The meaning of insurance: Insurance is a policy from a large financial

institution that offers a person, company, or other entity reimbursement or

financial protection against possible future losses or damages.

The insurance sector in India has come a full circle from being an open competitive
market to nationalisation and back to a liberalised market again. Tracing the
developments in the Indian insurance sector reveals the 360-degree turn witnessed
over a period of almost two centuries.

A brief history of the Insurance sector

The business of life insurance in India in its existing form started in India in the year
1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

• 1912: The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.
• 1928: The Indian Insurance Companies Act enacted to enable the
government to collect statistical information about both life and non-life
insurance businesses.
• 1938: Earlier legislation consolidated and amended to by the Insurance Act
with the objective of protecting the interests of the insuring public.
• 1956: 245 Indian and foreign insurers and provident societies taken over by
the central government and nationalised. LIC formed by an Act of Parliament,
viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the
Government of India.

The General insurance business in India, on the other hand, can trace its roots to the
Triton Insurance Company Ltd., the first general insurance company established in
the year 1850 in Calcutta by the British.

Some of the important milestones in the general insurance business in India are:

• 1907: The Indian Mercantile Insurance Ltd. set up, the first company to
transact all classes of general insurance business.
• 1957: General Insurance Council, a wing of the Insurance Association of
India, frames a code of conduct for ensuring fair conduct and sound business
practices.
• 1968: The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
 • 1972: The General Insurance Business (Nationalisation) Act, 1972
nationalised the general insurance business in India with effect from 1st
January 1973.
• 107 insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the
Oriental Insurance Company Ltd. and the United India Insurance Company
Ltd. GIC incorporated as a company.

Insurance sector reforms:

In 1993, Malhotra Committee headed by former Finance Secretary and RBI Governor
R.N. Malhotra was formed to evaluate the Indian insurance industry and recommend
its future direction.

The Malhotra committee was set up with the objective of complementing the reforms
initiated in the financial sector. The reforms were aimed at "creating a more efficient
and competitive financial system suitable for the requirements of the economy
keeping in mind the structural changes currently underway and recognizing that
insurance is an important part of the overall financial system where it was necessary
to address the need for similar reforms…"

In 1994, the committee submitted the report and some of the key recommendations
included:

1) Structure

• Government stake in the insurance Companies to be brought down to 50%.

• Government should take over the holdings of GIC and its subsidiaries so that
these subsidiaries can act as independent corporations.
• All the insurance companies should be given greater freedom to operate.

2) Competition

• Private Companies with a minimum paid up capital of Rs.1bn should be

allowed to enter the industry.
• No Company should deal in both Life and General Insurance through a single
entity.
• Foreign companies may be allowed to enter the industry in collaboration with
the domestic companies.
• Postal Life Insurance should be allowed to operate in the rural market.
• Only One State Level Life Insurance Company should be allowed to operate in
each state.

3) Regulatory Body

• The Insurance Act should be changed.

• An Insurance Regulatory body should be set up.
• Controller of Insurance (Currently a part from the Finance Ministry) should be
made independent.

4) Investments
 • Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%.
• GIC and its subsidiaries are not to hold more than 5% in any company (There
current holdings to be brought down to this level over a period of time).

5) Customer Service

• LIC should pay interest on delays in payments beyond 30 days.

• Insurance companies must be encouraged to set up unit linked pension plans.
• Computerisation of operations and updating of technology to be carried out in
the insurance industry The committee emphasized that in order to improve
the customer services and increase the coverage of the insurance industry
should be opened up to competition.

But at the same time, the committee felt the need to exercise caution as any failure
on the part of new players could ruin the public confidence in the industry. Hence, it
was decided to allow competition in a limited way by stipulating the minimum capital
requirement of Rs.100 crores. The committee felt the need to provide greater
autonomy to insurance companies in order to improve their performance and enable
them to act as independent companies with economic motives. For this purpose, it
had proposed setting up an independent regulatory body.

MAJOR POLICY CHANGES

Insurance sector has been opened up for competition from Indian private insurance
companies with the enactment of Insurance Regulatory and Development Authority
Act, 1999 (IRDA Act). As per the provisions of IRDA Act, 1999, Insurance Regulatory
and Development Authority (IRDA) was established on 19th April 2000 to protect the
interests of holder of insurance policy and to regulate, promote and ensure orderly
growth of the insurance industry. IRDA Act 1999 paved the way for the entry of
private players into the insurance market which was hitherto the exclusive privilege
of public sector insurance companies/ corporations. Under the new dispensation
Indian insurance companies in private sector were permitted to operate in India with
the following conditions:

• Company is formed and registered under the Companies Act, 1956;

• The aggregate holdings of equity shares by a foreign company, either by itself
or through its subsidiary companies or its nominees, do not exceed 26%, paid
up equity capital of such Indian insurance company;
• The company's sole purpose is to carry on life insurance business or general
insurance business or reinsurance business.
• The minimum paid up equity capital for life or general insurance business is
Rs.100 crores.
• The minimum paid up equity capital for carrying on reinsurance business has
been prescribed as Rs.200 crores.

The Authority has notified 27 Regulations on various issues which include

Registration of Insurers, Regulation on insurance agents, Solvency Margin, Re-
insurance, Obligation of Insurers to Rural and Social sector, Investment and
Accounting Procedure, Protection of policy holders' interest etc. Applications were
invited by the Authority with effect from 15th August, 2000 for issue of the
 Certificate of Registration to both life and non-life insurers. The Authority has its
Head Quarter at Hyderabad.

Insurance companies:

IRDA has so far granted registration to 12 private life insurance companies and 9
general insurance companies. If the existing public sector insurance companies are
included, there are currently 13 insurance companies in the life side and 13
companies operating in general insurance business. General Insurance Corporation
has been approved as the "Indian reinsurer" for underwriting only reinsurance
business. Particulars of the life insurance companies and general insurance
companies including their web address is given below:

LIFE INSURERS Websites

Public Sector
Life Insurance Corporation of India www.licindia.com
Private Sector
Allianz Bajaj Life Insurance Company Limited www.allianzbajaj.co.in
Birla Sun-Life Insurance Company Limited www.birlasunlife.com
HDFC Standard Life Insurance Co. Limited www.hdfcinsurance.com
ICICI Prudential Life Insurance Co. Limited www.iciciprulife.com
ING Vysya Life Insurance Company Limited www.ingvysayalife.com
Max New York Life Insurance Co. Limited www.maxnewyorklife.com
MetLife Insurance Company Limited www.metlife.com
Om Kotak Mahindra Life Insurance Co. Ltd. www.omkotakmahnidra.com
SBI Life Insurance Company Limited www.sbilife.co.in
TATA AIG Life Insurance Company Limited www.tata-aig.com
AMP Sanmar Assurance Company Limited www.ampsanmar.com
Dabur CGU Life Insurance Co. Pvt. Limited www.avivaindia.com
GENERAL INSURERS
Public Sector
National Insurance Company Limited www.nationalinsuranceindia.com
New India Assurance Company Limited www.niacl.com
Oriental Insurance Company Limited www.orientalinsurance.nic.in
United India Insurance Company Limited www.uiic.co.in
Private Sector
Bajaj Allianz General Insurance Co. Limited www.bajajallianz.co.in
ICICI Lombard General Insurance Co. Ltd. www.icicilombard.com
IFFCO-Tokio General Insurance Co. Ltd. www.itgi.co.in
Reliance General Insurance Co. Limited www.ril.com
Royal Sundaram Alliance Insurance Co. Ltd. www.royalsun.com
TATA AIG General Insurance Co. Limited www.tata-aig.com
Cholamandalam General Insurance Co. Ltd. www.cholainsurance.com
Export Credit Guarantee Corporation www.ecgcindia.com
HDFC Chubb General Insurance Co. Ltd.
 REINSURER
General Insurance Corporation of India www.gicindia.com

Protection of the interest of policy holders:

IRDA has the responsibility of protecting the interest of insurance policyholders.

Towards achieving this objective, the Authority has taken the following steps:

• IRDA has notified Protection of Policyholders Interest Regulations 2001 to

provide for: policy proposal documents in easily understandable language;
claims procedure in both life and non-life; setting up of grievance redressal
machinery; speedy settlement of claims; and policyholders' servicing. The
Regulation also provides for payment of interest by insurers for the delay in
settlement of claim.
• The insurers are required to maintain solvency margins so that they are in a
position to meet their obligations towards policyholders with regard to
payment of claims.
• It is obligatory on the part of the insurance companies to disclose clearly the
benefits, terms and conditions under the policy. The advertisements issued by
the insurers should not mislead the insuring public.
• All insurers are required to set up proper grievance redress machinery in their
head office and at their other offices.
• The Authority takes up with the insurers any complaint received from the
policyholders in connection with services provided by them under the
insurance contract.

PURPOSE & NEED OF INSURANCE

The business of insurance is related to the protection of the economic value of assets.
Every asset has value. The asset would have been created through the efforts of the
owner, in the expectation that, either through the income generated there from or some
other output, some of his needs would be met. In the case of a factory or a cow, the
production is sold and income generated. In the case of a motorcar, it provides comfort
and convenience in transportation. There is no direct income. There is normally expected
life time for the asset during which time it is expected to perform. The owner, aware of
this, can so manage his affairs that by the end of that life time, a substitute is made
available to ensure that the value or income is not lost. However, if the assert gets lost
earlier, being destroyed or made non functional, through an accident or other unfortunate
event, the owner and those deriving benefits there from suffer. Insurance is mechanism
that helps to reduce such adverse consequences.

