A SUMMER TRAINNING PROJECT REPORT ON FINANCIAL INSTRUMENTS A report submitted to U.P.Technical.

University for the partial Fulfillment of MBA Degree 2010-12

Submitted to: Prof. Hari Prakash SHARMA Director MBA Greater Noida Institute of Technology

Submitted by: ABHISHEK MBA- IIIrd. Sem. Roll No. 1027270002

Greater Noida Institute of Technology (Management Institute) Code: 272 7, Knowledge Park-II, Greater Noida (U.P)

2010-12
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CERTIFICATE

This is to certify that the

SUMMER TRAINNING Project Report entitled

FINANCIAL INSTRUMENT being submitted by _________________ fulfillment of the requirement of U.P.Technical. University is a record of an independent work done by his under my guidance and supervision.

Prof. Hari Prakash Director-MBA Greater Noida Institute of Technology (Management Institute)-Code: 272 Concerned Faculty Guide GNIT, Greater Noida.

DECLARATION

I,

to declare that the project report entitled FINANCIAL

INSTRUMENT being submitted to the U.P.TECHNICAL UNIVERSITY for the partial fulfillment of the requirement for the degree of Master of Business Administration is my own endeavours and it has not been submitted earlier to any institution/university for any degree.

Place: Date: ABHISHEK SHARMA ROLL NO.1027270002

ACKNOWLEDGEMENT

I would like to take the opportunity, especially to express my profound gratitude to Mr. Vikas Jain (CDM) HDFC SLIC, for his constant assistance and guidance in the completion of my project. I also deem it to be my privilege to acknowledge the encouragement and facilities provided to me by HDFC STANDARD Life Insurance Pvt. Ltd. Co. to make this project a fruitful one. I am also thankful to all those people of HDFC Standard Life Insurance Pvt. Ltd. Co, whom I came across for their extended support during the project period. I express my deep gratitude to HDFC Standard Life Insurance Company for giving me the chance to pursue my summer internship.

ABHISHEK SHARMA GNIT (MBA INSTITUTE) 272

PREFACE
The insurance sector in India has seen new highs in the recent past. Almost every insurance company has posted record growths and great profit figures. It was seen that the profits in the insurance sector were driven by the good performances in the public sector insurance companies.

The public sector insurance companies in the country have shown good results and good future. The financial performances suggest that even after the entry of numerous private sector insurance companies, the public still has faith in the public sector companies.

HDFC Standard life is one of the largest private sector companies in India and the volume of clients which they manage is also very high. Thus in-spite of such large volumes, they perform it very efficiently.

The Insurance Regulatory and Development Authority (IRDA) has played a proactive role as a regulator and a facilitator in the sectors development.

The size of the market presents immense opportunities to new players with only 20 per cent of the countrys insurable population currently insured. This project will take you through a major player i.e. HDFC Standard Life Insurance. This project basically includes what all products are provided by Standard Life.

OBJECTIVES
The Primary objective: Checking the awareness level of Insurance and their need towards it. Study of influencing factors affecting the purchase decision. Analyzing the preferred mode of savings Checking the satisfaction level of customers towards insurance

The secondary objective: To make clients and let them know about the different services offered by the HDFC Standard Life Insurance Company. To understand the problem faced by customers and finding way to solve the queries.

2.4 Scope of the study The data was enough to fulfill the objection of the study. The study provides the knowledge of HDFC Standard Life a part of HDFC Pvt. Ltd. The study help to learn the work culture in and around the organisation. The study a lot to know about consumer behavior while purchasing the product. The study provides first hand information regarding the required services.

TABLE OF CONTENTS

Introduction..10

Insurance in India 11 i. Insurance In India ii. A Brief History Of The Insurance Sector iii. Insurance Sector Reforms iv. Indian Insurance Industry v. Insurance Business vi. Entry Of Foreign Players vii. Guidelines For Entry Of Insurance Insurance Regulatory & Development Authority.47 i. Government Regulation ii. Duties, Powers And Functions Of IRDA iii. IRDA Notification

The Company55 i. ii. iii. iv. Industry profile Company profile Organizational structure Market position

Products.... 66 Distribution...73 Objective and Methodology 81 Competitor Profiling ...93 Analysis. 98 Recommendations 109 Conclusion 110 Bibliography. 114 Appendix-1... 115 Appendix-2... 118

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Introduction

Insurance is system of protection against financial loss of an asset in which a number of people agree to pay certain sums of money called premiums to create a common pool of funds. The pool guarantees compensation to the individual who suffers an accidental loss of his or her asset. Every asset has a life. An asset might not complete its life cycle due to accidental occurrences. Accidental losses can deprive the owner of the expected economic benefits of the asset. Insurance is related only with compensation for the losses caused by accidental occurrences. For e.g., cars cannot be insured against becoming obsolete but can be insured against road accidents and thefts. Insurance is a contract between the insurer and the insured that provides compensation for specific losses in exchange for a periodic payment. An individual contract is known as an insurance policy and the periodic payment is known as the insurance premium. Insurance provides a mechanism for shifting risk from a person, business, or organization to an insurance company in exchange for the payment of the insurance premium.

Insurance is basically a sharing device.

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INSURANCE IN INDIA

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Insurance Definition:
Insurance can be defined both in financial as well as in legal terms for it dabbles in both these fields.

Financial Definition: Transfer or shifting risk from one individual to a group and sharing losses on an equitable basis by all members of the group.

Legal Definition: In legal terms, insurance is a contractual agreement whereby one party agrees, for a consideration called premium, to compensate another party for losses. Each of such transaction involves following: Insurer - The party agreeing to pay for the losses of the insured. Insured - The party who insures his risks with the insurer. Premium - The payment the insurer receives from the insured for indemnifying losses. Policy - Policy is the contract between the insurer and insured that sets the contractual obligations between the two. Exposure to loss - The insureds possibility of loss is called the insureds exposure to loss.

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Insurance Sector
Insurance sector is broadly divided into two parts: Life Insurance Non Life/General Insurance

The reform in the insurance sector leading finally to the opening of the insurance sector for private participation has brought in its wake major changes not only in the design of the products available in the market but also the manner in which they are marketed. We have today a host of products coupled with a large number of intermediaries who market them.

Companies especially life insurance companies are adopting different types of distribution channels to grab customers. Multi-channel distribution model is such a new concept that is presently seemed to be alluring to Indian life insurers. In a multiple distribution model, a single insurance company uses more than one distribution channel to market its products.

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Distribution channels of Life Insurance in Indian Market

The distribution scenario of life insurance has varied a lot with post liberalization Policies in Indian market. By any yardstick, India, with about 200 million middle class households, presents a huge untapped potential for players in the insurance industry. Saturation of markets in many developed economies has made the Indian market even more attractive for global insurance majors. Financial consultant (agent) is one of the most important modes of distribution of life insurance products. Financial consultant (Agents) continues to be the predominant distribution channel, today a number of innovative alternative channels are being offered to consumers. Some of them are banc assurance, brokers, the internet and direct marketing.

The distribution system for life insurance products post liberalization involves various intermediaries between insurer and insured. Following are the different kind of distribution channels:

1. Agents:
Agents have function of direct selling to the customer; they are main intermediary between the company and the client. There are two types of agents, General and Career agents. The General agents work for different insurers at the same time but career agents work for only one insurer. Prior to liberalization no minimum qualification was laid down for the people who wanted to become insurance agents. They generally acted as life brokers and cared more for their commission than the needs of the customer. As the result they didnt make the required efforts to educate the customers about insurance 15

products being offered. But with the entry of the new players in the Indian market the insurance market has changed drastically. Private insurers focused more on the technical expertise and service excellence so they give proper training to the agents and teach them properly about the insurance products which they are suppose to sell.

2. Brokers:
Insurance brokers are the organizations who assess the complete insurance needs of the customers and then work out with insurers to give a complete solution to customers. Brokers attributes: 1) Brokers must have ability to develop a more comprehensive understanding of a clients business and broad spectrum of risks. 2) They are not tied with particular insurer and are expected to give the best service to the customer according to the need of the customer.

Broker versus Agent

1) A broker may sell the products of a number of insurers whereas an insurance agent has the Insurer as his principal and works in the interest of the Insurer and not the Insured. 2) An insurance broker differs from an insurance agent in that a broker is considered an agent of the Insured even though he or she may receive a commission from the insurance company

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3. Bancassurance:
This refers to the distribution of the insurance products through banks. Products are distributed through a banks branches and also through new distribution systems such as electronic banking. Bank assurance is believed to be the best because banks are familiar with the target customers needs and have a strong delivery mechanism. The reasons why banks have pushed the life insurance products are:

1) Mature and highly competitive banking markets 2) Broadening of the product base a) One - stop shopping b) Complementary Products 3) Leverage banks competitive edge on the marketing side a) Frequency of contacts b) Customer knowledge c) Image/Brand name

Some of the disadvantages of the bancassurance are initial investment and training of people and lack of awareness about this new concept.

