SUBMITTED TO SUBMITTED BY

Mr.B.S.Rao Sir Garima Khandelwal

B2-17
PGDM (BIFAAS)
 INTRODUCTION
Insurance = Collective bearing of Risk

Insurance is nothing but a system of spreading the risk of one onto the shoulders
of many. While it becomes somewhat impossible for a man to bear by himself
100% loss to his own property or interest arising out of an unforeseen contingency,
insurance is a method or process which distributes the burden of the loss on a
number of persons within the group formed for this particular purpose.

Basic Human trait is to be averse to the idea of risk taking. Insurance, whether life
or non-life, provides people with a reasonable degree of security and assurance
that they will be protected in the event of a calamity or failure of any sort.

Insurance may be described as a social device to reduce or eliminate risk of loss to

life and property. Under the plan of insurance, a large number of people associate
themselves by sharing risks attached to individuals. The risks, which can be insured
against, include fire, the perils of sea, death and accidents and burglary. Any risk
contingent upon these, may be insured against at a premium commensurate with the
risk involved. Thus collective bearing of risk is insurance.

• Insurance Indemnifies Assets & Income. Every Asset has a value and
generates Income to its Owner. There is a normally expected Life-time for the Asset
during which time it is expected to perform. If the Asset gets lost earlier, being
destroyed or made Non-functional through an Accident or other unfortunate event
the Owner is Prejudiced. Insurance helps to reduce CONSEQUENCES of such
Adverse Circumstances which are called Risks

• Insurance is the science of spreading of the risk. It is the system of

spreading the losses of an Individual over a group of Individuals

• Insurance is a Method of sharing of financial losses of a few from a

common fund formed out of Contribution of the many who are equally
exposed to the same loss
 • What is uncertainty for an Individual becomes a certainty for a
Group. This is the basis of All Insurance Operations. Thus insurance
convert uncertainties to certainty

DEFINITIONS

The definition of insurance can be made from two points:

1 Functional definition.
2 Contractual definition.

Functional definition

Insurance is a co-operative device to spread the loss caused by a particular risk

over a number of persons who are exposed to it and who agree to insure
themselves against the risk.

General Definition

Insurance has been defined to be that in which a sum of money as a premium is

paid in consideration of the insurer’s incurring the risk of paying a large sum
upon a given contingency.
In the words of John Magee, “Insurance is a plan by themselves which
large number of people associate and transfer to the shoulders of all, risks that
attach to individuals.”
Fundamental Definition

In the words of D.S. Hansell, “Insurance accumulated contributions of all parties

participating in the scheme.”

Contractual Definition

In the words of justice Tindall, “Insurance is a contract in which a sum of money is

paid to the assured as consideration of insurer’s incurring the risk of paying a large
sum upon a given contingency.”
 HISTORY OF INSURANCE

Worldwide History

To talk about the insurance companies, insurance in modern form had occurred
after the Great Fire in London in 1666 which destroyed myriad houses. Nicholas
Barbon, following the disaster, had established England's first fire insurance
company (The Fire Office) in1680. In the United States, the first insurance
company which provided fire insurance was formed in South Carolina; in
1732.The practice of perpetual insurance against fire was popularized by
Benjamin Franklin. In 1752, he founded the Philadelphia Contribution ship for
the Insurance of Houses. In India, the Oriental Life Insurance Company was
started in 1818 by Europeans, much before independence. The first indigenous
insurance company in India was started in the year 1870 in the form of Bombay
Mutual Life Assurance Society.

Babylonia

The roots of insurance might be traced to Babylonia, where traders were

encouraged to assume the risks of the caravan trade through loans that were
repaid (with interest) only after the goods had arrived safely—a practice
resembling bottomry and given legal force in the Code of Hammurabi (c.2100
B.C.). The Phoenicians and the Greeks applied a similar system to their seaborne
commerce. The Romans used burial clubs as a form of life insurance, providing
funeral expenses for members and later payments to the survivors.

Europe

With the growth of towns and trade in Europe, the medieval guilds undertook to
protect their members from loss by fire and shipwreck, to ransom them from
captivity by pirates, and to provide decent burial and support in sickness and
poverty
London

In London, Lloyd's Coffee House (1688) was a place where merchants, ship-
owners, and underwriters met to transact business. By the end of the 18th cent.
Lloyd's had progressed into one of the first modern insurance companies. In 1693
the astronomer Edmond Halley constructed the first mortality table, based on the
statistical laws of mortality and compound interest. The table, corrected (1756) by
Joseph Dodson, made it possible to scale the premium rate to age; previously the
rate had been the same for all ages.

