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FINANCE PROJECT
Submitted by-Saurabh kakhaniPCL -1WLCI, noida campus
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Executive Summary
Someone has greatly said that practical knowledge is better than classroom teaching
During this project I fully realized this and come to know about the present real world of
Insurance sector it includes all the actives involved in providing insurance products to
The final customers aim pleased to know about the customers wants and competitors
Actives in the real world of insurance
The subject of my study is to analyze the present
insurance sector and products offered by lic by Appling various tools like sold calling and
Through direct interaction with customers have also done research on the growth of
Private life insurance companies in the last five years lic provides stats factory in the
Sector
ICICI prudential life insurance is one of the largest
Insurance networks in the country 2nd life insurance company in India the icici group has
Been in existence in 1995 when icici ltd was created icici prudential started in 2002 is
Subsidiary of icici ltd today icici life insurance has 4 customer million with total 100000
cr making 2nd
the largest life insurance company in the country of lic
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CONTENTS
1. Introduction of industry2. Terminology used in insurance sector3. Types of insurance4. Classification of Indian insurance industry
A. Govt company
1. Life insurance corporation of India introduction2. Types of life insurances
3. Products of life insurance India
4. Risks and gains
B. Private company
1. Icici prudential life insurance introduction
2. Products of icici prudential life insurance
3. Risks and gains
Compartivitive analysis of icici and prudential life insurance
Conclusion
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Industry profileInsurance is a contract between two parties whereby one party called insurer undertakes inexchange for a fixed amount of money on the happening of a certain event. Insurance is aprotection against financial loss arising on the happening of an unexpected event. Theprimary purpose of Life Insurance is the protection of the family. Insurance in it's variousforms protects against such misfortunes by having the losses of the unfortunate few paid bythe contribution of the many who are exposed to the same risk. This is the essence ofinsurance- the sharing of losses and substitution of certainty for uncertainty. Insurancecompanies collect premiums to provide for this protection. A loss is paid out of thepremiums collected from the insuring public and the insurance companies act as trustees ofthe amount collected. In is a system by which the losses suffered by a few are spread over
many, exposed to similar risks.
In the western world, life insurance evolved mainly from the maritime industry. Started byprivate financiers who used to gamble on the lives of seafarers by offering five times themoney deposited with them in case of certain contingencies?
In its present form, life insurance has its origin in England and made its debit in India in theyear 1818.Initially, Indians were not considered on par with Europeans as far as theirinsurability was concerned. There were also many other failures. It was in the early part ofthe 20th century that some kind of legislation was made to regulate the industry. From thenon life insurance made great strides in the country.
At the time of independence and thereafter, there were more than 200 companies operatingin India and not all of them on sound ethical principles. Many factors combined together toprompt the then government to nationalize the life insurance industry in 1956 to form theLife Insurance Corporation of India.
The years from 1956 to 1999 saw the life insurance corporation of India emerge as a giantfinancial institution and the lone organization purveying life insurance, if we ignore theminimal presence of postal life insurance. The institution succeeded in penetrating in manyareas and segments of the population and in garnering public money for public welfare.
It was in the 1990s that the winds of change started sweeping over India and brought intheir wake many changes in the economy. Liberalization ensured competition in manyfields and there was a clamor that the insurance industry too is opened up to Private Indianand foreign players to provide the customer with a choice.
The Malhotra committee, appointed in 1993 was given the mandate to study the industryand to suggest the changes that were necessary to make it modern and in tune with peoplesaspirations. The report submitted by the committee was the precursor of the IRDA Bill.
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By the passing of the IRDA Bill, the Insurance sector has been opened up for the privatecompanies to carry on insurance business. Now the life insurance industry in India israpidly evolving and growing. It has witnessed a big growth as many Indian and foreignwere entered in to the Indian insurance sector. The life insurance industry in India has
become fiercely competitive with the entry of several new players including majormultinational insurers after the deregulation of the sector. It has opened up a range ofuntapped opportunities for new entrants into the industry, as the potential market for buyersis high since the emerging market in India has a low insurance penetration and high growthrates.
Terminology used in insurance-
Principles
Insurance involvespooling funds from many insured entities (known as exposures) to pay
for the losses that some may incur. The insured entities are therefore protected from risk for
a fee, with the fee being dependent upon the frequency and severity of the event occurring.
In order to be insurable, the risk insured against must meet certain characteristics in order
to be an insurable risk. Insurance is a commercial enterprise and a major part of the
financial services industry, but individual entities can also self-insure through saving
money for possible future losses.
Insurability
Risk which can be insured by private companies typically share seven common
characteristics:
1. Large number of similar exposure units: Since insurance operates through
pooling resources, the majority of insurance policies are provided for individual
members of large classes, allowing insurers to benefit from the law of large
numbers in which predicted losses are similar to the actual losses. Exceptions
include Lloyd's of London, which is famous for insuring the life or health of actors,
sports figures and other famous individuals. However, all exposures will have
particular differences, which may lead to different premium rates.
2. Definite loss: The loss takes place at a known time, in a known place, and
from a known cause. The classic example is death of an insured person on a life
insurance policy. Fire,automobile accidents, and worker injuries may all easily
meet this criterion. Other types of losses may only be definite in theory.
Occupational disease, for instance, may involve prolonged exposure to injurious
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conditions where no specific time, place or cause is identifiable. Ideally, the time,
place and cause of a loss should be clear enough that a reasonable person, with
sufficient information, could objectively verify all three elements.
