Professional Documents
Culture Documents
Submitted by Submitted to
Miss Saloni Garg Miss Swati jain
PSOM 2nd Year
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CERTIFICATE
This is to certify that MS. SALONI GARG of MBA fourth semester of POORNIMA
COLLEGE OF ENGINEERING, Jaipur, has completed her project report on the topic of
“ICICI PRUDENTIAL LIFE INSURANCE” under the supervision of MS. SWATI
JAIN, Faculty member, PSOM
To best of my knowledge the report is original and has not been copied or submitted
anywhere else. It is an independent work done by her.
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ACKNOWLEDGEMENT
I would also like to thank the supporting staff of Poornima school of management,
for their help and cooperation throughout our project.
Saloni garg
MBA 4th Sem.
(psom)
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PREFACE
This project report has been prepared as per the requirement of the syllabus of
MBA course structure under which the students are required to undertake real
life short term corporate study. The vision of this project study is to evaluate
which brand of detergent is prefer by customers at Jaipur city in Rajasthan.
Performing such study and surveying the market was a firsthand experience for
me. I was exposed to the professional set-up and faced the market, which was
really a great experience.
Now I take this opportunity to present the project report and sincerely hope that it
will be as much knowledge enhancing to the readers as it was to use during the
fieldwork and the completion of the report.
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EXECUTIVE SUMMARY
ICICI PRUDENTIAL Life insurance is the oldest life insurance company in the
world. It is the largest insurer in the UK and is the 28th largest company in the
world. In India, the company is marketing life insurance products and unit linked
investment plans. From my research at ICICI , I found that the company has a lot
of competition from other private insurers like HDFC, Aviva, Birla Sun Life and
Tata AIG. It also faces competition from LIC. To compete effectively ICICI
PRUDENTIAL could launch cheaper and more reasonable products with small
premiums and short policy terms (the number of year’s premium is to be paid).
The ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy
term would be 10 – 20 years.
ICICI must advertise regularly and create brand value for its products and
services. Most of its competitors like Aviva, HDFC, Max, Reliance and LIC use
television advertisements to promote their products. The Indian consumer has a
false perception about insurance – they feel that it would not benefit them if they
do not live through the policy term. Nowadays however, most policies are unit
linked plans where a customer is benefited even if their death does not occur
during the policy term. This message should be conveyed to potential customers
so that they readily invest in insurance.
Family responsibilities and high returns are the two main reasons people invest
in insurance. Optimum returns of 16 – 20 % must be provided to consumers to
keep them interested in purchasing insurance.
TABLE OF CONTENTS
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1. Intoduction to the industry
2. Introduction to the organization
3. Research Methodology
3.1 Title of the study
3.2 Duration of the study
3.3 Objective of the study
3.4 Type of research
3.5 Sample size
3.6 Scope of the study
3.7 Limitation of the study
4. Interpretation & analysis
5. Facts & findings
6. SWOT
7. Conclusion
8. Recommendation
9. Appendix
10. Bibliography
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“life insurance is the bridge which covers the economic gap
between the time a man dies & the time he should die”
INTRODUCTION OF INDUSTRY
Insurance is a legal Contract that protects people from the financial costs those
results from loss of life, loss of health, lawsuits, or property damage. Insurance
provides a means for individuals & society to cope up with some of the risks
faced in every day life by every body. People purchase contracts of insurance,
called a Policy, from various insurance companies.
1) Life Insurance
2) General Insurance
3) Health Insurance
Life insurance is a contract for payment of a sum of money to the person assured
on the happening of the event insured against. Usually the contract provides for
the payment of an amount on the date of maturity or at specified intervals or at
unfortunate death. The contract also provides for payment of premium
periodically to the corporation by the assured.
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History of insurance
In some sense we can say that insurance appears simultaneously with the
appearance of human society. We know of two types of economies in human
societies: money economies (with markets, money, financial instruments and so
on) and non-money or natural economies (without money, markets, financial
instruments and so on). The second type is a more ancient form than the first. In
such an economy and community, we can see insurance in the form of people
helping each other. For example, if a house burns down, the members of the
community help build a new one. Should the same thing happen to one's
neighbour, the other neighbours must help. Otherwise, neighbours will not
receive help in the future. This type of insurance has survived to the present day
in some countries where modern money economy with its financial instruments is
not widespread (for example countries in the territory of the former Soviet Union).
Achaemenian monarchs of Ancient Persia were the first to insure their people
and made it official by registering the insuring process in governmental notary
offices. The insurance tradition was performed each year in Norouz (beginning of
the Iranian New Year); the heads of different ethnic groups as well as others
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willing to take part, presented gifts to the monarch. The most important gift was
presented during a special ceremony. When a gift was worth more than 10,000
Derrik (Achaemenian gold coin) the issue was registered in a special office. This
was advantageous to those who presented such special gifts. For others, the
presents were fairly assessed by the confidants of the court. Then the
assessment was registered in special offices.
The purpose of registering was that whenever the person who presented the gift
registered by the court was in trouble, the monarch and the court would help him.
Jahez, a historian and writer, writes in one of his books on ancient Iran:
"[W]henever the owner of the present is in trouble or wants to construct a
building, set up a feast, have his children married, etc. the one in charge of this in
the court would check the registration. If the registered amount exceeded 10,000
Derrik, he or she would receive an amount of twice as much.
A thousand years later, the inhabitants of Rhodes invented the concept of the
'general average'. Merchants whose goods were being shipped together would
pay a proportionally divided premium which would be used to reimburse any
merchant whose goods were jettisoned during storm or sinkage.
The Greeks and Romans introduced the origins of health and life insurance c.
600 AD when they organized guilds called "benevolent societies" which cared for
the families and paid funeral expenses of members upon death. Guilds in the
Middle Ages served a similar purpose. The Talmud deals with several aspects of
insuring goods. Before insurance was established in the late 17th century,
"friendly societies" existed in England, in which people donated amounts of
money to a general sum that could be used for emergencies.
Separate insurance contracts (i.e., insurance policies not bundled with loans or
other kinds of contracts) were invented in Genoa in the 14th century, as were
insurance pools backed by pledges of landed estates. These new insurance
contracts allowed insurance to be separated from investment, a separation of
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roles that first proved useful in marine insurance. Insurance became far more
sophisticated in post-Renaissance Europe, and specialized varieties developed.
Insurance as we know it today can be traced to the Great Fire of London, which
in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas
Barbon opened an office to insure buildings. In 1680, he established England's
first fire insurance company, "The Fire Office," to insure brick and frame homes.
The first insurance company in the United States underwrote fire insurance and
was formed in Charles Town (modern-day Charleston), South Carolina, in 1732.
Benjamin Franklin helped to popularize and make standard the practice of
insurance, particularly against fire in the form of perpetual insurance. In 1752, he
founded the Philadelphia Contributionship for the Insurance of Houses from Loss
by Fire. Franklin's company was the first to make contributions toward fire
prevention. Not only did his company warn against certain fire hazards, it refused
to insure certain buildings where the risk of fire was too great, such as all wooden
houses. In the United States, regulation of the insurance industry is highly
Balkanized, with primary responsibility assumed by individual state insurance
departments. Whereas insurance markets have become centralized nationally
and internationally, state insurance commissioners operate individually, though at
times in concert through a national insurance commissioners' organization. In
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recent years, some have called for a dual state and federal regulatory system
(commonly referred to as the Optional federal charter (OFC)) for insurance
similar to that which oversees state banks and national banks.
59% of the advisors are satisfied by the commission provided by the co. Those
who are not satisfied said that the commission provided is very low as compared
other players in the industry. Most of the advisors are satisfied by the working
conditions.
This need has become even more important due to steady disintegration of the
prevalent joint family system, and emergence of nuclear families. The need to
protect your family’s ever growing needs is why you need Life Insurance.
Lifestyle Maintenance.
Costs of Education.
Mortgage and Debt protection.
Hardships Protection.
Replacement of Income.
Retirement Expenses.
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Principles of insurance
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event for which there is only the opportunity for cost. Events that contain
speculative elements, such as ordinary business risks, are generally not
considered insurable.
4. Large Loss. The size of the loss must be meaningful from the
perspective of the insured. Insurance premiums need to cover both the
expected cost of losses, plus the cost of issuing and administering the
policy, adjusting losses, and supplying the capital needed to reasonably
assure that the insurer will be able to pay claims. For small losses these
latter costs may be several times the size of the expected cost of losses.
There is little point in paying such costs unless the protection offered has
real value to a buyer.
5. Affordable Premium. If the likelihood of an insured event is so high,
or the cost of the event so large, that the resulting premium is large
relative to the amount of protection offered, it is not likely that anyone will
buy insurance, even if on offer. Further, as the accounting profession
formally recognizes in financial accounting standards, the premium cannot
be so large that there is not a reasonable chance of a significant loss to
the insurer. If there is no such chance of loss, the transaction may have
the form of insurance, but not the substance. (See the U.S. Financial
Accounting Standards Board standard number 113)
6. Calculable Loss. There are two elements that must be at least
estimable, if not formally calculable: the probability of loss, and the
attendant cost. Probability of loss is generally an empirical exercise, while
cost has more to do with the ability of a reasonable person in possession
of a copy of the insurance policy and a proof of loss associated with a
claim presented under that policy to make a reasonably definite and
objective evaluation of the amount of the loss recoverable as a result of
the claim.
7. Limited risk of catastrophically large losses. The essential risk
is often aggregation. If the same event can cause losses to numerous
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policyholders of the same insurer, the ability of that insurer to issue
policies becomes constrained, not by factors surrounding the individual
characteristics of a given policyholder, but by the factors surrounding the
sum of all policyholders so exposed. Typically, insurers prefer to limit their
exposure to a loss from a single event to some small portion of their
capital base, on the order of 5 percent. Where the loss can be aggregated,
or an individual policy could produce exceptionally large claims, the capital
constraint will restrict an insurer's appetite for additional policyholders. The
classic example is earthquake insurance, where the ability of an
underwriter to issue a new policy depends on the number and size of the
policies that it has already underwritten. Wind insurance in hurricane
zones, particularly along coast lines, is another example of this
phenomenon. In extreme cases, the aggregation can affect the entire
industry, since the combined capital of insurers and reinsurers can be
small compared to the needs of potential policyholders in areas exposed
to aggregation risk. In commercial fire insurance it is possible to find single
properties whose total exposed value is well in excess of any individual
insurer’s capital constraint. Such properties are generally shared among
several insurers, or are insured by a single insurer who syndicates the risk
into the reinsurance market.
