PROJECT ON

“EVOLUTION OF INSURANCE INDUSTRY IN INDIA”

K. M. AGRAWAL COLLEGE OF ARTS COMMERCE AND SCIENCE

GANDHARI, KALYAN (W)

(COURSE NAME)

SEMESTER

(ACADAMIC YEAR)

IN PARTIAL FULLFILLMENT OF REQUIREMENT FOR THE AWARD OF

DEGREE OF BACHELOR OF MANAGEMENT STUDIES

SUBMITTED BY:

(STUDENT NAME)

ROLL NO.

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K. M. AGRAWAL COLLEGE OF ARTS, COMMERCE AND SCIENCE

GANDHARI, KALYAN (W)

CERTIFICATE

I Prof. ________________, officially state that Mr/Mrs. ______________________ studying

in K. M. AGRAWAL COLLEGE OF ARTS, COMMERCE AND SCIENCE, GANDHARI, KALYAN (W)
student of Bachelor of _________________, has duly completed her project on “Evolution
of Insurance Industry in India” in the academic year ___________ under my guidance.

The information submitted by me is true and original to the best of my knowledge

PLACE: KALYAN

DATE:

PROF. (_______________)

(Project Guide)

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 K .M.AGRAWAL COLLEGE OF ARTS, SCIENCE AND
COMMERCE,GANDHARI, KALYAN (W)

(AFFILIATED BY UNIVERSITY OF MUMBAI)

BACHELOR OF MANAGEMENT STUDIES

CERTIFICATE
THIS IS TO CERTIFY THAT MRS. _________________________________ STUDENT OF
___________________________. SEMESTER __ FOR THE ACADEMIC YEAR _________ HAS
DULY COMPLETED THE PROJECT ON “EVOLUTION OF INSURANCE INDUSTRY IN INDIA”.

THE PROJECT HAS BEEN COMPLETED UNDER THE GUIDANCE OF PROF. ________________

____________________ ___________________

{PROF. ____________ } {DR. MISS ANITA MANNA}

{PROJECT GUIDE} {PRINCIPLE}

____________________ _____________

{COURSE CO-ORDINATOR} {EXTERNAL EXAMMINER}

{_______________}

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 DECLARATION

I, _______________________ STUDYING IN K. M. AGRAWAL COLLEGE OF

ARTS, COMMERCE AND SCIENCE GANDHARI, STUDENT OF TY.______

{BACHELOR OF _________________________SEM-__} HEREBY DECLARE THAT

I HAVE DULY COMPLETED MY PROJECT ON “EVOLUTION OF INSURANCE

INDUSTRY IN INDIA” IN THE ACADEMIC YEAR ___________.

THE INFORMATION SUBMITTED BY ME IS TRUE AND ORIGINAL TO THE

BEST OF MY KNOWLEDGE.

-(STUDENT NAME)

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 ACKNOWLEDGEMENT

This project is part of my curriculum, I am really thankful to my Prof. _________

_______ Sir/Ma’am for providing full co-operation and support by encouraging me in all
possible way and guiding me to do this project. I am grateful to my parents and friends
without their help and support I would not have been able to complete my project.

I express my hearty thanks to all the teaching and non-teaching members of my

college, for valuable guidance and help rendered to me in preparing this project.

I thank all my colleagues who were always besides me and all other who helped
me in this project. Finally, all the mistakes and ignorance are responsibility of undersigned.

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 CHAPTER 1

INTRODUCTOIN

1.1 INTRODUCTION TO THE STUDY

Everyone is exposed to various risks. Future is very uncertain, but there is way
to protect one’s family and make one’s children’s future safe. Life Insurance
companies help us to ensure that our family’s future is not just secure but also
prosperous.

Life Insurance is particularly important if you are the sole breadwinner for your
family. The loss of you and your income could devastate your family. Life
insurance will ensure that if anything happens to you, your loved ones will be
able to manage financially.

Insurance is a tool by which fatalities of a small number are compensated out

of funds (premium payment) collected from plenteous. Insurance companies
pay back for financial losses arising out of occurrence of insured events e.g. in
personal accident policy death due to accident, in fire policy the insured events
are fire and other allied perils like riot and strike, explosion etc. hence insurance
safeguard against uncertainties. It provides financial recompense for losses
suffered due to incident of unanticipated events, insured with in policy of
insurance. Moreover, through a number of acts of parliament, specific types of
insurance are legally enforced in our country e.g. third party insurance under
motor vehicles Act, public liability insurance for handlers of hazardous
substances under environment protection Act. Etc.

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WHAT IS INSURANCE

It is a commonly acknowledged phenomenon that there are countless risks in

every sphere of life. For property, there are fire risk; for shipment of goods,
there are perils of sea; for human life there are risk of death or disability; and so
on. The chances of occurrences of the events causing losses are quite uncertain
because these may or may not take place. Therefore, with this view in mind,
people facing common risks come together and make their small contribution to
the common fund. While it may not be possible to tell in advance, which person
will suffer the losses, it is possible to work out how many persons on an average
out of the group, may suffer losses. When risk occurs, the loss is made good out
of the common fund .in this way each and every one shares the risk .in fact they
share the loss by payment of premium, which is calculated on the likelihood of
loss. In olden time, the contribution makes the above-stated notion of insurance.

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DEFINITION OF INSURANCE

Insurance has been defined to be that in, which a sum of money as a premium is
paid by the insured in consideration of the insurer’s bearings the risk of paying a
large sum upon a given contingency. The insurance thus is a contract whereby:

1. Certain sum, termed as premium, is charged in consideration,

2. Against the said consideration, a large amount is guaranteed to be

paid by the insurer, who received the premium,

3. The compensation will be made in certain definite sum, i.e., the

loss or the policy amount which ever may be, and

4. The payment is made only upon a contingency

More specifically, insurance may be defined as a contact between two parties,

wherein one party (the insurer) agrees to pay to the other party (the insured) or
the beneficiary, a certain sum upon a given contingency (the risk) against which
insurance is required.

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TYPES OF INSURANCE

Insurance occupies an important place in the modern world because of the risk,
which can be insured, in number and extent owing to the growing complexity of
present-day economic system. The different type of insurance has come about
by practice within insurance companies, and by the influence of legislation
controlling the transacting of insurance business, broadly, insurance may be
classified into the following categories:

A. Classification from business point of view

1. Life insurance, and
2. General insurance

B. Classification on the basis of nature of insurance

1. Life insurance
2. Fire insurance
3. Marine insurance
4. Social insurance, and
5. Miscellaneous insurance

C. Classification from risk point of view

1. Personal insurance
2. Property insurance
3. Liability insurance
4. Fidelity general insurance

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THE IMPORTANCE OF INSURANCE

Insurance benefits society by allowing individuals to share the risks faced by

many people. But it also serves many other important economic and societal
functions. Because insurance is available and affordable, banks can make loans
with the assurance that the loan’s collateral (property that can be taken as
payment if a loan goes unpaid) is covered against damage. This increased
availability of credit helps people buy homes and cars. Insurance also provides
the capital that communities need to quickly rebuild and recover economically
from natural disasters, such as tornadoes or hurricanes.