3. Accidental loss: The event that constitutes the trigger of a claim should be
fortuitous, or at least outside the control of the beneficiary of the insurance. The
loss should be pure, in the sense that it results from an event for which there is only
the opportunity for cost. Events that contain speculative elements, such as ordinary
business risks or even purchasing a lottery ticket, are generally not considered
insurable.
4. Large loss: The size of the loss must be meaningful from the perspective of
the insured. Insurance premiums need to cover both the expected cost of losses,
plus the cost of issuing and administering the policy, adjusting losses, and
supplying the capital needed to reasonably assure that the insurer will be able topay claims. For small losses these latter costs may be several times the size of the
expected cost of losses. There is hardly any point in paying such costs unless the
protection offered has real value to a buyer.
5. Affordable premium: If the likelihood of an insured event is so high, or the
cost of the event so large, that the resulting premium is large relative to the amount
of protection offered, it is not likely that the insurance will be purchased, even if on
offer. Further, as the accounting profession formally recognizes in financial
accounting standards, the premium cannot be so large that there is not a reasonable
chance of a significant loss to the insurer. If there is no such chance of loss, the
transaction may have the form of insurance, but not the substance.
6. Calculable loss: There are two elements that must be at least estimable, if
not formally calculable: the probability of loss, and the attendant cost. Probability
of loss is generally an empirical exercise, while cost has more to do with the ability
of a reasonable person in possession of a copy of the insurance policy and a proof
of loss associated with a claim presented under that policy to make a reasonably
definite and objective evaluation of the amount of the loss recoverable as a result
of the claim.
Legal
When a company insures an individual entity, there are basic legal requirements. Several
commonly cited legal principles of insurance include:
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1. Indemnity the insurance company indemnifies, or compensates, the
insured in the case of certain losses only up to the insured's interest.
2. Insurable interest the insured typically must directly suffer from the loss.
Insurable interest must exist whether property insurance or insurance on a person is
involved. The concept requires that the insured have a "stake" in the loss or
damage to the life or property insured. What that "stake" is will be determined by
the kind of insurance involved and the nature of the property ownership or
relationship between the persons.
3. Utmost good faith the insured and the insurer are bound by a good
faith bond of honesty and fairness. Material facts must be disclosed.
4. Contribution insurers which have similar obligations to the insured
contribute in the indemnification, according to some method.
5. Subrogation the insurance company acquires legal rights to pursuerecoveries on behalf of the insured; for example, the insurer may sue those liable
for insured's loss.
6. Causa proxima, or proximate cause the cause of loss (the peril) must be
covered under the insuring agreement of the policy, and the dominant cause must
not beexcluded
7. Mitigation - In case of any loss or casualty, the asset owner must attempt to
keep the loss to a minimum, as if the asset was not insured.
Indemnification
To "indemnify" means to make whole again, or to be reinstated to the position that one was
in, to the extent possible, prior to the happening of a specified event or peril.
Accordingly, life insurance is generally not considered to be indemnity insurance, but
rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified event).
There are generally two types of insurance contracts that seek to indemnify an insured:
1. an "indemnity" policy, and
2. a "pay on behalf" or "on behalf of"[4] policy.
The difference is significant on paper, but rarely material in practice.
An "indemnity" policy will never pay claims until the insured has paid out of pocket to
some third party; for example, a visitor to your home slips on a floor that you left wet and
sues you for $10,000 and wins. Under an "indemnity" policy the homeowner would have to
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come up with the $10,000 to pay for the visitor's fall and then would be "indemnified" by
the insurance carrier for the out of pocket costs (the $10,000).
Under the same situation, a "pay on behalf" policy, the insurance carrier would pay the
claim and the insured (the homeowner in the above example) would not be out of pocket
for anything. Most modern liability insurance is written on the basis of "pay on behalf"
language.
An entity seeking to transfer risk (an individual, corporation, or association of any type,
etc.) becomes the 'insured' party once risk is assumed by an 'insurer', the insuring party, by
means of a contract, called an insurance policy. Generally, an insurance contract includes,
at a minimum, the following elements: identification of participating parties (the insurer,
the insured, the beneficiaries), the premium, the period of coverage, the particular loss
event covered, the amount of coverage (i.e., the amount to be paid to the insured or
beneficiary in the event of a loss), and exclusions (events not covered). An insured is thus
said to be "indemnified" against the loss covered in the policy.
When insured parties experience a loss for a specified peril, the coverage entitles the
policyholder to make a claim against the insurer for the covered amount of loss as specified
by the policy. The fee paid by the insured to the insurer for assuming the risk is called the
premium. Insurance premiums from many insureds are used to fund accounts reserved for
later payment of claims in theory for a relatively few claimants and
foroverhead costs. So long as an insurer maintains adequate funds set aside for anticipated
losses (called reserves), the remaining margin is an insurer'sprofit.
Effects
Insurance can have various effects on society through the way that it changes who bears the
cost of losses and damage. On one hand it can increase fraud, on the other it can help
societies and individuals prepare for catastrophes and mitigate the effects of catastrophes
on both households and societies.
Insurance can influence the probability of losses through moral hazard,insurance fraud,
and preventive steps by the insurance company. Insurance scholars have typicallyusedmorale hazard to refer to the increased loss due to unintentional carelessness and
moral hazard to refer to increased risk due to intentional carelessness or
indifference. Insurers attempt to address carelessness through inspections, policy
provisions requiring certain types of maintenance, and possible discounts for loss
mitigation efforts. While in theory insurers could encourage investment in loss reduction,
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some commentators have argued that in practice insurers had historically not aggressively
pursued loss control measures - particularly to prevent disaster losses such as hurricanes -
because of concerns over rate reductions and legal battles. However, since about 1996
insurers began to take a more active role in loss mitigation, such as throughbuilding codes.