Types of insurance
Any risk that can be quantified can potentially be insured. Specific kinds of risk
that may give rise to claims are known as "perils". An insurance policy will set out
in detail which perils are covered by the policy and which are not. Below are
(non-exhaustive) lists of the many different types of insurance that exist. A single
policy may cover risks in one or more of the categories set out below. For
example, auto insurance would typically cover both property risk (covering the
risk of theft or damage to the car) and liability risk (covering legal claims from
causing an accident). A homeowner's insurance policy in the U.S. typically
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includes property insurance covering damage to the home and the owner's
belongings, liability insurance covering certain legal claims against the owner,
and even a small amount of coverage for medical expenses of guests who are
injured on the owner's property.
Auto insurance
Auto insurance protects you against financial loss if you have an accident. It is a
contract between you and the insurance company. You agree to pay the
premium and the insurance company agrees to pay your losses as defined in
your policy. Auto insurance provides property, liability and medical coverage:
An auto insurance policy comprises six kinds of coverage. Most countries require
you to buy some, but not all, of these coverages. If you're financing a car, your
lender may also have requirements. Most auto policies are for six months to a
year.
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In the United States, your insurance company should notify you by mail when it’s
time to renew the policy and to pay your premium
Home insurance
Health
Health insurance policies by the National Health Service in the United Kingdom
(NHS) or other publicly-funded health programs will cover the cost of medical
treatments. Dental insurance, like medical insurance, is coverage for individuals
to protect them against dental costs. In the U.S., dental insurance is often part of
an employer's benefits package, along with health insurance.
Disability
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• Total permanent disability insurance provides benefits when a person is
permanently disabled and can no longer work in their profession, often
taken as an adjunct to life insurance.
• Workers' compensation insurance replaces all or part of a worker's wages
lost and accompanying medical expenses incurred because of a job-
related injury.
Casualty
Casualty insurance insures against accidents, not necessarily tied to any specific
property.
Life
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sometimes regarded as insurance against the possibility that a retiree will outlive
his or her financial resources. In that sense, they are the complement of life
insurance and, from an underwriting perspective, are the mirror image of life
insurance.
Certain life insurance contracts accumulate cash values, which may be taken by
the insured if the policy is surrendered or which may be borrowed against. Some
policies, such as annuities and endowment policies, are financial instruments to
accumulate or liquidate wealth when it is needed.
In many countries, such as the U.S. and the UK, the tax law provides that the
interest on this cash value is not taxable under certain circumstances. This leads
to widespread use of life insurance as a tax-efficient method of saving as well as
protection in the event of early death.
In U.S., the tax on interest income on life insurance policies and annuities is
generally deferred. However, in some cases the benefit derived from tax deferral
may be offset by a low return. This depends upon the insuring company, the type
of policy and other variables (mortality, market return, etc.). Moreover, other
income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better
alternatives for value accumulation. A combination of low-cost term life insurance
and a higher-return tax-efficient retirement account may achieve better
investment return.
Property
This tornado damage to an Illinois home would be considered an "Act of God" for
insurance purposes
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fire insurance, flood insurance, earthquake insurance, home insurance, inland
marine insurance or boiler insurance.
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property. Most ordinary homeowners insurance policies do not cover
earthquake damage. Most earthquake insurance policies feature a high
deductible. Rates depend on location and the probability of an earthquake,
as well as the construction of the home.
• A fidelity bond is a form of casualty insurance that covers policyholders for
losses that they incur as a result of fraudulent acts by specified
individuals. It usually insures a business for losses caused by the
dishonest acts of its employees.
• Flood insurance protects against property loss due to flooding. Many
insurers in the U.S. do not provide flood insurance in some portions of the
country. In response to this, the federal government created the National
Flood Insurance Program which serves as the insurer of last resort.
• Home insurance or homeowners' insurance: See "Property insurance".
• Landlord insurance is specifically designed for people who own properties
which they rent out. Most house insurance cover in the U.K will not be
valid if the property is rented out therefore landlords must take out this
specialist form of home insurance.
• Marine insurance and marine cargo insurance cover the loss or damage of
ships at sea or on inland waterways, and of the cargo that may be on
them. When the owner of the cargo and the carrier are separate
corporations, marine cargo insurance typically compensates the owner of
cargo for losses sustained from fire, shipwreck, etc., but excludes losses
that can be recovered from the carrier or the carrier's insurance. Many
marine insurance underwriters will include "time element" coverage in
such policies, which extends the indemnity to cover loss of profit and other
business expenses attributable to the delay caused by a covered loss.
• Surety bond insurance is a three party insurance guaranteeing the
performance of the principal.
• Terrorism insurance provides protection against any loss or damage
caused by terrorist activities.
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• Volcano insurance is an insurance that covers volcano damage in Hawaii.
• Windstorm insurance is an insurance covering the damage that can be
caused by hurricanes and tropical cyclones.
Liability
Liability insurance is a very broad superset that covers legal claims against the
insured. Many types of insurance include an aspect of liability coverage. For
example, a homeowner's insurance policy will normally include liability coverage
which protects the insured in the event of a claim brought by someone who slips
and falls on the property; automobile insurance also includes an aspect of liability
insurance that indemnifies against the harm that a crashing car can cause to
others' lives, health, or property. The protection offered by a liability insurance
policy is twofold: a legal defense in the event of a lawsuit commenced against the
policyholder and indemnification (payment on behalf of the insured) with respect
to a settlement or court verdict. Liability policies typically cover only the
negligence of the insured, and will not apply to results of wilful or intentional acts
by the insured.
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contestants who can make a half-court shot at a basketball game, or a
hole-in-one at a golf tournament.
• Professional liability insurance, also called professional indemnity
insurance, protects insured professionals such as architectural corporation
and medical practice against potential negligence claims made by their
patients/clients. Professional liability insurance may take on different
names depending on the profession. For example, professional liability
insurance in reference to the medical profession may be called
malpractice insurance. Notaries public may take out errors and omissions
insurance (E&O). Other potential E&O policyholders include, for example,
real estate brokers, Insurance agents, home inspectors, appraisers, and
website developers.
Credit
Credit insurance repays some or all of a loan when certain things happen to the
borrower such as unemployment, disability, or death.
Other types
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Foreign Nationals must also be covered under DBA. This coverage
typically includes expenses related to medical treatment and loss of
wages, as well as disability and death benefits.
• Expatriate insurance provides individuals and organizations operating
outside of their home country with protection for automobiles, property,
health, liability and business pursuits.
• Financial loss insurance protects individuals and companies against
various financial risks. For example, a business might purchase coverage
to protect it from loss of sales if a fire in a factory prevented it from
carrying out its business for a time. Insurance might also cover the failure
of a creditor to pay money it owes to the insured. This type of insurance is
frequently referred to as "business interruption insurance." Fidelity bonds
and surety bonds are included in this category, although these products
provide a benefit to a third party (the "obligee") in the event the insured
party (usually referred to as the "obligor") fails to perform its obligations
under a contract with the obligee.
• Kidnap and ransom insurance
• Locked funds insurance is a little-known hybrid insurance policy jointly
issued by governments and banks. It is used to protect public funds from
tamper by unauthorized parties. In special cases, a government may
authorize its use in protecting semi-private funds which are liable to
tamper. The terms of this type of insurance are usually very strict.
Therefore it is used only in extreme cases where maximum security of
funds is required.
• Nuclear incident insurance covers damages resulting from an incident
involving radioactive materials and is generally arranged at the national
level. See the Nuclear exclusion clause and for the United States the
Price-Anderson Nuclear Industries Indemnity Act)
• Pet insurance insures pets against accidents and illnesses - some
companies cover routine/wellness care and burial, as well.
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• Pollution Insurance, which consists of first-party coverage for
contamination of insured property either by external or on-site sources.
Coverage for liability to third parties arising from contamination of air,
water, or land due to the sudden and accidental release of hazardous
materials from the insured site. The policy usually covers the costs of
cleanup and may include coverage for releases from underground storage
tanks. Intentional acts are specifically excluded.
• Purchase insurance is aimed at providing protection on the products
people purchase. Purchase insurance can cover individual purchase
protection, warranties, guarantees, care plans and even mobile phone
insurance. Such insurance is normally very limited in the scope of
problems that are covered by the policy.
• Title insurance provides a guarantee that title to real property is vested in
the purchaser and/or mortgagee, free and clear of liens or encumbrances.
It is usually issued in conjunction with a search of the public records
performed at the time of a real estate transaction.
Travel insurance is an insurance cover taken by those who travel abroad, which
covers certain losses such as medical expenses, loss of personal belongings,
travel delay, personal liabilities, etc.
BUSINESS
Life Insurance Corporation General Insurance Corporation
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HDFC Standard Life Insurance The New India Assurance Company
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Program reduces and stabilizes the cost of insurance and provides
valuable risk management information.
• Retrospectively Rated Insurance is a method of establishing a premium on
large commercial accounts. The final premium is based on the insured's
actual loss experience during the policy term, sometimes subject to a
minimum and maximum premium, with the final premium determined by a
formula. Under this plan, the current year's premium is based partially (or
wholly) on the current year's losses, although the premium adjustments
may take months or years beyond the current year's expiration date. The
rating formula is guaranteed in the insurance contract. Formula:
retrospective premium = converted loss + basic premium × tax multiplier.
Numerous variations of this formula have been developed and are in use.
• Formal self insurance is the deliberate decision to pay for otherwise
insurable losses out of one's own money. This can be done on a formal
basis by establishing a separate fund into which funds are deposited on a
periodic basis, or by simply forgoing the purchase of available insurance
and paying out-of-pocket. Self insurance is usually used to pay for high-
frequency, low-severity losses. Such losses, if covered by conventional
insurance, mean having to pay a premium that includes loadings for the
company's general expenses, cost of putting the policy on the books,
acquisition expenses, premium taxes, and contingencies. While this is true
for all insurance, for small, frequent losses the transaction costs may
exceed the benefit of volatility reduction that insurance otherwise affords.
• Reinsurance is a type of insurance purchased by insurance companies or
self-insured employers to protect against unexpected losses. Financial
reinsurance is a form of reinsurance that is primarily used for capital
management rather than to transfer insurance risk.
• Social insurance can be many things to many people in many countries.
But a summary of its essence is that it is a collection of insurance
coverages (including components of life insurance, disability income
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insurance, unemployment insurance, health insurance, and others), plus
retirement savings, that requires participation by all citizens. By forcing
everyone in society to be a policyholder and pay premiums, it ensures that
everyone can become a claimant when or if he/she needs to. Along the
way this inevitably becomes related to other concepts such as the justice
system and the welfare state. This is a large, complicated topic that
engenders tremendous debate, which can be further studied in the
following articles (and others):
o National Insurance
o Social safety net
o Social security
o Social Security debate (United States)
o Social Security (United States)
o Social welfare provision
• Stop-loss insurance provides protection against catastrophic or
unpredictable losses. It is purchased by organizations who do not want to
assume 100% of the liability for losses arising from the plans. Under a
stop-loss policy, the insurance company becomes liable for losses that
exceed certain limits called deductibles.