New York City

The New York fire of 1835 called attention to the need for adequate reserves to
meet unexpectedly large losses; Massachusetts was the first state to require
companies by law (1837) to maintain such reserves. The great Chicago fire (1871)
emphasized the costly nature of fires in structurally dense modern cities.
Reinsurance, whereby losses are distributed among many companies, was devised
to meet such situations and is now common in other lines of insurance. The
Workmen's Compensation Act of 1897 in Britain required employers to insure
their employees against industrial accidents. Public liability insurance, fostered by
legislation, made its appearance in the 1880s; it attained major importance with
the advent of the automobile In recent years
insurance premiums (particularly for liability policies) have increased rapidly,
leaving unprecedented numbers of Americans uninsured. Many blame the
insurance conglomerates, contending that U.S. citizens are paying for bad risks
made by the companies. Insurance companies place the burden of guilt on law
firms and their clients, who they say have brought unreasonably large civil suits to
court, a

trend that has become so common in the United States that legislation has been
proposed to limit lawsuit awards. Catastrophic earthquakes, hurricanes, and
wildfires in late 1980s and the 90s have also strained many insurance company's
reserves.
Insurance Indian history

The history of life insurance in India dates back to 1818 when it was conceived as a
means to provide for English Widows. Interestingly in those days a higher
premium was charged for Indian lives than the non-Indian lives as Indian lives
were considered more riskier for coverage.

The Bombay Mutual Life Insurance Society started its business in 1870. It was the
first company to charge same premium for both Indian and non-Indian lives. The
Oriental Assurance Company was established in 1880. The General insurance
business in India, on the other hand, can trace its roots to the Triton (Tital)
Insurance Company Limited, the first general insurance company established in
the year 1850 in Calcutta by the British. Till the end of nineteenth century
insurance business was almost entirely in the hands of overseas companies.

Insurance regulation formally began in India with the passing of the Life
Insurance Companies Act of 1912 and the provident fund Act of 1912. Several
frauds during 20's and 30's sullied insurance business in India. By 1938 there were
176 insurance companies. The first comprehensive legislation was introduced with
the Insurance Act of 1938 that provided strict State Control over insurance
business. The insurance business grew at a faster pace after independence. Indian
companies strengthened their hold on this business but despite the growth that was
witnessed, insurance remained an urban phenomenon.

The Government of India in 1956, brought together over 240 private life insurers
and provident societies under one nationalized monopoly corporation and Life
Insurance Corporation (LIC) was born. Nationalization was justified on the
grounds that it would create much needed funds for rapid industrialization. This
was in conformity with the Government's chosen path of State lead planning and
development.

The (non-life) insurance business continued to thrive with the private sector till
1972. Their operations were restricted to organized trade and industry in large
cities. The general insurance industry was nationalized in 1972. With this, nearly
107 insurers were amalgamated and grouped into four companies- National
Insurance Company, New India Assurance Company, Oriental Insurance
Company and United India Insurance Company. These were subsidiaries of the
General Insurance Company (GIC).

The general insurance business was nationalized after the promulgation of

General Insurance Business (Nationalizations) Act, 1972. The post-nationalization
general insurance business was undertaken by the General Insurance Corporation
of India (GIC) and its 4 subsidiaries:
1. Oriental Insurance Company Limited;
2. New India Assurance Company Limited;
3. National Insurance Company Limited; and
4. United India Insurance Company Limited.

Some of the important milestones in the life insurance business in India are:
1850: Non life insurance debuts with triton insurance company.
1870 :Bombay mutual life assurance society is the first Indian owned life insurer
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 to by the Insurance Act with
the objective of protecting the interests of the insuring public.

1956: 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz.
LIC Act, 1956, with a capital contribution of Rs. 5 Crore from the Government of
India.

The General insurance business in India, on the other hand, can trace its roots to
the Triton Insurance Company Ltd., the first general insurance company
established in the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business in India are:

1907 The Indian Mercantile Insurance Ltd. set up, the first company to transact
all classes of general insurance of India.

1957 General Insurance Council, a wing of the Insurance Association of India,

frames a code of conduct for ensuring fair conduct and sound business practices.
1968 The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
1972 The General Insurance Business (Nationalization) Act, 1972 nationalized
the general insurance business in India with effect from 1st January 1973. 107
insurers amalgamated and grouped into four companies’ viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental
Insurance Company Ltd. and the United India Insurance Company Ltd. GIC
incorporated as a company.

