Introduction of Reliance

8/6/2019 Introduction of Reliance

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A PROJECT REPORT ON RELIANCE LIFE INSURANCE

CHAPTER 1 INTRODUCTION:

The Business of Insurance is related to the protection of the economic values of the assets.

Every human being has the tendency to save to protect him from risks or events of future. Insurance is one form

of savings where in people try to assure themselves against risks or uncertainties of future. It is assurance against

risks or events or losses.

People can save their earnings either in the form gold, fixed assets like property or in banking and insurances. All the

savings of people of a country account for gross domestic savings. In India, although savings rate is high but people

prefer to invest either in gold or fixed assets so that they can make money out of it. Hence insurance sector is still

untapped in India.

SIDVIN SCHOOL OF BUSINESS 1


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DEFINITION OF INSURANCE AND OVERVIEW OF CURRENT INSURANCE INDUSTRY

1.1 INSURANCE

1.1.1 WHAT IS INSURANCE?

Insurance is a tool by which fatalities of a small number are compensated out of funds (premium payment)

collected from plenteous. Insurance is a safeguard against uncertain events that may occur in the future.

It is an arrangement where the losses experienced by a few are extended over several who are exposed to similar

risks. It is a protection against financial loss arising on the happening of an unexpected event. Insurance companies

collect premium to provide security for the purpose. Loss is paid out of the premium collected from people and the

insurance companies act as trustees to the amount so collected. These companies have proposal forms which are

filled to give details of insurance required. Depending upon the answers in the proposal form insurance companies

assess the risk and decide on the premium.

Insurance companies are risk bearers. They underwrite the risk in return for an insurance premium. the function of

insurance is to provide protection, prevent losses, capital formation etc. hence insurance can be defined as a tool in

which a sum of money as a premium is paid by the insured in consideration of the insurers bearing the risk of paying



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a large sum .it may also be defined as a contract wherein one party (insurer) agrees to pay the other party (insured)

or his beneficiary, a certain sum upon a given contingency against which insurance is required.

Insurance industry commands massive funds through sales of insurance products to large number of clients.Insurers also create liabilities and commit themselves to compensate for losses occurring to the policyholders on

future date. It also plays an important role in process of capital formation.

From the above discussion we can find out some of the important characteristics of insurance which are as follows:

1. Pooling of losses

2. Payment of fortuitous losses

3. Risk transfer4. indemnification

Pooling of losses:

Pooling or sharing of losses is the main characteristic of an insurance industry. Pooling means to spread the losses

incurred by a few over the entire group, so that in the process, average loss is substituted for the actual loss.



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Payment of fortuitous losses:

A fortuitous loss is one that is unexpected and occurs as a result of chance or in other words it means the loss must

be accidental.

Risk transfer:

It means that a pure risk is transferred from the insured to the insurer, who typically is in a stronger financial position

to pay the loss than the insured.

Here pure risk means a situation in which there are only the possibilities of loss or no loss. For example premature

death, job related accidents, property destroyed by fire, flood, or earthquake.

Indemnification:

It means that the insured is restored to his or her approximate financial position prior to the occurrence of the loss.

Thus in the most basic sense, insurance is compensating a person or business for a loss.



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1.1.2 NATURE OF INSURANCE:

a) Risk sharing and risk transfer: insurance is used to share the financial losses that might occur to an individual

or his family on the happening of specified events. The loss arising from such events are shared by all the insured inthe form of premium.

Example: suppose in a village, there are 250 houses, each valued at Rs.200000.every year one house gets burnt,

resulting into a total loss of Rs 200000.if all the 250 owners come together and contribute Rs.800 each, the common

fund would be Rs200000.this is enough to pay to the owner whose house gets burnt. Thus the risk of one owner is

spread over 250 house owners of the village.

b) Risk assessment in advance: insurance companies are risk bearers. They assess the risk before insuring to

charge the amount of premium.

c) Its not gambling or charity: The uncertainty is changed to certainty by insuring property and life because the

insurer promises to pay a definite sum at damage or death. Insurance is antithesis of gambling. Failure of insurance

amounts to gambling because the uncertainty of loss is always looming. Moreover insurance is not possible withoutpremium. So it is different from charity because charity is given without consideration.



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d) Huge number of insured people: It is essential to insure larger number of people or property to make cost of

insurance less consequently premium would also be less.

e) Assists in capital formation: insurance provides capital to society. Accumulative funds are invested in

productive channels.

1.1.3 SEMANTICS:

1. Risk: it is defined as an uncertainty of a financial loss. It is the unintentional decline in or disappearance ofvalue arising from contingency.

2. Policy: it is the document which embodies the insurance contract

3. Whole life policy: it is the policy under which the amount of policy will be paid only on death of the insured.

Premiums may be payable throughout the life or for a limited period.

4. Endowment policy: endowment policies entitle the insured to receive the amount of the policy on his reaching

a certain age and premiums also stops. If death occurs earlier, amount of the policy will be paid at that timeand payment of premium will also stop at that time.

5. Claim: it is the amount which an insurer has to pay against a policy.



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6. Reinsurance: it refers to placing a part of the risk by an insurer with another insurer. The object is to reduce

the possible loss to be borne by the original insurer, who pays premiums at the ordinary rates to the reinsurer.

Reinsure must pay commission to the original insurer.7. Premium: A periodic payment made on an insurance policy.

8. Insurance penetration: it is defined as insurance premium as a share of gross domestic product.

9. Insurance density: insurance density is defined as per capita expenditure on insurance premium i.e. premium

per capita.

10.Actuary: the actuary is a specialist who combines an understanding of risks and mathematical technique to

develop financial products to manage these risks, price these products. He helps in designing insurance plansand then evaluates the financial risk of the company which it takes while selling an insurance policy.



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1.2. TYPES OF INSURANCE:

Insurance is broadly divided in two segments, based on the nature of insurance, those are:

1. Life Insurance &

2. Non-Life Insurance or General Insurance. It can be again subdivided into the following categories:

a) Fire Insurance.

b) Marine Insurance.

c) Social Insurance &

d) Miscellaneous Insurance. (Health insurance, Liability Insurance etc.)



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1.3. HISTORY OF INSURANCE:

1.3.1 GLOBAL:

For now we know the meaning of insurance, different types of insurance. Now let us know the history and reasons

for and behind different types of insurance.

Insurance has existed for thousands of years. The first ever type of insurance was Property Insurance. It became

popular about 3000 BC in China. It all started when Chinese merchants, as well as their investors, wanted to ensure

that they would see a profit from their goods that they shipped overseas. In the event that a ship was lost at sea, an

insuring partner would reimburse the owners of the ship and goods. To pay for the loss the merchant would be sold

into slavery to the insurer until the debt was repaid. This was so because, a merchant could not afford to pay for the

lost goods or even to buy a ship unless someone invested.

Property insurance was also seen in Babylon as well. In Babylon, merchants and investors entered into a contract,

in which the supplier of money for a trade agreed to cancel the loan if the trader was robbed of his goods. The trader

who borrowed the money paid an extra amount for this protection in addition to the usual interest. As for the lender,

collecting these premiums from many traders made it possible for him to absorb the losses of the few. Later this



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contract was extended to include provisions for a family's home and even the death of the insured, where life

insurance came into existence. Slowly this concept started to spread across other places like Greek, Roman.

