A SUMMER TRAINING PROJECT

REPORT ON
CONSUMER AWERENESS, PREFERANCES
& ESTIMATION OF MARKET SHARE OF
LIFE INSURANCE COMPANIES
AT NOIDA (UP)
FOR THE AWARD OF

PARTIAL COMPLETION OF THE COURSE

MASTER OF BUSINESS ADMINISTRATION (MBA)

FROM

U P Technical University, Lucknow

Under Supervision of Under Guidance of

Mr. Bhupesh Chandra Mahadani Mrs. Rati Shukla
(Sales Development Manager) (Faculty – MBA Department)
HDFC SL CO. LTD. Noida(UP) IPEM, Ghaziabad
Submitted by
Rajesh Kumar
MBA (2004-2006)

Institute of Professional Excellence & Management

A-13/1, S.S. G.T. Road Industrial Area, NH-24, Ghaziabad-201001
 ACKNOWLEDGEMENT
In order to accomplish a task, facts, situations and persons integrate together
to form a background. “Greatness lies in being grateful and not in being
great.” This research report is a result of contribution of distinct
personalities whose guidance here made my effort a producing one as “no
task is a single man’s effort”.

First of all, I would like to thank the management of HDFC SL Co Ltd., Noida
For giving me an opportunity to work with them.

I am heavily Indebt full to Mr. Bhupesh Chandra Mahadani(SDM) For

assigning me a project which Involved using and applying my knowledge
acquired during the first two semesters of the MBA & and especially for
providing me with a cordial and co-operative atmosphere to work in.

I express my deep gratitude and Indebtedness to Mrs. Rati Shukla (faculty

member, IPEM), under whose kind & constant guidance I had the opportunity
to expand my horizons and view the various problems from different
prospective. I am also thanking her for sparing her valuable time to listen my
problems and difficulties faced by me during the completion of this project
report.

I would also like to extend my sincere thanks to Mrs. Ruchika Jaiswal (Co-
ordinater MBA, IPEM, Ghaziabad), Mrs. Nidhi mathur & Mrs. Reena
Pandey (faculty members, IPEM) under their kind guidance, I have learned
the basic lessons of management, which made me able to understand different
aspect of
this training

Last but not least, it was the blessing of my parents & friends (especially Mr.
Saurabh Dixit, Mr.Arun srivastava & Shubham) for keeping me motivated
throughout the training period their close attitude and expressions of love and
patience have been nothing short of incredible.

(RAJESH KUMAR)
 PREFACE
As a part of course requirement of the course “Master of Business
Administration” , we are asked to undergo a project training in an organization so
as to give us exposure to practical management and to get familiarize with
various activities taking place out in the market.

The customer is king: finally 15 years after the liberalization of India's economy
its marketplace has, suddenly become frighteningly competitive. New players
including a host of powerful translation, stormed into the country, now more
brands available then ever in every segment of market. Befittingly, for the time in
above 50 years since Independence, delivering the final verdict will be the
customer who is already finicky about what will buy, in future, only that which
meets her every desire. This demands more intimate understanding of the
customer by the smart companies'.

I got an opportunity to undergo my summer training in HDFC SL Co. Ltd., Noida

branch. I got my practical work on-“Consumer awareness, Preferences &
estimation of market share” at Noida (UP).

I am hereby presenting the essence of market study done by me during this

summer training. I have divided this project report in several topics which
contains different aspects of my study.

I have done my best efforts to fulfill the need and requirements of the
company are carried out, so it can be fruitful to the company.

(RAJESH KUMAR)
 DECLARATION

I, Rajesh Kumar hereby declare that in this summer training

project report entitled-
“Consumer awareness, Preferences & estimation of market
share” of Different life insurance companies at Noida (UP),
has been completed based on actual Survey carried out by me. I am
presenting an authentic record of my own work carried out under
the supervision of Mr. Bhupesh Mahadani (SDM), HDFC SL,
Noida, which is required in the partial fulfillment for the Degree
of “Master of Business Administration” affiliated to U.P. TECH.
University, Lucknow.

The dissertation is original and the information, data & facts

furnished therein are factual, based on the survey carried out.
I haven’t submitted the matter embodied in this project report for
the award of any other degree or diploma in the best of my
knowledge.

(RAJESH KUMAR)
 TABLE OF CONTENTS

INTRODUCTION

EXECUTIVE SUMMARY

INDUSTRY REVIEW

COMPANY PROFILE

SWOT ANALYSIS

OBJECTIVE OF THIS STUDY

RESEARCH METHODOLOGY

SAMPLING PLAN

DATA ANALYSIS

FINDINGS

CONCLUSION

RECOMMENDAIONS & SUGGESTIONS

LIMITATIONS

ANNEXURE

BIBLIOGRAPHY
Insurance is a social device where uncertain risks of individuals
may be combined in a group and thus made more certain -
small periodic contribution by the individuals provide a fund
out of which those who suffer losses may be reimbursed. In
addition to being a means to protect oneself, the Insurance
Industry is an effective conduit for the savings of people to be
channeled towards economic growth. In India, the Insurance
Industry is more than 150 years old. Today, it is monopolsed by
two PSU's in their respective fields of Life and General
Insurance.

Insurance plays a very important role in the day-to-day activities of

the common man, business houses, industries, agriculturists and
other service providers. Insurance not only provides protection
for individual and industry through risk coverage; it also
mobilizes funds for economic activity, and encourages savings.
The insurance industry is a key sector in the economy of any
country.
The liberalization of the financial sector was started in 1991 and
carried forward by successive governments. These reforms
were carried out in a phased manner and affected the entire
financial sector. Till now, however, the insurance sector had
been left out of this reform process. With the passage of the
IRDA bill in December, 2004, the way has been paved for the
entry of private

players into this long neglected aspect of the Indian economy.

However, the opening up of this sector does not mean that its
character will undergo a sea change. The public sector
behemoths will continue to enjoy a huge market share. It is up
to the new players to device innovative strategies to both grab
business from the existing companies a as well as expand the
size of the pie itself.

The main benefits of this new competitive environment will be to

the consumer, who till now, has had to put up. With shoddy
products and even shoddier service. The new entrants will look
for new channels of distribution for their products, and banks
will play a very important part as the likely interfaces between
the insurance companies and their prospective customers.
The report gives a brief background of the sector and proceeds to
highlight the shortcomings of the existing setup and players.
The benefits of a liberalized sector are enumerated. The report
also tried to identify the market potential for insurance products
and the strategies that can be employed to exploit the same.

INSURANCE MARKET SCENARIO IN INDIA

India with about 200 million middle class household shows 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. The insurance sector in India has come to a
position of very high potential and competitiveness in the market.

Innovative products and aggressive distribution have become the say of the
day. Indians, have always seen life insurance as a tax saving device, are now
suddenly turning to the private sector that are providing them new products
and variety for their choice.

Life insurance industry is waiting for a big growth as many Indian and
foreign companies are waiting in the line for the green signal to start their
operations. The Indian consumer should be ready now because the market is
going to give them an array of products, different in price, features and
benefits. How the customer is going to make his choice will determine the
future of the industry.

CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After
the entry of the foreign players the industry is seeing a lot of competition
and thus improvement of the customer service in the industry.