Malhotra Committee

In 1993, Malhotra Committee- headed by former Finance Secretary and RBI

Governor R.N. Malhotra- was formed to evaluate the Indian insurance industry
and recommend its future direction. The Malhotra committee was set up with the
objective of complementing the reforms initiated in the financial sector. The
reforms were aimed at creating a more efficient and competitive financial system
suitable for the requirements of the economy keeping in mind the structural
changes currently underway and recognizing that insurance is an important part
of the overall financial

System where it was necessary to address the need for similar reforms. In 1994,
the committee submitted the report and some of the key recommendations
included:

i) Structure
Government should take over the holdings of GIC and its subsidiaries so that these
subsidiaries can act as independent corporations. All the insurance companies
should be given greater freedom to operate.

ii) Competition

Private Companies with a minimum paid up capital of Rs.1bn should be allowed to

enter the sector. No Company should deal in both Life and General Insurance
through a single entity. Foreign companies may be allowed to enter the industry in
collaboration with the domestic companies.

Postal Life Insurance should be allowed to operate in the rural market. Only one
State Level Life Insurance Company should be allowed to operate in each state.

iii) Regulatory Body

The Insurance Act should be changed. An Insurance Regulatory body should be set up. Controller
of Insurance- a part of the Finance Ministry- should be made independent

iv) Investments

Mandatory Investments of LIC Life Fund in government securities to be reduced

from 75% to 50%. GIC and its subsidiaries are not to hold more than 5% in any
company (there current holdings to be brought down to this level over a period of
time)

v) Customer Service

LIC should pay interest on delays in payments beyond 30 days. Insurance

companies must be encouraged to set up unit linked pension plans.
Computerization of operations and updating of technology to be carried out in the
insurance industry

The committee emphasized that in order to improve the customer services and
increase the coverage of insurance policies, industry should be opened up to
competition. But at the same time, the committee felt the need to exercise caution
as any failure on the part of new players could ruin the public confidence in the
industry.
The committee felt the need to provide greater autonomy to insurance companies
in order to improve their performance and enable them to act as independent
companies with economic motives. For this purpose, it had proposed setting up an
independent regulatory body- The Insurance Regulatory and Development
Authority.

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 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.

PURPOSE OF INSURANCE

1. Insurance spreads the economic burden of losses by using funds

contributed by members of the group to pay for them. Thus, it is a loss
spreading device.

2. The fundamental purpose of insurance however is neither the spreading

nor the prevention of losses. Rather, it is reduction of the uncertainty which
is caused by awareness of the possibility of loss.

3. An insurance scheme provides certainty for the individual members of the

group by averaging loss costs. The contribution made by the individual to
the group is assumed, on the basis of predictions, to be his share of losses
suffered by the group.
In exchange for this contribution, he is assured that the group will assume any
losses that involve him. He transfers his risk to the group and averages his loss
costs, thus substituting certainty for uncertainty. He pays a certain premium
instead of facing the uncertainty of the possibility of large loss.
FUNCTION OF INSURANCE

The functions of Insurance can be bifurcated into three parts:

1. Primary Functions
2. Secondary Functions
3. Other Functions

The primary functions of insurance include the following:

Provide Protection
The primary function of insurance is to provide protection against future risk,
accidents and uncertainty. Insurance cannot check the happening of the risk, but
can certainly provide for the losses of risk.

Collective bearing of risk

Insurance is a mean by which few losses are shared among larger number of
people. All the insured contribute the premiums towards a fund and out of which
the persons
Exposed to a particular risk is paid.

Assessment of risk
Insurance determines the probable volume of risk by evaluating various factors
that give rise to risk. Risk is the basis for determining the premium rate also .

Provide Certainty
Insurance is a device, which helps to change from uncertainty to certainty.
Insurance is device whereby the uncertain risks may be made more certain.

Research and publicity

Insurers also spend money in research and publicity in creating risk consciousness
amongst which has a far reaching effect on reduction in national waste.
The secondary functions of insurance include the following:

Prevention of Losses
Prevention of losses causes lesser payment to the assured by the insurer and this
will encourage for more savings by way of premium. Reduced rate of premiums
stimulate for more business and better protection to the insured.

Small capital to cover larger risks

Insurance relieves the businessmen from security investments, by paying small
amount of premium against larger risks and uncertainty.

Contributes towards the development of larger industries

Insurance provides development opportunity to those larger industries having
more risks in their setting up. Even the financial institutions may be prepared to
give credit to sick industrial units which have insured their assets including plant
and machinery.

If improves efficiency
The insurance eliminates worries and miseries of loans at death and destruction of
property. The carefree person an devote his body and soul together for better
achievement. It improves not only his efficiency, but the efficiencies of the masses
are also advanced.

It helps economic progress

The insurance by protecting the society from huge losses of damage, destruction
and death, provides an initiative to work hard for the betterment of the masses.
The next factor of economic progress. The capital is also immensely provided by
the masses. The property, the valuable assets, the man, the machine and the
society cannot lose much at the disaster.