Assets are insured, because they are likely to be destroyed or made non-functional
through an accidental occurrence. Such possible occurrences are called perils. Fire,
floods, breakdowns, lightning, earthquakes, etc, are perils. The damage that these perils
may cause the asset, is the risk.

The risk only means that there is possibility of loss or damage. It may or may not happen.
There has to be uncertainity about the risk. Insurance is done against the contingency that
it may happen. Insurance is relevant only if there are uncertainties. If there is no
uncertainty about the occurrence of an event, it cannot be insured against.

There are other meanings of the term ‘risk’. To the ordinary man in the street risk means
exposure to danger. In insurance practice risk is also used to refer to the peril or loss
producing event. For example, it is said that fire insurance covers the risks of fire,
explosion, cyclone, flood etc. again, it is used to refer to the property covered by
insurance. For example, a timber construction is considered to be a bad risk for fire
insurance purpose. Here the term risk refers to the subject matter of insurance.

Conceptually the mechanism of insurance is very simple. People who are exposed to the
same risks come together and agree that, if any one of the members suffers a loss, the
others will share the loss and make good to the person who lost. All people who send
goods by ship are exposed to the same risk related to water damage, ship sinking, piracy,
etc. those owning factories are not exposed to these risks, but they are exposed to
different kinds of risks like, fire, hailstorms, earthquakes, lightening, burglary, etc. like
this, different kinds of risks can be identified and separate groups, made including those
exposed to such risks. By this method, the risk is spread among the community and the
likely big impact on one is reduced to smaller manageable impacts on all.

The manner in which the loss is to be shared can be determined before hand. It may be
proportional to the likely loss that each person is likely to suffer, which is indicative of
the benefit he would receive if the peril befell him. The share could be collected from the
members after the loss has occurred or the likely shares may be collected in advance, at
the time of admission to the group. Insurance companies collect in advance and create
a fund from which the losses are paid.

A human life is also an income generating asset. This asset also can be lost through
unexpectedly early death or made non-functional through sickness and disabilities caused
by accidents. Accidents may or may not happen. Death will happen, but the timing is
uncertain. If it happens around the time of one’s retirement, when it could be expected
that the income will normally cease, the person concerned could have made some other
arrangements to meet the continuing needs. But if it happens much earlier when the
alternate arrangements are not in place, insurance is necessary to help those dependent on
the income.

In the case of a human being, he may have made arrangements for his needs after his
retirement. Those would have been made on the basis of some expectations like he may
live for another 15 years, or that his children will look after him. If any, of these
expectations do not become true, the original arrangement would become inadequate and
there could be difficulties. Living too long can be as much a problem as dying too young.
These are risks which need to be safeguarded against. Insurance takes care.

Insurance does not protect the asset. It does not prevent it loss due to the peril. The peril
cannot be avoided through insurance. The peril can sometimes be avoided through better
safety and damage control management. Insurance only tries to reduce the impact of the
risk on the owner of the asset and those who depend on that asset. It compensates, may
not be fully, the losses. Only economic or financial losses can be compensated.

The concept of insurance has been extended beyond the coverage of tangible assets.
Exporters run the risk of the importers in the other country defaulting as well as losses
due to sudden changes in currency exchange rates, economic policies or political
disturbances. These risks are now insured. Doctors run the risk of being charged with
negligence and subsequent liability for damages. The amounts in question can be fairly
large, beyond the capacity of individuals to bear. These are insured. Thus, insurance is
extended to intangibles. In some countries, the voice of a singer or the legs of a dancer
may be insured; even through the advantages of spread may not be available in these
cases.

Satisfaction of economic needs requires generation of income from some source. If the
property, which is the source of such income, is lost fully or partially, permanently or
temporarily, the income too would stop. The purpose of insurance is to safeguard against
such misfortunes by making good the losses of the unfortunate few, through the help of
the fortunate many, who were exposed to the same risk but saved from the misfortune.
Thus the essence of insurance is to share losses and substitute certainty by uncertainty

.
There are certain basic principles which make it possible for insurance to remain popular
and a fair arrangement. The first is the fact that people are exposed to risks and that the
consequences of such risks are difficult for anyone individuals to bear. It becomes
bearable when the community shares the burden. The second is that no one person should
be in a position to make the risk happen. In other words, none in the group should set fire
to his assets and ask others to share the costs of damage. This would be taking unfair
advantage of as arrangement put into place to protect people from the risks they are
exposed to. The occurrence has to be random, accidental and not the deliberate creation
of the insured person.
ROLE OF THE INSURANCE IN ECONOMIC DEVELOVEMENT
For economic development, investments are necessary. Investments are made out of
savings. A life insurance company
is a major instrument for the mobilization of savings of people, particularly from the
middle and lower income groups. These savings are channeled into investments for
economic growth.

An insurance
company’s strength lies in the fact that huge amounts come by way of premiums. Every
premium represents a risk that is covered by that premium. In effect, therefore, these vast
amounts represent pooling of risks. The funds are collected and held in trust for the
benefit of the policyholders. The management of insurance companies is required to
keep this aspect in mind and make all its decisions in ways that benefit the community.
This applies also to its investments. This is why successful insurance companies
would not be found investing in speculative ventures. Their investments benefit the
society the society at large.

The system of insurance provides numerous direct and indirect benefits to the individual
and his family as well as to industry and commerce and to the community and the nation
as a whole. Those who insure, both individuals and corporate, are directly benefited
because they are protected from the consequences of the loss that may be caused by the
accident or fortuitous event. Insurance, thus, in a sense protects the capital in industry and
releases the capital for further expansion and development of business and industry.

The very existence of risk that is, uncertainty concerning the future, is a severe handicap
in economic activities. Insurance removes the fear, worry and anxiety associated with this
future uncertainty and thus encourages free investment of capital in business enterprises
and promotes efficient use of existing resources. Thus insurance encourages commercial
and industrial development and there by contributes to a vigorous economy and increased
national productivity.

Present day organization of industry, commerce and trade depend entirely on insurance
for their operation, banks and financial institutions lend money to industrial and
commercial undertakings only on the basis of the collateral security of insurance. No
bank or financial institution would advance loans on property unless it is insured against
loss or damage by insurable perils.

Insurers are closely associated with several agencies and institutions engaged in fire loss
 prevention, cargo loss prevention, industrial safety and road safety.

Before acceptance of a risk, insurers arrange survey and inspection of the property to be
insured, by qualified engineers and other experts. The object of these surveys is not only
to assess the risk for rating purposes but also to suggest and recommend to the insured,
various improvements in the risk, which will attract lower rates of premium and what is
more important , reduce the loss potential. For example, burglary surveyors make
recommendation in regard to security measures such as better locking system,
appointment of Watchman, etc. Engineering surveys play a most useful part in accident
prevention as valuable technical advice is provided in respect of plant and machinery.
Insurance ranks with export trade
, shipping and banking services as earner of foreign exchange to the country. It helps to
earn foreign exchange and represent invisible exports.

Types of insurance
Any risk that can be quantified can potentially be insured. Specific kinds of risk that may
give rise to claims are known as "perils". An insurance policy will set out in detail which
perils are covered by the policy and which are not. Below are (non-exhaustive) lists of the
many different types of insurance that exist. A single policy may cover risks in one or
more of the categories set out below. For example, auto insurance would typically cover
both property risk (covering the risk of theft or damage to the car) and liability risk
(covering legal claims from causing an accident). A homeowner's insurance policy in the
U.S. typically includes property insurance covering damage to the home and the owner's
belongings, liability insurance covering certain legal claims against the owner, and even a
small amount of coverage for medical expenses of guests who are injured on the owner's
property.

Business insurance can be any kind of insurance that protects businesses against risks.
Some principal subtypes of business insurance are (a) the various kinds of professional
liability insurance, also called professional indemnity insurance, which are discussed
below under that name; and (b) the business owner's policy (BOP), which bundles into
one policy many of the kinds of coverage that a business owner needs, in a way
analogous to how homeowners insurance bundles the coverages that a homeowner needs.
[16]

[edit] Auto insurance

Main article: Vehicle insurance

A wrecked vehicle

Auto insurance protects you against financial loss if you have an accident. It is a contract
between the insured and the insurance company. You agree to pay the premium and the
insurance company agrees to pay losses as defined in the policy. Auto insurance provides
property, liability and medical coverage:

1. Property coverage pays for damage to or theft of the car.

2. Liability coverage pays for the legal responsibility to others for bodily injury or
property damage.
3. Medical coverage pays for the cost of treating injuries, rehabilitation and
sometimes lost wages and funeral expenses.

An auto insurance policy comprises six kinds of coverage. Most countries require you to
buy some, but not all, of these coverages. If you're financing a car, the lender may also
have requirements. Most auto policies are for six months to a year.

In the United States, the insurance company should notify you by mail when it’s time to
renew the policy and to pay the premium.[17]

[edit] Home insurance

Main article: Home insurance

Home insurance provides compensation for damage or destruction of a home from

disasters. In some geographical areas, the standard insurances exclude certain types of
disasters, such as flood and earthquakes, that require additional coverage. Maintenance-
related problems are the homeowners' responsibility. The policy may include inventory,
or this can be bought as a separate policy, especially for people who rent housing. In
some countries, insurers offer a package which may include liability and legal
responsibility for injuries and property damage caused by members of the household,
including pets.[18]

[edit] Health

Main articles: Health insurance and Dental insurance

NHS Facility

Health insurance policies by the National Health Service in the United Kingdom (NHS)
or other publicly-funded health programs will cover the cost of medical treatments.
Dental insurance, like medical insurance, is coverage for individuals to protect them
against dental costs. In the U.S. and Canada, dental insurance is often part of an
employer's benefits package, along with health insurance.