Insurers' business model-
Underwriting and investing
The business model is to collect more in premium and investment income than is paid out
in losses, and to also offer a competitive price which consumers will accept. Profit can be
reduced to a simple equation: Profit = earned premium + investment income - incurred loss
- underwriting expenses.
Insurers make money in two ways:
1. Throughunderwriting, the process by which insurers select the risks to
insure and decide how much in premiums to charge for accepting those risks;
2. By investing the premiums they collect from insured parties.
The most complicated aspect of the insurance business is the actuarial science of
ratemaking (price-setting) of policies, which usesstatistics andprobability to approximate
the rate of future claims based on a given risk. After producing rates, the insurer will use
discretion to reject or accept risks through the underwriting process.
At the most basic level, initial ratemaking involves looking at thefrequencyand severity of
insured perils and the expected average payout resulting from these perils. Thereafter an
insurance company will collect historical loss data, bring the loss data topresent value, and
compare these prior losses to the premium collected in order to assess rate adequacy. Loss
ratios and expense loads are also used. Rating for different risk characteristics involves at
the most basic level comparing the losses with "loss relativities" - a policy with twice as
many losses would therefore be charged twice as much. More complex multivariate
analyses are sometimes used when multiple characteristics are involved and a univariate
analysis could produce confounded results. Other statistical methods may be used inassessing the probability of future losses.
Upon termination of a given policy, the amount of premium collected and the investment
gains thereon, minus the amount paid out in claims, is the insurer'sunderwriting profiton
that policy. Underwriting performance is measured by something called the "combined
ratio" which is the ratio of expenses/losses to premiums. A combined ratio of less than 100
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percent indicates an underwriting profit, while anything over 100 indicates an underwriting
loss. A company with a combined ratio over 100% may nevertheless remain profitable due
to investment earnings.
Insurance companies earn investment profits on "float". Float, or available reserve, is the
amount of money on hand at any given moment that an insurer has collected in insurance
premiums but has not paid out in claims. Insurers start investing insurance premiums as
soon as they are collected and continue to earn interest or other income on them until
claims are paid out. The Association of British Insurers (gathering 400 insurance
companies and 94% of UK insurance services) has almost 20% of the investments in
theLondon Stock Exchange.
In the United States, the underwriting loss ofproperty and casualty insurancecompanies
was $142.3 billion in the five years ending 2003. But overall profit for the same period was
$68.4 billion, as the result of float. Some insurance industry insiders, most notably Hank
Greenberg, do not believe that it is forever possible to sustain a profit from float without an
underwriting profit as well, but this opinion is not universally held.
Naturally, the float method is difficult to carry out in an economically
depressed period.Bear markets do cause insurers to shift away from investments and to
toughen up their underwriting standards, so a poor economy generally means high
insurance premiums. This tendency to swing between profitable and unprofitable periods
over time is commonly known as the underwriting, or insurance, cycle.
Claims
Claims and loss handling is the materialized utility of insurance; it is the actual "product"
paid for. Claims may be filed by insureds directly with the insurer or throughbrokers or
agents. The insurer may require that the claim be filed on its own proprietary forms, or may
accept claims on a standard industry form, such as those produced by ACORD.
Insurance company claims departments employ a large number ofclaims
adjusters supported by a staff ofrecords management and data entry clerks. Incoming
claims are classified based on severity and are assigned to adjusters whose settlement
authority varies with their knowledge and experience. The adjuster undertakes an
investigation of each claim, usually in close cooperation with the insured, determines if
coverage is available under the terms of the insurance contract, and if so, the reasonable
monetary value of the claim, and authorizes payment.
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The policyholder may hire their ownpublic adjusterto negotiate the settlement with the
insurance company on their behalf. For policies that are complicated, where claims may be
complex, the insured may take out a separate insurance policy add on, called loss recovery
insurance, which covers the cost of a public adjuster in the case of a claim.
Adjusting liability insurance claims is particularly difficult because there is a third party
involved, theplaintiff, who is under no contractual obligation to cooperate with the insurer
and may in fact regard the insurer as adeep pocket. The adjuster must obtain legal counsel
for the insured (either inside "house" counsel or outside "panel" counsel), monitor litigation
that may take years to complete, and appear in person or over the telephone with settlement
authority at a mandatory settlement conference when requested by the judge.
If a claims adjuster suspects under-insurance, the condition of average may come into play
to limit the insurance company's exposure.
In managing the claims handling function, insurers seek to balance the elements of
customer satisfaction, administrative handling expenses, and claims overpayment leakages.
As part of this balancing act, fraudulent insurance practicesare a major business risk that
must be managed and overcome. Disputes between insurers and insureds over the validity
of claims or claims handling practices occasionally escalate into litigation (see insurance
bad faith).
Marketing
Insurers will often use insurance agents to initially market or underwrite their customers.
Agents can be captive, meaning they write only for one company, or independent, meaning
that they can issue policies from several companies. Commissions to agents represent a
significant portion of an insurance cost and insurers that sell policies directly via mass
marketing campaigns can offer lower prices. The existence and success of companies using
insurance agents (with higher prices) is likely due to improved and personalized service
TYPES OF INSURANCE
Insurance can be termed as a form of risk management which is mainly used to protectan individual against the risk of prospective financial loss, if any. Insurance can be used
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as a tool to shield an individual against potential risks like travel accidents, death,unemployment, theft, property destruction by natural calamities, fire mishaps etc.
