INSURANCE IN INDIA

In 2003, the Indian insurance market ranked 19th globally and was the fifth largest in Asia.
Although it accounts for only 2.5% of premiums in Asia, it has the potential to become one of
the biggest insurance markets in the region. A combination of factors underpins further strong
growth in the market, including sound economic fundamentals, rising household wealth and a
further improvement in the regulatory framework. The insurance industry in India has come a
long way since the time when businesses were tightly regulated and concentrated in the hands of
a few public sector insurers. Following the passage of the Insurance Regulatory and
Development Authority Act in 1999, India abandoned public sector exclusivity in the insurance
industry in favor of market-driven competition. This shift has brought about major changes to the
industry. The inauguration of a new era of insurance development has seen the entry of
international insurers, the proliferation of innovative products and distribution channels, and the
raising of supervisory standards. The insurance sector in India has come with a full circle from
being an open competitive market to nationalization and back to a liberalized market again.
Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed
over a period of almost two centuries. Insurance in India used to be tightly regulated and
monopolized by state-run insurers. Following the move towards economic reform in the early
1990s, various plans to revamp the sector finally resulted in the passage of the Insurance
Regulatory and Development Authority (IRDA) Act of 1999.

Significantly, the insurance business was opened on two fronts. Firstly, domestic private-sector
companies were permitted to enter both life and non-life insurance business. Secondly, foreign
companies were allowed to participate, albeit with a cap on shareholding at 26%. With the
introduction of the 1999 IRDA Act, the insurance sector joined a set of other economic sectors
on the growth march. During the 2003 financial year1, life insurance premiums increased by an
estimated 12.3% in real terms to INR 650 billion (USD 14 billion) while non-life insurance
premiums rose 12.2% to INR 178 billion (USD 3.8 billion). The strong growth in 2003 did not
come in isolation. Growth in insurance premiums has been averaging at 11.3% in real terms over
the last decade.

The business of life insurance in India in its existing from started in India in the year 1818 with
the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the life insurance business in India are:

1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the
life insurance business.

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1928: The Indian Insurance Companies Act enacted to enable the government to collect
statistical information about both life and non-life insurance businesses.

1938: Earlier legislation consolidated and amended to by the Insurance Act with the
objective of protecting the interests of the insuring public.

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

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

Some of the important milestones in the general insurance business in India are:

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

1968: The Insurance Act amended to regulate investments and set minimum solvency
margins and the Tariff Advisory Committee set up.

1972: The General Insurance Business (Nationalization) Act, 1972 nationalized the general
insurance business in India with effect from 1st January 1973. 107 insurers
amalgamated and grouped into four companies' viz. the National Insurance Company
Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd.
and the United India Insurance Company Ltd. GIC incorporated as a company.

INSURANCE SECTOR REFORMS

In 1993, Malhotra Committee, headed by former Finance Secretary and RBI Governor R.N.
Malhotra, was formed to evaluate the Indian Insurance Industry and recommend its future
direction.

The Malhotra committee was set up with the objective of complementing the reforms initiated in
the financial sector.

The reforms were aimed at 'creating a more efficient and competitive financial system suitable
for the requirements of the economy keeping in mind the structural changes currently underway
and recognizing that insurance is an important part of the overall financial system where it was
necessary to address the need for similar reforms...'.

In 1994, the committee submitted the report and some of the key recommendations included:

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I) Structure

1 Government stake in the insurance companies to be brought down to 50%.

2 Government should take over the holdings of GIC and its subsidiaries so that these
subsidiaries can act as independent corporations.

3 All the insurance companies should be given greater freedom to operate.

II) Completion

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

5 No Company should deal in both Life and General Insurance through a single entity.

6 Foreign companies may be allowed to enter the industry in collaboration with the
domestic companies.

7 Postal Life Insurance should be allowed to operate in the rural market.

8 Only one State Level Life insurance company should be allowed to operate in each
state.

III) Regulatory Body

9 The Insurance Act should be changed.

10 An Insurance Regulatory body should be set up.

11 Controller of Insurance (Currently a part from the Finance Ministry) should be made
independent.

IV) Investments

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

from 75% to 50%.