[edit] Accident, Sickness and Unemployment Insurance

• Disability insurance policies provide financial support in the event the

policyholder is unable to work because of disabling illness or injury. It provides
monthly support to help pay such obligations as mortgage loans and credit cards.
Short-term and long-term disability policies are available to individuals, but
considering the expense, long-term policies are generally obtained only by those
with at least six-figure incomes, such as doctors, lawyers, etc. Short-term
disability insurance covers a person for a period generally up to six months,
paying a stipend each month to cover medical bills and other necessities.
• Long-term disability insurance covers an individual's expenses for the long term,
up until such time as they are considered permanently disabled and thereafter.
Insurance companies will often try to find other ways to employ the person and
reintegrate them back into the work force in preference to and before declaring
them unable to work at all and therefore totally disabled. Insurance companies, for
obvious reasons, frequently go to great lengths, including undercover surveillance
via videocam and repeated independent medical evaluations by company doctors,
in hopes of avoiding the necessity of paying permanent disability stipends to a
claimant.
• If you are in the market to purchase long-term disability insurance, try to find out
whether the prospective insurer has ONLY their own doctors handle ALL claims
(including the questionable ones), or whether they hire out to firms who perform
medical file reviews and Independent Medical Examinations, and whose doctors
have nothing to gain or lose regardless of the opinion they derive from looking at
your records or performing an exam. Your claim, should it eventuate to be
disability of a permanent nature, is often more likely to be approved if
"questionable" claims (those that don't involve loss of all four limbs) are hired out
to independent firms for file reviews and/or IMEs as opposed to always being
handled by inhouse doctors working solely for the insurance company.
 Independent companies, such as University Disability Consortium, for instance,
perform medical file reviews and IMEs for insurance companies, plaintiff and
defense attorneys, among others, and because they have no stake or say-so
regarding the final determination of a claimant's disability status, provide totally
unbiased reports and IMEs and are, as a result, more likely to facilitate a desirable
outcome for the person seeking permanent disability status than are reports and
exams performed by doctors who work for the insurance company and have a
great deal to gain or lose (e.g., bonuses, their jobs) when disability claims are
upheld. So, caveat emptor: beware the practices of your prospective provider
regarding claims of total disability prior to handing over those exhorbitant fees
they demand per LTD (long-term disability) policy.
• Disability overhead insurance allows business owners to cover the overhead
expenses of their business while they are unable to work.
• Total permanent disability insurance provides benefits when a person is
permanently disabled and can no longer work in their profession, often taken as
an adjunct to life insurance.
• Workers' compensation insurance replaces all or part of a worker's wages lost and
accompanying medical expenses incurred because of a job-related injury.

[edit] Casualty

Casualty insurance insures against accidents, not necessarily tied to any specific property.

Main article: Casualty insurance

• Crime insurance is a form of casualty insurance that covers the policyholder

against losses arising from the criminal acts of third parties. For example, a
company can obtain crime insurance to cover losses arising from theft or
embezzlement.
• Political risk insurance is a form of casualty insurance that can be taken out by
businesses with operations in countries in which there is a risk that revolution or
other political conditions will result in a loss.

[edit] Life

Main article: Life insurance

Life insurance provides a monetary benefit to a decedent's family or other designated

beneficiary, and may specifically provide for income to an insured person's family,
burial, funeral and other final expenses. Life insurance policies often allow the option of
having the proceeds paid to the beneficiary either in a lump sum cash payment or an
annuity.

Annuities provide a stream of payments and are generally classified as insurance because
they are issued by insurance companies and regulated as insurance and require the same
kinds of actuarial and investment management expertise that life insurance requires.
Annuities and pensions that pay a benefit for life are sometimes regarded as insurance
against the possibility that a retiree will outlive his or her financial resources. In that
sense, they are the complement of life insurance and, from an underwriting perspective,
are the mirror image of life insurance.

Certain life insurance contracts accumulate cash values, which may be taken by the
insured if the policy is surrendered or which may be borrowed against. Some policies,
such as annuities and endowment policies, are financial instruments to accumulate or
liquidate wealth when it is needed.

In many countries, such as the U.S. and the UK, the tax law provides that the interest on
this cash value is not taxable under certain circumstances. This leads to widespread use of
life insurance as a tax-efficient method of saving as well as protection in the event of
early death.

In U.S., the tax on interest income on life insurance policies and annuities is generally
deferred. However, in some cases the benefit derived from tax deferral may be offset by a
low return. This depends upon the insuring company, the type of policy and other
variables (mortality, market return, etc.). Moreover, other income tax saving vehicles
(e.g., IRAs, 401(k) plans, Roth IRAs) may be better alternatives for value accumulation.

[edit] Property

Main article: Property insurance

This tornado damage to an Illinois home would be considered an "Act of God" for
insurance purposes

Property insurance provides protection against risks to property, such as fire, theft or
weather damage. This includes specialized forms of insurance such as fire insurance,
flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler
insurance.

• Automobile insurance, known in the UK as motor insurance, is probably the most

common form of insurance and may cover both legal liability claims against the
driver and loss of or damage to the insured's vehicle itself. Throughout the United
States an auto insurance policy is required to legally operate a motor vehicle on
public roads. In some jurisdictions, bodily injury compensation for automobile
accident victims has been changed to a no-fault system, which reduces or
 eliminates the ability to sue for compensation but provides automatic eligibility
for benefits. Credit card companies insure against damage on rented cars.
o Driving School Insurance provides cover for any authorized driver whilst
undergoing tuition, cover also unlike other motor policies provides cover
for instructor liability where both the pupil and driving instructor are
equally liable in the event of a claim.
• Aviation insurance insures against hull, spares, deductibles, hull wear and liability
risks.
• Boiler insurance (also known as boiler and machinery insurance or equipment
breakdown insurance) insures against accidental physical damage to equipment or
machinery.
• Builder's risk insurance insures against the risk of physical loss or damage to
property during construction. Builder's risk insurance is typically written on an
"all risk" basis covering damage due to any cause (including the negligence of the
insured) not otherwise expressly excluded. Builder's risk insurance is coverage
that protects a person's or organization's insurable interest in materials, fixtures
and/or equipment being used in the construction or renovation of a building or
structure should those items sustain physical loss or damage from a covered
cause.[19]
• Crop insurance "Farmers use crop insurance to reduce or manage various risks
associated with growing crops. Such risks include crop loss or damage caused by
weather, hail, drought, frost damage, insects, or disease, for instance."[20]
• Earthquake insurance is a form of property insurance that pays the policyholder in
the event of an earthquake that causes damage to the property. Most ordinary
homeowners insurance policies do not cover earthquake damage. Most earthquake
insurance policies feature a high deductible. Rates depend on location and the
probability of an earthquake, as well as the construction of the home.
• A fidelity bond is a form of casualty insurance that covers policyholders for losses
that they incur as a result of fraudulent acts by specified individuals. It usually
insures a business for losses caused by the dishonest acts of its employees.
• Flood insurance protects against property loss due to flooding. Many insurers in
the U.S. do not provide flood insurance in some portions of the country. In
response to this, the federal government created the National Flood Insurance
Program which serves as the insurer of last resort.
• Home insurance, also commonly called hazard insurance or homeowners
insurance (often abbreviated in the real estate industry as HOI), is the type of
property insurance that covers private homes.
• Landlord insurance covers residential and commercial properties which are rented
to others. Most homeowner's insurance covers only owner-occupied homes.
• Marine insurance and marine cargo insurance cover the loss or damage of ships at
sea or on inland waterways, and of cargo in transit, regardless of the method of
transit. When the owner of the cargo and the carrier are separate corporations,
marine cargo insurance typically compensates the owner of cargo for losses
sustained from fire, shipwreck, etc., but excludes losses that can be recovered
from the carrier or the carrier's insurance. Many marine insurance underwriters
will include "time element" coverage in such policies, which extends the
 indemnity to cover loss of profit and other business expenses attributable to the
delay caused by a covered loss.
• Surety bond insurance is a three party insurance guaranteeing the performance of
the principal.
• Terrorism insurance provides protection against any loss or damage caused by
terrorist activities.
• Volcano insurance is an insurance that covers volcano damage in Hawaii.
• Windstorm insurance is an insurance covering the damage that can be caused by
hurricanes and tropical cyclones.

[edit] Liability

Main article: Liability insurance

Liability insurance is a very broad superset that covers legal claims against the insured.
Many types of insurance include an aspect of liability coverage. For example, a
homeowner's insurance policy will normally include liability coverage which protects the
insured in the event of a claim brought by someone who slips and falls on the property;
automobile insurance also includes an aspect of liability insurance that indemnifies
against the harm that a crashing car can cause to others' lives, health, or property. The
protection offered by a liability insurance policy is twofold: a legal defense in the event
of a lawsuit commenced against the policyholder and indemnification (payment on behalf
of the insured) with respect to a settlement or court verdict. Liability policies typically
cover only the negligence of the insured, and will not apply to results of wilful or
intentional acts by the insured.