Different types of insurance is used to cover different properties and assets such asvehicles, home, health care etc. Basically, an insurance policy can also be known as a
protection net which secures you from any financial losses in future.All you have to do is pay the insurance agencies a specified amount every month,known as premium, so that they can take care of you by providing you financial back upin case of a sudden health emergency or a fatal incident.
There are two ways for getting an insurance done.
One way is to visit an agent and consult him for the best option you can avail for yoursituation. And then, trust him/her for their suggestion on the type of insurance they feelis right for you.
The other way is to research and choose on your own, the type of insurance which willbe best suited for your situation. You should research the market as well as the net, tolook for the best insurance companies, and furthermore, the most suitable type ofinsurance that they offer.Also explore the various types of policies which are available to you in the market, andthen compare to decide which one to choose finally.
TheLoanBazaar.com offer our clients with various types of insurance schemes andpolicies such as health insurance, travel insurance, life insurance etc, to name a few. Thedetail about all these types of insurance offered by us is as follows:
Health Care Insurance
With such high medical and health care costs these days, its hard to even think aboutvisiting a doctor. But what about an unexpected mishap or an unforeseen disability orattack, where the potential medical bills could shoot up to a sky? Where would you getso much money from?These are exactly the situations where you feel you had a security, something whichcould come to your rescue and save you from such financial crisis. While somecompanies do provide its employees with health insurance, for others, this is a must.Especially for the aging couples, who have a comparatively more chances of needingemergency bill money. The health insurance does it all, so that they do not have toworry for the huge payments at the last minute.A health insurance can cover all from a routine immunization to a major illness.
Life Insurance
Loss of a family member is a catastrophe which glooms a familys life. But even moretragic is the death of a sole bread earner for the family, who then has to go through the
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pain of losing their loved one, as well as the financial loss putting their survival injeopardy.This financial hardship due to a sudden death of a family member or a disabilityresulting to a loss of job or inability to work can be avoided to a great extent by taking
up a life insurance policy.A Life insurance or disability insurance covers such losses and pays a family,compensation to restore the earnings lost by them due to a sudden death or disability.
The monthly premiums for a life insurance are generally based upon the age, health, andoccupation information of the applicant, in addition to the total benefits to be paid tohim for his policy.
Home Insurance
Real estate property and hard assets are subject to accidental risks like theft, destruction
due to natural disasters or fire accidents etc. with such huge investments gone intobuying a real estate property like your home or office, the risk involved is a loss of largeamount of money.
Home and property insurance helps you in managing and protecting against these risks.The cost of a real estate property and its insurance is mostly based upon the worth of thealready insured hard assets and also the location in which the assets are situated.
Travel Insurance
This is intended to cover any of the financial or any other losses which were incurred by
the insured while traveling, be it nationally or internationally, such as mountaintrekkers, cruise travelers etc.
Auto Insurance
Any vehicle on road, no matter how safe its driver is, is bound to meet with an accidentor two, which may leave it with just a few scratches, or crash it up totally. Mostcountries today require you to have an auto insurance while on road in your vehicles.
If you have an accidental car crash, a total repair could cost you a fortune. On the otherhand, a little scratch on your Land Cruiser might also soar up your bills to a high.Whether or not you need an auto insurance mostly depends on the type of car you own.
If you have an expensive car and a little repair could wipe you out financially, youshould very well go in for a buying an all-inclusive and crash insurance which couldprotect you against any and every harm done to your vehicle.
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Introduction of insurance company
Introduction to insurance companies an accident or emergency can cripple you financially
to prepare yourself use the guide to learn what type of coverage insurance companies offerand how to pick best policy for your budget.General insurance companies have willinglycastrated to these increasing demands and have offered plethora of insurance covers thatalmost cover any thing under the sun.
Any insurance other than life insurance falls under the classification of general insurance itcomprises
Personal insurance such as accidents policy health insurance and liability
insurance which covers legal liabilities.
Insurance of property against fire theft burglary terrorism natural disastersetc
Errors and omissions insurance for professional and credit insurance etc
Insurance of motor vehicle against damage of accidents and theft
Classification of Indian Insurance Industry
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General Insurance is also known as Non-Life Insurance in India. There are totally 16General Insurance (Non-Life) Companies in India. These 16 General Insurance companieshave been classified into two broad categories namely:
1. PSUs (Public Sector Undertakings)
These insurance companies are wholly owned by the Government of
India. There are totally 4 plus in India namely:-
National Insurance Company Ltd
Oriental Insurance Company Ltd
The New India Assurance Put Ltd
United India Insurance Company Ltd
2. Private Insurance Companies:-
There are totally 12privateGeneral Insurance companies in India namely:-
o Apollo DKV Health Insurance
o Bajaj Allianz General Insurance Co. Ltd
o Cholamandalam MS General Insurance Co. Ltd
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o HDFC Ergo General Insurance Co Ltd.
o ICICI Lombard General Insurance Ltd
o Iffco Tokio General Insurance Pvt Ltd.o
***Some Facts in Insuarance Sector
Insurance Act, 1938In 1938, with a view to protect the interest of insuring public, earlie legislation(1928) wasconsolidated and amended by the Insurance Act, 1938 with comprehensive provisions fordetailed and effective control over the activities of insurer. For the first time in the historyof insurance in India, the whole business was brought under a unified system of controland its structure strengthened by statutory regulations. Weaker elements were weeded out;indiscriminate promotion was checked and speculative insurance was eliminated. The best
proof the soundness of the law was the effective check on large scale liquidations whichhad marred the name of insurance in the thirties. In due course, various amendments weremade in the Indian Insurance Act 1938 in subsequent years to improve the regulatorymechanism. The Act of 1938, which in many respects codified and modernized the lawsrelating to insurance in the country, suggest the same noteworthy changes in regulation andorganization of business. It was considerable step forward in the direction to envelopall forms of insurance.
