helps to develop a sound relation with customers. The expert system
helps the agent with a series of questions followed by several answer choices.
The user enters the corresponding question for the relevant response. The whole

TECHNOLOGY 93
process continues until the agent persuades the customer in getting an
appointment, a faxed contract, or a brochure.
III. Nature of customers
The agents should look forward to long term relationship with their customers
rather than Law of Large Numbers (LLN). They should try to build sound
relations with them so that the customers submit timely premiums and deal with
them always in the future.
Marketing Strategies
Today, the customer is very satiable in terms of rapid change in his preferences,
expectation of service at any place at any time, demand of variety of products
under the same umbrella or because of overload of information. This has
happened due to many reasons including globalization, access to better
technology etc. Also the insurance transactions, instead of strictly market-based
decision, often result on account of activities pertaining to relationship marketing
that the agents undertake from time-to-time. Also the agents have to keep
themselves updated about the companies’ expectations and policies from time to
time. For e.g. HDFC Standard Life had introduced gold and silver cards for those
salespersons that outperform their target before their stipulated time. Under this
scheme they also get the opportunity of holiday tours to the place of their choice.
Such kinds of practices keep the employees motivated to do their job. In this
competitive environment, the traditional methods of marketing are not sufficient
to attract customers. Television advertisements and telemarketing are some new
ways to do so but insurers have to think of more innovative ideas to market their
products.
Alternate Distribution Channels

TECHNOLOGY 94
As a part of their marketing strategy, the private life insurance companies resort
to several distribution channels such as banks, brokers, corporate agents and
other intermediaries to reach out to the masses throughout the length and breadth
of the country. The emphasis has now shifted from single-unit sale towards
multiple-product selling. The channel partners help the insurance companies to
augment their sales figure in return of a hefty commission. SBI Life had
launched its “Integrated Bancassurance” strategy by utilizing its seven associate
banks through the launch of its Super Suraksha Group Insurance Scheme to the
deposit account holders of those associate banks.
Other Strategies
The insurance companies have followed many other marketing strategies like tie-
ups with Regional Rural Banks (RRBs) for selling micro-insurance products, tie-
ups with hospitals for selling health insurance products, tie-ups with retail outlets
such as Pantaloons and Big Bazaar and offering insurance products based on the
amount of purchases made by the customers, online marketing or e-marketing,
opening up of makeshift sales outlets in different rural and semi-urban regions of
the country. The selling of the insurance products through the retail outlets is
expected to move up in the future because of the foray of Future Group into the
insurance sector, which has retail outlets like Pantaloons and Big Bazaar under
its belt. Reliance Life Insurance Company Limited has already taken this
initiative by providing its product “Express Life” over the counter.
Future Prospects
The government of india was not far behind in speeding up the development in
the insurance sector and even came forward with the introduction of a
“comprehensive insurance amendment bill” that would hike the investment limit
of the foreign players from 26% to 49% (chakraborty, 2007), at that time
awaiting the government’s approval.

TECHNOLOGY 95
The FDI hike would enable the foreign insurers to infuse fresh capital into the
indian insurance sector through the indian counterparts. Moreover, this would
increase the presence of the foreign investors in the indian insurance market. The
entry of the new private players would make the indian insurance market highly
competitive with ample opportunities in terms of business and volume. With
several entry proposals being on the pipeline, the IRDA recently granted
permission to pantaloons and Italy –based Assicurazioni Generali as the new
private liufe insurer to commense their operations in the indian insurance sector.
This new joint venture would surely open new and much-improved avenues of
insurance distribution along with the other conventional formats prevalent in the
country. The Indian Union Budget (2007-08) has even emphasized the
development of the country’s insurance sector with deductions in medical
insurance-u/s 80D being raised to Rs. 15000 and Rs 20000 for general and senior
citizens respectively( chakraborty 2007).
Besides these, the government of India has come out with numerous reform
initiatives to amend the insurance laws for the benefit of the society at large.
Among the most notable ones are the mandatory collection of customer’s
signature in the sales illustration sheet by the agent while selling unit linked
products (ULIPs). Moreover, the proposal put forth by the Department of
Economic Affairs (DEA) to amend the existing provisions of the insurance act is
a big initiative taken by the Indian government to impose the life insurers to
honour a policy at the time of claim settlements rather than questioning its
validity (chakraborty, 2007). The IRDA has even come down heavily on the life
insurance companies that were claiming to offer astronomical returns on their
products, in order to make the system flawless. In a move aimed at protecting
consumer’s interest, the Bombay High Court’s decision to allow trading of life
insurance policies in India received accolades from the industrial world.