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4. Corporate Agents:
Corporate agents function the same way as brokers do, barring the fact that they can sell only one insurance companys products. Some corporate agents, however, have tried to circumvent this regulation by setting up two or three sister firms so that they can offer a basket of products to their clients. This term refers to the corporate that acts as agents to the insurance companies. The insurance company chooses a third party which is financially sound and assigns it the responsibility of covering a given location. This third party is called corporate agent.

Winds of Change:
Reforms have marked the entry of many of the global insurance majors into the Indian market in the form of joint ventures with Indian companies. Some of the key names are AIG, New York, Allianz, Prudential, Standard Life, Old Mutual. The entry of new players has rejuvenated the erstwhile monopoly player LIC, which has responded to the competition in an admirable fashion by launching new products and improving service standards.

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Players in Life Insurance industry in India:

LIC HDFC STANDARD ICICI PRUDENTIAL ALLIANZ BAJAJ ING VYASA BIRLA SUNLIFE MAX NEWYORKLIFE METLIFE OM KOTAK MAHINDRA AVIVA SBI Life TATA-AIG AMP SANMAR (Now A Reliance Group Company) SRIRAM LIFE INSURANCE COMPANY( A New Entrant) BHARTI-AXA ( A New Entrant)

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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 is a (non-exhaustive) list of the many different types of insurance that exist. A single policy may cover risks in one or more of the categories set forth 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 health insurance for medical expenses of guests who are injured on the owner's property.

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 most of 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.

Aviation insurance insures against hull, spares, deductible, hull war and liability risks. 20

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.

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 owners policy (BOP), which bundles into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how home owners insurance bundles the coverages that a home owner needs.

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

Credit insurance repays some or all of a loan back when certain things happen to the borrower such as unemployment, disability, or death. Mortgage insurance (see below) is a form of credit insurance, although the name credit insurance more often is used to refer to policies that cover other kinds of debt.

Crime insurance insures 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.

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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."[4]

Defense Base Act Workers' compensation or DBA Insurance insurance provides coverage for civilian workers hired by the government to perform contracts outside the US and Canada. DBA is required for all US citizens, US residents, US Green Card holders, and all employees or subcontractors hired on overseas government contracts. Depending on the country, Foreign Nationals must also be covered under DBA. This coverage typically includes expenses related to medical treatment and loss of wages, as well as disability and death benefits.

Directors and officers liability insurance protects an organization (usually a corporation) from costs associated with litigation resulting from mistakes incurred by directors and officers for which they are liable. In the industry, it is usually called "D&O" for short.

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 mortgages and credit cards.
o

Total permanent disability insurance 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.

Errors and omissions insurance: See "Professional liability insurance" under "Liability insurance".

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Expatriate insurance provides individuals and organizations operating outside of their home country with protection for automobiles, property, health, liability and business pursuits.

Financial loss insurance protects individuals and companies against various financial risks. For example, a business might purchase cover to protect it from loss of sales if a fire in a factory prevented it from carrying out its business for a time. Insurance might also cover the failure of a creditor to pay money it owes to the insured. This type of insurance is frequently referred to as "business interruption insurance." Fidelity bonds and surety bonds are included in this category, although these products provide a benefit to a third party (the "obligee") in the event the insured party (usually referred to as the "obligor") fails to perform its obligations under a contract with the obligee.

Fire insurance: See "Property insurance". Hazard insurance: See "Property insurance". Health insurance policies will often cover the cost of private medical treatments if the National Health Service in the UK (NHS) or other publicly-funded health programs do not pay for them. It will often result in quicker health care where better facilities are available.

Home insurance or homeowners insurance: See "Property 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 23

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 willful or intentional acts by the insured.
o

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.

Professional liability insurance, also called professional indemnity insurance, protects professional practitioners such as architects, lawyers, doctors, and accountants 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, home inspectors, appraisers, and website developers.

Life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for 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.

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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.

Locked funds insurance is a little-known hybrid insurance policy jointly issued by governments and banks. It is used to protect public funds from tamper by unauthorised parties. In special cases, a government may authorise its use in protecting semi-private funds which are liable to tamper. The terms of this type of insurance are usually very strict. Therefore it is used only in extreme cases where maximum security of funds is required.

Marine insurance and marine cargo insurance cover the loss or damage of ships at sea or on inland waterways, and of the cargo that may be on them. 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.

Mortgage insurance insures the lender against default by the borrower. 25

National Insurance is the UK's version of social insurance (which see below). No-fault insurance is a type of insurance policy (typically automobile insurance) where insureds are indemnified by their own insurer regardless of fault in the incident.

Nuclear incident insurance covers damages resulting from an incident involving radioactive materials and is generally arranged at the national level. (For the United States, see the Price-Anderson Nuclear Industries Indemnity Act.)

Pet insurance insures pets against accidents and illnesses - some companies cover routine/wellness care and burial, as well.

Political risk insurance 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.

Pollution Insurance. A first-party coverage for contamination of insured property either by external or on-site sources. Coverage for liability to third parties arising from contamination of air, water, or land due to the sudden and accidental release of hazardous materials from the insured site. The policy usually covers the costs of cleanup and may include coverage for releases from underground storage tanks. Intentional acts are specifically excluded

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.

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Purchase insurance is aimed at providing protection on the products people purchase. Purchase insurance can cover individual purchase protection, warranties, guarantees, care plans and even mobile phone insurance. Such insurance is normally very limited in the scope of problems that are covered by the policy.

Retrospectively Rated Insurance is a method of establishing a premium on large commercial accounts. The final premium is based on the insured's actual loss experience during the policy term, sometimes subject to a minimum and maximum premium, with the final premium determined by a formula. Under this plan, the current year's premium is based partially (or wholly) on the current year's losses, although the premium adjustments may take months or years beyond the current year's expiration date. The rating formula is guaranteed in the insurance contract. Formula: retrospective premium = converted loss + basic premium tax multiplier. Numerous variations of this formula have been developed and are in use.

Social insurance can be many things to many people in many countries. But a summary of its essence is that it is a collection of insurance coverages (including components of life insurance, disability income insurance, unemployment insurance, health insurance, and others), plus retirement savings, that mandates participation by all citizens. By forcing everyone in society to be a policyholder and pay premiums, it ensures that everyone can become a claimant when or if he/she needs to.

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Along the way this inevitably becomes related to other concepts such as the justice system and the welfare state. This is a large, complicated topic that engenders tremendous debate, which can be further studied in the following articles (and others):
o o o o o o

Social welfare provision Social security Social safety net National Insurance Social Security (United States) Social Security debate (United States)

Terrorism insurance provides protection against any loss or damage caused by terrorist activities.

Title insurance provides a guarantee that title to real property is vested in the purchaser and/or mortgagee, free and clear of liens or encumbrances. It is usually issued in conjunction with a search of the public records performed at the time of a real estate transaction.

Travel insurance is an insurance cover taken by those who travel abroad, which covers certain losses such as medical expenses, lost of personal belongings, travel delay, personal liabilities, etc.

Workers' compensation insurance replaces all or part of a worker's wages lost and accompanying medical expense incurred because of a job-related injury.

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Types of insurance companies

Insurance companies may be classified as

Life insurance companies, which sell life insurance, annuities and pensions products.

Non-life or general insurance companies, which sell other types of insurance.

General insurance companies can be further divided into these sub categories.

Standard Lines Excess Lines

In most countries, life and non-life insurers are subject to different regulatory regimes and different tax and accounting rules. The main reason for the distinction between the two types of company is that life, annuity, and pension business is very long-term in nature coverage for life assurance or a pension can cover risks over many decades. By contrast, non-life insurance cover usually covers a shorter period, such as one year. In the United States, standard line insurance companies are your "main stream" insurers. These are the companies that typically insure your auto, home or business. They use pattern or "cookie cutter" policies without variation from one person to the next. They usually have lower premiums than excess lines and can sell directly to individuals. They are regulated by state laws that can restrict the amount they can charge for insurance policies.

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Excess line insurance companies (aka Excess and Surplus) typically insure risks not covered by the standard lines market. They are broadly referred as being all insurance placed with non-admitted insurers. Non-admitted insurers are not licenced in the states where the risks are located. These companies have more flexibility and can react faster than standard insurance companies because they don't have the same regulations as standard insurance companies. State laws generally require insurance placed with surplus line agents and brokers to not be available through standard licensed insurers. Insurance companies are generally classified as either mutual or stock companies. This is more of a traditional distinction as true mutual companies are becoming rare. Mutual companies are owned by the policyholders, while stockholders (who may or may not own policies) own stock insurance companies. Other possible forms for an insurance company include reciprocals, in which policyholders 'reciprocate' in sharing risks, and lloyds organizations. Insurance companies are rated by various agencies such as A.M. Best. The ratings include the company's financial strength, which measures its ability to pay claims. It also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products. Reinsurance companies are insurance companies that sell policies to other insurance companies, allowing them to reduce their risks and protect themselves from very large losses. The reinsurance market is dominated by a few very large companies, with huge reserves. A reinsurer may also be a direct writer of insurance risks as well.