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

V) Customer Service

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

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 15 Insurance companies must be encouraged to set up unit linked pension plans.

16 Computerization of operations and updating of technology to be carried out in the

insurance industry.

The committee emphasized that in order to improve the customer services and increase the
coverage of the insurance industry should be opened up to competition. But at the same time, the
committee felt the need to exercise caution as any failure on the part of new players could ruin
the public confidence in the industry.

Hence, it was decided to allow competition in a limited way by stipulating the minimum capital
requirement of Rs. 100 crores. The committee felt the need to provide greater autonomy to
insurance companies in order to improve their performance and enable them to act as
independent companies with economic motives. For this purpose, it had proposed setting up an
independent regulatory body.

INSURANCE REGULATION & DEVELOPMENT BILL

On Oct. 21st, 1999 the govt. Finally offered IRDA bill for the consideration of the new
parliament. The new bill knows called insurance Regulatory Authority Bill 1999. Bills to provide
for establishment of an authority to protect the interest of holders of insurance polices and to
regulate promote and insure orderly growth of the industry.

IRDA (The Insurance Regulatory and Development Authority)

As per the section 4 of IRDA Act' 1999, Insurance Regulatory and Development
Authority (IRDA, which was constituted by an act of parliament) specify the composition of
Authority.

The Authority is a ten-member team consisting of

(a) a Chairman;
(b) five whole-time members;
(c) four part-time members,
(all appointed by the Government of India)

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Duties, Powers and Functions of IRDA

Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.

(1) Subject to the provisions of this Act and any other law for the time being in force, the
Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance
business and re-insurance business.

(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers
and functions of the Authority shall include, -

(a) Issue to the applicant a certificate of registration, renew, modify, withdraw, suspend
or cancel such registration;

(b) Protection of the interests of the policy holders in matters concerning assigning of
policy, nomination by policy holders, insurable interest, settlement of insurance
claim, surrender value of policy and other terms and conditions of contracts of
insurance;

(c) Specifying requisite qualifications, code of conduct and practical training for
intermediary or insurance intermediaries and agents;

(d) Specifying the code of conduct for surveyors and loss assessors;

(e) Promoting efficiency in the conduct of insurance business;

(f) Promoting and regulating professional organizations connected with the insurance
and re-insurance business;

(g) Levying fees and other charges for carrying out the purposes of this Act;

(h) Calling for information from, undertaking inspection of, conducting enquiries and
investigations including audit of the insurers, intermediaries, insurance intermediaries
and other organizations connected with the insurance business;

(i) Control and regulation of the rates, advantages, terms and conditions that may be
offered by insurers in respect of general insurance business not so controlled and
regulated by the Tariff Advisory Committee under section 64U of the Insurance Act,
1938 (4 of 1938);

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 (j) Specifying the form and manner in which books of account shall be maintained and
statement of accounts shall be rendered by insurers and other insurance
intermediaries;

(k) Regulating investment of funds by insurance companies;

(l) Regulating maintenance of margin of solvency;

(m) Adjudication of disputes between insurers and intermediaries or insurance

intermediaries;

(n) Supervising the functioning of the Tariff Advisory Committee;

(o) Specifying the percentage of premium income of the insurer to finance schemes for
promoting and regulating professional organizations referred to in clause (f);

(p) Specifying the percentage of life insurance business and general insurance business to
be undertaken by the insurer in the rural or social sector; and

(q) Exercising such other powers as may be prescribed.

WHY PRIVATE INSURANCE?

 All the private companies have a lock in period of 3 yrs hence no disinvestments
possible.

 Minimum net worth of 500 Cr required for acquiring license with a minimum paid up
capital of 100 Cr in their insurance venture.

 Commitment to increase the paid up capital manifold in next five years.

 Re insurance for all its policies worth more than 5 lakhs. Reinsurance partners best
and the largest in the world – general cologne and Swiss reinsurance.

