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kat|o ana|ys|s of ID8I ILDLkAL LIIL INSUkANCL w|th other compan|es

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ID8I ILDLkAL LIIL INSUkANCL CC L1D

SubmlLLed ln parLlal fulflllmenL for Lhe award of
MasLers of 8uslness AdmlnlsLraLlon uegree
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AMI1 GLC8AL 8USINLSS SCnCCL
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@hls ls Lo cerLlfy LhaL rerana !a[u bearlng enrollmenL noA306901910018 of masLer of buslness
admlnlsLraLlon baLch 20102012 of amlLy global buslness school Pyderabad has successfully
compleLed Lhe pro[ecL LlLled kat|o ana|ys|s of Idb| federa| ||fe |nsurance w|th other
compan|es"
rerana !a[u has successfully compleLed Lhe pro[ecL under Lhe guldance of
She ls slncere and hardworklng sLudenL wlLh pleasanL manners




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ACkNCWLLDGLMLN1

l avall Lhls opporLunlLy Lo express my deep sense of graLlLude Lo all Lhe people who have helped me Lo
carry ouL and compleLe Lhls pro[ecL ln parLlal fulflllmenL of my M8A degree currlculum

l am deeply lndebLed Lo Dr rasad kao D|rector of AMl@ CLC8AL 8uSlnLSS SCPCCL for Lhe valuable
supporL and gave me an opporLunlLy Lo do my pro[ecL work

l Lhank DSureka 1hakur faculLy and manager(corporaLe relaLlons)for formulaLlng Lhe pro[ecL and
lmplemenLlng Lhe same

l wlsh Lo express me hearLy Lhanks Lo my faculLy gulde rofM|nu har|a|ka of AMl@ CLC8AL 8uSlnLSS
SCPCCL for Lhe help she provlded Lo carry ouL Lhls pro[ecL

l would llke Lo Lhank my pro[ecL gulde MrsShanth| agyanath Manager ulsLrlbuLlon Chlef lu8l Llfe
lnsurance Pyderabad for guldlng me Lhrough summer lnLernshlp and research pro[ecL Per
encouragemenL Llme and efforL are greaLly appreclaLed










DLCLAkA1ICN

l hereby declare LhaL Lhls pro[ecL reporL submlLLed ln parLlal fulflllmenL of Lhe requlremenL of Lhe award
for Lhe CM course Lo AMl@ CLC8AL 8uSlnLSS SCPCCL ls my orlglnal work and noL submlLLed for
award of any degree or dlploma fellowshlp or for slmllar LlLles or prlzes

l furLher cerLlfy LhaL l have no ob[ecLlon and granL Lhe rlghLs Lo AMl@ CLC8AL 8uSlnLSS SCPCCL Lo
publlsh any chapLer of Lhe pro[ecL lf Lhey deem flL ln [ournals/Magazlnes newspapers eLc wlLhouL my
permlsslon


lace PuL8A8Au SlgnaLure
name rerana !a[u uaLe














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EXECUTIVE SUMMARY
---------------------------------------------------------------------------------------------------------------------
O Summer Internship Program is conducted by every business school as a part oI their
curriculum so that the students get an exposure to the real corporate world. The internship
enables the student to get a Ieel oI the working environment oI big corporate houses. This
report provides the outline oI my work as a part oI the Summer Internship Program,
which corroborate the application oI my theoretical knowledge to the practical business
world. For my industrial spotlight and a Iirst exposure to the corporate world, I selected
'IDBI FEDERAL LIC LTD.
O I joined IDBI FEDERAL on 1
ST
JUNE,2011.
O I have been given chance to work in the Finance and Sales department. On my Iirst day I
met my company guide Mrs. Shanthi Yagyanath, who is Manager Distribution ChieI.
First two days we were taught the basics oI Insurance, about the products company
oIIers. I had initial discussion about my project with her.
O The project is divided in three major parts
1. Introduction to Insurance and IRDA
2. Comparative analysis oI IDBI and Iour other insurance companies
3. Survey oI expectations oI Insurance buyers
O The objective oI the project is to analyze the Iinancial position oI a Iairly new company
like IDBI FEDERAL by analyzing its Iinancial statements and comparing it with other
private liIe insurance companies. The LIC is not chosen Ior comparison as it is held by
government and is oldest liIe insurance company which has investor conIidence.
.
O In the beginning, we gain an insight about the company and its values and inherit them in
our liIe, and then studied diIIerent types oI insurance plans like ULIP`s, term plan,
endowment plan, and various other plans.
May 19, 2010

















SCOPE
---------------------------------------------------------------------------------------------------------------------
O The Scope oI the study is analyzing and comparing IDBI Federal LIC with Iour other
companies namely HDFC LiIe Insurance, SBI LiIe Insurance, ICICI Prudential LiIe
Insurance and Future Genrali LiIe Insurance.
O ICICI is selected as it has highest market share, SBI LiIe is next large in terms oI market
share, HDFC LiIe is the most promising one and Future Genrali is chosen because it is a
startup like IDBI FEDERAL.
O The Analysis is limited to compare the Iinancial statement and ratios oI all the
companies. Trend
O Analysis oI the companies and comparison oI their products is not considered while
analyzing.
O The research also includes a study oI expectation oI consumers Irom the insurance
products. The survey was conducted on 300 people to evaluate their expectation on
parameters like Ilexibility, premiums, risk etc.
May 19, 2010






























OB1ECTIVE
---------------------------------------------------------------------------------------------------------------------
O The main purpose oI the project is to determine the Iinancial position oI IDBI FEDERAL
LIC in comparison to other private liIe insurance companies.
O AIter the liberalization oI Insurance Sector in 1992 many private insurance players have
come up in India with the diIIerence in their operations and insurance plan they oIIer.
O People invest in these insurance companies in order to secure their Iuture against unseen
problems in liIe.
O ThereIore, it is necessary to analyze iI the company will be able to meet its obligations in
Iuture i.e. iI the company is Iinancially stable to IulIill its obligations?
O For the purpose oI comparison Iollowing LiIe Insurance companies are selected
1) HDFC LiIe Insurance
2) SBI LiIe Insurance
3) ICICI Prudential LiIe Insurance
4) Future Genrali LiIe Insurance
O The project also aims to determine the most important Iactors an insurance company
must keep in mind while designing an insurance product and how person with diIIerent
demographics behave to risk Iactor in insurance investment.
O To identiIy the strengths and weakness oI IDBI FEDERAL ad suggest areas where it
could Iocus on and improve upon
May 19, 2010

























LIMITATIONS
---------------------------------------------------------------------------------------------------------------------
The Iinancial statement oI IDBI Federal LIC like 'Cash Ilow statement, various schedules and
notes to Iinancial statement were not available. The quality oI their assets and liabilities could
not be adjudged accurately.
Reach to a limited number oI documents oI diIIerent insurance companies in regard to the
management and other policies and resultant Iigures so as to identiIy the exact cause oI their
lag in perIormance
Many approximations are done in order to calculate the various Iinancial ratios. ThereIore,
ratios may not be accurate but helpIul in indicating the Iinancial aspects oI company.
There is whole array oI insurance products that are available in market. Comparative analysis
these products were not done due the limitation oI time.
Non-ProIiciency in technical aspects oI insurance companies might have hindered the best
analysis oI the Iindings.
May 19, 2010


























VDGF
















INDIAN INSUkANCL
INDUS1k
"AN CVLkVILW"













INSURANCE REVIEW
---------------------------------------------------------------------------------------------------------------------
INTRODUCTION

"Insurance is a contract between two parties whereby one party called insurer undertakes in
exchange for a fixed sum called premiums, to pay the other party called insured a fixed amount
of money on the happening of a certain event."
Insurance is a protection against Iinancial loss arising on the happening oI an unexpected event.
Insurance companies collect premiums to provide Ior this protection. A loss is paid out oI the
premiums collected Irom the insuring public and the Insurance Companies act as trustees to the
amount collected.
For Example, in a LiIe Policy, by paying a premium to the Insurer, the Iamily oI the insured
person
receives a Iixed compensation on the death oI the insured. Similarly, in car insurance, in the
event oI the car meeting with an accident, the insured receives the compensation to the extent oI
damage. It is a system by which the losses suIIered by a Iew are spread over many, exposed to
similar risks.

Logic of insurance
It is a system by which the losses suIIered by a Iew are spread over many, exposed to similar
risks.
Insurance is a protection against Iinancial loss arising on the happening oI an unexpected event.
Insurance companies collect premiums to provide Ior this protection. A loss is paid out oI the
amount premiums collected Irom the insuring public and the Insurance Companies act as trustees
to the collected.

