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SUMMER TRAINING PROJECT REPORTSUMMER TRAINING PROJECT REPORT

AVIVA LIFE INSURANCE CO. LTD.AVIVA LIFE INSURANCE CO. LTD.

SUBMITTED IN FULFILLMENT FOR THE AWARD OF THE

DEGREE OF BACHELOR OF BUSINESS ADMINISTRATIONSession- 2012-2013

PORTFOLIO MANAGEMENT

Under the Guidance of::

Dr. Usha NairDr. Usha Nair

Submitted by: Sandeep KumarSubmitted by: Sandeep Kumar

VermaVerma

Enrolment No.:04814701810Enrolment No.:04814701810

BBA(B&I) 3BBA(B&I) 3rdrd YearYear

MAHARAJA AGRASEN INSTITUTE OF MANAGEMENT STUDIES

Affiliated to Guru Gobind Singh Indraprastha UniversityPSP Area, Plot No. 1, Sector 22, Rohini 110086

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STUDENT DECLARATION

This is to certify that I have completed the Summer Project titled Portfoilo management

in aviva life insurance company ltd under the guidance of Dr. Usha Nair in partial

fulfillment of the requirement for the award of Degree of Bachelor of Business

Administration at Maharaja Agrasen Institute of Management Studies, Delhi. This is an

original piece of work & I have not submitted it earlier elsewhere.

Date: Signature:Place: Name:University Enrollment No.:

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CERTIFICATE FROM THE INSTITUTE GUIDE

This is to certify that the summer project titled portfolio management in Aviva Life

insurance company is an academic work done by Mr. Sandeep Kumar Verma submitted

in the partial fulfillment of the requirement for the award of the degree of Bachelor of

Business Administration at Maharaja Agrasen Institute of Management Studies, Delhi,

under my guidance & direction. To the best of my knowledge and belief the data &

information presented by him/her in the project has not been submitted earlier.

Signature :Name of the Faculty :Designation :

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ACKNOWLEDGEMENT

The success of my research report would not hint at any one individual, but it was a

consolidated effort on the part of all who contributed to this report.

I am thankful to for providing me an opportunity to gain both theoretical and practical

knowledge in the field of Marketing and extending their full support.

Last but not the least, I would like to thanks my parents and friends for their moral

support throughout the project.

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EXECUTIVE SUMMARY

This project aims at providing information regarding insurance sector and how

emergence of private players proved to be a boom to this sector.

Chapter 1 explains about the concept of insurance, its purpose and need in contemporary

world. This chapter also includes origination of insurance; its nationalization in India;

benefits; advantages; basic principles that make insurance remain a popular and fair

arrangement; mechanism; governing legislation over insurance. IRDA (Insurance

Regulatory and Development authority) governs insurance industry. Its duties, powersand functions are mentioned.

Chapter 2 is all about the main as well as sub objectives of the organization and what are

their research methodologies.

Chapter 3 is about a brief comparison between private players and LIC.

Chapter 4 includes the analysis of data being collected regarding the Aviva LifeInsurance Co. Ltd. over other private players.

Chapter 5 findings are based on data analysis presented in earlier chapter and in the later

half of this chapter recommendations are given.

Chapter 6 is the conclusion made on the basis of this project. New players are leading the

sector due to their strategic management and tailor made projects. People opting for

Aviva plans are more as compared to other private players but the latter are gainingmomentum in the market day by day.

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CONTENTS

Chapter 1.0 INTRODUCTION

1.1 Insurance Industry Overview

1.2 Profile of Aviva Life Insurance Co. Ltd.

1.3 Problems of the Organization

1.4 Competition Information

1.5 S.W.O.T- Analysis

Chapter 2.0 OBJECTIVES AND METHODOLOGY

2.1 Significance

2.2 Managerial Usefulness of the study

2.3 Research Objective

2.4 Scope of the study

2.5 Research Methodology

Chapter 3.0 CONCEPTUAL DISCUSSION

Chapter 4.0 DATA-ANALYSIS

Chapter 5.0 FINDING AND RECOMMENDATIONS

Chapter 6.0 CONCLUSIONS

ANNEXURES

BIBLIOGRAPHY

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CHAPTER 1.0 INTRODUCTION

1.1 Insurance Industry Overview

1.2 Organization profile of Aviva

1.3 Competition Information

1.4 Problems of the Organization

1.4 S.W.O.T- Analysis

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INTRODUCTION

1.1 OVERVIEW OF INSURANCE INDUSTRY

1.1.1 Insurance

Every asset has a value for its owner and for those who are benefited with the existence

of that asset. Insurance is concerned with the protection of economic value of assets.

All of us are interested in the creation of assets because:

i. All assets have values.

ii. They yield income to the owner.

iii. They meet some other needs of the owner.

iv. They may provide satisfaction of some needs and also yield income to the

owner.

Every asset has normally an expected lifetime. During this period, it is expected to

perform and provide income/comfort to the owner. The owner, being aware of this, plans

the things in such a way that by the time the expected lifetime of the asset expires, he is

ready with the funds required for its replacement. In this way, he ensures that the value or

income from the asset is not lost. Well, this appears to be a fine arrangement provided the

asset completes its expected lifetime.

All assets carry the risk of being destroyed or damaged. But all assets may not necessarily

get destroyed or damaged. Only in a few instances, the probability turns out to be true

and the assets gets actually lost or destroyed by accident or some other unfortunate event

before the compilation of its expected lifetime. The owner and those deriving benefits

from the asset will suffer because the arrangement to make available its substitute is not

yet ready.

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Insurance is helpful in mitigating such adverse consequences. To sum up, assets are

insured, as they are likely to be lost or made non-functional through an accidental

occurrence.

Insurance does not protect the assets. This means that insurance cannot prevent loss to the

assets due to perils. Nor can insurance avoid the occurrence of perils. It only

compensates, may not be fully, the economic or financial loss resulting to the asset from

such damage or destruction.

1.1.2 BRIEF HISTORY OF INSURANCE

1.1.2.1 Beginning

In the beginning of insurance business is traced to the city of London. It started with the

marine business. Marine traders, who used to gather at Lloyds coffee house in London,

agreed to share losses to goods during transportation by ship. Marine related losses

included:-

Loss of ship by sinking due to bad weather in high seas.

Goods in transit by ship robbed by sea pirates.

Loss of or damage to the goods in transit by ship due to bad weather in high seas. The

first insurance policy was issued in England in 1583.

1.1.2.2 Life insurance in India

In India, insurance started with life insurance. It was in early 19 th century when the

Britishers on their postings in India felt the need of life insurance cover. It started with

English Companies like, The European and the Albert. The first Indian insurance

company was the Bombay Mutual Assurance Society Ltd., formed in 1870.

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In the wake of the Swadeshi Movement in India in the early 1900s, quite a good number

of Indian companies were formed in various parts of the country to transact insurance

business. To name a few :: Hindustan Co-operative and National Insurance in

Kolkata; United India in Chennai; Bombay Life, New India and Jupiter in Mumbai

and Lakshmi Insurance in New Delhi.

1.1.2.3 Nationalization of life insurance in India

In 1956, life insurance business was nationalized and LIC of India came into being on

1.9.1956. the government took over the business of 245 companies (including 75

provident fund societies) who were transacting life insurance business at that time.

Thereafter, LIC got the exclusive privilege to transact life insurance business in India.