 Audit of accounts by at least 2 independent approved auditors each year.

 Products and pricing are cleared by IRDA, which looks into the financial visibility of the
product and the financial implication.

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  IRDA is now proposing a Pvt. Policy Protection fund.

 Funds to be invested in only regulated and controlled areas with close to 80%being
pumped into only gilts thereby assuring safety of funds.

THE IMPORTANT FEATURES OF INSURANCE ARE:

 State insurance departments regulate the type of investments companies are
permitted to make;
 Investment profiles of companies differ depending on what type of insurance they
underwrite;
 Each state enforces laws to protect consumers against unfair discrimination in the
provision of insurance;
 Consumers who do not qualify for property insurance in the private market may
obtain it through insurance industry operated plans;
 The insurance industry does not benefit from federal deposit insurance. Insurance
companies pay for insolvencies in the industry through a system of state Guaranty Funds.

INSURANCE AS AN INVESTMENT TOOL :

Insurance invests in the economy. Insurance provides funds to help businesses grow and create
jobs. Premium funds that are not immediately needed are lent to government and businesses.
Lending to municipalities, in the form of bonds, provides local governments across the United
States with the means to build, maintain and repair municipal infrastructure — schools, roads,
bridges, sewers, airports.. Funds are also lent to businesses, providing them with the means to
purchase buildings, equipment and supplies. Along with housing interests, the insurance industry
is probably the most active voluntary investor in low- and moderate-income communities,
particularly those located in urban areas. Compared to less-developed countries, the developed
countries enjoy a higher standard of living, partly because these funds are available from
insurance companies.

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Support the provision of credit

Insurance provides support for credit. Even though mortgage lenders approve an applicant for a
home loan based on the applicant’s credit worthiness, most lenders also require that the dwelling
be covered by homeowner’s insurance. Likewise, a business applying for a loan to purchase
inventory might be required to show that the inventory is insured before the loan is granted.

Reduces anxiety

Insurance also reduces anxiety because the insured knows insurance will provide indemnification
if a covered loss occurs. By shouldering the burden of unexpected or catastrophic losses,
insurance helps businesses avoid bankruptcy and keeps workers employed and local economies
healthy. It also contributes to a stable society where people can plan for the future without an
undue fear of catastrophic loss.
Insurance and Risk Management Planning

Insurance and Risk Management Planning is the process of identifying the source and extent of
an individual’s risk of financial, physical, and personal loss, and developing strategies to manage
exposure to risk and minimize the probability and amount of potential loss.

Insurance and Risk Management Planning in the Context of Personal Financial

Planning

In personal financial planning (PFP), risk management and insurance planning results in clients
who are aware of the range of significant risks to their financial well-being and who are
adequately and properly protected from the loss that could result from those risks. Periodic
reviews help clients understand that life changes, such as a job change or divorce, affect risk
management and insurance coverage.

Risk Management Strategies

Risk Management is much broader than the purchase of insurance policies, involving strategies
such as:

 Risk avoidance—involving the elimination of a threatened financial loss.

 Risk reduction—involving strategies to minimize the amount of loss if a loss does occur.

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  Risk transfer—sharing the burden of loss. This strategy includes the use of insurance to
transfer some of the burden of loss to the third party insurer.
 Risk retention—involving either the acceptance of some of the economic burden of a
loss, or continuing to participate in activities with risks that cannot be transferred or
shared.

Insurance as a Risk Management Strategy

Insurance is just one aspect—but a very critical aspect—of risk management planning. A key
aspect of insurance planning understands what is available from insurance companies to assist in
offsetting the economic losses associated with a particular risk. From this point you can assist
your clients to inventory what risks are to be protected, identify gaps in coverage, evaluate
alternative insurance policies, and select and acquire the appropriate policies.

A Profile of the world Insurance Industry

The United States is the world leader in insurance with 31 percent of the premium volume in
2005. Japan is second with just under a quarter of the world’s volume. Germany, the UK,
France, South Korea and Italy combined, hold another quarter of the premium volume. The
insurance industry is a major contributor to the U.S. economy. Government authorities in the
various states regulate the operations of 7,900 domestic insurance companies. About 3,300
companies sell some form of property/casualty insurance. Altogether, the insurance industry
provides 2.3 million jobs.