• Public liability insurance covers a business against claims should its operations
injure a member of the public or damage their property in some way.
• Directors and officers liability insurance protects an organization (usually a
corporation) from costs associated with litigation resulting from mistakes made by
directors and officers for which they are liable. In the industry, it is usually called
"D&O" for short.
• Environmental liability insurance protects the insured from bodily injury, property
damage and cleanup costs as a result of the dispersal, release or escape of
pollutants.
• Errors and omissions insurance: See "Professional liability insurance" under
"Liability insurance".
• Prize indemnity insurance protects the insured from giving away a large prize at a
specific event. Examples would include offering prizes to contestants who can
make a half-court shot at a basketball game, or a hole-in-one at a golf tournament.
• Professional liability insurance, also called professional indemnity insurance,
protects insured professionals such as architectural corporation and medical
practice against potential negligence claims made by their patients/clients.
Professional liability insurance may take on different names depending on the
profession. For example, professional liability insurance in reference to the
medical profession may be called malpractice insurance. Notaries public may
 take out errors and omissions insurance (E&O). Other potential E&O
policyholders include, for example, real estate brokers, Insurance agents, home
inspectors, appraisers, and website developers

Advantages of Having Life Insurance

It is a general belief that life insurance is meant only for those with families. It is
true that Life Insurance Policies like whole-life insurance, joint-life-insurance, pension-
life-insurance etc are essential for family's financial security, but they are equally
important for individuals. Term Insurance policies protect your financial resources
against the uncertainties of life so you can protect your family's future.

Some of the life insurance advantages are:

• If an estate owner has not accumulated enough assets for his family,
• Insurance quote helps create an instant estate for the sake of the Family’s
security.
• Life Insurance provides the option to pass equal assets to the children who
are not active in the Family business at the time the family business is passed
on.
• Life Insurance policies can help secure the future of children for
college/educational purposes as the amount of life Insurance Policy increases
on a minor’s or parent’s life.
• The growth of a cash-value policy is tax-deferred - you do not pay taxes on
the cash value accumulation until you withdraw funds from the policy.
• Life Insurance can be useful in paying estate taxes, along with other estate
settlement amounts. Federal Estate Taxes are due nine months after death.

• If there’s a Business Transfer, life insurance can provide ready cash to finance
a transaction between business owners who are ready to buy the deceased
owner’s share from his or her estate after death.
• If there’s a home mortgage, one can pass the family residence to their
spouse/children to free them of any mortgage if one has a Life Insurance
Policy for the same. It is preferred to have a decreasing term policy that
decreases in face amount as the mortgage balance is paid down.
• Life Insurance helps retain your Business from the loss of a key employee.
Untimely death of a key employee can pose severe financial loss to the
business.
• The right insurance proceeds can provide liquidity to pay off personal loans or
business loans.
• Charitable Remainder Trusts provide tax benefits. Life Insurance helps replace
a charitable gift.
• A lot of Insurance products presently provide good returns, which could be a
beneficial way for saving necessary funds for retirement years.
• Benefits are available immediately and may be used to help pay expenses
such as final illness and funeral costs, eliminating the need to sell estate
assets to cover these costs
 ICICI Prudential Life Insurance is one of the largest Insurance networks in the

country, and 2nd Life Insurance Company in India. The ICICI Group has been in existence

since 1955 when ICICI Ltd., was created. ICICI Prudential started in 2002 as subsidiary of

ICICI Ltd., Today ICICI Life Insurance has a customer base of 4 million with total assets

exceeding Rs.1, 00,000 Cr. making it the 2nd largest life insurance company in the country,

next only to LIC.

The Insurance sector, after the opening up, provides greater opportunities. Several

global players have emerged and the market has changed significantly. In the changed

scenario, the expectation is that the low Insurance premium as a percentage of GDP

prevailing in India will improve and will offer better opportunities to the insurance players.

Life Insurance sector is one of the key areas where enormous business potential

exists. In India currently the life insurance premium as a percentage of GDP is 1.3 per cent

against 5.2 per cent in the US, but in the liberalized scenario, the life insurance premiums

were projected to grow at around 18% to 20% from Rs 215 billion in 1998- 99 to Rs 592

billion in 2004-05 and to Rs 1450 billion by 2009-10. Corporate non-life premium was

projected to grow from Rs 84 billion in 1998-99 to Rs 386 billion in 2009- 10 and personal

line non-life from Rs 4 billion to Rs 51 billion.

In the life Insurance segment the Life Insurance Corporation of India (LIC) is the

major player. The LIC has 2050 branches. It is constituted in to seven Zones. Currently there

are 5, 60,000 LIC agents in India. General Insurance is another segment, which has been

growing at a faster pace.1

INTRODUCTION
Life insurance is a form of insurance that pays monetary proceeds upon the death of the

insured covered in the policy. Essentially, a life insurance policy is a contract between the

named insured and the insurance company wherein the insurance company agrees to pay
an agreed upon sum of money to the insured's named beneficiary so long as the insured's

premiums are current.

With a large population and the untapped market area of this population insurance happens

to be a very big opportunity in India. Today it stands as a business growing at the rate of 15-

20% annually. Together with banking services, it adds about 7 percent to the countries GDP.

In spite of all this growth statistics of the penetration of the insurance in the country is very

poor. Nearly 80% of Indian populations are without life insurance cover and the health

insurance. This is an indicator that growth potential for the insurance sector is immense in

India.

It was due to this immense growth that the regulations were introduced in the insurance

sector and in continuation “Malhotra Committee” was constituted by the government in 1993

to examine the various aspects of the industry. The key element of the reform process was

participation of overseas insurance companies with 26% capital. Creating a more competitive

financial system suitable for the requirements of the economy was the main idea behind this

reform.

Since then the insurance industry has gone through many changes. The liberalization of the

industry the insurance industry has never looked back and today stand as one of the most

competitive and exploring industry in India. The entry of the private players and the

increased use of the new distribution are in the limelight today. The use of new distribution

techniques and the IT tools has increased the scope of the industry in the longer run.
Insurance is the business of providing protection against financial aspects of risk,
such as

those to property, life health and legal liability. It is one method of a greater concept known

as risk management –which is the need to mange uncertainty on account of exposure to

loss, injury, disadvantage or destruction.

Insurance is the method of spreading and transfer of risk. The fortunate many who are

exposed to some or similar risk shares loss of the unfortunate. Insurance does not protect

the assets but only compensates the economic or financial loss.

In insurance the insured makes payment called “premiums” to an insurer, and in return is

able to claim a payment from the insurer if the insured suffers a defined type of loss. This

relationship is usually drawn up in a formal legal contract.

Insurance companies also earn investment profits, because they have the use of the

premium money from the time they receive it until the time they need it to pay claims.

This money is called the float. When the investments of float are successful they may

earn large profits, even if the insurance company pays out in claims every penny received

as premiums. In fact, most insurance companies pay out more money than they receive in

premiums. The excess amount that they pay to policyholders is the cost of float. An

insurance company will profit if they invest the money at a greater return than their cost

of float.
An insurance contract or policy will set out in detail the exact circumstances
under which

a benefit payment will be made and the amount of the premiums.

Classification of insurance

The insurance industry in India can broadly classified in two parts. They are.

1) Life insurance.

2) Non-life (general) insurance.

1) Life insurance:
Life insurance can be defined as “life insurance provides a sum of money if the
person
who is insured dies while the policy is in effect”. 3

In 1818 British introduced to India, with the establishment of the oriental life insurance

company in Calcutta. The first Indian owned Life Insurance Company; the Bombay

mutual life assurance society was set up in 1870.the life insurance act, 1912 was the first

statuary measure to regulate the life insurance business in India. In 1983, the earlier

legislation was consolidated and amended by the insurance act, 1938, with
comprehensive provisions for detailed effective control over insurance. The union

government had opened the insurance sector for private participation in 1999, also

allowing the private companies to have foreign equity up to 26%. Following the opening

up of the insurance sector, 12 private sector companies have entered the life insurance

business.
Benefits of life insurance

Life insurance encourages saving and forces thrift.

It is superior to a traditional savings vehicle.

It helps to achieve the purpose of life assured.

It can be enchased and facilitates quick borrowing.

It provides valuable tax relief.

Thus insurance is found to be very useful in the lives of the person both in short term and

long term.

Fundamental principles of life insurance contract;

1) Principle of almost good faith:

“A positive duty to voluntary disclose, accurately and fully, all facts, material to the risk

being proposed whether requested or not”.

2) Principle of insurable interest:

“Relationships with the subject matter (a person) which is recognized in law and gives
legal right to insure that person”.
2) Non-life (general) Insurance:
Triton insurance co. ltd was the first general insurance company to be
established in India 4

in 1850, whose shares were mainly held by the British. The first general insurance

company to be set up by an Indian was Indian mercantile insurance co. Ltd., which was

stabilized in 1907 . there emerged many a player on the Indian scene thereafter.
The general insurance business was nationalized after the promulgation of General

Insurance Corporation (GIC) OF India undertook the post-nationalization general insurance

business.
CONCEPTUAL BACKGROUND
• Satisfaction is defined as . . .
“A person’s feeling of pleasure or disappointment resulting from comparing a
product’s
perceived performance (or outcome) in relation to his or her expectations.”

Customer Satisfaction can be defined as supplying or gratifying all wants or wishes, fulfilling

conditions or desires, or the state of the mind anything that makes a customer feel pleased or

contented.
Consumer Behavior:

Consumer behavior is defined as the behavior that consumers display in searching for,

purchasing, using, evaluating and disposing of products and services that they expect will

satisfy their needs.