Malhotra Committee
In 1993, the first step towards insurance sector reforms was initiated with the formation of
Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N.Malhotra. The committee was formed to evaluate the Indian insurance industry andrecommend its future direction with the objective of complementing the reforms initiated inthe financial sector.Key Recommendations of Malhotra Committee Structure
Government stake in the insurance Companies to be brought down to 50%.
Government should take over the holdings of GIC and its subsidiaries so that thesesubsidiaries can act as independent corporations.
All the insurance companies should be given greater freedom to
operate.Competition Private Companies with a minimum paid up capital of Rs.1billion should be
allowed to enter the industry.
No Company should deal in both Life and General Insurance through asingle Entity.
Foreign companies may be allowed to enter the industry in collaborationwith the domestic companies.
Postal Life Insurance should be allowed to operate in the rural market.
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Only one State Level Life Insurance Company should be allowed to operatein each state. Regulatory Body
The Insurance Act should be changed.
An Insurance Regulatory body should be set up.
Controller of Insurance should be made independent.
Investments Mandatory Investments of LIC Life Fund in government securities to be
reduced from 75% to 50%.
GIC and its subsidiaries are not to hold more than 5% in any company.Customer Service
LIC should pay interest on delays in payments beyond 30 days
Insurance companies must be encouraged to set up unit linked pensionplans.
Computerisation of operations and updating of technology to be carried outin the insurance industry.
Malhotra Committee also proposed setting up an independent regulatory body TheInsurance Regulatory and Development Authority (IRDA) to provide greater autonomy toinsurance companies in order to improve their performance and enable them to act asindependent companies with economic motives. Insurance sector in India was liberalized inMarch 2000 with the passage of the Insurance Regulatory and Development Authority(IRDA) Bill, lifting all entry restrictions for private players and allowing foreign players toenter the market with some limits on directforeign ownership. There is a 26 percent equity cap for foreign partners in an insurancecompany. There is a proposal to increase this limit to 49 percent. The opening up of theinsurance sector has led to rapid growth of the sector. Presently, there are 16 life insurancecompanies and 15 non-life insurance companies in the market. The potential for growth ofinsurance industry in India is immense as nearly 80 per cent of Indian population is withoutlife insurance cover while health insurance and non-life insurance continues to be wellbelow international standards.
Regulator Of Insurance Industry In India : IRDA
The Insurance Regulatory and Development Act of 1999 were set out as follows.To provide for the establishment of an Authority to protect the interests of holdersof insurance policies, to regulate, promote and ensure orderly growth of theinsurance industry and for matters connected therewith or incidental thereto andfurther to amend the Insurance Act,
1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business(Nationalization) Act, 1972. The Act effectively reinstituted the Insurance Act of1938 with (marginal) modifications.
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Whatever was not explicitly mentioned in the 1999 Act referred back to the 1938Act?
(1) It specified the creation and functioning of an Insurance Advisory Committeethat sets out rules and regulation.
(2) It stipulates the role of the Appointed Actuary. He/she has to be a Fellow ofthe Actuarial Society of India. For life insurers the Appointed Actuary has to be aninternal company employee, but he or she may be an external consultant if thecompany happens to be a non-life insurance company. The Appointed Actuarywould be responsible for reporting to the Insurance Regulatory and DevelopmentAuthority a detailed account of
the company.
(3) Under the Actuarial Report and Abstract, pricing of products have to be givenin detail. It also requires details of the basic assumptions for valuation. There areprescribed forms that have to be filled out by the Appointed Actuary includingspecific formulas for calculating solvency ratios.
(4) It stipulates the requirements for an agent. For example, insurance agents shouldhave at least a high school diploma along with training of 100 hours from arecognized institution.
(5) Under Assets, Liabilities, and Solvency Margin of Insurers, the InsuranceRegulatory and Development Authority has set up strict guidelines on asset andliability management of the insurance companies along with solvency marginrequirements. Initial margins are set high (compared with developed countries). Themargins vary with the lines of business.
Life insurers have to observe the solvency ratio, defined as the ratio of the amountof available solvency margin to the amount of required solvency margin: (a) therequired solvency margin is based on mathematical reserves and sum at risk, andthe assets of the policyholders fund; (b) the available solvency margin is the excessof the value of assets over the value of life insurance liabilities and other liabilitiesof policyholders and
Shareholders funds.
(6) It sets the reinsurance requirement for (general) insurance business. For allgeneral insurance, a compulsory cession of 20% regardless of line of business to theGeneral Insurance Corporation, the designated national reinsurer was stipulated.
(7) Under the Registration of Indian Insurance Companies, it sets out details of
registration of an insurance company along with renewal requirements. Forrenewal, it stipulates a fee of one-fifth of one percent of total gross premium writtendirect by an insurer in India during the financial year preceding the year. It seeks togive detailed background for each of the following key personnel: Chief Executive,Chief Marketing Officer, Appointed Actuary, Chief Investment Officer, Chief ofInternal Audit and Chief Finance Officer. Details of sales force, activities in ruralbusiness and projected values of each line of business are also required.
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(8) Under Insurance Advertisements and Disclosure, details of insuranceadvertisement in physical and electronic media has to be detailed with the InsuranceRegulatory and Development Authority. The advertisements have to comply withthe regulation prescribed in section 41 of the Insurance Act, 1938. The Act of 1938says, No person shall allow or offer to allow, either directly or indirectly, as an
inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or
property in India, any rebate of the whole or part of the commission payable or anyrebate of the premium shown on the policy, nor shall any person taking out orrenewing or continuing a policy accept any rebate, except such rebate as may beallowed in accordance with the published prospectus or tables of the insurer.