Computerization of operations and updating of technology has become

imperative in the current scenario. Foreign players are bringing international
best practices in service through use of latest technologies. The one
monopoly of the LIC and its agents are now going through a through
revision and training programmes to catch up with the other private players.
Though lot is being done for the increased customer service and adding
technology to it but there is a long way to go and various customer surveys
indicate that the standards are still below customer expectation levels.

DISTRIBUTION CHANNELS
Till date insurance agents still remain the main source through which
insurance products are sold. The concept is very well established in the
country like India but still the increasing use of other sources is imperative.
It therefore makes sense to look at well- balanced, alternative channels of
distribution.
LIC has already well established and have an extensive distribution channel
and presence. New players may find it expensive and time consuming to
bring up a distribution network to such standards. Therefore they are looking
to the diverse areas of distribution channel to have an advantage. At present
the distribution channels that are available in the market are:

 Direct selling

 Corporate agents

 Group selling

 Brokers and cooperative societies

To make all these channels a success the companies have to be very alert
and skillful to know how to use these channels in a proper way.
Bancassurance is on of the most upcoming channels of distribution and
therefore is being discussed in details.

BANCASURANCE
India has an extensive bank network established over the years. What
Insurance companies have to do is to just take advantage of the customers'
long-standing trust and relationships with banks. This is a mutually
beneficial situation as banks can also expand their range of products on offer
to customers, while the insurance company will also earn profits from the
exposure.

Another advantage is that banks, with their network in rural areas, help to
fulfill rural and social obligations stipulated by the Insurance Regulatory and
Development Authority (IRDA) recently. Insurance companies should see
bancassurance as a tool for increasing their market penetration in India.
It is also good for the one who sees bancassurance in terms of reduced price,
high quality product and delivery at doorsteps. Everybody is a winner here.
The creation of bancassurance operations has made an important impact on
the financial services industry at large. This is though a new concept but it
has gained a lot of importance in the industry at present and has a great
future.

PRODUCT INNOVATION
There has been a plethora of new and innovative products offered by the
new players. Customers have tremendous choice from a large variety of
products from pure term (risk) insurance to unit-linked investment products.
Customers are offered unbundled products with a variety of benefits as
riders from which they can choose. More customers are buying products and
services based on their true needs and not just traditional money-back
policies, which is not considered very appropriate for long-term protection
and savings. There is lots of saving and investment plans in the market.
However, there are still some key new products yet to be introduced - e.g.
health products.

INFORMATION TECHNOLOGY AND INSURANCE

In the insurance industry today, there is a clear trend away from selling a
broad range of products to a large volume of customers in a one –size-fits-all
manners. Instead of focusing on their different products lines as silos (i.e.,
life, property and casualty etc) insurers are looking for ways to offer highly
targeted insurance products that are tailored to the individuals customers
with the highest propensity to buy them. There is an evolutionary change in
the technology that has revolutionized the entire insurance sector. Insurance
industry is a data-rich industry, and thus, there is dire need to use the data for
trend analysis and personalization. With increased competition among

Insurers, service have become a key issue. Moreover, customers are getting
increasingly sophisticated and tech-savvy. People today don’t want to accept
the current value propositions, they want personalized interactions and they
look for more and more features and add ones and better service. The
insurance companies today must meet the need of the hour for more and
more personalized approach for handling the customer. Today managing the
customer intelligently is very critical for the insurer especially in the very
competitive environment.

Companies need to apply different set of rules and treatment strategies to

different customer segments. However, to personalize interactions, insurers
are required to capture customer information in an integrated system. With
the explosion of Website and greater access to direct product or policy
information, there is a need to developing better techniques to give
customers a truly personalized experience. Personalization helps
organizations to reach their customers with more impact and to generate new
revenue through cross selling and up selling activities.
To ensure that the customers are receiving personalized information, many
organizations are incorporating knowledge database-repositories of content
that typically include a search engine and let the customers locate the all
document and information related to their queries of request for services.
Customers can hereby use the knowledge database to mange their products
or the company information and invoices, claim records, and histories of the
service inquiry.

These products also may be able to learn from the customer’s previous
knowledge database and to use their information when determining the
relevance to the customers search request. The insurance sector remains a
very competitive market and those companies that are able to best utilize
their data and provide their customer with the most personalized options will
have the distinct competitive advantage. The insurers that come up to the top
will be those who leverage the appropriate technology solutions effectively
in order to foster customer loyalty attract new customers and improve
operational efficiency by providing common information across their lines
of business.

MERGERS AND AQUISITIONS

This is an era of mergers and acquisitions. Private companies including

MNC’s are amalgamating the world over to get more competitive edge.
Currently, the general insurance industry has been opened up. The question
here is that for over two years, eight private companies have operated and
has the size of the cake expanded. We here find that this is not true. The
insurers are doing enough to raise the level of risk awareness or are they
merely content to compete in the markets organized and established.
However sooner or later the private sector players will have to put in place
strategies aimed not at winning the existing accounts of the public players
but at diversifying markets penetration as a whole. The private players in the
future would have to turn their attention to working in the unorganized and
under served markets.

What is likely to happen is that the private players would continue to skim
the profitable segments of the already organized business in the urban areas?
The time has already come for the government of India to evaluate the
performance of private companies’ vis-à-vis their declared objective of
opening up the industry. However it is high time for the government to
realize that importance of merging the public sector general insurance
companies into single entity.

The resent scenario calls for a better performance from part of each of the
public sector insurance companies against each other; or in other words a
competition to be the best. The result what we see is the undercutting of
premium to retain or wrest business and quoting an uneconomical rate of
premium. While this allows one of the Public Sectors Company to win a
business form another in this manner.

The others suffer a loss and the resultant effect is a cannibalization with a
fall in the average premium of the public sector itself. This at many times
brings advantage to the private players who grab the business because of the
unethical competition among the public players.

The purpose of having four companies all subsidiaries of General Insurance

Corporation of India (GIC)– National Insurance Company, New India
Assurance Company, Oriental Insurance Company, And The United India
Insurance Company; at the time of nationalization was to have competition
among themselves –in service and products at the same price. The service

provided by them was also equally good or bad depending on the experience
of the customers. Now with real competition coming in with most of the
global insurance players setting footprints here, it is felt that the time for
merger has come and to enjoy the benefits if the size. It is to be sated that
size does matter in insurance business. All over the world’s mergers and
acquisitions in the risk-underwriting sector is common. The benefits if the
four insurance companies merge will be enormous.

The merged entity will enjoy higher underwriting and risk retention
capacity; increase in reinsurance premium, reduction in reinsurance outflow,
healthy solvency margins, setting right the asset –liability mismatch and
reduction in cost. The insurance market thus becomes a gambling place. Had
the public sector companies made into a single entity, perhaps the total
premium of the four public sector companies in the year 2003-04 would
have gone up but 25 percent. But the public sector alone is forced to
underwrite the loss making motor third party liability (TPL) insurance.
The public insurance companies insured a loss of Rs 1943 crore on this
portfolio on just one year (03-04). The cumulative loss under this portfolio is
astronomical. The loss of profitable business in view of undeserved
competition among the public sector companies is hampering the
subsidization of social insurance including the motor TPL. It is thus clear
that it is good for the public sector companies to merge immediately when
they are still strong, lest a merger becomes inevitable later after the
independent public sector companies fail one after another.

This does not bid well for the public sector, nor fort he insuring public and
not for the economic development either. For a progress me require merger
of strong public sector companies. Else it would render public sector
companies weak and destroy them.