The study of the processes involved when individuals or groups select, purchase,
use, or
dispose of products, services ideas, or experiences to satisfy needs and desires
Customer value:The ratio between the customers’s perceived benefits (economic,
functional and psychological) and the resources (momentary, time, effort,
psychological)
used to obtain those benefits.
Customer satisfaction: Customer satisfaction is the individual’s perception of the
performance of the product or service in relation to his or her expectations 5

Motivation: The processes that account for an individual’s intensity, direction, and
persistence of effort toward attaining a goal.
Personality can be described ad the psychological characteristics that both
determine and
reflect how person responds to his or her environment.
Perception is defined as the process by which an individual selects, organizes,
and
interprets stimuli into a meaningful and coherent picture of the world.
Consumer learning is the process by which individuals acquire the purchase and
consumption knowledge and experience they apply to future related behavior.
THE CONSUMER ADOPTION PROCESS

The consumer adoption process is the process by which customers learn about new

products, try them, and adopt or reject them. Today many marketers are targeting heavy

users and early adopters of new products recognizing that specific media can reach both

groups and tend to be opinion leaders. The consumer adoption process is influenced by
many factors beyond the marketer’s control, including consumers and organizations

willingness to try new products, personal influences and the characteristics of the new

products or innovations 6

An innovation refers to any good, service, or idea. That is perceived by someone as new.

The idea may have long history, but it is an innovation to the person who sees it as new.

Innovation takes time to spread through the special system. The consumer adoption

process focuses on the mental process through which an individual passes from first

hearing about an innovation to final adoption. Adopters of new products have moved

through the following five stages.

1. AWARENESS: The consumer becomes aware of the innovation but lacks
information about it.
2. INTEREST: The consumer is stimulated to see the information about the

innovation.

3. EVALUATION: The Consumer considers whether to try the innovation or not.

4. TRIAL: The consumer tries the innovation to improve his estimate of its value.
5. ADOPTION: The consumer decides to make full and regular use of the
innovation. 7

Study of consumer behavior & customer satisfaction towards ICICI Prudential Life
Insurance Products”.
OBJECTIVE OF THE STUDY
For every problem there is a research. As all the researches are based on some
and my study is also based upon some objective and these are as follows.
1. To understand the insurance business and products of ICICI Prudential life

insurance co ltd.

2. To find out the people’s perception about life insurance.

3. To find out whether people were really aware of life insurance.

4. To find out how people think about private life insurance.

5. To find out what respondents expect from life insurance.

6. To understand Consumer buying behavior

7. To come out with conclusion and suggestions based on the analysis and the
Interpretation of data.
SIGNIFICANCE OF THE STUDY

The project is concerned with the “STUDY ON CONSUMER BEHAVIOR AND CUSTOMER

SATISFACTION AT ICICI PRUDENTIAL LIFE INSURANCE. This study is very useful as the

financial market become more sophisticated and complex, investor needs a financial

intermediary who provides the required knowledge and professional expertise on successful

investing and Life insurance is a form of insurance that pays monetary proceeds upon the

death of the insured covered in the policy. Essentially, a life insurance policy is a contract

between the named insured and the insurance company wherein the insurance company

agrees to pay an agreed upon sum of money to the insured's named beneficiary so long as

the insured's premiums are current

Research in common parlance refers to a search for knowledge. One can also

define research as a scientific and systematic search for pertinent information on

a specific topic.
The word research has been derived from French word Researcher means to
search.

FRANCIES RUMMER defined “Research: It is a careful inquiry or examination to discover

new information or relationship and to expand or verify existing knowledge.

Research is the solution of the problem, whether created or already generated. When

research is done, some new out come, so that the problem (created or generated) to be

solved.
RESEARCH DESIGN:

Research Design is the conceptual structure within which research is conducted. It

constitutes the blueprint for collection, measurement and analysis of data. The design used

for carrying out this research isDescri ptive.

DATA TYPE: In this research the type of data collection is
• Primary data
• Secondary data
DATA SOURCE: The sources of collection of secondary data are:
• Questionnaire
• Books • Websites
• Magazine
• Brochure
SAMPLING PLAN:
It is very difficult to collect information from every member of a population .As
time and costs are the major limitation that the researcher faces.

A sample of1 00 was taken the sample size of 100 individuals were selected on the basis of

convenient sampling technique. The individuals were selected in the random manner to form

sample and data were collected from them for the research study.
ANALYSIS AND INTERPRETATION:

Data collection through questionnaire and personnel interview resulted in availability of the

desired information but these were useless until there were analyzed. Various steps required

for this purpose were editing, coding and tabulating. Tabulating refers to bringing together

similar data and compiling them in an accurate and meaningful manner. The data collected

by questionnaire was analyzed, interpreted with the help of table, bar chart and pie chart.
1. INDUSTRY PROFILE
1.1 Insurance in India
The insurance sector in India has come a full circle from being an open competitive market to
nationalization and back to a liberalized market again. Tracing the developments in the
Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two
centuries.

1.2 A Brief history of the Insurance Sector

The business of life insurance in India in its existing form started in India in the
year

1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance in India are;

1912: The Indian Life Assurance

For over 50 years, life insurance in India was defined and driven by only one company- the

Life Insurance Corporation of India (LIC). With the Insurance Regulatory and Development

Authority (IRDA) Bill 1999 paving the way for entry of private companies into both life and

general sectors there was bound to be new-found excitement- and new success stories.

Today, just three years since their entry, their cumulative share has crossed 13% (source:

IRDA), far exceeding expectations. Clearly insurance is on a growth path.

The percentage of premium income to GDP which was just 2.3% in 2000-01 rose
to 3.3%
in 2002-03; and life insurance has emerged as the dominant contributor to this
growth.

The industry presented a huge opportunity. Life insurance penetration, for instance, was at

an abysmal 22% of the insurable population. However, private players have had to rise to

many challenges. They were faced with attitudinal barriers towards the category and the

perception that insurance was only a tax saving tool. Insurance per se had lost it basic

rationale: protection. It wasn’t surprising then that its potential lay frozen and unexploited.

The challenge for private insurance players was to change the established category driver

and get customers to evaluate life insurance as an investment-cum- protection tool

.
PREMIUM UNDERWRITTEN BY LIFE INSURERS
The life insurance industry recorded a premium income of Rs.82854.80 crore during the financial
year 2005-06 as against Rs.66653.75 crore in the previous financial year, recording a growth of
24.31 per cent. The contribution of first year premium, single premium and renewal premium to
the total premium was
Rs.15881.33 crore (19.16 per cent); Rs.10336.30 crore (12.47 per cent); and Rs.56637.16 crore
(68.36 percent), respectively. In the year2000-01, when the industry was opened up to the private
players, the life insurance premium was Rs.34,898.48 crore which constituted of Rs. 6996.95
crore of first year premium, Rs. 25191.07 crore of renewal premium and Rs. 2740.45 crore of
single premium. Post opening up, single premium had declined from Rs.9, 194.07 crore in the
year 2001-02 to Rs.5674.14 crore in 2002-03 with the withdrawal of the guaranteed return
policies. Though it went up marginally in 2003-04 to Rs.5936.50 crore (4.62 per cent growth)
2004-05, however, witnessed a significant shift with the single premium income rising to Rs.
10336.30 crore showing 74.11 per cent growth over 2003-04.
(Rs. lakh)
Insurer
2004-05
2005-06
First year premium including Single premium
LIC*
1734761.74
2065306.36
(6.34)
(19.05)
Private Sector
244070.58
556457.34
(152.74)
(127.99)
Total
1978832.32
2621763.70
(14.68)
(32.49)
Renewal Premium
LIC
4618580.96
5447422.62
(19.47)
(17.95)
Private Sector
67962.05
216293.48
(343.12)
(218.26)
Total
4686543.01
5663716.10
(20.75)
(20.85)
Total Premium
LIC
6353342.70
7512728.98
(15.63)
(18.25)
Private Sector
312032.63
772750.82
(178.83)
(147.65)
Total
6665375.33
8285479.80
(18.91)
(24.31)
1.3 Brief Review of Scenario – Insurance
Insurance in India started without any Regulation in Nineteenth century.
It was story of a typical colonial era. A few British companies dominated
the market mostly in large urban centers.12

1.3 Brief Review of Scenario – Insurance

Insurance in India started without any Regulation in Nineteenth century.
It was story of a typical colonial era. A few British companies dominated
Insurance was nationalized mainly on 3 counts First, Indian lives were not insured. Second,
even if they were insured, they were treated as substandard lives and extra premium was
charged. Third, there were gross irregularities in the functioning of Life insurance was
nationalized in the year 1956, and then general insurance was nationalized in the year 1972.
In 1999, the private insurance companies were allowed back again into insurance sector with
maximum cap of 26 percent foreign holding.
♦ 1818 The British introduce to India, with the establishment of the Oriental
Life
Insurance company in Calcutta.
♦ 1850 Non life insurance debuts, with Triton Insurance Company.

♦ 1870 Bombay Mutual life Assurance Society is the first Indian-owned life

insurer

♦ 1907 Indian mercantile Insurance is the first Indian non-life insurer.

♦ 1912 The Indian life assurance companies’ act enacted to regulate the life
insurance business.
♦ 1938 The insurance act, which forms the basis for most current insurance
laws,
replaces earlier act.
♦ 1956 Life insurance nationalized, government takes over 245 Indian and
foreign
insurers and provident societies. 13

♦ 2001 ICICI Prudential Life Insurance came into the market to sell a policy.
♦ 2002 Banks were allowed to sell insurance plans, as TPAs enter the scene,
insurers start settling non-life claims in the cashless mode.

1.4 The Insurance Regulatory and Development Authority

(IRDA):

Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in

Parliament in December 1999. The IRDA since its incorporation as a statutory body in April

2000 has fastidiously stuck to its schedule of framing regulations and registering the private

sector insurance companies.

The other decisions taken simultaneously to provide the supporting systems to the insurance

sector and in particular the life insurance companies were the launch of the IRDA’s online

service for issue and renewal of licenses to agents.

The approval of institutions for imparting training to agents has also ensured that the

insurance companies would have a trained workforce of insurance agents in place to sell

their products, which are expected to be introduced by early next year.