Need of insurance
Insurance is desired to saIeguard oneselI and one's Iamily against possible losses on account oI
risks and perils. It provides Iinancial compensation Ior the losses suIIered due to the happening
oI any unIoreseen events. By taking liIe insurance a person can have peace oI mind and need not
worry about the Iinancial consequences in case oI any untimely death. Certain Insurance
contracts are also made compulsory by legislation. For example, Motor Vehicles Act 1988
stipulates that a person driving a vehicle in a public place should hold a valid insurance policy
covering 'Act" risks. Another example oI compulsory insurance pertains the Environmental
Protection Act, wherein a person using or to carrying hazardous substances (as deIined in the
Act) must hold a valid public liability (Act) policy.

How Insurance Works?
The mechanism oI insurance is very simple. People who are exposed to the same risks come
together and agree that, iI any one oI them suIIers a loss, the others will share the loss and make
good to the person who lost. All people who send goods by ship are exposed to the same risks,
which are related to water damage, ship sinking, piracy, etc. Those owning Iactories are not
exposed to these risks, but they are exposed to diIIerent kinds oI risks like, Iire, hailstorms,
earthquake, lightning, burglary, etc. Like this, diIIerent kinds oI risks can be identiIied and
separate groups made, including those exposed to sucH risks. By this method, the heavy loss that
any one oI them may suIIer (all oI them may not suIIer such losses at the same time) is divided
into bearable small losses by all. In other words, the risk is spread among the community and the
likely big impact on one is reduced to smaller manageable impacts on all.
II a Jumbo Jet with more than 350 passenger`s crashes, the loss would run into several cores oI
rupees.
No airline would be able to bear such a loss. It is unlikely that many Jumbo Jets will crash at
same time.
II 100 airline companies Ilying Jumbo Jets, come together into an insurance pool, whenever one
oI the Jumbo Jets in the pool crashes, the loss to be borne by each airline would come down to a
Iew lakhs oI rupees. Thus, insurance is a business oI sharing.
There are certain principles, which make it possible Ior insurance to remain a Iair arrangement.
The Iirst is that it is diIIicult Ior any one individual to bear the consequences oI the risks that he
is exposed to. It will become bearable when the community shares the burden. The second is that
the perils should occur in an accidental manner. Nobody should be, in a position to make the risk
happen. In other words, none.in the group should set Iire to his assets and ask others to share the
costs oI damage. This would be taking unIair advantage oI an arrangement put into place to
protect people Irom risks they are exposed to. The occurrence has to be random, accidental, and
not the deliberate creation oI the insured person.
The manner in which the loss is to be shared can be determined beIore-hand. It may be
proportional to the risk that each person is exposed to. This would be indicative oI the beneIit he
would receive iI the peril beIell him. The share could be collected Irom the members aIter the
loss has occurred or the likely shares may be collected in advance, at the time oI admission to the
group. Insurance companies collect in advance and create a Iund Irom which the losses are paid.
The collection to be made Irom each person in advance is determined on assumptions. While it
may not be possible to tell beIorehand, which person will suIIer, it may be possible to tell, on the
basis oI past experiences, how many persons, on an average, may suIIer losses. The Iollowing
two examples explain the above concept oI insurance:

Example 1
In a village, there are 400 houses, each valued at Rs. 20000. Each year, on the average, 4 houses
get
burnt, resulting into a total loss oI Rs. 80000. II all the 400 owners come together and contribute
Rs. 200 each, the common Iund would be Rs. 80000. This is enough to pay Rs. 20000 to each oI
the 4 owners whose houses got burnt. Thus, the risk oI 4 owners is spread over 400 house-
owners oI the village.

Example 2
There are 1000 persons who are all aged 50 and are healthy. It is expected that oI these, 10
persons may die during the year. II the economic value oI the loss suIIered by the Iamily oI each
dying person is taken to be Rs. 20000, the total loss would work out to Rs. 200000. II each
person in a group contributed Rs. 200 a year, the common Iund would be Rs. 200000. This
would be enough to par Rs. 20000 to the Iamily oI each oI the ten persons who die. Thus, the
risks in the case oI 10 persons are shared by 1000 persons.
May 19, 2010



Insurance of Human Asset`
A human being is an income generating asset. One`s manual labor, proIessional skills and
business acumen are the assets. This asset also can be lost through unexpectedly early death or
through sickness and disabilities caused by accidents. Accidents may or may not happen. Death
will happen, but the timing is uncertain. II it happens around the time oI one`s retirement, when
it could be expected that the income will normally cease, the person concerned could have made
some other arrangements to meet the continuing needs. But iI it happens much earlier when the
alternate arrangements are not in place, there can be losses to the person and dependents.
Insurance is necessary to help those dependent on the income.
A person, who may have made arrangements Ior his needs aIter his retirement, also would need
insurance. This is because the arrangements would have been made on the basis oI some
expectations like, likely to live Ior another 15 years, or that children will look aIter him. II any oI
these expectations do not become true, the original arrangement would become inadequate and
there could be diIIiculties.
Living too long can be as much a problem as dying too young. Both are risks, which need to be
saIeguarded against. Insurance takes care.

Insurance of Intangibles
The concept oI insurance has been extended beyond the coverage oI tangible assets. Exporters
run risk oI losses iI the importers in the other country deIault in payments or in collecting the
goods. They will also suIIer heavily due to sudden changes in currency exchange rates, economic
policies or political disturbances in the other country. These risks are insured. Doctors run the
risk oI being charged with negligence and subsequent liability Ior damages. The amounts in
question can be Iairly large, beyond the capacity oI individuals to bear. These are insured. Thus,
insurance is extended to intangibles. In some countries, the voice oI a singer or the legs oI a
dancer may be insured.


INSURANCE CONTRACT

Contract:
Definition: A contract is an agreement between two or more parties to do or to abstain Irom
doing anact and which is intended to create a legally binding relationship

Essentials of a Valid Contract:
Two or more parties
LawIul Objective
OIIer and acceptance
LawIul Consideration
Free Consent
May 19, 2010





Life Insurance Contract:

Principles of Insurance:
1) Insurable interest
2) Indemnity
3) Proximate cause
4) Utmost good Iaith.

Insurable Interest:
Insurable Interest is a relation between the insured and the event insured against such that the
occurrence oI the event will cause substantial loss or injury oI some kind to the assured.
Subject matter oI insurance
Fire building, stock or machinery
Liability legal liability Ior injury or damage
LiIe liIe being assured
Marine hull or cargo
Essentials
There must be some property, right, interest, liIe, limb or potential liability capable oI being
insured;
This property, right, interest etc which must be the subject matter oI insurance.
Insured must stand in a relationship with subject matter oI insurance whereby Irom its saIety,
well being or Ireedom Irom liability and would be prejudiced by its loss, damage or existence oI
liability.
Relationship between insured and subject matter oI insurance must be recognized at law
INSURER
pay claims
INSURED
pay premiums
AGREEMENT
On happening oI insured event or survival to a speciIied term
May 19, 2010
Indemnity
A contract oI indemnity is one in which the promise promises to make good the loss that occurs
to the promise on the happening oI an event.
Indemnity Contract Fire or Marine Insurance
Non-indemnity Contract LiIe Insurance

Proximate cause
The active eIIicient cause that sets in motion a train oI events which bring about a result, without
intervention oI any Iorce started and working actively Irom a new and independent source.
Proximate in eIIiciency and not in time e.g.: A ship torpedoed while her Iinal loss was due to a
storm.
It is not the latest, but direct, dominant, operative and eIIicient cause that must be regarded as
proximate.

Utmost good faith
A positive duty voluntarily to disclose, accurately and Iully, all Iacts material to the risk being
proposed, whether requested or not.

Material Fact
Every circumstance is material which would inIluence the judgment oI a prudent insurer in
Iixing the
premium or determining whether he will take the risk.

Duty oI disclosure:
The requirement oI utmost good Iaith is complimented by the duty oI disclosure which places an
obligation on both parties to the insurance contract to disclose material Iacts relevant to the
contract to each other.

Types of Insurance
Any risk that can be quantiIied can potentially be insured. SpeciIic kinds oI 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 is not.Below is a (non-exhaustive) list oI the many diIIerent
types oI insurance that exist.
A single policy may cover risks in one or more oI the categories set Iorth below. For example,
auto insurance would typically cover both property risk (covering the risk oI theIt or damage to
the car) and liability risk (covering legal claims Irom causing an accident). A homeowner's
insurance policy 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 oI health insurance Ior medical expenses oI guests who are injured on the
owner's property.