(9) All insurers are required to provide some coverage for the rural sector. It iscalled the Obligations of Insurers to Rural Social Sectors
GOVT COMPANY
LIC (LIFE INSURANCE Corporation)
Date of Establishment 1 Sep. 1956Address1st Floor,West Wing, Mumbai Do-Iv, Yogakshema, Jeevan Bima Marg,Mumbai - 400 021, IndiaBranches 8 Zonal Offices and 101 Divisional Offices
Management Team
T.S. Vijayan - ChairmanD.K. Mehrotra - MD, LICThomas Mathew T - MD, LICA K Dasgupta - MD, LICArun Ramanathan - Secretary, Financial Services, Dept. of FinancialServices, Ministry of Finance, Govt of India
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Sindhushree Khullar - Addl. Secretary, Dept of Economic Affairs, Ministryof FinanceYogesh Lohiya - Chairman cum MD, GIC of IndiaT.C. Venkat Subramanian - Chairman & MD, Export Import Bank of India.
Overview
The largest life insurance company in India, Life Insurance Corporation isfully owned by the government. It provides individual life insurance, groupinsurance and pension plans. Its subsidiaries include Life InsuranceCorporation of India International, LIC Nepal, LIC Lanka, LIC HousingFinance and LICHFL Care Homes. It has over 12 million policy holders andover 9 lakh agents. It has underwritten more than 120 million policies.
LIC saw computers in 1964. Today the company is on the Internet and isutilizing Information Technology in servicing its clients. It has baggedvarious award including Loyalty Awards 2008 in Insurance Sector, NDTVProfit Business Leadership Award 2007, CNBC Awaaz Consumer Awards2007 and Outlook Money NDTV Profit Awards 2007.
LIC provides a rewarding career as sales agents. It offers world classtraining, freedom to work and unmatched financial strength.
Types of life insurance
There are two basic forms of life insurance term life and permanent life, thelatter of which comes in several flavors. Heres a quick breakdown of the basic policytypes:
1. Team life
2. whole life
3. universal life
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TEAM LIFE
Term life is the simplest and (typically) cheapest form of life insurance. Term life
is designed to provide coverage for a fixed period of time, such as 5, 10, or 20 years. Thepremium for the term policy is guaranteed for the duration of the term; if it is a renewablepolicy, the premium will increase with each renewal. The premiums for renewals aregenerally guaranteed when the original policy is issued. Because term life policy is for aspecific period of time and the payout does not increase, the overall cost of term lifeinsurance is usually very low.
Whole life
policies, for example, are designed to provide you and your lovedone with coverage until your death. Unlike term life, there are no fixed periods for wholelife coverage. Whole life is sometimes referred to as cash value insurance because itbuilds cash value over your lifetime. Whole life coverage contains both investment andinsurance components. The investment portion invests your premiums, earns interest, andaccumulates a cash value. On the other hand, the policy also has a stated insurancecoverage amount that is paid upon the death of the insured.
Universal life
is a popular option that acts like whole life. It is a renewable policy the investment component, premiums, and death benefits can be renewed and changedbased upon the policy owners needs. The policy owner has flexibility over the policy money can be moved between the insurance and investment components of the policy. Thepremiums, unlike whole life policies, can be paid out of interest from the accumulatedsavings.
Products line Life Insurance Corporation
http://www.insurance.com/life-insurance/coverage/term-life-insurance.aspxhttp://www.insurance.com/life-insurance/coverage/term-life-insurance.aspxhttp://www.insurance.com/life-insurance/coverage/term-life-insurance.aspxhttp://www.insurance.com/life-insurance/coverage/term-life-insurance.aspx7/31/2019 ~WRL3370.tmp
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Insurance Plan Pension Plans Unit Plan Special Plan Group Scheme
Insurance Plans:
LIC understands that each individual is different from others and also their needs andrequirements are not the same. This applies even to their insurance and other financialneeds. LIC as such has designed various products which can be customized according toindividual's needs and helps the policy holders to choose the best product for themselves.Under individual plans further sub categories have been created.
A-Children Plans:
LIC- Jeevan Anurag
LIC- CDA Endowment Vesting At 21
LIC- CDA Endowment Vesting At 18
LIC- Jeevan Kishore
LIC- Child Career Plan
B-Plans For handicapped Dependents
LICJeevan Aadhar
LICJeevan Vishwas
C-Endowment Assurance Plans:
LIC-The Endowment Assurance Policy
LIC-The Endowment Assurance Policy-Limited Payment
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LIC-Jeevan Mira(Double Cover Endowment Plan)
LIC-Jeevan Mitra(Triple Cover Endowment Plan)
LIC-Jeevan Anand
LIC-New Janaraksha Plan
LIC-Jeevan Amrit
Pension Plans:
Pension Plans helps in providing financial security to an individual after his retirement sothat they are able to lead the same standard of life and that too without any tension.
LIC-Jeevan Nidhi
LIC-Jeevan Akshay-V
LIC-New Jeevan Dhara-I
LIC-New Jeevan Suraksha-I
Unit Plans:
Unit plans are meant for those people who aim to earn a good return on their investmentsand also reap the benefits of an insurance cover. It also helps in getting tax benefit on theinvested sum.