Insurance itself has become a significant economic force in most industrialized

countries. Employers buy insurance to cover their employees against work-
related injuries and health problems. Businesses also insure their property,
including technology used in production, against damage and theft. Because it
makes business operations safer, insurance encourages businesses to make
economic transactions, which benefits the economies of countries. In addition,
millions of people work for insurance companies and related businesses. In
1996 more than 2.4 million people worked in the insurance industry in the
United States and Canada. Insurance as an investment that offers a lot more in
terms of returns, risk cover & as also that tax concessions & added bonuses

Not all effects of insurance are positive ones. The possibility of earning
insurance payments motivates some people to attempt to cause damage or
losses. Without the possibility of collecting insurance benefits, for instance, no
one would think of arson, the willful destruction of property by fire, as a
potential source of money.

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THE INSURANCE INDUSTRY TODAY

Since the 1970s, the insurance business has grown dramatically and undergone
tremendous changes. As a result of the deregulation of financial services
businesses including insurance, banking, and securities trading the roles,
products, and services of these formerly distinct businesses have become
blurred. For instance, citizens in the U.S. state of California voted in 1988 to
allow banks to sell insurance in that state. In Canada, banks may also soon be
allowed to sell insurance.

Advances in communications technology have also allowed traditionally

distinct financial businesses to keep instantaneous track of developments in
other businesses and compete for some of the same customers. Some insurance
companies now offer deposit accounts and mortgages. In the United States, life
insurance companies now sell more pension plans and other asset management
services than they do conventional life insurance.

Developments in computer technology that have given insurance providers the

ability to quickly access and process information have allowed them to custom-
design policies to fit the needs of individual customers. But the increasing
complexity of policies has also made some aspects of buying and selling
insurance more difficult.

In addition, improvements in geological and meteorological technology have

the potential to change the way property insurers calculate risks of damage. For
example, as scientists improve their abilities to predict severe weather patterns,
such as hurricanes, and geological disturbances, such as earthquakes, insurers
may change how they provide protection against losses from such events.

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EVOLUTION OF INSURANCE IN INDIA

The marine insurance is the oldest form of insurance. If we trace Indian history
there are evidence that marine insurance was practiced here about three
thousand years ago. The code of Manu indicates that there was the practice of
marine insurance carried out by the traders in India with those of Sri Lanka,
Egypt and Greece .it is wonderful to see that Indians had even anticipated the
doctrine of average and contribution. Fright was fixed according to season and
was then very much at the mercy of the wind and other elements. Travellers by
sea and land were very much exposed to the risk of losing their vessels and
merchandise because of piracy on open seas and highway robbery of caravans
was very common. The practice of insurance was very common during the rule
of Akbar to Aurangzeb, but the nature and coverage of the insurance in this
period is not well known. It was the British insurer who introduced general
insurance in India in the modern form. The Britishers opened general insurance
in India around the year 1700 .the first company known as the sun insurance
office was set up in Calcutta in the year 1710. This was followed by several
insurance companies like London assurance and royal exchange assurance
(1720), Phoenix Assurance Company (1782). Etc. General insurance business in
the country was nationalized with effect from 1st January 1973 by the General
Insurance Business (Nationalization) Act, 1972. More than 100 non-life
insurance companies including branches of foreign companies operating within
the country were 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. with head offices at Calcutta, Bombay, New Delhi and Madras,
respectively.

Life insurance in the current form came in India from United Kingdom with the
establishment of a British firm, oriental life assurance company in 1818
followed by Bombay life assurance company in 1823, the madras equitable life
insurance society in 1829 and oriental life assurance company in 1874.prior to
1871, Indian lives were treated as substandard and charged an extra premium of
15% to 20%. Bombay mutual life assurance society, an Indian insurer that came
in to existence in 1871, was the first to cover Indian lives at normal rates. The
Indian insurance company Act 1923 was enacted inter alia, to enable the
government to collect statistical information about life and nonlife insurance
business transacted in India by Indian and foreign insurer, including the
provident insurance societies.

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The first half of the 20th century marked by two world wars, the adverse affects
of the World War I and World War II on the economy of India, and in between
them the period of worldwide economic crises triggered by the Great
depression. The first half of the 20th century was also marked by struggles for
India’s independence. The aggregate effect of these events led to a high rate of
bankruptcies and liquidation of life insurance companies in India. This had
adversely affected the faith of the general public in the utility of obtaining life
cover.

In this background, the Parliament of India passed the Life Insurance of India
Act on 19th June 1956, and the Life Insurance Corporation of India was created
on 1st September, 1956, by consolidating the life insurance business of 245
private life insurers and other entities offering life insurance services.

Since 1972, the insurance sector has been totally under the control of
government of India through LIC and GIC and its subsidiaries. As a result,
revenue of both of them increased in the last year’s .the amount of savings
pooled by LIC increased from Rs.2704 corers in 1974 to Rs .57670 in 1994 with
an annual growth rate of 16.53%. Similarly Premium underwritten by GIC
raised from 280 corers in 193 to 7647 corers in 1998 showing an annual growth
rate of 25.18%.

Despite increase in premium collected by both LIC and GIC there were
inefficiency and red tape sum creped in to the insurance sector. Apart from that
a major policy shift by the Narasimha Rau government during 1990’s.the Indian
economy opened for foreign competition .In this background The government
of India in 1993 had set-up a high powered committee by R.N Malhothra
,former governor reserve bank of India, to examine the structure of Indian
insurance sector and recommended changes to make it more efficient and
competitive keeping in view structural changes in other part of the financial
system of the country.

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.

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EVOLUTION OF INSURANCE ORGANIZATION

With a view to serve the society, the insurance organizations have been
developed in different forms with innovation of insurance practice for social
welfare and development; some of these forms are outlined here.

a) Self-insurance:

The arrangement in which an individual or concern sets up a private fund to

meet the future risk. If some losses happened in the future the firm meets the
loss out of the fund. While it may be called ‘self insurance’ it is not a single
matter of fact, insurance at all because there is no hedge, no shifting, or
distributing the burden of risk among larger Persons. It is merely a provision to
meeting the unforeseen event. Here the insured become the insurer for the
particular risk. But it can be effectively worked only when there is wide
distribution of risks subjected the same hazard.

b) Partnership:

A partnership firm may also carry on the insurance business for the sake of
profit. Since it is not an entity distinct from the persons comprising it, the
personal liability of partners in respect to the partnership debts is unlimited. In
case of huge loss the partners may have to pay from their own personal funds
and it will not be profitable to them to starts insurance business .in the early
period before the advent of joint stock companies many insurance undertakings
were partnership firms or unincorporated companies.

c) Joint stock companies:

The joint stock companies are those, which are organized by the shareholders
who subscribe the necessary capital to start the business. These are formed for
earning profits for the stockholders who are the real owners of the companies.
The management of a company is entrusted to a board of directors who is
elected by the shareholders from amongst themselves. The company can operate
insurance business and policyholders have nothing to do with the management
of the concern. But in life insurance it is the practice to share certain portion of
profit among the certain policyholders.