With largest number of life insurance policies in force in the world, Insurance happens to be a
mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually and
presently is of the order of Rs 450 billion. Together with banking services, it adds about 7 per
cent to the country’s GDP. Gross premium collection is nearly 2 per cent of GDP and funds
available with LIC for investments are 8 per cent of GDP. Yet, nearly 80 per cent of Indian
population is without life insurance cover while health insurance and non-life insurance
continues to be below international standards. And this part of the population is also subject to
weak social security and pension systems with hardly any old age income security. This itself is
an indicator that growth potential for the insurance sector is immense.

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How Insurance Companies Work

Unlike banks, insurance companies are chartered to provide insurance. They generally do
not extend credit and are often precluded from doing so by law and regulation. Because
property/casualty policies are short-term – usually one-year – state insurance laws require
most property/casualty investments to be short-term and highly liquid. Legally permissible
investments include cash, mutual funds, Treasury bills and notes, mortgage-backed
securities, specified types of debt securities, and preferred stock. Generally, property and
casualty insurers cannot invest in real estate, other than their own buildings and property.

To illustrate the short-term nature of property/casualty investments, consider that in an

average year, out of $100 paid in homeowners’ premiums, the industry pays out $74 in
claims. 3 The remainder goes to agent commissions, administrative expenses, operating
costs, and, in good years, policyholder protection funds 4 which protect against future
catastrophic loss. When catastrophes strike, such as fires, hurricanes, or earthquakes a
greater percentage of premiums will be paid out in claims. Over time, customers receive
back the vast majority of premiums in claims payments. The billions of dollars paid by the
industry in claims is itself "reinvestment" in the local community when disaster strikes. This
reinvestment not only benefits policyholders, it benefits the people who rebuild the structure
after the tornado, fix the car damaged by hail or sell the appliances and cabinets needed to
repair the kitchen damaged by fire. Life insurance companies primarily issue life insurance
policies and annuities. Policyholder premiums are invested in compliance with state
insurance laws for the benefit of policyholders to ensure that the company can meet its
obligations under the terms of the policies. As they do for property/casualty companies, state
insurance laws establish the types and amounts of permissible investments for life
companies.

Legally permissible investments include cash, mutual funds, Treasury bills and notes,
mortgage-backed securities, corporate stock and other types of equity and debt securities,
loans, and real estate. Reflecting the long-term nature of a life insurance policy, life
insurance companies generally are permitted longer-term investments than those permitted
for property/casualty companies.

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How Insurance is Regulated

Insurance regulation is conducted by each state through its department of insurance, run by a
commissioner or director who may be elected, or appointed by the governor. Insurance
departments are charged with regulating the safety and soundness of insurance companies
and consumer protection. Primarily the home state regulator, who leads safety and
soundness examinations and reviews investments and the adequacy of policy reserves,
conducts safety and soundness regulation. Each state regulator must license any company
that wants to do business in his or her state, and review and approve rates and policy forms
to be used by any licensed company. Unlike banks and thrifts, most insurance companies
have no geographic community. Insurance companies must be "domiciled" in a single state
and are primarily regulated by the home state regulator. They must be licensed in every state
in which they do business. However, there may be no connection between a company’s
physical location and its home state or other states in which it is licensed. For example, an
insurance company may be domiciled in Illinois, have its headquarters in California, and be
licensed for business in 40 states. In the case of automobile insurance, the company likely
would have claims offices and perhaps agents in each of the states in which it is licensed. In
the case of more specialized coverage such as director’s and officer’s liability insurance, a
company may not have a physical presence in any of its licensed states.

In a competitive environment, some insurance company failures will inevitably occur.