TECHNOLOGY 96
The insurance companies in India may soon have more flexibility in investing in
corporate bonds and mortgage-based securities so that they can enjoy higher
yields from their investments. But they would only be allowed to invest in all
highly-rated (minimum AA+) corporate issues (chakraborty, 2007). The insurers
are also looking at developing need-based insurance products for the largely
untapped rural market in india. The high growth potential of the Indian insurance
sector also promises tremendous employment opportunities for the masses.
Despite all these ,the Indian insurance market is still at a nascent stage because of
the low penetration in the rural and semi-urban regions of the country. It is high
time that both LICI and the private life insurers capitalized on this fact and
started penetrating more into the remote areas of the country through attractive
product offerings.
Objective of the Project: To identify a new customer base for Standard

Chartered Bank and thereby maximize its profits.
Methodology:
• Getting the database of customers, calling them, fixing up appointments

with them and then convincing them to buy the financial products.
• Also I have developed a questionnaire asking about the different

insurance companies people have invested in and the features of these
products which they prefer while buying. The questionnaire gives
complete information about risk taking nature of the customer as well.
This would give the new database of customers to my bank, also their
preferences as well as their risk taking
• Nature which would help them to pinch the right customer the right kind
of product.

TECHNOLOGY 97
OBJECTIVE OF PROJECT
MY PROJECT ON………..
DIFFERENT ASPECTS OF INSURANCE PRODUCTS AND

MUTUAL FUNDS AND THEIR EFFECT ON THE BUYING
BEHAVIOUR OF INVESTORS
To divide different features of an insurance product into different factors by

using the statistics tool Factor Analysis and then do Multiple Regression of
those factors on the customers preference of buying to find out the factor which
affects the buying behavior of the customers the most. This would help the
bank to peach those products in the market which have those features in them.
Methodology:
a) Making the questionnaire
Mistakes make you learn very fast, this was realized by me during this project.
The very first thing I did to develop the questionnaire is to think about all the
possible features an insurance product can have and documented them all. For

TECHNOLOGY 98
this I referred to different brochures given to me from different banks and also
the internet. Then I developed the questionnaire based on it. I wanted to get the
approval of my company guide and branch manager but they were busy. So I
showed it to my faculty guide and after her making some changes it was
approved by her.
The very next day the branch manager himself asked me about my proceedings
about the project. I did not want to lose the opportunity and so showed him my
questionnaire. According to him I had missed some points, so he asked me to
make some changes. After making the changes according to him, I showed it to
the statistics faculty of our campus that is Mr. Manish Dube, the market research
faculty Mr. Devashis bose( Director IMRT,) and also . My company guide also
checked my questionnaires.
I took the 15 responses and did the pilot testing for it. In question number 3,4,9
and 10, people were choosing more than one options which became a problem
for doing SPSS analysis. Again it was discussed with faculty members and it was
suggested to change question numbers 3 and 4 to ordinal scale and highlight in
question number 9 and 10 to strictly choose only one option.
Another problem which was faced was that the dependent variable for doing
multiple regression had been missed. So it was decided to add one question to
get the same.
b) Methodology for Sample Design
The choice of sampling method depended on the objectives of the survey

and perhaps on the survey technique being employed. For the purpose of
data collection convenient sampling has been done. Questionnaires have
been got filled according to my reach and contacts.
C) Sample size