Aviation insurance insures against hull, spares, deductible, hull war and liability risks.
Boiler insurance (also known as boiler and machinery insurance or equipment breakdown
insurance) insures against accidental physical damage to equipment or machinery.
Builder's risk insurance insures against the risk oI physical loss or damage to property during
construction
Business insurance can be any kind oI insurance that protects businesses against risks.
Casualty insurance insures against accidents, not necessarily tied to any speciIic property.
Credit insurance repays some or all oI a loan back when certain things happen to the borrower
such as unemployment, disability, or death
Crime insurance insures the policyholder against losses arising Irom the criminal acts oI third
parties
Crop insurance
Disability insurance policies provide Iinancial support in the event the policyholder is unable
to
work because oI disabling illness or injury. It provides monthly support to help pay such
obligations as mortgages and credit cards.
Total permanent disability insurance provides beneIits when a person is permanently disabled
and can no longer work in their proIession, oIten taken as an adjunct to liIe insurance.
Health insurance policies will oIten cover the cost oI private medical treatments
LiIe insurance
Marine insurance and marine cargo insurance cover the loss or damage oI ships at sea or on
inland waterways, and oI the cargo that may be on them.

HISTORY OF INSURANCE IN INDIA
1818: Oriental LiIe Insurance Company, the Iirst liIe insurance company on Indian soil started
Iunctioning (IRDA Website).
1870: Bombay Mutual LiIe Assurance Society, the Iirst Indian liIe insurance company started its
business.
1912: The Indian LiIe Assurance Companies Act enacted as the Iirst statute to regulate the liIe
insurance
business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical
inIormation about both liIe and non-liIe insurance businesses.
1938: Earlier legislation consolidated and amended to by the Insurance Act with the objective oI
protecting the interests oI the insuring public.
1956: 245 Indian and Ioreign insurers and provident societies are taken over by the central
government and nationalized. LIC Iormed by an Act oI Parliament, viz. LIC Act, 1956, with a
capital contribution oI Rs.5 crore Irom the Government oI India.
The General insurance business in India, on the other hand, can trace its roots to the Triton
Insurance Company Ltd., the Iirst general insurance company established in the year 1850 in
Calcutta by the British.

Some oI the important milestones in the general insurance business in India are:
1907: The Indian Mercantile Insurance Ltd. set up, the Iirst company to transact all classes oI
general
insurance business (indianeconomy/india-insurance-sector.html).
1957: General Insurance Council, a wing oI the Insurance Association oI India, Irames a code oI
conduct Ior ensuring Iair conduct and sound business practices.
1968: The Insurance Act amended to regulate investments and set minimum solvency margins
and the TariII Advisory Committee set up.
1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general
insurance
business in India with eIIect Irom 1st January 1973.
107 insurers amalgamated and grouped into Iour company`s viz. the National Insurance
Company Ltd.,
the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United
India
Insurance Company Ltd. GIC incorporated as a company.




Insurance Sector Reforms
In 1993, Malhotra Committee, headed by Iormer Finance Secretary and RBI Governor
R.N.Malhotra was Iormed to evaluate the Indian Insurance industry and recommended its Iuture
direction.
The Malhotra committee was set up with the objective oI complementing the reIorms initiated in
the Iinancial sector.
The reIorms were aimed at "creating a more eIIicient and competitive Iinancial system suitable
Ior therequirements oI the economy keeping in mind the structural changes currently underway
and recognizing that insurance is an important part oI the over all Iinancial system where it was
necessary to address the need Ior similar reIorms...".
In 1994, the committee submitted the report and some oI the key recommendations included:

(1)STRUCTURE

Government stake in the Insurance Companies to be brought down to 50.
Government should take over the holdings oI GIC and its subsidiaries so that these subsidiaries
can act as independent corporations.
All the insurance companies should be given greater Ireedom to operate.

(2) COMPETETION
Private Companies with minimum paid up capital oI Rs.1 ban should be allowed to enter the
industry
No Company should deal in both LiIe and General Insurance through a single entry
Foreign Companies may be allowed to enter the industry in collaboration with the domestic
companies
Postal LiIe Insurance should be allowed to operate in the rural market
Only one State Level LiIe Insurance Company should be allowed to operate in each state.

(3) REGULATORY BODY
The Insurance Act should be changed
An Insurance Regulatory Body should be set up
Controller oI Insurance (Currently a part Irom the Finance Ministry)should be made
Independent.

(4) INVESMENTS
Mandatory Investments oI LIC LiIe Fund in government securities to be reduced Irom 75 to
50
GIC and its subsidiaries are not to hold more than 5 in any company (There current holdings
to
be brought down to this level over a period oI time)
(5) CUSTOMER SERVICE
LIC should pay interest on delays on payments beyond 30 days
Insurance Companies must be encouraged to set up unit linked pension plans
Computerization oI operations and updating oI technology to be carried out in the insurance
industry
The committee emphasized that in order to improve the customer service and increase the
coverage oI insurance industry should opened up to competition. But at the same time, the
committee Ielt the need
to exercise caution as any Iailure on the part oI new players could ruin the public conIidence in
the industry. Hence, it was decided to allow competition in a limited way by stipulating the
minimum capital requirement oI Rs. 100 crores. The committee Ielt the need to provide greater
autonomy to insurance companies in order to improve their perIormance and enable them to act
as independent companies with economic motives. For this purpose, it had proposed setting up
an independent regulatory body.
May 19, 2010

LIBERALIZATION:

Opening Up OI Insurance Sector 1999 The Insurance Regulatory And
Development Authority
ReIorms in the Insurance sector were initiated with the passage oI the IRDA Bill in Parliament in
December 1999. The IRDA since its incorporation as a statutory body in April 2000 has
Iastidiously stuck to its schedule oI Iraming regulations and registering the private sector
insurance companies.
The other decision taken simultaneously to provide the supporting systems to the insurance
sector and in particular the liIe insurance companies was the launch oI the IRDA's online service
Ior issue and renewal oI licenses to agents.
The approval oI institutions Ior imparting training to agents has also ensured that the insurance
companies would have a trained workIorce oI insurance agents in place to sell their products,
which are expected to be introduced by early next year.
Since being set up as an independent statutory body the IRDA has put in a Iramework oI globally
compatible regulations. In the private sector 14 liIe insurance companies have been registered.

Entry OI Private Companies
Under the IRDA Act, private companies can now operate in India's insurance industry. However,
they must obtain a license Irom the IRDA beIore being permitted to write business.
To have its license application considered, a domestic private company must be registered in
accordance with the Companies Act oI 1956 and have approximately US$ 20 million oI
investment capital. The speciIic licensing requirements that
Private Indian Companies must IulIill are set Iorth in the Registration on Indian Insurance
Companies Regulations, published by the IRDA 2000.

LiIting OI Barriers To Foreign Investment
The IRDA Act also liIts certain barriers to Ioreign direct investment in Indian insurance industry.
Global insurers are now permitted to set up and register a domestic company in order to write
business
in India. However, regulations stipulate that they have a capital base oI at least US $ 20 million,
and their
investment in such company is capped at 26 percent. Thus, to participate in the market, they
must Iorm a joint venture with an Indian partner that is able to invest the remaining Iunds.
The equity investments limit is the same Ior global reinsures seeking to write business in India,
but they are required to put up a capital oI approximately US$ 45 million in order to establish a
domestic company.
Since the IRDA Iirst enacted these rules, 13 new liIe insurance companies have entered the
market.
May 19, 2010


On the other hand, no global reinsurer has established a domestic company. Instead, most oI the
top international reinsurance companies operate Irom their overseas oIIices by sharing the
reinsurance risks picked up by the GIC. A recent proposal has been put Iorward to increase
Ioreign direct investment to 49 percent.
In addition, global companies are pushing Ior the right to establish branch oIIices in India. These
changes are likely to substantially increase the presence oI international insurers, reinsurers, and
brokers in India.
The IRDA Insurance Brokers Act in India 2002 permitted overseas insurance and reinsurance
brokers to enter the market, but with the same equity cap as that governing the operations oI
Ioreign insurers and reinsurers. Thus, Ioreign brokers must also Iorm a joint venture with an
Indian partner in order to establish an Indian broking house.
The 2002 IRDA legislation established Iour broker categories, one oI which brokers must select
when applying Ior a license:
1. Category 1A : Direct General Insurance Broker
2. Category 1B : Direct LiIe Insurance Broker
3. Category 2 : Reinsurance Broker
4. Category 3: Composite Broker
5. Category4: Others, Ior example Insurance Consultants and Risk Management Consultants
Each category has diIIerent solvency margins and capital adequacy ratios, and all categories need
to carry proIessional indemnity insurance at diIIerent minimum levels.
In the years since market liberalization was initiated, the insurance sector has witnessed some
impressive changes. The needs oI insurance and reinsurance buyers have grown; the market is
introducing new products to address these needs; and the services oI brokers are now seen as
critical to making inIormed insurance and reinsurance decisions.

