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SUMMER TRAINING PROJECT REPORT
ON
CONTRIBUTION OF HDFC LIFE IN
INSURANCE SECTOR
HDFCL, DEHRADUN
SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE
MASTERS DEGREE IN BUSINESS ADMINISTRATION
OF
UTTARAKHAND TECHNICAL UNIVERSITY, DEHRADUN
SUBMITTED TO:
INTERNAL GUIDE EXTERNAL GUIDE
Name: Mr. Abhishek Tripathi Name Mr.: Abhinav Jain
Designation Designation : Branch Manager
IMS Company Name: HDFC LIFE
Dehradun Location: DEHRADUN
SUBMITTED BY:
Himadri Thapliyal
( MB12FB10)
INSTITUTE OF MANAGEMENT STUDIES, DEHRADUN
BATCH 2012-14
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ACKNOWLEDGEMENT
This project is an outcome of the support and encouragement provided
by a number of people at HDFC STANDARD LIFE INSURANCE
COMPANY that embodies some of the best aspect of Indian corporate
world.
I would like to express my sense of gratitude to the company for giving
me this valuable learning opportunity and for allowing me to conduct
this summer project.
I sincerely thanks my project guide. Mr. Sachin Gupta(Circle Manager)
& Mr .Abhinav Jain (Branch Manager), HDFC STANDARD LIFE
INSURANCE COMPANY for guiding me throughout the project and
helpful in furnishing the required information.
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CERTIFICATE
I have the pleasure in certifying that Mr./Ms. .......is a
bonafide student of IIIrd Semester of the Masters Degree in Business Administration
(Batch 2012-14), of Institute of Management Studies, Dehradun under Uttarakhand
Technical University Roll No. ... .
He/She has completed his/her project work entitled
.. under my guidance.
I certify that this is his/her original effort & has not been copied from any other source.
This project has also not been submitted in any other Institute / University for the purpose
of award of any Degree.
This project fulfils the requirement of the curriculum prescribed by this Institute for the
said course. I recommend this project work for evaluation & consideration for the award
of Degree to the student.
Signature :
Name of the Guide :
Designation :
Date :
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EXECUTIVE SUMMERY:
HDFC Standard Life Insurance has core computer in selling and has a very
aggressive sales team. Since it is a services industry where world of mouth is very
important. A negative world of mouth may remove 10 existing customers on the other
hand a positive word of mouth may earn 10 customers. So service should be targeted at a
level, which not only should meet the customers expectation but also exceed it.
However understanding the market, consumer preference and introducing new
products to suit different tastes and at the same time offering a value product would be
the key steps to fight competition.
Marketing is an important activity in any organizations sales strategy. Marketing
helps in promoting the products in the targeted market and create a recall value and
branding to the products. Marketing department perform the initial market study for the
suitability of the product launches; study the market requirements in the existing markets
to further strengthen the market capitalization identity the feature needed for a longevity
of a product.
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INDEX
INTRODUCTION .. 9-14
COMPANY PROFILE 15-31
FORM OF ORGANISATION . 32-33
HISTORY OF INSURANCE . 34-37
PRODUCTS OF HDFC STANDARD LIFE INSURANCE 38-45
BARRIERS TO ENTRY 46-49
GROWTH POTENTIAL 50
FUTURE TRENDS 51-52
UNIT LINKED INSURANCE PLAN 53-58
FUTURE OF INSURANCE INDUSTRY 59-62
AWARDS & ACCOLADES 63-65
DISTRIBUTION STRATEGY 66-74
COMPETTIVE ANALYSIS 75-81
RESEARCH METHODOLOGY .. 82-83
ANALYSIS & FINDINGS OF SURVEY 84-93
LIMITATIONS . 94
CONCLUSION . 95
RECOMMENDATIONS . 96-97
BIBLIOGRAPHY . 98
ANNEXURE. 99-100
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List of figures
Figure no. Description Page no.
01. Young and single stage 42
02 just married stage 42
03 proud parents 43
04 planning of retirement 43
05 life stage 44
List of table
Table no. List of tables Page no.
01 list of plans 30
02 Willingness to be FC for HDFC 71
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OBJECTIVES OF STUDY
Exposure to financial Service sector particularly insurance and mutual
funds sector.
The study of Insurance in India & Unit Linked Insurance Plans.
And gain the professional knowledge while working in corporate
environment.
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SCOPE OF THE STUDY
The scope of my project was to get an overall view of the Indian
insurance market through comparative study and analysis.
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INTRODUCTION
BRIEF IDEA ABOUT THE PROJECT
The outlook of the modern day investors has undergone a dramatic change.
In the changed fiscal scenario with drastic fall in the interest for
investment and the volatile capital market with limited investment
options, ULIP comes to the rescue of the prudent investors. Investment
in insurance has become the style of the day. The individual looks at
buying an insurance policy more of an investment, which comes with
the additional benefits of life cover and tax benefit also.
Unit Linked plans provides one with not only an effective protection
against individual investment risks and inflation but above all it brings
along a long-term growth potential of financial means. Everyone
decides on their own what is the right method of investment for them,
which predetermines evaluation of deposited money.
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THE INSURANCE INDUSTRY IN INDIA
AN OVERVIEW
With the largest number of life insurance policies in force in the world, Insurance
happens to be a mega opportunity in India. Its a business growing at the rate of 15-20 per
cent annually and presently is of the order of Rs 1560.41 billion (for the financial year
2006 2007). Together with banking services, it adds about 7% to the countrys Gross
Domestic Product (GDP). The gross premium collection is nearly 2% of GDP and funds
available with LIC for investments are 8% of the GDP.
Even so nearly 65% of the Indian population is without life insurance cover while health
insurance and non-life insurance continues to be below international standards. A large
part of our population is also subject to weak social security and pension systems with
hardly any old age income security. This in itself is an indicator that growth potential for
the insurance sector in India is immense.
A well-developed and evolved insurance sector is needed for economic development as it
provides long term funds for infrastructure development and strengthens the risk taking
ability of individuals. It is estimated that over the next ten years India would require
investments of the order of one trillion US dollars. The Insurance sector, to some extent,
can enable investments in infrastructure development to sustain the economic growth of
the country.
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KEY MILESTONES
1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate
the life insurance business.
1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.
1938: Earlier legislation consolidated and amended by the Insurance Act with the
objective of protecting the interests of the insuring public.
1956: 245 Indian and foreign insurers along with provident societies were taken over by
the central government and nationalized. LIC was formed by an Act of
Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the
Government of India.
INDUSTRY REFORMS
Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body in
April 2000 has fastidiously stuck to its schedule of framing regulations and registering
the private sector insurance companies. Since being set up as an independent statutory
body the IRDA has put in a framework of globally compatible regulations.
The other decision taken simultaneously to provide the supporting systems to the
insurance sector and in particular the life insurance companies was the launch of the
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IRDA online service for issue and renewal of licenses to agents. The approval of
institutions for imparting training to agents has also ensured that the insurance companies
would have a trained workforce of insurance agents in place to sell their products.
PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIA
The life insurance industry in India grew by an impressive 47.38%, with premium
income at Rs. 1560.41 billion during the fiscal year 2007-2008. Though the total volume
of LIC's business increased in the last fiscal year (2007-2008) compared to the previous
one, its market share came down from 85.75% to 81.91%.
The 17 private insurers increased their market share from about 15% to about 19% in a
year's time. The figures for the first two months of the fiscal year 2008-09 also speak of
the growing share of the private insurers. The share of LIC for this period has further
come down to 75 percent, while the private players have grabbed over 24 percent.