Relevant laws in India were amended in 1999 and LICs monopoly right to transact life

insurance business in India came to an end. At the close of financial year ending

31.3.2004, twelve new companies were registered with the Insurance Regulatory &

Development Authority (IRDA) to transact life insurance business in India.

1.1.3 What is Life Insurance?

Life Insurance is a contract providing for payment of a sum of money to the person

assured or, to the person entitled to receive the same, on the happening of a certain event.

A family is dependent for its food, clothing and shelter on the income brought by the

family's breadwinner. The family is secure so long as this breadwinner is alive and is

capable of earning. A sudden death (or disability) may leave the family in a financially

difficult situation.

Uncertainty of death is inherent in human life and this uncertainty makes it necessary to

have some protection against the financial loss arising from untimely death. Life

insurance offers this protection. The earliest type of life insurance was started by the

Greeks and Romans. Contributions were made by all surviving members for the burial

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cost of a member. In case of the death of a member the cost of burial was made out of the

contributed fund.

The first organized life insurance company was founded in 1759 in Philadelphia, in North

America. Subsequently, over the past three centuries, numerous life insurance companies

sprung up, making life insurance a popular tool for protection coupled with investment.

1.1.4 Purpose and need for insurance

Assets are likely to be destroyed or made non-functional due to accidental

occurrences called perils. Assets can, therefore, be insured. A few examples of

perils are: fire, floods, breakdowns, lighting and earthquakes. Perils are the

events. Risks are the consequential losses or damages.

Possibility of damage to asset caused by any peril is the risk that asset is exposed

to.

Risk means uncertainty or unpredictability about future loss or damage, which

may or may not happen. This refers to the losses, which may happen suddenly and

unexpectedly.

This is because of uncertainty about the risk that insurance plays the role.

Insurance become relevant only if there are uncertainties of occurrences of event

leading to losses. Insurance is done against the contingency of the happening of

such events.

No uncertainty- No insurance.

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1.1.5 Life Insurance vs. Other Investments

Most investment options make your money work harder, but there are no substitutes to

life insurance. Because only a life insurance policy gives you both - risk cover against

your life, as well as returns on your money invested Life insurance allows long tem

savings to be made in a relatively painless manner because of the low and convenient

investments made through premiums. Moreover, it encourages 'forced thrift' which means

the insured is made to pay premiums and save money which he/she may not do in the

regular course of life.

Should you require loans, say for building a house, it can be easily obtained against a life

insurance policy. Amongst the most known benefits of Life Insurance is the savings on

your income taxes.

Life insurance cannot be compared with any other form of investment as life insurance

gives you a life long benefit and returns on your money when it is most required.

Insurance premiums are linked to age of the life insured and the earlier you buy, the

lower are the premium requirements. Besides, the money stays invested for a longer time

and thereby maximizing your returns through the power of rupee compounding.

So, a life insurance policy is an ideal tool to gain security and ensure savings. Most

importantly it provides you with that unique sense of security and peace of mind that no

other form of investment provides.

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1.1.6 Certain Basic Principles That Make Insurance Remain a Popular

and Fair Arrangement

People are exposed to risks the consequences of which are difficult to be

borne by an individual.

No person should be in position to make the risk happen and take advantage.

This means that the occurrence has to be random, accidental and nodeliberate

of the insured person i.e. the losses must happen suddenly and creation

unexpectedly.

1.1.7 Mechanism of Insurance

The concept of insurance is that-

People exposed to the same risk come together and agree to share a loss

collectively if any one of their members suffers it from that risk.

The insurance companies play the role of implementing this concept-

They bring together people exposed to similar risk.

They collect members contribution in advance in the shape of premiums and

create a fund out of which the losses are paid.

In the event of breadwinners death, the family income stops suddenly.

The family income may also stop on retirement of the breadwinner.

Life insurance covers the above contingencies and provides relief to the

family in the event of death or retirement of the breadwinner.

Variable needs for life insurance can be-

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I. Providing financial security for the family.

II. Provision for education, marriage etc. of children.

III. Post-retirement income for self and dependents.

IV. Special needs like Medical Expenses.

1.1.8 Governing legislation

Insurance is a federal subject in India and the legislation that governs insurance in India

is:

The Insurance Act, 1938; and

The IRDA Act.

1.1.9 Insurance Regulatory & Development Authority

Insurance Regulatory and Development Authority (IRDA) was constituted in

1999 by an Act of Parliament to protect the interests of the policyholders and to regulate,promote and ensure orderly growth of the insurance industry. IRDA consists of a ten

member team that comprises a Chairman, five whole-time members and four part-time

members.

IRDA allows registration of new players in the insurance field. It also has the

authority to renew, modify, withdraw, suspend or cancel such registration. IRDA ensures

protection of the interests of the policy holders in matters concerning assigning of policy,

nomination by policy holders, insurable interest, settlement of insurance claim, surrender

value of policy and other terms and conditions of contracts of insurance. It specifies

requisite qualifications, code of conduct and practical training for intermediary or

insurance intermediaries and agents.

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After creation of IRDA, insurance sector has seen tremendous growth. Before

IRDA came into force there were only players in the insurance field, namely, Life

Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC).

Since then 13 new players have entered in the insurance sector.

1.1.10.1 Composition of Authority under IRDA Act, 1999

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development

Authority (IRDA, which was constituted by an act of parliament) specify the composition

of Authority

The Authority is a ten member team consisting of

Chairman;

Five whole-time members;

Four part-time members,

(All appointed by the Government of India)

1.1.10.2 Duties, Powers and Functions of IRDA

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;

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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, 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 organizations 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 organizations 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;

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m. adjudication of disputes between insurers and intermediaries or insurance

intermediaries;

n. supervising the functioning of the Tariff Advisory Committee;

o. specifying the percentage of premium income of the insurer to finance

schemes for promoting and regulating professional organizations referred

to in clause (f);

p. specifying the percentage of life insurance business and general insurance

business to be undertaken by the insurer in the rural or social sector; and

q. exercising such other powers as may be prescribed

Indian Life Insurance Joint Ventures

Foreign Entity Local Company/VentureAIG Tata

Allianz Bajaj

Aviva Life Dabur

Cardiff State Bank of India Life

ING Life Vysya

New York Life MaxMet Life J & K Bank, Pallonji Group & others

Old Mutual Kotak Mahindra

Prudential ICICI

Standard Life HDFC

Sun Life Birla

Future Planning and Insurance

Every insurance plan revolves around the financial consequences of a premature death.

Obviously, the consequences are too large to ignore and cannot be totally covered by an

individual's personal resources.

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Basically, life insurance is nothing but a contract where the insured party or the purchaser

of insurance pays a premium that protects him against specific losses. When planning

your life insurance portfolio, you must consider your family's recurring needs like

medical expenses, house rent, provision costs for instance as well as long-term needs that

involve reinstating your family's set standard of living and their future such as higher

education and marriages.

Throughout our living existence, we are faced by numerous risks - failing health,

financial losses, accidents and even fatalities. Insurance addresses all these uncertainties

on financial terms.

Change is perhaps, the only static constant within the dynamics of life and risks always

move in tandem within a changing environment. Life insurance is more of a hedging

mechanism rather than a real investment avenue. It is essentially a mechanism that

eliminates risks primarily by transferring the risk from the insured to the insurer.

The insurance industry in particular has been subjected to numerous changes in the last

few decades since the need for insurance is more evident now than earlier. People's

spending patterns are changing and more & more resources are needed for immediate

consumption. In fact, we recommend that you review your needs and insurance portfoliofrom time to time, say every 2-3 years.