Overview OI The Current Insurance Market

In the years since the IRDA Act initiated market reIorms, the insurance sector has experienced
some remarkable changes.
The entry oI a large number oI Indian and Foreign private companies in liIe insurance business
has to lead greater choice in terms oI products and services. Increased consumer awareness oI the
beneIits and importance oI insurance and reinsurance has generated many more buyers; and new
distribution channels, among them brokers, bank assurance, the Internet, and corporate agents
have provided additional ways oI getting products and services to customers.
May 19,1
Private insurance companies have to date written a small percentage oI business in this sector
during the last three years, but they have ushered in a competitive environment that has
accelerated market growth.
State owned insurers still write the bulk oI insurance business, and they have the net worth
required to underwrite large corporate risks without depending almost entirely on reinsurance
support. However,their Iocus on restructuring is beginning to put them at a disadvantage against
private competitors.
Over the next Iew years, the share oI the market held by the public insurers is expected to drop
substantially, with private companies assuming a growing percentage oI the business written.
At present there are 15 private insurers with two standalone private players and remaining
privateIoreign joint venture.

The main powers and Iunctions oI the Authority are as under:
Protect the interest oI and secure Iair treatment to policyholders;
Bring about speedy and orderly growth oI the insurance industry (including annuity and
superannuation payments), Ior the beneIit oI the common man, and to provide long term Iunds
Ior accelerating growth oI the economy;
Set, promote, monitor and enIorce high standards oI integrity, Iinancial soundness, Iair dealing
and competence oI those it regulates;
Ensure that insurance customers receive precise, clear and correct inIormation about products
and services and make them aware oI their responsibilities and duties in this regard;
Ensure speedy settlement oI genuine claims, to prevent insurance Irauds and other malpractices
and put in place eIIective grievance redressed machinery;
Promote Iairness, transparency and orderly conduct in Iinancial markets dealing with insurance
and build a reliable management inIormation system to enIorce high standards oI Iinancial
soundness amongst market players;
Take action where such 'standards are inadequate or ineIIectively enIorced;
Bring about optimum amount oI selI-regulations in day to day working oI the industry
consistent with the requirements oI prudential regulation
May 19,
May 19, 2010
2526
Indian Insurance Industry
By end March 2010, there were Iorty-Iour insurance companies (IRDA, 2009) operating in India;
oI which twenty- two were in the liIe insurance business and the remaining twenty-one were in
general insurance business and one national re-insurer. OI these Iorty-Iour companies, 8 are in
the public sector (two specialized insurers, namely ECGC and AIC, one in liIe insurance, Iour in
general insurance and one reinsurer).
The remaining thirty-six are private sector companies.
During the Iinancial year 2008-09, IRDA has granted CertiIicate oI Registration to seven new
companies; oI which, Iour are in liIe insurance business and the remaining three are general
insurance companies.
These insurance companies are Canada HSBC Oriental Bank oI Commerce LiIe Insurance Co.
Ltd., Aegon Religare LiIe Insurance Co. Ltd., DLF Pramerica LiIe Insurance Co. Ltd., Star
Union Daiichi LiIe Insurance Co. Ltd., Shriram General Insurance Co. Ltd., Bharti AXA General
Insurance Co. Ltd., and Raheja QBE
General Insurance Co. Ltd. The Iiscal 2008-09 witnessed global Iinancial meltdown. Despite it,
the Indian insurance industry, which has big opportunity to expand, given the large population
and untapped potential, grew satisIactorily.
While liIe insurance business registered a growth oI 10.15 per cent, general insurance business
recorded a growth oI 9.09 per cent in 2008-09. With this, Insurance penetration (premium
volume as a ratio oI GDP) in rupee terms Ior the year 2008-09 stood at 4.74 per cent; 4.17 per
cent Ior liIe insurance and 0.57 per cent Ior non-liIe insurance. The level oI penetration,
particularly in liIe insurance, tends to rise as income levels increase. India, with its huge middle
class households, has exhibited growth potential Ior the insurance industry. Saturation oI markets
in many developed economies has made the Indian market even more attractive Ior global
insurance majors. The insurance market in India has witnessed dynamic changes including entry
oI a number oI global insurers.

LiIe Insurance
The total capital oI the liIe insurers at end March 2010 stood at Rs.18253.04 crore, with
additional inIusion oI capital to the extent oI Rs.5956.62 crore. There had been no inIusion oI
capital in the case oI LIC, which continued to be Rs.5 crore. The inIusion oI additional capital oI
Rs. 5956.62 crore comprised oI Rs. 987.05 crore Irom new companies and remaining Rs.
4969.57 crore Irom existing private insurers.


New Policies
New policies underwritten by the liIe insurers were 509.23 lakh in 2008-09 as against 508.74
lakh during 2009-10 showing a marginal increase oI 0.10 per cent. The private insurers exhibited
a growth oI 13.19 percent, which is much lower than 67.40 per cent recorded in the previous
year. LIC, showed a negative growth Ior the second consecutive year at 4.52 percent as against
its previous year negative growth oI1.61 per cent. In terms oI number oI policies underwritten,
private insurers have increased their market share Irom 26.07 per cent in 2007-08 to 29.48 per
cent in 2009-10. To that extent, LIC has lost its market share.

















COMPANY PROFILE
OF
IDBI FEDERAL LIFE INSURANCE
COMPANY LTD











Introduction to IDBI Federal Life Insurance Company Limited:
IDBI Federal LiIe Insurance Co Ltd is a joint-venture oI IDBI Bank, India`s premier
development and commercial bank, Federal Bank, one oI India`s leading private sector banks
and Federal Insurance International, a multinational insurance giant based out oI Europe. In this
venture, IDBI owns 48 equity while Federal Bank and Federal own 26 equity each. At IDBI
Federal, we endeavor to deliver products that provide value and convenience to the customer.
Through a continuous process oI innovation in product and service delivery we intend to deliver
world-class wealth management, protection and retirement solutions to Indian customers. Having
started in March 2008, in just Iive months oI inception we became one oI the Iastest growing
new insurance companies to garner Rs 100 Cr in premiums. The company oIIers its services
through a vast nationwide network across the branches oI IDBI Bank and Federal Bank in
addition to a sizeable network oI advisors and partners. In only its Iirst year oI operations, as on
March 31st 2009, the company collected more than 328 Cr in premiums highest Iirst year
collection in the history oI Indian liIe insurance industry, through over 87000 policies and over
Rs 2825 Cr in Sum Assured.


IDBI Bank Ltd. - A Profile:

IDBI Bank Ltd. is today one oI India's largest commercial Banks. For over 40 years, IDBI Bank
has essayed a key nation-building role, Iirst as the apex Development Financial Institution (DFI)
(July 1, 1964 to September 30, 2004) in the realm oI industry and thereaIter as a Iull-service
commercial Bank (October 1, 2004 onwards). As a DFI, the erstwhile IDBI stretched its canvas
beyond mere project Iinancing to cover an array oI services that contributed towards balanced
geographical spread oI industries, development oI identiIied backward areas, emergence oI a
new spirit oI enterprise and evolution oI a deep and vibrant capital market. Post the mergers oI
the erstwhile IDBI Bank with its parent company (IDBI Ltd.) on April 2, 2005 (appointed date:
October 1, 2004) and the subsequent merger oI the erstwhile The United Western Bank Ltd. with
IDBI Bank on October 3, 2006, the tech-savvy, new generation Bank with majority Government
shareholding today touches the lives oI millions oI Indians through an array oI corporate, retail,
SME and Agri products and services.