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 d) Mutual fund companies:

The mutual fund companies are co- operative association formed for the
purpose of effecting insurance on the property of its members. The
policyholders are themselves the shareholders of the companies each member is
insured as well as insured. They have power to participate in management and
in the profit sharing to the full extent. Whenever the income is more than the
expenses and claims, it is accumulated I the form of saving and is entitled in
reducing the rate of premium. Since the insured are insurers also, they always
try to reduce the management expenses and to keep the business at sound level.

e) Co-operative insurance organizations:

Cooperative insurance organizations are those concerns, which are incorporated

and registered under Indian cooperative societies Act. The concerns are also
called ‘co operative insurance societies’ these societies like mutual fund
companies are non profit organization .the aim is to provide insurance
protection to its members at the lowest reasonable net cost .the Indian insurance
Act. 1938, has provided special provisions for the co-operative insurance
societies, but after nationalization the societies have ceased to exist.

f) Lloyd’s Association:

Lloyd’s association is one of the greatest insurance institutions in the world.

Taking its name from the coffee house Lloyd where underwriters assembled to
transact business and pick-up news. The organization traces its origins to the
latter part of the seventeenth century .so it is the oldest insurance organization in
existing form in the world. In 1871, Lloyds Act was passed incorporating the
members of the association into a single corporate body with perpetual
succession and a corporate seal. The powers of Lloyds Corporation were
extended from the business of marine insurance to the other insurance and
guarantee business. The Lloyds Association also publishes Lloyd’s list and
register of shipping for the information of insuring public and the insurers.

g) State Insurance:

The government of a nation, sometimes, owns the insurance and runs the
business for the benefit of the public. The state insurance is defined as that
insurance which is under public sector. In Brazil, Japan and Mexico, the
insurance are largely nationalized. Previously, the state undertook only those
insurances, which were regarded as vital for the national interest.
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INSURANCE SECTOR REFORMS

Having looked at the insurance sector, the efforts made by the government to
make the industry more dynamic and customer friendly. To begin with, the
Malhotra committee was set up with the objective of suggesting changes that
would achieve the much required dynamism.

The Malhotra Committee Report

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. In 1994, the committee submitted the report
and gave the following recommendations:

h) 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.

i) 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.

j) 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)

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 k) 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).

l) 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.
Computerization of operations and updating of technology to be carried out in
the insurance industry.
Overall, the committee strongly felt 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.

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Few Life Insurance policies are:

Whole life policies - Cover the insured for life. The insured does not receive
money while he is alive; the nominee receives the sum assured plus bonus upon
death of the insured.

Endowment policies - Cover the insured for a specific period. The insured
receives money on survival of the term and is not covered thereafter.

Money back policies - The nominee receives money immediately on death

of the insured. On survival the insured receives money at regular intervals
during the term. These policies cost more than endowment with profit policies.

Annuities / Children's policies - The nominee receives a guaranteed

amount of money at a pre-determined time and not immediately on death of the
insured. On survival the insured receives money at the same pre-determined
time. These policies are best suited for planning children's future education and
marriage costs.

Pension schemes - are policies that provide benefits to the insured only upon
retirement. If the insured dies during the term of the policy, his nominee would
receive the benefits either as a lump sum or as a pension every month. Since a
single policy cannot meet all the insurance objectives, one should have a
portfolio of policies covering all the needs.

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1.2 BACKGROUND OF THE STUDY

“Life Insurance is a contract for payment of a sum of money to the person

assured on the happening of the event insured against”. Usually the insurance
contract provides for the payment of an amount on the date of maturity or at
specified dates at periodic intervals or at unfortunate death if it occurs earlier.
Obviously, there is a price to be paid for this benefit. Among other things the
contracts also provides for the payment of premiums, by the assured.

Life Insurance is universally acknowledged as a tool to eliminate risk, substitute

certainty for uncertainty and ensure timely aid for the family in the unfortunate
event of the death of the breadwinner. In other words, it is the civilized world’s
partial solution to the problems caused by death. Life insurance helps in two
ways dealing with premature death, which leaves dependent families to fend for
themselves and old age without visible means of support.

The most common types of life insurance are whole life insurance and term life
insurance. Whole life insurance provides a lifetime of protection as long as you
pay the premiums to keep the policy active. They also accrue a cash value and
thus offer a savings component. Term life insurance provides protection only
during the term of the policy and the policies are usually renewable at the end of
the term.

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There are many Life Insurance Companies like

1. LIFE INSURANCE CORPORATION OF INDIA.

2. BAJAJ ALLIANZ LIFE INSURANCE COMPANY.
3. ICICI PRUDENTIAL LIFE INSURANCE COMPANY.
4. HDFC STANDARD LIFE INSURANCE COMPANY.
5. BIRLA SUN-LIFE INSURANCE COMPANY.
6. ING VYSYA LIFE INSURANCE COMPANY.
7. METLIFE INSURANCE COMPANY.
8. TATA AIG LIFE INSURANCE COMPANY.
9. MAX NEW YORK LIFE INSURANCE COMPANY.
10. OM KOTAK MAHINDRA LIFE INSURANCE
COMPANY.

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 History of Insurance and its
evolution in India

History of Insurance in India started from the prehistoric period

as Insurance in its primitive form has been known to exist from as
back as 3000 BC. Various civilizations were known to practising
the basic concept of insurance – pooling and sharing in an un
organized manner.

While considering the history of insurance in India, the principle of

insurance was reflected in the joint family concept, widely
followed in many regions, and is considered as one of the best form
of life insurance down the ages.

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 IRDA BEFORE CHANGES
History of Insurance in modern India

Modern Insurance in India began around 1800 AD with agencies of foreign

insurance starting marine Insurance business. Some Important milestones
in the insurance history of is listed below.

1. 1818: Oriental Life Insurance Company, the first life insurance

company on Indian soil started functioning.1870: Bombay Mutual
Life Assurance Society, the first Indian life insurance company
started its business.

2. 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

3. 1938: Earlier legislation consolidated and amended to by the

Insurance Act with the objective of protecting the interests of the
insuring public.1956: Nationalization of life insurance: Life insurance
business was nationalized on 1st September 1956 and the Life
Insurance Corporation of India (LIC) was formed through LIC Act,
1956. A capital contribution of Rs. 5 crore from the Government of
India was also made. There were 170 companies and 75 provident
fund societies doing life insurance business in India at that time.
From 1956 to 1999, the LIC held exclusive rights to do life insurance
business in India

4. 1972: Nationalization of non-life insurance: With the enactment of

General Insurance Business Nationalization Act (GIBNA) in 1972, the
non-life insurance business

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 IRDA AFTER CHANGES

1. Currently, 24 life insurance companies and 29 non life insurance

companies in the indian market compete with each other on price
and service to attract.

2. Life insurance corporation of india (lic) is the sole public sector

company fully owned by government of india. all the policies
issued by lic of india enjoys sovereign guarantee of indian
parliament.

3. The country’s insurance market is expected to quadruple in size

over the next 10 years from its current size of us$ 60 billion. during
this period, the life insurance market is slated to cross us$ 160
billion.

4. The general insurance business in india is currently at rs 78,000

crore (us$ 11.7 billion) premium per annum industry and is
growing at a healthy rate of 17 per cent.

5. India’s insurance market lags behind other economies in the

baseline measure of insurance penetration. at only 3.9 percent,
india is well behind the 11.9 percent for korea, 11.5 percent for
the uk, 11.1 percent for japan, and 7.5 percent for the us. indian
insurance industry is expected to grow to us $ 280 billion by
financial year 2020.