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Captive insurance companies may be defined as limited-purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. This definition can sometimes be extended to include some of the risks of the parent company's customers. In short, it is an in-house self-insurance vehicle. Captives may take the form of a "pure" entity (which is a 100% subsidiary of the selfinsured parent company); of a "mutual" captive (which insures the collective risks of members of an industry); and of an "association" captive (which self-insures individual risks of the members of a professional, commercial or industrial association). Captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. Additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices. The types of risk that a captive can underwrite for their parents include property damage, public and products liability, professional indemnity, employee benefits, employers liability, motor and medical aid expenses. The captive's exposure to such risks may be limited by the use of reinsurance. Captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent.

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This can be understood against the following background:

Heavy and increasing premium costs in almost every line of coverage; Difficulties in insuring certain types of fortuitous risk; Differential coverage standards in various parts of the world; Rating structures which reflect market trends rather than individual loss experience;

Insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy amongst many companies . Similar to an insurance consultant, an 'insurance broker' also shops around for the best insurance policy amongst many companies. However, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client. Neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. Third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. These companies often have special expertise that the insurance companies do not have.

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Life insurance and saving

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. A combination of low-cost term life insurance and a higher-return tax-efficient retirement account may achieve better investment return. Global insurance premiums grew by 9.7% in 2004 to reach $3.3 trillion. This follows 11.7% growth in the previous year. Life insurance premiums grew by 9.8% during the year, thanks to rising demand for annuity and pension products. Non-life insurance premiums grew by 9.4%, as premium rates increased. Over the past decade, global insurance premiums rose by more than a half as annual growth fluctuated between 2% and 10%. 33

Advanced economies account for the bulk of global insurance. With premium income of $1,217 billion in 2004, North America was the most important region, followed by the EU (at $1,198 billion) and Japan (at $492 billion). The top four countries accounted for nearly two-thirds of premiums in 2004. The United States and Japan alone accounted for a half of world insurance premiums, much higher than their 7% share of the global population. Emerging markets accounted for over 85% of the worlds population but generated only 10% of premiums. The volume of UK insurance business totaled $295 billion in 2004 or 9.1% of global premiums.

Financial viability of insurance companies

Financial stability and strength of an insurance company should be a major consideration when purchasing an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool or other arrangement with less attractive payouts for losses). A number of independent rating agencies, such as Best's, Fitch, Standard & Poor's, and Moody's Investors Service, provide information and rate the financial viability of insurance companies.

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Controversies
Insurance insulates too much By creating a "security blanket" for its insureds, an insurance company may inadvertently find that its insureds may not be as risk-averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer). This problem is known to the insurance industry as moral hazard. To reduce their own financial exposure, insurance companies have contractual clauses that mitigate their obligation to provide coverage if the insured engages in behavior that grossly magnifies their risk of loss or liability. For example, life insurance companies may require higher premiums or deny coverage altogether to people who work in hazardous occupations or engage in dangerous sports. Liability insurance providers do not provide coverage for liability arising from intentional torts committed by the insured. Even if a provider were so irrational as to desire to provide such coverage, it is against the public policy of most countries to allow such insurance to exist, and thus it is usually illegal.

Closed community self-insurance

Some communities prefer to create virtual insurance amongst themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. A number of religious groups, including the Amish and some Muslim groups, depend on support provided by their communities when disasters strike.

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The risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. In supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. In this manner the community can even out the extreme differences in insurability that exist among its members. Some further justification is also provided by invoking the moral hazard of explicit insurance contracts.

Complexity of insurance policy contracts

Insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. As a result, people may buy policies on unfavorable terms. In response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold. Many institutional insurance purchasers buy insurance through an insurance broker. Brokers represent the buyer (not the insurance company), and typically counsel the buyer on appropriate coverages, policy limitations. A broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible.

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Insurance may also be purchased through an agent. Unlike a broker, who represents the policyholder, an agent represents the insurance company from whom the policyholder buys. An agent can represent more than one company.

INDIAN INSURANCE INDUSTRY Insurers

Insurance industry, as on 1.4.2000, comprised mainly two players: the state insurers:

Life Insurers:

Life Insurance Corporation of India (LIC)

General Insurers:

General Insurance Corporation of India (GIC) (with effect from Dec'2000, a National Reinsurer)

GIC had four subsidiary companies, namely (with effect from Dec'2000, these subsidiaries have been de-linked from the parent company and made as independent insurance companies):

1. The Oriental Insurance Company Limited 2. The New India Assurance Company Limited, 3. National Insurance Company Limited 4. United India Insurance Company Limited

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Yr: 2000-2001: (From 2nd April '2000 to 31st December'2001) Insurance Industry in the year 2000-2001 had 16 new entrants, namely:

Life Insurers:
S.No. Registrat Date of ion Number 1 101 23.10.20 HDFC Standard Life Insurance Company Ltd. 00 2 104 15.11.20 Max New York Life Insurance Co. Ltd. 00 3 105 24.11.20 ICICI Prudential Life Insurance Company Ltd. 00 4 107 10.01.20 Kotak Mahindra Old Mutual Life Insurance Limited 01 5 109 31.01.20 Birla Sun Life Insurance Company Ltd. 01 6 110 12.02.20 Tata AIG Life Insurance Company Ltd. 01
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Name of the Company

Reg.

111

30.03.20 SBI Life Insurance Company Limited . 01

114

02.08.20 ING Vysya Life Insurance Company Private Limited 01

116

03.08.20 Bajaj Allianz Life Insurance Company Limited 01

10

117

06.08.20 Metlife India Insurance Company Pvt. Ltd. 01

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General Insurers :
S.No. Registration Date of Number 1 2 102 103 Registration 23.10.2000 23.10.2000
Royal Sundaram Alliance Insurance Company Limited Reliance General Insurance Company Limited.

Name of the Company

3 4 5 6

106 108 113 115

04.12.2000 22.01.2001 02.05.2001 03.08.2001

IFFCO Tokio General Insurance Co. Ltd TATA AIG General Insurance Company Ltd. Bajaj Allianz General Insurance Company Limited ICICI Lombard General Insurance Company Limited.

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Yr: 2001-2002: (From 1st Jan 2001 to Dec. 2002) Insurance Industry in this year, so far has 5new entrants; namely

Life Insurers: S.No. Registration Date of Reg. Name of the Company Number 1 2 3 4. 5. 121 122 123 124 125 03.01.2002 14.05.2002 15.07.2002 27.08.2002 27.08.2002
AMP Sanmar Life Insurance Company Limited. Aviva Life Insurance Co. India Pvt. Ltd. Cholamandalam General Insurance Company Ltd. Export Credit Guarantee Corporation Ltd. HDFC-Chubb General Insurance Co. Ltd.

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Yr: 2003-2004: (From 1st Jan 2003 till date) Insurance Industry in this year, so far has 1 new entrants; namely

Life Insurers:
S.No. Registration Date of Number 1 127 Reg. 06.02.2004 Sahara India Insurance Company Ltd. Name of the Company

42

INSURANCE BUSINEES
Insurance business is divided into four classes : 1) Life Insurance 2) Fire Insurance 3) Marine Insurance and 4) Miscellaneous Insurance. Life Insurers transact life insurance business; General Insurers transact the rest. No composites are permitted as per law. LEGISLATION (as on 1.4.2000): Insurance is a federal subject in India. The primary legislation that deals with insurance business in India is: Insurance Act, 1938 and Insurance Regulatory & Development Authority Act, 1999. INSURANCE PRODUCTS (as on 1.4.2000) (for latest information get in touch with the current insurers website information of insurers is provided at the web page for insurers):

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Life Insurance:
Popular Products: Endowment Assurance (Participating), and Money Back

(Participating). More than 80% of the life insurance business is from these products.

General Insurance:
Fire and Miscellaneous insurance businesses are predominant. Motor Vehicle insurance is compulsory. Tariff Advisory Committee (TAC) lays down tariff rates for some of the general insurance products (please visit website of GIC for details)

2001
New products have been launched by life insurers. These include linked-products. For details, please visit the websites of life insurers.