IMPACT OF BUDGET IN INSURANCE

The 2005-06 Budget has dampened the spirit of insurance companies.

Hardly any changes have been made in the general insurance sector. The
change in the tax structure may have some impact on the life insurers. With
the removal of the Section 88 relief there is not much for the insurance
players to cheer for.

FDI HIKE IN INSURANCE SECTOR

The Finance Minister commended on the growth in the insurance sector,
there was no mention of the steps being taken for increasing FDI in
insurance sector. There is a dire need to attract more foreign capital in the
sector. However it seems that the Union Finance Ministry is looking at
proposals to delink the FDI limit from the Insurance Act, when it is
amended. This move would empower any future government to increase the
FDI limit through an executive order without taking the issue to the
Parliament. Removal of Sec 88 tax relief: With the removal of the Section
88 tax relief on life insurance products there would be a sever blow on the
life insurance companies.

Removal of tax relief will have an adverse impact on the flow of investments
into life insurance products.

Continuation of Sec 10(10) (d): The continuations of this section create

sever blow for the insurance players. Here by the life insurance companies
for availing the optimum benefit under this section need to change their
strategy. Till now, life insurers were selling life insurance products mostly
on tax-benefit grounds. However, now they will have to sell products with
an investment pitch.

The investment limit in pension plans is unaltered at Rs 10,000 so these

plans may not enjoy the luxury of the expanded limit of Rs 1 lakh allowed
for investments/expenditures that could be claimed as a deduction from
income. This is likely to have an adverse impact on the overall growth of the
sector. Pension plans are the only Investment Avenue where specific limits
continue to apply.
CONCLUSION

The size of the market has grown and the size of the insurable population in
India is indeed vast and the existing player has managed to cover about one-
fourth of it. The opportunities before the players are therefore a plenty in
terms of target audience. The falling interest rates, the collapse of many
small-time financial institutions, the scope for entering related areas like

banking and pensions in a bid for synergy and the promise of e-commerce
are some of the other opportunities knocking at the doors of the insurance
majors.

There is a probability of a spurt in employment opportunities. A number of

web-sites are coming up on insurance, a few financial magazines exclusively
devoted to insurance and also a few training institutes being set up hurriedly.
Many of the universities and management institutes have already started or
are contemplating new courses in insurance. Health insurance, which is still
in its infancy, is also likely to get a major boost, ultimately leading to
improvement in the quality of medical treatment and facilities in the country.

Life insurance has today become a mainstay of any market economy since it
offers plenty of scope for garnering large sums of money for long periods of
time. A well-regulated life insurance industry which moves with the times
by offering its customers tailor-made products to satisfy their financial needs
is, therefore, essential if we desire to progress towards a worry-free future.
INTRODUCTION

Respect yourself

HDFC Standard Life Insurance Company Limited is a joint venture of

HDFC Ltd. & Standard life Ltd. It was incorporated on 14th August 2000.
Now it is one of the biggest market players of Indian life insurance market.
It was awarded as “Most respected life insurance company” by
Businessworld. HDFC Standard Life Insurance has crossed Rs. 10,000 crore
in Sum Assured. HDFC Standard Life Insurance Company Limited was one
of the first companies to be granted license by the IRDA to operate in life

Insurance sector. Both the JV player is highly rated and been conferred with
many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly,
Standard Life is rated 'AAA' both by Moody's and Standard and Poors.
These reflect the efficiency with which HDFC and Standard Life manage
their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr respectively.
Incorporated in 1977 with a share capital of Rs. 10 crores, HDFC

has since emerged as the largest residential mortgage finance

institution in the country. The corporation has had a series of share

issues raising its capital to Rs. 119 crores. The net worth of the

corporation as on March 31, 2000 stood at Rs. 2,096 crores.

HDFC operates through 75 locations throughout the country with

its Corporate Headquarters in Mumbai, India. HDFC also has an

international office in Dubai, V.A.E., with service associates in

Kuwait, Oman and Qatar. Now it has become a market giant in

financial sector of India.

SUBSIDIARY COMPANIES OF HDFC LTD.

 HDFC Bank

 HDFC Deposits

 HDFC Mutual Fund

 HDFC Standard Life Insurance

 HDFC Home loan

 HDFC Chubb General Insurance Company Ltd.

 Intel net Global Services Ltd.

 Credit Information Bureau (India) Limited

 Other Companies Co-Promoted by HDFC

 HDFC Trustee Company Ltd.

 GRUH Finance Ltd.
 HDFC Developers Ltd.
 HDFC Ventures Trustee Company Ltd.
 HDFC Venture Capital Ltd.
 HDFC Investments Ltd.
 HDFC Holdings Ltd.
 Home Loan Services India Pvt. Ltd.
STANDARD LIFE

Standard Life is Europe's largest mutual life assurance company.

Standard Life, which has been in the life insurance business for the
past 175 years, is a modern company surviving quite a few changes
since selling its first policy in 1825. Standard Life has been looking
after its customers for over 180 years, and currently over 7 million
people rely on us for their financial needs.

We have assets under management which are worth more than the
combined market value of Shell, Reuters, Tesco, Cadbury
Schweppes and Marks & Spencer. Standard Life places a great
deal of importance on getting investor’s money to work hard for
them; that's why its customer has believed confidence in the
company.

The company expanded in the 19th century from its original

Edinburgh premises, opening offices in other towns and acquiring
other similar businesses. Standard Life currently has assets

exceeding over £70 billion under its management and has the
distinction of being accorded "AAA" rating consequently for the
past six years by Standard & Poor.

THE JOINT VENTURE:

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

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

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

In October 1998, the joint venture agreement was renewed and

additional resource made available. Around this time Standard Life
purchased 2% of Infrastructure Development Finance Company
Ltd. (IDFC).
Standard Life also started to use the services of the HDFC
Treasury department to advise them upon their investments in
India. Towards the end of 1999, the opening of the market looked
very promising and both companies agreed the time was right to
move the operation to the next level. Therefore, in January 2000 an
expert team from the UK joined a hand picked team from HDFC to
form the core project team, based in Mumbai. Around this time
Standard Life purchased a further 5% stake in HDFC and a 5%
stake in HDFC Bank.

In a further development Standard Life agreed to participate in the

Asset Management Company promoted by HDFC to enter the
mutual fund market. The Mutual Fund was launched on 20th July
2000.
INCORPORATION OF HDFC SL CO. LTD.

The company was incorporated on 14th August 2000 under the

name of HDFC Standard Life Insurance Company Limited.
Our ambition from as far back as October 1995 was to be the first
private company to re-enter the life insurance market in India. On
the 23rd of October 2000, this ambition was

Realized when HDFC Standard Life was the only life insurance
company to be granted a certificate of registration.

HDFC are the main shareholders in HDFC Standard Life, with

81.4%, while Standard Life owns 18.6%. Given Standard Life's
existing investment in the HDFC Group, this is the maximum
investment allowed under current regulations.

HDFC and Standard Life have a long and close relationship built
upon shared values and trust. The ambition of HDFC Standard Life
is to mirror the success of the parent companies and be the
yardstick by which all other insurance company's in India are
measured. HDFC is the majority stakeholder in the insurance JV
with 81.4 % stake and Standard Life has a stake of 18.6%. Mr.
Deepak Satwalekar is the MD and CEO of the venture. HDFC
Standard Life.
MISSION OF THE COMPANY:

We aim to be the top new life insurance company in the market.