The other functions of insurance include the following:

Means of savings and investment
Insurance serves as savings and investment, insurance is a compulsory way of
savings and it restricts the unnecessary expenses by the insured's For the purpose
of availing income-tax exemptions also, people invest in insurance.

Source of earning foreign exchange

Insurance is an international business. The country can earn foreign exchange by
way of issue of marine insurance policies and various other ways.

Risk Free trade

Insurance promotes exports insurance, which makes the foreign trade risk free
with the help of different types of policies under marine insurance cover.

NATURE OF INSURANCE

Sharing of risk
Insurance is a device to share the financial losses which might be fall on an
individual or his family on the happening of specified event. The event may be
death, incase of life insurance, marine perils, marine insurance, fire in fire
insurance and other certain events in general insurance.

Co-operative Device
The most important feature of every insurance plan is the co-operation of large
number of persons who, agree to share the financial loss arising due to a particular
risk which is insured. All co-operative devices, there is no compulsion here on
anybody to purchase the insurance policy.

Value of risk
The risk is evaluated before inuring to charge the amount of share of an insured,
here is called, consideration or premium. If there is expectation of more loss,
higher premium may be charged. So, the probability of loss is calculated at the
time of insurance.
Payment at Contingency
The payment is made at a certain contingency insured. If the contingency occurs,
payment is made. Since the life insurance is a contract of certainty, because the
contingency, the death or the expiry of term, will certainly occur, the payment is
certain.

Amount of payment
The amount of payment depends upon the value of loss occurred due to the
particular insured risk provided insurance is there up to that amount. In case of
life insurance, the insurer promises to pay a fixed sum on the happening of an
even. (Either death or the expiry of the term).

Large number of insured persons

The co-operation of a small number of persons may also be insurance but in that
case, the cost of insurance to each number may be higher. In case of large number
of persons opposite condition is applicable.

Insurance is not gambling

The insurance is just opposite of gambling. In gambling by bidding the persons
exposes himself to risk of losing ,in the insurance the insured is always opposed to
risk and will suffer loss if he is not insured.

Insurance is not charity

Charity is given without consideration but security and safety provided by
insurance is not possible without consideration or premium. It provides security
and safety to an individual and to the society although it is a kind of business
because inconsideration of premium it guarantees the payment of loss.

PRINCIPLE OF INSURANCE

Principles of Co-operation.

Insurance is co-operative device. If one person is providing for his own losses, it
can not be strictly insurance because in insurance, the loss is shared by a group of
persons who are willing to co-operate. It is the duty and responsibility of the
insurer to obtain adequate funds from the members of the society to pay them at
the happening of the insured risk. Thus, the shares of loss took the form of
premium. Today, all the insured

give a premium to join the scheme of insurance. Thus, the insured are co-
operating to share the loss of an individual be payment of a premium in advance.

Principles of Probability

The loss in the shape of premium can be distributed only on the basis of theory of
probability. The chances of loss are estimated in advance to affix the amount of
premium. Since the degree of loss depends upon various factors, the affecting
factors are analyzed before determining the amount of loss. With the help of this
principle, the uncertainty of loss is converted into certainty. The insurer will have
not to suffer loss as well have to gain windfall. Therefore, the insurer has to charge
only so much of amount which is adequate to meet the loss. The probability tells
what the chances of loss are and what will be the amount of losses.

The insurance, on the basis of past experience, present conditions and future
prospects, fixes the amount of premium. Without premium, no-operation is
possible and the premium can not be calculated without the help of theory of
probability, and consequently no insurance is possible. So, these two principles are
the two main legs of insurance.