INFORMATION
About the insurance industry, the following documents may be helpful: Malhotra Committee Report (The Report of the Committee on Reforms in the Insurance Sector); IRDA's First Annual Report 2001

44

ENTRY OF FOREIGN PLAYERS

As a few of these players are also in different areas of financial services, the revenue figures do not relate only to insurance related income. However, most of the global insurance majors wish to participate in the opening up of the industry in India. Players like ING Group, Prudential of the U.K., Standard Life, Sun Life of Canada and Zurich Financial Services have already made an entry into the asset management business in India. Further, a few such as AIG, Allianz and Zurich Financial Services have started offering risk management services to Indian corporate. The entrants into the insurance business in India can be divided into the following categories: (i) (ii) Major international insurance groups, Large private groups such as the Tata's, Birla's and Reliance,

who can enter the insurance industry on their own strength in terms of funds, but who require technical/ managerial support from foreign participants; the number of Indian groups belonging to this category is limited as insurance demands substantial investment in ventures with long gestation periods. Such groups may involve foreign insurance companies as they feel that this would be the best way to proceed, (iii) Indian groups/companies which are not financially very strong but would still like

to enter this new field opening up. They can, however, enter the business only in joint ventures with foreign insurance majors. The foreign majors would provide technical, managerial and equity support. However, the amount of equity that would be required over the years is substantial and given the fact that insurance projects have long gestation, such groups may have difficulty in meeting fund requirements on their own at a later date;

45

(iv) and ICICI.

Banks and financial institutions such as State Bank of India

GUIDELINES FOR ENTRY OF INSURANCE

Commercial banks in India have a huge distribution network that cannot be matched by other financial service organizations. Hence commercial banks have been eyeing banc assurance as a logical diversification. The Reserve Bank of India (RBI) has come out with detailed guidelines on the entry norms of commercial banks into insurance. Basically for banks wanting to enter the insurance field, there are three options. Strong banks, subject to eligibility norms, will be permitted to set up joint ventures for undertaking insurance business with risk participation. The maximum equity contribution such a bank would hold in the joint venture would normally be 50 per cent of the paid-up capital of the insurance company. However, a higher level of equity contribution may be permitted, subject to divestment of equity within the prescribed period. Banks which are not eligible as joint venture participants can make investments up to ten per cent of the net worth of the bank or Rs. 50 crores, whichever is lower, in the insurance company for providing infrastructure and services support. Such participation shall be treated as an investment and should be without any contingent liability for the bank. Finally, any scheduled commercial bank would be permitted to undertake insurance business as agent of insurance companies on fee basis, without any risk participation. Subsidiaries of banks will also be allowed to undertake distribution of insurance products on agency basis. However, it may be added here that marketing/

46

selling of insurance products is different from banking products, hence the selling techniques will be different.

47

Norms for NBFC's

In the case of non-banking finance companies (NBFCs) also, the RBI has come out with detailed guidelines for diversification into the insurance area. All NBFCs registered with the RBI and satisfy the eligibility criteria will be permitted to set up a joint venture company for undertaking insurance business with risk participation. In fact there are very few NBFCs which meet the stringent norms laid down by the RBI. However, any NBFC registered with the RBI having net owned fund of Rs. 2 crores would be permitted to undertake insurance business as agent of insurance companies on fee basis, without any risk participation.

48

Insurance Regulatory & Development Authority (IRDA)

GOVERNMENT REGULATION
49

INSURANCE REGULATORY DEVELOPMENT ACT (IRDA):

On the recommendation of the Malhotra Committee Indian Parliament passed Insurance Regulatory Development Act. (IRDA) in the year 1999. Government of India has set up on interim Insurance Regulatory Authority (IRA) for proper monitoring and control of the insurance industry. The IRA is headed by a chairman who also controller of insurance and Chairman of IBC. IRDA, for the time being prohibits 100% foreign equity in insurance. It requires the Indian promoters to invest either wholly in an insurance venture or team up with a foreign insurer with a cap of 26% of equity for a foreign partner. The Indian promoter is permitted to divest only after 10 years to the Indian public, through a public offering of shares, at which tune the equity structure will provide for equal participation between the Indian and foreign partner with a share of 26% each in the share capital. IRA is a sole authority responsible for awarding of licenses. There is no restriction on the number of licenses and no composite license for life & non life business. Composition of Authority under IRDA Act, 1999 As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development Authority (IRDA, which was constituted by an act of parliament) specify the composition of Authority .The Authority is a ten member authority consists of: 1. A chairman. 2. 5 whole-time members. 3. 4 part-time members.

IRDA proposals for new license are:

50

New players should commence business within 15-18 months. Trafficking of licenses not to be permitted and shares are not Transferable without approval. Report 1999 Report 2000 REPORT 2000:

(General Insurance - Reinsurance) Regulations, 2000 In exercise of the powers conferred by Sections 114A of the Insurance Act, 1938(4 of 1938), the Authority in consultation with the Insurance Advisory Committee hereby makes the following regulations, namely:

PRELIMINARY 1. Short title and commencement

These regulations may be called the Insurance Regulatory and Development Authority (Reinsurance) Regulations, 2000 and are issued in pursuance of Section 114 of the Act. They shall come into force from the date of its publication in the Official Gazette. These regulations apply to all general insurers transacting direct insurance business.

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The General Insurance Company

The business of general insurance is the monopoly of General Insurance Corporation of India (GIC), owned by the Government of India. This entity is a single organization with four subsidiaries. GIC was incorporated as a holding company in 1992 under the General Insurance Act, 1972. The insurance business is subject to regulations under the Insurance Act. 1938 and General Insurance Act, 1972. Being a fully owned subsidiary of GOI, the paid-up capital of the GIC is fully subscribed by the govt. and GIC, in turn owns fully, the paid-up capital of its four subsidiaries. Before nationalization in November, 1972, a number of Indian and many foreign companies did general insurance business in India and this business was linked with their branches abroad. In addition, this product was also offered by LIC, some mutual companies and cooperative societies In fact, on the eve of nationalization, 68 Indian (including LIC) and 45 non-Indian entities carried out insurance business in India. Nationalization saw the business of all 1. National Insurance Co. Ltd. 2. New India Assurance Co. Ltd. 3. Oriental Fire and General Insurance Co. Ltd. 4. United India Insurance Co. Ltd. These organizations absorbed by the General Insurance Company (GIC) with its four subsidiaries viz. These subsidiaries carry out the entire general insurance business in the country and cede 20% of it to GIC through the obligatory reinsurance premium on a quota share basis. GIC's direct business is only in the form of aviation insurance.

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The general insurance business is mainly of three types: Marine, Fire and, Miscellaneous. As of now, fire insurance contributes the largest share in the business, although its share has been going down. Miscellaneous business has been the growth area with health insurance assuming increasing importance in terms of potential. Marine insurance is relatively less important in India. Acknowledging the trend of growth in miscellaneous business, GIC has recently come out with a host of new policies/plans/schemes. Personal Accident Policy for Visitors in Bank Premises, Mediclaim, Householders' Comprehensive Insurance Policy, Professional Indemnity Insurance, insurance against liability and contingency for members of stock exchanges and joint stock companies, Rejection Insurance on marine products, Nuclear Insurance Pool for insurance of nuclear power plants and other nuclear related risks, hut insurance, and Personal Accident Insurance Social Security Scheme are examples of such policies. GIC has also become active in mutual funds and housing as GIC Mutual Fund, GIC Griha Vitta Ltd. Floating of Loss Prevention Association of India Ltd., and the National Insurance Academy are some of the other long term customer friendly activities.

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Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.. Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business. Without prejudice to the generality of the provisions contained in sub-section1, the powers and functions of the Authority shall include, Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend or cancel such registration; Protection of the interests of the policy holders in matters concerning Assigning of policy, nomination by policy holders, insurable interest, Settlement of insurance claim, surrender value of policy and other Terms and conditions of contracts of insurance; Specifying requisite qualifications, code of conduct and practical training for intermediary or insurance intermediaries and agents; Specifying the code of conduct for surveyors and loss assessors; Promoting efficiency in the conduct of insurance business; Promoting and regulating professional organizations connected with the insurance and re-insurance business; Levying fees and other charges for carrying out the purposes of this Act; Calling for information from, undertaking inspection of, conducting Enquiries and investigations including audit of the insurers,

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IRDA NOTIFICATION

INSURANCE

REGULATORY

AND

DEVELOPMENT

AUTHORITY

(LICENSING OF INSURANCE AGENTS) 2002 F.No. IRDA/Reg./ 10/2002:-

(AMENDMENT) REGULATIONS,

In exercise of the powers conferred by section 42 and section 114A of the Insurance Act, 1938 (4 of 1938), the Authority, in consultation with the Insurance Advisory Committee, hereby makes the following regulations to amend the Insurance Regulatory and Development Authority (Licensing namely:of Insurance Agents) Regulations, 2000,

1(1). These regulations may be called the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) (Amendment) Regulations, 2002. 1(2). They shall come into force on the date of their publication in the Official Gazette.

2. In the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations, 2000, after sub-regulation 3(2), the following sub-regulations 3(3) and 3(4) shall be added:(1) The designated person shall grant or renew the license within a period of 3 months from the date of application. (2) The designated person shall, if the consideration of the application is likely to get delayed within 60 days of the receipt of the application, inform the applicant the reasons for such a delay, and the likely time it would take to do so. 55

3. In the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations, 2000 after regulation 11, the following regulation shall be added:-

12. From the date of coming into force of the Insurance Regulatory and Development Authority (Licensing of Corporate Agents) Regulations, 2002, the Insurance Regulatory and Development Authority (Licensing of Insurance Agents) Regulations, 2000 or any part thereof applying to corporate agents shall cease to have any effect, except as respects things done or omitted to be done there under.