This doe’s not just mean being the largest or the most productive
company in the market; rather it is a combination of several things
like:-

 Customer service of the highest order

 Value for money for customers
 Professionalism in carrying out business
 Innovative products to cater to different needs of different
customers
 Use of technology to improve service standards
 Increasing market share

Their mission is to be the best new life insurance company in

India and these are the values that will guide us in this.
 VALUES OF THE COMPANY

SECURITY: Providing long term financial security to the policy

holders will be our constant endeavor. We are doing this by
offering life insurance and pension products.

TRUST: We appreciate the trust placed by our policy holders in

us. Hence, we will aim to manage their investments very carefully
and live up to this trust.

INNOVATION: Recognizing the different needs of our

customers, we will be offering a range of innovative products to
meet these needs.

ORGANISATIONAL STRUCTURE:

M D & C E O

S A L EF SI N A N C O E P &E R A A C T I C TI O UN L ENS GT AS L & H S R E C R E T A R I

R E T A I LA CS AC LO EU S N T S

G R O U PM S E A D L I EC S A L

A L T E R UN NA DT EE R S WA LR E I TS I N G

S A L E S TA RC AT IU N R I I N A G L

M A R K E T I N G
RETAIL TEAM SETUP:

G M - S A L E S
( M r . S u r e s h M a h a l i n g a m )

H A R D R E T A I L S A L E S
( M r . D i l i p G a z a r a o )

Z o n a l M a n a Ng ea rt si o n a l S a l e s T r a i n i n g M a n a g
( M r . F r e d e r i c k D 'S o u z a )

R e g i o n a l m a n a g e r s

B r a n c h M a n a g e r s

R e s i d a n t / S a l e s M a n a g e r s

A S M s

B D M s / S D M s
INVESTMENT MANAGEMENT STRUCTRE:

Investment decisions taken by the HDFC SL Investment Committee which

is advised by HDFC AMC. Members of HDFC SL Investment Committee
comprising:

 Mr. Deepak Parekh – Chairman, HDFC Ltd.

 Mr. Deepak Satwalekar - MD & CEO, HDFC SL

 Mr. Keki Mistry - MD, HDFC Ltd.

 Dr. Nick Taket - Appointed Actuary &

GM (Finance), HDFC Ltd.

HDFC AMC

 Leading fund house in the country.

 Assets under management of US $ 3.3 billions
 Common reach & dealing
 Investment advisory input from the team
 Investment philosophy aimed at attractive returns with reasonable risk
 Dedicated investment administration

SOCIAL INITIATIVES

The year 2004-05 saw HDFC making renewed efforts in fulfilling

its social commitment by way of several ongoing as well as new
initiatives. The latter included innovative financing of slum up-
gradation and low-income housing projects, dialoguing with key
stakeholders on policy issues, responding to the tsunami tidal wave
disaster and staff volunteering and participation in varied
community development activities. HDFC also gained special
recognition for its corporate social responsibility (CSR) function in

the form of winning The Economic Times Corporate Citizen

Award for 2003-04.

Shelter Assistance Reserve

During the year, the Shelter Assistance Reserve continued to play

its role of participating in and supporting various meaningful
development initiatives by extending grant funding to over 135
NGOs, philanthropic and voluntary agencies, local bodies and
others. The overall utilization effected out of the Reserve for the
year 2004-05 stood at Rs. 497.36 lacs and its segment-wise break-
up is highlighted in the chart below:

HDFC Standard Life results for 1st quarter of

FY 2005-06

Recording a quarter-on-quarter growth of 167 percent for April-June

2005, HDFC Standard Life saw its new business premium income increase
from Rs.53.11 crores to Rs. 142.02 crores. The growth achieved by the
company was way above the private sector industry average of 73
percent for the first quarter. In terms of effective premium income (EPI),
which gives a 10% value to a Single Premium policy and is an
internationally accepted indicator of an insurance company's performance,
HDFC Standard Life’s premium income grew 248% from Rs. 38.77 crores
to Rs. 134.91 crores.

Voted the most respected amongst the private life insurance companies,
HDFC Standard Life’s growth in terms of annualized premiums was 211
percent – from Rs. 53 crores in Apr-Jun 2004 to Rs. 165.08 crores in Apr-
Jun 2005. A complete product portfolio offering by HDFC Standard Life
on the group business front also led to a robust growth of premium from
Rs. 1.18 crores to Rs. 8.91 crores in effective premium income terms and
from Rs. 2.68 crores to Rs. 16.94 crores in terms of first year premiums – a
532 percent growth.
Commenting on the high growth rate achieved on the back of a robust
growth in 2004-05, Mr. Deepak Satwalekar, MD and CEO, HDFC Standard
Life said, “this growth is a clear vindication of the strategy adopted by the
company of eschewing rapid growth in favor of establishing a firm

foundation in the early years. The decision to establish a geographically

dispersed branch network supported by a sales force which has undergone
an intensely focused sales training programme to imbibe and practice
HDFC Standard Life’s customer-centric approach has helped reach out to
more customers, helping them find the most suitable insurance solutions.”
Leveraging the parent brand and the wide distribution network, HDFC
Standard Life launched a cross media advertising campaign, which has seen
brand recognition almost double to one of the highest amongst all life
insurers.

For the individual business, volume, measured by the number of policies

sold, witnessed a 91 percent quarter-on-quarter growth from 26,752 in
2004 to 51,066 in 2005. Average effective premium on the other hand
more than doubled from Rs. 12,000 to Rs. 25,000.

Contribution to the individual business premium income by the different

channels of distribution also changed significantly compared to the first
quarter last year. “The strategy to concentrate on activating a limited number
of bancassurance partners rather than going in for signing up a large number
of banks also paid off.” While the alternate channels of distribution
including banks, brokers and other corporate agents accounted for 20
percent of the business last year, their share increased to 36 percent in
Apr-Jun 2005.

HDFC Standard Life added 33 new offices, enhancing its national

footprint and taking the number of offices to 137 by the end of the first

quarter as compared to 53 locations at the end of the first quarter last year.
“ Our decision almost 18 months ago, to spread to B and C class towns has
paid off with the non-metro locations already accounting for 53 percent of
the individual business”. Ongoing training for conventional products
and specialized training for unit linked products for around 25,000
financial consultants representing HDFC Standard life has also helped
its customers choose the products best suited for their need for protection,
savings, investments and pensions. HDFC Standard life had 18,700
financial consultants in the same period last year.

A quick look at the Premium figures:

% Growth
Q1 2004-05 Q1 2005-06
Parameters (Q1 05-06 over
(Rs. Cr.) (Rs. Cr.)
Q1 04-05)
Total received
75.35 187.45 149
premium
I. New Business 53.11 142.02 167
ii. Renewal 22.24 45.43 104
Effective Premium
38.77 134.91 248
Income
Annualized Premium 53.00 165.08 211
Group Business
2.68 16.94 532
Premium

Unit Prices

Product(s): HDFC Unit Linked Endowment Plan &

HDFC Unit Linked Young Star Plan

Unit Prices as at 7/10/2005

Offer
Unit Linked Fund Bid Price (Rs)
Price (Rs)
Liquid Fund 21.6105 21.6105
Secure Managed
Fund 20.4583 20.4583
Defensive Managed
Fund 23.6338 23.6338
Balanced Managed
Fund 27.2488 27.2488

PRODUCTS OF HDFC STANDARD LIFE

INSURANCE COMPANY LTD.