FORMATION OF INSURANCE REGULATION AND DEVELOPMENT

AUTHORITY ACT

The Insurance Act, 1938 had provided for setting up of the Controller of
Insurance to act as a strong and powerful supervisory and regulatory authority for
insurance. Post nationalization, the role of Controller of Insurance diminished
considerably in significance since the Government owned the insurance
companies. But the scenario changed with the private and foreign companies
foraying in to the insurance sector. This necessitated the need for a strong,
independent and autonomous Insurance Regulatory Authority was felt. As the
enacting of legislation would have taken time, the then Government constituted
through a Government resolution an Interim Insurance Regulatory Authority
pending the enactment of a comprehensive legislation.
The Insurance Regulatory and Development Authority Act, 1999 is an act to
provide for the establishment of an Authority to protect the interests of holders of
insurance policies, to regulate, promote and ensure orderly growth of the
insurance industry and for matters connected therewith or incidental thereto and
further to amend the Insurance Act, 1938, the Life Insurance Corporation Act,
1956 and the General insurance Business (Nationalization) Act, 1972 to end the
monopoly of the Life Insurance Corporation of India (for life insurance business)
and General Insurance Corporation and its subsidiaries (for general insurance
business).
The act extends to the whole of India and will come into force on such date as the
Central Government may, by notification in the Official Gazette specify. Different
dates may be appointed for different provisions of this Act.
The Act has defined certain terms; some of the most important ones are as
follows appointed day means the date on which the Authority is established under
the act. Authority means the established under this Act.
Interim Insurance Regulatory Authority means the Insurance Regulatory
Authority set up by the Central Government through Resolution No. 17(2)/ 94-lns-
V dated the 23rd January, 1996. Words and expressions used and not defined in
this Act but defined in the Insurance Act, 1938 or the Life Insurance Corporation
Act, 1956 or the General Insurance Business (Nationalization) Act, 1972 shall have
the meanings respectively assigned to them in those Acts. A new definition of
"Indian Insurance Company" has been inserted. "Indian insurance company"
means any insurer being a company
(a) which is formed and registered under the Companies Act, 1956
(b) in which the aggregate holdings of equity shares by a foreign company,
either by itself or through its subsidiary companies or its nominees, do not
exceed twenty-six per cent. Paid up capital in such Indian insurance
company (c) whose sole purpose is to carry on life insurance business,
general insurance business or re-insurance business.
 COMPANY PROFILE
Birla Sun Life Insurance Company Limited (BSLI)

+ =
Vision
To create long term value along with market leadership

Mission

• To help people mitigate risks of life, accident, health and money at all
stages and under all circumstances
• Enhance the financial future of our customers, including enterprises.

Values
•Integrity
•Commitment
•Passion
•Seamlessness

Birla Life Insurance Co Ltd market share of the company increased from 1.22%
to 2.11% in 2007-08. The company moved to the 7th position in 2007-08 from 8the
a year before, pushing down Max New York Life insurance company.
About Birla Sun Life Insurance Company Limited
 Birla Sun Life Insurance pioneered the unique Unit Linked Life Insurance
Solutions in India.

 Within 4 years of its launch, BSLI has cemented its position as a leading
player in the Private Life Insurance Industry.
  There has been focus on Investment Linked Insurance Products, supported
with protection products to maintain leadership in product innovation.

 Multi Distribution Channels- Direct Sales Force, Alternate Channels and

Group offering convenient channels of purchase to customers.

 Web-enabled IT systems for superior customer services.

 First to have issued policies over the Internet.

 Corporate governance and a high degree of transparency in all business

practices and procedures.

 First to have an operational Business Continuity Plan.

Strong fundamentals based on the Aditya Birla group's local insight and Sun Life
financial global expertise.

PARTNERSHIP

Briefing mediapersons, Birla said, "The insurance sector, which is a knowledge

based industry is to be one of our core business. Our vision is to be among the top
five insurance companies in India and in this regard, we have aligned with one of
the best companies-the Sun Life financial group.

The partnership is based on values, mutual respect, integrity and customer focus.
Sun life financial is indeed delighted to be back in India in the insurance sector
after almost 40 years."

"Our group holding is 74 per cent, with Indian Rayon and Birla Global Finance
Ltd having a stake of 69 per cent and 5 per cent respectively, while Sun Life
financial holds 26 per cent. The current capitalization of this venture stands at Rs
120 crore."
He informed the gathering that the current funding for the insurance business "in
no way affects Indian Rayon's existing cap". "Considering the immense growth
potential of the life insurance business, this venture will definitely create value for
our three lakh shareholders. Our group's extensive presence in India as well as our
network of employees, shareholders and distributors is a great advantage, which
our insurance business will leverage. We have a receptive population of over a
million stakeholders," Birla added.

He also said that the new team for the insurance company was declared and that
Don Steward, chairman & CEO of Sun Life financial services, takes over as the
chairman of the Birla Sun Life insurance board of directors. Kumarmanagalam
Birla continues as a director on the board. The total 12 directors have been
nominated consisting of six directors each from Aditya Birla group and Birla Sun
Life insurance company.

JOINT VENTURES

Birla Sun Life under the management of Mr. Nani B. Javeri as the CEO is a Rs.
180 crore equity capital company. Birla Sun Life Insurance Co. Ltd is a 26:74 joint
venture between Sun Life Financial Services Canada and Aditya Birla Group. Just
four years down the industry pipeline, Birla Sun Life Insurance or BSLI has
secured a lead in private life insurance market.

About the Aditya Birla Group:

The Aditya Birla Group has a turnover exceeding Rs. 28,000 crores (as on 31
March 2004) and is one of the largest business houses in India. It enjoys a
leadership position in all the sectors in which it operates. With over 75 business
units, spanning the South East Asian belt, Africa, Canada and the UK, among
others, it is reckoned as India's first multinational corporation. The group is
anchored by 72,000 employees and has seven lakh shareholders, with an asset base
of over Rs.23,000 crores.