Since being set up as an independent statutory body the IRDA has put in a framework of

globally compatible regulations. In the private sector 12 life insurance and 6 general

insurance companies have been registered.

With the demographic changes and changing life styles, the demand for insurance cover has

also evolved taking into consideration the needs of prospective policyholder for packaged

products. There have been innovations in the types of products developed by the insurers,

which are relevant to the people of different age groups, and suit their requirements. Continued

innovations in product development has resulted in a wide range of flexible products to meet

the requirements for cover at different stages of life -today avariety of products are available

ranging from traditional to Unit linked providing protection towards child, endowment, capital

guarantee, pension and group solutions. A number of new products have been introduced in

the life segment with guaranteed additions, which were subsequently withdrawn/toned down;

single premium mode has been popularized; unit linked products; and add-on/riders including

accidental death; dismemberment, critical illness, fixed term assurance risk cover, group

hospital and surgical treatment, hospital cash benefits, etc. Comprehensive packaged products

have been popularized with features of endowment, money back, whole life, single premium,

regular premium, rebate in premium for higher sum assured, premium mode rebate, etc.,

together with riders to the base products

1.5 Historical Perspective

⇒ Prior to 1956-242 companies operating
⇒ 1956
-Nationalization- LIC monopoly player -Government control
⇒ 2001
-Opened up sector
1.6 Contribution to Indian Economy

 Life Insurance is the only sector which garners long term savings.

 Spread of financial services in rural areas and amongst socially less

privileged.

 Long term funds for infrastructure.

 Strong positive correlation between development of capital markets and

insurance/pension structure.
 Employment generation.
1.7 Insurance Industry prior to de-regulation
Prior to deregulation in 2000, market was a public monopoly.
 Public Monopoly
- 2000 Offices
- Over 800,000 agents

 Distribution through tied agents only

 Sales approach primarily on a tax savings platform

 Traditional style product offering : Endowment and money back plans

 Inadequate and inflexible products

 Pensions: Small part of product offer

 Limited focus on customer needs

1.8 Improving Service Standards
⇐ Pre Deregulation – Limited Distribution 16

2. COMPANY PROFILE
ICICI Prudential Life Insurance Company Limited (‘the Company’) a
joint venture
between ICICI Bank Limited and Prudential plc of UK was incorporated
on July
20, 2000 as a company under the Companies Act, 1956 (‘the Act’). The
Company
is licensed by the Insurance Regulatory and Development Authority
(‘IRDA’) for
carrying life insurance business in India17

ICICI Prudential Life Insurance Company is a joint venture

between ICICI Bank, a
premier financial powerhouse and prudential plc, a leading international financial services

group headquartered in the United Kingdom (UK). The company brings together the local

market expertise and financial strength of ICICI Bank and Prudential’s International life

insurance experience. The company was granted a certificate of Registration by the IRDA on

November 24, 2000 and eighteen days later, issued its first policy on December 12. ICICI

Prudential was amongst the first private sector insurance companies to begin operations in

December 2000 after receiving approval from Insurance Regulatory Development Authority

(IRDA).

From its early days, ICICI Prudential seemed to have the wherewithal for a large-scale

business. By March 31, 2002, a little over a year since its launch, the company had issued

100,000 policies translating into premium income of approximately Rs. 1,200 million on a

sum assured of over Rs.23 billion. When the company began its operations, the need was to

build a brand that was relatable to, symbolized trust and was easily recognized and

understood. It launched a corporate campaign ICICI Prudential also made using the theme

of ‘Sindoor’ to epitomize protection, trust, togetherness and all that is Indian; endearing itself

to the masses. The success of the campaign, ‘the calling card of the company’ saw the

brand awareness scores almost at par with its 40 year old competitor. The theme of

protection was also extended to subsequent product and category specific campaigns –from

child plans to retirement solutions –which highlight how the company will be with its

customers at every step of life.

From day one, the company has unflinchingly focused on being mass-market player,

developing products, creating a distribution network and deploying resources that would

further its goal. Apart from ramping up thoroughly training its advisors, the company has

twelve ‘Bancasurance’ partners –the largest in the country. It swiftly revised and added to its

initial range of products, pioneering market-linked products and pension plans, to offer

customers the most flexible life insurance policies in the country. In February 2004, ICICI

Prudential increased its capital base by Rs. 500 million, its ninth capital hike, bringing the

total paid –up equity capital to Rs. 6,750 million. With the authorized capital of the company

standing at Rs. 12 billion, ICICI Prudential continues to have the highest capital base
amongst all life insurers in the country. The challenge ICICI Prudential now faces is to retain

its top-notch position and continue to deliver the finest life insurance and pension solutions to

its ever-growing customer base.

ICICI Prudential’s equity base stands at Rs. 1185 crore with ICICI Bank and Prudential plc

holding 74% and 26% stake respectively. For the year ended March 31, 2006, the company

garnered Rs.2, 412 crore of weighted new business premium and wrote 837,963 policies.

The sum assured in force stands at Rs.45, 888 crore. The company has a network of over

72,000 advisors; as well as 9 bancasurance partners and over 200 corporate agent and

broker tie-ups.

ICICI Prudential is also the only private life insurer in India to receive a National Insurer

Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA rating is the highest credit

rating, and is a clear assurance of ICICI Prudential’s ability to meet its obligations to

customers at the time of maturity or claims.

For the past five years, ICICI Prudential has retained its position as the No.1 private insurer

in the country, with a wide range of flexible products that meet the needs of the Indian

customer at every step in life.

Beginning operations in December 2000, ICICI Prudential’s success has been meteoric,

becoming the number one private life insurer within months of launch. Today, it has one of

the largest distribution networks amongst private life insurers in India, with branches in 54

cities. The total number of policies issued stands at more than 780,000 with a total sum

assured in excess of Rs.160 billion.

ICICI Prudential closed the financial year ended march 31, 2004 with a total received

premium income of Rs. 9.9 billion; up 135% last years total premium income of Rs.4.20

billion. New business premium income shows a 106% growth at Rs. 7.5 billion, driven mainly

by the company’s range of unique unit-linked policies and pension plans. The company’s

retail market share amongst private companies stood at 36%, making it clear 19

leader in the segment. To add to its achievements, in the year 2003/04 it was adjudged Most

Trusted Private Life Insurer (Economic Times ‘Most Trusted Brand Survey’ by AC Nielsen

ORG-MARG). It was also conferred the ‘Outlook Money-Best Life Insurer’ award for the
second year running. The company is also proud to have won Silver at EFFIES 2003 for its

‘Retire from work, not life’ campaign. Notably, ICICI Prudential was also short-listed to the

final round for its ‘Sindoor campaign in EFFIES 2002.

ICICI Prudential’s success is rooted in its philosophy to always offer the customer a choice.

This has been the driving force behind its multi-channel distribution strategy, which includes

advisors, banks, direct marketing and corporate agents. In fact, ICICI Prudential was the first

life insurer to invest in multiple channels and offer the customer choice and access; thus

reducing dependency on any one channel, great strides in the retirement solutions and

pensions market.

The Company’s penetration of the retirement market was driven by the focused approach

towards creating awareness through sustained campaign; ‘Retire from work, not life’. Within

six months, the campaign rewarded ICICI Prudential with an increased share of 23% of the

total pensions market and 78% amongst private players. ICICI Prudential has one of the

largest distribution networks amongst private life insurers in India, having commenced

operations in 132 cities and towns in India, stretching from Bhuj in the west to Guwahati in

the east, and Jammu in the north to Trivandrum in the south.

The company has 9 bank partnerships for distribution, having agreements with ICICI Bank,

Bank of India, Federal Bank, South Indian Bank, Lord Krishna Bank, and some co-operative

banks, as well as over 200 corporate agents and brokers, it has also tied up with NGOs,

MFIs and corporates for the distribution of rural policies.

ICICI Prudential has recruited and trained more than 72,000 insurance advisors to interface

with and advise customers. Further, it leverages its state-of-the-art IT infrastructure to

provide superior quality of service to customers. 20

About the Promoters

ICICI Bank (NYSE:IBN) is India’s second largest bank with an asset base of

Rs.2513.89 billion as on March 31, 2006. ICICI Bank provides a broad spectrum of financial

services to individuals and companies. This includes mortgages, car and personal loans,

credit and debit cards, corporate and agricultural finance. The Bank services a growing a

customer base of more than 17 million customers through a multi channel access network
which includes over 620 branches and extension counters, 2200 ATMs, call centers and

internet banking (www.icicibank.com)

PRUDENTIAL plc, Established in London in 1848, through its business in the UK
and

Europe, the US and Asia, provides retail financial services products and services to more

than 16 million customers, policy holder and unit holders world wide. As of December 31,

2005, the company had over US$ 400 billion in funds under management. Prudential has

brought to market an integrated range of financial services products that now includes life

assurance, pensions, mutual funds, banking, investment management and general

insurance. In Asia, Prudential is the leading European life insurance company with a vast

network of 23 life and mutual fund operations in twelve countries –China, Hong Kong, India,

Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and

Vietnam.
Achievements

Beginning operations in December 2000, ICICI Prudential’s success has been meteoric,

becoming the number one private life insurer within months of launch. Today, it has one of

the largest distribution networks amongst private life insurers in India, with branches in 54

cities. The total number of policies issued stands at more than 780,000 with a total sum

assured in excess of Rs.160 billion.