6. he indian insurance market is considered to have a huge business

opportunity waiting to be harnessed. india currently accounts for
less than 1.5 per cent of the world’s total insurance premiums and
about 2 per cent of the world’s life insurance premiums despite
being the second most populous nation.

7. The country is the fifteenth largest insurance market in the world

in terms of premium volume, and has the potential to grow
exponentially in the coming years.

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Role of Insurance Regulatory and Development Authority
in Indian Insurance sector

Introduction
The IRDA Act, 1999 was passed as per the major recommendation of the
Malhotra Committee report (1994) which recommended the establishment of
an independent regulatory authority for insurance sector in India. Later, it
was incorporated as a statutory body in April, 2000. The IRDA Act, 1999
also allows private players to enter the insurance sector in India besides a
maximum foreign equity of 26 per cent in a private insurance company
having operations in India. Considering some of the emerging requirements
of the Indian insurance industry, IRDA was amended in 2002. As stated in
the act mission of IRDA is "to protect the interests of the policyholders, to
regulate, promote and ensure orderly growth of the insurance industry and
for matters connected therewith or incidental thereto." Indian insurance
industry is regulated by the terms and conditions of the IRDA. Indian law
has certain expectations from the IRDA to perform in the Indian insurance
industry. IRDA should protect the interest of policyholders by ensuring fair
treatment by the insurance companies. The growth of insurance companies
in a speedy and orderly manner should be taken care by the IRDA.

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Guidelines on Stewardship Code for
Insurers in India

Insurers should formulate a policy for Stewardship based on the principles

indicated in these guidelines and get the approval of the Board for
implementation of the same. The principles and the guidance for their
implementation are given below:

Stewardship Principles

 Principle 1

Insurers should formulate a policy on the discharge of their stewardship

responsibilities and publicly disclose it.

Guidance

Stewardship activities include monitoring and engaging with companies on

matters such as strategy, performance, risk, capital structure, and corporate
governance, including culture and remuneration.

The Stewardship policy should identify and define the stewardship

responsibilities that the insurer wishes to undertake and how it intends to
fulfill the same to enhance the wealth of its clients. The policy should be
approved by the Board of the insurer and should bring out how the insurer
applies stewardship with the aim of enhancing and protecting the value for
the ultimate beneficiary or client.

While the Boards of an insurer could decide to engage in all cases, it may also
decide to selectively intervene based on its extent or level of investment. In
such case, the policy should clearly identify the threshold (level of

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investment or any other criteria as may be determined by the Board) for
intervention.

The policy should clearly state whether the insurer intends to use the
services of external service providers such as institutional advisors and
should clearly provide that the ultimate stewardship responsibilities shall
be discharged by the insurer.

 Principle 2

Insurers should have a clear policy on how they manage conflicts of interest in
fulfilling their stewardship responsibilities and publicly disclose it.

Guidance

Insurers should put in place, maintain and publicly disclose a policy for
identifying and managing conflicts of interest with the aim of taking all
reasonable steps to put the interests of their client or beneficiary first. The
policy should identify scenarios of likely conflict of interest as envisaged by
the Board and should also address how matters are handled when the
interests of clients or beneficiaries diverge from each other.

 Principle 3

Insurers should monitor their investee companies.

Guidance

Insurers should have mechanisms for regular monitoring of their investee

companies in respect of their performance, leadership effectiveness,
succession planning, corporate governance, reporting and other parameters
they consider important.

Insurers may or may not wish to have more participation through

nominations on the Board for active involvement with the investee

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companies. An insurer who may be willing to have nominations on the Board
of an investee company should indicate in its stewardship statement the
willingness to do so, and the mechanism by which this could be done.

 Principle 4

Insurers should have a clear policy on intervention in their investee companies.

Guidance

Insurers may decide their own engagement strategy and the policy should
clearly set out the criteria/ circumstances in which they will actively
intervene. The policy should provide for regular assessment of the outcomes
of intervention by the insurer. Intervention should be considered regardless
of whether an active or passive investment policy is followed. Instances
when insurers may want to intervene include, but are not limited to, when
they have concerns about the company’s strategy, performance, governance,
remuneration or approach to risks, including those that may arise from
social and environmental matters.

The meetings with investee companies should be held in a confidential

manner with the view to resolve the issue constructively. If dissatisfied with
the response of the investee company, the insurer may decide to escalate the
matter, in accordance with the pre-defined policy.

Principle 5

Insurers should have a clear policy for collaboration with other institutional
investors, where required, to preserve the interests of the policyholders
(ultimate investors), which should be disclosed.

Guidance

For issues that require larger engagement with the investee company,
insurers may choose to act collectively with other institutional investors in
order to safeguard the interests of their investors. For such situations, the
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insurers should have a policy to guide their actions and extent of
engagement.

Principle 6

Insurers should have a clear policy on voting and disclosure of voting activity.

Guidance

Insurers should exercise their own independent judgment as regards voting

decisions on resolutions and should not automatically support the proposals
of the Board of the investee company. The decisions should be aimed at
promoting the overall growth of the investee companies and, in turn,
enhance the value of their investors.

The voting policy should be publicly disclosed.

Insurers should disclose their approach to stock lending and recalling lent
stock.

 Principle 7

Insurers should report periodically on their stewardship activities.

Guidance

In addition to the regular fulfilment of their stewardship activities, insurers

should also provide a periodic report to their ultimate beneficiaries
(policyholders) of how they have discharged their responsibilities, in a
format which is easy to understand, as a part of public disclosures.

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Disclosure and Reporting:

It is clarified that compliance with the aforesaid principles does not

constitute an invitation to manage the affairs of a company or preclude a
decision to sell a holding when this is considered in the best interest of
clients or beneficiaries. The Board shall ensure that there is effective
oversight on the insurer’s stewardship activities and a Committee of the
Board entrusted with the compliance with corporate governance code shall
exercise the same.

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What is the Role and Importance of Insurance?
The process of insurance has been evolved to safeguard the interests of
people from uncertainty by providing certainty of payment at a given
contingency. The insurance principle comes to be more and more used and
useful in modern affairs.
Uses to an individual :

1. Insurance provides Security and Safety:

The insurance provides safety and security against the loss on a particular
event. In case of life insurance payment is made when death occurs or the term
of insurance is expired. The loss to the family at a premature death and
payment in old age are adequately provided by insurance. In other words,
security against premature death and old age sufferings are provided by life
insurance.

2. Insurance affords Peace of Mind:

The security wish is the prime motivating factor. This is the wish which
tends to stimulate to more work, if this wish is unsatisfied, it will create a
tension which manifests itself to the individual in the form of an unpleasant
reaction causing reduction in work.

3. Insurance protects Mortgaged Property:

At the death of the owner of the mortgaged property, the property is taken
over by the lender of money and the family will be deprived of the uses of the
property. On the other hand, the mortgagee wishes to get the property insured
because at the damage or destruction of the property he will lose his right to get
the loan replayed.

4. Insurance eliminates dependency:

At the death of the husband or father, the destruction of family needs no

elaboration. Similarly, at destruction of, property and goods, the family would
suffer a lot. It brings reduced standards of living and the suffering may go to any
extent of begging from the relatives, neighbours or friends.
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 5. Life Insurance encourages saving:

The elements of protection and investment are present only in case of life
insurance. In property insurance, only protection element exists. In most of the
life policies elements of saving predominates. These policies combine the
programs of insurance and savings.