Since ancient times, communities have pooled some of their resources to help individuals who suffer loss. Like,about 3500 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."

Later the origin of credit insurance, which was included in the Code of Hammurabi, a collection of Babylonian laws

said to predate the Law ofMoses.Credit insurance means, in ancient times the ship owners obtained loans from

investors to finance their trading expeditions. In case, if a ship was lost, the owners were not responsible to pay back

the loans to the investors. The risk to the lenders was covered by the interest paid by numerous ship owners, sincemany ships returned safely.

By the middle of the 14th century, marine insurance was one of the most popular types of insurance among nations

of Europe. Things changed dramatically in the 17th century in Europe. In 1666, the Great Fire of London bought the

need for fire insurance .The Great Fire of London burned for four days and nights. It destroyed 436 acres, 13,200

houses, 89 churches (including Saint Paul's Cathedral), the Custom House, the Royal Exchange and dozens of other

public buildings. Only six people were victims in the flames, but hundreds died from shock and exposure.

By 1688, Edward Lloyd was running a coffeehouse in London. Where, London merchants and bankers met

informally to do business. There financiers who offered insurance contracts to seafarers wrote their names under the



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specific amount of risk that they would accept in exchange for a certain payment, called premium. These insurers

came to be known as underwriters. Finally, in 1769, Lloyd's became a formal group of underwriters that in time grew

as an insurance company.The concept of insurance developed at a fast pace with the growth of British commerce in the 17 th and 18th century.

The first stock companies to engage in insurance were chartered in England in the year 1720.

In 1735, the first insurance company in the American colonies was founded at Charleston. Later in the year 1787,

fire insurance corporations were formed in New York. Then later in the year 1759, the life insurance corporation was

started in Philadelphia, America.

The New York fire which occurred in the year 1835 was the main reason to draw attention to create reserves to meetunexpected losses. In the year 1837, Massachusetts was the first state to require companies by law to maintain such

reserves. After 1840, life insurance entered a boom period.

The Workmen's Compensation Act of 1897 in Britain required employers to insure their employees against industrial

accidents. Public liability insurance, fostered by legislation, made its appearance in the 1880s.It attained major

importance with the advent of the automobile.

Until the 1950s, most insurance companies in the United States were restricted to provide only one type of

insurance, but then legislation was passed to permit fire and casualty companies to underwrite several classes of

insurance. Many firms have since expanded and also were responsible for many mergers.



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From this brief accounting of history we can see how insurance came into existence. Fortunately for us we no longer

have to sell ourselves into slavery if our car is stolen nor we have to be scared of losses due to absence of reserves.

However we can be confident that we will be compensated for our loss. Without people wanting to secure theirinvestments and great tragedies throughout history we may not have insurance as we know it today resulting in

peace of mind.

1.3.2 HISTORY OF INSURANCE INDUSTRY IN INDIA

The insurance industry in India over the past century has gone through big changes. In India this industry reveals the

360 degree turn. 360 degree turn means that it started in India from being an open competitive market tonationalization and back to a liberalized market again.

Insurance industry in India started as a fully private system with no restriction on foreign participation in the

Nineteenth Century. Before independence, a few British insurance companies dominated the Market. Life insurance

was first set up in India through a British company called the Oriental Life Insurance Company in 1818, followed by

the Bombay Assurance Company in 1823 and the Madras Equitable Life Insurance Society in 1829.All of these

companies operated in India but did not insure the lives of Indians. They were there insuring the lives of Europeans

living in India. Some of the companies that started later did provide insurance for Indians. But, they were treated as



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"substandard" and therefore had to pay an extra premium of 20% or more. The first company that had policies that

could be bought by Indians with "fair value" was the Bombay Mutual Life Assurance Society starting in 1871.

The first general insurance company, Triton Insurance Company Ltd., was established in 1850. It was owned andoperated by the British. The first general insurance company was the Indian Mercantile Insurance Company Limited

set up in Bombay in 1907.By 1938; the insurance market in India had nearly 176 companies (both life and non-life).

After the independence, the industry went to the other extreme. It became a state-owned monopoly. The industry

started to witness a problem like fraud. Hence many regulations were put in place to reduce and control the problems

in the industry. After which Insurance was nationalized. In 1956, the then finance minister S. D. Deshmukhannounced nationalization of the life insurance business and then the general insurance business was nationalized

in 1972. Only in 1999 private insurance companies have been allowed back into the business of insurance with a

maximum of 26% of foreign holding.



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1.4. GLOBAL SCENARIO OF THE INSURANCE INDUSTRY

If we see the figures in terms of both the premium value and the total market share of some of the leading countries

operating in the Insurance sector, the following picture emerges in front of us.

Country Total Life Premium(in $bn.)

Market Share (%)

US 517.0 26.2

Japan 375.9 19.5

UK 194.0 10.11

France 154.0 7.81

Italy 91.7 4.65

Germany 90.2 4.57

China 39.5 2.1



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Taiwan 38.8 1.97

India 20.1 1.02

Others 452.8 22.07

Source: The Economic Times, dated 20th July, 2006.

SIDVIN SCHOOL OF BUSINESS

Shares of different countries in Life Insurance

517

375.9

19415491.7

90.2

39.5

38.8

20.1

452.8USJapanUKFranceItalyGermanyChinaTaiwanIndia

Others

15


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The above figure shows that US is still the leader in Life Insurance sector, closely followed by Japan. Indias share in

the global market has doubled since 2000 (0.50%) to 2005 (1.02%), but the growth of china is the maximum from0.79% in 2000 to 2.10% in 2005. The total premium received in life insurance sector has increased from $ 1,521 bn.

in 2000 to $ 1,974 bn. in the year 2005.

1.4.1 CONCERNS IN GLOBAL INSURANCE INDUSTRY

INSURANCE FRAUD

One of the major problems which is faced by this industry is insurance fraud. Property insurance fraud cost insurersabout $30 billion in 2004. Every year more than $100 billion is stolen from Medicare and Medicaid programs across

the world in health insurance.

Fraud may be committed at different points in the insurance transaction by different parties like applicants for

insurance, policyholders, third-party claimants and professionals who provide services to claimants in the industry

Common frauds include "padding," which means that the one who commits fraud will inflate the actual claims. This is

done by misrepresenting facts on an insurance application or submitting claims for injuries or damage that has never

occurred.



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1.5 INDIAN SCENARIO:


INDIANINSURANCE INDUSTRY

PrivateSector (15)

PublicSector (1)

PublicSector (4)

PrivateSector (9)

LIFEINSURANCE

NON LIFEINSURANCE

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1.5.1 LIFE INSURANCE:Insurance business in India is growing at an annual rate of 21.9%.together with banking services, it accounts for

7.1% of GDP. But insurance penetration as compared to other nations of the world is very low in India. In 2004-05 it

was 2.53% for life insurance and .65 % for non life insurance.

Life insurance penetration in India was less than 1% till 1990-91.during the 90s it was between 1-2% and from 2001

onwards it is over 2%.this is due to active role played by IRDA in licensing private players and taking steps to

increase awareness among masses.Indias insurance sector is poised for explosive growth powered by better penetration into rural and semi urban

regions. Gross insurance premiums have been rising. The gross premium collected in the last fiscal year was Rs

27000 crores as compared to that of Rs 25343 crores in the last year.