About Sun Life Financial Inc.:

Sun Life Financial Inc. is a leading international financial services organization
providing a diverse range of wealth accumulation and protection products and
services to individuals and corporate customers. Tracing its roots back to 1865,
Sun Life Financial 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. As of 31 March
2004, the Sun Life Financial group of companies had total assets under
management of USD 282 billion.

Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and
Philippine (PSE) stock exchanges under ticker symbol "SLF".

SPAN OF ORGANISATION

• CEO
• CFO
• Senior Vice President- Direct Sales Forces
• Senior Vice President –Alternate Channel And Group Life
• Senior Vice President and Appointed Actuary
• Vice President - Marketing and Communication
• Vice President - Planning, Legal and Finance
• Vice President - Technology
• Vice President - Implementation, Control and Administration
• Vice President - Client Services and Underwriting
• Vice President - Field Operations Direct Sales Force

KEY PERSONS

Name Nani Javeri

Designation CEO

Name Anil J. Jhala

Designation CFO

Name E. N. Goveia
Designation Senior Vice President - Direct Sales Force

Name P. Nandagopal
Designation Senior Vice President - Alternate Channel and Group Life
Name K.S. Gopalakrishnan
Designation Senior Vice President and Appointed Actuary

Name Anjana Grewal

Designation Vice President - Marketing and Communication

Name Mayank Bathwal

Designation Vice President - Planning, Legal and Finance

Name M.C Raisinghani

Designation Vice President - Technology

Name Snehal Shah

Designation Vice President - Implementation, Control and Administration

Name Mario Braganza

Designation Vice President - Client Services and Underwriting

Name Murli Iyer

Designation Vice President - Field Operations Direct Sales Force

BUSINESS PERFORMANCE IN THE LAST FISCAL

• Achieved a first year weighted annualized premium of Rs. 2,204 crores, as

against Rs. 953 corers in the previous year
• a growth of over 131%, amongst the highest in the industry
• improved market share considerably
• ranked number six amongst private sector players
• Revenue growth of 94% to Rs. 4,012 corers, from Rs. 2,069 crores last year
• Launched 10 products in individual life segment and 2 in Group business
segment
• An aggressive growth in customer contact points
• No. of branches has grown from 137 to 339, with another 261 branches
going on stream from Q1 2008-09
• No. of agents has grown from 56, 000 to 115, 000, over the year
• Strong fund performance
 FUTURE PERFORMANCE PLANNING

Comparative study of BSLI’s Business Performance Q1 FY 2007-08 and Q1 FY

2008-09

BSLI (Q1 FY 2007-08) BSLI (Q1 FY 2008-09)

Market Share-4.9% Market Share-8.15%
Growth Rate (Individual + Group) Growth Rate (Individual + Group)
22% 194%
Annualized Premium Equivalent (APE) Annualized Premium Equivalent
(APE)
Rs. 185.3 Rs. 507.4

Birla Sun Life Insurance Company Ltd. (BSLI), the pioneer of Unit Linked Life
Insurance plans amongst the private life insurers in India, has registered strong
growth amongst the private life insurers, as per reports for the Q1 of the fiscal
2008-09. As per the Q1 FY 2008-09 figures, BSLI has a market share of 8.15%
amongst private life insurance players as compared to BSLI’s market share for Q1
FY 2007-08, which was 4.9%, indeed a significant leap. BSLI’s life insurance
business has achieved a growth rate of 194%. The total APE (Annualized Premium
Equivalent) is at Rs. 507.4crores.

“Birla Sun Life Insurance continues its momentum into the new fiscal year with an
increased market share of 8.15% for Q1 FY 2008-09 (amongst private life
insurance players) and a growth rate of 194%. The first quarter FY 2008-09 has
seen a ramp up on account of our expansion in distribution network with 600
branches nationally as on July 2008, our innovative product suite and superior
quartile fund performance, resulting in the present high growth rate and market
share,” said Mr. Vikram Mehmi, President & CEO, and Birla Sun Life Insurance
 PRODUCTS

Protection Policies:

o Birla Sun Life Term Plan

o Premium Back Term Plan

Savings Based Policies:

o Birla Sun life Insurance Saral Jeevan

o Birla Sun Life Insurance Gold-Plus
o Supreme Life
o Dream Plan
o Classic Life Premium
o Simply Life

o Prime Life Premium

o Prime Life
o Life Companion
o Flexi Cash Flow
o Flexi Save Plus
o Flexi Life Line
o Single Premium Bond

Retirement Solutions:

o Flexi secure Life Retirement Plan II

Child Policy:

o Children's Dream Plan

Policies For Rural India:

o Bima Suraksha Super

o Bima Dhan Sanchay
o Bima Kavach Yojana

Accident Protection Policies

o Accidental Death Rider

o Accidental Death Dismemberment Rider
o Term Rider
o Critical Illness Rider
o Waiver PF Premiums
o Critical Illness Plus Rider
 o Critical Illness-Woman Rider

Besides these the Group Insurance Products by Birla Sun Life Insurance include
Group Protection Solutions that offers you insurance at affordable prices, Group
Superannuation and Gratuity Plans, Single Premium Group Term Plan and
Group Credit Guard Plan.