During the days of yore, the Joint family system had provided protection in case any

unfortunate incidents were to occur to any individual of the family. But after the advent

of industrialization, joint families have split into single nuclear families. The support of

the extended family cannot be counted upon anymore. Doesn't this lack of a unified

support system enhance the risks an individual is subjected to and intensify his or her

need for insurance?

1.2 COMPANY PROFILE

Aviva is UKs largest and the worlds fifth largest insurance Group. It is one of the

leading providers of life and pensions products to Europe and has substantial businesses

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elsewhere around the world. With a history dating back to 1696, Aviva has a 40 million-

customer base worldwide. It has more than 364 billion of assets under management.

In India, Aviva has a long history dating back to 1834. At the time of nationalization it

was the largest foreign insurer in India in terms of the compensation paid by the

Government of India. Aviva was also the first foreign insurance company in India to set

up its representative office in 1995.

In India, Aviva has a joint venture with Dabur, one of India's oldest, and largest Group

of companies. A professionally managed company, Dabur is the country's leading

producer of traditional healthcare products.

In accordance with the government regulations Aviva holds a 26 per cent stake in the

joint venture and the Dabur group holds the balance 74 per cent share.

With a strong sales force of over 28,000 Financial Planning Advisers (FPAs), Aviva has

initiated an innovative and differentiated sales approach to the business. Through the

Financial Health Check (FHC) Avivas sales force has been able to establish its

credibility in the market. The FHC is a free service administered by the FPAs for a need-

based analysis of the customers long-term savings and insurance needs. Depending on

the life stage and earnings of the customer, the FHC assesses and recommends the right

insurance product for them.

Aviva pioneered the concept of Bancassurance in India, and has leveraged its global

expertise in Bancassurance successfully in India. Currently, Aviva has Bancassurance tie-

ups with ABN Amro Bank, American Express Bank, Canara Bank, Centurion Bank of

Punjab, The Lakshmi Vilas Bank Ltd. and Punjab & Sind Bank, Co-operative Banks in

Gujarat, Rajasthan, Jammu & Kashmir, Bihar, West Bengal, Andhra Pradesh and

Maharashtra and regional Banks.

When Aviva entered the market, most companies were offering traditional life products.

Aviva started by offering the more modern Unit Linked and Unitised With Profit

products to the customers, creating a unique differentiation. Avivas products have been

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designed in a manner to provide customers flexibility, transparency and value for money.

It has been among the first companies to introduce the more modern Unit Linked

products in the market. Its products include: whole life (LifeLong), endowment

(LifeSaver, EasyLife Plus), child policy (Young Achiever) single premium (LifeBond

and LifeBond Plus), Pension (PensionPlus), Term (LifeShield), fixed term protection

plan (Freedom LifePlan) and a tax efficient investment plan with limited premium

payment term (LifeBond5). Aviva products are modern and contemporary unitised

products that offer unique customer benefits like flexibility to choose cover levels,

indexation and partial withdrawals.

Avivas Fund management operation is one of its key differentiators. Operating from

Mumbai, Aviva has an experienced team of fund managers and the range of fund optionsincludes Unitised With-Profits Fund and four Unit Linked funds: - Protector Fund,

Secure Fund, Balanced Fund and Growth Fund.

Aviva has 156 Branches in India (including rural branches) supporting its distribution

network. Through its Bancassurance partner locations, Aviva products are available

in close to 500 towns and cities across India.

Aviva is also keen to reach out to the underprivileged that have not had access toinsurance so far. Through its association with Basix (a micro financial institution) and

other NGOs, it has been able to reach the weaker sections of the society and provide life

insurance to them.

DABUR

Founded in 1884, Dabur is one of India's oldest and largest group of

companies with consolidated annual turnover in excess of Rs 1,899 crores. A

professionally managed company, it is the country's leading producer of traditional

healthcare products.

Partners

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At Aviva we are committed to helping our customers get 'Kal par Control' and make the

most out of their lives. It is our constant endeavour to ensure that our customers have

easy access to Aviva products and services at all times.

Aviva has pioneered bancassurance in the country through its tie-ups with 22 leading

private and nationalized Banks in the country. Aviva also focuses on bancassurance

worldwide and has a proven track record of successful bancassurance relationships. It has

40 major partnerships with leading banks across the globe. Aviva is a leading bancassurer

in countries such as France, Italy, Spain, Australia and New Zealand.

ABN AMRO Bank

ABN AMRO is a prominent international bank with European roots and a clear focus on

consumer and commercial banking gaining a competitive edge on the chosen markets and

client segments. ABN AMRO Bank (India) ventured into the Indian market in 1920

primarily to finance the diamond trading business and evolved by mid 1990s into a

fastest growing retail bank and a well-respected wholesale bank.

The Bank is recognized as one of the most successful consumer banking outfits in the

county, known for its innovation and aggression. ABN India consumer banking

pioneered the distribution of third party financial products like mutual funds, bonds and

life insurance.

Aviva's relationship with ABN India commenced in June 2002 under which the bank

introduces its customers to Aviva for insurance and provides access to its affluent

customer base across the country through its operations in 21 branches at 14 locations.

American Express Bank

American Express Company is a diversified worldwide travel and financial services

company founded in 1850. It is the worlds largest single card issuer, based on purchase

volume generated of nearly 55 million cards worldwide. Present in India since 1921,

American Express provides high quality travel related and financial services in India.

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Aviva Life Insurance entered into a strategic alliance with American Express for

distribution of Life Insurance in June 2002 to offer top-of the line saving-cum-protection

plans to Amex bank and card customers.

Aviva offers tailor-made investment solutions to the high net worth clients of the Wealth

Management channel. The retail card segment is being tapped through outbound calling

to the Amex card holders. The American Express Inbound call centre also pitches Aviva

products to its callers.

The Lakshmi Vilas Bank Ltd

The Lakshmi Vilas Bank Ltd, based out of Karur, is among the top private banks in India.

It has 221 branches with a customer base of 1.2 million, across 10 states. Currently Aviva

products are sold across 204 branches of LVB.

CANARA BANK

Canara Bank is one of the largest retail banks in India with 2,513 branches spread across

25 States and 4 Union Territories. The customer base of Canara Bank exceeds 27 million.

With a net profit of INR 1110 Crores, deposits of over INR 96,908 Crores, 47389

employees for the year ending Mar 2005, Canara Bank is truly a Bank to be reckoned

with for the sheer magnitude of coverage it offers its clients. Canara Bank has tied up

with Aviva as a Corporate Agent for its Life Insurance Products. Aviva products are

currently offered in 1030 Canara Bank branches in 103 Cities.

Punjab & Sind Bank

Punjab & Sind Bank was established in the year 1908. Based on the principles of social

commitment to the people, help the farmers, and the weaker sections of the society to

raise their standard of living and play a significant role in the development of the country.

Even after 96 years of its inception, Punjab & Sind Bank stands committed to honor the

high ideals of its founding fathers. Punjab and Sindh Bank has a network of 759

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branches and 132 extension counters all over the country with close to 9,765 employees.

42 per cent of its branches are in the rural and semi urban areas.

In line with spirit of liberalisation the Bank has laid special emphasis on International

banking, Hire purchase, Leasing, Tele-banking and Credit card facilities. The bank has

also started their Rural Development Division, High Tech Agricultural Branches,

Specialised Locker Branches, Industrial Finance and SSI branches, besides Housing

Finance Branch for the convenience of its customers.