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extreme differences in insurability that exist among its members. Some further
justification is also provided by invoking the moral hazard of explicit insurance
contracts.
In the United Kingdom, The Crown (which, for practical purposes, meant the Civil
service) did not insure property such as government buildings. If a government
building was damaged, the cost of repair would be met from public funds
because, in the long run, this was cheaper than paying insurance premiums.
Since many UK government buildings have been sold to property companies,
and rented back, this arrangement is now less common and may have
disappeared altogether.
Insurance companies
General insurance companies can be further divided into these sub categories.
• Standard Lines
• Excess Lines
In most countries, life and non-life insurers are subject to different regulatory
regimes and different tax and accounting rules. The main reason for the
distinction between the two types of company is that life, annuity, and pension
business is very long-term in nature — coverage for life assurance or a pension
can cover risks over many decades. By contrast, non-life insurance cover usually
covers a shorter period, such as one year.
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In the United States, standard line insurance companies are "mainstream"
insurers. These are the companies that typically insure autos, homes or
businesses. They use pattern or "cookie-cutter" policies without variation from
one person to the next. They usually have lower premiums than excess lines and
can sell directly to individuals. They are regulated by state laws that can restrict
the amount they can charge for insurance policies.
Excess line insurance companies (aka Excess and Surplus) typically insure risks
not covered by the standard lines market. They are broadly referred as being all
insurance placed with non-admitted insurers. Non-admitted insurers are not
licensed in the states where the risks are located. These companies have more
flexibility and can react faster than standard insurance companies because they
are not required to file rates and forms as the "admitted" carriers do. However,
they still have substantial regulatory requirements placed upon them. State laws
generally require insurance placed with surplus line agents and brokers not to be
available through standard licensed insurers.
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Reinsurance companies are insurance companies that sell policies to other
insurance companies, allowing them to reduce their risks and protect themselves
from very large losses. The reinsurance market is dominated by a few very large
companies, with huge reserves. A reinsurer may also be a direct writer of
insurance risks as well.
The types of risk that a captive can underwrite for their parents include property
damage, public and product liability, professional indemnity, employee benefits,
employers' liability, motor and medical aid expenses. The captive's exposure to
such risks may be limited by the use of reinsurance.
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• differential coverage standards in various parts of the world;
• rating structures which reflect market trends rather than individual loss
experience;
• insufficient credit for deductibles and/or loss control efforts.
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Global insurance industry
Global insurance premiums grew by 11% in 2007 (or 3.3% in real terms) to reach
$4.1 trillion. The macro-economic environment was characterised by slower
economic growth in 2007 and rising inflation. Profitability improved in life
insurance and fell slighlty in the non-life sector during the year. Life insurance
premiums grew by 12.6%, accelerating in the advanced economies with the
exception of Japan and Continental Europe. Non-life insurance premiums grew
by 7.6% during the year. Figures for premium income are not yet available for
2008, but the insurance industry is likely to see a slowdown in new business and
falling investment revenue.
Advanced economies account for the bulk of global insurance. With premium
income of $1,681bn, Europe was the most important region, followed by North
America ($1,330bn) and Asia ($814bn). The top four countries accounted for
nearly 60% of premiums in 2007. The US and UK alone accounted for 42% of
world insurance, much higher than their 7% share of the global population.
Emerging markets accounted for over 85% of the world’s population but
generated only around 10% of premiums.
Insurance policies can be complex and some policyholders may not understand
all the fees and coverages included in a policy. As a result, people may buy
policies on unfavorable terms. In response to these issues, many countries have
enacted detailed statutory and regulatory regimes governing every aspect of the
insurance business, including minimum standards for policies and the ways in
which they may be advertised and sold.
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For example, most insurance policies in the English language today have been
carefully drafted in plain English; the industry learned the hard way that many
courts will not enforce policies against insureds when the judges themselves
cannot understand what the policies are saying.
Redlining
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that race has long affected and continues to affect the policies and practices of
the insurance industry.
All states have provisions in their rate regulation laws or in their fair trade practice
acts that prohibit unfair discrimination, often called redlining, in setting rates and
making insurance available.
What is often missing from the debate is that prohibiting the use of legitimate,
actuarially sound factors means that an insufficient amount is being charged for a
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given risk, and there is thus a deficit in the system. The failure to address the
deficit may mean insolvency and hardship for all of a company's insureds. The
options for addressing the deficit seem to be the following: Charge the deficit to
the other policyholders or charge it to the government (i.e., externalize outside of
the company to society at large).
Insurance patents
New assurance products can now be protected from copying with a business
method patent in the United States.
There are currently about 150 new patent applications on insurance inventions
filed per year in the United States. The rate at which patents have issued has
steadily risen from 15 in 2002 to 44 in 2006. Inventors can now have their
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insurance U.S. patent applications reviewed by the public in the Peer to Patent
program. The first insurance patent application to be posted was US2009005522
“Risk assessment company”. It was posted on March 6, 2009. This patent
application describes a method for increasing the ease of changing insurance
companies
Certain insurance products and practices have been described as rent seeking
by critics. That is, some insurance products or practices are useful primarily
because of legal benefits, such as reducing taxes, as opposed to providing
protection against risks of adverse events. Under United States tax law, for
example, most owners of variable annuities and variable life insurance can invest
their premi
LIFE INSURANCE
Life insurance is the only tool to secure out life in future. It also provides a safe
guard to the uncertainty of our life. Life insurance is the cheapest investment tool
in which we can earn more in a short period of time.
The function of insurance is to protect you against losses you can’t afford.
Insurance reduces anxiety over a possible loss and absorbs the financial brunt of
its consequences.
India has traditionally been a high savings oriented country being on par with the
thrifty Japan. Insurance sector in the United States of America is as big in size as
the banking industry there. This gives us an ideal of how important the sector is.
36
Insurance sector changeless the savings of the people to long- term investments.
In India where infrastructure is said to be of critical importance, this sector will
bring the nations own money for the nation.
• The global life insurance market stands at $ 1,521.2 billion while the
non-life insurance market is placed at $922.4 billion.
• India takes the 23rd position with US $ 9.933 billion annual premium
collections and a meager 0.41% share.
Out of the billion people is India; only 35 million people are covered by insurance.
In 3 years time we would expect the 10% of the population to be under some sort
of an insurance cover. This assuming a premium of Rs. 5000 on an average,
amounts to 100 million x Rs. 5000= Rs. 500 bn.
This has made the sector the hottest one in India after IT. With social security
and security to the people at large being the agenda for opening the sector, the
role of the regulator becomes all the more serious and one that would be
carefully watched at every step.
The life insurance corporation was established on 01.09.1956 and has been the
sole corporation to write the life insurance business in India.
The Indian insurance industry saw a new sun when the Insurance regulatory &
Development Authority (IRDA) invited the applications for registration as insurers
in August, 2000. With the liberalization and opening up of the sector to private
players, the industry has presented promising prospects for the coming future.
37
The transition has also resulted into introduction complete opportunities for the
professionals.
Life insurance or life assurance is a contract between the policy owner and the
insurer, where the insurer agrees to pay a sum of money upon the occurrence of
the insured individual's or individuals' death or other event, such as terminal
illness or critical illness. In return, the policy owner agrees to pay a stipulated
amount called a premium at regular intervals or in lump sums. There may be
designs in some countries where bills and death expenses plus catering for after
funeral expenses should be included in Policy Premium. In the United States, the
predominant form simply specifies a lump sum to be paid on the insured's
demise.
As with most insurance policies, life insurance is a contract between the insurer
and the policy owner whereby a benefit is paid to the designated beneficiaries if
an insured event occurs which is covered by the policy.
The value for the policyholder is derived, not from an actual claim event, rather it
is the value derived from the 'peace of mind' experienced by the policyholder,
due to the negating of adverse financial consequences caused by the death of
the Life Assured.
To be a life policy the insured event must be based upon the lives of the people
named in the policy.
• Serious illness
Life policies are legal contracts and the terms of the contract describe the
limitations of the insured events. Specific exclusions are often written into the
contract to limit the liability of the insurer; for example claims relating to suicide,
fraud, war, riot and civil commotion.
38
Life-based contracts tend to fall into two major categories:
TEMPORARY TERM
• Term assurance: provides for life insurance coverage for a specified term
of years for a specified premium. The policy does not accumulate cash
value. Term is generally considered "pure" insurance, where the premium
buys protection in the event of death and nothing else.
• The three key factors to be considered in term insurance are: face amount
(protection or death benefit), premium to be paid (cost to the insured), and
length of coverage (term).
• Various insurance companies sell term insurance with many different
combinations of these three parameters. The face amount can remain
constant or decline. The term can be for one or more years. The premium
can remain level or increase. A common type of term is called annual
renewable term. It is a one year policy but the insurance company
39
guarantees it will issue a policy of equal or lesser amount without regard
to the insurability of the insured and with a premium set for the insured's
age at that time. Another common type of term insurance is mortgage
insurance, which is usually a level premium, declining face value policy.
The face amount is intended to equal the amount of the mortgage on the
policy owner’s residence so the mortgage will be paid if the insured dies.
• A policy holder insures his life for a specified term. If he dies before that
specified term is up, his estate or named beneficiary receives a payout. If
he does not die before the term is up, he receives nothing. In the past
these policies would almost always exclude suicide. However, after a
number of court judgments against the industry, payouts do occur on
death by suicide (presumably except for in the unlikely case that it can be
shown that the suicide was just to benefit from the policy). Generally, if an
insured person commits suicide within the first two policy years, the
insurer will return the premiums paid. However, a death benefit will usually
be paid if the suicide occurs after the two year period.
40
• The four basic types of permanent insurance are whole life, universal life,
limited pay and endowment.
• Whole life insurance provides for a level premium, and a cash value table
included in the policy guaranteed by the company. The primary
advantages of whole life are guaranteed death benefits, guaranteed cash
values, fixed and known annual premiums, and mortality and expense
charges will not reduce the cash value shown in the policy. The primary
disadvantages of whole life are premium inflexibility, and the internal rate
of return in the policy may not be competitive with other savings
alternatives. Riders are available that can allow one to increase the death
benefit by paying additional premium. The death benefit can also be
increased through the use of policy dividends. Dividends cannot be
guaranteed and may be higher or lower than historical rates over time.
Premiums are much higher than term insurance in the short-term, but
cumulative premiums are roughly equal if policies are kept in force until
average life expectancy.
• Cash value can be accessed at any time through policy "loans". Since
these loans decrease the death benefit if not paid back, payback is
optional. Cash values are not paid to the beneficiary upon the death of the
insured; the beneficiary receives the death benefit only. If the dividend
option: Paid up additions is elected, dividend cash values will purchase
additional death benefit which will increase the death benefit of the policy
to the named beneficiary.