6. Life Insurance provides profitable Investment:

Individuals unwilling or unable to handle their own funds have been

pleased to find an outlet for their investment in life insurance policies.
Endowment policies, multipurpose policies, deferred annuities are certain
better form of investment.

7. Life Insurance fulfils the needs of a person:

Death is certain, but the time is uncertain. So, there is uncertainty of the
time when the sufferings and financial stringencies may be fall on the family.
Moreover, every person is responsible to provide for the family.
It would be a more pathetic sight in the world to see the wife and children
of a man looking for someone more considerate arid benevolent than the
husband or the father, who left them unprovoked.

Uses to business :
The insurance has been useful to the business society also. Some of the
uses are discussed below:

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RESEARCH DESIGN

STATEMENT OF THE PROBLEM

This Study will help us to understand the consumer’s perception about life
insurance companies. This study will help the companies to understand, how a
consumer selects, organizes and interprets the Quality of service and product
offered by life insurance companies.

SCOPE OF THE STUDY

The study will be able to reveal the preferences, needs, perception of the
customers regarding the life insurance products, It also help the insurance
companies to know whether the existing products are really satisfying the
customer’s needs .

That I have done research on secondary data available on my topic.

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NEED FOR THE STUDY

1. The deeper the understanding of consumer’s needs and perception, the

earlier the product is introduced ahead of competitors, the expected
contribution margin will be greater .Hence the study is very important.

2. Consumer markets and consumer buying behaviour can be understood

before sound product and marketing plans are developed.

3. This study will help companies to customize the service and product,
according to the consumer’s need.

4. This study will also help the companies to understand the experience and
expectations of the existing customers.

5. Apart from creating, manufacturing and distribution capabilities for life

insurance products, and in depth study of the consumers, their preferences
and demand for their product is very necessary for setting up an efficient
marketing network.

OBJECTIVE OF THE STUDY

1. Ascertain the profile and characteristics of potential buyers.

2. To have an insight into the attitudes and behaviours of customers.

3. To find out the differences among perceived service and expected

service.

4. To produce an executive service report to upgrade service characteristics

of life insurance companies.

5. To access the degree of satisfaction of the consumers with their current

brand of Insurance products.

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REVIEW OF LITERATURE:

The literature review section critically examine the recent or historically

significant studies, company data or industry reports that acts as a basis for
proposed studies to begin with the research discussion of the related literature
and relevant secondary data from a comprehensive prospective, moving to more
specific studies, that are associate with research problem. Basically the literature
should be applied to the study, than the researcher proposes. The literature may
also explain the needs for the proposed work to appraise the short comings and
informational gaps in secondary data sources.

To carry the research work the researcher has gone through a few reports,
books, journals and websites. The details regarding Life Insurance Industry,
history, origin and growth of the industry is also taken from some books,
magazines etc. The sources of this information are as follows:

1. Catalogues and Broachers from various life insurance companies.

2. Articles from magazines and news paper.

3. Information from various websites.

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SOURCES OF DATA:

After identifying and defining the research problem and determining specific
information required solving the problem the researcher will look for the type
and sources of data which may yield the desired results, while deciding about
the method of data collection to be used for the study, there are two types of
data.

A. Secondary Data:

Secondary data means data that are already available i.e. they refer to the data
which have been collected and analyzed by someone and can save both money
and time of the researcher. Secondary data may be available in the form of
company records, trade publications, libraries etc.

Secondary data sources are as follows:

1. Company Reports
2. Daily Newspaper
3. Standard Textbook
4. Various Websites

B. Primary Data:

Primary data are those, which are collected for the first time. Primary data is
collected by framing questionnaires. The questionnaire contained questions,
which are both open-ended and closed-ended. Open-ended questions are
questions requiring answers in the responder’s own words. Closed-ended
questions are those wherein the respondent has to merely check the appropriate
answer from a list of options available. Any doubts raised by the respondents
were clarified to get the perfect answers from the distributors. Open-ended
questions yielded more insightful information, whereas closed-Ended questions
Were relatively simple to tabulate and analyze.

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LIMITATIONS OF THE STUDY

Although the study was carried out with extreme enthusiasm and careful
planning there are several limitations, which handicapped the research viz.

C. Time Constraints:

The time stipulated for the project to be completed is less and thus there are
chances that some information might have been left out, however due care is
taken to include all the relevant information needed.

D. Sample size:

Due to time constraints the sample size was relatively small and would
definitely have been more representative if I had collected information from
more respondents.

E. Accuracy:

It is difficult to know if all the respondents gave accurate information; some

respondents tend to give misleading information.

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 CHAPTER 2

INDUSTRY PROFILE

History and Development of Life Insurance

Life Insurance, in its present form, came to India from the United Kingdom
with establishment of a British firm, Oriental Life Insurance Company in
Calcutta in 1818, followed by Bombay Life Assurance Company in 1823, the
Madras Equitable Life Insurance society in 1829 and Oriental Government
security Assurance Company in
1874. Prior to 1871, Indian Lives were treated as sub-standard and charged an
extra premium of 15% to 20%. Bombay Mutual Life Assurance Society, a
Indian insurer which came into existence in 1871 was the first to cover Indian
lives at normal rates.

The Indian life Assurance Companies Act, 1912 was the first statutory measure
to regulate life insurance business. Later, in 1928, the Indian Insurance
Companies Act was enacted, to enable the government to collect statistical
information about both life and non-life insurance business transacted in India
by Indian and foreign insurers, including the provident insurance societies.
Comprehensive arrangements were, however, brought into effect with the
enactment of the Insurance Act, 1938.

By 1956, 154 Indian insurers, 16 non-Indian insurers and 15 provident societies

were carrying online insurance business in India. On 19th January 1956, the
management of the entire life insurance business of 229 Indian insurers and
provident insurance societies and the Indian life insurance business of 16 non-
Indian Life insurance companies then operating in India, was taken over by the
central Government and then nationalized on 1st September 1956 when the Life
Insurance Corporation came into existence.
With largest number of life insurance policies in force in the world, Insurance
happens to be a mega opportunity in India. It’s a business growing at the rate of
15-20 per cent annually and presently is of the order of Rs 450 billion. Together
with banking services, it adds about 7 per cent to the country’s GDP. Gross
premium collection is nearly 2 per cent of GDP and funds available with LIC
for investments are 8 per cent of GDP.

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Yet, nearly 80 per cent of Indian population is without life insurance cover
while health insurance and non-life insurance continues to be below
international standards. And this part of the population is also subject to weak
social security and pension systems with hardly any old age income security.
This it is an indicator that growth potential for the insurance sector is immense.

A well-developed and evolved insurance sector is needed for economic

development as it provides long-term funds for infrastructure development and
at the same time strengthens the risk taking ability. It is estimated that over the
next ten years India would require investments of the order of one trillion US
dollar. The Insurance sector, to some extent, can enable investments in
infrastructure development to sustain economic growth of the country.

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INSURANCE AND BUSINESS ENVIRONMENT

Insurance is considered as one of the important segment of the economy for its
growth and development. This industry provides long term funds which are
essential for the growth and development of the nation .so the growth of
insurance industry largely depends up on the environment in which they exists.
Here I would like to mention about Indian business environment and their
impact on insurance sector. There are two type of environment which affect the
business one is environment which is internal to the organization (internal
environment) and the other one which is external to the organization (external
environment). Internal environment includes management, technology,
competitors, employees, shareholders, policyholders, marketing intermediary
etc. The external environment of insurance business has been classified in four
parts, namely legal, economic, financial, and commercial. let us discus them in
detail by taking one by one.