However, unlike banks, thrifts and credit unions, the insurance industry does not have a
government-backed fund to handle insolvency. Instead, each state has a life insurance
guaranty fund and a property/casualty insurance company guaranty fund. The guaranty
funds ensure that the insolvent company is retired from the market in an orderly manner that
gives maximum protection to the public.

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Development of Insurance in India

A thriving insurance sector is of vital importance to every modern economy. First because it
encourages the savings habit, second because it provides a safety net to rural and urban
enterprises and productive individuals. And perhaps most importantly it generates long-term
investible funds for infrastructure building. The nature of the insurance business is such that the
cash inflow of insurance companies is constant while the payout is deferred and contingency
related.

This characteristic of their business makes insurance companies the biggest investors in long-
gestation infrastructure development projects in all developed and aspiring nations. This is the
most compelling reason why private sector (and foreign) companies which will spread the
insurance habit in the societal and consumer interest are urgently required in this vital sector of
the economy.

With the nation's infrastructure in a state of imminent collapse, India couldn't have afforded to be
lumbered with sub-optimally performing monopoly insurance companies and therefore the
passage of the Insurance Regulatory & Development Authority Bill on December 2, 1999
heralds an era of cautious optimism where stakes are high for all parties concerned. For the Govt.
of India, Foreign Direct Investment (FDI) must pour in as anticipated; for foreign insurers,
investments must start yielding returns and for the domestic insurance industry - their market
penetration should remain intact. On the fringe, the customer is pondering whether all the hype
created on liberalization will actually benefit him.

The IRDA Bill provides for the establishment of an authority to protect the interests of the
holders of insurance policies, to regulate, promote and insure orderly growth of the insurance
industry and amend the Insurance Act, 1938, the Life Insurance Act, 1956 and the General
Insurance Business (Nationalization) Act, 1972. The bill allows foreign equity stake in domestic
private insurance companies to a maximum of 26 per cent of the total paid-up capital and seeks
to provide statutory status to the insurance regulator. Before privatization, insurance business in
India was pegged at $ 6.6 Billion whereas industry leaders expected at that time that privatization
will increase it to $ 40 Billion within next 3-5 years.

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ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank, A premier
financial powerhouse, and prudential pica 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’s equity base stands at Rs 1185 crore with ICICI Bank and Prudential and
Prudential plc holding 74% and 26% stake respectively. For the past five years, ICICI Prudential
has retained its position as the No. 1 private life insurer in the country, with a wide range of
flexible products that meet the needs of the Indian customer at every step in life. In the first
quartet of financial year 2006- 07, we have crossed a new milestone of insuring the lives of more
than 2.5 million policy holders.

ICICI Prudential Life Insurance is the first in India to receive a National Insurer Financial
Strength rating of AAA (Ind) by Fitch Ratings. This rating is determined after a thorough
evaluation of the company’s financial processes, risk management framework, product mix,
market share etc. After a thorough evaluation, Fitch has assigned us rating reflecting the highest
creditworthiness. Over the past five years, we have paid over 2,100 claims amounting to more
than Rs 26 crore and taken several steps to assure customers of a quick and smooth claims
process. We have a record of settling 92% of claims received within eight working days from the
date of receiving the last requirement. The AAA rating also reflects the ongoing operational and
capital support that ICICI Prudential receives from its shareholders. ICICI Prudential Assets
under management crosses 9300 crores mark: Again we are the no. 1 among the private Life
Insurers to achieve this milestone. We have once again maintained our leadership position with a
32% market share amongst the private Life Insurance Companies.

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. 23.72 billion, with ICICI Bank holding a stake of
74%

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

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 The ICICI Prudential Edge - What makes us No. 1

The ICICI Prudential edge comes from our commitment to our customers, in all that we do - be it
product development, distribution, the sales process or servicing. Here's a peek into what makes
us leaders.

1. Our products have been developed after a clear and thorough understanding of customers'
needs. It is this research that helps us develop Education plans that offer the ideal way to truly
guarantee your child's education, Retirement solutions that are a hedge against inflation and yet
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.

2. Having the right products is the first step, but it's equally important to 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.

3. 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.

4. 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.