Centurion Bank of Punjab

Centurion Bank of Punjab is a new generation private sector bank offering a wide

spectrum of retail and corporate banking products and services. It holds leadership

positions in retail two-wheeler loans and commercial vehicle loans. It has been among the

earliest banks to offer a technology-enabled customer interface that provides easy access

and superior customer service.

RBI has approved the merger between Centurion Bank and Bank of Punjab effective

from October 1st, 2005. The merged entity, named Centurion Bank of Punjab, has a

strong nationwide franchise of 241 branches and extension counters and 389 ATMs. With

strengths in the retail, SME and agriculture businesses the bank is well poised to capture

the opportunities that exist in the Indian market. The combined banks 3,500 employees

will continue to provide support and an enhanced banking experience to our customers,

as part of a bigger, stronger bank.

IndusInd Bank

IndusInd Bank Ltd., is one of the leading new-generation private-sector banks in India,

commenced operations in 1994 and had a net worth of Rs.866 crore as at March 31,

2012. As of date, the Bank has a network of 148 branches and 87 offsite ATMs spread

over 118 geographical locations in 24 states and Union Territories.

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Recently the Bank received licenses for opening 19 new branches across the country.

With this the network will now increase to 180 branches by March-April 2012.

Internationally, the Bank has a representative office each in Dubai and London. The Bank

also enjoys strategic alliances with Union National Bank, Abu Dhabi in the UAE and

Doha Bank in Qatar. These strategic alliances encompass a wide range of banking

services, including deposit accounts, remittance business, loans, wealth management

advisory, distribution of third party products, trade finance, global banking, and

investment banking including corporate finance.

PRODUCTS & SERVICES

The right investment strategies won't just help you plan for a more comfortable tomorrow

-- they will help you getKal Par Control.

At Aviva, life insurance plans are created keeping in mind the changing needs of you and

your family. Our life insurance plans are designed to provide you with flexible options

that meet both protection and savings needs.

We offer our customers a full range of transparent, flexible and value for money products

that include whole life (LifeLong), endowment (LifeSaver, EasyLife Plus), child policy

(Young Achiever) single premium (LifeBond, LifeBond Plus), Pension (PensionPlus),

Term (LifeShield), fixed term protection plan (Freedom LifePlan) and a 5 year recurring

premium investment cum protection plan (LifeBond5). Aviva products are modern and

contemporary unitised products that offer unique customer benefits like flexibility to

choose cover levels, indexation and partial withdrawals.

We also offer you a choice of investment options. You can choose between our Unit

Linked Fund or our With Profits Fund.

The With Profits Fund guarantees that the selling price of the units will never fall. The

unit value of this fund is increased by crediting bonuses on a daily compounding basis.

The fund provides investment security to your capital.

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The Unit Linked Fund is designed to provide relatively more progressive capital growth

wherein you automatically receive the benefit related to the investment performance of

the fund.

Under Unit Linked Fund, on some of our products we offer a choice of fund options:

Protector Fund:

Progressive returns on your investment by investing higher element of assets in debt

securities, with minimum exposure to equities. The fund comprises of debt securities in

the range of 60-100%, equities in the range of 0-20% and money market and cash in the

range of 0-20%.

Secure Fund:

The investment objective of this fund is to provide progressive return on your investment

with a minimum guarantee on maturity. The fund comprises of debt securities in the

range of 50-100%, equities in the range of 0-20% and money market and cash in the

range of 0-20%. Initially the equity exposure will be 10 %.

Growth Fund:

The investment objective of this fund is to provide high capital growth by investing

higher element of assets in the equity market. The fund will comprise of debt securities in

the range of 0-50%, equities in the range of 0-85% and money market and cash in the

range of 0-20%. Initially the equity exposure will be 75%.

Balanced Fund:

The investment objective of this fund is to provide capital growth by availing

opportunities in debt and equity markets and providing a good balance between risk and

return. The fund comprises of debt securities in the range of 50-90%, equities in the range

of 0-45% and money market and cash in the range of 0-10%.

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Aviva also offers a whole range of group insurance products and corporate solutions. We

have a dedicated team that works with corporates across the country.

PURE PROTECTION PRODUCTS

Aviva Life Insurance offer the following policies to take care of our protection needs-

Life Long

Life Shield

LIFE LONG

LifeLong is designed to suit your individual requirements, no matter which life stage you

are at, and changes as your needs change during your entire life. For the same premium,

you can opt for a higher life cover (protection) and lower savings or lower life cover and

higher savings. The choice of protection-savings mix is yours, and the decision can be

based on your priorities and age. You can also cover your spouse under the same policy

without any additional expense through a joint life policy (first death basis).

LifeLong offers a With Profits or 3 Unit Linked investment fund options, which give you

the flexibility of choosing how your money should be invested in terms of the risk and

the security of the return on the investment. You can invest 100% of your premiums

either in With Profits Fund or in any of the Unit Linked Funds. The minimum allocation

in each selected unit linked fund must be 10%.

LIFESHIELD

Insurance Term Pure

LifeShield is a low cost life insurance plan which guarantees to pay a lump sum amount

in case of your death during the term of the policy. LifeShield can be purchased for any

life between 18 to 55 years of age. However, the maximum age of the life insured at

expiry of the policy is 65 years. The minimum and maximum policy terms are 5 years

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and 40 years, respectively. The minimum annual premium is Rs.2,000 and the minimum

sum insured is Rs.500,000. The sum insured of the policy can be increased (only upto 40

years of age) once by 50% (subject to maximum increase of Rs.1,000,000) during the

term of the policy, without submitting any evidence of good health, if:

- You decide to increase the sum insured within three months of your marriage.

- You decide to increase the sum insured within three months of the birth of your

child.

This option to increase the sum insured is available if the policy has been accepted on

standard rates. It can be exercised only when outstanding term of the policy is at least 5

years and the policy is inforce for full sum insured

PURE SAVINGS PRODUCTS

Aviva Life Insurance offer the following savings policies-

Easy Life Plus

Young Achiever

Life Bond 5

Life Bond

Life Saver

Life Long

Pension Plus

Save Guard

Life Bond Plus

Save Guard Junior Life saver Plus

Freedom Life Plan

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Easy Life Plus

EasyLife Plus is a simple, unit-linked endowment plan with the benefit of life protection.

By choosing an appropriate premium level and term, you can match the maturity date of

the plan to a specific savings need such as your childs education, wedding or any other

financial need.

EasyLife Plus also offers an extra protection against accident without requiring you to

undergo any medical examinations.

EasyLife Plus offers a With Profits or 3 Unit Linked investment fund options, which give

you the flexibility of choosing how your money should be invested in terms of the risk

and the security of the return on the investment. You can invest 100% of your premiums

either in With Profits Fund or in any of the Unit Linked Funds. The minimum allocation

in each selected unit linked fund must be 10%.

Young Achiever

Child policy

YoungAchiever is a regular premium life insurance product designed to meet the

financial needs of your children- be it higher education, marriage, establishing

themselves while starting a career or a business, or any other need. Through this policy,

you save regularly to meet your children's needs, and at the same time their financial

needs are taken care of should something unfortunate happen to you. YoungAchiever can

be purchased on the life of any one of the parents with the child as the nominee.