ICICI Prudential closed the financial year ended march 31, 2004 with a total
received
premium income of Rs. 9.9 billion; up 135% last years total premium income of
Rs.4.20

billion. New business premium income shows a 106% growth at Rs. 7.5 billion, driven mainly

by the company’s range of unique unit-linked policies and pension plans. The company’s

retail market share amongst private companies stood at 36%, making it clear leader in the

segment. To add to its achievements, in the year 2003/04 it was adjudged Most Trusted

Private Life Insurer (Economic Times ‘Most Trusted Brand Survey’ by ACNeilsen ORG-
MARG). It was also conferred the ‘Outlook Money-Best Life Insurer’ award for the second

year running. The company is also proud to have won Silver at EFFIES 2003 for its ‘Retire

from work, not life’ campaign. Notably, ICICI Prudential was also short-listed to the final

round for its ‘Sindoor campaign in EFFIES 2002.

In Keeping with its belief that a happy customer is the best endorsement, ICICI Prudential

has embraced the ‘SIX SIGMA’ approach to quality, an exercise that begins and ends with

the customer from capturing his voice to measuring and responding to his experiences. This

initiative is currently helping the company improve processes, turnaround times and

customer satisfaction levels. Another Novel introduction is the ICICI Prudential Lifestyle

Rewards Club, India’s first rewards programme for Life Advisors; it allows ICICI Prudential

Advisors to redeem points for items ranging from kitchenware to gold, white goods, and even

international holidays.
Promotion

ICICI Prudential is a case study in how advertising and marketing can play a vital role in re-

shaping an industry. It has demonstrated how an industry where the customer was nothing

more than a policy number has changed to one where ‘customer preference’ rules the roost.

Brand-building in a complex category like life insurance is an uphill and multi-faceted task. At

the time of launching operations, the communications task was to build credibility, so as to

give the customer the confidence that it was ‘a company that could be trusted to invest funds

with’. The aim was to encourage people to view insurance not as a compulsory tax saving

instrument, but as a means to lead a worry-free, secure life and in the process, create the

differentiator for brand ICICI Prudential22

The brand proposition for all the campaigns was reflected in the line: ‘Suraksha: Zindagi ke

har kadam par’. The campaign featured a significant competitive advantage, the sound

financial backing and credentials of ICICI Prudential, and showcased products from different

segments. The advertising idea was encapsulated in the symbol of protection – the ‘Sindoor’.
This campaign contributed extensively to raising brand awareness and creating a distinctive

identity for the company.

The Company recently tied up with the Forbes Six Sigma rated Dabbawalla organization in

Mumbai for a direct marketing exercise. In a Unique effort to create awareness about a tax

saving product, the company attached a creative of a bitten apple to Mumbai’s ubiquitous

lunchboxes. It worked wonderfully with Mumbai’s office-goers and one that translated into

substantial business for the company.

Brand Values

Market Research reveals that the values people associate with ICICI Prudential are, indeed,

those that the company hopes to project: lifelong protection and value for money. The core

value is protecting your loved ones, throughout life’s ups and downs. It is a powerful

proposition; one, which ICICI Prudential, is taking into the market place.
DISTRIBUTION SYSTEM
Tied Agency

Tied Agency is the largest distribution channel of ICICI Prudential, comprising a large advisor

force that targets various customer segments. The strength of tied agency lies in an

aggressive strategy of expanding and procuring quality business. With focus on sales &

people development, tied agency has emerged as a robust, predictable and sustainable

business model.
Bancassurance and Alliances23

ICICI Prudential was a pioneer in offering life insurance solutions through banks
and

alliances. Within a short span of two years, and with nearly a large number of partners,

B & A has emerged as a vital component of the company’s sales and distribution strategy,

contributing to approximately one third of company’s total business.

The business philosophy at B&A is to leverage distribution synergies with our partners
and add value to its customers as well as the partners. Flexibility, adaptation and
experimenting with new ideas are the hallmarks of this channel.
CUSTOMER SERVICE AND OPERATIONS

The Operations department oils the work processes between the customer and the company

to ensure consistent and quality service to the customer. To streamline the operations, the
Operations department interfaces between the clients and the agents, the branches and the

underwriters, and manages work processes.

The Vision at Customer Service is to deliver ‘World Class Service’ at every opportunity. Units

such as the 9 to 9 contact centre, Outbound Call Centre, Customer Care and Query

Resolution Unit are all committed to providing effective solutions to over lakhs of customers

across the country.

Information Technology

The Information Technology function at ICICI Prudential is committed to enable business

through the use of technology. It is segmented into 4 groups to enable highest levels of

delivery to the customers: Life Asia Solutions Group that provides flexibility in designing 24

better product offerings to end-users, the Solutions Group- Web that provides real-time

information to customers and is responsible for customer relationship management, IT

Architecture & Corporate Solutions Group is in charge of developing and maintaining a

blueprint for the IT architecture for the enterprise as a whole. This team works as an in house

R&D Solution Group, exploring new technological initiatives and also caters to information

needs of corporate functions in the organization. IT Infrastructure group is responsible for

providing hardware, software, network services to the whole organization. This group runs

the 'Digital Nervous System' of the Enterprise at the highest levels of efficiency and provide

robust, scalable and highly available platform for deployment of business application.
Marketing

The Marketing function at ICICI Pru covers an array of activities - brand and media

management, channel support, direct marketing and corporate communications. The Brand

and Communications team is in charge of advertising, consumer research, media planning &

buying and Public Relations; that helps develop and nurture ICICI Prudential's corporate

identity while effectively communicating its varied product offerings to the customer. Channel

marketing provides support to the sales force by streamlining the design and development of

collaterals and sales tools across distribution channels. The Direct marketing team was set

up to generate high quality leads for profitable business. The team achieves this through
target database acquisition and communicating customized product information through e-

mailers, telemarketing and innovative direct mailers.

Finance
Finance function in ICICI Prudential is committed to create an infrastructure that
is
aligned to shareholder expectations. Finance basically comprises of four
functions25

Corporate Planning and MIS provide feedback on business strategies. This includes driving

the budgeting process, providing strategic inputs for decision-making and management

reporting and analysis. The Accounts function includes preparation and maintenance of

financial records, funds management, and expense processing and treasury operations.

Compliance ensures that every action is within the regulatory framework. This includes

reviewing compliance requirements and supporting the ethical framework of ICICI Pru life.

Internal audit provides assurance to the management over the organizations' control

framework and includes process risk management, information security assessment and

business continuity assessment.

Human Resource

The people strategy of ICICI Prudential is “To build a committed team with a culture of

innovation, learning and growth. The Human Resource Function at ICICI Prudential drives

the people strategy of the business. With its initial focus on operational excellence to deliver

benefits and services to staff members, HR is now committed to building capability through

state of the art processes. A robust performance management system, compensation

system and a segmented training architecture enable it to deliver value to the organization.
Business Excellence

The Business Excellence function is committed to building a quality mindset across the

organization. ICICI Prudential is the first organization in the Insurance Industry that has

adopted the Six Sigma Methodology for process efficiency and measurement. The team is

also driving the Malcolm Baldrige framework across the organization, an intervention that

examines management of key inputs for Business Excellence.

Bancassurance
One of the most significant advances in the financial services sector over the
past
couple of years has been the growth of Bancassurance – which, in simplest terms
26

means the distribution of insurance products through a bank’s distribution channels. In other

words, Bancassurance is a service which can fulfill both banking and insurance needs at the

same time.

Bancassurance as a concept first began in India with the opening up of the insurance

industry to private sector participation in December 1999 which saw the entry of 20 new

players - with 12 in the life insurance sector and 8 in the non-life sector. Bancassurance has

also seen significant rise in other Asian markets. For example, Bancassurance accounted for

24% of new life insurance sales by ‘weighted’ premium income in Singapore in 2002. This is

a significant increase on the equivalent 2001 statistic of 15% and is as a result of growth in

significant bank-centric Bancassurance operations.

Although the concept of Bancassurance looks simple enough, it is far from that in real life

practice. Legislative differences, consumer behavior, impact of history and culture, product

complexity, employee work culture and many such other factors have contributed to

significant differences in results across countries. For example, in France and Spain 60% to

80% of life insurance products are sold through bank branches compared to 10% in UK and

USA.
Bancassurance Models
Globally we have 4 kinds of Bancassurance business models:
•

Distribution alliance between the insurance company and the bank

•

JV between the two

•

Merger between bank and insurer

•

Bank builds or buys own insurance products

Most of the Bancassurance operations in India fall into the first model, which in a way is quite

a prudent decision. The Indian Bancassurance scene as of now looks as promising as

perilous, being a vast, unexplored and uncharted expanse. As banks are quite risk 27
averse, it is but natural for them to withhold from making any long term commitment, which

would be quite costly if the Bancassurance business runs into trouble. In terms of the

present regulatory framework, one bank can tie-up with only one life and one non-life insurer,

while insurers have the choice to tie-up with any number of banks. We also have examples

of joint ventures between the bank and insurer such as SBI Life and ICICI Prudential.
Stages in Policy Issuance
1) Proposal

A Proposal Stage is the First stage before the policy is issued at COPS. At this stage, the

application form is received by COPS, but it is pending for issuance due to further

clarifications required from the customer.

2) Login
A proposal which is complete i.e., duly filled with all necessary documents
attached to it
& accepted by the Branch ops, is called a Login
3) Reject

An Application gets rejected at the Branch Ops level due to necessary details not filled in

the form or necessary documents not submitted is a Reject. It is then sent back to the

Advisor for completion.