5. Last but definitely not the least, our 20,000 plus strong team is given the opportunity to learn
and grow, every day in a multitude of ways. We believe this keeps them engaged and
enthusiastic, so that they can deliver on our promise to cover you, at every step in life.

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 Vision & Values

Our vision:

To be the dominant Life, Health and Pensions player built on trust by world-class people and
service.

This we hope to achieve by:

 Understanding the needs of customers and offering them superior products and service
 Leveraging technology service customers quickly, efficiently and conveniently
 Developing and implementing super risk management and investment strategies to offer
sustainable and stable returns to our policyholders
 Providing an enabling environment to foster growth and learning for our employees
 And above all, building transparency in all our dealings.
The success of the company will be founded in its unflinching commitment to 5 core values --
Integrity, Customer First, Boundary less, Ownership and Passion. Each of the values describes
what the company stands for, the qualities of our people and the way we work.
We do believe that we are on the threshold of an exciting new opportunity, where we can play a
significant role in redefining and reshaping the sector. Given the quality of our parentage and the
commitment of our team, there are no limits to our growth.
Our values:

Every member of the ICICI Prudential team is committed to 5 core values: Integrity, Customer
First, Boundary less, Ownership, and Passion. These values shine forth in all we do, and have
become the keystones of our success.

Promoters
ICICI Bank

ICICI Bank (NYSE:IBN) is India's second largest bank and largest private sector bank with
over 50 years presence in financial services and with assets of over Rs 3569.32 bn (USD 88
billion) as on June 30, 2007. The 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 in the areas of investment banking, life and non-life insurance, private
equity and asset management. ICICI Bank is a leading player in the retail banking market and

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services its large customer base through a network of over 950 branches (including extension
counters), 3469 ATMs, call centers and internet banking (www.icicibank.com) to ensure that
customers have access to its services at all times

Prudential Plc

Established in London in 1848, Prudential plc, through its businesses in the UK and Europe, the
US and Asia, provides retail financial services products and services to more than 20 million
customers, policyholder and unit holders and manages over £256 billion of funds worldwide (as
on June 30,2007). In Asia, Prudential is the leading European life insurance company with life
operations in China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines,
Singapore, Taiwan, Thailand, Vietnam. Prudential is the second largest retail fund manager for
Asian sourced assets ex-Japan as at June 2006. Its fund management business has expanded into
a total of ten markets : China, Hong Kong, India, Japan, Korea, Malaysia, Singapore, Taiwan,
Vietnam and United Arab Emirates.

Fact Sheet

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
(IRDA).
ICICI Prudential's capital stands at Rs. 23.72 billion with ICICI Bank and Prudential plc holding
74% and 26% stake respectively. For the first quarter ended June 30, 2007, the company
garnered Rs. 987 crore of weighted retail + group new business premiums and wrote over
450,000 retail policies in the period. The company has assets held to the tune of over Rs. 18,400
crore.
ICICI Prudential is also the only private life insurer in India to receive a National Insurer
Financial Strength rating of AAA (Ind) from Fitch ratings. The AAA (Ind) rating is the highest
rating, and is a clear assurance of ICICI Prudential's ability to meet its obligations to customers
at the time of maturity or claims.

For the past six years, ICICI Prudential has retained its position as the No. 1 private life insurer
in the country, with a wide range of flexible products that meet the needs of the Indian customer
at every step in life.

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Distribution

ICICI Prudential has one of the largest distribution networks amongst private life insurers in
India. It has a strong presence across India with over 680 branches and over 235,000 advisors.

The company has over 23 bancassurnace partners, having tie-ups with ICICI Bank, Federal
Bank, South Indian Bank, Bank of India, Lord Krishna Bank, Idukki District Co-operative Bank,
Jalgaon Peoples Co-operative Bank, Shamrao Vithal Co-op Bank, Ernakulam Bank, 9 Bank of
India sponsored Regional Rural Banks (RRBs), Sangli Urban Co-operative Bank, Baramati Co-
operative Bank, Ballia Kshetriya Gramin Bank, The Haryana State Co-operative Bank and
Imphal Urban Cooperative Bank Limited.