YoungAchiever offers a With Profits or 3 Unit Linked investment fund options, which

give you the flexibility of choosing how your money should be invested in terms of therisk and the security of the return on the investment. You can invest 100% of your

premiums either in With Profits Fund or in any of the Unit Linked Funds. The minimum

allocation in each selected unit linked fund must be 10%.

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Life Bond

LifeBond 5 is an investment plan where you pay premiums only for 5 years and get

investment returns with maximum tax benefits. This unit-linked plan gives you the

flexibility that you, as a smart investor, seek both at the time of investment and at

maturity. LifeBond 5 offers 3 Unit Linked investment fund options, which give you the

flexibility of choosing how your money should be invested in terms of the risk and the

security of the return on the investment. You can invest your premiums in any one fund

or in a combination of funds. The minimum allocation in each selected fund must be

10%. LifeBond is a unit linked, Single Premium Whole Life plan, designed to provide

you the maximum benefit of investment returns and tax benefits. You can gift LifeBond

to your newborn and provide financial security when he/ she needs it. Also, you cancover your spouse under the same policy without any additional expense through a joint

life policy (second death basis). LifeBond offers a With Profits Fund and 3 unit linked

funds, which give you the flexibility of choosing how your money should be invested in

terms of risk and security of return on investment.

Life saver

Life Saver is a unit linked endowment plan designed to meet your specific long-term

savings needs such as education and wedding costs for your children, with the added

reassurance of a life cover to meet those costs in the unfortunate event of your death

before the policy matures. You can take LifeSaver on single life or jointly with your

spouse (first death basis). LifeSaver can be purchased on any life between 18 to 65 years.

However, for any rider cover the maximum entry age is 55 years. LifeSaver offers a With

Profits or 3 Unit Linked investment fund options, which give you the flexibility of

choosing how your money should be invested in terms of the risk and the security of the

return on the investment. You can invest 100% of your premiums either in With Profits

Fund or in any of the Unit Linked Funds. The minimum allocation in each selected unit

linked fund must be 10%.

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Pension plus

Pension Plus is a tax efficient, personal pension plan that is designed to help you earn a

regular income, even after you stop working. Through this plan, you build a fund till you

retire which provides you financial security after retirement. Pension Plus can be

purchased for any life between 18 to 65 years of age. The minimum age at maturity is 40

years and the maximum age at maturity is 70 years. You have the option of either paying

regular premiums or paying a single premium. The minimum annual premium is Rs.

6,000 for regular premium and Rs 1,00,000 for a single premium option. The minimum

policy term is 5 years. A With Profits Fund or 3 unit linked funds; Secure, Growth and

Balanced Funds.

Save Guard

SaveGuard is a simplified, unit-linked endowment plan. It is specially designed to help

you save for important milestones like your childs education and marriage, building a

house or even creating a retirement fund. It also provides financial protection for your

dependants in the unfortunate event of your demise. SaveGuard offers life insurance as

well as an investment opportunity without requiring you to undergo any medical

examinations.

SaveGuard offers 3 Unit Linked investment fund options, which give you the flexibility

of choosing how your money should be invested in terms of the risk and the security of

the return on the investment. You can invest your premiums in any one fund or in a

combination of funds. The minimum allocation in each selected fund must be 10%.

Life Bond plus

LifeBond Plus is a unit linked, Single Premium Endowment plan, designed to provide

you the maximum benefit of investment returns and tax benefits.The entry age is 18 to 65

years (last birthday) and in case rider is opted, the maximum entry age is 55 years. The

policy terms is 5 to 25 years (maximum age at maturity 70 years).A With Profits Fund or

3 unit linked funds; Secure, Growth and Balanced Funds.

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SaveGuard Junior

SaveGuard Junior is a simplified, unit-linked endowment plan, which covers your childs

life. It is specially designed to help you save for important milestones in your childs life

like education, setting up a business or marriage. SaveGuard Junior offers an investment

opportunity as well as life insurance without requiring you to undergo any medical

examinations. SaveGuard Junior offers entry ages from 0 to 17 years, a choice of policy

terms, from 10 to 30 years as well as an option of investing in any or a combination of 3

unit-linked funds. SaveGuard Junior also offers a guarantee that the units invested in the

Secure Fund will not be less than the price they were bought at plus 3% interest

compounded annually. LifeSaver Plus is a Unit Linked endowment plan designed to meet

your future savings requirements besides offering a higher life cover. The plan offers fullSum Assured in addition to the Fund Value as death benefit in case of your unfortunate

death, thereby providing a higher financial protection to your family. You can also opt

for the Systematic Transfer Plan. The plan provides a guaranteed addition at maturity.

In addition, the Plan offers a minimum guarantee on maturity on the funds allocated

towards the Secure Fund.

LifeSaver Plus

LifeSaver Plus can be purchased for any age between 0 to 60 years. However, in case any

rider is opted for the maximum entry age is 55 years. You can also choose the premium

payment term separately from the policy term so that you can match your paying capacity

to your financial goals. You have the freedom of choosing from 4 Unit Linked Funds:

Protector, Secure, Growth and Balanced Funds and the option of investing through the

Systematic Transfer Plan. In addition, you get a minimum 2% Guaranteed Addition at

maturity and have the choice of increasing or decreasing your premium amount whenever

you like.

Freedom Life Plan

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Freedom LifePlan is a unit-linked limited premium paying endowment plan with

guaranteed loyalty additions. This unit linked plan gives you the flexibility to customise

the plan to suit your individual needs and alter it subsequently with your changing needs.

You can take Freedom LifePlan on single life or jointly with your spouse (first death

basis). Freedom LifePlan offers 3 Unit Linked investment fund options, which give you

the flexibility of choosing how your money should be invested in terms of the risk and

the security of the return on the investment. You can invest your premiums in any one

fund or in a combination of funds. The minimum allocation in each selected fund must be

10%.

1.3 PROBLEMS OF THE ORGANIZATION

Service delivery / Logistics perception is weak

Negative Environment

Top management takes large amount of time to approve high value loan

borrowers.

1.4 COMPETITION INFORMATION

1.4.1 Insurance Companies in India

Before insurance sector was opened to the private sector Life Insurance Corporation

(LIC) was the only insurance company in India. After the opening up of Insurance sector

in India there has been a glut of insurance companies in India. These companies have

come up with innovative and flexible insurance policies to cater to varying needs of the

individual. Opening up of the Insurance sector has also forced the Lic to tighten up its

belt and deliver better service. All in all it has been a bonanza for the consumer.

Major Life insurance Companies in India are:

Bajaj Allianz

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Birla S un Life Insurance

HDFC Standard Life Insurance

ICICI Prudential

ING Vysya

Kotak Mahindra

LIC

MetLife India Insurance

Reliance Life Insurance

SBI Life Insurance

Shriram Life Insurance

Tata AIG Life Insurance

Bajaj Allianz

Bajaj Allianz is a joint venture between Allianz AG one of the world's largest insurance

companies, and Bajaj Auto, one of the biggest 2 and 3 wheeler manufacturers in the

world. Bajaj Allianz is into both life insurance and general insurance.

Allianz Group is one of the world's leading insurers and financial services providers.

Founded in 1890 in Berlin, Allianz is now present in over 70 countries with almost174,000 employees. Bajaj group is the largest manufacturer of two-wheelers and three-

wheelers in India and one of the largest in the world.

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Today, Bajaj Allianz is one of India's leading and fastest growing insurance companies.

Currently, it has presence in more than 550 locations with over 60,000 Insurance

Consultants.