Headquartered in Mumbai, IDBI Bank today rides on the back oI a robust business strategy, a
highly competent and dedicated workIorce and a state-oI-the-art inIormation technology
platIorm, to structure and deliver personalized and innovative Banking services and customized
Iinancial solutions to its clients across delivery channels.
IDBI Bank currently has a balance sheet oI more than Rs.1,72,000crore and business size
(deposits plus advances) oI more than Rs.2,15,000 crore. As an Universal Bank, IDBI Bank,
besides its core Banking and project Iinance domain, has an established presence in associated
Iinancial sector businesses like Capital Market and Investment Banking, Home Finance, Primary
Dealership area and more recently, the LiIe Insurance Business. Recently, IDBI Bank
reorganized its business and structure commensurate with its aspiration to become a 'Top 5' Bank
by asset size & market capitalization by the year 2012. As a Iirst step, to give the organization
the Iocus necessary Ior accelerated growth, the Bank has reorganized its businesses around nine
verticals, six customer verticals, each Iocusing on distinct customer segments and three business
verticals. Going Iorward, IDBI Bank is strongly committed to work towards emerging as the
'Bank oI choice' and 'the most valued Iinancial conglomerate', besides generating wealth and
value to all its stakeholders.
IDBI Bank Ltd. continues to be, since its inception, India`s premier industrial development bank.
Created in 1956 to support India`s industrial backbone, IDBI Bank has since evolved into a
powerhouse oI industrial and retail Iinance. Today, it is amongst India`s Ioremost commercial
banks, with a wide range oI innovative products and services, serving retail and corporate
customers in all corners oI the country Irom 720 branches and 1228 ATMs. The Bank oIIers its
customers an extensive range oI diversiIied services including project Iinancing, term lending,
working capital Iacilities, lease Iinance, venture capital, loan syndication, corporate advisory
services and legal and technical advisory services to its corporate clients as well as mortgages
and personal loans to its retail clients. As part oI its development activities, IDBI Bank has been
instrumental in sponsoring the development oI key institutions involved in India`s Iinancial
sector such as the Securities and Exchange Board oI India (SEBI), National Stock Exchange oI
India Limited (NSE) and National Securities Depository Ltd.
IDBI Bank Ltd. is a Universal Bank with its operations driven by a cutting edge core Banking IT
platIorm. The Bank oIIers personalized banking and Iinancial solutions to its clients in the retail
and corporate banking arena through its large network oI Branches and ATMs, spread across
length and breadth oI India. We have also set up an overseas branch at Dubai and have plans to
open representative oIIices in various other parts oI the Globe, Ior encashing emerging global
opportunities.
As on March 31, 2010, the Bank had a network oI 720 Branches and 1210 ATMs and plans to
roll out another 300 branches during FY 2010-11. The Bank's total business, during Fy 2009-10,
reached Rs. 3.06 Lakh Crore (up by 41.7 ), Balance sheet reached Rs. 2.34 Lakh Crore (up by
35.5 ) while it earned a net proIit oI Rs.1031 Crore (up by 20 ).


Our vision Ior the Bank is Ior it to be the trusted partner in progress, by leveraging quality
human capital and setting global standards oI excellence, to build the most valued Iinancial
conglomerate. Our experience oI Iinancial markets helps us to eIIectively cope with challenges
and capitalize on the emerging opportunities by participating eIIectively in our country`s growth
process.

Federal Bank:
Federal Bank is one oI India`s leading private sector banks, with a dominant presence in the state
oI Kerala. It has a strong network oI 708 branches and 749 ATMs spread across India. The bank
provides over Iour million retail customers with a wide variety oI Iinancial products. Federal
Bank is one oI the Iirst large Indian banks to have an entirely automated and interconnected
branch network. In addition to interconnected branches and ATMs, the Bank has a wide range oI
services like Internet Banking, Mobile Banking, Tele Banking, Any Where Banking, debit cards,
online bill payment and call centre Iacilities to oIIer round the clock banking convenience to its
customers. The Bank has been a pioneer in providing innovative technological solutions to its
customers and the Bank has won several awards and recommendations.

COMPANY OVERVIEW
Type Joint Venture
Industry LiIe insurance
Founded March 2008|1|
Headquarter Headquarters in Mumbai, India (various other locations in
India)
Product Individual LiIe Insurance, Group Insurance and Pension Plans
Employees` 1,000 on-roll employees and 7,500 agents




History:

The history oI Federal Bank dates back to the pre-independence era. Though initially it was
known as the Travancore Federal Bank, it gradually transIormed into a Iull-Iledged bank under
the able leadership oI its Founder, Mr. K P Hormis. The name Federal Bank Limited was
oIIicially announced in the year 1947 with its headquarters nestled on the banks on the river
Periyar. Since then there has been no looking back and the bank has become one oI the strongest
and most stable banks in the country.




48
26
26
LUI1 SnAkLS
Vision:

Develop into a stronger and more eIIicient and proIitable Iinancial institution with a growing
share oI the market, providing an expanding range oI products and services to a growing
clientele within and outside the country, adopting best industry practices and employing
contemporary technology, and be counted among the top private banks in the country.
Mission:

Devote balanced attention to the interests and expectations oI stakeholders.
Shareholders:

Achieve a consistent annual post-tax return oI at least 20 on net worth.
Employees:

Develop in every employee a high degree oI pride and loyalty in serving the Bank.
Customers:

Meet and even exceed expectations oI target customers by delivering appropriate products and
services, employing, as Iar as Ieasible, the single-window and 24-hour-seven-day-week concepts,
leveraging strengthened branch inIrastructure, ATMs, and other alternative distribution channels,
cross-selling a range oI products and services to meet customer needs varying over time, and
ensuring the highest standards oI service at all times.

Pursue excellence in various facets of banking:

Develop, adopt, and review a well-conceived business plan Ior achieving realistic targets oI
growth, proIitability, and market share over the medium term.
Operate within a well-deIined, diversiIied, risk proIile and adopt prudent risk-management
norms and processes and eIIective control practices.
Employ and leverage appropriate modern inIormation technology to: enhance the quality, speed,
and accuracy oI product/service delivery; provide anytime-anywhere` banking Iacility;
strengthen management inIormation and control systems and processes; improve productivity;
and reduce costs.
Increase awareness oI the "Federal Bank" brand among targeted customer groups through cost-
eIIective marketing.
Adopt a robust corporate governance code emphasizing a high degree oI proIessionalism oI the
Board and the management, and accountability and disclosure to shareholders.
Decentralize decision making with accountability Ior decisions made, and assign cascading proIit
responsibilities to middle and junior management.
Develop a conducive and transparent work environment that Iosters staII commitment,
competence, initiative, innovation, teamwork and service-orientation.

Future:

It is the Iourth largest bank in India in terms oI capital base and can easily boast oI a Capital
Adequacy Ratio oI 19.11, one oI the highest in the industry. This along with the existence in a
highly regulated environment has helped the bank to tide over the recession with minimum
impact to its Iinancial stability.
In Iact we have been expanding organically over the past Iew months. We believe in extending
our reach to our customers by making our services available to all, 24x7. We have over 690
ATMs and 669 Branches across India in addition to the Representative OIIice at Abu Dhabi that
serves as a nerve centre Ior the NRI customers in UAE.
We are transIorming ourselves, keeping our principles in tact, into an organization that oIIers
service beyond par.Being in the service industry we are conscious oI our surroundings and what
happens in the society.

Federal:

It is an international insurance group composed oI AG Insurance, the overall market leader in liIe
and non-liIe insurance in Belgium, distributing its insurance products through the network oI
BNP Paribas Federal Bank and independent insurance brokers, and Federal Insurance
International with subsidiaries in the UK, France, Hong Kong, Luxembourg (Non-liIe),
Germany, Turkey, Russia and Ukraine, and joint ventures in Luxembourg (LiIe), Portugal,
China, Malaysia, Thailand and India.
IDBI Products:
INCOMESURANCE
WEALTHSURANCE
HOMESURANCE
BONDSURANCE
RETIRESURANCE
MICROSURANCE
TERMSURANCE
HEALTHSURANCE


Incomesurance:

Incomesurance is loaded with lots oI beneIits which ensure that you get Guaranteed Annual
Payout along with insurance protection which will help you to reach you goals with Iull
conIidence. Incomesurance Plan is very Ilexible and allows you to customize your Plan as per
your individual and Iamily`s Iuture requirements. Moreover it also allows you to choose
Premium Payment Period, Payout Period, Payout Options and more.