With the opening up of the insurance industry in India many foreign players have entered
the market. The restriction on these companies is that they are not allowed to have more
than a 26% stake in a companys ownership.
Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7
billion have poured into the Indian market and 19 private life insurance companies have
been granted licenses.
Innovative products, smart marketing, and aggressive distribution have enabled fledgling
private insurance companies to sign up Indian customers faster than anyone expected.
Indians, who had always seen life insurance as a tax saving device, are now suddenly
turning to the private sector and snapping up the new innovative products on offer. Some
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of these products include investment plans with insurance and good returns (unit linked
plans), multi purpose insurance plans, pension plans, child plans and money back plans.
INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY
Reforms in the Insurance sector were initiated with the passes of the IRDA Bill in
Parliament in December 1999. The IRDA since its incorporation as a statutory body in
April 2000 has fastidiously such to its schedule of framing regulations and registering the
private sector insurance companies.
The other decision taken simultaneously to provide the supporting systems to the
insurance sector and in particular the life insurance companies was the launch of the
IRDA online service for issue and renewal of licenses to agents.
Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA..
(1) Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the
insurance business and re-insurance business.
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the
powers and functions of the Authority shall include,
(a) issue to the applicant a certificate of registration, renew, modify, withdraw, suspend
or cancel such registration;
(b) protection of the interests of the policy holders in matters concerning assigning of
policy, nomination by policy holders, insurable interest, settlement of insurance claim,
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surrender value of policy and other terms and conditions of contracts of insurance;
(c) specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents;
(d) specifying the code of conduct for surveyors and loss assessors;
(e) promoting efficiency in the conduct of insurance business;
(f) promoting and regulating professional organisations connected with the insurance and
re-insurance business;
(g) levying fees and other charges for carrying out the purposes of this Act;
(h) calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries
and other organisations connected with the insurance business;
(i) control and regulation of the rates, advantages, terms and conditions that may be
offered by insurers in respect of general insurance business not so controlled and
regulated by the Tariff Advisory Committee under section 64U of the Insurance Act,
1938 (4 of 1938);
(j) specifying the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance intermediaries;
(k) regulating investment of funds by insurance companies;
(l) regulating maintenance of margin of solvency;
(m) adjudication of disputes between insurers and intermediaries or insurance
intermediaries;
(n) supervising the functioning of the Tariff Advisory Committee;
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COMPANY PROFILE
HDFC STANDARD LIFE INSURANCE
HDFC Standard Life Insurance Company Ltd. is one of Indias leading
private life insurance companies, which offers a range of individual and
group insurance solutions. It is a joint venture between Housing
Development Finance Corporation Limited (HDFC Ltd.), Indias leading
housing finance institution and one of the subsidiaries of Standard Life plc,
leading providers of financial services in the United Kingdom. Both the
promoters are well known for their ethical dealings and financial strength
and are thus committed to being a long-term player in the life insurance
industry all-important factors to consider when choosing your insurer.
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HDFC Limited
HDFC is Indias leading housing finance institution and has helped
build more than 23,00,000 houses since its incorporation in 1977.
In Financial Year 2003-04 its assets under management crossed
Rs.36,000Cr.
As at March 31, 2004, outstanding deposits stood at Rs. 7,840 crores.
The depositor base now stands at around 1 million depositors.
Rated AAA by CRISIL and ICRA for the 10th consecutive year
Stable and experienced management.
High service standards.
Awarded The Economic Times Corporate Citizen of the year Award
for its long-standing commitment to community development.
Presented the Dream Home award for the best housing finance
provider in 2004 at the third Annual Outlook Money Awards.
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Standard Life Group (Standard Life plc and its subsidiaries)
The Standard Life group has been looking after the financial needs of
customers for over 180 years.
It currently has a customer base of around 7 million people who rely
on the company for their insurance, pension, investment, banking
and health-care needs.
Its investment manager currently administers 125 billion in assets.
It is a leading pensions provider in the UK, and is rated by Standard &
Poor's as 'strong' with a rating of A+ and as 'good' with a rating of
A1 by Moody's.
Standard Life was awarded the 'Best Pension Provider' in 2004, 2005
and 2006 at the Money Marketing Awards, and it was voted a 5 star
life and pensions provider at the Financial Adviser Service Awards
for the last 10 years running. The '5 Star' accolade has also been
awarded to Standard Life Investments for the last 10 years, and to
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Standard Life Bank since its inception in 1998. Standard Life Bank
was awarded the 'Best Flexible Mortgage Lender' at the Mortgage
Magazine Awards in 2006.
BOARD MEMBERS
Brief Profile of The Board of Directors
Mr. Deepak S. Parekh is the Chairman of the
Company. He is also the Executive Chairman of
Housing Development Finance Corporation Limited
(HDFC Limited). He joined HDFC Limited in a senior
management position in 1978. He was inducted as a whole-time director
of HDFC Limited in 1985 and was appointed as its Executive Chairman
in 1993. He is the Chief Executive Officer of HDFC Limited. Mr.
Parekh is a Fellow of the Institute of Chartered Accountants (England &
Wales).
Sir Alexander M. Crombie joined the Board of
Directors of the Company in April, 2002. He has been
with the Standard Life Group for 34 years holding
various senior management positions. He was
appointed as the Group Chief Executive of the Standard Life Group in
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March 2004. Sir Crombie is a fellow of the Faculty of Actuaries in
Scotland.
Mr. Keki M. Mistryjoined the Board of Directors of
the Company in December, 2000. He is currently the
Managing Director of HDFC Limited. He joined
HDFC Limited in 1981 and became an Executive
Director in 1993. He was appointed as its Managing Director in
November, 2000. Mr. Mistry is a Fellow of the Institute of Chartered
Accountants of India and a member of the Michigan Association of
Certified Public Accountants.
Ms. Marcia D. Campbell is currently the Group
Operations Director in the Standard Life group and is
responsible for Group Operations, Asia Pacific
Development, Strategy & Planning, Corporate
Responsibility and Shared Services Centre. Ms. Campbell joined the
Board of Directors in November 2005.
Ms. Renu S. Karnad is the Executive director of
HDFC Limited, is a graduate in law and holds a
Master's degree in economics from Delhi University.
She has been employed with HDFC Limited since
1978 and was appointed as the Executive Director in 2000. She is
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responsible for overseeing all aspects of lending operations of HDFC
Limited.
Mr. Norman K. Skeoch is currently the Chief
Executive in Standard Life Investments Limited and is
responsible for overseeing Investment Process &
Chief Executive Officer Function. Prior to this, Mr.
Skeoch was working with M/s. James Capel & Co. holding the positions
of UK Economist, Chief Economist, Executive Director, Director of
Controls and Strategy HSBS Securities and Managing Director
International Equities. He was also responsible for Economic and
Investment Strategy research produced on a worldwide basis. Mr.
Skeoch joined the Board of Directors in November 2005.
Mr. Gautam R. Divan is a practising Chartered
Accountant and is a Fellow of the Institute of
Chartered Accountants of India. Mr. Divan was the
Former Chairman and Managing Committee Member
of Midsnell Group International, an International Association of
Independent Accounting Firms and has authored several papers of
professional interest. Mr. Divan has wide experience in auditing
accounts of large public limited companies and nationalised banks,
financial and taxation planning of individuals and limited companies
and also has substantial experience in structuring overseas investments
to and from India.