Birla Sun Life Insurance

Birla Sun Life Insurance Company Limited is a joint venture between Aditya Birla Group

and Sun Life Financial of Canada. Aditya Birla Group is an Indian multinational

conglomerate with presence in India, Thailand, Indonesia, Malaysia, Philippines, Egypt,

Canada, Australia and China.

Sun Life Assurance, Sun Life Financial's primary insurance business, is one of the

leading insurance companies of the world and ranks amongst the largest international

financial services organizations in the world. The Group has presence in several countries

such as Canada, United States, Philippines, Japan, Indonesia, India and Bermuda.

HDFC Standard Life Insurance

HDFC Standard Life Insurance Co. Ltd. is a joint venture between HDFC Ltd., India's

largest housing finance institution and Standard Life Assurance Company, Europe's

largest mutual life company. It was the first life insurance company to be granted a

certificate of registration by the IRDA on the 23rd of October 2000.

Standard Life, UK was founded in 1825 and has experience of over 180 years.

Companies. The company is rated as "very strong" by Standard & Poor's (AA) and

"excellent" by Moody's (Aa2).

HDFC Standard Life's cumulative premium income, including the first year premiums

and renewal premiums is Rs. 672.3 Crores for the financial year, Apr-Nov 2005. So far

the company has covered over 11,00,000 individuals and has declared 5th consecutive

bonus in as many years for its 'with profit' policyholders.

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ICICI Prudential Life Insurance

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, a

premier financial powerhouse and Prudential plc, a leading international financial

services group headquartered in the United Kingdom.

ICICI was established in 1955 to lend money for industrial development. Today, it has

diversified into retail banking and is the largest private bank in the country. Prudential plc

was established in 1848 and is presently the largest life insurance company in the UK.

ICICI Prudential is curently the No. 1 private life insurer in the country. For the financial

year ended March 31, 2005, the company garnered Rs 1584 crore of new business

premium for a total sum assured of Rs 13,780 crore and wrote nearly 615,000 policies.

ING Vysya Life Insurance

ING Vysya Life Insurance Company Limited is a joint venture between Vysya Bank and

ING Group of Holland, the world's 4th largest financial services group, with presence

across 50 countries, and a heritage of over 150 years.

ING Vysya Life Insurance Company Private Limited entered the private life insurance

industry in India in September 2001. With in a short span of time ING Vysya Life

Insurance has registered an impressive growth. The company currently has over 10,000

active advisors working from 75 branches (in 30 cities) across the country and over 2300

employees.

Kotak Mahindra Old Mutual Life Insurance Limited

Kotak Mahindra Old Mutual Life Insurance Ltd. is a joint venture between Kotak

Mahindra Bank Ltd.(KMBL), and Old Mutual plc. Kotak Mahindra is one of India's

leading financial institutions and offers a range of financial services such as commercial

banking, stock broking, mutual funds, life insurance, and investment banking.

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Old Mutual was established more than 150 years ago and offers a diverse range of

financial services in South Africa, the United States and the United Kingdom. The

company is listed on the London Stock Exchange with a market capitalization and has its

headquarters in London.

Life Insurance Corporation of India (LIC)

Life Insurance Corporation of India (LIC) is an autonomous body authorized to run the

life insurance business in India with its Head Office at Mumbai. It has been established

by an act of the Parliament and started functioning from 1/9/1956.

LIC is the biggest insurance player in the country. Out of the total premium of Rs 3766

crore generated by the insurance industry through group business in the year 2005-06,

LIC alone accounted for Rs 3051 crore.

In the financial year 2005-06, LIC has grown at 30.68%. In respect of number of lives

insured, LIC has shown a growth of over 152%. In respect of number of schemes, LIC

has a growth of 2%. LIC's market share in number of individuals covered and number of

policies stands at 77% and 81%, respectively.

MetLife India Insurance

MetLife India Insurance Co. Pvt Ltd is a joint venture between MetLife Group and its

Indian partners. The Indian partners include J&K Bank, Dhanalakshmi Bank, Karnataka

Bank, Karvy Consultants, Geojit Securities, Way2Wealth, and Mini Muthoothu.

Met Life Group has presence in America and Asia and has an experience of over 137

years in providing financial services. The MetLife companies are the number one life

insurer in the U.S. with approximately US $2.8 trillion of life insurance in force. MetLife

serves 88 of the top one hundred FORTUNE 500 companies. MetLife entered Indian

insurance sector in 2001.

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Reliance Life Insurance

Reliance Life Insurance Company Limited is a part of Reliance Capital Ltd. of the

Reliance - Anil Dhirubhai Ambani Group. The company acquired 100 per cent

shareholding in AMP Sanmar Life Insurance Company in August 2005. Taking over

AMP Sanmar Life provided Reliance Life Insurance a readymade infrastructure and a

portfolio.

AMP Sanmar Life Insurance was a joint venture between AMP, Australia and the Sanmar

Group. Headquartered in Chennai, AMP Sanmar had over 90 offices across the country,

9,000 agents, and more than 900 employees.

SBI Life Insurance

SBI Life Insurance is a joint venture between the State Bank of India and Cardif SA of

France. SBI Life Insurance is registered with an authorised capital of Rs 500 crore and a

paid up capital of Rs 350 crores.

State Bank of India is the largest banking franchise in India. Along with its 7 Associate

Banks, SBI Group has a network of over 14,000 branches across the country, the largest

in the world.

Cardif is a wholly owned subsidiary of BNP Paribas, which is The Euro Zone's leading

Bank. BNP is one of the oldest foreign banks with a presence in India dating back to

1860

Shriram Life Insurance

Shriram Life Insurance Company Ltd is a joint venture between the Chennai-based

Shriram Group and the South African insurance major Sanlam.

The company launched its operations in India in December 2005.

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Shriram Life has set a target of achieving a premium income of Rs 110 crore during the

first year of operations. While focussing largely on the strong network of over 65,000

agents and distribution network of more than 550 branches, Shriram Life is also

contemplating bancassurance alliances with couple of banks.1.3.14 Tata AIG Life

Insurance

Tata AIG Life Insurance Company Limited is a joint venture between Tata Group and

American International Group, Inc. (AIG). Tata Group is one of the oldest and leading

business groups of India. Tata Group has had a long association with India's insurance

sector having been the largest insurance company in India prior to the nationalization of

insurance. The Late Sir Dorab Tata, was the founder Chairman of New India Assurance

Co. Ltd., a group company incorporated way back in 1919.American International Group, Inc is the leading U.S. based international insurance and

financial services organization and the largest underwriter of commercial and industrial

insurance in the United States. AIG has one of the most extensive life insurance networks

in the world.

1.5 SWOT ANALYSIS

Both Strengths and Weaknesses are inherent with the company while Opportunities and

Threats are usually outside factors, which affect the existence of the company at large.

Let us make the SWOT Analysis for Life Insurance Corporation:

1.5.1 Strengths

The early bird advantage

More penetration in the rural parts of India

The trust they have created so far

Established agency network during the last decades

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The incomparable supremacy in the number of agents

More awareness among the people

1.5.2 Weaknesses

The marketing approach is not that much professional

The sluggishness of the activities has given at times a bad repute

As a public company lacks sincerity and activeness.

1.5.3 Opportunities

As people become more internet savvy, the Ad. Expenditure will come down as

the prospective clients can be approached through net.

The high growth rate of Indian Economy

The penetration of Insurance in rural area is minimal.