4) Issuance
Issuance means a policy that is issued to the Customer by Central Ops.
5) Decline Status
When a customer refuses to take a policy post login but before Issuance is called
a
Decline
6) Cancellation 28

When the cheque given by the customer bounces, it amounts to cancellation of

the policy.
7) Lapse
A policy for which the Customer fails to pay subsequent premiums is a Lapsed
Policy.
8) Freelook
Post issuance of the policy, the policyholder has the option to turn down the
policy within
15 days from the date of issuance. This period of 15 days is called Freelook
Period.
9) Surrender: When a customer wants to discontinue with the policy.
2.4 PRODUCT/SERVICES PROFILE
ICICI Prudential’s ultimate promise is financial security. A strong brand certainly boosts sale,

but without customer-friendly, innovative products, even the best brand would not last long.

ICICI Prudential’s product range has been developed on the understanding that different

people have their own sets of needs at various stages of their lives. It has thus built a flexible

portfolio of products that can be customized to cater to varying needs of people at each

stage, and thus ensure protection in every step of life. The company’s philosophy has been

to help customers understand their financial needs and work closely with them to customize

a product that would meet. Advisors can offer a complete range of products –Savings plans,

Child plans, Market-linked plans, Protection plans, and Retirement plans – and tailor a

flexible solution to meet customers’ changing needs at every stage of life. In fact, ICICI

Prudential was the first to un-bundle product benefits, pioneering the concept of ‘riders’ and

soon after introduce comprehensive market-linked and retirement plans.

ICICI Prudential has launched a handful of products that are analyzed below:

ICICI Prudential's life insurance products may be loosely categorized under three forms:

pure life insurance products without an investment angle to them; a product that is a mix of a

cumulative investment scheme and an insurance product; and, finally, standard products

such as money-back and endowment policies 30

Single Premium Bond: The Single Premium Bond is the name of a policy
that combines
the features of an investment in a cumulative deposit scheme with that of an
insurance
product.

Policy-holders are required to pay a one-time premium based on a target sum assured. At

maturity, the policy-holder gets the sum assured and guaranteed additions that work out to a

compound return of 4.5 per cent the sum assured.

The insurance part of the package comes in the form of death benefits that are paid in the

case of the demise of the policy-holder. The size of the death benefit is linked to the number
of years left for the policy to expire. On maturity date, the maturity value is also paid in

addition to the death benefits that would have been paid earlier.
Life Guard policies: The company offers two pure life insurance products that have
an

umbrella name, Life Guard. One of them involves a one-time premium for which there are no

maturity benefits. The other requires regular premium payments that are returned at the end

of the policy. Life Guard offers absolutely no investment-related return and is suitable for

individuals looking for an unadulterated insurance package.

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that

meet the needs of customers at every life stage. Its products can be enhanced with up to 5

riders, to create a customized solution for each policyholder.

Savings Solutions
• Secure Plus is a transparent and feature-packed savings plan that offers 3
levels
of protection.
• Cash Plus is a transparent, feature-packed savings plan that offers 3 levels of
protection as well as liquidity options.
• Save ‘n’ Protect is a traditional endowment savings plan that offers life
protection
along with adequate returns 31

• CashBak is an anticipated endowment policy ideal for meeting milestone

expenses like a child’s marriage, expenses for a child’s higher education or
purchase of an asset.
• LifeTime and LifeTime II offer customers the flexibility and control to
customize
the policy to meet the changing needs at different life stages. Each offer 4 fund
options –Preserver, Protector, Balancer and Maximiser.
• LifeLink Super is a single premium Unit Linked Insurance Plan which
combines
life insurance cover with the opportunity to stay invested in the stock market.
• Premier Life is a limited premium paying plan that offers customers life
insurance cover till age of 75.
• InvestShield Life is a Unit Linked plan that provides capital guarantee on the
invested premiums and declared bonus interest.
• InvestShield Cash is a Unit Linked plan that provides capital guarantee on the
invested premiums and declares bonus interest along with flexible liquidity
options.
• InvestShield Gold is a Unit Linked plan that provides capital guarantee on the
invested premiums and declares bonus interest along with limited premium
payment terms.
Protection Solutions
• LifeGuard is a protection plan, which offers life cover at very low cost. It is
available in 3 options –level term assurance with return of premium and single
premium. 32

• HomeAssure is a mortgage reducing term assurance plan designed

specifically to
help customers cover their home loans in a simple and cost-effective manner.
Child Plans
• SmartKid education plans provide guaranteed educational benefits to a child

along with life insurance cover for the parent who purchases the policy. The policy is

designed to provide money at important milestones in the child’s life. SmartKid plans are also

available in unit-linked form – both single premium and regular premium.

Retirement Solutions
• ForeverLife is a retirement product targeted at individuals in their thirties.
• SecurePlus Pension is a flexible pension plan that allows one to select
between 3
levels of cover.

• Market-linked retirement products

• LifeTime Pension II is a regular premium market-linked pension plan.

• LifeLink Pension II is single premium market linked pension plan.

• InvestShield Pension is a regular premium pension plan with a capital

guarantee
on the investible premium and declared bonuses
• Golden Years: is a limited premium paying retirement solution that offers tax
benefits up to Rs 100,000 u/s 80C, with flexibility in both the accumulation and
payout stages.
Health Solutions
• Health Assure and Health Assure Plus: Health Assure is a regular premium
plan which provides long term cover against 6 critical illnesses by providing
policy holder with financial assistance, irrespective of the actual medical

expenses. Health Assure Plus offers the added advantage of an equivalent life
insurance cover
• Cancer Care: is a regular premium plan that pays cash benefit on the
diagnosis as well as at different stages in the treatment of various cancer
conditions.
Group Insurance Solutions
ICICI Prudential also offers Group Insurance Solutions for companies seeking to
enhance benefits to their employees.
 ICICI Pru Group Gratuity Plan: ICICI Pru’s group gratuity plan helps employers

fund their statutory gratuity obligation in a scientific manner. The plan can also be

customized to structure schemes that can provide benefits beyond the statutory obligations.
ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined

contribution superannuation scheme to provide a retirement kitty for each member of the

group. Employees have the option of choosing from various annuity options or opting for a

partial commutation of the annuity at the time of retirement.

ICICI Pru Group Term Plan: ICICI Pru’s flexible group term solution helps

provide affordable cover to members of a group. The cover could be uniform or based on

designation/rank or a multiple of salary. The benefit under the policy is paid to the beneficiary

nominated by the member on his/her death.

Flexible Rider Options
ICICI Pru Life offers flexible riders, which can be added to the basic policy at a
marginal cost, depending on the specific needs of the customer.

1.Accident and disability benefit: If death occurs as the result of an accident during the term of

the policy, the beneficiary receives an additional amount equal to the rider sum assured

under the policy. If the death occurs while traveling in an authorized mass transport vehicle,

the beneficiary will be entitled to twice the sum assured as additional benefit. 33

2.Accident Benefit: This rider option pays the sum assured under the rider on
death due to accident.

3.Critical Illness Benefit: Protects the insured against financial loss in the event of 9 specified

critical illnesses. Benefits are payable to the insured for medical expenses prior to death

4.Income Benefit: This rider pays the 10% of the sum assured to the nominee every year, till

maturity, in the event of the death of the life assured. It is available in SmartKid, SecurePlus,

and CashPlus.

5.Waiver of Premium: In case of total and permanent disability due to an accident, the

premiums are waived till maturity. This rider is available with SecurePlus and CashPlus. 35
• Above 20% of respondents are shown interest for investment and financial

plan

• About 33.33% of respondents are not interest to give their personal records.

• About 12.67% of respondents have already been covered by other insurance

companies.

• About 10% of respondents have given invalid records.

• About 10% of respondents are newly employed or trainees.

• About 10% of respondents interested for investment plan after knowing ICICI
PRUDENTIAL LIFE INSURANCE products.
RECOMMENDATIONS TO COMPANY:

Since ICICI Prudential Life Insurance co. ltd is the largest in terms of FDI invested, in

terms of work force, in terms of market share, in terms of no. of customers. All these

positive stands of the company place at the number one position. On second aspect

whatever amount of money ICICI Prudential save, can be used to increase the no. of

policies, which will helpful to increase the market share of the company. Since the

customers think about the companies in the industry, when they invest money in the life

insurance industry. So it’s necessary to increase the market share of the company. There

are some recommendations.

• Open some more branches in semi urban and rural area.

ICICI Prudential has almost its branches in urban area or metros. So in order to

increase the no. of customer, ICICI Prudential should increase the approach

towards potential customers. For that it has to increase the branches in the semi

urban cities like C, D grade cities. And the rural marketing is the best option for

ICICI Prudential to increase its base in the market 48

• Improve customer services.

In order to take the advantage of being industry leader in private sector, ICICI

Prudential has to improve its customer services. According to my experience in

the company, a good number of customers forget to pay their premium at time so

it causes a big loss to the company. ICICI Prudential has already collaborated with

the ICICI bank for its Bancassurance facility and then can include another feature

in it. ICICI bank can offer a bank account with the life insurance policy in which

an ATM card will be provided. This card will have all the information regarding

the policy as like future premium payment dates, payment made, money value of

the policy at that date, value of the unit linked plan and all other information what

the customer want. This will help the customer to pay premium on time and save

their losses. This will be mutually helpful for both sister companies, ICICI bank

will get new account and ICICI prudential will be able to more efficient services

to their customers.
• Bring some unit linked life insurance plans in the market.

Being a market leader doesn’t ensure the leadership in the future. Since after

increment in FDI from 26% to 49% all player will have the opportunity to capture

the market share. So in order to maintain its position ICICI Prudential should
-Introduce some new market linked insurance plan, which will give a competitive
advantage to the ICICI Prudential against its competitors.
• Trained the financial advisors more efficiently.

In the changed scenario, more efficient training will be needed, so ICICI

Prudential should provide good and efficient training to their financial advisors.

Because they are the one who interact directly with the customers. So good

training will give them the right way to deal with the potential customers. 49