HDFC SL has products which are suited to all the people. It has customized
& flexible products. Each of us leads a unique life and so has unique needs.
HDFC Standard Life offers a range of products and invites you to choose the
one that suits you best.

INDIVIDUAL PRODUCTS

Plan Benefits
Savings Plans
Endowment Assurance Plan Life Insurance with Savings
Life Insurance & Savings with choice of
Unit Linked Endowment Plan
investment funds
Children’s Plan Financial Security for your child
Financial security for your child with
Unit Linked Young Star Plan
choice of investment funds
Money Back Plan Life Insurance with Savings
Investment Plans
Single Premium Whole Of Life
Investment with Life Insurance
Plan
Protection Plans
Term Assurance Plan Life Insurance at an affordable price
Loan Cover Term Assurance Life Insurance customized for home
Plan loans
Retirement Plans
Personal Pension Plan Savings for retirement
Retirement Savings with a choice of
Unit Linked Pension Plan
investment funds
SWOT ANALIYSIS

STRENGTH

 Multi-channel distribution and one of the largest

distribution networks in India.

 Implementing Six-Sigma process.

 Customer centric products and services.

 Superior investment and risk management framework

 1 Million Policies sold within 3 and half years.

 Company has maximum number of MDRT as well as

good number of HNI advisors.

 Training process of the company is very strong .

 Different plan for different peoples

 According to the change in surrounding environment

like changes in customer requirement.

WEAKNESS

 COMPANY does not penetrate on the rural market at a

time.

 There is no plan for the low income group.

 Fees for the advisor is high than the other company.

OPPORTUNITY

Insurance market is very big, where company can expand

its horizon in insurance industry.

 Though good investment and insurance it is easy to

top Indian customers.

 The huge insurance market (77%) is left so company

has opportunity to expand our products.

 To associate with the more number of HNI.

THREATS

‘OLD HABITS DIE HARD’: Its still difficult task to win

the confidence of public towards private company.

 The company is facing major threats from LIC -which

is an only government company.

 Plans for all income groups are not available which

can create adverse effect later on the market share of the

company.
The objectives of this summer training project are as
follows:-
1. To study the awareness of consumers about life insurance
2. To get the feedback of the consumers about life insurance product
of HDFC SL
3. Estimate the market share of Different life insurance life insurance
company in Noida
4. To study the market potential of HDFC standard life insurance
company ltd
5. To determine the prospective market for life insurance product of
HDFC SL
6. To determine the consumer preferences of purchasing life
insurance products.
Marketing research
In order to produce superior value and satisfaction for consumers,
companies need information at almost every turn. Companies also
need an abundance of information on competitors, resellers and other
factors and forces in the market-place. Now-a-days, marketers are
viewing information not only as an input for making better decisions
but also as an important strategic asset and marketing tool.

In today’s more rapidly changing environment, managers need up-to-

date information to make timely high-quality decisions. It is said that
running an organization without adequate marketing information
reduces business to guess work. In such cases, managers running an
organization fails to obtain right information, in the right form, at the
right time, which hampers in the decision making process.

Managers can obtain the needed information in a number of ways,

viz., internal data, marketing intelligence, marketing research, etc. In
addition to information about competitor and environmental
happenings, marketers sometimes need formal studies of specific
situations, managers need to go for marketing research.
Defining the market research

Marketing research may be defined as:-

“The systematic design, collection, analysis, and reporting of data
relevant to a specific marketing situation facing an organization.”
In 1987, the American Management Association defined marketing
research as:-
“Marketing research is the function which links the customer and
public to the marketer through information that is used to identify and
define marketing opportunities and problems, refine and revaluate
marketing actions; monitor marketing performance and improve
understanding of marketing as a process.”

The following steps are followed in marketing research:-

Defining the problem and research objectives-

The starting point of any market project is to define the problem
and agree on research objectives. Objectives are a statement of why
the research is being carried out and links to what information is being
sought.
Research planning
 A plan of how this objective is to be met and how the
information is to be obtained is then required. The main elements of
an effective research plans are as follows-

1. Research objectives
2. Information coverage
3. Accuracy levels
4. Research methods
5. Resources
6. Time table

Data collection

It is a vital part of the whole process. When data is gathered,

collected, and presented in some understandable form to people such
as table or graph, it becomes information.
To meet the manager’s information needs, the researcher
gathers secondary data, primary data or both.
Collection of primary data (raw data)-
It involves primary or field research i.e., when data is directly
collected from people through research questions or observations.
Collection of secondary data-
It involves desk research which is obtaining data or information
that has already been collected by others for their own purpose.
Conducting market research survey-
 When we undertake research to extract and evaluate
quantitative and qualitative information regarding a sample of people
as representative of the total market, we refer the study as survey.

There are four popular methods of obtaining data from respondents to

questions that form a part of market research surveys, namely:
1. Telephonic interviews
2. Personal interviews
3. Observations
4. Questionnaire
Field work

Market research field-work is faced on sampling. Once a

questionnaire is designed, the next step is to take sample of people to
be interviewed to ensure that they are the representatives of the total
people we wish to reach.
Sample may be selected in two ways-
1.Randomly
2.Non-randomly
Sampling can be practically planned in three steps:
1.Defining the population to be sampled.
2.Defining the sample size and structure.
3.Choosing the method of selecting the sample.
Data analysis and interpretation

The end result of field-work is the complete questionnaire or

similar records. Individual questionnaire are of a little value and
interest. What is required is aggregated data for the whole sample, as
far sub-samples. Data analysis is the process of producing this
aggregated data from the individual response as raw data.

Reporting the findings

After analysis of the field-work data, the results of the research project
need reporting. The reporting stage is therefore concerned with
effective communication of the result to those who are going to take
some action on the basis of what they learn the research results.

During the completion of this research project, the researcher covered

a portion of the Noida city. The area covered is as follows:-
Why Life Insurance

Life Insurance has come a long way from the earlier days when it was
originally conceived as a risk covering medium for short periods of time,
covering temporary risk situations, such as sea voyages. As life insurance
became more established, it was realized what a useful tool it was for a
number of situations, including -

a) Temporary needs / threats:

The original purpose of life insurance remains an important element, namely

providing for replacement of income on death etc.

b) Regular Savings:

Providing for one's family and oneself, as a medium to long term exercise
(through a series of regular payment of premiums). This has become more
relevant in recent times as people seek financial independence for their
family.

c) Investment:

Put simply, the building up of savings while safeguarding it from the

ravages of inflation. Unlike regular saving products, investment products are
traditionally lump sum investments, where the individual makes a one off
payment.

d) Retirement:

Provision for later years becomes increasingly necessary, especially in a

changing cultural and social environment. One can buy a suitable insurance
policy, which will provide periodical payments in one's old age.

I NTRODUCTION TO I NSURANCE

Insurance is not necessarily an investment from which one

expects to get one's money back. Nor is it gambling. A gambler

takes risks, while insurance offers protection against risks that

already exist. Insurance is a way to share risk with others.

Since ancient times, communities have pooled some of their

resources to help individuals who suffer loss. About 3,500 years

ago, Moses instructed the nation of Israel to contribute a portion

of their produce periodically for "the alien resident and the

fatherless boy and the widow."