The Government policies are offering more and more rebates on the insured

amount and such a scenario will help more people getting interested in itThe

people are becoming more aware of Insurance and started considering it.

1.5.4 Threats

Now as India is on the brim of emerging out as an economic power center,

stringent laws can be expected in the coming future.

As the number of agents are considerably huge, efficient management of all the

field force need greater strain and effort

The aggressive style of marketing by the private players is a threat to LIC

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More and more companies are coming into the field and the existing ones have to

struggle hard to keep the customers loyal and to get more customers

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Chapter 2.0 OBJECTIVES AND METHODOLOGY

1. Significance

2. Managerial usefulness of the study

3. Objectives

4. Research Methodology

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2.1 SIGNIFICANCE

The main significance of the study is the reasons of salaried people taking up

Insurance Services pertaining to Life Insurance

2.2 MANAGERIAL USEFULNESS OF THE STUDY

This project is very useful to study about the reasons of salaried people taking up

insurance services pertaining to life insurance.

2.3 MAIN OBJECTIVE

To study the reasons of salaried people taking up Insurance Services pertaining to

Life Insurance

To know the Most Preferred Policy.

To study the types of benefits provided by Insurance Services.

2.4 RESEARCH METHODLOGY

1. Research and Design

a. Descriptive research attempts to describe systematically a situation,

problem, phenomenon, service or programme, or provides information

about , say, living condition of a community, or describes attitudes

towards an issue.

b. Correlational research attempts to discover or establish the existence of a

relationship/ interdependence between two or more aspects of a situation.

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c. Explanatory research attempts to clarify why and how there is a

relationship between two or more aspects of a situation or phenomenon.

d. Exploratory research is undertaken to explore an area where little is

known or to investigate the possibilities of undertaking a particular

research study (feasibility study / pilot study).

2. Data collection method

a. Primary Research

i. Questionnaire: Questionnaire is a research instrument consisting

of a series ofquestions and other prompts for the purpose of

gathering information from respondents. Although they are often

designed forstatistical analysis of the responses, this is not always

the case. The questionnaire was invented by Sir Francis Galton

b. Secondary Research

i. Journal/Brochure of IRDA

ii. Published Reports

iii. Internet

3. Sampling Plan

a. Sampling unit employed people having salary between Rs. 10000 Rs.

40000 per month.

b. Sampling size 150 people

c. Sampling procedure non probability judgement sampling

4. Data collection instrument

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a. Questionnaire

b. Focus group interview

5. Analysis

a. Though a detailed study was planned but due to time constraint it was

restricted to around 150 people only.

6. Presentation of data

a. Data have been shown in the form of pie chart and the tabular.

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CHAPTER 4.0 Data Analysis

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DATA ANALYSIS

4.1 Data gives figures of ranking of insurance company according to the respondents.

Table 1

Company Name Number of respondents Share (%)LIC 45 45

Aviva 40 40

ICICI Prudential 10 10

OM Kotak Mahindra 3 3

HDFC 2 2

Total 100 100

Fig. 9

Interpretation:

40% of the

people have

Aviva policy

and is ranked number one by that percent of respondent.

4.2 Data gives figures of benefits of insurance cover perceived by respondents.

Table 2

Benefits Number of respondents Share (%)Cover Future Uncertainty 55 55

Tax Deductions 20 20

45%

40%

10%

3%2%

LIC

Aviva

ICICI Prudential

OM Kotak

Mahindra

HDFC

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Future Investment 25 25

Total 100 100

55%

20%

25%Cover Future

Uncertanity

Tax

Deductions

FutureInvestment

Fig. 10

Interpretation: 55% of the respondents believe that covering future uncertainty is the

biggest benefit of insurance policy. 20% and 25% of them believe that other benefits are

tax deduction and future investment.

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4.3 Data provides features of insurance policy which attracted the respondents the most.

Table 3

Features Number of

respondents

Share (%)

Money Back Guarantee 15 15

Larger Risk Coverance 37 37

Easy Access to Agents 7 7

Low Premium 30 30

Reputation of Company 11 11

Total 100 100

15%

37%

7%

30%

11%

Money Back

Guarantee

Larger RiskCoverance

Easy Access to

Agents

Low Premium

Reputation of

Company

Fig. 11

Interpretation: Majority of the respondent found larger risk conversance as the most

attracted feature of their policy.

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4.4 Data provides type of policy respondents are holding

Table 4

Policy Type Number of respondents Share (%)Life Policy 60 60

Non Life Policy 25 25

Both 15 15

Total 100 100

60%

25%

15%

Life Policy

Non - Life

Policy

Both

Fig. 12

Interpretation: 60% of the respondents have life insurance policy while 15% have both

life and non life insurance policy.

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4.5 Data provides various instruments of Insurance.

Table 5

Instrument Number of respondents Share (%)Protection 75 75

Investment 10 10

Tax 6 6

Great Returns 5 5

Risk Management 4 4

Total 100 100

75%

10%

6%

5%

Protection

Investment

Tax

Great Returns

Risk

Management

Fig. 13

Interpretation: 75% of the respondents say protection is most important.

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4.6 Data provides how many people are aware of Private Participators.

Table 6

Awareness Number of respondents Share (%)Yes 80 80

No. 20 20

Total 100 100

80%

20%

Yes

No

Fig. 14

Interpretation: 80% of the respondents are aware of private participators. It a good

amount of people know there are private player to in the insurance sector.

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CHAPTER 5.0 FINDINGS & RECOMMENDATIONS

5.1 Findings

5.2 Recommendations

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5.1 FINDINGS

The project study report has the following findings with it:

Almost 75% of respondents have an insurance policy.

People have more number of life insurance policies as compared to non life

insurance.

Only 80% people are aware that Insurance has been opened for Private

Participators.

Due to increased in consumerism new product is launched everyday thus non

life/general insurance business is also going to have boom period.

Due to the increasing concern of people towards their health/life the life insurance

business has good prospects.

Majority of the respondent believed that larger risk conversance of their policy

was the main feature of their policy that attracted them to buy that policy. Though

low premium was the next important feature.

Majority of the respondent preferred to have Aviva policies than other private

companies.

Not many people know about the IRDA Act.

Majority of the respondents believe that covering future uncertainty is the most

important benefit of an insurance policy.

Protection is the most important instrument of insurance followed by investment,

tax, greater returns and risk management.

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5.1.1 Life insurance industry grows 21%. Sources are:

Life insurance industry grew by 21 per cent with LIC and 13 private players mopping up

Rs 4,437 crore in the first three lean months of 2005-06, according to agency reports.

Private players expanded business by 73 per cent while state-owned Life Insurance

Corporation grew by 10.2 per cent.

Fueled by aggressive growth, the private players have now cornered over 25 per cent of

the life insurance market till June 2005 compared to 17.61 per cent a year ago in terms of

premium income from fresh businesses, as per data released by regulator IRDA.

LIC continues to shed ground as its market share came down to 74.87 per cent till June

2005 as against 82.39 per cent during the corresponding period last year.

LIC mopped up Rs 3,322 crore in premium income during April-June this fiscal by

selling 33.86 lakh policies.

To arrest the decline in market share, LIC is planning to engage a large chunk of its

60,000 odd Class-III staff in selling products and is focusing on widening policyholders

base rather than run after a niche segment.

ICICI Prudential topped the chart of private players with a market share of 7.53 per cent

after logging a business growth of 51 per cent at Rs 334 crore.