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THE COMPANY

HDFC Standard Life Insurance

57

INDUSTRY PROFILE

Incorporated in 1977 as a public limited company To specialize in provision of housing finance to individuals, co-operative societies & the corporate sector

First private sector retail housing finance company HDFC is listed on both BSE and NSE Market capitalization (June 2002) - Rs. 79 billion (US $ 1.6 bn)

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Profiles

59

COMPANY PROFILE

COMPANY NAME:

HDFC STANADARD LIFE INSURANCE CO.

INDIAN PARTNER: FORIGN PARTNER: EQUITY RATIO: COMMENCEMENT DATE: FIELD OF OPERATION: CEO OF THE COMPANY:

HDFC BANK STANDARD LIFE (U.K ) 74:26 January 1995 LIFE INSURANCE Mr. Amitabh Chaudhry Managing Director and Chief Executive Officer

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About the company

HDFC Standard Life Insurance Limited is a joint venture between HDFC of India & Standard Life of UK wherein HDFC has a stake of 72.37% and Standard Life a stake of 26% & rest for others. The company currently has 28 retail and 9 group products in its portfolio, along with ten optional rider benefits catering to the savings, investment, protection and retirement needs of customers. HDFC is a AAA rated first private sector retail housing finance company. Standard Life UK is the largest mutual life insurance company in Europe with assets over Rs. 5, 81,000 crores ( 83.2 bn) Achievements HDFC Standard Life Insurance is the first private life insurer to re-enter the life insurance market in India. HDFCSL was the first life insurer to be granted a certificate of registration incorporated on 14th August 2000. Ranked as Indias most respected private insurance company in 2004, HDFCSL seeks to mirror the success of its parent company and be a yardstick by which all other insurance companies are measured. During the year 2003-04, the company crossed Rs. 13,500 Crore in Sum Assured covering 450,000 lives and registered a 76% growth in new business premium. Growth Strategy The future growth strategy of HDFCSL is to reach out to more and more customers. Company is strengthening their presence in the existing markets and also it is targeting

61

new market, focusing on offering customized solutions and maintaining excellent service standards.

BANK ASSOCIATE PARTNERS

62

Financial Conglomerate

HDFC CHUBB GENERAL INSURANCE CO. LTD.

SECURITISATION

DISTRIBUTIO N

63

Bancassurance Partners

HDFC Bank

Saraswat Bank

Indian Bank

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ORGANIZATIONAL STRUCTURE

Organization Structure HDFCSL

27

27

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MARKET POSITION
HDFC Standard Life Insurance Company Ltd. In the total market share, LIC has reduced its share from 91% to 70%. This means that private insurance players have got more margins in their hands which have increased from 9% to 30% in last 2years only. In the private market share, HDFC SLIC leads with 39% of the market share in its hand followed by Bajaj Allianz with 18% shares and then comes Birla Sun Life with 15% market shares. HDFC SLIC has been maintaining its NO 2nd position since last 5 years because of its prolific product range and commanding brand equity. It has a highest capital base of Rs. 925 crores and a team of more than 56,300 well-trained advisors. It enjoys a brand recall rate of 92% and gives credit of its success to the 5 core values Integrity Customer Boundary Less Ownership Passion

Private share in the market

Bajaj Allianz 18% Birla Sun Life 15% Max New HDFC Std York Life HDFC STANDARD LIFE Life 8% 14% ICICI Prudential
39% ICICI Prudential Tata AIG HDFC Std Life Max New York Life Birla Sun Life Bajaj Allianz

Tata AIG 6%

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HDFC Standard Life Insurance Company is a joint venture between India's largest housing finance provider, HDFC and Europe's largest mutual life assurance company

The Standard Life Assurance Company (U. K). Standard Life, UK, founded in 1825, has been at the forefront of the UK insurance industry for 175 years by combining sound financial judgment with integrity and reliability. It is the Largest Mutual Life company in Europe and has total assets of Rs. 5, 50,000 crore.

Training activities for agents/advisors: As per IRDA guidelines, 100hrs training is compulsory. Both online & classroom training are available. Training is compulsory with both part-time & full time Options. A clear exam is conducted by IRDA, the minimum qualification required is12th pass for urban areas 10th pass for rural areas.

Commission Structure: Depends on the product, like on savings 20-40% 1st year premium. On investment 2% On pension 7.5% 67

68

Modes & ways through which the company recruits agents: Direct contacts. Newspaper adds. Consultants. Member of the company can introduce a new member.

Current agent force: Around 500-700 in Delhi.

Top 5 USPs (Unique Selling Proposition) Of HDFC Std. Life: Best insurer according to Outlook. Well supported by foreign 1st private sector life insurance Company to be granted a license. Declared bonus every year from the day of incorporation (only company)

Provides fast service to the customers in terms of claim

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PRODUCTS

70

HDFC Standard Life Products Life Insurance Products are basically classified into 4 sub segments: I. II. III. IV. Protection Low Premium cost, High-Risk Cover Investment Aim for long term real growth and steady accumulation of funds Pension Provide for retirement expenses and income at old age. Savings Helps to save for a particular event in future

Protection

Investment

Term Assurance Plan Loan Cover Term Assurance

Plan

Single Premium
Whole of Life Plan

Endowment Assurance Plan Unit Linked Endowment Plan Childrens Plan Unit Linked Young Star Plan
Saving

Personal Pension Plan Unit Linked Pension Plan

Pension

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LIFE TIME POLICIES

HDFC Standard Life Insurance

LIFE TIME PLAN Policy that meets your changing need over a lifetime Premium part is adjusted towards morality and administrative charges and rest is invested in plan of your choice.

ENDOWMENT POLICIES

72

HDFC Standard Life Insurance HDFC STANDARD LIFE INSURANCE HDFC STANDARD LIFE INSURANCE SAVE N PROTECT HDFC STANDARD LIFE INSURANCE CASH BACK An HDFCSLIC ideal plan for those who want to accumulate funds on a regular An ideal plan for every milestone of life. It combines life basis with life cover cover+liquidity+savings. It provides survival benefit after every 3 or 4 yrs and add-on benefit for a It is a fixed term policy that combines saving with life cover. The premium is paid nominal extra premium. regularly during the term

On death up to age: - basic premium returned without interest On death after age 7: - sum assured @3.5% compounded interest for first 4 yrs and then vested bonus.

MONEY BACK POLICIES

CHILDREN POLICIES

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74

SINGLE PREMIUM POLICIES

HDFC STANDARD LIFE INSURANCE

HDFC STANDARD LIFE INSURANCE REASSURE A safe and comprehensive plan for those about to retire or has retired. It combines best of insurance and investment Liquidity with assured and steady annual returns. Life cover up to 110% of premium

paid. HDFC STANDARD LIFE INSURANCE HDFC STANDARD LIFE INSURANCE ASSURE INVEST An investment with healthy returns and added benefit of insurance. SMART KID Plan designed for critical educational This policy has a fixed term of 7 or10 yrs. milestone include specialised course in the country and abroad HDFC STANDARD LIFE INSURANCE LIFE LINK The sum assured is paid immediately from 100,000 to 300,000 An ideal market linked insurance plan that enables you to enjoy the upside of market returns. All future payments are waived off Most you importantly the Childs willyour continue to receive the between policy benefits. It gives flexibility of choosing investment option growth, income or balanced plan.

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TERM INSURANCE PLANS

HDFC STANDARD LIFE INSURANCE

HDFC STANDARD LIFE INSURANCE LIFE GUARD An ideal low cost policy that covers your life with uncertainties It comes with a choice of two convenient premium payment modes-one time and regular It gives the flexibility of accident and disability cover for a extra premium Minimum premium payable 2400 per annum. It has no maturity benefits

Protection Plans Protection range includes our Term Assurance Plan & Loan Cover Term Assurance Plan. Investment Plans Single Premium Whole Of Life plan is well suited to meet your long term investment needs Pension Plans Pension range includes our Personal Pension Plan, Unit Linked Pension, Unit Linked Pension Plus Savings Plans 76

Savings range includes Endowment Assurance Plan, Unit Linked Endowment, Unit Linked Endowment Plus, Money Back Plan, Childrens Plan.