IDBI Federal Incomesurance Endowment & Money Back Plan is a unique combination oI the
oldest type oI insurance policies. On purchasing a typical endowment plan, it is diIIicult to know
the Iinal maturity amount till the date oI maturity at the time oI investing. Also, the maturity date
is usually Iixed and thereIore, iI your goals shiIted, like getting your daughter married earlier,
your plan would not provide the required Ilexibility. Knowing the customer helped us to
combine the Endowment & Money Back plans into a single plan that would allow you to
withdraw at maturity but also take your money back at intervals.
This way, you can now have the Ilexibility to tailor your investment to your liIe`s goals. To add,
we linked the returns to the G-Sec rates, transparently declared by the government. This way,
you would know the exact amount on maturity at the time oI investing. So you could invest
according to the desired corpus you intended to build. The Premium is eligible Ior tax deduction
under Sec 80C. Also, the Guaranteed Annual Payout and other beneIits upon death are tax-Iree
under Sec Wealthsurance. The combined knowledge oI our partners` customer base oI over 9
million, and the combined expertise in the insurance business allowed us to look at the category
in a diIIerent way. Customers are oIten leIt perplexed by the various insurance options, insurance
plus investment options, insurance riders and the multitude oI other complicated terminologies
that hit them every day.
This is apparent in the way customers buy insurance - as an investment. So we decided to design
one product that can have the Ilexibility to incorporate within it, all the possible investments and
insurance combinations. We realised that, to reach long-term Iinancial goals, one needs to have a
balanced investment plan. II this plan continues to work, the power oI compounding can ensure
that one would logically reach their goals. Simple, isn`t it? UnIortunately, liIe is uncertain and
any plan is incomplete without being prepared Ior uncertainties. Be it your changing risk appetite
or a major illness or accident that poses a sudden Iinancial demand that could Iorce one to break
this plan.
One break in a continuous investment plan can heavily dent your investment objective. This very
insight Iorms the basis oI our product. Presenting an insured wealth plan. A plan that not only
allows the policyholder to invest according to their changing risk appetite; it also provides a host
oI insurance beneIits to protect them against uncertainties, so that they don`t have to break their
investment to meet sudden Iinancial demands. And their money can keep compounding. The
Wealthsurance Foundation Plan enables the policyholder to save and build wealth to meet
their Iinancial goals. This Plan comes with a wide range oI 12 investment options and 8
insurance beneIits - all packaged with a low charge structure and unmatched Ilexibility.
Moreover, get tax beneIits on investment and returns under Sec 80C and Sec 10(10D).
How does Incomesurance work?



















How
do I
get
Incomesured?

Now reach your goals with Iull conIidence. The process to create your plan is very simple and
convenient. You can create your plan by Iollowing three simple steps given below.




Wealthsurance:


Your dreams and aspirations need money to IulIill them.
Make a promise to build wealth
Everyone needs money to IulIill their dreams.
Everyone has unique dreams and aspirations. For themselves and their loved ones. Whether it is
to build a house, educate a child or gain Iinancial security. The list can be long, but most oI them
require money.
Make a promise to save adequately and build wealth.
Dreams do not come true, unless you make the eIIort to bring them true. To meet your cherished
goals, you have to make the promise to save enough money and build the wealth you need. But
once you have made that promise, you will need a plan which can ensure that your goals will
indeed be achieved.
It is a wealth building plan protected by insurance. The Wealthsurance Foundation Plan enables
you to save and build wealth to meet your Iinancial goals. However, unlike other investment
alternatives, it also enables you to achieve your wealth goals even in the event oI unexpected
death, accidents, disablement or serious illness.
The Wealthsurance Foundation Plan can ensure that your plans Ior wealth creation are achieved
by protecting that plan with insurance beneIits.


With Wealthsurance Foundation Plan, you can:

O Save into the Plan as much money as you want whether at one time, at regular intervals
or as per your convenience.
O Build your wealth by choosing the investments your savings go into and change them
Irom time to time as you wish.

O Get adequate liIe insurance cover with a unique built-in terminal illness beneIit, so that
the Iinancial security oI your loved ones is assured and your plans are always realised.
O Get health, accident and disablement beneIits so you can ensure that your wealth-building
plans are not aIIected by unexpected medical expenses or loss oI earning capacity in case
oI serious ailments, accidents or disablement.
O Grow wealth Iaster with tax Iree income, thus making the whole package even more
attractive.


Homesurance Plan:
Homesurance Protection Plan is a mortgage reducing term
insurance plan that secures the policyholder, irrespective oI interest Iluctuations at a nominal cost
with high beneIits. IDBI Federal Homesurance Protection Plan provides Iull insurance cover Ior
properties even under construction, thus ensuring that the beneIiciary gets the Iull sanctioned
amount in case oI any unIortunate event. It also has an innovative Iixed period cover Ior those
who would aim to prepay their loans early and would Iind a cover Ior the Iull term a waste.
Complete protection Ior your home loan. Homesurance is a mortgage reducing term plan which
oIIers protection to you and your Iamily Irom your home loan liability. The plan provides a
cover equal to the outstanding balance oI your home loan in the unIortunate event oI expiry oI
the insured.

Protection against Loan Liability:

Homesurance covers your liIe Ior an amount equal to your home loan liability as per your home
loan schedule. In case oI an unIortunate event oI expiry oI the insured, the outstanding balance
amount is paid to the nominees in one lump sum, who may then settle the loan liability.

Cover for Terminal Illness:

A unique Ieature oI the Homesurance plan is that it pays an accelerated payment oI death beneIit
upon the diagnosis oI a terminal illness, where the insured has a medical prognosis oI a liIe
expectancy oI six months or less. This helps you to settle the home loan liability should an
unIoreseen terminal illness occur.
Optional Insurance Benefits:

During the tenure oI your loan, unIoreseen events like accidents, hospitalization & major
diseases could aIIect your Iinances.To protect you and your Iamily Irom such tribulations, you
may opt Ior optional insurance beneIits as an addition to your Homesurance base plan.
The Optional Insurance BeneIit is available only with the regular premium plan. You need to pay
additional premiums Ior the term oI the optional insurance beneIit depending upon the sum
insured chosen.
With the Homesurance regular premium plan, you can choose Optional insurance beneIits such
as:
Bondsurance:

Given the ever-changing market conditions, a certain segment oI customers preIer to invest their
money in guaranteed return products. Bondsurance is designed Ior customers looking Ior
guaranteed returns which will not get aIIected by Iinancial market conditions. It oIIers
guaranteed return on investment along with liIe insurance cover. Investment in the Plan is
eligible Ior deduction under Sec 80C oI the Income Tax Act and the maturity amount is tax-Iree
under Sec 10(10D) oI the Income Tax Act.

Guaranteed Return on your investment with liIe insurance.Bondsurance is a single premium plan
which allows you to make a one-time investment and get a guaranteed amount on maturity. You
can choose a maturity period oI 5 or 10 years Ior your investment. At the end oI the chosen
period, you will receive a guaranteed maturity amount.Besides the guaranteed maturity amount,
Bondsurance also provides a liIe insurance cover. In case oI death beIore the maturity date, a
Death BeneIit which is also guaranteed will be paid.Thus you can get liIe insurance cover, while
earning an assured return on your investment.


Microsurance:
MicroIinance is recognized globally as the Ioremost tool in pulling large numbers oI poor
households Irom the grip oI poverty. Micro-insurance in particular is an explicit need and desire
oI poor households as it oIIers some protection Irom their intense vulnerability to external
shocks. IDBI Federal Microsurance Plan is a one oI its kind insurance plan which can be very
useIul Ior various Micro Financial Institutions and NGOs, wherein not only the members but
even the member`s Iamily gets an insurance cover.

Termsurance Protection Plan
A term plan is a term plan, that`s how this product has been seen. We realized, diIIerent people
have diIIerent needs Ior insurance. Some look Ior a large cover option at a low cost, while others
seek return oI premium on maturity oI the policy. There are some who may want their plan to
keep in touch with inIlation, while others may seek Ilexible premium payment options. IDBI
Federal Termsurance Protection Plan is not a typical term insurance plan that gives you a
cover Ior the premium, it is innovatively designed to deliver more value to the customers who
are looking Ior a Ilexible protection plan and a large insurance cover at an AIIordable cost. The
plan oIIers a Level Paying Term, like a usual term plan. In addition it also oIIers a Return oI
Premium so you can get the premiums paid, back on maturity. That`s not all; we understood that
by the time an insurance policy matures, inIlation and rising costs can make the cover
inadequate. IDBI Federal
Termsurance Protection Plan oIIers the unique Increasing Cover option that automatically
increases the cover every year without increasing the premium. This way, your sum assured
keeps increasing just like rising costs and inIlation, keeping you adequately covered till maturity.
The Premium is eligible Ior tax deduction under Sec 80C.
Termsurance Grameen Suraksha
IDBI Federal Termsurance Grameen Suraksha is a low-cost, simple term individual insurance
plan targeted at the rural population. It is an ideal plan to protect the policyholder`s Iamily
members in the event oI unIortunate demise oI the major income earner.
Termsurance Grameen Bachat Yojana
IDBI Federal Termsurance Grameen Bachat Yojana is a low-cost risk protection plan targeted
at the rural population. It is an ideal plan to protect Iamily members in the event oI unIortunate
demise oI the major income earner and also to save Ior speciIic events like repayment oI loan,
daughter's marriage or child's education. The plan oIIers liIe cover at a nominal cost along with
the option oI reIund oI premiums paid by you at maturity. This product has got a very unique
mix oI options that allow the customers to receive either oI 0, 50, 90 or 100 return oI
premium. The coverage terms oIIered are 3 years, 5 years & 10 years. The customer has the
Ilexibility oI get the sum assured ranging Irom Rs. 5,000 to Rs. 1,00,000 in the multiples oI Rs.
1,000.