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THE INSURANCE REGULATORY AND DEVELOPMENT
AUTHORITY (IRDA)

The Malhotra 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- The Insurance Regulatory
and Development Authority.
Based on the Malhotra committee report in April 2000 IRDA was incorporated.
Since being set up as an independent statutory body the IRDA has put in a
framework of globally compatible regulations. Section 14 of the IRDA Act
1999, lays the duties, power and functions of the authority .the authority shall
have the duty to regulate, promote and ensure orderly growth of the insurance
business and reinsurance business.

Reforms and Implications

The liberalizations of the Indian insurance sector have been the subject of much
heated debate for some years. The sector is finally set to open up to private
competition. The Insurance Regulatory and Development Authority bill will
clear the way for private entry into insurance, as the government is keen to
invite private sector participation into insurance. To address those concerns, the
bill requires direct insurers to have a minimum paid-up capital of Rest.1 billion,
to invest policyholder’s funds only in India; and to restrict international
companies to a minority equity holding of 26 percent in any new company.
Indian Promoters will also have to dilute their equity holding to 26 percent over
a 10-year period.

Over the past three year, around 30 companies have expressed interest in
entering the sector and many foreign and Indian companies have arranged
alliances. Whether the insurer is old or new, private or public, expanding the
market will present challenges. A number of foreign Insurance Companies have
set up representative offices in India and have also tied up with various asset
management companies. Some of the Indian companies, which have tied up
with International partners, are.

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The likely impact of opening up of India’s insurance sector is that private
players may swamp the market. International insurers often derive a significant
part of their business from multinational operations. Multinational insurers are
indeed keenly interested as; perhaps their home markets are saturated while
emerging countries have low insurance penetration and high growth rates.

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Type of life insurance policies

a) Whole life insurance

Whole life is a form of permanent insurance, with guaranteed rates and

guaranteed cash values. It is the least flexible form of permanent insurance.

b) Universal life insurance

Universal life is similar to whole life, except that you can change the death
benefit (the money paid to the beneficiary when the insured person dies), the
amount of premiums and how often you pay the premiums.

c) Variable life insurance

Variable life insurance is the riskiest form of permanent insurance, but it can
also give you the best return for your money. Essentially, the life insurance
company will invest your insurance premiums for you. If the investments do
well, the death benefits and cash value of the policy go up. If they do poorly,
they go down. It's a little like putting your savings into the stock market.

d) Group life insurance

Many companies allow their employees to buy group life insurance through the
company. Usually, you can get very good rates for this insurance but you have
to give the insurance up when you stop working there. For that reason, group
insurance can be a good way to buy a little extra life insurance, but it does not
make sense to make it your main policy.

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There are a number of policies for specific insurance
needs. Some of these include:

a) Family income life insurance.

This is a decreasing term policy that provides a stated income for a fixed period
of time, if the insured person dies during the term of coverage. These payments
continue until the end of a time period specified when the policy is purchased.

b) Family insurance.

A whole life policy that insures all the members of an immediate family -
husband, wife and children. Usually the coverage is sold in units per person,
with the primary wage-earner insured for the greatest amount.

c) Senior life insurance.

Also known as graded death benefit plans, they provide for a graded amount to
be paid to the beneficiary. For example, in each of the first three to five years
after the insured dies, the death benefit slowly increases. After that period, the
entire death benefit is paid to the beneficiary. This might be appropriate if the
beneficiary is not able to handle a large amount of money soon after the death,
but would be in a better position to handle it a few years later.

d) Juvenile insurance.

This is life insurance on a child. Coverage is paid for by an adult, usually the
parents or guardians. Such policies are not considered traditional life insurance
because the child is not producing an income that needs to be protected.
However, by buying the policy when the child is young, the parents are able to
lock in an extremely low premium rate and allow many more years of tax-
deferred cash value build-up.

e) Credit life insurance.

This insurance is designed to pay off the balance of a loan if you die before you
have repaid it. Credit life insurance is available for many kinds of loans
including student loans, auto loans, farm equipment loans, furniture and other
personal loans including credit cards. Credit life insurance can be purchased by
an individual. Usually it is sold by financial institutions making loans, like
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banks, to borrowers at the time they take out the loan. If a borrower dies, the
proceeds of the policy repay the loan directly to the lender or creditor.

f) Mortgage insurance

This decreasing term coverage is designed to pay off the unpaid balance of a
mortgage if you die before the mortgage is paid off. Premiums are generally
level throughout the term of the policy. The policy is usually independent of the
mortgage, meaning that the financial institution granting the mortgage is
separate from the insurance company issuing the policy. The proceeds of the
policy are paid to the beneficiaries of the policy, not the mortgage company.
The beneficiary is not required to use the proceeds to pay off the mortgage.

g) Annuity

An annuity is a form of insurance that enables you to save for your retirement.
Basically, you give the insurance company money for a certain period of time,
and then after you retire they will pay you a certain amount of money every
year until you die. There are many different forms of annuities. . Most people
who buy annuities are 55 or older.

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 CHAPTER 3

PROFILE OF THE ORGANISATIONS:

LIFE INSURANCE CORPORATION OF INDIA

Life Insurance Corporation of India was formed in September 1956 by passing

LIC Act, 1956 in Indian parliament. On the nationalization of the life insurance
in 1956, the premium rating of Oriental Government security life Assurance
company were adopted by LIC with a reduction of 5% of the tabular premium
or Re. 1 per thousand sum assured, whichever was less? This reduction was
made in anticipation of economies of scale that would emerge on the merger of
different insurers in a single entity.

Life Insurance Corporation Of India - there are many things to consider as Life
Insurance Corporation of India offers various insurance products which are very
complex, but underlying this complexity is a simple fact. The building blocks
for all Life Insurance Corporation of India are (1) investment return; (2)
mortality experience; and (3) expense management; for your Life Insurance
Corporation Of India.

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Objectives of LIC

1) Spread Life Insurance much more widely and in particular to the rural areas
and to the socially and economically backward classes with a view to
reaching all insurable persons in the country and providing them adequate
financial cover against death at a reasonable cost.

2) Maximize mobilization of people's savings by making insurance-linked

savings adequately attractive.

3) Bear in mind, in the investment of funds, the primary obligation to its

policyholders, whose money it holds in trust, without losing sight of the
interest of the community as a whole; the funds to be deployed to the best
advantage of the investors as well as the community as a whole, keeping in
view national priorities and obligations of attractive return.

4) Conduct business with utmost economy and with the full realization that the
moneys belong to the policyholders.

5) Act as trustees of the insured public in their individual and collective

capacities.

6) Meet the various life insurance needs of the community that would arise in
the changing social and economic environment.

7) Involve all people working in the Corporation to the best of their capability
in furthering the interests of the insured public by providing efficient service
with courtesy.

Promote amongst all agents and employees of the Corporation a sense of

participation, pride and job satisfaction through discharge of their duties with
dedication towards achievement of Corporate Objective.