AWARDS & ACCOLADE

'YoungStar Super' Voted 'Product of the Year 2010'

Best Companies to Work for in India in 2010- ranked 34 among 50. Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007 in business category-2008 Rated as the Best Non-Banking Financial Company in Asia by Institutional Investor Research Group 2002 Euromoney identified HDFC as one of Asias top 10 best managed companies in the finance sector 2001 Asiamoney declared HDFC as the second best managed company in India 2001 IMC Ramakrishna Bajaj National Quality Award in the service category 1999

Excellence in service industry by the Indian Institute of Marketing Management & Top Management Club (Pune) 1998 Rated as one of the best companies in India for strategy & management and investor relations by Asiamoney - 1998 Best presented accounts 1994-95 and 1996-97 (3rd place) - in the SAARC region by the South Asian Federation of Accounts in the financial sector category Most competitive Indian company by Euromoney 1997 Indias best managed company by Asia money magazine - 1995 and 1996 77

 United Nations Scroll of Honour 1991 Shield for the best presented accounts for banks and financial institutions - over 11 times (8 years in a row)

DISTRIBUTION

78

EXECUTIVE CHANNEL DISTRIBUTION

HDFC Standard

Life pioneered the multi-channel distribution model, which

encompasses bank tie-ups, corporate agents, brokers as well as advisors. The company started with a base of 62 advisors and then slowly expanded its distribution channels through bancassurance, direct marketing, and other measures. HDFC SLIC also ventured into the rural segment through various state-level and non-government organizations. Today the company has one of the widest distribution networks with 153 branches in 110 locations spread across the country. On service, the focus is to create a variety of touch points in order to enable customers to interact easily with the company. There are basically three channels of distribution under HDFC Standard Life Insurance. Bank assurance Direct marketing Tied-agency / Corporate Agents/ Financial Advisors

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BANCASSURANCE
Bancassurance symbolizes the convergence of banking and insurance. The term has its origins in France and involves distribution of insurance products through a bank's branch network. Banks and Life insurers build a mutually beneficial relationship and offer their customers a great deal of value-add in the process. Banks give life insurance companies an opportunity to increase their distribution presence, and they also earn a fee income from the arrangement. Currently HDFC Standard Life Insurance have seven partners HDFC Bank, HDFC Security, HDFC Home Loan, HDFC Mutual Fund, HDFC Reality.com, HDFC Deposit.

ADVANTAGES OF BANCASSURANCE
Advantages to banks

Productivity of the employees increases. By providing customers with both the services under one roof, they can improve overall customer satisfaction resulting in higher customer retention levels.

Increase in return on assets by building fee income through the sale of insurance products.

Can leverage on face-to-face contacts and awareness about the financial conditions of customers to sell insurance products.

Banks can cross sell insurance products E.g. Term insurance products with loans.

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Advantages to insurers

Insurers can exploit the banks' wide network of branches for distribution of products. The penetration of banks' branches into the rural areas can be utilized to sell products in those areas.

Customer database like customers' financial standing, spending habits, investment and purchase capability can be used to customize products and sell accordingly.

Since banks have already established relationship with customers, conversion ratio of leads to sales is likely to be high. Further service aspect can also be tackled easily.

Advantages to consumers

Comprehensive financial advisory services under one roof. i.e., insurance services along with other financial services such as banking, mutual funds, personal loans etc.

Enhanced convenience on the part of the insured Easy accesses for claims, as banks are a regular go. Innovative and better product ranges

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HDFC SLIC was a pioneer in offering life insurance solutions through banks. Within a short span of two years, and with nearly a large number of partners, Bank 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 Bank 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.

DIRECT MARKETING
Direct marketing program of HDFC Standard life insurance is a powerful way to

communicate with best prospects and customerstargeted direct marketing efforts are necessary for acquiring more and more customers for the company. HDFC Standard Life Insurance Companys directing marketing distribution channel gives the opportunity to:

Create an effective direct marketing plan Acquire new customers Gain insight into your direct marketing customer base Leverage relationships with your existing customers Improve customer retention and decrease churn Target new direct marketing opportunities Assist with new product development 82

The Direct Marketing function at HDFC Standard Life Insurance 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 HDFC Standard 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. HDFC Standard Life has been advertising in outdoor, TV and press. The company launched a corporate television campaign Saat Phere which took the emotions and thoughts of initial Sindoor corporate film a few steps The company has also undertaken press and internet campaigns to inform customers about benefits of some of its products, particularly retirement solutions. HDFC Standard Life Insurance also introduced some innovations in the category, such as: having a tax planner by the name of Chintamani on radio, who would answer consumers queries about the role of insurance in financial planning.

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Other initiatives included tie-up with the Dabbawalla Organization in Mumbai for a direct marketing exercise, to talk to the customer through a non-cluttered route, and thereby have a higher impact. The direct mailer was about HDFC SLIC retirement solutions and the tax benefits that one can avail of buy investing in any of these. About 100,000 direct mailers were attached to the dabbas, in areas such as Churchgate, Bandra and Andheri where there are mostly office-goers.

In addition to advertising, the company has also initiated several activities to raise consumer awareness about life insurance and HDFC Standard Life. It includes seminars HDFC SLIC regularly holds consumer awareness meets on the need for retirement planning in different cities such as Pune, Aurangabad, Coimbatore, Nagpur, Bangalore and Mangalore. These are very well attended and have contributed significantly towards increasing awareness about the category and the company. Apart from this, They have also entered into alliances with telecom companies, as well as companies like BPCL and Dominos.

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TIED-AGENCY / CORPORATE AGENTS/ FINANCIAL ADVISORS

Tied agency comprising a large advisor force that targets various customer segments. An advisor is a representative of an insurance company authorized to sell insurance policies, who has completed the regulatory requirements for being an advisor as prescribed by the insurance regulatory and development authority holds a current and valid license issued by IRDA to act as a life insurance agent and is registered as an advisor with the Insurance Company. The agent draws commissions from the insurer irrespective of the quality of service he provides to the policyholder and, as long as the policy is in force and premiums are being paid. The IRDA has prescribed a code of conduct for agents and may cancel the agents license in case of gross misconduct and fraud. Today in life insurance companies advisors are known to be the backbone of the whole system. Advisors/agents do not work on monthly payroll basis; they receive a certain commission on the policies they sell to the clients. Tied Agency is the largest distribution channel of HDFC Standard Life. 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.

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OBJECTIVE & METHODOLOGY

86

Significance
The significance of the project is to make clients and let them know about the different services offered by the HDFC Standard Life, also to convince them about how
HDFC Standard Life services out score there rivals. And how in future they will be

benefited from the services offered by HDFC Standard Life. This project will accomplish to understand the problem faced by the existing client and find ways to solve there queries at your level otherwise let the above level know about there problem. It is necessary to be in regular contacts with the clients so that we come to know about the problem they are facing. This also helps us to multiply our clients by getting the further references. By this we are able to make a chain of the customers, which expands as we satisfy there needs.

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Managerial and usefulness of the Study

The study reveals many facts that have come up during my and these facts can either be used as opportunities in exploring and expanding the business as well as can be used as safeguards against treat by the competitors. To prepare an effective marketing strategy, a company must study its competitors as well as its actual and potential customers. A company should maintain good relation with distributor and retailers. A companys closest competitors are seeking to satisfy the same customers and needs and making similar offers. As important as a competitive orientation is in companies should manage a good balance of consumer, Dealer and competitor monitoring.

The information will prove beneficial in taking proactive action or combating competition. The standing of the company and its competitors in the minds of the customers is a vital factor in deciding the success of business. The study also aims at finding out the ranking of the company and its competitors in terms of certain parameters, as adjudged by consumers. This information is a good guide to management as it brings out the strengths of the competitors and the areas where the company needs to improve. Thus the study is basically aimed at providing the management desired vital information about the market situation.

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2.3 Objectives The Primary objective is: Checking the awareness level of Insurance and their need towards it. Study of influencing factors affecting the purchase decision. Analyzing the preferred mode of savings Checking the satisfaction level of customers towards insurance

Secondary objective: To make clients and let them know about the different services offered by the
HDFC Standard Life.

To understand the problem faced by customers and finding way to solve the queries.

2.4 Scope of the study

The data was enough to fulfill the objection of the study. The study provides the knowledge of HDFC Standard Life a part of HDFC Pvt. Ltd.

The study help to learn the work culture in and around the organization. The study a lot to know about consumer behavior while purchasing the product. The study provides first hand information regarding the required services.

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2.5 Methodology

Research Design

Research design is the conceptual structure within which the research would take place. The presentation of such a design facilitates research to be as efficient as possible yielding maximum information. 1. Deciding the Objective of the Study. 2. 3. 4. 5. Questionnaire. Sample Selection. Feedback Collection. Analysis.

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Types of research
I used a descriptive type of research. It is one which includes surveys and fact finding, Enquiries of different kinds. The major purpose of such research is description of the state of affairs, as it exists at present.

Data Sources
There are 2 types of data. They are: 1. Primary data 2. Secondary data Primary Data are those, which are collected afresh and for the first time and thus happen to be original in character. Primary data will not only be relevant for research project but it is also reliable, accurate and dependable.