LIC-Market Plus (Closed for Sale)
LIC-Profit Plus
LIC-Fortune Plus
LIC RISKS AND GAINS
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RISKS
1. The traditional model has changed
2. Concern for out living retirement assets is becoming agreater concern than premature death.
3. This has caused growth in assets accumulation products
4 investment risks and competition with banks and securitiesfirms is significant for insures
GAINs
1. The life insurance industry recorded 68 per cent increase to Rs25,399 core in new business premium collected in March 2010 compared to Rs15,090 cores in the corresponding month in 2009.
2.Insurers witnessed a spurt in business during the last month ofthe financial year with contributions over 23 per cent of the total collection in 2009-10 as individuals opted to purchase covers to avail tax benefits.
3. Private players registered a whopping 47 per cent growth in thenew business premium while state-owned Life Insurance Corporation of India (LIC)posted 83 per cent increase in new business income in March.
4. Last quarter contribute to 40 per cent of sales. But Marchexperienced the maximum inflow, said a senior executive of a life insurance company.
PRIAVATE COMPANY
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ICICI PRUDENTIAL
Introduction
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, oneof the foremost financial services companies of India and Prudential plc, one of the leadinginternational financial services group headquartered in the United Kingdom. ICICIPrudential was amongst the first private sector life insurance companies to begin operations
in December 2000 after receiving approval from Insurance Regulatory DevelopmentAuthority (IRDA).
ICICI Prudential Life's capital stands at Rs. 4,780 corers (as of September 30, 2010) with
ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For the periodApril 1, 2010 to September 30, 2010, the company garnered Rs 7,267 cores of totalpremiums and has underwritten over 10 million policies since inception. The company hasa network of over 1,500 offices and over 1, 60,000 advisors, as on September 30, 2010.The company has assets held over Rs. 65,000 cores as on September 30, 2010.Since the liberalization of Indian Insurance sector, ICICI Prudential Life Insurance has
been one of the earliest private players. Since the time, ICICI Pru Life has been the leaderin terms of market share as indicated by the IRDA (Insurance Regulatory and DevelopmentAuthority, the regulator for Indian Insurance Industry) In June, 2009 ICICI Prudential LifeInsurance has decided to snap its tie up with TTK Healthcare to settle insurance claims ofits users.
ICICI Prudential's life insurance products may be loosely categorized under four forms- Life Plans
(further categorized into Term Plans and Wealth Plans), Child Plans, Retirement Plans and Health
Plans.
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Overview
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank - one ofIndia's foremost financial services companies-and Prudential plc - a leading internationalfinancial services group headquartered in the United Kingdom. Total capital infusionstands at Rs. 47.80 billion, with ICICI Bank holding a stake of 74% and Prudential plcholding 26%.We began our operations in December 2000 after receiving approval from InsuranceRegulatory Development Authority (IRDA). Today, our nation-wide team comprises ofover 2100 branches (inclusive of 1,116 micro-offices), over 290,000 advisors; and 18bancassurance partners.ICICI Prudential is the first life insurer in India to receive a National Insurer FinancialStrength rating of AAA (Ind) from Fitch ratings. For three years in a row, ICICIPrudential has been voted as India's Most Trusted Private Life Insurer, by The EconomicTimes - AC Nielsen ORG Marg survey of 'Most Trusted Brands'. As we grow ourdistribution, product range and customer base, we continue to tirelessly uphold ourcommitment to deliver world-class financial solutions to customers all over India.
Our vision:
To be the dominant Life, Health and Pensions player built on trust by world-class peopleand service.This we hope to achieve by:
Understanding the needs of customers and offering them superior products andservice
Leveraging technology to service customers quickly, efficiently and conveniently Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to our policyholders Providing an enabling environment to foster growth and learning for our
employees And above all, building transparency in all our dealings
The success of the company will be founded in its unflinching commitment to 5 corevalues -- Integrity, Customer First, Boundaryless, Ownership and Passion. Each of the
values describe what the company stands for, the qualities of our people and the way wework.We do believe that we are on the threshold of an exciting new opportunity, where we canplay a significant role in redefining and reshaping the sector. Given the quality of ourparentage and the commitment of our team, there are no limits to our growth.
Our values :
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Every member of the ICICI Prudential team is committed to 5 core values: Integrity,Customer First, Boundaryless, Ownership, and Passion. These values shine forth in all wedo, and have become the keystones of our success.
Mangement Profile:
Board of Director
The ICICI Prudential Life Insurance Company Limited Board comprises reputed peoplefrom the finance industry both from India and abroad.
Mr. K.V. Kamath, ChairmanMs. Chanda Kochhar, DirectorMr. Barry Stowe, DirectorMr. Adrian OConnor, Director
Prof. Marti G. Subrahmanyam, DirectorMr. Mahesh Prasad Modi, DirectorMs. Rama Bijapurkar, DirectorMr. Keki Dadiseth, DirectorMs. Shikha Sharma, Managing DirectorMr. N.S. Kannan, Executive DirectorMr. Bhargav Dasgupta, Executive Director
Management Team
The ICICI Prudential Life Insurance Company Limited Management team comprisesreputed people from the finance industry both from India and abroad.