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VISION

"A trans-nationally competitive financial conglomerate of significance to

societies and Pride of India “

MISSION

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

Various policies offered by life insurance corporation of India are

A. Whole Life Schemes

1. Whole life with profit
2. Limited payment whole life
3. Single Premium whole life
4. Convertible whole life plan

B. Endowment Schemes
1. Endowment plan with profit
2. Limited payment Endowment
3. Jeevan Mitra (Double Cover)
4. Jeevan Mitra (Triple cover)
5. Bhavishya Jeevan
6. Jeevan Anand
7. New Jana Raksha

C. Term Assurance Plan

1. Anmol Jeevan
2. Year Term Assurance
3. Covertible Term
4. New Bima Kiran

D. Plan for needs of Children

1. Komal Jeevan
2. Jeevan Sukanya
3. Jeevan Kishore
4. Jeevan Balya
5. Jeevan Chaya
6. Marriage/educational annuity

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E. Periodic Money Back Plan
1. Jeevan Samridhi
2. Jeevan Rekha Plan
3. Money Back Plan
4. Jeevan Surabhi
5. Jeevan bharathi

F. Medical benefits linked insurance

1. Asha Deep II
2. Jeevan Asha II

G. For benefits to Handicapped

1. Jeevan Aadhar
2. Jeevan Vishwas

H. Plans to cover housing loans

1. Mortagage redemption

I. Joint life plan

1. Jeevan sathi

J. Investment plan
5. Bima Nivesh Triple cover

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Description of the LIC Policies

Whole life plan:

Whole life plan are those policies which life assured has to pay premiums till
his death the sum assured will be paid to his dependent generally 70 years is
assumed as a maximum age for payment of premium. Under the whole life
premium are payable throughout the life time of the life assured and this is the
cheapest form of policy. This plan is ideally suited to person who wants
maximum provision for his family at minimum cost. It also meets the needs for
funds required for funeral, religious rites and ceremonies to be performed, tax
liabilities if any and expenses connected with the last sickness and hospital
charges etc.

Endowment Assured Plan:

Endowment plans are not covering the risk for whole life of the life assured.
The term of risk cover under this plan is as per the need of life assured.
Endowment assurance plan are the most popular. They are eminently Suited to
meet it one policy the twin demands of old age provision and risk cover for
family. The sum assured is payable on maturity or at death if earlier. Thus an
Endowment Assurance Policy provides for retirement and also serves as a
means of family provisions.

Term Assurance:

Under the term assurance the risk cover is generally for specific short term.
Such term assurance is maximum for 2 years. Generally this type of assurance is
useful for air travelling.

Money Back Plans:

Under this plan specific percentage of sum assured will be backed to the life
assured after specific period of time. This plan is of special interest to person
who besides desiring to provide for their own old age and family feels the need
for lump sum benefits at periodical intervals. Under these policies part of the
sum assured is paid to the life assured in instalments at selected intervals.

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Children Plan:

Under the children plans the risk on the life of the children were covered
generally this type of plans are helpful in education and marriage of the
children.

Jeevan Balya:

This plan is designed to enable a parent to provide for the child by payment of a
very low premium an Endowment Assurance Policy, the risk under which will
commence from the vesting date. In addition, Premium benefit and income
benefit are included as additional benefit by payment of appropriate additional
premium during the deferment period.

This policy shall be cancelled in case the life assured shall die before the
deferred dates and in such an event provided the policy is then in full force in
for a reduced cash option.

Marriage Endowment/ educational annual plan

Every father desires to see that his children are well settled in life through sound
education, leading to good jobs and happy marriage. These needs arise at ages
which can be approximately anticipated. Say when the children are between 18
to 25 year of age. This plan provides for a sum assured to keep aside to meet
marriage educational expenses of children. Under this plan the S A along with
the vested bonus shall be payable at the end of the selected term either is lump
sum or in ten half yearly instalment, at the option of the life assured nominee
beneficiary.

Jeevan Mitra

This plan provides additional insurance cover equal to the sum assured in the
event of death during the term of policy so that the total insurance cover in the
event of death is twice the basic sum assured. i.e. The basic sum assured is
doubled and the accrued bonus is also paid.

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ING VYSYA LIFE INSURANCE

ING Vysya Life Insurance Company Private Limited entered the private life
insurance industry in India in September 2001, and in a short span of 18 months
has established itself as a distinctive life insurance brand with an innovative,
attractive and customer friendly product portfolio and a professional advisor
force. It also distributes products in close cooperation with its sister company
ING Vysya Bank through Bank assurance. Currently, it has over 3000 advisors
working from 22 locations across the country and over 300 employees.

ING Vysya Life Insurance Company is headquartered at Bangalore and has

established a strong presence in the cities of Delhi, Mumbai, Kolkata,
Hyderabad and Chennai. In addition ING Vysya Life operates in Vizag,
Vijaywada, Mangalore, Mysore, Pune, Nagpur, Chandigarh, Ludhiana and
Jaipur.

ING Vysya Life has pioneered product innovations in the Indian life insurance
market with customer-oriented cash bonus endowment and money back
products. (Reassuring Life and Maximising Life), the first anticipated whole life
product (Fulfilling Life) and the first Term/Critical Illness combination product
(Conquering Life). Conquering Life is an innovative term and critical illness
product that has been launched recently. Conquering Life provides affordable
term cover and critical illness coverage for 10 critical illnesses of up to 50% of
the Sum Assured. ING Vysya Life declared a bonus in September 2002 of 5%
(cash bonus - payable immediately) and 4% (reversionary bonus - payable at the
end of the term).

The company has over 25,000 customers at the end of 2002 and has achieved a
first premium income of Rs. 17 crores in 2002.

ING Vysya Life Insurance is a joint venture between ING Insurance

International BV a part of ING Group, the world's largest life insurance
company (Fortune Global 500, 2002), ING Vysya Bank, with 1.5 million
customers and over 400 outlets and GMR Technologies and Industries Limited,

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part of GMR Group also based in Bangalore and involved in the field of power
generation, infrastructural development and several other businesses.

ING Vysya Life has a paid up capital of Rs.140 crores and an authorised capital
of Rs. 200 crores.

Life insurance products offered by the company are:

1) Protection plan
• Critical illness plan
• Endowment plan

2) Savings plan
• Endowment plan
• Child protection plan
• Money back plan

3) Investment Plan
• Whole life plan
• Limited payment endowment plan
• Anticipated whole life plan

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HDFC STANDARD LIFE INSURANCE

The Partnership:
HDFC and Standard Life first came together for a possible joint venture, to
enter the Life Insurance market, in January 1995. It was clear from the outset
that both companies shared similar values and beliefs and a strong relationship
quickly formed. In October 1995 the companies signed a 3 year joint venture
agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further

strengthening the relationship.

The next three years were filled with uncertainty, due to changes in government
and ongoing delays in getting the IRDA (Insurance Regulatory and
Development authority)
Act passed in parliament. Despite this both companies remained firmly
committed to the venture.

In October 1998, the joint venture agreement was renewed and additional
resource made available. Around this time Standard Life purchased 2% of
Infrastructure Development
Finance Company Ltd. (IDFC). Standard Life also started to use the services of
the HDFC Treasury department to advise them upon their investments in India.
Towards the end of 1999, the opening of the market looked very promising and
both companies agreed the time was right to move the operation to the next
level. Therefore, in January 2000 an expert team from the UK joined a
handpicked team from HDFC to form the core project team, based in Mumbai.