41
in premium payment and the potential for a higher internal rate of return.
There are several types of universal life insurance policies which include
"interest sensitive" (also known as "traditional fixed universal life
insurance"), variable universal life insurance, and equity indexed universal
life insurance.
• A universal life insurance policy includes a cash account. Premiums
increase the cash account. Interest is paid within the policy (credited) on
the account at a rate specified by the company. Mortality charges and
administrative costs are then charged against (reduce) the cash account.
The surrender value of the policy is the amount remaining in the cash
account less applicable surrender charges, if any.
• With all life insurance, there are basically two functions that make it work.
There's a mortality function and a cash function. The mortality function
would be the classical notion of pooling risk where the premiums paid by
everybody else would cover the death benefit for the one or two who will
die for a given period of time. The cash function inherent in all life
insurance says that if a person is to reach age 95 to 100 (the age varies
depending on state and company), then the policy matures and endows
the face value of the policy.
• Actuarially, it is reasoned that out of a group of 1000 people, if even 10 of
them live to age 95, then the mortality function alone will not be able to
cover the cash function. So in order to cover the cash function, a minimum
rate of investment return on the premiums will be required in the event that
a policy matures.
• Universal life insurance addresses the perceived disadvantages of whole
life. Premiums are flexible. Depending on how interest is credited, the
internal rate of return can be higher because it moves with prevailing
interest rates (interest-sensitive) or the financial markets (Equity Indexed
Universal Life and Variable Universal Life). Mortality costs and
administrative charges are known. And cash value may be considered
42
more easily attainable because the owner can discontinue premiums if the
cash value allows it. And universal life has a more flexible death benefit
because the owner can select one of two death benefit options, Option A
and Option B.
• Option A pays the face amount at death as it's designed to have the cash
value equal the death benefit at maturity (usually at age 95 or 100). With
each premium payment, the policy owner is reducing the cost of insurance
until the cash value reaches the face amount upon maturity.
• Option B pays the face amount plus the cash value, as it's designed to
increase the net death benefit as cash values accumulate. Option B offers
the benefit of an increasing death benefit every year that the policy stays
in force. The drawback to option B is that because the cash value is
accumulated "on top of" the death benefit, the cost of insurance never
decreases as premium payments are made. Thus, as the insured gets
older, the policy owner is faced with an ever increasing cost of insurance
(it costs more money to provide the same initial face amount of insurance
as the insured gets older).
Limited-pay
Endowments
• Endowments are policies in which the cash value built up inside the policy,
equals the death benefit (face amount) at a certain age. The age this
commences is known as the endowment age. Endowments are
considerably more expensive (in terms of annual premiums) than either
43
whole life or universal life because the premium paying period is
shortened and the endowment date is earlier.
• In the United States, the Technical Corrections Act of 1988 tightened the
rules on tax shelters (creating modified endowments). These follow tax
rules as annuities and IRAs do.
• Endowment Insurance is paid out whether the insured lives or dies, after a
specific period (e.g. 15 years) or a specific age (e.g. 65).
Accidental Death
44
to be commonly referred to as a double indemnity coverage. In some
cases, some companies may even offer a triple indemnity cover.
45
senior market to address needs of an aging population. Many companies
offer policies tailored to the needs of senior applicants. These are often
low to moderate face value whole life insurance policies, to allow a senior
citizen purchasing insurance at an older issue age an opportunity to buy
affordable insurance. This may also be marketed as final expense
insurance, and an agent or company may suggest (but not require) that
the policy proceeds could be used for end-of-life expenses.
Preneed (or prepaid) insurance policies: are whole life policies that, although
available at any age, are usually offered to older applicants as well. This type of
insurance is designed specifically to cover funeral expenses when the insured
person dies. In many cases, the applicant signs a prefunded funeral arrangement
with a funeral home at the time the policy is applied for. The death proceeds are
then guaranteed to be directed first to the funeral services provider for payment
of services rendered. Most contracts dictate that any excess proceeds will go
either to the insured's estate or a designated beneficiary um payments in the
stock market and defer or eliminate paying any taxes on their investments until
withdrawals are made. Sometimes this tax deferral is the only reason people use
these products.[citation needed] Another example is the legal infrastructure which allows
life insurance to be held in an irrevocable trust which is used to pay an estate tax
while the proceeds themselves are immune from the estate tax
46
Other criticisms include:
47
ABOUT THE ORGANISATION
Company Profile
Overview
ICICI Bank is India's second-largest bank with total assets of Rs. 3,744.10 billion
(US$ 77 billion) at December 31, 2008 and profit after tax Rs. 30.14 billion for the
nine months ended December 31, 2008. The Bank has a network of 1,438
branches and about 4,644 ATMs in India and presence in 18 countries. ICICI
Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, life and
non-life insurance, venture capital and asset management. The Bank currently
has subsidiaries in the United Kingdom, Russia and Canada, branches in United
States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre and representative offices in United Arab Emirates, China, South
Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has
established branches in Belgium and Germany.
48
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and
the National Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). 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 Prudential was
amongst the first private sector insurance companies to begin operations in
December 2000 after receiving approval from Insurance Regulatory
Development Authority (IRDA).
ICICI Prudential equity base stands at Rs. 925 crores with ICICI Bank and
Prudential policy holding 74% and 26% stake respectively. In the period April-
December 2004, the company garnered Rs 860 crores of new business
premiums for a total sum assured of over Rs 7,360 crores and wrote nearly
345,000 policies. Today the company is the No. 1 private life insurer in the
country.
History
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI
Bank was reduced to 46% through a public offering of shares in India in fiscal
1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000,
ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation
in fiscal 2001, and secondary market sales by ICICI to institutional investors in
fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World
Bank, the Government of India and representatives of Indian industry. The
principal objective was to create a development financial institution for providing
medium-term and long-term project financing to Indian businesses. In the 1990s,
ICICI transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide
variety of products and services, both directly and through a number of
49
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian
company and the first bank or financial institution from non-Japan Asia to be
listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of
the emerging competitive scenario in the Indian banking industry, and the move
towards universal banking, the managements of ICICI and ICICI Bank formed the
view that the merger of ICICI with ICICI Bank would be the optimal strategic
alternative for both entities, and would create the optimal legal structure for the
ICICI group's universal banking strategy. The merger would enhance value for
ICICI shareholders through the merged entity’s access to low-cost deposits,
greater opportunities for earning fee-based income and the ability to participate in
the payments system and provide transaction-banking services. The merger
would enhance value for ICICI Bank shareholders through a large capital base
and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments,
higher market share in various business segments, particularly fee-based
services, and access to the vast talent pool of ICICI and its subsidiaries. In
October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with
ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank
in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and
by the High Court of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
ICICI Bank has formulated a Code of Business Conduct and Ethics for its
directors and employees.
ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,
and Prudential Policy, a leading international financial services group which has
its headquarters in U.K.ICICI Prudential was amongst the first private sector
50
companies to begin operation in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). ICICI Prudential total equity
is 6.75 Bn with ICICI Bank & Prudential Policy In the end of year 2003-04, ICICI
Prudential had issued over 7.8 lackhs policies, for a total sum assured of over
16000 crores and premium collection is over 951 crores.
Foundation of ICICI
• 1955 The Industrial Credit and Investment Corporation of India Limited
(ICICI) was incorporated at the initiative of World Bank, the Government of
India and representatives of Indian industry, with the objective of creating
a development financial institution for providing medium-term and long-
term project financing to Indian businesses.
• 1994 ICICI established Banking Corporation as a banking
subsidiary.formerly Industrial Credit and Investment Corporation of India.
Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'.
ICICI founded a separate legal entity, ICICI Bank, to undertake normal
banking operations - taking deposits, credit cards, car loans etc.
• 2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a
Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933)
and Illanji Bank (established 1904) in the 1960s.
• 2002 The Boards of Directors of ICICI and ICICI Bank approved the
reverse merger of ICICI, ICICI Personal Financial Services Limited and
ICICI Capital Services Limited, into ICICI Bank. After receiving all
necessary regulatory approvals, ICICI integrated the group's financing and
banking operations, both wholesale and retail, into a single entity.
Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that
Standard Chartered Bank had inherited when it acquired Grind lays Bank.
51
ICICI started its international expansion by opening representative offices
in New York and London.
• 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK),
and in the UK it established an alliance with Lloyds TSB.
It also opened an Offshore Banking Unit (OBU) in Singapore and
representative offices in Dubai and Shanghai.
• 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade
between that country, India and South Africa.
• 2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank
with about US$4mn in assets, head office in Balabanovo in the Kaluga
region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank
Eurasia.
Also, ICICI established a branch in Dubai International Financial Centre
and in Hong Kong.
• 2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI
opened representative offices in Bangkok, Jakarta, and Kuala Lumpur.
• 2007 ICICI amalgamated Sangli Bank, which was headquartered in
Sangli, in Maharashtra State, and which had 158 branches in Maharashtra
and another 31 in Karnataka State. Sangli Bank had been founded in
1916 and was particularly strong in rural areas
• .ICICI also received permission from the government of Qatar to open a
branch in Doha. ICICI Bank Eurasia opened a second branch, this time in
St. Petersburg.
• 2008 The US Federal Reserve permitted ICICI to convert its
representative office in New York into a branch.
ICICI also established a branch in Frankfurt.
52
ICICI Group
ICICI Bank also has banking subsidiaries in UK, Canada and Russia
Bank Profile:-
53
The company has presence in various businesses in the financial sector. The
prominent ones are Infrastructure Finance, Structured Finance, Project Finance,
Treasury Services, Corporate Finance, Advisory services, Demat Services etc.
Over the year, ICICI has gained prominence in most of the segments in financial
sector through its various subsidiaries. Some of the important ones are:
ICICI Bank
ICICI Securities
ICICI Personal financial
Services
ICICI Infotech
ICICI Web Trade
Over the years ICICI promoted a number of specialized Financial Institutions like
HDFC, CRISIL, TDICI etc.
ICICI Bank is India’s second largest bank and largest private sector
bank with over 50 years of financial experience and with assets of Rs. 2416.79
Billions as on July 31, 2007. ICICI Bank offers a comprehensive range of deposit
and loan products at its branches to cater to different customer profiles and
54
needs. ICICI Bank has over 746 branches and extension counters and over 2270
ATM’s spread across the country. The bank services its large customer base of
more than 17.5 million customers’ accounts through a multi-channel delivery
network of branches. ATM’s call centers and Internet Banking
(www.icicibank.com) to ensure that customers have access to its services at all
times.
ICICI Bank has emerged as India’s fastest growing retail bank. It offers
individuals a broad spectrum of deposit, investment and credit policies. The bank
is often credited for bringing in the retail finance phenomenon to India by
pioneering the effort to make retail loans much more accessible and affordable
enabling the rising Indian middle class to fund their lifestyle requirements across
the country. The bank has market leadership in retail credit, which comprises
mortgages, car loans, two wheeler, credit cards, personal loans etc.