Since liberalization of insurance sector in 2001, 14 life insurance companies have entered the market out of which 13

are joint ventures with international companies. While private players have eaten up a part of LICs market share,

PSU behemoth has been witnessing tremendous growth. LICs premium collection was RS 18000 crores as

compared to only Rs 200 crores in 1957.LICs premium accretion grew by 42% last year. Among the private players



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companies like Bajaj-Allianz and ICICI have captured the major portion of the market and others are still trying to

establish themselves in the Indian market.

1.5.2 GENERAL INSURANCE:

General insurance in India has been expecting growth except in some portfolios like motor insurance, fire and

engineering. These portfolios are still under tariff- this means that premium depends on a fixed predetermined rate

structure.

In India, GDS as a proportion of GDP at current prices increased from 26.1% in 2002-03 to 28.1% in 2003-04.house

hold sector continued to be the major contributor to GDS at 24.3% in 2003-04.this can be attributed to soft interestrates prevailing in housing sector. General Insurance has low market penetration. It is 1.95% and ranks 51 st.

However in collection of premium it is ranked 23 rd. The ratio of the premium collected to that of GDP is 0.58. The

main reason for the general insurance industry to perform very poorly was because of the slow settlement of claims.

Moreover the rates of claim in India were highest in the world. It was 70 percent compared to 40 percent

internationally. This meant that out of 100 people who had insured their commodities 70 claimed for a loss or

damage. The main reason for the lack of demand for general insurance is that people consider it as an unnecessary

expenditure. However it must be noted that the general insurance has been earning consistent profits and has an

efficient dividend paying record accompanied by a steady growth in its financial resources. The industry is



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recognized as one of the largest financial Institutions in the country. Some of the private players in this sector are-

ICICI Lombard, Reliance, Royal-Sundaram, Chholamandalam etc.

1.5.3 PRIVATE PLAYERS IN THE LIFE INSURANCE SECTOR:The different private players in the life insurance sector and their associations with foreign companies are

being given below:

COMPANY INDIAN

PROMOTER/PARTNER

FOREIGN

INSURER

TOTAL

CAPITAL

(RS MN.)

FDI

(%)

FOREIGN

CAPITAL

(RS MN.)

AMP

SANMAR

RELIANCE

GROUP(ADAG)

None 2,170 0 0

Aviva Life Dabur Aviva (UK) 4,590 26 1193.4

Bajaj-

Allianz

Bajaj Auto Allianz

(Germany)

3680 26 960

Birla Sun

Life

Aditya Birla Group SunLife

(Canada)

4,000 26 1,040

HDFC

Standard

HDFC StandardLife

(UK)

2,500 18.9 470

ICICIPrudential

ICICI Bank Prudential (UK) 10,850 26 2,820



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ING Vysya Vysya Bank ING Ins.

(Netherlands)

4,400 26 680

Kotak

Mahindra

Old Mutual

Kotak Mahindra Bank OldMutual

(South Africa)

2,600 26 680

Max

Newyork

Max India NewYorkLife

(US)

5,000 26 1,300

Met Life J&K Bank Met Life (US) 3,550 26 920

Sahara

Life Ins. I

Sahara India None 1,000 0 0

SBI Life SBI Cardiff (France) 3,500 26 910

TATA AIG TATA Group AIG (US) 3,810 26 990

Shriram Shriram Sanlam Life Ins.

Some of the new companies who are waiting to come in to the life insurance sector are:



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a) IDBI-FORTIS.

b) AXA-BHARTI &

c) Syndicate Bank.

Source: IRDA Report.



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Source: IRDA Report

LIC market share continued to decline in the period up to March, 2006, it declined to 71.44% from 78.23% in thesame period last year. On the other hand the market share of the private players is continuously growing up; it

increased to 28.56% from

21.77% in terms of insurance premium.

Source: IRDA Report

BAJAJ ALLIANZ BECOMES THEMARKET LEADER AMONG PRIVATEPLAYERS:

Bajaj Allianz has taken over from

ICICI Prudential as the number one



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among the private players in the life insurance sector in terms of insurance premium collected by each company.

This was mainly possible because of increase in the number of agents in Bajaj Allianz by 1.2 lakh and also an

increase in the number of branches (more than 550 branches in total). The increase in the growth rate of BajajAllianz is 215.76% when compared to the same of the last financial year. The market share of Bajaj Allianz increased

to 7.56%, while the same for ICICI is only 7.35%.

1.6 CONTRIBUTION OF THE INSURANCE SECTOR TO INDIAN ECONOMY:

Some surveys have predicted that India and China will play a very vital role in the years to come. Indian economy

can be termed as an emerging economy as it is doubling its GDP in 3 to 5 years and moreover it is not dependent onany particular sector for its GDP.

If we look at the GDP of the Indian economy very closely over the years, we can easily come to know the changing

structure of the economy. We can also come to know the changing contribution of the various sectors like agriculture,

manufacturing and the service sector. In the financial year 1993-94, agricultural sector contributed to 31%,

manufacturing accounted to 26.3% and the service sector contributed to 42.7% of the total GDP of the country. Thus

over the years as India became an emerging economy in 2003-04 manufacturing sector contributed for 21.7 %,

manufacturing contributed for 26.8 whereas service sector contributed for 51.4% of the total GDP.



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There has been 7.5% growth in the total GDP of the country and is estimated to grow at 7.5% in 2005-06. The

Indian economy has shown signs of strong performance despite a rise in oil prices, high inflation rate and abnormal

rains in many parts of the country. The overall growth of the Indian economy has been equally supported by all thethree sectors of the economy, i.e. the agriculture, manufacturing and the service sector. Insurance, together with the

banking sector, contributes to about 7.1 % of the total GDP of India, and the gross premium collected contributes to

about 2% of the total GDP of the country

The insurance sector in India has completed a full circle from being an open competitive market to nationalization

and back to a liberalized market again. Tracing the developments in the Indian insurance sector reveals the 360

degree turn witnessed over a period of almost 200 years.

1.7 GOVERNMENT POLICIES REGARDING LIFE INSURANCE:

Some of the important acts which have been passed in India to regulate insurance industry are mentioned here:

a)Insurance Act 1938: It was the first comprehensive piece of insurance legislation in the country governing both

life and non life insurance business. It was aimed to prevent the growth of mushrooming companies and to prevent

misappropriation of funds and to protect assets. This act had a strict control over the insurance business and was

amended from time to time. Till 1945, it was amended 6 times. Under the chairmanship of Shri Kavas Ji Jahangir, a



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committee was appointed to investigate all the misconduct of insurance business. According to this act, the central

government had control over the insurance business through the Controller of Insurance. The insurance companies

must follow the rules and regulations else they would be penalized.The act of 1938 applied to all types of insurance business-life, fire, marine etc. It also governed the provident

companies, mutual offices and cooperative societies. According to one of the provisions of this act, there is

prohibition of transaction of insurance business by certain persons.

To prevent the growth of insurers of small financial resources, this act provided for registration of all insurers and a

substantial deposit in the RBI.

Further under this act, no person shall, after the commencement of this act, begin to carry any class of insurance

business in India and no insurer carrying on any class of insurance business in India shall after the expiry of 3

months from the commencement of this act, continue to carry on any such business unless he obtained the

certificate of registration for the particular class of insurance business.

b) Life Insurance Corporation Act 1956

Life insurance business in India was nationalized with effect from January 19, 1956.on the date, 16 non Indian

insurers operating in India and 75 Provident Societies were taken over by Government of India. This act came into

effect from July 1st 1956.Life Insurance Corporation of India commenced its functioning as a corporate body.