Special NRI Insurance Policies on offer by Birla Sun life include:

o Prime Life Premium

o Prime Life
o Life Companion
o Flexi Life Line Plan
o Flexi Save Plus
o Flexi Cash Flow
o Classic Life Premier
o Single Premium Bond
o Simply Life

The current range of products offered by BSLI includes:

• Flexi Life Line

• Flexi Cash Flow

• Flexi Save Plus

• Flexi Secure Life

• Classic Life Premier

• Birla Sun Life Term & Premium Back Term Plan

• Life Companion

• Prime Life & Prime Life Premier

• Gold Plus

• Simply Life

• Single Premium Bond

 • Supreme Life

• Children’s Dream Plan, Dream Plan

• Birla Sun Life Insurance Gold-Plus Plan

• Birla Sun Life Bima Kavach Yojana

• Birla Sun Life Group Protection Solutions

• Birla Sun Life Social Development Plan

• Birla Sun Life Group Gratuity Plan

• Birla Sun Life Group Superannuation Plan

• Birla Sun Life Group Interest Credit Plan

• Birla Sun Life Credit Guard Plan

CHANNELS OF DISTRIBUTION

The distribution channels by BSLI include

 Direst sales force

 Alternate channels
 IT systems
 Groups to ensure convenience of the potential customers
 Highly professional dealing
 Corporate governance

Complete transparency has earned Birla Sun Life Insurance Co Ltd the trust of its
customers.

PIONEERING ACTIVITIES

The many pioneering activities by Birla Sunlife include:-

 Unit Linked Life Insurance Solutions

 Investment Linked Insurance Products
 Web-Based Insurance Policies sale

Birla Sun Life Insurance Company Limited also offers:-

 MF (Mutual Fund)
 International equity funds
 Dream plans in insurance products that give you complete transparency
and value-for-money.

ASSET UNDER MANAGEMENT

The total Assets Under Management (AUMs) of the company are

approximately Rs.4500 corers as of June 30, 2007. BSLI has one of the highest
persistency ratios of 97.7% in terms of premium, amongst private life insurers.
Its Outstanding Claims Ratio continues to be the best in the industry at 0.41%.

FUTURE GROWTH STRATEGIES PLANS

 Mumbai March 5 Birla Sun Life Insurance hopes to grab a fair share of the
growing insurance market and be among the top three in two years.
 Mr Vikram Mehmi, President and CEO, said that the accent would now be
on aggressive growth.
 "The life insurance industry is growing at 100 per cent. We plan to
introduce innovative products and expand our channel reach," said Mr
Mehmi, who took over as CEO in December 2006. He was earlier CEO of
Idea Cellular.
 The company has registered 40 per cent growth in new business premium
to Rs 579 crore in the first 10 months of the fiscal, against Rs 414 crore in
the previous year.
 On lower rate of growth when compared to other insurance companies, Mr
Mehmi said: "To a certain extent it was a conscious decision, since other
companies do not have many long-term products. Besides, there has been a
change in the leadership of the company."
 In terms of maturity value, most of Birla Sun Life's products have a term of
15 years, said an official.
 The company is exploring distribution tie-ups with other companies in the
Birla group, Mr. Mehmi said.
 "We will evaluate all the opportunities we have to build synergies among
the group companies and try to evolve a low-cost distribution model."
  Currently, the company has a tie-up with Idea Cellular to offer group term
insurance cover for subscribers aged 18-35.
 It is in talks with non-life insurance companies to design a composite micro-
insurance product.
 Mr. Mehmi also said that the company's average premium per policy was
close to the industry average of Rs 20,000.
 It is likely to be lower in the future as insurers reach out to smaller towns
and lower income groups.
 On breaking even, he said that if the company had to grow, break-even
would have to be postponed.
 On Monday the company launched the `Children's Dream Plan,' a unit-
linked insurance plan with guaranteed maturity benefits.
 The plan combines a guaranteed return on savings with upside potential
based on the performance of the investment funds.
 The policy administration charge is customized and is deducted on a
monthly basis.