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Mr. Ranjan Pant is a global Management Consultant advising
CEO/Boards on Strategy and Change Management. Mr. Pant, until 2002
was a Partner & Vice-President at Bain & Company, Inc., Boston,
where he led the worldwide Utility Practice. He was also Director,
Corporate Business Development at General Electric headquarters in
Fairfield, USA. Mr. Pant has an MBA from The Wharton School and
BE (Honours) from Birla Institute of Technology and Sciences.
Mr. Ravi Narain is the Managing Director & CEO of
National Stock Exchange of India Limited. Mr. Ravi
Narain was a member of the core team to set-up the
Securities & Exchange Board of India (SEBI) and is also
associated with various committees of SEBI and the Reserve Bank of
India (RBI).
Mr. Gerald E. Grimstone was appointed Chairman
in May 2007, having been Deputy Chairman since
March 2006. He became a director of The Standard
Life Assurance Company in July 2003. He is also
Chairman of Candover Investments plc and was appointed as one of the
UKs Business Ambassadors by the Prime Minister in January 2009.
Gerry held senior positions within the Department of Health and Social
Security and HM Treasury until 1986. He then spent 13 years with
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Schroders in London, Hong Kong and New York, and was Vice
Chairman of Schroders worldwide investment banking activities from
1998 to 1999. He is the Alternate Director to Sir Alexander Crombie.
Mr. Paresh Parasnis is the Principal Officer and
Executive Director of the company since November
14, 2008. A fellow of the Institute of Chartered
Accountants of India, he has been associated with the
HDFC Group since 1984. During his 16-year tenure at HDFC Limited,
he was responsible for driving and spearheading several key initiatives.
As one of the founding members of HDFC Standard life, Mr. Parasnis
has been responsible for setting up branches, driving sales and servicing
strategy, leading recruitment, contributing to product launches and
performance management system, overseeing new business and claims
settlement, customer interactions etc.
HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has since
emerged as the largest residential mortgage finance institution in the country. The
corporation has had a series of share issues raising its capital to Rs. 119 Crores. The gross
premium income for the year ending March 31, 2007 stood at Rs. 2,856 Crores and new
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business premium income at Rs. 1,624 Crores. The company has covered over 8,77,000
lives year ending March 31, 2007.
HDFC operates through almost 450 locations throughout the country with its corporate
head quarters in Mumbai, India. HDFC also has an International Office in Dubai, UAE
with service associates in Kuwait, Oman and Qatar. HDFC is the largest housing
company in India for the last 27 years.
SNAPSHOT - I
Incorporated in 1977 as the first specialized Mortgage Company in India.
Almost 90% of initial shareholding in the hands of domestic institutes and retail
investors. Current 77% of shares held by foreign institutional investors.
Besides the core business of mortgage HDFC has evolved into a financial
conglomerate with holdings In:
HDFC Standard Life insurance Company- HDFC holds 78.07 %.
HDFC Asset Management Company HDFC holds 50.1%
HDFC Bank- HDFC holds 22.25%.
Intelenet Global (Business Process Outsourcing) HDFC holds 50%.
HDFC Chubb General Insurance Company HDFC holds 74%.
SNAPSHOT-II
Loan Approvals Rs. 805 billion.
(up to Dec 2007) (US $ 18.30 bn.)
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Loan Disbursements Rs.669 billion
(up to Dec. 2007) (US $ 15.20 bn)
Housing Units Financed 2.5 million.
Distribution
Offices 181
Outreach Programs 90
KEY PLAYERS
Mr. Deepak S Parekh is the Chairman of the Company. He is also the Executive
Chairman of Housing Development Finance Corporation Limited (HDFC Limited). He
joined HDFC Limited in a senior management position in 1978. He was inducted as a
whole-time director of HDFC Limited in 1985 and was appointed as its Executive
Chairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh is a
Fellow of the Institute of Chartered Accountants (England & Wales).
Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company since
November, 2000. Prior to this, he was the Managing Director of HDFC Limited since
1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the Indian
Institute of Technology, Bombay and a Masters Degree in Business Administration from
The American University, Washington DC.
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GROUP COMPANIES
HDFC Bank: World Class Indian Bank- among the top private banks in India.
HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.
Intelenet Global: BPO services for international customers.
CIBIL: Credit Information Bureau India Limited.
HDFC Chubb: Upcoming Private companies in the field of General Insurance.
HDFC Mutual Fund
HDFC reality.com: Helps to search properties in all major cities in India
HDFC securities
STANDARD LIFE
Standard Life is Europes largest mutual life assurance company. Standard Life, which
has been in the life insurance business for the past 175 years is a modern company
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surviving quite a few changes since selling its first policy in 1825. The company
expanded in the 19th century from kits original Edinburgh premises, opening offices in
other towns and acquitting other similar businesses.
Standard Life Currently has assets exceeding over 70 billion under its management and
has the distinction of being accorded AAA rating consequently for the six years by
Standard and Poor.
SNAPSHOT
Founded in 1875, company supporting generation for last 179 years.
Currently over 5 million Policy holders benefiting from the services offered.
Europes largest mutual life insurer.
JOINT VENTURE
HDFC Standard Life Insurance Company Limited was one of the first companies to be
granted license by the IRDA to operate in life insurance sector. Reach of the JV player is
highly rated and been conferred with many awards. HDFC is rated AAA by both
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CRISIL and ICRA. Similarly, Standard Life is rated AAA both by Moodys and
Standard and Poors. These reflect the efficiency with which HDFC and Standard Life
manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.
HDFC Standard Life Insurance Company Ltd was incorporated on 14 th August 2000.
HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standard of
as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.
HDFC Standard Life Insurance Company Ltd. Is one of Indias leading Private Life
Insurance Companies, which offers a range of individual and group insurance solutions.
It is a joint venture between Housing Development Finance Corporation Limited (HDFC
Ltd.) Indias leading housing finance institution and the Standard Life Assurance
Company, a leading provider of financial services from the United Kingdom. Both the
promoters are will known for their ethical dealings and financial strength and are thus
committed to being a long-term player in the life insurance industry- all important factors
to consider when choosing your insurer.
BUSINESS GROWTH
Track Record so far
The gross premium income of HDFC, for the year ending March 31, 2007 stood at Rs.
2,856 crores and new business premium income at Rs. 1,624 crores.
The company has covered over 8,77,000 lives year ending March 31, 2007. Company
also declared our 5th consecutive bonus in as many years for our with profit
policyholders.
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KEY STRENGTH
Financial Expertise
As a joint venture of leading financial services groups. HDFC standard Life has the
financial expertise required to manage long-term investments safely and efficiently.
Range of Solutions
HDFC SLIC has a range of individual and group solutions, which can be easily
customized to specific needs. These group solutions have been designed to offer
complete flexibility combined with a low charging structure.
Strong Ethical Values:
HDFC SLIC is an ethical and Cultural Organization. False selling or false commitment
with the customers is not allowed.
Most respected Private Insurance Company
HDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the World Class
Magazine Business World for Integrity, Innovation and Customer Care.
CORPORATE OBJECTIVE
Vision
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'The most successful and admired life insurance company, which means that we are the
most trusted company, the easiest to deal with, offer the best value for money, and set the
standards in the industry'.
'The most obvious choice for all'.
Values
.Integrity .Innovation
.Customer centric .People Care One for all
.Teamwork .Joy and Simplicity
Our key strengths
Financial Expertise
As a joint venture of leading financial services groups, HDFC
Standard Life has the financial expertise required to manage your
long-term investments safely and efficiently.