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Under this act, LIC shall be a body having perpetual succession and a common seal with power, subject to the

provisions of this act to acquire, hold and dispose of property and may by its name sue and be used.

The original capital of the corporation shall be Rs 5 crores provided by the government and the terms and conditionsrelating to the provisions of capital shall be determined by the central government.

It is the general duty of the corporation to carry on life insurance business whether in India or outside, and the

corporation shall exercise its powers under this act towards the development of life insurance business to the best of

the

advantage of the community.

C) Insurance Regulatory and Development Authority (IRDA) 1999

Reforms in the insurance sector were initiated with the passage of the IRDA bill in December 1999.it was set up as

an independent body and it has been able to frame globally compatible legislations.

The IRDA was set up to protect the interests of holders of insurance policies ,to regulate ,promote and insure orderly

growth of the insurance industry and for matters connected therewith or incidental thereto.

This act extends to whole of India. With the establishment of this act, government amended Insurance act 1938, Life

Insurance Act 1956 and General Insurance Act 1972.



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IRDA was formed on the recommendations of Malhotra Committee. In 1999 government of India has set up Malhotra

Committee to examine the structure of insurance industry and recommend changes, under R.N Malhotra former

governor of RBI.

Some of the recommendations made by Malhotra committee were:

1. Raising the capital base of LIC and GIC up to Rs 200 crores, half retained by the government and rest sold to

public

2. Public sector is granted permission to enter insurance industry with a minimum paid capital of Rs 100 crores.

3. Foreign insurance companies may be allowed to enter by floating with an India company preferably by a joint

venture.

4. Limited number of private companies to be allowed in the sector but no firm can be allowed to operate in both

life and non life sectors with the same entity.

5. Tariff Advisory Commission (TAC) is delinked from GIC to function as a separate body under the supervision of

the insurance regulatory authority.

6. All insurance companies to be treated on equal footing and governed by the provisions of insurance act. No

special dispensation shall be given to the government companies



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7. Setting up of a strong and effective regulatory body with independent source for financing before allowing

private companies in this sector

On the basis of the recommendations Insurance Regulatory Authority (IRA) bill was introduced in the parliament in

1996.later in 1999 IRA bill was renamed as IRDA and was introduced in the parliament.

Under this act a certificate of registration is issued to the applicant to review, modify, withdraw, suspend or

cancel such registration.

It also specifies requisite qualification and practical training for insurance agents. It promotes efficiency in the insurance business and specifies code of conduct for surveyors and loss

assessors.

It also specifies the manner in which the books of accounts of the insurer and the insurance intermediaries

shall be maintained.

It regulates investment of funds by insurance companies

It regulates the margin of solvency

It also controls and regulates the rates, advantages, terms, and conditions that may be offered by the insurer.



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it also supervises the working of Tariff Advisory Committee, which is related to the regulation of general

insurance in India

it specifies the percentage of premium income of the insurer to finance schemes for promoting professionalorganizations.

It also specifies the percentage of life insurance business and general insurance business to be undertaken by

the insurer in rural or social sector.



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2. ORGANIZATIONAL OVERVIEW

Before talking about Reliance Life Insurance company Limited, lets have a brief introduction about its parent

company which is Anil Dhirubhai Ambani Group (ADAG). Reliance is a brand name which was made popular by

Mr. Dhirubhai Ambani all over the world and the same tradition is being carried on by his son Mr. Anil Ambani. After

splitting with his brother Mr. Mukesh Ambani, Anil Ambani created this ADAG and soon he has started to achieve the

success that once was started by his father.



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2.1 WHAT IS ADAG?

The Reliance Anil Dhirubhai Ambani Group is among Indias top three private sector business houses on all major

financial parameters, with a market capitalisation of Rs 100,000 crore (US$ 22 billion), net assets in excess of Rs

31,500 crore (US$ 7 billion), and net worth to the tune of Rs 27,500 crore (US$ 6 billion)

Across different companies, the group has a customer base of over 50 million, the largest in India, and a shareholder

base of over 8 million, among the largest in the world.

Through its products and services, the Reliance - ADA Group touches the life of 1 in 10 Indians every single day. It

has a business presence that extends to over 4,500 towns and 300,000 villages in India, and 5 continents across the

world.



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The interests of the Group range from communications (Reliance Communications) and financial services (Reliance

Capital Ltd), to generation, transmission and distribution of power (Reliance Energy), infrastructure and

entertainment .

2.1.1 STRUCTURE

OF ADAG



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2.1.2 VALUES/ OBJECTIVES OF ADAG:

Shareholder Interest

We value the trust of shareholders, and keep their interests

paramount in every business decision we make, every choice we

exercise

People Care

We possess no greater asset than the quality of our human capital

and no greater priority than the retention, growth and well-being of

our vast pool of human talent

Consumer Focus

We rethink every business process, product and service from the

standpoint of the consumer so as to exceed expectations at every



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touch point

Excellence in Execution

We believe in excellence of execution in large, complex projectsas much as small everyday tasks. If something is worth doing, it is

worth doing well.

Team Work

The whole is greater than the sum of its parts; in our rapidly-

changing knowledge economy, organizations can prosper only by

mobilizing diverse competencies, skill sets and expertise; by

imbibing the spirit of thinking together -- integration is the rule,

escalation is an exception

Proactive Innovation

We nurture innovation by breaking silos, encouraging cross-

fertilization of ideas & flexibility of roles and functions. We create an

environment of accountability, ownership and problem-solving

based on participative work ethic and leading-edge research.



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Leadership by Empowerment

We believe leadership in the new economy is about consensus

building, about giving up control; about enabling and empoweringpeople down the line to take decisions in their areas of operation

and competence

Social Responsibility

We believe that organizations, like individuals, depend on the

support of the community for their survival and sustenance, and

must repay this generosity in the best way they can

Respect for Competition

We respect competition because theres more than one way of

doing things right. We can learn as much from the success of others

as from our own failures.

2.1.2 VISION OF ADAG:

To build a global enterprise for all our stakeholders, and

A great future for our country,



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To give millions of young Indians the power to shape their destiny,

The means to realize their full potential

2.2. COMPANIES UNDER ADAG:

A) Reliance Capital

Reliance Capital (RCL) is one of Indias leading and fastest growing private sector financial services companies, and

ranks among the top 3 private sector financial services and banking companies, in terms of net worth.

The company has interests in asset management and mutual funds, life and general insurance, private equity and

proprietary investments, stock broking and other activities in financial services.

RCL is registered as a depository participant with National Securities Depository Ltd (NSDL) and Central Depository

Services Ltd (CDSL) under the Securities and Exchange Board of India (Depositories and Participants) Regulations,

1996. RCL has sponsored the Reliance Mutual Fund within the framework of the Securities and Exchange Board of

India (Mutual Fund) Regulations, 1996.RCL primarily focuses on funding projects in the infrastructure sector and

supports the growth of its subsidiary companies, Reliance Capital Asset Management Limited, Reliance Capital

Trustee Co. Limited, Reliance General Insurance Company Limited and Reliance Life Insurance Company Limited.