TECHNOLOGY 99
There are around 14 variables in the Likert Scale of Questionnaire and ten times
of it is around 140. For that I would have to get at least 200 questionnaires filled.
This would be my sample size.
d) Survey technique
The survey technique which has been used is getting the questionnaire filled by
those who can fill it. Otherwise an interview of the customer is taken and the
questionnaire is filled according to the responses given by him/her.
CONCLUSION
Really summer training is very important part of our PGDM course curriculum
because I got live exposure of market as well as customers. How to handle the
customers, how to satisfied the customers and basically these things are back
bone of any business and companies. During two months I did hard work for
myself and identifying where I am lacking right now.
This report is prepared to get the basic ideas of mutual fund and life insurance
products. The general concept of the market study will help the different
individuals to invest in different investment tools as per their appetite. Through
research study, it is very much visualized the present market trend opted by the
selected number of people and their perception regarding Mutual Fund as well as
insurance policy.

TECHNOLOGY 100
Hence, from this report I conclude that people are more keen interested to invest
in mutual Fund due to the stability and getting more diversified options they are
not interested to invest in insurance sector because most of the people insured
before .
In spite of this hard fact, where there is a will, there is way. If I will get
opportunity, I will do it. This type sector required more patience, confidence, as
well as smart and tricky verbal and non verbal communication skill because we
should have must be follow-up the customers till conversion of business.
SUGGESTIONS
1. As some of the people think that mutual fund is risky so the company
should show people the advantages of the mutual fund and how it is better
than the other investment avenues.
2. Now a day’s people are investing in more of an equity fund because it
gives high return as compare to other mutual fund schemes.
3. It is suggestion to SCB , develop their customer data base because I got
knowledge that STANDARD CHARTERED BANK,L.K.O has approx

TECHNOLOGY 101
10000 Accounts and Lucknow has population approx 500000 (APRIL
2009) means that there is huge opportunity for SCB in future.
4. The people of Lucknow have enough purchasing power supported by
N.R.I. and SCB should also identify more N.R.I. peoples.
5. A very small part market has been covering SCB. It can increase the circle
of its business in small and rural areas of every state and cities of India
where they an find a huge business.
6. Company should undertake the Campaign, Road shows, Advertisement and
other type of Publicity for the effective awareness of different schemes that
are available in the market.
7. The company should arrange seminars and presentations, giving detail idea
about securities and benefits of SCB,L.K.O.
8. Really Standard chartered Bank do have a class banking system and they
cater premium class people but they really need to increase their database
regarding the same because due to a scarce or say limited database of High
Net Individuals (HNI) the bank is facing a literal shrinkage.
9. Due to cut throat competition in service Market, the banking is in boom
period without any recessionary effect, hence SCB should need to be keen
concern about their competitor like City BANK, HSBC ,ABN-AMRO
e.t.c.
10. Due to excessive growth in population of Lucknow ,there is need of
increase the branches as well as ATM machines to cater more and more
customers.
Limitations of the Study:
a) Access to high end customers’ database is very difficult.

TECHNOLOGY 102
b) Due to present market conditions, people are reluctant to invest
in financial products. Even they are not interested to talk about
any financial product.
c) LIC being a government organization, people are more prone to

invest in its products.
d) People are not interested in filling up the questionnaire or even if

they are filling it, they are filling it wrongly because of lack of
interest, improper reading of the question and hence improper
understanding of the same or improper understanding of English
Language by so called educated class. Sometimes they may be in
a hurry to fill it up.
e) Basically I am in cross selling in insurance product ,according to

me for selling insurance policy there is a need of personal
relation with customer.
f) For success in this field there is need of motorcycle to go

anywhere according demand of customers.