Retiresurance Plan:
GiIt yourselI a monthly paycheque Ior liIe aIter retirement. The IDBI Federal Retiresurance
Pension Plan is a Unit Linked Insurance Plan that helps you accumulate your Iunds Ior your
retirement. The plan is tailor-made Ior the ever changing investment environment, with built-in
Ilexibilities to manage your investment mix. On retirement, you can use the maturity proceeds to
buy an annuity so that you have a monthly paycheck Ior liIe, even aIter you stop earning your
regular income.

IDBI Federal GroupMicrosurance Plan:



The IDBI Federal Group Microsurance Plan provides aIIordable liIe insurance cover to groups.
The plan is extremely useIul to Micro Finance Institutions, SelI Help Groups and NGOs to insure
the lives oI their group members and thus provide security to the group member`s Iamilies. The
plan can also be used Ior providing loan protection to the group member`s Iamilies.




Termsurance Protection Plan:
A host oI beneIits and options aimed at satisIying your every need. Termsurance comes with
three cover options which you can select on the basis your requirement. Termsuranceis designed
with a host oI beneIits & options aimed at satisIying you`re every need. It not only allows you to
customize your plan as per your individual and your Iamily`s needs but it comes with a host oI
beneIits like convenient insurance cover options, Ilexible premium payment terms, choice oI
policy term and lots more Ilexible options.


Multiple cover options give you tailor-made protection





Healthsurance:


IDBI Federal Healthsurance Hospitalisation and Surgical Plan
A Health Plan without the Headaches
Every year, millions oI adults in India are admitted to hospitals due to illness or injury. Even II
you think it won`t happen to you, there is unIortunately a very real chance that it will. The costs
involved in even the shortest hospital stay can be diIIicult to meet Ior many individuals and
Iamilies. On top oI the costs oI the treatment itselI, household bills still need to be paid and there
could be extra costs to cover, such as travel expenses Ior Iamily visits and additional childcare
costs.
It is an IDBI Federal Healthsurance Hospitalization and Surgical Plan. II you`re aged 18 years to
55 years and currently in good health, this new insurance plan is designed to help you manage
the extra Iinancial burden that comes with hospitalization, by providing a wide range oI
attractive beneIits.
What is Healthsurance?
Presenting IDBI Federal Healthsurance Hospitalisation and Surgical Plan. II you`re aged 18
years to 55 years and currently in good health, this new insurance plan is designed to help you
manage the extra Iinancial burden that comes with hospitalisation, by providing a wide range oI
attractive beneIits.

Here are the Iew reasons why you should include Healthsurance in your Iinancial plan.



TAX BENEFITS:


Maximize your tax beneIits
LiIe insurance and retirement plans are one oI the most eIIective ways oI saving taxes.
A summary oI these beneIits is provided below:
O LiIe Insurance Plans and certain types oI annuity plans are eligible Ior deduction under
Section 80C.
O SpeciIied Pension Plans are eligible Ior a deduction under Section 80CCC.
O The contributions/payments made towards the liIe insurance plans and annuity/pension
plans are eligible Ior an overall tax deduction oI Rs. 1, 00,000.
O Health Insurance Plans/Riders are separately eligible Ior deduction under Section 80D.
O The proceeds or withdrawals Irom LiIe Insurance Policies are exempt under Sec
10(10D), subject to norms prescribed in that section










Life at IDBI Federal:

HARD WORK IS FUN BUT FUN AT WORK IS NOT HARD:
At IDBI Federal, we invest heavily in progressive HR practices to ensure that an enriching and
vibrant career Ior our employees is assured.

INTERACTION - NEWS, VIEWS & MORE:
Our quarterly newsletter showcases:
O Organizational and individual successes
O Exciting developments at IDBI Federal
O Interests pursued by our employees beyond work

REFERSURANCE-WE MULTIPLY, YOU MULTIPLY:
Our employee reIerral program, oIIers an incentive to our existing employees Ior contributing to
the company`s talent needs, by recommending people in their network who can add value to the
company`s growth.

FUN AT WORK:
At IDBI Federal we strive to create a work culture that is conducive to great perIormance as well
as Iun and stimulating.
AFTERHOURS:
To make the working week a little less boring we launched AIterhours to give employees more
reasons to look Iorward to their weekend! AIterhours are all about workshops (that have nothing
to do with work!) and interactive sessions on Iun & interesting topics.
PAGE-TURNERS:
A central knowledge repository that houses books, journals, magazines, white papers etc. across
insurance and other non-Iictional reading areas. Going Iorward, we plan to leverage the initiative
to make it a melting pot oI ideas.




HR Organizational Structure at IDBI Federal

There are no Zonal Heads in the Human Resource Department the area Human Resource
executive only acts as the Human Resource Manager and reports all the activities to the Head
OIIice that is in MUMBAI.





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Senlor Manager Chlef Manager
AsslLanL Manager
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(CounLry Pead
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Operations Organizational Structure at IDBI Federal

The Zonal Managers are supported by Branch Support Executives and the Operations
department is present only in the Head OIIice which is in Mumbai.


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norLh Zonal SupporL
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SouLh Zonal SupporL
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WesL Zonal SupporL
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CCMAkI1IVL
ANALSIS


















FINANCIAL RATIOS
Financial ratio analysis is a study oI ratios between various items or groups oI item in Iinancial
statement. Financial ratios have been categorized according to the Iinancial activity or Iunction
to be evaluated. The parties interested in a Iinancial analysis are short- and long-term creditors,
owners and management. Short term creditors` main interest is in the liquidity position or the
short term solvency oI the Iirm. Long term creditors, on the other hand are more interested in the
long term solvency and the proIitability oI the Iirm. In this manner we compute the diIIerent
types oI ratios are:
O Liquidity ratio.
O Leverage ratio.
O Activity ratio.
O ProIitability ratio.
Liquidity ratios measure the Iirm`s ability to meet current obligations; leverage ratios show the
proportions oI debt and equity in Iinancing the Iirm`s assets; activity ratios reIlect the Iirm`s
eIIiciency in utilizing its assets and proIitability ratios measure the overall perIormance and
eIIectiveness oI the Iirm.
Our interest as a researcher is to Iind the pattern oI the Iinancial ratio whether they are increasing
or decreasing or remaining constant. Then we can inIer whether the company is heading towards
the way oI proIits or not.

.1 Liquidity ratio:
Liquidity reIers to the ability oI a Iirm to meet its obligations in the short run, usually one year.
Liquidity ratios are generally based on the relationship between current assets (the sources Ior
meeting the short term obligations) and the current liabilities. In this we have
a) Current Ratio
b) Quick Ratio
c) Cash Ratio
d) Net Working capital ratio.

Comparative Study and Ratio
O Liquidity Ratios

For any insurance company meet the insurance claims. ThereIore, here we calculate the various
ratios which company`s ability to pay claims.

Current Ratio:
Current Ratio Current Assets / Current liabilities
It is the measure oI excess value oI current assets to current liabilities. Current ratios are
important Ior creditors. Higher current assets as compared over current liabilities provide a
buIIer against losses that may be incurred in disposition or liquidation oI current assets other
than cash. For shareholders point oI view a low current ratio is good as it implies that more oI the
company`s assets are working to grow the business.





Interpretation:
There is a decline in current ratio Ior all the companies. But the Current Ratio oI IDBI Federal is
1.04. This means there is availability oI Rs104 Ior every liability oI Rs 100. Keeping in mind that
IDBI Federal is startup, there is no need to maintain high current ratio. As possible liabilities Ior
an insurance company are the policies getting mature or death claims made. Since it has only
three years oI operations, maturity claims are not suppose to happen in near Iuture and company
has maintained enough current ratio to meet claim obligations.
Also, the Current Ratio Ior the Industry is 1.23 and Ior private players it is 0.37. So, as compared
to industry, the current ratio oI IDBI Federal is Iair enough.

Limitations of Current Ratio:
The current ratio is a static or stock concept oI the resources that are available at a given time to
meet the obligations at that moment. The ratio has limitations to Iollowing aspect:
i. Measuring and predicting the Iuture Iund Ilows
ii. Measuring the adequacy oI Iuture Iund inIlows in relation to outIlow



ACID TEST RATIO:
The acid test ratio (Chandra, 2007)
to meet its short-term Iinancial obligations. It takes into the account what the comp
quickly use to pay oII its current liabilities.
than 0.8 is considered good.
It is calculated as:
Quick Ratio Current Assets
But in case oI insurance companies it is calculated as:


Interpretation:
The value Ior Quick Ratio Ior IDBI Federal Ior current year is 0.55 which has decreased by 47
Irom previous year. The ratio is good enough considering that IDBI Federal is a new company.
The Quick Ratio Ior the private industry Ior current year is 0.37 (decreased by 12.28) and Ior
the insurance industry is 1.33. The ratio oI 0.55 is good enough because there are no inventories
as such Ior insurance companies. The liquid assets purely amount to cash and bank balances. In
case oI claims made towards insurance the company gets enough time to convert the current
assets into cash. However a high quickratio indicates inappropriate use oI cash in hand. The
same money can be used Ior generating returns.