As of March 31, 2005, the companys investment in infrastructure projects stood at Rs. 1071 Crores. The investment

portfolio of RCL is structured in a way that realizes the highest post-tax return on its investments.



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B) Reliance Communication Ventures Limited :

The flagship company of the Reliance ADA Group, Reliance Communication Ventures Limited, is the realisation of

our founders dream of bringing about a digital revolution that will provide every Indian with affordable means of

communication and a ready access to information.

The company began operations in 1999 and has over 20 million subscribers today. It offers a complete range of

integrated telecom services. These include mobile and fixed line telephony, broadband, national and international

long distance services, data services and a wide range of value added services and applications aimed at enhancing

the productivity of enterprises and individuals.

C) Reliance Energy Limited

Reliance Energy Limited, incorporated in 1929, is a fully integrated utility engaged in the generation, transmission

and distribution of electricity. It ranks among Indias top listed private companies on all major financial parameters,

including assets, sales, profits and market capitalization.



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It is Indias foremost private sector utility with aggregate estimated revenues of Rs 9,500 crore (US$ 2.1 billion) and

total assets of Rs 10,700 crore (US$ 2.4 billion).

Reliance Energy Limited distributes more than 21 billion units of electricity to over 25 million consumers in Mumbai,Delhi, Orissa and Goa, across an area that spans 1,24,300 sq. kms. It generates 941 MW of electricity, through its

power stations located in Maharashtra, Andhra Pradesh, Kerala, Karnataka and Goa.

The company is currently pursuing several gas, coal, wind and hydro-based power generation projects in

Maharashtra, Uttar Pradesh, Arunachal Pradesh and Uttaranchal with aggregate capacity of over 12,500 MW. These

projects are at various stages of development.

Reliance Energy Limited is vigorously participating in emerging opportunities in the areas of trading and transmission

of power. It is also engaged in a portfolio of services in the power sector in Engineering, Procurement and

Construction (EPC) through a network of regional offices in India.

D) Reliance Health

In a country where healthcare is fast becoming a booming industry, Reliance Health is a focused healthcare services

company enabling the provision of solution to Indians, at affordable prices. The company aims at providing integrated

health services that will compete with the best in the world.It also plans to venture into diversified fields like Insurance



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Administration, Health care Delivery and Integrated Health, Health Informatics and Information Management and

Consumer Health.

Reliance Health aims at revolutionising healthcare in India by enabling a healthcare environment that is bothaffordable and accessible through partnerships with government and private businesses.

E) Reliance Media & Entertainment

As part of the Reliance - ADA Group, Reliance Entertainment is spearheading the Groups foray into the media and

entertainment space. Reliance Entertainments core focus is to build significant presence for Reliance in the

Entertainment eco-system: across content and distribution platforms.

The key content initiative are across Movies, Music, Sports, Gaming, Internet & mobile portals, leading to direct

opportunities in delivery across the emerging digital distribution platforms: digital cinema, IPTV, DTH and Mobile TV.

Reliance ADA Group acquired Adlabs Films Limited in 2005, one of the largest entertainment companies in India,

which has interests in film processing, production, exhibition & digital cinema.



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Reliance Entertainment has made an entry into FM Radio through Adlabs Radio, having won 45 stations in the

recent bidding, which will soon be the Radio station with the largest footprint in India.

2.3RELIANCE LIFE INSURANCE COMPANY LIMITED:

As it has been presented before Reliance Life Insurance Company Ltd. Is a part of Reliance Capital which is again

a part of ADAG. Reliance Capital acquired 100% share of an Australian Based life insurance company i.e. AMP

SANMAR LTD. In October 2005, to form the Reliance Life Insurance Company. Though the acquisition was made in

October, the functioning of Reliance Life has only started from February, 2006. It is one of the two private players

(along with Sahara) in the life insurance sector which does not have any foreign collaboration. The basic idea behind

the formation of Reliance Life was to provide the people of India with some better investment alternatives as well as

to make them aware about the usefulness of life insurance for catering the future needs of them. Reliance life

insurance has a range of products which can fulfill the needs of both the individual as well as corporate houses. So, it

can be said that Reliance Life is another step forward for Reliance Capital Limited to offer need based financial

services (life insurance) to individuals and corporate houses.

2.3.1 GOALS TO ACHIEVE:

Reliance Life Insurance has the following goals to achieve in the near future:



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a) Emerge as a transnational life insurer of global scale and standard.

b) Achieve impeccable reputation and credentials through best business practices.

c) To become the market leader among the private players in the Indian life insurance sector by the end of

the current financial year.

2.3.2 MISSION:

Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and

pension plans.

2.3.3 VISION:

Empowering everyone live their dreams

2.3.4 GUIDING PRINCIPLES:

a) Customer care and satisfaction: The foremost responsibility for an organization is to provide its customers

utmost care and satisfaction and Reliance Life is no exception in this regard. The main objective of theorganization is to provide the customers with best possible financial plans which will match their needs and the

expectations.



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b) Corporate Governance: In todays modern business world corporate governance is utmost essential, because

it gives a clear picture of the organization to its shareholders as well to the general public at large. So, it is aim

of Reliance Life to maintain ethical practices in all their business transactions, to promote a better picture of

themselves.

c) Creativity and Innovation: After the IRDA ACT 1999, the private players are also allowed to participate in the

life insurance sector, and this has opened a vast area of field to operate for many of the companies and thats

why we see that not less than 15 players have entered the market in the last few years. So, to survive in this

market, the goal of reliance Life is Creativity and Innovation which is the best way to success for any

organization.

d) Competitiveness: It provides the base for any organization to operate in any area of business and life

insurance is no exception. Competitiveness provides the urge for any company to outperform their competitors

in the market and become the leader in that particular sector. It is the competitiveness which has impelled

Reliance life to set a goal such as to become the market leader among all the private players by the end of the

current financial year.



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2.3.5 DEPARTMENTS AND BRANCHES OF RELIANCE LIFE INSURANCE COMPANY LIMITED:

Branches:

There are more than 200 branches of Reliance life spread all over the country, the head office being situated in

Chennai. In the city of Bangalore though there are only three (3) branches of Reliance life and those are situated

in:

a) Malleswaram

b) Jayanagar and

c) Indiranagar.

They are planning to open new branches at places like Mahatma Gandhi Road and Koramangla very soon.

Departments:

The various departments that can be seen in an insurance organization and that has been observed by me are as

follows:



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a) Marketing Department: This department mainly deals with the marketing and promotion part of the Insurance

Company. They spend most of their time in formulating strategies to make their products known to the common

people and to promote the same in a easy and cost effective way.

b) Sales Department: This department mainly deals with the sales part of the Insurance Company; the

department includes designations like Sales Manager and Financial Advisor who personally contacts with

people for performing the task of sales of various products.

c) Accounts/ Financial Department: This department has the task of keeping track of the various expenses

incurred by the various other departments of the organization and also performs the task of allocating various

funds to different departments according to their requirements.

d) Human Resource Department: This department is handled by the Human Resource manager of the

company. The function of this department involves the well being of the employees of the company, I,e, to see

whether there is employee grievance in the organization or not and if it is there what are the possible causes

for that and also try to find out solutions for the same if possible.

e) Investment Department: This department deals with the task of investing the money of the policy holders in

such way that will ensure both safety of the money and also a steady return on the same. The task of this

department is very difficult as it deals with the money given by the policy holders, so it requires lot of thinking

on the part of the personnel of this department before deciding where to invest the money.