ICICI Bank is also India’s foremost technology bank. ICICI Bank uses IT as a
strategic tool in all the business operation, so as to gain competitive advantages.
ICICI Bank offers a wide range of baking products and financial services to
corporate and retail customers through a variety of delivery channels and through
its specialized subsidiaries and affiliates in the areas of investment banking, life
and non-life insurance, venture capital, asset management and information
technology. ICICI Bank’s equity shares are listed in India on stock exchanges at
Chennai, Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution and was reduce to 46% through a public offering of shares in India in
fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal
2000, ICICI Bank’s acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional
investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative
of the World Bank, the Government of India and representatives of Indian
55
industry. The principal objective was to create a development financial institution
offering only project financing to Indian businesses. In the 1990s, ICICI
transformed its business from a diversified financial services group offering a
wide variety of products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999. ICICI become the first Indian
company and the first bank or financial institution from non-Japan Asia to be
listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the
emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the management of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for 0both
entities, and banking strategy.
The company has seven ban assurance tie-ups, having agreements with ICICI
Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank and
some co-operative banks, as well as over 160 corporate agents and brokers. It
has also tied up with Specialized like Dhan for distribution of Salaam Zindagi, a
policy for the socially and economically underprivileged sections of society.
ICICI Prudential has recruited and trained about 50,000 insurance advisors to
interface with and advise customers. Further, it leverages its state-of-the-art IT
infrastructure to provide superior quality of service to customers.ICICI (Industrial
Credit and Investment Corporation of India):
The World Bank; the Government of India and the Indian Industry, to promote
industrial development of India by providing project and corporate finance to
Indian industry, established ICICI Ltd. In 1955.
ICICI has thus far financed all the major sectors of the economy, covering 6,848
companies and 16,851 projects As of March 31st, 2000. ICICI had disbursed a
total of Rs. 1, 13,070 crores, since inception.
56
VISION
The company’s vision is “to make ICICI Prudential the dominant Life and
Pensions player built on trust by world-class people and service.”
• Integrity,
• Customer First,
• Ownership,
• Passion,
57
. MISSION OF THE ICICI BANK
Present Scenario
ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and
the National Stock Exchange of India Limited. Overseas, its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). As of
December 31, 2008, ICICI is India's second-largest bank, boasting an asset
value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion, for the nine
months, that ended on December 31, 2008.
FUNCTION
58
SALES DISTRIBUTION
GROUP
The Group Business of ICICI Prudential has been in existence for over 2
years. Today, we are the Number 1 player among private life insurance
companies in Group Business excluding Mortgage Reducing Term
Assurance (MRTA) with a market share of 26 %( FY 2004-2005). We offer
the entire gamut of products including Gratuity, Superannuation Term
Insurance, Leave Encashment, Employee Deposit Linked Insurance
(EDLI), Mortgage Reducing Term Assurance (MRTA) & Informal Group
Term covers.
59
CUSTOMER SERVICE & OPERATIONS
INFORMATION TECHNOLOGY
60
provide robust, scalable and highly available platform for deployment of
business application.
MARKETING
FINANCE
61
of ICICI Prudential life. Internal audit provides assurance to the
management over the organizations' control framework and includes
process risk management, information security assessment and business
continuity assessment.
HUMANRE SOURCE
The people strategy of ICICI Prudential is "To build a committed team with
a culture of innovation, learning and growth. The Human Resource
Function at ICICI Prudential drives the people strategy of the business.
With its initial focus on operational excellence to deliver benefits and
services to staff members, HR is now committed to building capability
through state of the art processes. A robust performance management
system, compensation system and a segmented training architecture
enable it to deliver value to the organization.
BUSINESS
Strategy-
1. Identify and support projects and programmes that are within its focus areas
and,
• have a large- scale and measurable – impact
62
• are replicable in a cost effective manner; and
• are time –bound.
2. Identify and support pilot projects within its focus areas.
3. Contribute towards improving the efficacy of assisted organizations through:
• capacity building
• providing access to research and information; and providing platforms for
an
Business Overview
63
ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659
crore at March 31, 2006 and profit after tax of Rs. 2,005 crore for the year ended
March 31, 2006 (Rs. 1740 crore in fiscal 2004). ICICI Bank has a network of
about 570 branches and extension counters and over 2200 ATMs. ICICI Bank
offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and through its
specialised subsidiaries and affiliates in the areas of investment banking, life and
non-life insurance, venture capital and asset management. ICICI Bank set up its
international banking group in fiscal 2002 to cater to the cross border needs of
clients and leverage on its domestic banking strengths to offer products
internationally. ICICI Bank currently has subsidiaries in the United Kingdom,
Canada and Russia, branches in Singapore and Bahrain and representative
offices in the United States, China, United Arab Emirates, Bangladesh and South
Africa.
At April 4, 2006 ICICI Bank, with free float market capitalization* of about Rs.
308.00 billion (US$ 7.00 billion) ranked third amongst all the companies listed on
the Indian stock exchanges.
64
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the
NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-
stock amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at
the initiative of the World Bank, the Government of India and representatives of
Indian industry.
The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development
financial institution offering only project finance to a diversified financial services
group offering a wide variety of products and services, both directly and through
a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the
first Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry, and
the move towards universal banking, the managements of ICICI and ICICI Bank
formed the view that the merger of ICICI with ICICI Bank would be the optimal
strategic alternative for both entities, and would create the optimal legal structure
for the ICICI group's universal banking strategy. The merger would enhance
value for ICICI shareholders through the merged entity's access to low-cost
deposits, greater opportunities for earning fee-based income and the ability to
participate in the payments system and provide transaction-banking services.
The merger would enhance value for ICICI Bank shareholders through a large
capital base and scale of operations, seamless access to ICICI's strong
corporate relationships built up over five decades, entry into new business
segments, higher market share in various business segments, particularly fee-
based services, and access to the vast talent pool of ICICI and its subsidiaries. In
October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
65
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with
ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank
in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and
by the High Court of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
*Free float holding excludes all promoter holdings, strategic investments and
cross holdings among public sector entities.
66
• ICICI Bank Germany won the yearly banking test of the investor
magazine €uro in the “call money”category.
• The ICICI Bank was awarded the runner's up position in Gartner
Business Intelligence and Excellence Award for Asia Pacific for its
Business Intelligence functions.
• ICICI Bank's Organizational Excellence Group was recently
awarded ISO 9001:2008 certification by TUV Nord. The scope of
certification comprised processes around consulting and capability
building on methods of quality & improvements.
• ICICI Bank has been awarded the following titles under The Asset
Triple A Country Awards for 2009:
• Best Transaction Bank in India
• Best Trade Finance Bank in India
• Best Cash Management Bank in India
• Best Domestic Custodian in India
ICICI Bank has bagged the Best Cash Management Bank in India award
for the second year in a row. The other awards have been bagged for the
third year in a row.
• ICICI Bank Canada received the prestigious Canadian Helen Keller
Award at the Canadian Helen Keller Centre's Fifth Annual Luncheon in
Toronto. The award was given to ICICI Bank its long-standing support to
this unique training centre for people who are deaf-blind.
• Profit before tax for FY2009 was Rs. 51.17bn compared to Rs. 50.56bn for
FY2008.
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Profit after tax for FY2009 was Rs. 37.58bn compared to Rs. 41.58bn for
FY2008 due to the higher effective tax rate on account of lower proportion
of income taxable as dividends and capital gains.
• 15% increase in net interest income from Rs. 73.04bn in FY2008 to Rs.
83.67bn in FY2009.
NIM increased from 2.2% in FY2008 to 2.4% in FY2009.
• Fee income decreased marginally from Rs. 66.27bn in FY2008 to Rs.
65.24bn in FY2009.Lower corporate fees in H2-2009 due to slowdown in
corporate activity.
Reduced third party distribution and low disbursals impacted retail fees
• Credit rating
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Senior Debt & Deposit Ratings of ICICI Bank Limited
ICICI Bank
Agency India
Limited
Moody's FC - Long Term Baa2 Baa2
FC - Long Term BBB- BBB-
S&P
FC - Short Term A-3 A-3
JCRA FC - Long Term BBB+ BBB+
Rupee - Long Term Care - AAA
CARE Fixed Deposits Care - AAA
Rupee - Short Term PR1+
Rupee - Long Term LAAA
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OVERVIEW
India's Number One private life insurer, ICICI Prudential Life Insurance Company
is a joint venture between ICICI Bank-one of India's foremost financial services
companies-and prudential plc- a leading international financial services group
headquartered in the United Kingdom. Total capital infusion stands at Rs. 20.60
billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%.
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). Today, our nation-wide
team comprises of over 580 offices, over 234,000 advisors; and 22 bank
assurance partners.ICICI Prudential was the first life insurer in India to receive a
National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For
three years in a row, ICICI Prudential has been voted as India's Most Trusted
Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of
'Most Trusted Brands'. As we grow our distribution, product range and customer
base, we continue to tirelessly uphold our commitment to deliver world-class
financial solutions to customers all over India.
Promise a fixed income after you retire or Health insurance that arms you with
the funds you might need to recover from a dreaded disease.
1. Ensure that our customers can access them easily and quickly. To this
end, ICICI Prudential has an advisor base across the length and breadth
of the country, and also partners with leading banks, corporate agents and
brokers to distribute our products.
2. Robust risk management and underwriting practices form the core of our
business. With clear guidelines in place, we ensure equitable costing of
risks, and thereby ensure a smooth and hassle-free claims process.
3. Entrusted with helping our customers meet their long-term goals, we adopt
an investment philosophy that aims to achieve risk adjusted returns over
the long-term.
4. Last but definitely not the least, our 16,000 plus strong team is given the
opportunity to learn and grow, every day in a multitude of ways.
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Key attributes
more concrete. From the customer’s point of view, this makes it difficult to
only two hours a day can never regain that economic opportunity.
"production".
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key success factor in service industries. It is difficult to achieve economies
Parties to contract
There is a difference between the insured and the policy owner (policy holder),
although the owner and the insured are often the same person. For example, if
Joe buys a policy on his own life, he is both the owner and the insured. But if
Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured.
The policy owner is the guarantee and he or she will be the person who will pay
for the policy. The insured is a participant in the contract, but not necessarily a
party to it.
The beneficiary receives policy proceeds upon the insured's death. The owner
designates the beneficiary, but the beneficiary is not a party to the policy. The
owner can change the beneficiary unless the policy has an irrevocable
beneficiary designation. With an irrevocable beneficiary, that beneficiary must
agree to any beneficiary changes, policy assignments, or cash value borrowing.