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Range of Solutions
We have a range of individual and group solutions, which can be
easily customized to specific needs. Our group solutions have been
designed to offer you complete flexibility combined with a low
charging structure.
Track Record so far
Our cumulative premium income, including the first year premiums
and renewal premiums is Rs. 1532.21 Crores Apr-Mar 2005 - 06.
We have covered over 1.6 million individuals out of which over
5,00,000 lives have been covered through our group business tie-ups.
Our Vision
'The most successful and admired life insurance company, which means that
we are the most trusted company, the easiest to deal with, offer the best
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value for money, and set the standards in the industry'.
'The most obvious choice for all'.
Our Values
Values that we observe while we work::
Integrity
Innovation
Customer centric
People Care One for all and all for one
Team work
Joy and Simplicity
Accolades and Recognition
Rated by 'Business world' as 'India's Most Respected Private Life
Insurance Company' in 2004.
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Rated as the "Best New Insurer - 2003" by Outlook Money magazine,
Indias number 1 personal finance magazine.
Form of Organisation
HDFC standard life insurance belongs to a life insurance sector in India.
Life Insurance in India
Introduction
With such a large population and the untapped market area of this
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population, insurance happens to be a very big opportunity in India.
Today it stands as a business growing at the rate of 15-20 percent annually.
Together with banking services, it adds about 7 percent to the countrys
GDP. In spite of all this growth the statistics of the penetration of the
insurance in the country is very poor. Nearly 80% of the Indian population is
without life insurance cover and the health insurance.
This is an indicator the growth potential for the insurance sector is immense
in India. It was due to this immense growth that the regulations were
introduced in the insurance sector and in continuation the government in
1993 to examine the various aspects of the industry constituted Malhotra
committee. The key element of the reform process was participation of
overseas insurance companies with 26% capital. Creating a more efficient
and competitive financial system suitable for the requirements of the
company was the main idea behind this reform.
Since then the insurance industry has gone through many sea changes.
The competition LIC started facing from these companies were
threatening to the existence of the LIC. Since the liberalization of the
industry, the insurance industry has never looked back and today
stand as one of the most competitive and exploring industry in India.
The entry of the private players and the increased use of the new
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distribution are in the limelight today. The use of new distribution
techniques and the IT tools have increased the scope of the industry in
the longer run.
HISTORICAL PERSPECTIVE
In India, insurance has a deep-rooted history. It finds mention in the writings of Manu (
Manusmrithi ), Yagnavalkya (Dharmasastra ) and Kautilya ( Arthasastra ). The writings
talk in terms of pooling of resources that could be re-distributed in times of calamities
such as fire, floods, epidemics and famine. This was probably a pre-cursor to modern day
insurance. Ancient Indian history has preserved the earliest traces of insurance in the
form of marine trade loans and carriers contracts. Insurance in India has evolved over
time heavily drawing from other countries, England in particular.
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1818 saw the advent of life insurance business in India with the establishment of the
Oriental Life Insurance Company in Calcutta. This Company however failed in 1834. In
1829, the Madras Equitable had begun transacting life insurance business in the Madras
Presidency. 1870 saw the enactment of the British Insurance Act and in the last three
decades of the nineteenth century, the Bombay Mutual (1871), Oriental (1874) and
Empire of India (1897) were started in the Bombay Residency. This era, however, was
dominated by foreign insurance offices which did good business in India, namely Albert
Life Assurance, Royal Insurance, Liverpool and London Globe Insurance and the Indian
offices were up for hard competition from the foreign companies.
In 1914, the Government of India started publishing returns of Insurance Companies in
India. The Indian Life Assurance Companies Act, 1912 was the first statutory measure to
regulate life business. In 1928, the Indian Insurance Companies Act was enacted to
enable the Government to collect statistical information about both life and non-life
business transacted in India by Indian and foreign insurers including provident insurance
societies. In 1938, with a view to protecting the interest of the Insurance public, the
earlier legislation was consolidated and amended by the Insurance Act, 1938 with
comprehensive provisions for effective control over the activities of insurers.
The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there
were a large number of insurance companies and the level of competition was high.
There were also allegations of unfair trade practices. The Government of India, therefore,
decided to nationalize insurance business.
An Ordinance was issued on 19 th January, 1956 nationalising the Life Insurance sector
and Life Insurance Corporation came into existence in the same year. The LIC absorbed
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154 Indian, 16 non-Indian insurers as also 75 provident societies245 Indian and foreign
insurers in all. The LIC had monopoly till the late 90s when the Insurance sector was
reopened to the private sector.
The history of general insurance dates back to the Industrial Revolution in the west and
the consequent growth of sea-faring trade and commerce in the 17 th century. It came to
India as a legacy of British occupation. General Insurance in India has its roots in the
establishment of Triton Insurance Company Ltd., in the year 1850 in Calcutta by the
British. In 1907, the Indian Mercantile Insurance Ltd, was set up. This was the first
company to transact all classes of general insurance business.
1957 saw the formation of the General Insurance Council, a wing of the Insurance
Association of India. The General Insurance Council framed a code of conduct for
ensuring fair conduct and sound business practices.
In 1968, the Insurance Act was amended to regulate investments and set minimum
solvency margins. The Tariff Advisory Committee was also set up then.
In 1972 with the passing of the General Insurance Business (Nationalization) Act, general
insurance business was nationalized with effect from 1 st January, 1973. 107 insurers were
amalgamated and grouped into four companies, namely National Insurance Company
Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd and
the United India Insurance Company Ltd. The General Insurance Corporation of India
was incorporated as a company in 1971 and it commence business on January 1sst 1973.
This millennium has seen insurance come a full circle in a journey extending to nearly
200 years. The process ofre-opening of the sector had begun in the early 1990s and the
last decade and more has seen it been opened up substantially. In 1993, the Government
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set up a committee under the chairmanship of RN Malhotra, former Governor of RBI, to
propose recommendations for reforms in the insurance sector. The objective was to
complement the reforms initiated in the financial sector. The committee submitted its
report in 1994 wherein , among other things, it recommended that the private sector be
permitted to enter the insurance industry. They stated that foreign companies be allowed
to enter by floating Indian companies, preferably a joint venture with Indian partners.
Following the recommendations of the Malhotra Committee report, in 1999, the
Insurance Regulatory and Development Authority (IRDA) was constituted as an
autonomous body to regulate and develop the insurance industry. The IRDA was
incorporated as a statutory body in April, 2000. The key objectives of the IRDA include
promotion of competition so as to enhance customer satisfaction through increased
consumer choice and lower premiums, while ensuring the financial security of the
insurance market.
The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The Authority
has the power to frame regulations under Section 114A of the Insurance Act, 1938 and
has from 2000 onwards framed various regulations ranging from registration of
companies for carrying on insurance business to protection of policyholders interests.
In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a
national re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in
July, 2002.
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Today there are 14 general insurance companies including the ECGC and Agriculture
Insurance Corporation of India and 14 life insurance companies operating in the country.
The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.
Together with banking services, insurance services add about 7% to the countrys GDP.
A well-developed and evolved insurance sector is a boon for economic development as it
provides long- term funds for infrastructure development at the same time strengthening
the risk taking ability of the country.
PRODUCTS
At HDFC Standard Life, we offer a bouquet of insurance solutions to meet
every need. We cater to both, individuals as well as to companies looking to
provide benefits to their employees. This section gives you details of all our
products. We have incorporated various downloadable forms and product
details so that you can make an informed choice about buying a policy.
For individuals, we have a range of protection, investment, pension and
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savings plans that assist and nurture dreams apart from providing protection.