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Actuarial Department: This department is under the supervision of an Actuary who decides the premiums and

charges to be taken from the policy holder on the basis of certain informations (like Age, Annual Income etc.)

provided by the prospective customer. The task also involves the calculation of mortality charges which requires high

statistical knowledge from ones point of view. So, this department involves in the calculation of various amounts to

be charged from the prospective customers.

2.3.6 RELIANCE LIFE INSURANCE PRODUCTS:

Reliance Life Insurance has products which can meet the needs of both the individuals as well as the corporate

houses. The products of the Reliance Life can be subdivided broadly into two segments, namely:

a) Individual Products. &

b) Group Products.

2.3.6.1: INDIVIDUAL PRODUCTS:

These products are offered by Reliance Life by mainly focusing to the needs of the individual persons, these

products will offer them the best solutions possible to their different needs. The products offered under this category

are as follows:



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i) ENDOWMENT PLAN: This plan provides an easy and inexpensive way to protect the needs of the

customer, his/her family and the business of the customer. In this plan the customer has the option of

choosing the sum assured on the basis of his current financial condition and probable future expenses, he

also has the option of choosing the term of the plan. In the event of untimely death, this plan will provide all

the support necessary to the beloved ones of the policy holder.

ii) SPECIAL ENDOWMENT PLAN: This insurance policy is designed for the people who want to combine

savings with extended security. The special feature of this plan is, the customer will get the benefit ( life

protection) of the plan even after 5years from the date on which the customer has stopped paying the

premium. This policy can also be taken as one which can also be participate in the profit of the company.

iii) CASH FLOW PLAN: This policy is designed for the people who have a recurring need of reinvestment in

the business or look for short-term investment channels. The advantage of policy is in no time the customer

has to pay a sizable amount of money as premium and on the other hand he can ensure a periodic return of

a lump sum amount which can become a basis for reinvestment at a later period.



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iv) CHILD PLAN: This insurance policy is designed for those people who wish to save money for a future time

when there will be a recurring need of substantial amount of money. This is specially true when someone

needs money for the higher education of his son or daughter. The unique feature of this policy is that the

risk cover continues for the full sum assured even when the periodical payments are being made.

v) TERM PLAN: This insurance policy is designed for those people who want only life cover for their family

and does not want to save anything for themselves. It can also be useful for business house who want to

cover their businesses against the sudden loss of partners or key manpower. The premium charged for this

policy is comparatively low than the other policy offered by Reliance Life.

vi) WHOLE LIFE PLAN: This insurance policy is designed for those people who does not want to avail any

benefit for themselves but rather want to create an immediate estate to protect their family by availing of

insurance cover on their life at a very low cost. The unique feature of this policy is that the risk cover

continues throughout the duration of the policy holders life irrespective of the period of premium payment.

vii) MARKET RETURN PLAN (ULIP): In this policy one can have the twin advantage of insurance protection as

well as reaping the benefits of investment growth. It is a flexible plan which works throughout the life and



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meets the changing requirements like additional protection, liquidity through cash, option to invest in

different asset class and many more.

viii) GOLDEN YEAR PLAN: This policy is a flexible package that gives the customer the freedom of choice in

choosing the type of investment, life cover, vesting options such as commuting and annuity options. This

policy is available for all individuals ranging between the age of 18-65.

2.3.6.2 GROUP PRODUCTS: These insurance products are mainly designed keeping in mind the needs of the

group of people in an organization or any other place. The various plans under this category are as follows:

i) TERM ASURANCE PLAN: This policy is a one year renewable term assurance contract. The sum is paid

on the happening of the event for which the policy was taken with in the one year. After one year the policy

can be further renewed for one more year.

ii) RELIANCE EMPLOYEE DEPOSIT LINKED INSURANCE SCHEME (EDLI): All establishments which have

at least 10 full time employees and which come under the purview of Employees provident fund and

miscellaneous provisions act 1952, have a provision to undertake Employee Deposit linked Insurance



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Scheme to provide life insurance to their employees. Reliance EDLI has been approved as a substitute for

the EDLI scheme 1976 that was provided earlier.

iii) RELIANCE GROUP GRATUITY POLICY: It is a policy that offers various services to manage the gratuity

obligations of any particular organization. It helps the management to provide all the benefits of gratuity to

the employees with out requiring proper control from their behalf.

iv) RELIANCE GROUP SUPER ANNUATION POLICY: It is a policy that offers various services to manage the

superannuation obligations of any particular organization. It gives a choice to the organizations to tailor the

super annuation facilities fir their employees according to their convenience.

2.3.7 SWOT ANALYSIS OF RELIANCE LIFE INSURANCE COMPANY LIMITED:

STRENGTHS:

a) Impeccable brand name of Reliance.

b) Sound financial and infrastructural backup.

c) Real urge to become the leader in the market.



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d) The success in one of the fields in Reliance may create a good feeling with in the customers about Reliance

Life Insurance also.

WEAKNESSES:

a) Unawareness among the people about Reliance Life Insurance.

b) Recent split in the top management may have a bad impact on the general people who believe in family

bodings even in business matters.

c) As they have recently come to the insurance sector, not aware of the pros and cons of the sector.

OPPORTUNITIES:

a) Many people now days are being aware of the benefits of insurance, so there is a vast market to target by the

company.

b) 80% of the total population in India is still not covered by any Life Insurance Policy, so there is a vast market

that can be tapped by Reliance.



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c) Reliance group already has a huge number of customers in different fields of operation, so there is a possibility

that those people may be willing to invest in this area also.

THREATS:

a) Most of the people still believe on public players like LIC, so it is very hard to shift those customers from LIC to

other companies like Reliance.

b) The number of players in the private insurance sector is increasing day by day, so the competition is getting

tough.

c) The failure in one of the fields of Reliance may affect adversely the business opportunities of Reliance Life

Insurance.



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2.4. Explanation of the 7-S Framework of McKinsey



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2.4.1 What is the 7-S Framework?

The 7-S Framework of McKinsey is a management model that describes 7 factors to organize a company in a holistic and effective way . Together

these factors determine the way in which a corporation operates. Managers should take into account all seven of these factors, to be sure of successful

implementation of a strategy. Large or small. They're all interdependent, so if you fail to pay proper attention to one of them, this may affect all others

as well. On top of that, the relative importance of each factor may vary over time. 2.4.2Origin of the 7-S Framework : History



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The 7-S Framework was first mentioned in "The Art Of Japanese Management" by Richard Pascale and Anthony

Athos in 1981. They had been investigating how Japanese industry had been so successful. At around the

same time that Tom Peters and Robert Waterman were exploring what made a company excellent. The Seven

S model was born at a meeting of these four authors in 1978. It appeared also in "In Search of Excellence" by

Peters and Waterman, and was taken up as a basic tool by the global management consultancy company

McKinsey. Since then it is known as their 7-S model.

2.4.3The Mckinsey 7S Framework

In recent years, the 7S framework for management analysis developed by the respected consulting firm of Mckinsey

& Company has gained in popularity. The Mckinseys 7S framework essentially looks at seven elements of an

organization that must be understood when seeking to work out how it works and how to bring about any sort of

change in the organization.