Insurance is defined as a cooperative device to spread the loss

caused by a particular risk over a number of persons who are

exposed to it and who agree to ensure themselves against that

risk. Risk is uncertainty of a financial loss. The insurance is also

defined as a social device to accumulate funds to meet the

uncertain losses arising through a certain risk to a person injured

against the risk.

LIFE INSURANCE IN INDIA

The Indian Insurance market has a grand history. The

th
development of insurance dates back of the 19 century when

the Europeans started the Oriental Life Insurance Company,

Calcutta in 1888. The first Indian Insurance Company Bombay

Mutual Life Insurance came into existence in 1870 to cover

Indian lives at normal rates. The year 1870 is also important in

the sense at British Government for the first time act that year.

Four years later Firoz Shah Mehta one of the doyen of Indian

Financial Sector, Oriental Government established the Oriental

Government Security Life Assurance Company and after that,

many Insurance companies in surfaced on Indian soil.

However, the first Indian Insurance act was passed on 1912,

again in 1938 and an amendment in 1950, when it was

nationalized however the sector was once again thrown open to

the private sector in December 1999

followed by the establishment of I.R.D.A. (Insurance

Regulatory and Development Authority) in April 2000.

The Indian Insurance Industry was dominated by two states

Insures i.e. The Life Insurance Corporation in Life Insurance

and the General Insurance Corporation

in general insurance before 2000 which were created after the

nationalization of the Life and non Life sector in 1956 and 1972

respectively. In Dec’99, the IRDA Act was passed which limited

foreign investors to a 26% cap on equity participation, and

minimum capital requirement of $20 Million. At present, more

than 12 private players are in the market and some are in the

pipeline. The advent of the new kids poses to LIC to somewhat

extent, for which LIC will have to change its current policies

regarding marketing and product management.

LIFE INSURANCE SCENARIO IN INDIA

Since 1956, with the nationalization if Insurance Industry, the

states run Life Insurance Corporation of India (LIC) has held the

monopoly in country’s life insurance sector. General Insurance

Corporation of India (GIC), with its four subsidiaries, was its

counterpart in the casualty sector. Over the time, taking

advantages of its monopoly and virtual prerogative in

establishing the premiums, LIC has evolved into a monolith.

With around 60,000 agents in every nook and corner of the vast

country, it has created an enviable brand name, particularly

among the rural population of the country. It has around $40

billion as its financial sector. However, on the qualitative side, it

has every little pride in, and there lies the potential for players to

challenge this behemoth.

As typical with monopolies, the premiums rates

charged LIC are among the highest in the world, and its track

record in customer service can at best be called shabby. With a

huge unionized, rigid workforce mostly in clerical category. LIC

run the risk of high fixed cost, which will be the deciding factor

productivity in the competitive scenario. While boasting full-

scale automations of its operation, the truth is that its technology

outdated.

The new p[layers, with the state- of-the- art technology under the

belt, will be in advantageous position. 80% of LIC’s business is

procured by 20% of its ill-trained agent force. The foreign

player, with the domestic partner’s string brand value, can test

the unconventional distribution channels like brokers, the

Internet, the banking distribution system etc., although foreign

players may be tempted to keep their operations in big cities for

the ‘cream layer’ of the society, the real market lies in rural

India, which accounts for the lions share of LIC’s present

business.

The foreign players must adapt to Indian realities, the well

published failures of the world famous consumer goods

companies like Electrolux, Whirlpool, Reebok, Nike etc. to

gauge the Indian psyche and sentiments demonstrate the concept.

They failed in the area of realistic pricing, product promotion

and reaching to the consumer. The foreign companies know the

“ground realities” to the details.

REVIEW OF INSURANCE SECTOR

India is having population of 1 Billion with a middle class

th
population estimated up to 300 million. It being the 5 largest

economy in the world in terms of Purchasing Power Parity (PPP)

has a GDP growth rate of over 6% per year on an average for the

last decade. The saving rate is estimated to be about 26% of the

GDP. In the total population, the insured the population is

estimated to be about 70 million.

PRIVATIZATION OF INSURANCE
The Indian Insurance Sector has finally opened up and it is with

much anticipation that new players are awaiting their share of

market. License have been issued to both Indian and Foreign

Players- Reliance, HDFC Standard-Life, Max India-New York,

Royal Sundaram Alliance, ICICI Prudential, IFFCO-Tokyo

Marine, Bajaj Allianz, Birla Sun life, Tata AIG, AVIVA Life

Insurance, SBI Life, Om Kotak Mahindra are some of the

entrants into the newly liberalized Indian Insurance market.ICICI

Prudential and HDFC- Standard Life have issued their life

policies from the private sector after 45 years.

The first move for the liberalization came with the Malhotra

Committee Report in 1993 which recommended the privatization

of insurance, setting of insurance regulatory authority and

restructuring the government monopoly LIC and GIC and its

subsidiaries IRDA Act passed in November 1999 had set ball

rolling for the entry of Private Players in domestic sector.

LIBERALIZATION OF INSURANCE SECTOR

Liberalization commitment of the country to help in disciplining

future economic policies will include the insurance reforms.

When world over insurance market has been opened up. India

cannot remain in isolation. History has shown that it is very

difficult to proper in isolation.

Globalization is the new economic reality, which is here to stay,

heralding a new era of Insurance in India. With the opening of

the insurance industry, Indian stands to gain with the following

major advantages.

• Globalization will provide opportunities to the

consumer for the better production. With more

reasonable and affordable pricing.

• The customer will get quicker service

• It will enhance the saving rate.

 • Long-term funds for infrastructure development will

be available to the country.

• It will secure for India larger inflow of foreign capital

need to sustain our GDP growth

ADVANTAGES OF LIBERLIZATION

• The opening up will enable the country to save more

and invest more for the development in infrastructure.

• With new insurance intermediaries and more

distribution channels the market is bound to develop by

leaps and bounds

• In the next few years it is established that the Indian

insurance sector will develop a better understanding of

consumer requirement leading to more satisfaction of

consumers.

• Lead to increase in employment.

 • Social and rural obligations will also be served as

IRDA has come out with clear regulation in this regard,

which makes the development in this area mandatory.

• Global competition will help in building expertise

with their global practice.

Unlike west, in India, insurance is sold as the instrument of

saving. About 18% of the policies are sold as death risk

consideration. Impression about LIC is that they are not meant

for the market requirements. They are only intended to find

customers. Insurance awareness is therefore low. Unit linked

insurance products are not available. Insurance covers are

expensive and returns are low. Turn over the agent is high. The

choice available to the insuring public is inadequate in terms of

services, products and prices. These are the areas of weakness,

which may act as opportunities for new players who may work to

offer policies to the customer with the value additions at a

competitive premium with much improved servicing.

The IRDA governs the critical aspect of Insurance Sector

Including:

• The number and role of Private Sector operates

including-Roman area intermediaries.

• Regulate covering investment, solvency norms

• Product Range

• Accounting Practices

• Consumer Protection Norms

• Ensuring the Rural and Health Insurance are

developed

• Fixing of License fee

Perhaps all the most critical regulation is the 26% equity Capital

for Foreign Insurers. This regulation bring in issues regarding

management control and one of the reasons for joint venture

breaking up Cubb-Kotak, Liberty-Dabur, AllState-Dabur, Manu

Life-UTI are some of the broken up alliances.