You can choose from a range of products to suit your life-stage and needs.
For organizations we have a host of customized solutions that range from
Group Term Insurance, Gratuity, Leave Encashment and Superannuation
Products. These affordable plans apart from providing long-term value to the
employees help in enhancing goodwill of the company.
Following are the major plans of HDFC:
Endowment plan.
Whole life plan
Pension plan
Childrens plan
Money back plan
HDFCSL product plan is a Life Stage Plan
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We can see its plan is like a LIFE STAGE Plan. According to it there are four
stage of life, young and single stage, Just Married stage, proud parents and
Planning and Retirements
Stage 1
Young and Single stage:-
It is an important stage where on lays down the
foundation of a successful life ahead. It helps in this
stage for taking advantage of the time and power of
compounding to ensure that you build up your dreams. Our needs in this stage our
needs are save for home and weeding, tax planning and save for golden years.
Figure1
Stage 2
Just Married stage:-
Marriage brings about a significant change. New dreams
and new opportunities also bring in additional
responsibilities. In this stage our needs are planning for
home, save for vacation, and save for our child
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Stage 3
Proud Parents:-
Once you have children, your need for life insurance is even
more. In this stage our need will be provide good education
for childrens, safeguarding family against loan liabilities,
and saving for post-retirement.
(Figure 3)
Stage 4
Planning for Retirement:-
In this stage our needs becomes more like as we
need more secure, independent and comfortable life style in
our retirement years.
Life Stage Structure
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HDFCSLIC have divided our whole life into four stages and describe above the
different needs of our different stage. It all insurance plan are based upon these
states and it tried to fulfill all the requirement of all the need of each stages of life
through endowment plan, young star plan , retirement plus plan, and pension plus
plan.
ENDOWMENT PLAN
The HDFCSL Endowment Assurance Plan gives you:An ideal way to secure your long-term financial goalsValuable protection to your family by way of lump sum payment in case of your
unfortunate death within policy termProvides lump sum payment (basic Sum Assured plus any bonus additions) on
survival up to maturity dateVery flexible benefit options and payment options
In case of your unfortunate demise during the policy term, this participating
(With Profits) insurance plan will pay your family the Sum Assured
(together with the attached bonuses) you had chosen.
The plan receives simple Reversionary Bonuses, which are usually added
annually. At the end of the term an additional Terminal Bonus may be paid
depending on the performance of the underlying investment.
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WHOLE LIFE PLAN
HDFC Single Premium Whole Of Life Insurance Plan is a tailor-made
plan well suited to meet your long-term investment needs. This participating
plan offers you the following benefits:
Whole of life plan aimed at providing long-term real growth of your
money.
Single premium investment planIn case of your unfortunate demise during the policy term, this
participating (With Profits) insurance plan will pay your family the
Sum Assured and compound Reversionary Bonuses, which are usually
added annually. An additional Terminal Bonus may be paid depending on
the performance of the underlying investments.During Guaranteed Surrender Periods you get the Sum Assured and all
bonuses vested as at the date of surrender.
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PENSION PLAN
HDFC PERSONAL PENSION PLAN
We understand your need to build a secure future for yourself. Hence, the
HDFC Personal Pension Plan is an insurance policy that is designed to
provide a post - retirement income for life with the freedom to choose your
retirement date.
You can choose your premium, the Sum Assured and your retirement date.
At the end of the policy term, you will receive the Sum Assured plus any
attaching bonus, which will provide your post - retirement income.
The HDFC Personal Pension Plan is an insurance policy, which can benefit
you in the following ways:
Provides a post retirement income in your golden yearsGives you the flexibility to plan your retirement dateGives you tax benefits on your premiums
The plan receives simple Reversionary Bonuses, which are usually added
annually. At the end of the term an additional Terminal Bonus may be paid
depending on the performance of the underlying investment.
Dont compromise on your self-respect, ever. Go ahead, hold your head high
and enjoy life with the HDFC Personal Pension Plan.
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CHILDRENS PLAN
The HDFC Children's Plan gives you:
Invaluable financial support to your childHelps you customize an ideal plan for your childProvides you multiple options for multiple benefits
The HDFC Childrens Plan is designed to secure your childs future by
giving your child (the beneficiary) a guaranteed lump sum, on maturity or
in case of your unfortunate demise, early in the policy term. The
company to give you good long-term returns invests the premiums, paid
by you.
The plan receives simple Reversionary Bonuses, which are usually added
annually. At the end of the term an additional Terminal Bonus may be
paid depending on the performance of the underlying investment (See
Bonuses for more details).
MONEY BACK PLAN
The HDFC Money Back Plan is a With Profit Plan that gives you:
A proportion of the basic Sum Assured as cash lump sums at regular 5-
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year intervals within the policy term (see the table given below) an
ideal way to secure your long- term as well as short-term financial goalsA lump sum payment on survival up to maturity dateValuable protection to your family by way of lump sum payment in case
of your unfortunate death within the policy term. This is over and above
any earlier payouts
Making the right kind of investment will enable you to achieve your
objectives be it your immediate expenses or else securing your future
financial needs. Our Money Back Plan gives you a wide range of terms and
cash benefit schedule to choose from. A summary of Key Benefits including
the cash lump sum payments, expressed as a percentage of Sum Assured is
shown below:
Key Benefits
Total Policy
TermSurvival Benefit
Death
Benefit
5 Yrs. 10 Yrs. 15 Yrs. 20 Yrs. 25 Yrs. 30 Yrs.
Within
Policy
Term10 40% 60% +
Attaching
Bonuses
- - - - 100%
Sum
Assured
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+
attaching
bonuses
(Over
and
above
the
earlier
payouts).
15 30% 30%
40% +
Attaching
Bonuses
- - -
20 25% 25% 25%
25% +
Attaching
Bonuses
- -
25 20% 20% 20% 20%
20% +
Attaching
Bonuses
-
30 15% 15% 15% 15% 15%
25% +
Attaching
Bonuses
Maturity Value
On maturity you receive survival benefit due at that point of time along with
attaching bonuses for the full Sum Assured calculated for the full term.
You can ensure your financial independence. And be able to live life on your
own terms. Always.
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BARRIERS TO ENTRY
Capital requirements
High gestation period
Access to distribution channels
Brand equity
Indian consumer psychology
Tax avoidance
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Capital Requirements
The huge capital requirements pose a major barrier to entry in the
insurance sector . These requirements can be attributed to the costs
incurred in setting up your distribution network. To achieve
economies of scale you would require a nationwide presence, unless
you want to cater to a niche group, which would involve setting up a
huge sales force.
High Gestation Period
On an average a player in the insurance sector would require around
7-10 years to break-even. This comparatively long gestation period would
entail the player to have sufficiently deep pockets to bear the losses till the
time he breaks even.
Access to Distributional Channels
Given the poor reach of the insurance companies amongst the Indian
public especially in the rural sector the distribution channels adopted
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will determine the future growth of the industry. For the insurance
industry to take off in a big way in India companies will have to adopt new
and innovative distribution channels to be able to cover the vast
majority of the Indian population which is still not covered by the
insurance companies.
Brand equity
Customer loyalty in the insurance sector is very high, thus benefiting
players whove already been there in the market for a long time.
While going in for an insurance policy, the brand and the trust that it
generates are essential criteria on which the customer makes his
judgement. Thus a brand, which has been there for a long period of
time and has managed to serve it customers well , would be in a
position to leverage its brand equity.