Secondary Data are those which have already been collected by someone else and which have already been passed through the statistical process. For my research data has been procured from both primary and secondary sources. Dealers, customers and organization constituted the primary source. Newspapers, magazines and websites constituted the Secondary data. Research approach: There are 2 basic types of approaches to research. They are, 1. Quantitative Approach 2. Qualitative Approach 91

Quantitative Approach involves the generation of data, which can be subjected to rigorous quantitative analysis in a formal and rigid fashion. This approach can be further sub classified into inferential, experimental and simulation approaches to research. The purpose of inferential approach to research is to form a database to infer characteristics or relationships of population. Qualitative Approach to research is concerned with subjective assessment of attitudes, opinions and behavior; research in such a situation is a function of researchers insight and impressions. In this research a quantitative as well as Qualitative approach was used.

Research Instruments: The various research instruments at the hands of the researcher are as follows: 1) Observations: Under this the information is sought by way of investigators, own direct observation without asking the respondents. 2) Interview: It involves presentation, oral-verbal, stimuli and reply in terms of oral-verbal responses. This method can be used through personal interviews and if possible, through telephone interviews. 3) Questionnaires: It consists of number of questions printed or typed in a definite order on a form or a set of forms; the respondents have to answer the questions themselves.

For my survey I used the entire three Instruments.

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Types of questionnaires:Questionnaires can be of 2 types. Structured: It is one in which all questions and answers are specified and comments in the respondents own words are held to the minimum. Unstructured: It is one in which the answers to the questions can be framed in the respondents own words. My questionnaire was a structured one.

Types of questions: Open Ended and Closed Ended

Sample Plan A sample plan is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting items for the sample. It includes the following: Sample size:This refers to the number of items to be selected from the universe to constitute a sample. For my research the sample size 100 customers surveyed.

Sampling procedure There are 2 main sampling procedures. 1. Probability Sampling 2. Non-Probability Sampling

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Non-Probability sampling is that sampling procedure which does not afford any basis for estimating the probability that each item in the population has of being included in the sample. Probability sampling is one in which every item of the universe has an equal chance of inclusion in the sample. It is further divided into random sampling and non-random sampling. Random Sampling form a finite population refers to that method of sample section, which gives each possible sample combination an equal probability of being picked up and each item in the entire population to have an equal chance of being included in the sample. The sampling procedure followed was random sampling in case of customers. 1. A questionnaire was prepared comprising of all the data required to achieve the objectives. 2. The data were collected in random way from the various high performing parlors in different areas of Delhi and NCR. 3. The questions asked to dealers were of open as well as closed ended type. 4. The sample collected from the parlors comprised of 100 in total. 5. The questions were asked mainly on 7 different aspects namely awareness, investment pattern, association with broking House, satisfaction level, influence, sectors considered for investment and factors considered for investment which is affordable to the customers. The questions formulated in each questionnaire were such as to maintain uniform replies from the customers.

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Tools used
In-depth interviews lasting between 1 hour to 1.5 hours Informal discussions based on questionnaire format (Refer To Annexure -1)

Sample Size
100 respondents.

LIMITATIONS OF THE RESEARCH Lack of awareness of Stock market. Lack of Techno Savvy people and poor Internet penetration. Misleading concepts Sample was not pure. Time was not sufficient to carry out the study properly. The customer survey was done only in Agra and only for the customers of the bank during the months of May and June. As the sample size is small and restricted, generalizations may not be accurate. It was difficult to contact the customers and getting the questionnaires filled telephonically.

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Data Distribution:

The following two pie chart shows the lead generated by

way of primary research and secondary research.

PRIMARY LEADS BREAKUP

30, 17% 70, 41%

23, 13%

50, 29%

CA

INS. CNSLT

PERSONAL NETWORK

SECRETARIES & OTHERS

SECONDARY LEADS BREAKUP

90, 8% 200, 17%

100, 9% 500, 42%

80, 7%

200, 17%

CA INS. CNSLT JUST DIAL TRANSPORTERS

PLAYSCHOOL ESTATE AGENTS

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DATA ANALYSIS TOOLS: Graphical representation Statistical Data Pie Charts Histograms

FACT/ KEY FINDINGS: People are ignorant about the Insurance Sector. LIC dominated Indian Insurance Sector as it is 50 year old company. HDFC SLIC 2nd topped amongst private players. Insurance Sector provides 7% of countrys GDP.

New business premium - Rs. 232.5 crores Growth - 76% Corporate agency channel, including its bank assurance business grew by 150% to Rs.50cr Unit linked Products 27% Company with largest distribution network among private insurers

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COMPETITOR PROFILING

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LIFE INSURANCE CORPORATION OF INDIA (LIC) The Life Insurance Corporation (LIC) was established about 52 years ago with a view to provide an insurance cover against various risks in life. A monolith then, the corporation, enjoyed a monopoly status and became synonymous with life insurance. Its main asset is its staff strength of 1.24 lakh employees and 2,048 branches and over six-lakh agency force. At the industry level, along with the Government and the GIC, it has helped establish the National Insurance Academy. It presently transacts individual life insurance businesses, group insurance businesses, social security schemes and pensions, grants housing loans through its subsidiary; and markets savings and investment products through its mutual fund. It pays off about Rs 6,000 crores annually to 5.6 million policyholders.

Training activities for agents/advisors: As per IRDA, 50hrs training is compulsory for 9 days. Only classroom training is available. Only full-time training is given. (ICICI Prudential advantage: - Part time option available.)

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Commission Structure: Depends on the plan or the product / policy which the advisor sells to the customer.

Every policy has a commission amount fixed on it as per specifications of IRDA.

Modes & ways through which the company recruits agents: - Through development officers. - Through corporate agencies (Bankers and Brokers). - Carrier agent branch (i) rural carrier agent (ii) Urban carrier agent.

Current agent force Around 30000-35000 agents in Delhi

Top 5 USPs (Unique Selling Proposition) Of LIC TRUST (since 1956), ORG marks survey has rated LIC most trusted branch in life insurance Having a vast network of 2050 branches and nearly 10 lakh agents. Best claim performance in the world by Depth and Maturity claim. A government-undertaken company ensuring safe and corruption free insurance. Variety of plans available to match the customers needs.

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MAX NEW YORK LIFE

Max India: Max India Limited is a multi-business corporation that has business interests in telecom services, bulk pharmaceuticals, electronic components and specialty products. It is also the service-oriented businesses of healthcare, life insurance and information technology.

New York Life: New York Life has grown to be a Fortune 100 company and an expert in life insurance. It was the first insurance company to offer cash dividends to policy owners.

In 1894, New York Life pioneered the then unheard-of concept of insuring women at the same rate as men. Thereafter, it continued to introduce a series of firsts - a disability benefit clause in 1920, unemployment insurance in 1992, and complete customer care on the Web in 1998.

Today New York Life has over US billion in assets under management and over 30,000 agents and employees worldwide. The October 2000 Fortune Survey named New York Life amongst the top three most admired life and health insurance companies worldwide.

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Training activities for agents/advisors: As per IRDA, 100hrs training is compulsory. Only classroom training is available. Only fulltime training is given.

(HDFC Standard Life advantage: - Part time option available.)

Commission Structure: Minimum - 2% Maximum 40%.

Varies from product to product- 2.5%, 7.5%, 10% & 15%. Modes & ways through which the company recruits agents: Reference (only) Max New York life recruits agents only on basis of reference. Current agent force: Around 2000-3000 in Delhi.

Top 5 USPs (Unique Selling Proposition) Of Max New York: Training, which is compulsory for every agent/advisor so that they work according to the companys working style. Emphasizes on whole life products. Flexibility of the product to adapt to customers changing needs in future. Believes in healthy competition with other life insurance companies. 102

Agent is the power.

ANALYSIS
1.Are you interested in getting insured yourself a) Yes b) No

These stats show that most of the Indian population is very open minded and are very much aware about their duties and their responsibilities. Thus 83% of the population is very much ready to insure themselves and thus this is a good sign for the insurance firms.

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2. Do you get irritated when you get a telephonic call for getting insured from insurance company? a) Yes b) No

Do you get irritated when you get a telephonic call for getting insured from insurance company?

36% Yes No 64%

The figures show that 64% of the respondents do not like the telephonic mode of advertisements adopted by the insurance firms. The insurance companies should avoid using this mode, in order to keep a good public image.

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3. What means would you prefer for educating about the insurance? a) Personal meeting c) Visit to the company b) Pamphlets d) Advertisements

What means would you prefer for educating about the insurance? 40 35 30 25 20 15 10 5 0 Personal meeting Pamphlets Visit to the Company Advertisements Telephonic calls

The respondents have portrayed a common human psychology of personal attention, which means every person likes to get a personal counseling sessions to get educated about the different schemes and plans. Thus the companies should take it as a chance and make more of personal sessions rather than telephonic sessions.