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These seven elements play a significant role in any organization and the Mckinsey 7S framework gives an insight

into the integration of these significant elements. The outstanding feature of the 7S framework is that it has been

tested extensively by Mckinsey consultants in their studies of many companies. At the same time this framework

has been used by respected business schools such as Harvard and Stanford. Thus, theory and practice seem to

support each other in the study of management.



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a) Style

"Style" refers to the management style or the leadership style that is followed by the superiors in an organization to

carry out different activities in the organization. Style is basically the way the management behaves and

collectively spends its time to achieve organizational goals. There are a lot of different management and

leadership styles in use but the most popular ones are: -

Exploitive Autocratic

Benevolent Autocratic

Participative

Democratic

b) Systems

In an organization, "systems" refer to the procedures and processes such as information systems, manufacturing

processes, budgeting and control processes. When taking into consideration the systems of any organization,

things such as the customization of the systems, tailoring those systems to individual managers, the setting up of



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objectives for those systems, economizing those systems, the flexibility of the systems and blending those

systems into the organizational environment, come into any managers mind.



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It is these elements of concern associated with the Systems of the organization that Mckinsey consultants have

included this issue of Systems of the organization into their framework.

c) Staff

The term "Staff" refers to the people in the organization and their socialization into the organizational culture. This

includes Staffing that is the filling, and keeping filled positions in the organizational structure through identifying

work-force requirements, recruiting, selecting, placing, promoting, appraising, planning the careers,

compensating, and training or otherwise developing both candidates and current job holders to accomplish their

tasks effectively and efficiently. Plus this also implies towards the chosen culture of the organization and the

selection of employees according to that particular organizational culture and the fact that whether the employees have blended

into and accepted the culture or not.

d) Structure



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"Structure" is the organizational structure or the hierarchy of the organization that comprises of the authority and

responsibility relationships in the firm. This function of the framework is concerned with the direction of delegation

of authority, the organizational structures, whether Flat or Tall and the degree of Centralization or

Decentralization. Structure is closely related to Staff as the size of the staff greatly impacts the type of structure

that the organization has. It is also dependant upon the Style of management preferred by the superiors in the

organization, as it is the preference of the top management that really matters in the real world on the type of

organizational structure being applied.

e) Strategy

The systematic actions and the allocation of resources to achieve the organizational objectives and aims is referred

to as "Strategy". There are many predefined strategies but the management can effectively create some other

strategy through the use of creative techniques like brainstorming or professional approach such as the Delphi

Technique.



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f) Shared vision

"Shared vision" or Super ordinate goals are the values held and shared by the members of an organization. By using

the term Shared Values, the 7S theorists emphasize that goal statements are very important in determining the

destiny of the organization; they also point out that the organization members must share values equally.

Therefore, special attention is given to personal and organizational values in order to increase organizational

effectiveness.

g) Skills

These are the distinctive capabilities of an organization. In traditional management literature the term "skills" refers tothe personal skills (e.g. technical, human, conceptual) while in the 7S framework "skills" not only means this but it

also points towards the capabilities of the organization as a whole.



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Application of 7s

a) STRUCTURE OF ADAG



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b) Shareholder

Interest

We value the trust of

shareholders, and keep their

interests paramount in

every business decision we

make, every choice we

exercise In the copany

orgation People Care

We possess no greater asset

than the quality of our human



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capital and no greater priority than the retention, growth and well-being of our vast pool of human talent We also

gives the different way to focusing the consumer to

We rethink every business process, product and service from the standpoint of the consumer so as to exceed

expectations at every touch point

Excellence in Execution

We believe in excellence of execution in large, complex projects as much as small everyday tasks. If something

is worth doing, it is worth doing well.

Team Work

The whole is greater than the sum of its parts; in our rapidly-changing knowledge economy, organizations can

prosper only by mobilizing diverse competencies, skill sets and expertise; by imbibing the spirit of thinking

together -- integration is the rule, escalation is an exception

Proactive Innovation

We nurture innovation by breaking silos, encouraging cross-fertilization of ideas & flexibility of roles and

functions. We create an environment of accountability, ownership and problem-solving based on participative

work ethic and leading-edge research.



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c) Style

Reliance insurance have a different working style in different areas those are followings.

Leadership by Empowerment

We believe leadership in the new economy is about consensus building, about giving up control; about enabling

and empowering people down the line to take decisions in their areas of operation and competence

Social Responsibility

We believe that organizations, like individuals, depend on the support of the community for their survival and

sustenance, and must repay this generosity in the best way they can

Respect for Competition

We respect competition because theres more than one way of doing things right. We can learn as much fromthe success of others as from our own failures.

Generally company use the style to develop the first relianshionship to customer then after the start the businesswith him. Give the good product .in this way customer can satisfy and second time

d) Strategy

To build a global enterprise for all our stakeholders, andA great future for our country,



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To give millions of young Indians the power to shape their destiny,

The means to realize their full potential

Our strategy for insurance is to keep the customer satisfaction as focal point of all our operations, adopt the best

international practices in underwriting, claims and customer service, be the most innovative in product development,

establish presence all over India, ensure sustained value addition to all stake holders and to uphold Corporate Value

& Corporate Governance.

e) Staff

There are more than 200 branches of Reliance life spread all over the country, the head office being situated in

Chennai. In the city of Bangalore though there are only three (3) branches of Reliance life and those are situated in

a) Malleswaram b) Jayanagar and c) Indiranagar. In organization divided in to different depart on the bases of hiss

work like Marketing Department Sales Department Accounts/ Financial Department Human Resource Department

Investment Department Actuarial Department. In these department are to train person on the base of his work

.because of it more useful to for his work. Sales person fist he pass the exam then after company issue the

license .After time by time company arrange the different product train to the agent and other staff member it helps to

easy to convenes to customer.



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f) Skill

Skill is most important to all the staff member because of insurance business is

Intangible there for very difficult to convenient to the people. In insurance business also skill required for calculation

of premium or claims calculation or under writer, In big insurance took by any person or company at this time for

reinsurance skill person required. Reliance life insurance company having a very good skill person because we saw

the within one years company get good perform.

g) System

The Company recognizes that the security of information requires an ongoing commitment. Towards this end a

security program would provide a continuous cycle for assessing risk, developing and implementing effective security

procedures, and monitoring the effectiveness of those procedures. We want to guarantee the reliability,

confidentiality and availability of critical information. To that end, we will continue implementation of our strategy for

enhancing information security management controls.

We are in a challenging environment, dealing with all the changes in technology, the insurance industry, the IRDA

regulations and the workplace. The expectations of what information technology (IT) can do to benefit the business

and its customers continue to grow. We've been working hard to provide day-to-day IT services, while keeping our



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eye on where the Company is headed strategically, and also transforming the IT organization to meet future

requirements.



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d) Rider Benefits provided by the company

e) Bonus and interest paid by the company

f) Services provided by company (pre and post sales),

g) Accessibility of the company &

h) Company Image.

3.3. SAMPLE SIZE: After due consultation with the company supervisor as well as with the college guide, also

keeping in mind the requirements of the company for the research, the sample size that was found to be appropriate

for the study was 100.

3.4. SAMPLING TECHNIQUE: The sampling technique that adapted to conduct the survey was Simple Random

Sampling and the area of the research was concentrated in the city of Bangalore only. The survey was conducted by

visiting different Reliance web world branches in places like koramangala and Jayanagar in the city of Bangalore.