Indian Consumer Psychology
The Indian customer, liken his global counterpart , buys policies for
tax benefits and to ensure secure savings for the future. Although he
is price sensitive , he still deserves value and sound services for his
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money.
Insurance as savings: There is reluctance amongst Indians to use
insurance policies as a means of investment of their savings.
Traditionally Indians have invested the bulk of their savings in bank
fixed deposits followed by the capital markets in spite of the low
returns offered by the banks and the large risk involved in trading in
stocks. The changing mindset of the Indian public will be a key driver
for growth in the liberalized era.
Insurance for Tax Avoidance:
The urban educated class of Indians traditionally looked at insurance as
a tax avoidance tool. Mindsets are now changing, but purchase patterns
are not. The months of February and March still are the busiest at
LIC. The traditional hook of tax incentives and savings will take a
long time to change. Private players need to step up their selling in
terms of need and protection.
Due to low consumer awareness of the need for insurance and benefits
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attached to it, most of the insurance is still sold through agents. Other
distribution channels like banc assurance are now being explored.
Growth potential of the Indian insurance market
India at a glance
Population: 1 Billion
Economy: 5th largest in the world in terms of Purchasing Power
Parity (PPP)
GDP growth Rate: Over 6% per year on an average for the last decade
Savings Rate: Around 26% of GDP
Estimated middle class population: 300 Million
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Insured population: 70 million only
Future Trends
The Insurance sector is set to see a whole lot of changes in the way
business was traditionally done with new and innovative products,
distribution networks , etc. Changes in the external environment for the
life Insurance market will have to be suitably understood in order to
avoid excessive selling and mis-selling out of over-enthusiasm.
New Products
Most of the insurance products offered by the traditional Indian players
are outdated, as they are not suitable to the needs of the consumers.
Hence, old as well as new insurers will be offering innovative
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products to the consumers. The consumers are particularly expecting
good pension plans, health insurance, term insurance and Investment
products like unit-linked insurance, from the life insurers. Similarly, the
consumers expect innovative products from the general insurers for
managing healthcare, property insurance, accident insurance and other
products related to the personal line of insurance. The consumers also
expect reduction in the premium of the insurance products as the
mortality rate in India has come down by three times in the last 50
years.
Consumer Education
Very soon the market will be flooded with a large number of products
by a fairly large number of insurers operating in the Indian market.
Even with the limited range of traditional insurance products , the
consumers are confused. Their confusion will further increase in the
face of a large number of products in the market. The existing level
of awareness of the consumers for insurance products is very low. This
is because only 65 percent of the Indian population is literate. Even
the educated consumers are ignorant about the various products of
insurance. Moreover , there is a shortage of trained agents and brokers.
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It is necessary that all the insurers should undertake extensive plans
for educating the consumers.
UNIT LINKED INSURANCE PLAN
Now One should know what it means Unit Linked Insurance
Imagine an ideal combination of insurance and life savings that will
help One in the future to finance lofty plans, whether referring to
purchase of a car, contribution to education of children or grandchildren
or just some extra income when retired.
Unit Linked provides you with not only an effective protection
against individual investment risks and inflation but above all it brings
along a long-term growth potential of financial means. Everyone
decides on their own what is the right method of investment for them,
which predetermines evaluation of deposited money.
Financial means invested into Unit Linked are evaluated in the course
of insurance period through four financial funds. It is one oneself that
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decide on division of the invested means. One can at any time
reallocate Ones money among the funds. The four funds for
investments are :-
Balancer, Maximizer, Protector, Preserver.
Types of riders offered:
Waiver of premium
Accidental death rider
Accidental death and disability rider
Accidental full disability annuity rider
Specified accidents and accidental disability rider for a child
How can a person draw the saved money
After the insurance period is over, One will be paid out the invested
sum increased by evaluation, this as a lump-sum payment or regular
annuity.
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In case of death in the course of insurance period, the sum assured
agreed upon or the fund value is immediately paid out to a beneficiary
(beneficiaries). The investment value is paid out if it is higher than
the sum assured agreed upon.
How to pay premium
Premium can be paid in regular monthly installments: monthly,
quarterly, semi-annually, and annually. In the course of insurance
period, it is possible to invest other financial means in the form of
top-ups, thus reinforcing the investment part of insurance.
The three in one option - Unit-linked policies:
The outlook of the modern day investors has undergone a dramatic
change. In the changed fiscal scenario with drastic fall in the interest
for investment and the volatile capital market with limited investment
options, ULIP comes to the rescue of the prudent investors. Investment
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in insurance has become the style of the day. The individual looks at
buying an insurance policy more of an investment, which comes with
the additional benefits of life cover and tax benefit also.
ULIP - Unit Linked Insurance Policy - ULIP is a unique, multiple
benefits Plan which combines the basic benefit of life insurance, tax
benefits and accident insurance cover. The plan offers tax deductions
on the amount invested under Section 80C of the Income Tax Act
within the overall limit of Rs. 1,00,000/-.
With the Insurance industry booming up in the Indian economy
following liberalized regulations from the IRDA, the ULIPs have
regained their strength. This was further boosted by the private
insurance companies with foreign partners. .
Under ULIPs, the premiums are invested after deducting the charges
and fees in a fund similar to that of a mutual fund along with a life
insurance cover.
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The IRDA regulates that a unit-linked plan must be offered to the
investor with an option to select among debt, balanced and equity
funds. For example, if an investor opts for a unit-linked endowment
policy, he can choose to invest his premiums in debt, balance or
equity funds. If he selects a debt fund, the majority of his premium
will be invested in debt securities like gilts and bonds. If the option
is equity, a major portion of the premium is invested in the equity
market. The selection of policy depends upon its risk profile and the
Investment needs. Higher the risk, higher would be the returns and
vice versa..
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The HDFC Unit Linked Endowment Plan gives you:
An outstanding investment opportunity by providing a choice of
thoroughly researched and selected investmentsValuable protection to your family in case you are not aroundFlexible benefit combinations and payment optionsFlexible additional benefit options such as critical illness coverAccess to your accumulated fund before maturity
You can choose your premium and the investment fund or funds. We will
then invest your premium, net of premium allocation charges in your chosen
funds in the proportion you specify. At the end of the policy term, you will
receive the accumulated value of your funds.
In case of your unfortunate demise during the policy term, we will pay the
greater of your Sum Assured (less any withdrawals you have made in the
two years before your claim) and your total fund value to your family.
Use HDFC Standard Lifes excellent investment options to maximize your
savings & secure your and your familys future. We will provide financial
security for your family in your absence.
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THE FUTURE OF THE INSURANCE INDUSTRY
The insurance industry is today witness to a massive
transformation from its earlier days. From a humble beginning
made in 1956 since the nationalization of the industry and the birth of
the Life Insurance Corporation, the industry today sees a deluge of
multinational insurers all charging in to set up shop here considering
the existent vast unexploited potential.
Multinational partnerships:
The winds of liberalisation have initiated vast changes in the functioning of
the industry today. Increasing number of multinational partnerships with
private insurers have paved the way for a radical shift in insurance selling -
through a number of new distribution channels besides bringing about more
awareness on the need for insurance and also stressing on the important role
technology can play.
With major trade barriers gone, the Indian insurance industry is slowly
opening itself from a protected environment to e-business, incorporating
newer technologies in insurance, thanks to competition, that will hopefully
bring forth a marked improvement in customer service, insurance marketing,
risk management, claim settlement, underwriting etc in comparison to its
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earlier days.