Ms. Shikha Sharma, Managing Director & CEOMr. N. S. Kannan, Executive DirectorMr. Bhargav Dasgupta, Executive DirectorMs. Anita Pai, Executive Vice President Customer Service & TechnologyDr. Avijit Chatterjee, Appointed ActuaryMr. Puneet Nanda, Executive Vice President & Chief Investment Officer
PRODUCTS OF ICICI PRUDENTIAL LIFE INSURANCE
ICICI has grouped its various products into two main categories. Under these:
http://www.iciciprulife.com/public/About-us/ProfileTeam-ShikhaSharma.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-NSKannan.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-BhargavDasgupta.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-AnitaPai.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-Dr.%20Avijit%20Chatterjee.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-PuneetNanda.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-ShikhaSharma.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-NSKannan.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-BhargavDasgupta.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-AnitaPai.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-Dr.%20Avijit%20Chatterjee.htmhttp://www.iciciprulife.com/public/About-us/ProfileTeam-PuneetNanda.htm7/31/2019 ~WRL3370.tmp
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Categories there are further sub-categories. They are
1. Individual plans
2. group plan
Individual Plans:
ICICI Prudential Life Insurance has designed various customized and innovative insuranceproducts to meet the various needs of the customer which keeps on changing with thechanging phases of life. Theirs are various riders available which can be adding to productsto make them utmost customized.
A-Savings & Wealth Creation Solutions
1. ICICI Prudential Life Insurance-Save'n'Protect
2. ICICI Prudential Life Insurance-CashBakLifeTime Gold & Lifetime Plus
3. ICICI Prudential Life Insurance-Life Link Super.
4. ICICI Prudential Life Insurance-Premier Life GoldInvestShield Life New
5. ICICI Prudential Life Insurance-Invest Shield Cashbook
6. ICICI Prudential Life Insurance-Life Stage RP
B-Protection Solutions
1. ICICI Prudential Life Insurance-Lifeguard
2. ICICI Prudential Life Insurance-Home Assure
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C-Education insurance plans
1. ICICI Prudential Life Insurance-Smart Kid
D-Retirement Solutions
1. ICICI Prudential Life Insurance-Forever Life
2. ICICI Prudential Life Insurance-Lifetime Super Pension
3. ICICI Prudential Life Insurance-Life Link Super Pension
4. ICICI Prudential Life Insurance-Immediate Annuity
5. ICICI Prudential Life Insurance-Premier Life Pension
E-Health Solutions
1. ICICI Prudential Life Insurance-Health Assure Plus
2. ICICI Prudential Life Insurance-Cancer Care.
3. ICICI Prudential Life Insurance-Cancer Care Plus.
4. ICICI Prudential Life Insurance-Diabetes Care.
,5. ICICI Prudential Life Insurance-Diabetes Care Plus
Group Plans:
ICICI Prudential Life also offers Group Insurance Solutions for companieswhich aim to provide tension free working environment for their employees.
1. ICICI Prudential Life Insurance-Group Gratuity Plan
2. ICICI Prudential Life Insurance-Group Superannuation Plan
3. ICICI Prudential Life Insurance-Group Immediate Annuities
4. ICICI Prudential Life Insurance-Group Term Plan
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ICICI PRUDENTIAL INSURANCE RISKS AND ANALAYSIS
RISKS
1. The past performance of other funds of the Company is not necessarily Indicativeof the future performance of any of these funds.
2. The investments in the funds are subject to market and other risks and There can be
no assurance that the objectives of any of the Funds will be achieved.
3. The premium paid in Unit Linked Life Insurance policies are subject to Investmentrisks associated with capital markets and debt markets and the NAVs of the unitsmay go up or down based on the performance of fund and factors influencing theCapital market and the insured is responsible for his/her decisions
Gains
1. ICICI Pru Lifetime Maxima with Trigger Portfolio Strategy allows investors toprotect gains made through their equity market investments from any future marketvolatility. In addition, you are also provided with an insurance cover.
2.More than 100% allocation to funds on premium payment from the 6th policyyear onwards
3.There will be additional allocation of units @ 2% of annual premium every yearstarting from the 6th year.
COMPERATIVE OF ANALAYSIS OF LIC &ICICI PRUDENTI
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Insurance is an upcoming sector in India the year2000 was a landmark year of the insurance industry in this year the life insurance industrywas liberalized after more than fifty years insurance sector was a monopoly with l;ic as theonly company a public sector enterprise but onwards the market opened up and there are
many private players competing the market the market shall of lice have been considerablereduced in the last five years industry in terms of products market channels andadvertisement of products agent training and customers services etc
The entry of foreign MNCs and the conductive business environment fostered by thegovernment, it is no wonder that the re-entry of private insurance has marked a secondcoming for the sector. In just five years, the sector has undergone a makeover, offeringmore choice, better services, quicker settlement, tighter regulation and greater awareness sthe environment become more and more competitive and services and products becomealike, creating a differentiation is becoming extremely tough.
o .Understanding the needs of customers and offering them superior productsand service
o Leveraging technology to service customers quickly, efficiently and
conveniently
o Developing and implementing superior risk management and investment
o Strategies to offer sustainable and stable returns to our policyholder
CONCLUSION
The financial markets have continued to witness
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Unprecedented liberalization, growth and reforms over the last decade prompted by
Regulatory compulsions and rapid integration between domestic and global markets. And
As a result, one has seen substantial growth in the number of financial firms (insurance
Companies, mutual funds, brokerages, banks etc.) And in the numberand variety of
Financial products and services offered by them. As the need of the people is changing so
Is changing the investment habits of the people and this has brought in a spate of new
Products and schemes where people can invest. The concept of insurance as an
Investment option has arrived wherepeople first identify the varying needs ofmoney
Then converts the needs into specific amount of money and time required to achieve the
Objective of investments plans.
In addition to the above, companies should also innovate to come
Up with better products that would suit the Indian population and should also try to
Market and sell their products through new channels of distribution that can be effective
Selling their products to the masses. People should identify their needs and then decide
On the type of policy they want to invest in. insurance is a good investment option for
Those people who do not know where to invest and who do not want to the risk of capital
Erosion But, people who are financially savvy can opt for term insurance and invest the
Rest other options that may give them higher return