Around this time Standard Life purchased a further 5% stake in HDFC and a
5% stake in HDFC Bank.

In a further development Standard Life agreed to participate in the Asset

Management Company promoted by HDFC to enter the mutual fund market.
The Mutual Fund was launched on 20th July 2000.

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Incorporation of HDFC Standard Life Insurance
Company Limited:

The company was incorporated on 14th August 2000 under the name of HDFC
Standard Life Insurance Company Limited. Companies’ ambition from as far
back as October 1995, was to be the first private company to re-enter the life
insurance market in India. On the 23rd of October 2000, this ambition was
realized when HDFC Standard Life was the only life company to be granted a
certificate of registration. HDFC are the main shareholders in HDFC Standard
Life, with 81.4%, while Standard Life owns 18.6%. Given Standard
Life's existing investment in the HDFC Group, this is the maximum investment
allowed under current regulations. HDFC and Standard Life have a long and
close relationship built upon shared values and trust. The ambition of HDFC
Standard Life is to mirror the success of the parent companies and be the
yardstick by which all other insurance company's in India are measured.

Products offered by the company are:

INDIVIDUAL PLAN

• With Profit Endowment Assurance

• With Profits Money Back
• Single Premium Whole of Life
• Term assurance Plan
• Loan Cover Term Assurance
• Personal Pension Plan
• Children’s Plan

GROUP PLANS

• Group Term Insurance

• Development Insurance Plan

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ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI Prudential Life Insurance Company is a joint venture between ICICI

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

ICICI Prudential’s equity base stands at Rs. 925 crore with ICICI Bank and
Prudential plc holding 74% and 26% stake respectively. In the quarter ended
June 30, 2005 , the company garnered Rs 335 crore of new business premium
for a total sum assured of Rs 2,619 crore and wrote 111,522 policies. For the
past four years, ICICI Prudential has retained its position as the No. 1 private
life insurer in the country, with a wide range of flexible products that meet the
needs of the Indian customer at every step in life.

Products offered by ICICI Prudential are:

1. Savings Plan
 Smart kid
 Life Time
 Save ‘n’ Protect
 Cash Back

2. Protection plan
• Life Guard
• Extra Protection Through
• Riders

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3. Retirement Plans

• Forever Life
• Life link pension
• Life time pension
• Reassure

4. Investment Plans

• Assure Invest
• Life Link

5. Group plans

• Group Superannuation
• Group Gratuity
• Group Term Assurance

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BAJAJ ALLIANZ LIFE INSURANCE COMPANY LTD.

Bajaj Allianz life Insurance Company Limited is a joint venture between Bajaj
Auto Limited and Allianz AG of Germany. Both enjoy a reputation of expertise,
stability and strength. Bajaj Allianz General Insurance received the Insurance
Regulatory and Development Authority (IRDA) certificate of Registration (R3)
on May 2nd, 2001 to conduct General Insurance business (including Health
Insurance business) in India. The Company has an authorized and paid up
capital of Rs 110 crores. Bajaj Auto holds 74% and Allianz, AG, holds the
remaining 26% Germany.

In its first year of operations, the company has acquired the No. 1 status among
the private non-life insurers. As on 31st March 2003, Bajaj Allianz General
Insurance maintained its leadership position by garnering a premium income of
Rs.300 Crores. Bajaj Allianz also became one of the few companies to make a
profit in its first full year of operations. Bajaj Allianz made a profit after tax of
Rs.9.6 crores.

Bajaj Allianz today has a network of 42 offices spread across the length and
breadth of the country. From Surat to Siliguri and Jammu to
Thiruvananthapuram, all the offices are interconnected with the Head Office at
Pune.

In the first half of the current financial year, 2004-05, Bajaj Allianz garnered a
premium income of Rs. 405 crores, achieving a growth of 84% and registered a
52% growth in Net profits of Rs.20 Crores over the last year for the same
period. In the financial year 2003-04, the premium earned was Rs.480 Crores,
which is a jump of 60% and the profit zoomed by 125% to Rs. 21.6 Crores.

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 CHAPTER 4

ANALYSIS AND INTERPRETATION

TABLE 1

AGE OF RESPONDENTS

INFERENCE: The above table classified the respondents according to their

age group. The majority of the respondents belong to the age group 19 to 28
years with 48% and the second age group is 29 to 38 years with 26%, followed
by 39 to 48 years and 49 to 58 years with 12% each.

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 TABLE 2

DIFFERENCIATION OF THE RESPONDENTS INTO MALE

AND FEMALE

INFERENCE: This table helps us to understand that there are more

number of male consumers with 68% market share than the female
consumers with 32% Market share.

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 TABLE 3

MARKET SHARE OF DIFFERENT LIFE INSURANCE

COMPANIES

INFERENCE: This table helps us to understand the market share of

different life insurance companies. LIC has a major share of 78 %, followed by
ICICI Prudential with 8% market share, followed by HDFC Standard Life with
6% market share.

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 TABLE 4

RESPONDENTS PREFERENCE TO INVEST THEIR MONEY

INFERENCE: From the table it is clear that majority of people

(52%) prefer to invest in Bank and others (48%) prefer to invest in
Insurance companies.

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 CHAPTER 5

FINDINGS

5.1 FINDINGS

1. The majority of respondents belonged to the age group of 19 to 28

years which formed 48% followed by age group of 29 to 38 years
which formed 26%.
2. The male consumers capture the Market share with 68%, followed by
the female consumers with 32%.
3. The majority of the consumers of life insurance companies are private
employees with 48% and Government employees with 40%
4. The dominant income group having life insurance group belong to the
group of 10001 to 15,000 followed by 5,001 to 10,000.
5. LIC has a major market share of 78%.
6. The factors which influenced to select a life insurance company are
the personal factor, followed by family, friends, agents and
advertisements.
7. The value of respondents life insurance policy costs more than 1,
00,000 followed by 50,000 to 1,00,000.
8. Majority of the people (52%) prefer to invest in bank others (48%)
prefer to invest in insurance company.
9. Majority of consumers are satisfied with the service and quality of
products of their life insurance companies.
10.Majority of consumers (78%) would like to communicate the service
offered by life insurance companies.
11.Majority of consumers (58%) are aware about 5 to 7 life insurance
companies.
12.LIC stands first followed by ICICI prudential, followed by HDFC
Standard Life.

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 BIBLIOGRAPHY
1) Dr. Singh, Avtar, Principles of Insurance Law, S Chand & Sons,
Delhi,2003.

2) Leon G. Schiffman, Lestie Lazar Kanwk, Consumer Behaviour,

Himalaya Publishers, Delhi,2004.

3) Kotler Philip, Marketing Management, Pearson Education Inc. 11th

Edition.

4) Stanton William J, Etzel Michael J, Walker Bruce J, Fundamentals of

Marketing, McGraw-Hill international, Singapore, 2002.

5) Ravi Shankar, Services Marketing, Prentice Hall, 2000.

6) Valarie Azithaml, Marry Jo Bittner, Services of Marketing, Prentice Hall,

2001.

Newspapers:

 Economic Time
 Business Line

World Wide Web:

• www.lic.com
• www.irda.org
• www.wikipedia.com

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