IRDA
(Insurance Regulatory and Development Authority)

The regulatory body for insurance IRDA has been established

with the following mission:

"To protect the interests of the policy holders, to regulate,

promote and ensure orderly growth of the insurance industry

and for matters connected therewith or incidental thereto."

Private Players in Indian Life Insurance

The major players in Indian life insurance sector include:

* Allianz Bajaj Life Insurance Company Ltd.,

* Aviva Life Insurance Co. India Pvt. Ltd.,

* AMP SANMAR Assurance Company Ltd.,

* Birla Sun Life Insurance Company Ltd.,

* HDFC Standard Life Insurance Company Ltd.,

* ICICI Prudential Life Insurance Company Ltd.,

* ING Vysya Life Insurance Company Private Ltd.,

* Life Insurance Corporation of India

* Max New York Life Insurance Co. Ltd.,

* MetLife India Insurance Company Pvt. Ltd.,

* Om Kotak Mahindra Life Insurance Co. Ltd.,

* SBI Life Insurance Company Ltd.,

* Sahara India Insurance Company Ltd.,

 * Tata AIG Life Insurance Company Ltd.,

The market share for LIC is 90 percent and other players share

only the remaining 10 percent.

The insurance sector has been opened up in India, as there was

an urgent need. The international experience indicates those

country with a liberalized insurance sector have witnessed a

rapid growth in premium volumes enhancing the domestic saving

rate. This happened in China, Malaysia and Singapore where a

competitive market has led to improvement in Services and

quicker settlement of claims.

It is also important to note that competition will bring about

advancement in information, communication and technology.

And rightly therefore a decision was taken by the Government of

India to open up Insurance sector. The establishment of IRDA in

the month of April 2000 has been important development in this

direction, making the end of monopoly in the insurance sector.

W hat if I already have Life Insurance?

As an individual, for the extent of financial protection you need

is different from that as a married man which in turn is different

from that as a parent. At each life stage, it is necessary to re-

evaluate the amount of protection and provision you require and

adjust for the same. Below are some of the events in your life for

which you should re-evaluate and plan your life insurance needs.

Life stages

 Marriage

 Birth of a child

 Schooling of child

 College education of child

 Marriage of child

 Retirement

Let us take an example to understand the need

for Insurance:

Mr. Amit is 45 and self-employed. His wife Nandini, who is a

housewife, looks after their two children aged 3 and 7 years.

They stayed in a rented accommodation, where the rent is

Rs.15000/- per month. Mr. Amit has taken a loan of Rs. 2 Lakh.

His monthly earnings on average are Rs.40,000/-. Mr. Amit

passes away in an unfortunate road accident. What are some of

the financial implications of his death on his family?

There may be several financial implications on his family.

Some of these are:

• The monthly income, previously provided would stop.

• His wife and children may have to seek financial

assistance from other relatives.

• His wife may not have enough money to pay back the

loan of Rs.2 lakhs.

• The families have to move into a cheaper

accommodation.

• The widow may have to take up work to earn money.

 • The education of their children may suffer.

This simple example illustrates the impact premature death can

have on a family, where the main earner has no life cover.

Had Mr. Amit taken a life cover, his family would not have faced

such hardships in the event of his unfortunate death. A simple

life insurance policy could have provided Mr. Amit’s family with

a lump sum that could have been invested to provide an income

equal to all or part of his income.

In simple words, insurance protects against untimely losses.

Insurance has been found useful in the lives of persons both in

the short-term and long-term. Short term needs like sudden

medical costs and long-term needs like marriage expenses etc.

can be met with using life insurance.

How much insurance do I need?

The main purpose of life insurance is to provide a financial

cushion to your loved ones in the event that something

unfortunate should happen to you. One must provide enough, so

as to generate a future income stream that will take care of the

financial needs of their dependants.

How much insurance you need depends on your annual income,

your expenses and your existing assets.

WHY INSURANCE IN INDIA

• Only 22% of the insurance population has been

extended cover. Market penetration is low and the

potential to exploit is high.

• Insurance premium per capita is very low.

• Lack of comprehensive social system benefit and

welfare means that demand for pension products is high.

• Huge middle class of approximately 300 Million.

• Existing insurance company score low on customer

service front.
The insurance market registered growth in the Asian region even

though India’s share in global insurance is less than 0.5% (1988)

as compared to USA (24.2%) and Japan (21%). Studies have

reveled that in an emerging market, as disposable income rises,

Insurance premiums as a ratio of GDP shoots up. The

confederation of Indian Industry projected a growth of Life

Insurance premiums from Rs. 350 Billion at present to Rs.140

Billion. The growth of non-life insurance premium is expected to

increase from 75 billion to 375 billion. Out of which, only 10%

is tapped by the existing insurer.

Insurance even more than banking is a volume game. A

very exclusive approach in view is unlikely to provide

meaningful numbers. Currently, insurance is bought for the

purpose of tax-benefits. A higher percentage of business is in the

rural market. The share of rural new business insurance total new

business is 55% in terms of policies and 47% in terms of sum

assured. However, this needs to be viewed in the light of some

recent issues that have been raised regarding as to what

constitutes the rural market. Therefore, private insurers will be

best served by middle market approach, targeting the customer

segments that are presently unexploited.

How many Indians are aware that LIC has more than

60Products and GIC has more than 180Products? Not only there

is a reduction in the premiums of Life Insurance products have

long overdue since Indian morality rate has decreased three folds

in the last 50years. There is also scope to increase the yield on

life insurance policies (presently 6%) with proper risk

management in place.

It is been debated that insurance business does not

produce profit in the first five years cross subsidization is a

feature of Indian market. Even the first portfolio vote that is

considered profitable, cross subsidizes other departments. Tariffs

reduction is likely to reduce profits; further insurers have to

institute proper claims management progress in order to extract

efficiencies. At present life insurance business in the country is

taxed at 12.5% of the profit in financial year. The government is

soon to present a new model of taxing life insurance companies

at international rates.

New entrants should be well advised to look ahead to

the stage where brand strength will be a competitive advantage

and sketch their alliances accordingly. In fact, we believe that

alliance related to distribution rather than to produce or

technology will prove most valuable in the long run. Banks and

financial companies will emerge, as attractive distribution

channel for this insurance trend will be led by two factors, which

already apply in other world market. First Banking food

insurance, fund management and other financial services

companies are being to increase their profitability and provide

maximum value to their customers.

Therefore, they are themselves looking for a range of products to

distribute. In other market notably Europe; this has resulted in

bank assurance. Bank entering into the insurance business in

India to bank hope to maximize expensive existing network by

selling a range of products more of a loss alliance between

insurance and bank than a formal ownership. Some Indian

entrants like ICICI, HDFC and Reliance hope to ride their

existing network and customer bases.

NEED OF BRAND NAME IN INSURANCE

Branding is the new key challenge in the financial services
st
industry. Life in the 21 century will be longer with more choice

in more field of activity. The financial consequence of the

increased life span is particularly likely to be tough. Inevitably,

this will lead to more complexity, which in turn necessities

greater clarity and appeal from the service providers.

Branding is more important in the financial services market

which not only faces the problem of securing and retaining

customers in an increasing competitive market place but also

experience the need for heightened relevance of the brand

positioning in a world where brand has been termed as new

religion.