TECHNOLOGY 103
OVER ALL EXPERIENCE DURING SUMMER TRAINING
In the company…
It was the beautiful morning of MAY 15, 2009… my first experience inside my
own office! I could have never thought of entering the premises of an MNC
before!! But I was not dreaming… it was reality! Such a reputed bank! Such a
location! The infrastructure was really beautiful!
My company guide was Mr. Devanshu Dhawan, an Excel manager in the branch
whose sales skills were commendable. Beside his cabin was the cabin of Mr.
Vipul Kumar, another Excel manager of the bank. He was the first person in the
bank who behaved in a very friendly manner with me. It gave me sigh of relief! I
started doing my own work.
Within 3-4 days of my SIP, I got acquainted with around 8 employees of the
bank. They were good to me but soon I realized that I would have to make my
own ways to get my work done. Everybody was so busy and when they were not,
they wanted to relax or enjoy. So I tried to help my company guide with his work
so that I get some work to do there. Whenever I used to get the opportunity, I
used to ask him about the products which the bank was into selling. It was very
tough to get the information… but I found my own ways to get the same. I even
visited Bajaj Allianz office to get some idea of the products. Mr.Bagha helped
me a lot to understand the product of insurance.
It was tough to build the trust which I tried to do. I used to sit at my own place
without moving cabins to cabins so that they feel that I am not an outsider who is
acting as a detective to know their secrets. I did never touch sir’s system or

TECHNOLOGY 104
anything else. I did never try to go for lunch when the employees of the bank
were discussing amongst themselves in the dining room. I used to sit somewhere
else when some customer used to come to meet Devanshu Sir or the branch
manager. This practice of mine started working to some extent as a result of
which, my company guide allowed me to surf net on his system twice. I started
gaining his trust.
Working there, I also started understanding the real corporate life and the kind of
competition involved with it. Everybody is concerned about his/her own targets
and forgets about everything else. How people respond to you only when they
feel it is fruitful for them. It made me more practical .Even branch manager has
very friendly relation with me, he inspired me a lot. Basically in SATANDAR
CHARTERED all peoples are very co-operative. I never forget Mr.Anshu Bajpai
( area manager of operation),he is oldest employee in SCB. He taught me a lot of
issues related to banking as well as banking operations.
Experience with the customers…
While sitting in the office, I listened to the conversation of my company guide

with some of his customers. There were some who were very fussy and did not
like to speak even if any other employee of the bank was sitting there. Some
were very talkative who used to talk for an hour, some humorous and the
remaining to the point. My company guide being an Excel Relationship Manager
dealt with only high end customers who used deal with more than 25 lacs with
the bank. So most of them were very educated and from standard families.
I called many customers from the database which I got from my classmates. I
also pinched the IMRT employees. The way they reacted reminded me of the
treatment we give to the sales people who come to our homes for selling some
product. As soon as they used to hear the word investment, they used to make

TECHNOLOGY 105
excuses or put down the phone. I called around 300-400 customers in all. It was
a mixed experience… somewhere sweet and bitter at some places.
I met Mr. Arsad Bhai in Budha Park, he was always ready to take child plan of
insurance but he procrastinated the date of conversion. It is done by starting with
the closest contacts of yours, asking for their help. Then gradually he would tell
another person, that person would recommend your name to some other person
in his contact. In this way, a chain is developed, trust is built on your face value
and life becomes easy for you. It takes some time to develop your own customer
base.
I visited many places like malls, parks even I did survey in the Hazarat chauraha
.but ultimately I got only procrastinated from him. Really this is hard core
marketing. it requires patient as well as proper follow up with customers. I
believe that it is tough and hard core marketing but it has growth and future.
Then Mr. Rajesh Bhatnagar of Bajaj Allianz gave further insights into selling
process. He said the very first thing you need to make sure is to make the
customer comfortable that you are not there for selling. Talk to him about his
needs in life, his spending, and then pinch him when he becomes emotional.
Visiting different banks for doing comparative study of their products…
It was on April 3, 2009 that I visited ICICI Prudential at Mahanagar and HDFC
Standard Life at Halwasia market. I went to these banks as a customer and tried
to find out their child gain scheme and pension plan. I acted well!! This was done
just to understand the features of same products of different companies and thus
do the comparative analysis of the same.
I met Parvez bhai, the sales manager of Max New York Life on March 30, 2009
through some contact. He put some inputs on the selling skills and also gave me
some valuable information regarding his company’s products.