QUESTION THAT WE ASKED TO BIRLA SUN LIFE

IMPORTANT QUESTION

BDM (BUSINESS DEVLOPMENT MANAGER)

What is BSLI' s investment philosophy and stock picking strategy?

BSLI:- Our primary objective is to provide CONSISTENT and long-term returns
to our policyholders. For stock picking, our emphasis is on outstanding track
record of management, clear visibility of growth, financial strengths and a scalable
business model. We focus on blue-chip companies with excellent track record,
management vision and the best degree of corporate governance.

What are the various fund options provided to policyholders by BSLI?

BSLI:-BSLI has been a pioneer of Unit Linked plans in India. Our product range
on the Individual life and Group front largely consists of Unit Linked plans. We
have a range of fund options on our individual and group plans. The equity
component in this fund option varies from 10 % to 90 %. We recommend our
policyholders to select their fund options based on their risk tolerance level and
the future need of capital. Some of the fund options listed below for Individual life
plans are:

Fund Equity
Component
Protector Up to 10 %
Builder Up to 20 %
Enhancer Up to 35 %
Creator Up to 50 %
Magnifier Up to 90 %

KEY STRENGTH

Financial Expertise
As a joint venture of leading financial services groups. BIRLA SUN LIFE has the
financial expertise required to manage your long-term investments safely and
efficiently.

Range of Solutions
They have a range of individual and group solutions, which can be easily
customized to specific needs. There group solutions have been designed to offer
you complete flexibility combined with a low charging structure.

Strong Ethical Values:

BIRLA SUN LIFE is an ethical and Cultural Organization. False selling or false
commitment with the customers is not allowed.

Most respected Private Insurance Company.

Comment

India’s insurance sector is likely to clock an unprecedented growth of over 200 per
cent by 2009-10. During this period, private players will grow at 140 per cent
owing to their aggressive marketing techniques as against a growth rate of 35-40
per cent of state owned insurance companies.
The Chamber expects the total insurance business to reach Rs. 2000 billion in the
next two years from current level of Rs. 500 billion. On account of intense
marketing strategies adopted by private insurance players, the market share of
state owned insurance companies like GIC, LIC and others have already come
down to 70 per cent in the last four-five years from over 97 per cent and more
intense competition is likely to be witnessed in the near future.

Till very recently, the insurance sector was largely under the government.
However, many private multinational firms have now entered the scene, such as
HDFC, ICICI, Kodak Mahindra and Birla Sunlife.

Anyone interested in this field can either work in one of the areas of insurance:
life, general and postal or become an agent or an insurance surveyor. In an
insurance company a person can take a, job in.

The skills required to succeed in this field are almost the same as those for any
marketing or sales-related job. ? You have to be outspoken, gentle, persuasive,
calm, and very good at whatever responsibility you take. You have to remember
that here you have to persuade people to go for your insurance policy as against
the hordes of such policies available in the market.

To be eligible for a license, an insurance surveyor must have one of the following:
Fellowship of associate ship through the exam held by the Institute of Insurance
Surveyors and Adjusters (IISA), Mumbai? Degree or diploma in architecture
from a recognized university

With increasing awareness for life insurance, the customer base & mix is changing
rapidly. Birla Sun Life Insurance has been on a high growth path. The report
clearly shows how BSLI is emerging as the preferred life insurance provider for
higher age brackets. An increase in customers in the less than 1 laky income
group validates there efforts in increasing spread and reach.

For YTD January 2008. BSLI’s New Business Premium stood at Rs.1259.20 cores,
a 117% increase over same period last year. The AUM for Birla Sun Life
Insurance is in excess of Rs.6590 cores as on 29th February, 2008. Its Outstanding
Claims Ratio is 0.41%. BSLI has a pan-India branch presence of 339 branches
with over 1, 00,000 advisors nationally, out of which over 500 advisors are
members of the prestigious Million Dollar Round Table (MDRT). BSLI has
insured over 2 million lives since inception, comprising over 1.5 million through its
individual business and the rest through its Group business.

Birla Sun Life Insurance (BSLI) in its 7 successful years of operations has
contributed significantly to the growth and development of the life insurance
industry in India. It pioneered the launch of Unit Linked Life Insurance plans
amongst the private players in India. It was the first player in the industry to sell
its policies through the Banc assurance route and through the Internet. It was the
first private sector player to introduce a pure Term plan in the Indian market.
This was supported by sales practices, which brought a degree of transparency
that was entirely new to the market. The process of getting sales illustrations
signed by customers, offering a free look period on all policies, which are now
industry standards were introduced by BSLI. Being a customer centric company,
BSLI has invested heavily in technology to build world class processing
capabilities. BSLI has covered more than 2 million lives since inception and its
customer base is spread across more than 1500 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.