Life Insurance

Company Premiums Sum Assured

LIC 0.32 5.52

ICICI Prudential 0.67 30.15

HDFC Standard- 5.97 100

Life
Birla Sunlife 14099.66 2,03,085.28
Focus and strategies are essential for development of brand in

any sector but the less tangible world of financial products

historically has escaped the branding issues that have governed

development and culture in other industries.

If there was an industry, which is least, considered as an

essentiality it would be the insurance industry. It was always felt

as abstract services or a fall back, more likely a safety net. But it

is more of shifting through competitive products to select most

appropriate one, but with liberalization of the industry, players

have to realize the need for branding in a competitive

environment. Insurance companies need to strive for a greater

customer focus regardless the customer is the end or the

intermediary.
Market Share Among Private Companies

Market Share Among Private

Competitors

4% 4% 1%1%
6%
6% 38%

6%
9%
10% 15%

ICICI Prudendial Birla Sunlife HDFC Standard Bajaj Allianz

MAX. NYL. TATA Aig OM Kotak AVIVA Life

Ing Vyasa Metlife AMP Sammar

M ARKET P OTENTIAL FOR P RIVATE L IFE I NSURANCE
C OMPANIES IN I NDIA

It has been found out that:

 85 percent of the Indians prefer LIC than any other

insurance companies.

 'Prevention of Loss', 'Assured Returns' and 'Long

term Investment' are the important factors

influencing Indians in opting for Life Insurance

 Only few of the Indians are aware of private life

insurance companies.
 Most of the Indians are of the opinion that private

insurance companies would be able to perform well

in the long run.

 Most of the Indians are interested in 'Money back'

policies than others

 Most of them are interested in insuring for an amount

of Rs. 1- 2 lakhs
 There is significant relationship existing between

monthly household income and amount insured

 Based on the monthly household income, Indians

prefer to their investment needs like bank deposit,

 Post office schemes, real estate, insurance, gold, chit

funds, shares etc.

 Agents are mostly responsible for selling insurance

products in India
QUESTIONNAIRE ANALYSIS

Total number of Respondents approached 1400

Respondents Responded 1000

Response Rate 71.42%

Number of male respondent 680(68%)

Number of female respondent 320(32%)

(1) What do you understand by insurance?

 Pvt. Govt. Business Self Unemployed
Comments Employees Employees Man employed
Risk 95 50 45 45 30
minimization
Investment 125 40 60 35 30
Tax saving 120 70 45 15 70
Cant say 45 20 15 25 20

140
Number of respondents

120 Risk minimization

100
80 Investment
60 Tax saving
40
20 Cant say
0
Business

employed
Unemployed
Employees

Employees

Man
Self
Govt.
Pvt.
 LEARNING EXPERIENCE DURING THE TRAINING
My, project entitled -“Consumer awareness, Preferences & estimation of
market share” at Noida (UP). It has been a great experience, while during a training
in Noida city. In, my life it was my first experience to get people knows of different
categories through interviewing and getting fill up questionnaires from them. After
doing my survey, I learnt that at each and every level there is a competition.
GAINS
1. The first and main thing I gained is I removed my hesitations
2. About the consumer behavior towards Insurance.
3. About the current situation of market condition.
4. About handling the work force.
5. How to get people convince for buying the product.
6. How to increase the sales force.
7. Consumer preferences towards insurance.
LOSS
1. During the training some if the sample respondents does not give their
full information and also hesitate to fill up the Questionnaires.
2. The sample selected by the research was of 1000 consumers so due to
a small sample out of a big universe, the results may not be
completely correct.
3. It was too hot, outside, and places were far from each other.
Conclusion

The consumer awareness for insurance is found to be

greater in the long run as most of the Indians are of the

opinion that, private insurance companies would be able

to perform well in the future. The private and foreign

insurance companies have to immediate steps in

appointing more number of agents and/or advisors in

addition to the employees as it has been found out that

agents are the best channel to reach the general public

regarding selling of insurance products. The private and

foreign insurance companies have to concentrate on the

factors like 'Prevention of Loss', 'Assured Returns' and

'Long term Investment'. They can also focus on an

insurance amount of Rs. 1 – 2 lakhs with 'money back

policies'. Hence, the market has potential. The private and

foreign insurance companies that are taking immediate

steps.
 QUESTIONNAIRE

Dear Sir, / Madam

I, Rajesh Kumar a MBA Student from “Institute of Professional Excellence &

Management” (UP Tech. University, Lucknow) A-13/1, S.S. G.T. Road Industrial Area
NH-24, Ghaziabad-201001 (U.P.) is conducting a market survey to study the consumer
“Consumer awareness, Preferences & estimation of market share” of Different life
insurance companies at Noida (UP). Which is a part of my summer training in the
HDFC SL CO. Noida.

I will be highly obliged if you could spare some of your valuable time in filling up this
questionnaire.

1: -. Users Identification Date…………………

• Respondents Name…………………………………….
• Address…………………………………………………
• Age……………………………………………………..
• Sex………………………………………………………
• Marital Status……………………………………………
• Contact No……………………………………………..
• Educational Qualification………………………………
• Occupation/Profession: -

. A. Pvt. Employee B. Govt. Employee

C. Businessman D. Self employed

E. Unemployed

_______________________________________________________________________
_

(1)What do you understand by insurance?

A. It is a mean of minimizing risk. B. It is a mean of investment

C. It is a mean of tax saving. D. All of these.

(2) Is insurance necessary for you?

A. Yes B. No

(3)According to you; whether insurance policies are in the direction of public welfare?

A. Yes. B. No

(3) Do you have any life insurance policy?

A. Yes. B. No

(4) From which company you have purchased it?

A. LIC B. ICICI Pru.

C. HDFC SL D. Others.

If, others please mention it.

………………………………………

(5) Which type of policy do you have?

A. Money back B.Unit linked

C. Retirement Plan. D.Children Plan.

(6) Why you have purchased it from that company?

A. It has good financial base. B.It is experienced in its fields

C. Its service Quality is good. D.My friend/relative is working

with that company.

(7) How you came to know about that company?

A. By advertisement B. By friends/Relatives
C. By agent D. Others.

(8) Are you planning for purchasing any life insurance policy?

A. Yes B. No

(9) From which company you are planning to purchase it?

A. LIC B. ICICI Pru.

C. HDFC SL D. Others.

If, others please mention it.

……………………………………………..

(10) Which type of policy you are planning for?

A. Money back B.Unit linked

C. Retirement Plan. D.Children Plan.

(11) What matters you in a life insurance company?

A. Low premium rates B. Better Quality of service.

C. High rate of returns D. Strong financial base.

(12) By which mean of insurance advertisement you appealed more regarding insurance?

A. By television advertisement B.By print media

C. By radio C. By cold callings

Brochures / Information Booklets
 Product List L.I.C.
 L.I.C. Annual Report, 2004
 ICICI Annual Report, 2004
 HDFC Annual Report, 2004

Report/Acts
 Malhotra Committee Report on Reforms in the Insurance Sector,
1993.
 The Insurance Regulatory and Development Authority Bill, 1999.

Newspapers / Magazines
• The Economic Times
• The Insurance Times
• Insurance Post

Books

• Business Statistics by Addition 2002, New Delhi, Dr. S.P. Gupta, Dr.
M.P. Gupta,

Websites

• www.licoflndia.com
• www.lrdaindia.org.com
• www.indiainfoline.com
• www.icici.com
• www.hdfc.com
• www.google.co.in