TECHNOLOGY 106
A trip to Gosaiganj and Takroi…
While surfing net, I had come across news clippings where it was said that only
7%-8% of Indian market has been tapped by insurance business and 80% of
Indian market lies in the rural market. So to find out the awareness level and to
tap the unreached market, two of my friends and myself went to Gosaiganj on
April 5, 2009.
It was a good experience as we talked to some people there. We first talked to the
“pradhan” of “Alamgarh” Shri Lal Mohammad. He called some other people as
well as the school teacher named Shri Jagat Narayan, 2-3 villagers and also one
LIC agent Mr. J. P. Verma and one corporate agent named Merajjuddin of the
village. They listened to whatever we talked and understood the concepts. They
knew the so called “Beema”, hindi word for insurance.
The corporate agent had a tie up with around 7 companies and he sells around
4500 policies a month!!! He was very confident about his business. The LIC
agent was also doing good in his business. The pradhan asked us to come again
after 30th April because all the villagers were busy in wheat fields and very few
educated were busy with election campaigns. He would call for a meeting then
so that we can talk to all the villagers.
On our way back to Lucknow, we passed by a place called Arjungarh. I met 2-3
shopkeepers there who seemed somewhat educated to us. One of them filled my
questionnaire and when I asked him about meeting other villagers, he said it is a
waste of time. Nobody would be interested in talking about insurance products
because most of them are illiterate. He inspite of being a student of Christian
college was not actually interested in filling it.Then we paved our way to Takroi ,
a village at the back of munshi pulia. It was 1 pm till that time and everybody on
work or rest. I talked to one of the general merchant who told me that the whole
village had trust in “LIC Beema” and most of them invested in it because one or

TECHNOLOGY 107
the other relatives of them are working as the agent of company and investing in
the insurance would profit those relatives.
BIBLIOGRAPHY
1. Kenneth Black,Jr., Harold D. Skipper, Jr., “Life & Health Insurance”,

Thirteenth Edition, Pearson Education, page nos. 19-22
2. Mutual Funds, ICFAI Publications, page nos. 1-40
3. Wikipedia, The Free Encyclopedia, Insurance
Available from: http://en.wikipedia.org/wiki/Insurance [Accessed April 15,

2009]
4. Sandeep Ray Chaudhary and Joy Chakraborty, Private Life Insurance

Companies In India: Strategizing Ways To Overcome The Product

TECHNOLOGY 108
Selling Challenges, The Icfai Journal of Risk & Insurance, ICFAI
UNIVERSITY PRESS, Vol. V, No. 2, April 2008
5. Available from: http://www.helplinelaw.com/docs/insurance/1.php

[Accessed April 15, 2009]
6. Standard Chartered official website standardchartered.com
Available from: http://www.standardchartered.com/about-us/en/index.html

[Accessed April 18, 2009]
7. Standard Chartered Bank India official website Standard Chartered.co.in
Available from:
http://www.standardchartered.co.in/personal/home/en/index.html [Accessed
April 18, 2009]
8. India Business Directory ,standard chartered bank, maps of india.com’s
Available from: http://business.mapsofindia.com/banks-in-india/standard-

chartered-grindlays-bank-ltd.html [Accessed April 18, 2009]
9. Google maps, Finance And Investment Guide, standard chartered bank,

India,Available from: http://www.iloveindia.com/finance/bank/foreign-
banks/standard-chartered-bank.html http://maps.google.co.in/maps?
hl=en&um=1&ie=UTF-
8&q=standard+chartered+bank+lko&near=Lucknow,
+Uttar+Pradesh&fb=1&split=1&gl=in&view=text&latlng=10944815455
42338728 [Accessed April 18, 2009]
10.Wikimapia, standard chartered bank and Bajaj Allainz Lucknow

TECHNOLOGY 109
Available from: http://wikimapia.org/383899/Standard-Chartered-Bank-Bajaj-
Allianz [Accessed April 18, 2009]
11.Life Insurance- Indian life insurance sector on the rise, Only

Finance.com,
Available from: http://www.onlyfinance.com/Life-Insurance/Indian-life-

insurance-sector-on-the-rise.aspx [Accessed March 21, 2009]
12. RNCOS, MINDBRANCH, Indian Insurance Industry: New Avenues for