Faster decision making:
Today, information dissemination is increasingly faster with the advent
of information technology, which will largely help individuals gain
access to every bit of information they would require, enabling faster
decision-making. This is in stark contrast with the pre-liberalization era
wherein information sourcing was virtually non-existent except from the
recruited agents of the insurance company.
Policy servicing, an area that has long remained neglected will now receive a
major thrust with insurance companies redefining strategies to weed out
sluggishness and provide the policyholder with prompt service. Online
policy servicing too will soon become the norm thereby cutting down on the
unnecessary delays.
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Information explosion:
The oncoming technological revolution is all set to totally revamp the very
concept of Knowledge management. Automating knowledge management
will become the sole aim to increase productivity. Large databases of raw
information on individuals' investment patterns can be fed into computers to
enable faster segregation of information as per required categories.
Computerizing information can make a major difference to the general
insurance industry wherein motor claim losses particularly have been hitting
the roof. With an organized system of data collection and storage, data
analysis and claim management system, keeping track of the claim
applicants behavioral patterns becomes easy.
Easier Claims settlement:
Claims settlement that was hitherto a time consuming affair will see a
marked difference in operations. With competition building and improved
customer service becoming the new mantra the time taken for claim
settlements will reduce considerably. World over underwriting risks, claims
management, risk surveys etc are far more simplified thanks to technology.
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Insurance companies are slowly realizing the mass difference information
technology can make to business. Consider policy information being made
available online. Tracking policy details, the premiums to be paid, premiums
paid so far, the bonus percentage, maturity date of the policy and several
such details can be accessed at the mere click of a mouse soon.
Improved customer service - the ultimate aim:
The insurance industry, with competition hooting up is has woken up
to ground realities and is in the process of implementing software
solutions. Realizing the unlimited power information technology holds,
insurance companies have realized that strategic deployment of
technology for integrating office operations, and gaining customer
confidence through improved customer service is the need of the hour.
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Awards & Accolades
Sept, 2008
Received 2008 CIO Bold 100 and CIO Security Awards
HDFC Standard Life has received the 2008 CIO Bold
100 Award. This annual award recognizes
organizations that exemplify the highest level of
operational and strategic excellence in information
technology. This year's award theme, The Bold 100,
recognized those executives and organizations that embraced great risk for the sake of
great reward.
HDFC Standard Life has also been one of the five recipients of the Special 2008 CIO
Security Award aimed at CIOs, whose pioneering implementations have taken their
enterprise security to the next level. This award
category identifies innovative and groundbreaking
deployment of technologies aimed at creating a
secure business infrastructure.
The company received the 2008 CIO Bold Award for
its mobile workforce portal and the CIO Security Award for its initiatives for a secure
computing environment, including identity management.
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May, 2008
Received PCQuest Best IT Implementation Award 2008
HDFC Standard Life received the PCQuest Best IT Implementation Award 2008 for
Consultant Corner, the applications for its financial consultants, providing centralized
control over a vast geographical spread for key business units such as inventory, training,
licensing, etc. Read more about the Consultant Corner tool in the HDFCSL in News
Section.
HDFC Standard Life has won the PCQuest Best IT Implementation Award for two years
consequently. Last year, the company received the award for Wonders, its path-breaking
implementation of an enterprise-wide workflow system.
March, 2008
Silver Abby at Goafest 2008
HDFC Standard Life's radio spot for Pension Plans won a Silver Abby in the radio
writing craft category at the Goafest 2008 organised by the Advertising Agencies
Association of India (AAAI). The radio commercial Pata nahin chala touched several
changes in life in the blink of an eye through an old mans perspective. The objective was
drive awareness and ask people to invest in a pension plan to live life to the fullest even
after retirement, without compromising on ones self-respect
March, 2008
Unit Linked Savings Plan Tops Mint Best TV Ads Survey
The Unit Linked Savings Plan advertisement of HDFC Standard Life, one of the leading
private insurance companies in India, has topped Mints Top Television Advertisement
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survey conducted, for February 2008. HDFC Standard Lifes Unit Linked Savings Plan
advertisement was ranked 4th in terms of a combined score of ad awareness and brand
recall and 3rd in terms of ad diagnostic scores (likeability, enjoyment, believability, and
claim). The respondents were between 18 and 40 years. Mints exclusive report, New
voices in a makeover outlines the survey in detail.
February, 2008
Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007
Mr Deepak M Satwalekar, Managing Director and CEO, HDFC Standard Life, received
the QIMPRO Gold Standard Award 2007 in the business category at the 18th annual
Qimpro Awards function. The award celebrates excellence in individual performance and
highlights the quality achievements of extraordinary individuals in an era of global
competition and expectations.
January, 2008
Sar Utha Ke Jiyo Among Indias 60 Glorious Advertising Moments
HDFC Standard Lifes advertising slogan honoured as one of 60 Glorious Advertising &
Marketing Moments' over the last 60 years in India, by 4Ps Business and Marketing
magazine. The magazine said that HDFC Standard Life is one of the first private insurers
to break the ice using the idea of self respect (Sar Utha Ke Jiyo) instead of 'death' to
convey its brand proposition. This was then, followed by others including ICCI
Prudential, thus giving HDFC Standard Life the credit of bringing up one such glorious
advertising and marketing moment in the last 60 years.
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DISTRIBUTION STRATEGY
Why HDFC is better ?
1. Investment returns: investment returns and business growth provided by HDFC
is validated by bajaj Capital report. HDFC pacify the need of invertors up to healthy level
and make the strong relationship with them.
2. Financial Background and Experience: HDFC existing in the market since
1977. It has a very handsome experience in the field of finance because it completely
involved in finance Sector only where as the others are running in many other field also
like Reliance (Petroleum, Textile, Telecom etc.)
3. Ethics and Values: HDFC is an ethical and cultural organization which prevents
the false selling and prohibit the false commitment to the customer.
4. Sales Force: Properly trend licensed and Educated People are the strength of the
company. So that they could give the best customer service.
5. Huge branch network HDFC is having 450 branches in all over the country.
6. Online accessibility : It makes the process faster and make the customer
delighted.
Who can be the financial consultant: ?
Section 42(4) of the amended Insurance Act, 1938 states an agent to be one who is not: A
minor.
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Found to be sound mind by a court of competition jurisdiction.
Found guilty of criminal background.
Found guilty of having knowingly participated in or connived at any fraud
/dishonesty or misrepresentation against an insured.
Work of financial consultant:
The FC is the interface between the customer and insurance company. The agent should
be able to accomplish the following service.
Assessing and analyzing the clients risk profile.
Finding the best product or products available in the market.
Negotiating the best deal available.
Continuity of service throughout the period of insurance.
Objective of FC:
Recruitment of Financial consultant (FCs) of a excellent profile and their retention
strategies and what are their benefit that company going to provided for retention of their
FCs.
(A) What type of people are we looking for ?
1- Committed people who have the drive, determination and ability to become
professional financial consultants.
2- Ability to sell a range of financial products.
(B) What do We Expect from financial Consultant ?
1- Devote a time and energy during training.
2- Sell at least 5 policies each month once after licensed with company.
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3- We look forward to a long term mutually beneficial relationship.
(C) Why should financial consultant choose HDFC standard life ?
Brand value and the reputation of the partners (HDFC Limited) Market leader in
housing finance:
15 lakhs home financed.
11 lakhs retail deposits customer base.
Reputation for providing the higher standards of customer service.
Financial Strength of the partners.
Brand value and the reputation of the partners standard life:
175 years experience in life insurance.
Largest mutual life insurer in Europe.
Product innovation.