3.5 RESEARCH FINDINGS:

Various Investment Alternatives Available to consumers:

To begin with the analysis, let us see what are the various investment alternatives that are available to the people

and among that which are the most preferred one. Now, from the data collected from the 100 respondents which

were surveyed through the questionnaire, the following representation can be made:



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Investment Alternatives Preffered by People

50, 18%

41, 15%

33, 13%33, 13%

31, 12%

26, 10%

21, 8%

19, 7%10, 4%

Insurance

Mutual Fund

PPF

Real Estate

Bank Deposits

Equity

Post Office

Gold and Silver

Bonds and Debntures

So, from the above representation it can be seen that 18% of the people think that Insurance is the most preferred

investment alternative that is available to them, followed by alternatives such as Mutual Fund (15%), PPF (13%),

Real Estate (13%) etc. The reason that can be attributed for the liking of people towards insurance may be

because of that insurance provides both life cover as well as security to the holder of the policy and also to the

family members of the insurance holders. As well as now a days insurance are also providing option to invest in

the markets through plans like ULIP, which gives the holder both the life cover as well as an opportunity to earn



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income at the market rate. So, these are the reasons why people like to invest in the insurance in comparison to

others.

SEGMENTATION OF THE RESPONDENTS ON THE BASIS OF CERTAIN IMPORTANT CRITERIAS:

Now, let turn our attention towards the respondent who were covered under this study. These respondents can be

categorized on the basis of certain important criteria like age group, annual income, have previous life insurance

policy and awareness about Reliance Life Insurance in the following way:

Age group:


age group

58 58.0 58.0 58.0

31 31.0 31.0 89.07

7.0 7.0 96.03

3.0 3.0 99.01

1.0 1.0 100.0

100 100.0 100.0

< 30 yrs.

31 - 40 yrs.

41 - 50 yrs.

51 - 60 yrs.

> 60 yrs.

Total

Valid

Frequency Percent Valid Percent

Cumulative

Percent

73


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From this representation we can see that 58% of the respondent belonged to the age group of below 30 years,followed by 31% who belonged to the age group between 31-40 years and the other persons were who belonged toother age groups were small in number.


age group

age group

> 60 yrs.51 - 60 yrs.41 - 50 yrs.301- 40 yrs.< 30 yrs.

Frequency

70

60

50

40

30

20

10

0

74


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Annual income


annual income

17 17.0 17.3 17.3

27 27.0 27.6 44.9

23 23.0 23.5 68.4

31 31.0 31.6 100.0

98 98.0 100.02

2.0

100 100.0

< Rs. 1 lakh

Rs. 1.01 - 3 lakh

Rs. 3.01 - 5 lakh

> Rs. 5 lakh

Total

Valid

SystemMissing

Total


Cumulative

Percent

annual income

annual income

> Rs. 5 lakhRs. 3.01 - 5 lakhRs. 1.01 - 3 lakh< Rs. 1 lakh

Frequency

40

30

20

10

0

75


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From the above representation we can see that 31% of the respondents belonged to a group which has an annualincome of more than 5 lakh, followed by 27% who belonged to the group of annual income between 1-3 lakh and 23% who have an annual income between 3-5 lakh. Among the 100 respondents, two of them were unwilling toexpress their annual income to us, which represents the missing system in the chart presented above.

Hold life insurance policy

hold life insurance policy

23 23.0 23.0 23.0

77 77.0 77.0 100.0

100 100.0 100.0

no

yes

Total

Valid


Cumulative

Percent


A O C O O A C S A C


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yesno

Frequency

100

80

60

40

20

0

Among the 100 respondents that were taken as a sample size, 77 of them had life insurance policy that was eithertaken by him/her self or it was taken by their parents on their name, while 23 of them did not have any kind of Lifeinsurance policy from any company.




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Awareness about-Reliance Life

awareness-RIL

awareness-RIL

yesno

Fre

quency

70

60

50

40

30

20

10

0

Now coming to the point of awareness among the people about Reliance Life Insurance, the response was very

disappointing from the point of view of the company. Out of 100 respondents not less than 64 respondents did not

have the knowledge that Reliance has also come to the life insurance sector by overtaking the Australia based life


awareness-RIL

64 64.0 64.0 64.0

36 36.0 36.0 100.0

100 100.0 100.0

no

yes

Total

Valid


Cumulative

Percent



79/138


insurance company AMP SANMAR, while the rest 36 had knowledge of the acquisition of AMP SANMAR by

Reliance.

IMPOPRTANT CRITERIAS BEFORE TAKING AN LIFE INSURANCE POLICY:

Now, let us see what criterias people consider most important before taking a life insurance policy (the criterias

for the study have been mentioned before). Here, the most important criteria as perceived by the people are being

rated as 1 and the least important criteria is being rated as 8, (as there are 8 criterias that have been suggested

under the research study). Here the number of respondent is only 77, because those people who do not have any

life insurance policy have been excluded from the purview of the study.

PREMIUM:




80/138


PREMIUM

42 42.0 54.5 54.5

6 6.0 7.8 62.36 6.0 7.8 70.1

6 6.0 7.8 77.9

11 11.0 14.3 92.2

5 5.0 6.5 98.7

1 1.0 1.3 100.0

77 77.0 100.0

23 23.0

100 100.0

1

23

4

5

6

7

Total

Valid

SystemMissing

Total


Cumulative

Percent




81/138


PREMIUM

PREMIUM

7654321

Frequency

50

40

30

20

10

0

Now if we consider one of the criteria we can see that 54.5% of the respondent has rated it as the most important

thing that they consider before taking any insurance policy from any company, while no body has rated it as the least

important criteria. So, it can be clearly interpreted that premium that the policy holder has to pay to continue his/her

policy plays a very important role before selecting the terms and conditions of the policy and also the company from

which the policy is to be taken.




82/138


CHARGES:

CHARGES

6 6.0 7.8 7.8

7 7.0 9.1 16.9

17 17.0 22.1 39.0

20 20.0 26.0 64.9

12 12.0 15.6 80.5

9 9.0 11.7 92.2

3 3.0 3.9 96.1

3 3.0 3.9 100.0

77 77.0 100.0

23 23.0

100 100.0

1

2

3

4

5

6

7

8

Total

Valid

SystemMissing

Total


Cumulative

Percent




83/138


CHARGES

CHARGES

87654321

Frequency

30

20

10

0

Now if we consider the charges the customer has to pay to the insurance company like Fund Management charges,

administration charges etc. most of the people consider it as a important criteria which can dictate the terms before

deciding on whether to take the policy or not. But very few people (only 7.8% of the total respondents), considers that

it can be the most important criteria before taking the decision on life insurance policy.



84/138



85/138


policy term

policy term

87654321

Frequency

20

10

0

The tenure of the policy i.e. the policy term depends on the policy holder but sometimes the insurer can also

influence the policy term by giving some additional benefits on policies taken for a longer period of time or vice versa.

In the study that was conducted by us, we found out that nearly 22% of the respondents thinks that policy term

offered by the company is the most important thing that one should consider before taking any life insurance policy

while 5.3% of the respondents think that it is the least important thing that one should consider before taking any life

insurance policy.



86/138



87/138


rider benefits

rider benefits

87654321

Frequency

16

14

12

10

8

6

4

2

0

Rider benefits are the additiona

Date post:	07-Apr-2018
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Introduction of Reliance

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