Bajaj Allianz was second with a market share of 4.18 per cent followed by HDFC

Standard (3.2 per cent), Tata AIG (1.93 per cent), Birla Sunlife (1.84 per cent), SBI Life

(1.69 per cent), Aviva (1.44 per cent) and MNYL (1.14 per cent).

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5.2 RECOMMENDATIONS

There are certain flaws existing in this working of the insurance industry. There are some

of the recommendation I come across while doing this thesis. It will help to make

insurance more important sector in todays economy.

The need of the hour is to devise a comprehensive strategy that will help the firms

face the challenges of the future. The financial service industry around the world

over is undergoing a major transformation. It is very important that trained

marketing professionals who are able to communicate specific features of the

policy should sell the policy.

From the research I could find out that people are not aware about the policies and

features of insurance. Therefore LIC and ICICI are recommended to shed light on

policies and explain the benefits, thus increasing the awareness.

The penetration of insurance in India is around 22%. This indicates that a vast

majority of rural population is not covered. The market player needs to explore

this untapped potential through their marketing and sales network.

The returns of the policies are not properly managed and never given in time. So,

these areas must be looked at.

Pricing of insurance products, as empirically available in India, shows that pricing

is not in consonance with market realities. Life Insurance premium is generally

perceived, as being too high while general insurance (especially motor insurance)

is priced too low.

Some insurance products, which are not available in India, should, be introduced

in market. There are areas for new product development like Industry all risk

policies; large projects risk cover, Risk beyond a floor level, extended public and

product liability cover.

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Insurance companies will also have to get savvy in distribution. Enhanced

marketing thus will be crucial. Already many companies have full operation

capabilities over a 12-hour period. Facilities such as customer service center are

already into 24-hour mode. These will provide services such as motor vehicle

recovery. Technology will also play an important role on the market.

The lines of distinction between banks insurance companies and brokerages are getting

blurred. The future seems to belong to financial supermarkets that will offer a host of

services and products to the consumer. In the next millennium all these activities would

play a crucial role in the overall development and maturity of the insurance industry.

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CHAPTER 6.0 CONCLUSIONS

I have drawn various conclusions from this study. There has been tremendous change in

the insurance history. And with it there has been continuous growth in this sector both in

Indian as well as world context.

The opening up of the insurance sector has changed the whole look of the industry. While

the various companies in order to face the competition is coming with new strategies.

New players are leading the sector due to their strategic management and tailor made

projects.

From the research also I conclude that though the awareness and people opting for Aviva

plans are more as compared to other private players but the latter are gaining momentum

in the market day by day.

The primary reasons for buying an insurance policy, whether life or non-life is to protect

us from vagaries of life. We do not invest in insurance for returns; rather we invest in it

for regrettable necessities. Though a large proportion of policies available in the country

provide for returns, but nobody is looking for returns to the inflation rate. So what does

insurance offer, perhaps peace of mind, but even that takes time, due to poor claim

performance.

The demand for insurance is likely to increase with rising per-capita incomes, rising

literacy rates and increase of the service sector, as has been seen from the example of

several other developing countries. In fact, opening up of the insurance sector is an

integral part of the liberalization process being pursued by many developing countries.

Insurance is an Rs.400 billion business in India and yet its spread in the country is

relatively thin. Insurance as a concept has not been able to make headway in India. There

has been a strong fall in insurance business in recent years. Furthermore, it can be

observed that non-life business is not increasing as strongly as life business. On the other

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hand, growth fluctuations have been relatively small with growth rates varying between

1% and 5%.

Life insurance business by contrast achieved average growth rates of 6%, although the

actual rates ranged from 0% to 13%. This shows on the one hand the increasing

significance of life insurance as an instrument for old age provisions and on the other

hand indicates the sensitivity of life insurance to changes in the institutional and

economic environment.

The current state of insurance distribution in India is still in flux. On one hand, insurers

are awaiting regulations to be approved for brokerages and bancassurance to be truly

launched. On the other hand they are trying the corporate model of intermediaries in

addition to the traditional models in the market.

There is no right and wrong in all this. The success of marketing insurance depends on

understanding the social and cultural needs of the target population, and matching the

market segment with the suitable intermediary segment.

In addition a major segment of the Indian population has low disposable income,

meaning that every penny won will be obtained after a lot of persuasion and the expected

value for money is high.

All intermediaries can't sell all lines of business profitably in all markets. There should be

clear demarcation in the marketing strategies of the company from this perspective.

Clients should also receive price differentials for using different channels. This is not a

new concept, as the Public sector Property & Casualty companies are giving discounts in

lieu of agency commission. The channel composition should not be homogeneous but

should reflect the larger society.

For example:

Agents from different economic, social strata and different age and gender.

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Banc assurers ranging from multinational banks to micro credit lending agencies.

Brokers stretching from corporate to NGOs to milk co-operatives.

These intermediaries need to be empowered with the right learning, training and sales

tools and technology enablers. Coupled with the right product mix, this will help the

insurers to survive and flourish in this competitive market.

Let us conclude with a story of a retired postal clerk who became a success story for

selling postal savings and insurance in his village in Punjab in Northern India. The person

is the father of my colleague, who is a retired postal employee and took up agency for

postal savings and insurance to supplement his meager retirement earnings.

Today 10 years later he is one of the top agents selling postal savings and insurance in

his village, assisted by his illiterate wife and grandson (a seven year old computer

literate) doing all the administrative work from home on a small Personal computer using

a package (developed by our friend who is a programmer) to handle his client portfolio!

The entire village population trusts him with the investment advices that he doles out and

has no qualms in handing over small amounts of cash to him for depositing in the post

office. He is their trusted customer care or financial consultant. This we feel is the

essence of distribution of financial products in India.

So lets conduct this business with utmost economy with the spirit of trusteeship; thereby

making insurance widely popular.

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ANNEXURES

1. QUESTIONNAIRE

1. Are you employed?

Yes { }

No { }

2. Do you think that Insurance is important?

Yes { }

No { }

3. Do you have any insurance policy?

Yes { }

No { }

4. Which insurance policy do you have?

Life { }

Non Life { }Both { }

5. Do you know about Aviva?

Yes { }

No { }

6. Do you know about Aviva Life Insurance?

Yes { }

No { }

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7. Your monthly house hold income?

a)


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10. Are you aware as to how many private Life Insurance Companies have set up the

operations in the country?

_______________________________________________________________

_______________________________________________________________

_______________________________________________________________

11. Which companies insurance policy you prefer the most (rank them)?

a) Aviva { }

b) L.I.C { }

c) ICIC Prudential { }

d) OM Kotak Mahindra { }

e) HDFC Standard Life { }

f) Any Other ______________________ (Please Specify)

12. Are you aware of any Act Passed for Insurance?

Yes { }

No { }

14. For how many years do you have insurance policy?

a)


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16. Which feature of your policy attracts you to buy it (rank them)?

a) Low Premium { }

b) Larger Risk Coverance { }

c) Money Back Guarantee { }

d) Reputation of Company { }

e) Easy Access to Agents { }

f) Any Other ______________________ (Please Specify)

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BIBLIOGRAPHY

BOOKS

C.R Kothari, Research Methodology

R. K. Trivedi, Investment Prospects

M. N. Mishra, Principles of Insurance

Nalini Trivedi and Paul, Insurance Theory and Practice

INTERNET

http://www.irdaindia.org

http://www.iloveindia.com

http://www. avivaindia.com

Documents

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