Cash Flow from operations:
The Cash Flow Irom Operations is used to determine the extent to which cash Ilow diIIers Irom
the reported level oI either Operating Income or Net Income. In other words, it is a check on the
quality oI the company`s earnings. It`s a better measure oI the business`s proIits than earnings,
because a company can show positive net earnings and still not be able to pay its debts.
CFO Income Irom Operations Noncash expenses Noncash Sales / Income Irom Operations
OR
CFO Net Income Noncash expenses Noncash Sales / Net Income


Interpretation:
The Operating Margin has increased Ior IDBI Federal Irom 0.53 to 2.89
players overall has go down by 19.47 while it has increased Ior IDBI
Future Generali. This is because both being start up companies have exponential growth in terms
oI business.


Liquidity Ratio
LiIe insurance contracts (Financial Statement Analysis)
make provision Ior Iuture reserves on a continuous basis so that the obligations are met.
Liquidity Ratio



Liabilities to Liquid Asset Ratio
For any insurer company the liabilities (Financial Statement Analysis) in Iuture is its policy
liabilities (the sum insured amount in case oI any sudden event), Ior which the company needs to
have suIIicient amount oI liquidity in terms oI liquid asset so as to serve the liabilities quickly
should below.
Liabilities to Liquid Asset Ratio Stated Liabilities / Liquid Assets


Interpretation
SBI LiIe have shown a very high value, their policy liabilities are accumulating in response to
which the liquid assets have not been increased in the same proportion which may impose a big
concern Ior the company. Other companies have also not shown a good number, and are advised
to increase their liquid assets so as to meet the liabilities in Iuture. IDBI Federal showed a good
number in 2008, but as they


















FINDINGS & SUGGESTIONS

People who have high or medium experience in dealing with Iinancial instrument want
maximum control over the policy. They generally belong to high income group and are
job people. They see insurance policy both as tax saving as well as investment instrument
in addition to protection. To target this group policy should be made Ilexible as much as
possible.

These people should be continuously given inIormation about the product. Such people
like more and more innovative products.

People who have no experience or little experience are the ones who have brought liIe
insurance policies seeking potential Ior high returns.

Premium payment pattern is oI at most importance to people. People Iind yearly premium
payment pattern to be more convenient and wants to switch their premium pattern
according to their needs. So, the policies should have Ilexibility Ior premium payment.

People are ready to compromise their current returns in order to maximize their long term
gain

People are willing to take risk provided returns are assures. People oI age group oI 25-35
are ready to take more risk. While those in age group oI 40-60 wants guaranteed returns.

People believe in Iinancial ratings oI companies. They want to invest their money in Top
20 oI best company. Financial ratings indicate company`s sound Iinancial position. So
a company should seek Iinancial rating Irom rating companies to gain investor`s
conIidence.

In the event oI disability to pay premium people strongly believe that policy should not
be lapsed. Instead, it should be continued by the insurance company. They also want an
option to change policy`s death beneIit iI it is required by them.
IDBI and Federal individually are big names. People seem to be aware oI them. Brand
recall Ior ishigh amongst people. But 'IDBI Fortis as a LiIe Insurance is less known, but
people show conIidence in the company as they have conIidence in 'IDBI and 'Federal
Brands.
May 19,









CONCLUSION:



In its second year oI operations IDBI Fortis LiIe Insurance is showing very promising Iuture.
The business has grown 2000 Iolds aIter its Iirst year. Operating Margin has considerably
improved thus showing eIIicient in terms oI operations. There is inIusion oI capital amounting oI
200 crores in its second year.
Company is intelligently managing its assets. The income Irom investments has increased. It has
been able to decrease its expense ratio in its second year and has to reduce it Iurther. The
Liquidity position oI the company is sound enough to meet its present and Iuture obligations.
Claims were rapidly settled. Although the loss ratio is 0.06 but it has increased by 300 in its
second year. This is an alarming sigh Ior the company. It should revisit its products and
underwriting practices to be able to control it. Another area that is oI concern Ior IDBI Federal is
'surplus. AIter 3 years oI operations company has to maintain a minimal surplus amount to
meet regulation requirements.
Overall by way oI analyzing Iinancial statements and by ratio analysis it was Iound the overall
Iinancial position oI the company is good and promising. In just one year it is grown its business
tremendously and will continue to improve in Iuture.
May 19,
72


























BIBLIOGRAPHY





O Retrieved May 18, 2010, Irom IDBI Fortis LIC website: http://www.idbiIortis.com/
O . Retrieved 4 10, 2010, Irom IRDA Website: http://www.irdaindia.org/
O Retrieved Irom Actuaries India: http://www.actuariesindia.org/
O Retrieved May 2, 2010, Irom Institute oI Chartered Analyst oI India: http://www.icai.org
O Retrieved Feb 2010, Irom ICICI Prudential: http://www.icicipruliIe.com
O Retrieved Feb 2010, Irom HDFC LiIe Insurance: www.hdIcinsurance.com
O Retrieved Feb 2010, Irom LIC India: www.licindia.com
O Retrieved Feb 2010, Irom SBI LiIe: www.sbiliIe.co.in
O Chandra, P. (2007). inancial Management - Theory and Practice. Tata McGraw Hill.
O Financial Statement Analysis. ICFAI University Press.
O indianeconomy/india-insurance-sector.html.
O Retrieved March 12, 2010, Irom economy watch:
O http://www.economywatch.com
O insurance.asp.
O Retrieved March 10, 2010, Irom Investopedia:
O http://www.investopedia.com/categories/insurance.asp
O IRDA. (2009). nnual Report.
O Malhotra, N. K. (2006). Marketing Research. Pearson Prentice Hall.
O Narayan, J. H. (2010). Undewriting Practices. IRD Journal , 96.
May 19,
73














May 19,


ANNEXURE

QUESTIONNAIRE

First Name:
Last Name:
DOB (dd/mm/yyyyy):
Gender:
o Male
o Female

Status:
o Married
o Unmarried
Occupation:

o Student
o Employed
o Owns Business
o Currently unemployed
o HousewiIe
o Retired

Monthly Income:
o Less than 5000
o 5000-15000
o 15000-25000
o 25000-50000
o More than 50000
You monthly expenses (in Rupees):

City:

Mobile Number:

Email ID:
May 19,

Que1. Are you only earning member?
o Yes
o No

Que2. Do you have outstanding debts?
o Yes
o No



Que3. Do you have existing liIe insurance plan?
O Yes
O No


Que4. How do you see insurance policy as?
. For Protection
. Tax Saving Instrument
. Investment Option

Que5. II you buy an insurance policy, how long will you require the death beneIit?
o Less than 5 yrs
o 10 years
o 20 years
o LiIe Time

Que6. Which premium pattern do you preIer?
o Single Premium
o Yearly
o Semi annually
o Quarterly
o Monthly

Que7.While buying an insurance policy how important is it to be able to alter your premiums up
or down, or skip a premium in a given year?
o Very Important
o Somewhat Important
o Not Important

Que8. How important is it to have the Ilexibility to increase or decrease your policy`s death
beneIit?
(In case you want to change the time period in which death insurance cover should be provided)
o Very Important
o Somewhat Important
o Not Important
May 19,
Que9. How important is it to have access to signiIicant cash values at some point in the Iuture?
(i.e. iI you want to withdraw money in between)
o Very Important
o Somewhat Important
o Not Important

Que10. Would You Like Your Premiums To Be Paid By The Insurance Company In The Event
OI Disability?
o Yes
o No

Que11. Choose the most important objective
(What do you expect more Irom the policy)
o I want strong guarantees
o I want to pay a lower initial premium
o I want the best potential Ior high return.

Que12. Are you willing to accept large variations in annual returns as you seek higher long-term
returns.
o Strongly Agree
o Agree
o Disagree
o Strongly Disagree

Que13. Are you willing to accept a substantial short-term decline in your cash value iI it is
required to obtain potentially higher long-term returns.
o Strongly Agree
o Agree
o Disagree
o Strongly Disagree
May 77
Que14. How would you rate your experience or knowledge oI investments and money
management?
o Very high
o High
o Medium
o Low


Que15. Have you heard oI IDBI LIFE INSURANCE plans?
o Yes
o No