Growth 2012
Available from: http://www.mindbranch.com/Indian-Insurance-Avenues-R459-

85/ [Accessed March 21, 2009]
THE FINANCIAL EXPRESS, Rural insurance business to touch $35 billion

by 2010, says Assocham
Available from: http://www.financialexpress.com/news/rural-insurance-business-

to-touch-35-billion-by-2010-says-assocham/168898/ [Accessed March 21, 2009]
13. Invest In India, Mutual Funds 2009-02-25 11:31:00
Available from: http://investmoneyinindia.com/mutual-funds-2009-02-25-

113100/ [Accessed March 22, 2009]
14.Harish Dhawan, Top News. in, Average AUM for Indian Mutual funds
increase 8.68% in Feb, 2009: AMFI
Available from: http://www.topnews.in/average-aum-indian-mutual-funds-

increase-868-feb-2009-amfi-2134339 [Accessed March 22, 2009]

TECHNOLOGY 110
15.Arindam Banerjee, Mutual Funds In India: Perspectives & Strategies,
Extracts taken from Overview of the above said book
Available from: http://www.books.iupindia.org/IB11012700009.htm [Accessed

March 22, 2009]
16. Available from

http://www.domainb.com/finance/insurance/2005/200509
16_types_insurance.html
17. Available from : http://www.medical-billing-

coding.org/Content260.html
18. Available from:
http://www.blonnet.com/2008/03/20/stories/20080320523
00500.htm

TECHNOLOGY 111
Appendices
Questionnaire
(This questionnaire is aimed at understanding different aspects of an insurance

product which an investor looks before investing in it. The project is purely for
academic purpose and will not be used for publishing.)
1. Have you ever invested in insurance?
a) Yes b) No
2. Which insurance company have you invested in?
a) Birla plus b) Max New York life
c)Bajaj Allianz d) LIC
3. Are you satisfied with your existing plan?
a) Very satisfied b) Satisfied
c) Neither satisfied nor dissatisfied d) dissatisfied e) very

dissatisfied
4. Do you buy insurance for..........
a) Life cover b) Return
c) Tax benefit d) others.......
5. Which kind of insurance would you go for?

TECHNOLOGY 112
a) Money back b) pension plan
c) Child gain d) ULIP
6. Through whom do you buy insurance product?
a) Agent b) Broker
c) Bank assurance d) corporate agent
7. What would you opt if you have a choice?
a) High risk, high return b) Moderate risk, moderate

return
c) Low return but negligible risk d) Capital preservation

model
8. For how long would you like to invest?(tenure)
a) 1-4yrs b) 4-7yrs
c) 7-10yrs d) more than 10yrs
9. You have opted this policy in persuasion of...
a) Self-awareness b) Relatives
c) Advisor d) other....
10. What is the main reason for investing in that company?
a) High return b) security of your money
c) Reputation d) Service quality
11. Which service you prefer the most?

TECHNOLOGY 113
a) Prompt claim settlement b) timely receivables
c) Facilitating premium submission d) reminders for

premium submission
12. Do you keep track of various schemes of investment from

different companies?
a) Yes b) no
13. Rank the aspects below of an insurance scheme which

you look into before investing into it in the order of your
preference: (type 1 in the box you feel your preference is)
Least Less preferr More Most

preferr preferr ed preferr preferre
ed ed ed d
Return
Less
premium
term of
plan
High
benefit
term
Risk
associated

TECHNOLOGY 114
Charges
related
Your
advisor
perspectiv
e
Newspape
r article or
financial
magazines
WOM
Riders
attached
with
scheme
Flexibility
Risk cover
Entry age

TECHNOLOGY 115
Name: _______________________________
Age: _________________________________
Gender: ______________________________
Profile: _______________________________
Income: _______________________________
Contact no:____________________________
Address: _______________________________

TECHNOLOGY 116

Summer Project in S.i.p., by Ajeet Samrik, IMRT, Lucknow

Încărcat de

Informații document

Titlu original

Drepturi de autor

Formate disponibile

Partajați acest document

Partajați sau inserați document

Opțiuni de partajare

Vi se pare util acest document?