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4. Would you like to get insured from? a) Public sector company b) Private sector company

It was seen that 65% of the people still have faith more towards the public sector insurance companies. Thus the entry of the private sector enterprises may be hampered as the people are not willing to take chances with them. So this hampers the growth of private sector insurance companies and creates an entry barrier for new companies

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5. Other than life, what other thing would you like to get insured? a) Automobile c) Land building b) Electronic goods d) jewellery

Taking in consideration other than life insurance people prefer to have their land and building insured more towards any other as it is most important part for every one as its the largest investment for everyone so we can say that people are insuring things with respect to the value

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6. Are you comfortable with the insurance plans and the subsequent premium payment volumes that the company provides?

a) Yes

b) No

. This is shows that most of the respondents are comfortable with the premium payment and the principal payment of the companies.

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7. Insurance according to you is: a) Saving c) Burden b) Necessity d) cant say

The Indian society, refers to insurance as a necessity, thus it justifies the above statements that Indian population is still not aware about the additional importance of insurances.

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8. When do you think a person should get himself insured? a) 15-25 yrs c) 36-45 b) 26-35 d) 45 onwards.

66 70 60 50 40 30 20 10 0 6. How many members of your family you would like to get insured. 8 11 15 1 to 2 2 to 3 All Depending upon age

66% of the respondents would like to get insured according to the age, and thus we can see that the Indian society considers insurance as a fighting weapon during the times of adversities. So we can say that the Indian insurance sector is yet to attain full maturity.

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MARRIED V/S UNMARRIED

Married people get responsible so they are readily insuring themselves and their spouse so they can be the target for the companies

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EARNING MAN V/S HOUSEWIVES

As men are the treasury of money so they can be the one who are more towards the insuring the family rather than house wives though they are the one who request the same.

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EARNING MEN V/S EARNING WOMAN

This shows that women are more interested towards insurance and they insure more than an earning men when the ratio is compared earning are high as they are more towards protection and saving

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RECOMMENDATIONS
1. It must also tap the rural sector where penetration is poor, it can be made possible by better offer with its product i.e. margin level, loan on low percentage.

2. It must also improve its brand awareness through shelling out more expenditure on advertisement and other promotional tools.

3. Brand loyalty also needs to be strengthened by customer relationship model, keeping a wide network of financial consultant and providing them with adequate training and support so that the customers can be satisfied to the fullest and thereby making new customers and pushing the existing ones for repurchase.

4. Improvement in distribution system it may be done by involving more middlemen with a defined territory so that a systematic procedure and follow up can be done.

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CONCLUSION
THE CUSTOMER IS THE PROFIT EVERYTHING ELSE OVERHEAD!! At any organization where customer is the king, the Japanese word dantotsu striving to be the capture the very essence of the companys commitment towards them. With changing customer &market demand, a need is felt to radically reorient the customer processes of order generation & fulfillment as well as market development. Business process should be redesigned with a view to improve customer satisfaction level, enhancing compliance to customer order specification & reducing the order to cash cycle time.

On the threshold of the new millennium HDFC Standard Life insurance company should embark upon a compressive program to the customer better. The companys strategies should aim to improve customer better consciousness and emphasize customer orientation. As part of this program, the sales organization structure is being aligned to the order generation and fulfillment process, which follows through from sales planning and order generation to collection and complaint settlement. Fifteen market development processes should be restructured including segmentation, marketing strategy, and customer account management and customer acquisition.

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Also, the marketing and sales organization structure is being IT enable through implementation of enterprise resource planning system. Coupled with these, the process of determining exact customer requirements by various products and services features result in enhancing customer satisfaction, reduction of complaints and in share of spend.

Customer satisfaction is both affordable and profitable. Affordable, because a satisfied customer is the best and most economical advertiser that any business can have profitable, because a satisfied customer is the repeat customer .No amount of advertising leaflets, banners, hoardings, wall painting, television, and films have the credibility, which a satisfied customer has. Each customer should be treated with great care, as part of the companys policy of fostering friendship with him is a means to this end.

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CONTENT

EXECUTIVE SUMMARY

Insurance industry is growing rapidly day-by-day. India itself has a population of 1.2billion out of which roughly 5% of the middle class people are insured. This clearly demonstrates that citizens are not insured merely because they dont know much about Insurance sector and its benefits. Generally Insurance is considered as Tax Saving device instead of other implied long term financial benefits.

In order to study the environment for the above mentioned status, I did a market research classifying diverse contour of the public and giving them a Business Opportunity to join HDFC Standard Life as an advisor/agent.

A marketplace analysis was done on life insurance companies. Sample questionnaire was formulated related to the Insurance Sector.

The vicinity covered up in this analysis was Delhi and its suburbs. The Analysis inculcates information of public response with respect to the Insurance Sector and its upcoming growth stratum.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Executive Summary Industry Profile Company Profile Organizational Structure Research Methodology Market Position Competitor Profiling Executive Channel Distribution Customer Acquisition and Retention Strategy Sample Questionnaire Data Analysis and Interpretation Sample Questionnaire Data Interpretation Recommendations and Suggestions Bibliography

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BIBLIOGRAPHY
151 Secrets of Insurance Direct Marketing Practices Revealed by Donald R. Jackson. Power Position Your Agency by Troy Korsgaden. Insurance Chronicle, ICFAI Press. Life Insurance revised addition, Insurance Institute of India. www.hdfcinsurance.co.in www.google.co.in www.hdfcbank.com Official journals of HDFC Standard Life Insurance Co. www.bimaonline.com Study material provided by the company.

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APPENDIX-1
CONSTRAINTS While collecting data, doing analysis and preparing this report there were certain constrains. And thus the report should be reviewed taking into consideration the following constrains:

INFORMATION RELATED The data regarding clients, their payment pattern, their monthly invoicing and the monthly receipts of the company are confidential data to the company. Thus, only the details provided by the company were used for analysis. The data purposefully exclude the sensitive details like name of the clients.

Due to the restriction on information availability and its usage, certain figures could be overstated or understated. But the data used is authentic and accurate with regards to the one provided and all possible efforts were made to avoid any grossing up of the information.

The figures of debtors, revenue etc. could not be made public before statutory audit. So figures of previous years are used.

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SAMPLE AND ANALYSIS RELATED

As analyzing the complete list of clients would be cumbersome and infeasible, only a sample of 25 clients has been analyzed.

While selecting the sample no distinction was made between the clients on the basis of their dispute over outstanding with the company because such a data is extremely sensitive and can not be shared. More over all the clients with the amount due for more than 3 to 4 month or so need some explanation for the amount due.

Some clients have more than one payer I D but the payment is made by one single entity. Such payer ids are treated as different clients due to lack of complete information.

ASSUMPTIONS In case the amount which is still outstanding from a particular client as on 1 st April 2008, it has been assumed that it would be collected by 1 st May 2008. This is done for the purpose of analysis as the company is making genuine efforts to collect al past dues from clients.

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While working with the system it was observed that in case lease rental for a month was received very late and adjusted against next months lease rental the error is seldom corrected and the forthcoming payment is knocked off against pending months invoices. For example, if the payment for Marchs lease rental is received on 27th march and is adjusted against the bills of April due to lack of details, the knockoff is not corrected and the forthcoming check is adjusted with pending invoices. Due consideration has been given to this while calculating the days the payment was delayed.

ERRORS AND OMISSIONS Sometime client pay the lease rental of two months together, but while knocking off of these receipts no mention is made of the other month in the remarks. It was impossible for me to detect such cases or any other flaw if caused due to wrong remarks recorded in MIS. Similarly there might be some receipts remaining unapplied without proper remarks for invoices I have used for analysis. In such case, the system doesnt adjust them against the amount outstanding nor have I.

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APPENDIX
QUESTIONNAIRE

PERSONAL DETAILS:

Name: _________________________________________

Age_________

Location________________________

Gender:

Male

Female

Occupation:

Govt. Service Businessman

Private Service Professional (Doctor, Teacher etc)

Monthly Income: Below 30,000 45,000-60,000 30,000-45,000 above 60,000

Contact no.________________________

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(Dear respondent this information is only for study and it will confidential.)

1. Are you interested in getting insured yourself a) Yes b) No

2. Do you get irritated when you get a telephonic call for getting insured from insurance company? a) Yes b) No

3. What means would you prefer for educating about the insurance? a) Personal meeting c) Visit to the company b) Pamphlets d) Advertisements

4. Would you like to get insured from? a) Public sector company b) Private sector company

5. Are you comfortable with the insurance plans and the subsequent premium payment volumes that the company provides? a) Yes b) No

6. How many members of your family you would like to get insured? a) 1-2 c) All b) 2-3 d) Depending upon age

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7. When do you think a person should get himself insured?

a) 15-25 yrs c) 36-45

b) 26-35 d) 45 onwards.

8. Insurance according to you is: a) Saving c) Burden b) Necessity d) cant say

9. Other than life, what other thing would you like to get insured?

a) Automobile c) Land building

b) Electronic goods d) jewellery

10. The ideal insurance company is...............

THANK YOU VERY MUCH FOR TIME AND COOPERATION!

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