In cases where the policy owner is not the insured (also referred to as the celui
qui vit or CQV), insurance companies have sought to limit policy purchases to
those with an "insurable interest" in the CQV. For life insurance policies, close
family members and business partners will usually be found to have an insurable
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interest. The "insurable interest" requirement usually demonstrates that the
purchaser will actually suffer some kind of loss if the CQV dies. Such a
requirement prevents people from benefiting from the purchase of purely
speculative policies on people they expect to die. With no insurable interest
requirement, the risk that a purchaser would murder the CQV for insurance
proceeds would be great. In at least one case, an insurance company which sold
a policy to a purchaser with no insurable interest (who later murdered the CQV
for the proceeds), was found liable in court for contributing to the wrongful death
of the victim (Liberty National Life v. Weldon, 267 Ala.171 (1957)).
Contract terms
• Special provisions may apply, such as suicide clauses wherein the policy
becomes null if the insured commits suicide within a specified time
(usually two years after the purchase date; some states provide a
statutory one-year suicide clause). Any misrepresentations by the insured
on the application is also grounds for nullification. Most US states specify
that the contestability period cannot be longer than two years; only if the
insured dies within this period will the insurer have a legal right to contest
the claim on the basis of misrepresentation and request additional
Sinformation before deciding to pay or deny the claim.
The face amount on the policy is the initial amount that the policy will pay at the
death of the insured or when the policy matures, although the actual death
benefit can provide for greater or lesser than the face amount. The policy
matures when the insured dies or reaches a specified age (such as 100 years
old).
The insurer (the life insurance company) calculates the policy prices with intent to
fund claims to be paid and administrative costs, and to make a profit. The cost of
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insurance is determined using mortality tables calculated by actuaries. Actuaries
are professionals who employ actuarial science, which is based in mathematics
(primarily probability and statistics). Mortality tables are statistically-based tables
showing expected annual mortality rates. It is possible to derive life expectancy
estimates from these mortality assumptions. Such estimates can be important in
taxation regulation
The three main variables in a mortality table have been age, gender, and use of
tobacco. More recently in the US, preferred class specific tables were introduced.
The mortality tables provide a baseline for the cost of insurance. In practice,
these mortality tables are used in conjunction with the health and family history of
the individual applying for a policy in order to determine premiums and
insurability. Mortality tables currently in use by life insurance companies in the
United States are individually modified by each company using pooled industry
experience studies as a starting point. In the 1980s and 90's the SOA 1975-80
Basic Select & Ultimate tables were the typical reference points, while the 2001
VBT and 2001 CSO tables were published more recently. The newer tables
include separate mortality tables for smokers and non-smokers and the CSO
tables include separate tables for preferred classes.
Recent US select mortality tables predict that roughly 0.35 in 1,000 non-smoking
males aged 25 will die during the first year of coverage after underwriting.
Mortality approximately doubles for every extra ten years of age so that the
mortality rate in the first year for underwritten non-smoking men is about 2.5 in
1,000 people at age 65.Compare this with the US population male mortality rates
of 1.3 per 1,000 at age 25 and 19.3 at age 65 (without regard to health or
smoking status).
The mortality of underwritten persons rises much more quickly than the general
population. At the end of 10 years the mortality of that 25 year-old, non-smoking
male is 0.66/1000/year. Consequently, in a group of one thousand 25 year old
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males with a $100,000 policy, all of average health, a life insurance company
would have to collect approximately $50 a year from each of a large group to
cover the relatively few expected claims. (0.35 to 0.66 expected deaths in each
year x $100,000 payout per death = $35 per policy). Administrative and sales
commissions need to be accounted for in order for this to make business sense.
A 10 year policy for a 25 year old non-smoking male person with preferred
medical history may get offers as low as $90 per year for a $100,000 policy in the
competitive US life insurance market.
The insurance company receives the premiums from the policy owner and
invests them to create a pool of money from which it can pay claims and finance
the insurance company's operations. Contrary to popular belief, the majority of
the money that insurance companies make comes directly from premiums paid,
as money gained through investment of premiums can never, in even the most
ideal market conditions, vest enough money per year to pay out claims
Rates charged for life insurance increase with the insurer's age because,
statistically, people are more likely to die as they get older.
Given that adverse selection can have a negative impact on the insurer's
financial situation, the insurer investigates each proposed insured individual
unless the policy is below a company-established minimum amount, beginning
with the application process. Group Insurance policies are an exception.
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Underwriters will determine the purpose of insurance. The most common is to
protect the owner's family or financial interests in the event of the insurer's
demise. Other purposes include estate planning or, in the case of cash-value
contracts, investment for retirement planning. Bank loans or buy-sell provisions
of business agreements are another acceptable purpose.
Many companies use four general health categories for those evaluated for a life
insurance policy. These categories are Preferred Best, Preferred, Standard, and
Tobacco
Preferred Best is reserved only for the healthiest individuals in the general
population. This means, for instance, that the proposed insured has no adverse
medical history, is not under medication for any condition, and his family
(immediate and extended) have no history of early cancer, diabetes, or other
conditions. Preferred means that the proposed insured is currently under
medication for a medical condition and has a family history of particular illnesses
Most people are in the Standard category. Profession, travel, and lifestyle factor
into whether the proposed insured will be granted a policy, and which category
the insured falls. For example, a person who would otherwise be classified as
Preferred Best may be denied a policy if he or she travels to a high risk
country.Underwriting practices can vary from insurer to insurer which provide for
more competitive offers in certain circumstances.
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Life insurance contracts are written on the basis of utmost good faith. That is, the
proposer and the insurer both accept that the other is acting in good faith. This
means that the proposer can assume the contract offers what it represents
without having to fine comb the small print and the insurer assumes the proposer
is being honest when providing details to underwriter.
Death proceeds
Upon the insured's death, the insurer requires acceptable proof of death before it
pays the claim. The normal minimum proof required is a death certificate and the
insurer's claim form completed, signed (and typically notarized If the insured's
death is suspicious and the policy amount is large, the insurer may investigate
the circumstances surrounding the death before deciding whether it has an
obligation to pay the claim.
Proceeds from the policy may be paid as a lump sum or as an annuity, which is
paid over time in regular recurring payments for either a specified period or for a
beneficiary's lifetime.
The basics of the insurance business in India are governed by the Agency Law,
which is part of the Indian Contracts Act, 1872. Further, after the industry got
opened up the regulatory authority has been the Insurance Regulatory &
Development Authority (IRDA).
According to the section 182 of the Indian Contract Act, 1872, “an agent is a
person employed to do any act for another or to represent another in dealing with
77
a third person”. In the insurance sector the term “Agent” is ordinarily applied to a
person engaged by the insurer to procure new business.
An agent can act only to the extent of authority may be expressed or implied. An
authority is said to be expressed when it is given by words spoken or written. It is
implied when it is to be inferred from the circumstances of the case.
The Insurance Act, 1938 defines as agent as “one who is licensed under the act
& is paid consideration of his soliciting or procuring insurance business including
business relating to continuance, renewal or revival of policies of insurance”.
Investment policies
Some policies allow the policyholder to participate in the profits of the insurance
company these are with-profits policies. Other policies have no rights to
participate in the profits of the company, these are non-profit policies.
Investment Bonds
Pensions: Pensions are a form of life assurance. However, whilst basic life
assurance, permanent health insurance and non-pensions annuity business
includes an amount of mortality or morbidity risk for the insurer, for pensions
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there is a longevity risk.
A pension fund will be built up throughout a person's working life. When the
person retires, the pension will become in payment, and at some stage the
pensioner will buy an annuity contract, which will guarantee a certain pay-out
each month until death.
Annuities
Premiums paid by the policy owner are normally not deductible for federal and
state income tax purposes.
Proceeds paid by the insurer upon death of the insured are not included in gross
income for federal and state income tax purposes; however, if the proceeds are
included in the "estate" of the deceased, it is likely they will be subject to federal
and state estate and inheritance tax.
Cash value increases within the policy are not subject to income taxes unless
certain events occur. For this reason, insurance policies can be a legal and
legitimate tax shelter wherein savings can increase without taxation until the
owner withdraws the money from the policy. On flexible-premium policies, large
deposits of premium could cause the contract to be considered a "Modified
Endowment Contract" by the Internal Revenue Service (IRS), which negates
many of the tax advantages associated with life insurance. The insurance
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company, in most cases, will inform the policy owner of this danger before
applying their premium.
Tax deferred benefit from a life insurance policy may be offset by its low return in
some cases. This depends upon the insuring company, type of policy and other
variables (mortality, market return, etc.). Also, other income tax saving vehicles
(i.e. Individual Retirement Account (IRA), 401K or Roth IRA) may be better
alternatives for value accumulation. This will depend on the individual and their
specific circumstances.
The tax ramifications of life insurance are complex. The policy owner would be
well advised to carefully consider them. As always, the United States Congress
or the state legislatures can change the tax laws at any time.
Premiums are not usually allowable against income tax or corporation tax,
however qualifying policies issued prior to 14 March 1984 do still attract LAPR
(Life Assurance Premium Relief) at 15% (with the net premium being collected
from the policyholder).
Non-investment life policies do not normally attract either income tax or capital
gains tax on claim. If the policy has as investment element such as an
endowment policy, whole of life policy or an investment bond then the tax
treatment is determined by the qualifying status of the policy.
Qualifying status is determined at the outset of the policy if the contract meets
certain criteria. Essentially, long term contracts (10 years plus) tend to be
qualifying policies and the proceeds are free from income tax and capital gains
tax. Single premium contracts and those run for a short term are subject to
income tax depending upon your marginal rate in the year you make a gain. All
(UK) insurers pay a special rate of corporation tax on the profits from their life
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book; this is deemed as meeting the lower rate (20% in 2005-06) liability for
policyholders. Therefore a policyholder who is a higher rate taxpayer (40% in
2005-06), or becomes one through the transaction, must pay tax on the gain at
the difference between the higher and the lower rate. This gain is reduced by
applying a calculation called top-slicing based on the number of years the policy
has been held. Although this is complicated, the taxation of life assurance based
investment contracts may be beneficial compared to alternative equity-based
collective investment schemes (unit trusts, investment trusts and OEICs). One
feature which especially favors investment bonds is the '5% cumulative
allowance' – the ability to draw 5% of the original investment amount each policy
year without being subject to any taxation on the amount withdrawn. If not used
in one year, the 5% allowance can roll over into future years, subject to a
maximum tax deferred withdrawal of 100% of the premiums payable. The
withdrawal is deemed by the HMRC (Her Majesty's Revenue and Customs) to be
a payment of capital and therefore the tax liability is deferred until maturity or
surrender of the policy. This is an especially useful tax planning tool for higher
rate taxpayers who expect to become basic rate taxpayers at some predictable
point in the future (e.g. retirement), as at this point the deferred tax liability will
not result in tax being due.