Este necorespunzător acest conținut?

Drepturi de autor:

Formate disponibile

Summer Project in S.i.p., by Ajeet Samrik, IMRT, Lucknow

Încărcat de

Drepturi de autor:

Formate disponibile

SUMMER INTERNSHIP PROJECT REPORT ON

“DIFFERENT ASPECTS OF INSURANCE PRODUCTS

FOR THE PARTIAL FULFILLMENT OF THE REQUIREMENT

UNDER THE GUIDANCE OF: UNDER THE SUPERVISION

INSTITUTE OF MANAGEMENT RESEARCH AND

INSTITUTE OF MANAGEMENT RESEARCH AND

This is to certify that the project work done on “DIFFERENT

Name & sign of company guide Name & sign of faculty

INSTITUTE OF MANAGEMENT RESEARCH AND

With great zeal, I present my individual summer training Report

I convey my deepest gratitude to Mr.Vivek Sinha Branch

Really I am too much oblige with Mr.Devanshu Dhawan Sir who

INSTITUTE OF MANAGEMENT RESEARCH AND

I avail this opportunity to convey my sincere thanks to

I AJEET KUMAR, student of PGDM (M.B.A.), Semester III of

INSTITUTE OF MANAGEMENT RESEARCH AND

I am also declaring that I am submitting this report on the

INSTITUTE OF MANAGEMENT RESEARCH AND

In todays globalize world, where cutthroat competition is prevailing in the

INSTITUTE OF MANAGEMENT RESEARCH AND

1. Executive summary ………………………………….. 7

5. Mutual Fund……………………………………………... 27--

6. The Emerging market for Mutual Funds

And Insurance ……………………………………………

7. Bajaj Allianz Life Insurance co. Ltd……………………. 48

INSTITUTE OF MANAGEMENT RESEARCH AND

10. Objective of Project………………………………………

13. Limitation of Study………………………………………

14. Over All experience During Summer training…………

INSTITUTE OF MANAGEMENT RESEARCH AND

The function of insurance is to safeguard against misfortunes in the way

INSTITUTE OF MANAGEMENT RESEARCH AND

STANDARD CHARTERED BANK

 Asia Pacific Region including Australia, China, India, Japan, North

The Chartered Bank

INSTITUTE OF MANAGEMENT RESEARCH AND

The Standard Bank

INSTITUTE OF MANAGEMENT RESEARCH AND

Share Price as on April 18, 2009

Last Price Change Open Day High 52-Week High

3.00 (0.30%) 1011.00 1037.00 1903.00

Volume Previous Close Day Low 52-Week Low

Standard Chartered Bank India, The Indian operations of Chartered Bank

INSTITUTE OF MANAGEMENT RESEARCH AND

MR NEERAJ SWAROOP, CEO-India, Standard Chartered Bank

The function of insurance is to safeguard against misfortunes in the way

INSTITUTE OF MANAGEMENT RESEARCH AND

For comparative analysis of different products of various companies, I have

INSTITUTE OF MANAGEMENT RESEARCH AND

INSTITUTE OF MANAGEMENT RESEARCH AND

At the beginning of 2008, there were 18 registered life insurance companies in

INSTITUTE OF MANAGEMENT RESEARCH AND

b) In economic terms, Insurance, in economics, is a form of risk

INSTITUTE OF MANAGEMENT RESEARCH AND

(Quoted from http://en.wikipedia.org/wiki/Insurance )

FUNDAMENTAL PRINCIPLES OF INSURANCE

Some useful terms in Insurances:

1) INDEMNITY :-A contract of insurance contained in a fire, marine,

INSTITUTE OF MANAGEMENT RESEARCH AND

5) Risk - In a contract of insurance the insurer undertakes to protect the insured

INSTITUTE OF MANAGEMENT RESEARCH AND

· Subrogation - The doctrine of subrogation is a corollary to the principle of

INSTITUTE OF MANAGEMENT RESEARCH AND