Strategies for recruitment of FC:
Strategies Employed to achieve the target are as follows:-
Telecalling
Contacting the person directly (interview)
Collect references.
Some important steps to make effective telecalling:-
Open the call in a friendly and positive way.
State the name, position and company name.
Check the prospect has time to speak.
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State the reason for the call.
Clearly succinctly explain how the meeting will be benefiting the prospect.
Achievements:
Recruited eight financial consultants for company.
Increase in confidence level.
Got the knowledge about, how to differentiate our product form that of LIC.
Made more and more people aware about my companies Products (Policies)
Taken some appointments for policies and got positive response from 8 persons with the
help of my BDM.
Limitations:-
So though the study aim to achieve the above mentioned Objective in full earnest and
accuracy, it may be hampered due to certain limitation. Some of the limitations are as
follows:
To cover the various section for the society.
Respondents may not be at home and may have to re-contacted or replaced by
others.
Getting accurate response form the respondents due to their inherent problem is
difficult.
Limited response from client.
There is a time limitation it is not possible to study whole thing I covered some
special aspect as well as some topics.
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FIELD METHODOLOGY
The methodology adopted in the field to collect the data represented diagrammatically
below:
TABULATION AND
ANALYSIS
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Filling up questionnaire
and Schedule
Meeting with People
Segmentation of People
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In order to determine the willingness of the people to become FC for HDFC SLIC in
Bilaspur, data collected by surveying is treated as analysis. Response to the parameter
like professional, unemployed students, housewives, investment consultant, post office
agent.
Willingness to be FC for HDFC
Yes No TotalProfessional 2 28 30
Working employees 2 33 35
House wives 2 18 20
Students 3 22 25
Investment consultants 2 18 20
Post office agents 3 12 15
Others - - 10
Total 14 131 155
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COMPETITIVE ANALYSIS
LIFE INSURANCE CORPORATION OF INDIA (LIC)
LIC has an excellent money back policy which provides for periodic payments of partial
survival benefits as long as the policy holder is alive. 20% of the sum assured is payable
after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th year along with
accrued bonus. (www.lic.com)
For a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20 years
and the balance 40% plus the accrued bonus becomes payable at the 25 th year. An
important feature of these types of policies is that in the event of the death of the policy
holder at any time within the policy term the death claim comprises of full sum assured
without deducting any of the survival benefit amounts which have already been paid. The
bonus is also calculated on the full sum assured.
HDFC SLIC does not have a money back policy. It could offer a money back plan and
capture some portion of this market. While marketing insurance products I found that
many customers wanted to purchase these plans.
LIC offers 66 different plans; plans are formulated for specific occasions whole life
plans, term assurance plans, money back plan for women, child plans, plans for the
handicapped individuals, endowment assurance plans, plans for high worth individuals,
pension plans, unit linked plans, special plans, social security schemes diversified
portfolio of products. HDFC SLIC could diversify its product portfolio. It could add more
plans for high worth individuals and women.
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ICICI PRUDENTIAL
ICICI Prudential is a stiff competitor for HDFC SLIC. The company is a merger between
ICICI Bank which is the biggest private bank in India and Prudential Plc which is a
global life insurance company.
The company has an investment plan which is market related Invest Shield Life. In this
plan even if the market falls, the premium will be returned to investors. It is a guaranteed
plan which ensures the company carefully invests your money. The stock market
performance of ICICI Prudential is much better than HDFC SLIC. The returns on the
growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC. Customers
are attracted by higher returns and this is a plus point for Prudential.
The company is very well advertised. The advertisements are showcased in movies,
television, newspapers, magazines, bill boards, radio etc. The company has an excellent
brand ambassador Mr. Amitabh Bacchan. His promotion of the company builds trust
and faith in the minds of our people.
However the charges are very high in the plans offered by ICICI Prudential. It is 35%
during the first year, 15% in the next year and 3% from the third year onwards. Also a
higher minimum premium of Rs. 8000 is charged. Hence the policies are not accessible to
the lower strata of the society.
BIRLA SUN LIFE
Birla Sun Life Insurance Company Limited is a joint venture between The Aditya Birla
Group, one of the largest business houses in India and Sun Life Financial Inc., a leading
international financial services organization. The local knowledge of the Aditya Birla
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Group combined with the expertise of Sun Life Financial Inc., offers a formidable
protection for your future. (Source: www.birlasunlife.com)
The Aditya Birla Group has a turnover close to Rs. 33000 crores with a market
capitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000 employees
across all its units worldwide. It is led by its Chairman - Mr. Kumar Mangalam Birla.
Some of the key organizations within the group are Hindalco and Grasim.
Sun Life Financial Inc. and its partners today have operations in key markets worldwide,
including Canada, the United States, the United Kingdom, Hong Kong, the Philippines,
Japan, Indonesia, India, China and Bermuda. It had assets under management of over
US$343 billion, as on 31st March 2007. The company is a leading player in the life
insurance market in Canada.
Being a customer centric company, BSLI has invested heavily in technology to build
world class processing capabilities. BSLI has covered more than a million lives since
inception and its customer base is spread across more than 1000 towns and cities in India.
All this has assisted the company in cementing its place amongst the leaders in the
industry in terms of new business premium income. The company has a capital base of
520 crores as on 31st July, 2007.
Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100 years
of age. There are guaranteed returns of 3% p.a. net of policy charges after every 5 years
from the eleventh policy year onwards. However the charges are very high. The initial
charges for the first year are 65%. Hence the fund value is greatly reduced.
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BAJAJ ALLIANZ
Bajaj Allianz is a joint venture between Allianz AG with over 110 years of experience in
over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55 years in
the Indian market. Together they are committed to offering you financial solutions that
provide all the security you need for your family and yourself. Bajaj Allianz is the
number one private life insurer for the year 2005 2006. It is leading by 78 crores. It has
experienced a whopping growth of 216% in the last financial year.
The company has sold 13, 00,000 policies and is backed by 550 offices across India. It
offers travel insurance, motor insurance, home insurance, health and corporate insurance.
The mortality charges are lower than HDFC SLIC. The entry age could be zero years
which allow even new born babies to be insured.
TATA AIG
Tata Aig is a joint venture between the Tata group and American International Group Inc.
In one of the plans the company offers hospital cash benefit wherein it will pay Rs. 2500
per day in case of hospitalization and Rs.12.5 lakhs in case the person suffers from any
critical illness. Annual premium is much less (about Rs. 6712) to avail such a good
benefit. Charges are relatively low compared to HDFC SLIC for some policies.
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The company offers high coverage plans at low cost. There is a plan even for a policy
term of 1 year. Your family can continue to enjoy their current lifestyle even in the case
of something happening to you. These plans are very flexible and HDFC SLIC could
adopt this idea of insuring individuals for short periods of time. For example; there is a
family of four. The only earning member is the father.
He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is able to
repay the loan with his current salary in 15 years. The problem arises if something were
to happen to him within these fifteen years. Not only will the family face the emotional
and financial loss of their father but they will also have to repay the home loan or risk
being homeless.
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MARKETING PROBLEMS
The old and out dated technique of tele marketing is used to prospect customers. More
modern techniques must be adopted. The company must sponsor shows and give
presentations in corporate houses. The financial health check must be performed for
every prospect to assess his/her true financial position and needs. Some of the advisors
skip this vital step and the prospect ends up with a plan they do not appreciate and soon
surrender or discontinue.
Some of the main problems in marketing the policies are:
Large amount of competition (18 players in the market)
Other brands are well advertised and have higher recall value
LIC is considered a safer option
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