The proceeds of a life policy will be included in the estate for death duty (in the
UK, inheritance tax (IHT)) purposes, except that policies written in trust may fall
outside the estate. Trust law and taxation of trusts can be complicated, so any
individual intending to use trusts for tax planning would usually seek professional
advice from an Independent Financial Adviser (IFA) and/or a solicitor.
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PRODUCTS OF THE COMPANY
Savings Solutions
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• Invest Shield Cash’s a Market Linked plan that provides capital
guarantee on the invested premiums and declared bonus interest along with
flexible liquidity option.
• Invest Shield Gold is Market Linked plan that provides capital
guarantee on the invested premiums and declared bonus interest along with
limited premium payment terms.
Although available before April 2006, from this date pension term assurance
became widely available in the UK. Most UK product providers adopted the name
"life insurance with tax relief" for the product. Pension term assurance is
effectively normal term life assurance with tax relief on the premiums. All
premiums are paid net of basic rate tax at 22%, and higher rate tax payers can
gain an extra 18% tax relief via their tax return. Although not suitable for all, PTA
briefly became one of the most common forms of life assurance sold in the UK
until the Chancellor, Gordon Brown, announced the withdrawal of the scheme in
his pre-budget announcement on 6 December 2006. The tax relief ceased to be
available to new policies transacted after 6 December 2006, however, existing
policies have been allowed to enjoy tax relief so far.
Market trends
According to a study by Swiss Re, the EU was the largest market for life
insurance premiums written in 2005 followed by the USA and Japan.
Criticism
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used in cases of exploitation and fraud. In the case of life insurance, there is a
motivation to purchase a life insurance policy, particularly if the face value is
substantial, and then kill the insured. Usually, the larger the claim, and/or the
more serious the incident, the larger and more intense will be the number of
investigative layers, consisting in police and insurer investigation, eventually also
loss adjusters hired by the insurers to work independently.
The television series Forensic Files has included episodes that feature this
scenario. There was also a documented case in 2006, where two elderly women
are accused of taking in homeless men and assisting them. As part of their
assistance, they took out life insurance on the men. After the contestability period
ended on the policies (most life contracts have a standard contestability period of
two years), the women are alleged to have had the men killed via hit-and-run car
crashes
Recently, viatical settlements have thrown the life insurance industry into turmoil.
A viatical settlement involves the purchase of a life insurance policy from an
elderly or terminally ill policy holder. The policy holder sells the policy (including
the right to name the beneficiary) to a purchaser for a price discounted from the
policy value. The seller has cash in hand, and the purchaser will realize a profit
when the seller dies and the proceeds are delivered to the purchaser. In the
meantime, the purchaser continues to pay the premiums. Although both parties
have reached an agreeable settlement, insurers are troubled by this trend.
Insurers calculate their rates with the assumption that a certain portion of policy
holders will seek to redeem the cash value of their insurance policies before
death. They also expect that a certain portion will stop paying premiums and
forfeit their policies. However, viatical settlements ensure that such policies will
with absolute certainty be paid out. Some purchasers, in order to take advantage
of the potentially large profits, have even actively sought to collude with
uninsured elderly and terminally ill patients, and created policies that would have
84
not otherwise been purchased. Likewise, these policies are guaranteed losses
from the insurers' perspective.
The criticism goes also in the direction of pointing out much lower payouts for life
insurance than for health or disability insurance in some countries (for example,
UK).
Benefits
Both cash value life and term life insurance have their benefits.
The most significant benefit of cash value life insurance is its ability to offer
coverage for the entire life of the policyholder. Many people take advantage of
buying this type of insurance when they are young when they need it most. Cash
value accounts may also be borrowed against or drawn from during the life of the
policy. Policyholders are also not required to pay taxes on any interest or
earnings attached to cash value accounts.
Individuals and corporations also benefit from term life insurance. The biggest
advantage of term life are the often very cheap premiums, especially when a
person is young and healthy. It is possible, in many situations, for significantly
large face amounts to be purchased for monthly costs of $20 to $30. Term life is
good for covering obligations that will eventually end, such as mortgages,
automobile loans and educational needs.
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Instructions
Things you’ll need:
• Financial Calculator
• Internet Access
• Computers
• Life Insurance
Step1
Roughly estimate the amount of insurance you need by multiplying your gross
annual income by 6, 7, or 8 (if under 40), or 4, 5, or 6 (if over 40). If you have a
mortgage to pay off, consider adding that amount to whatever result you have.
Step2
Go to ICICI insure.com Web sites that feature life insurance quotes.
Step3
Fill out the questionnaires as honestly as possible; if in doubt about any health
question, be a little pessimistic - at least for a quote.
Step4
A medical or paramedical exam is necessary, schedule the exam time in the
morning, if possible, for best results.
Step5
After successful underwriting, check your policy carefully for errors or
inaccuracies.
Step6
Sign the delivery documents and return them to the insurance company along
with your first premium check to put the coverage in force.
Step7
Keep your insurance policy in a safe place, treating it like any other legal
document.
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Step8
Make sure your beneficiary knows the policy's location and/or provide that person
with a full copy of the policy.
Protection Solutions:
Life Guard is a protection plan, which offers life covers at very low cost. It is
available in 3 options?
Child Plans:
Retirement Solutions:
• Secured plus Pension is a flexible pension plan that allows one to select
between 3 of cover.
ICICI Prudential also launched? Salaam Zindagi. A social sector group insurance
policy targeted at the economically underprivileged sections of the society.
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Group Insurance Solutions:
ICICI Prudential also offers Group Insurance Solutions for companies seeking to
enhance benefits to their employees.
ICICI Prudential Group Gratuity Plan: ICICI Prudential? Group gratuity plan helps
employers fund their statutory gratuity obligation in a scientific manner. The plan
can also be customized to structure schemes that can provide benefits beyond
the statutory obligations.
ICICI Prudential Group Super annuity Plan: ICICI Prudential offers a flexible
defined contribution Super annuity scheme to provide a retirement kitty for each
member of the group. Employees have the option of choosing from various
annuity options of opting for a partial commutation of the annuity at the time of
retirement.
ICICI Prudential Group Term Plan: ICICI Prudential flexible group term solution
helps provide affordable cover to members of a group. The cover could be
uniform or based on designation rank or a multiple of salary. The benefit under
the policy is paid to the beneficiary nominated by the member on his/her death.
ICICI Prudential Life offers flexible riders, which can be added to the basis policy
at a marginal cost, depending on the specific needs of the customer.
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• Critical Illnesses Benefit: protects the insured against financial loss in
the event of 9 specific critical illnesses. Benefits are payable to the
insured for medical expanses prior to death.
• Major Surgical Assistance Benefit: provides financial support in the
event of medical emergencies, ensuring benefits are payable to the life
assured for medical expenses incurred for surgical procedures. Cover
is offered against 43 surgical procedures.
• Income Benefit: This rider pays the 10% of the sum assured to the
nominee every year till maturity, in the event of the death of the life
assured. It is available on Secure Plus and Cash Plus.
• Waiver of Premiums: In case of total and permanent disability due to
an accident the premiums are waived till maturity. This rider is
available with Secure Plus and Cash Plus.
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amount of the mortgage protection life insurance benefit decreases as well. The
two sums—the principle balance and the death benefit—are matched throughout
the term of the insurance. When the mortgage protection life insurance
policyholder pays off the home loan, the amount of the benefit becomes zero.
Low-cost alternative
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ADVANTAGES OF LIFE INSURANCE
It is a general belief that life insurance is meant only for those with families. It is
true that Life Insurance Policies like whole-life insurance, joint-life-insurance,
pension-life-insurance etc are essential for family's financial security, but they are
equally important for individuals. Term Insurance policies protect your financial
resources against the uncertainties of life so you can protect your family's future.
• If an estate owner has not accumulated enough assets for his family,
• Insurance quote helps create an instant estate for the sake of the Family’s
security.
• Life Insurance provides the option to pass equal assets to the children
who are not active in the Family business at the time the family business
is passed on.
• Life Insurance policies can help secure the future of children for
college/educational purposes as the amount of life Insurance Policy
increases on a minor’s or parent’s life.
• The growth of a cash-value policy is tax-deferred - you do not pay taxes
on the cash value accumulation until you withdraw funds from the policy.
• Life Insurance can be useful in paying estate taxes, along with other
estate settlement amounts. Federal Estate Taxes are due nine months
after death.
• If there’s a Business Transfer, life insurance can provide ready cash to
finance a transaction between business owners who are ready to buy the
deceased owner’s share from his or her estate after death.
• If there’s a home mortgage, one can pass the family residence to their
spouse/children to free them of any mortgage if one has a Life Insurance
Policy for the same. It is preferred to have a decreasing term policy that
decreases in face amount as the mortgage balance is paid down.
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• Life Insurance helps retain your Business from the loss of a key employee.
Untimely death of a key employee can pose severe financial loss to the
business.
• The right insurance proceeds can provide liquidity to pay off personal
loans or business loans.
• Charitable Remainder Trusts provide tax benefits. Life Insurance helps
replace a charitable gift.
• A lot of Insurance products presently provide good returns, which could be
a beneficial way for saving necessary funds for retirement years.
• Benefits are available immediately and may be used to help pay expenses
such as final illness and funeral costs, eliminating the need to sell estate
assets to cover these costs.
Disadvantages
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The importance of advisors:
ICICI Prudential Life Insurance Co. Ltd. Aspires to provide state of the art of
customer’s service & opportunities & avenues for enterprising people to grow &
prosper. The company wish to grow exponentially that is backed by the latest
technology, hence offering its customers:
If looked from the other side of the business where the company is operating the
competitive Indian market & more so in the business of life insurance where the
customers looks for self-belief & faith then the advisor certainly holds the vital link
in the overall business proposition. They represent the company’s face & words
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on which the customers can trust because the customers know that face. The
advisor helps to create a web for the business to grow & driving the customer to
come to the company with complete trust & faith.
Insurance is an attractive option for investment. While most people recognize the
risk hedging and tax saving potential of insurance, many are not aware of its
advantages as an investment option as well. Insurance products yield more
compared to regular investment options, and this is besides the added incentives
(read bonuses) offered by insurers.
You cannot compare an insurance product with other investment schemes for the
simple reason that it offers financial protection from risks, something that is
missing in non-insurance products.
In fact, the premium you pay for an insurance policy is an investment against
risk. Thus, before comparing with other schemes, you must accept that a part of
the total amount invested in life insurance goes towards providing for the risk
cover, while the rest is used for savings.
In life insurance, unlike non-life products, you get maturity benefits on survival at
the end of the term. In other words, if you take a life insurance policy for 20 years
and survive the term, the amount invested as premium in the policy will come
back to you with added returns. In the unfortunate event of death within the
tenure of the policy, the family of the deceased will receive the sum assured.
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Now, let us compare insurance as an investment options. If you invest Rs 10,000
in PPF, your money grows to Rs 10,950 at 9.5 per cent interest over a year. But
in this case, the access to your funds will be limited. One can withdraw 50 per
cent of the initial deposit only after 4 years.
First and foremost, insurance is about risk cover and protection - financial
protection, to be more precise - to help outlast life's unpredictable losses.
Designed to safeguard against losses suffered on account of any unforeseen
event, insurance provides you with that unique sense of security that no other
form of investment provides. By buying life insurance, you buy peace of mind and
are prepared to face any financial demand that would hit the family in case of an
untimely demise.
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great help when you retire, in case no untoward incident happens during the term
of the policy.
With the entry of private sector players in insurance, you have a wide range of
products and services to choose from. Further, many of these can be further
customized to fit individual/group specific needs. Considering the amount you
have to pay now, it's worth buying some extra sleep
FAQS ON TAXATION:
Life insurance premium paid by an individual qualifies for rebate under section 88
of income tax act. An individual can claim rebate on premium paid for a
maximum of Rs. 70000 in each financial year.
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How is tax rebate under section 88 calculated?
Calculation of tax rebate under section 88 depends on the individual’s gross total
income and contribution made towards life insurance premium.
• Less than Rs. 150000 rebate is calculated at 20% of the premium paid
towards life insurance.
• Greater than Rs. 150000 but less than Rs. 500000, rebate is computed at
15% of the premium paid.
• Greater than Rs. 150000 the individual is not eligible to claim any tax
benefit on the Life insurance premium paid.
The maturity process of life insurance policies is not taxable. However under
pension plans, any amount received on surrender of the plan shall be deemed to
be the assessed income and taxed accordingly.
An individual can make payment on his/her spouse’s policy and the premium
paid will qualify for rebate under section 88.
Under section 88CC where an assess has paid/deposited any amount towards
any annuity plan receiving pension fund, he/she will be allowed deduction up to
Rs. 100 from the total income. Where the amount paid/deposited into
consideration for the purpose of claming deduction a rebate where reference to
shall not be allowed under section 88.
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If a person discontinues premium on his insurance or a pension policy, does he
get tax benefit
If a tax payer discontinues the life insurance policy before premiums have been
paid of a period of 2 years from the commencement of the policy, no tax
deduction is allowed is respect of any premium paid on that policy in the year in
which the policy s terminated. Further the amount of tax deduction allowed for
the premium paid in the preceding year is also treated as the tax payable for the
year in which the policy is terminated.
If a person participates as unit linked plan (ULIP) and terminates his participation,
he will no be entitled to claim ant rebate.
No, the maturity proceeds of UTI ULIP scheme are exempt from tax under
section 10(33) subject to the same being received on or after April, 2002.
The premium paid under financial insurance premium qualifies for rebate under
section 80D as follows:
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• The aforesaid limit is Rs. 15000, where the individual or his spouse of
dependent parent’s or any member of the family (for whom such premium
is paid is a senior citizen (i.e. one who is resident in India and who is at
least 65 years of age at any time during the previous years).
RESEARCH METHODOLOGY
1. Natural Market
• Relatives
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• Friends
• Neighbors
2. Stall Operation
3. Survey
4. Seminar (Focus Group)
1. Yellow Pages
2. Database of different companies LI\GI Agents
Type of research
Discriptive research
This chapter discusses the types of quantitative study that fall under the broad
heading of descriptive quantitative research. This type of research involves either
identifying the characteristics of an observed phenomenon or exploring possible
correlations among two or more phenomena. In every case, descriptive research
examines a situation as it is. It does not involve changing or modifying the
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situation under investigation, nor is it intended to detect cause–effect
relationships. Examples of descriptive research that yields quantitative data are
correlation studies, developmental designs, observation studies, and survey
research.
LIMITATIONS
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not allowed the ones who are doing their practice. So, still this decision is
very dicey.
Sometimes, even those people want to become advisors for the company
who are not a localities but then the major problem that they face is that
they have got no natural market, so they are very susceptible about their
performance and whether they will be able to generate business for the
company or not, so they avoid to take up this challenge.
It was a great problem to get appointments form people in the month of
March, as most of them were busy in filing their returns.
Some people ask about comparative analysis with LIC.
Some people consider IRDA fees of Rs. 1000 as a constraint.
Non-availability of part-time training.
All small towns are not open for doing this business.
One person cannot take Life Insurance Agency of two different Companies.
DATA ANALYSIS
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As per the analysis we can say that most of the people fall under the group of
annual income of Rs.300000-500000 i.e.40% they can be called as middle
income group. The next 30% are under or have annual income of Rs.100000-
300000. Only 15% have income more than 500000 and remaining 10% have less
than 100000as their annual income
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• It can be interpreted from the chart that 84% of the people have insurance
plans and most have them have life insurances, it means that they are
less aware about other insurances or are less interested in taking
insurance for their vehicle, house etc. Only 16% people do not have or
are not interested in taking insurance.
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People have or want to have insurance plans mostly for the safety or
protectioni.e.30% it is the basic reason behind taking insurance. 26% have it for
savings, and 22% for tax rebateand remaining 22% for investment purpose.
a) traditional
b) modern
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• It can be said that people have equal preference for making investment or
have invested in Traditional and Modern scheme i.e.57% and
43%respectively.
a) icici prudential
b) hdfc standerd life
c) LIC
d) others
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a ) ic ic i p ru d e n tia l
d ) o th e r a ) ic ic i
6% p ru d e n tia l
b ) h d fc sta n d e rd
30% life
c) L IC
c) L IC
44% b ) h d fc
sta n d e rd life d ) o th e r
20%
The most preferred company is LIC . people still have preference for
public company and they have more trust on LICi.e.44%, the next
preferred company is HDFC(32%), 16% prefer ICICI and remaining 8%
go for other companies
6. Why?
a) efficient financial advisor
b) brand value
c) others
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• People prefer a particular company mostly because of its brand valuei.e.
64% , 26% prefer because of efficient financial advisors and remaining
10% for other reasons. Still people see brand or the companies name as
the criteria for purchasing insurance rather the advice or services of
financial advisors.
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• customers have somewhat equal preference for Government securities,
debentures and equity fund. As they like to have safety and assured
returns out of their investments.
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• People are not interested in investing their money in ULIP in this scenerio
or time of recession ,it does not seem them to be a safe option.
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We find that 47% of the respondents fall in the age group of 18 – 25 years, 25%
fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49
years. Therefore most of the respondents are relatively young (below 26 years of
age). These individuals could be induced to purchase insurance plans on the
basis of its tax saving nature and as an investment opportunity with high returns.
In India, the largest life insurance company is Life Insurance Corporation of India.
It has been in existence in India since 1956 and is completely owned by the
Government of India. Today the organization has grown to 2048 offices serving
18 crore policies and has a corpus of over 340000 crore INR.
SWOT ANALYSIS
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Environmental Scan
SWOT Matrix
STRENGTH
ICICI Prudential Life Insurance Company Limited is right now the market leader
in Private Insurer segment.
WEAKNESS
The company right now has lesser number of agents (i.e. financial advisors) than
LIC of India, which affects their sales in comparison to LIC of India.
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ICICI Prudential Life Insurance Company Limited can give LIC of INDIA agents
an opportunity to join ICICI Prudential Life Insurance Company Limited as ICICI
Prudential has got more incentive packages & servicing quality better than LIC of
INDIA. Doing this they can reduce their cost of training and can exploit their
experience.
THREAT
Other big brand names like BIRLAS, TATA, HDFC, SBI and AVIVA, RELIANCE
etc.
POLITICAL
Right one ICICI Prudential Life Insurance Company Limited, can go for opening
up more & more offices, as the present political environment is business friendly.
ECONOMIC
SOCIAL
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ICICI Prudential Life Insurance Company Limited enjoys a good brand name;
they can use it for their profit.
TECHNOLOGICAL
ICICI Prudential Life Insurance Company Limited uses latest technology for their
operations, which give them an edge over the competition.
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CONCLUSION
1. ICICI PRUDENTIAL has interested and profitable planes for different age
group.
2. There are lots of scopes of life insurance in Indian only 2.5 people are
secure with life insurance so the insurance sector is its booming stage this
boom will more increase in 2 or 3 years.
3. Good profile insurance advisor could do the better job. If ICICI
PRUDENTIAL mentions the level of advisor them they may give great
sales to the company.
4. ICICI PRUDENTIAL has tuff competition with LIC as well as TATA AIG,
BAJAJ ALLIAZE, BIRLA SUNLIFE INSURANCE, SAHARA, ING VYSYA,
OM KOTAK MAHINDRA, HDFC INSURANCE, SBI LIFE AND RELIANCE
LIFE INSURANCE, PNB LIFE INSURANCE.
5. ICICI PRUDENTIAL LIFE INSURANCE COMPANY has great goodwill in
market in liberalized Indian market there are approximately 13 big
companies in Indian market and ICICI PRUDENTIAL is the No.1 private
insurance company. I found this fact in my recent survey.
6. If the company starts to concentrate on village segment market. Then
company can get great business.
7. I got the good profile people near by bank and share market. When I
concentrated on the 20-25 year age group people I found good result.
8. Within 20-25 year age group the sincerity level is high. They are career
oriented and want to earn more.
9. In the age group people made interest to purchase the kids plan and
pension plan and money back plan.
10. In the age group of 30-35 years the people who earning more then 3 lakh
p.a. made interest to purchase ULIP.
11. I found that in insurance sector a person should have great
communication and convenience skill.
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12. People made interest in the business opportunity of ICICI PRUDENTIAL
because there are lots of chances to increase earning and make high
place in the company.
13. People took interest in pinnacle programme and also life the professional
environment of the company.
14. In my survey I found that low percentage of people is aware with the life
insurance.
15. It was great experience to communicate with different people. I learnt
through cross-question by peoples.
AWARDS
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RECOMMENDETATION
After going through the above table regarding market share of various companies
in the financial year 2003-04, there is no reason why ICICI prudential should
rejoice of being the number one company in the country. The growth that
companies like BIRLA SUNLIFE, SBI LIFE INSURANCE, TATA-AIG, BAJAJ
ALLIANZ, OM KOTAK MAHINDRA, AVIVA, ING VYASA, METLIFE & AMP
SANMAR have produced that can be quite a big unseen threat for the company
in the coming years. So the company should start thinking of what they want from
the market & where they want to see themselves after a span of 10 years
because if the popularity of these companies continues then one day they will
become good competitors of ICICI Prudential & then the consequences can be
quite disturbing for the company.
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BIBLIOGRAPHY
Websites
• www.google.com
• www.yahoo.com
• www.wikipedia.com
Newspapers
• Economics times
• Times of India
Magazines
•Business Today
•Business World
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