Products

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that meet
the needs of customers at every life stage. Its products can be enhanced with up to 4 riders, to
create a customized solution for each policyholder.

Savings & Wealth Creation Solutions

 Save'n'Protectis a traditional endowment savings plan that offers life protection along
with adequate returns.
 Cash Back is an anticipated endowment policy ideal for meeting milestone expenses like
a child's marriage, expenses for a child's higher education or purchase of an asset. It is
available for terms of 15 and 20 years.
 Life Time Super & Life Time Plus are unit-linked plans that offer customers the
flexibility and control to customize the policy to meet the changing needs at different life
stages. Each offer 6 fund options - Preserver, Protector, Balancer, Maxi miser, Flexi
Growth and Flexi Balanced
 Life Link Super is a single premium unit linked insurance plan which combines life
insurance cover with the opportunity to stay invested in the stock market.
 Premier Life Gold is a limited premium paying plan specially structured for long-term
wealth creation.

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 Invest Shield Life New is a unit linked plan that provides premium guarantee on the
invested premiums and ensures that the customer receives only the benefits of fund
appreciation without any of the risks of depreciation.
 Invest Shield Cash bak is a unit linked plan that provides premium guarantee on the
invested premiums along with flexible liquidity options.

Protection Solutions

 Life Guard is a protection plan, which offers life cover at low cost. It is available in 3
options - level term assurance, level term assurance with return of premium & single
premium.
 Home Assure is a mortgage reducing term assurance plan designed specifically to help
customers cover their home loans in a simple and cost-effective manner.

Education insurance plans

 Education insurance under the Smart Kid brand provides guaranteed educational
benefits to a child along with life insurance cover for the parent who purchases the
policy. The policy is designed to provide money at important milestones in the child's
life. Smart Kid plans are also available in unit-linked form - both single premium and
regular premium.

Retirement Solutions

 Forever Life is a traditional retirement product that offers guaranteed returns for the first
4 years and then declares bonuses annually.
 Life Time Super Pension is a regular premium unit linked pension plan that helps one
accumulate over the long term and offers 5 annuity options (life annuity, life annuity with
return of purchase price, joint life last survivor annuity with return of purchase price, life
annuity guaranteed for 5, 10 and 15 years & for life thereafter, joint life, last survivor
annuity without return of purchase price) at the time of retirement.
 Life Link Super Pension is a single premium unit linked pension plan.
 Immediate Annuity is a single premium annuity product that guarantees income for life
at the time of retirement. It offers the benefit of 5 payout options.

Health Solutions

 Health Assure and Health Assure Plus: Health Assure is a regular premium plan which
provides long term cover against 6 critical illnesses by providing policyholder with

18
 financial assistance, irrespective of the actual medical expenses. Health Assure Plus
offers the added advantage of an equivalent life insurance cover.
 Cancer Care: is a regular premium plan that pays cash benefit on the diagnosis as well
as at different stages in the treatment of various cancer conditions.
 Diabetes Care: Diabetes Care is a unique critical illness product specially developed for
individuals with Type 2 diabetes and pre-diabetes. It makes payments on diagnosis on
any of 6 diabetes related critical illnesses, and also offers a coordinated care approach to
managing the condition. Diabetes Care Plus also offers life cover.
 Hospital Care: is a fixed benefit plan covering various stages of treatment –
hospitalization, ICU, procedures & recuperating allowance. It covers a range of medical
conditions (900 surgeries) and has a long term guaranteed coverage upto 20 years.
 Crisis Cover: is a 360-degree product that will provide long-term coverage against 35
critical illnesses, total and permanent disability, and death.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance
benefits to their employees.

Group Gratuity Plan: ICICI Pru's 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.

Group Superannuation Plan: ICICI Pru offers both defined contribution (DC) and defined
benefit (DB) superannuation schemes to optimize returns for the members of the trust and
rationalize the cost. Members have the option of choosing from various annuity options or opting
for a partial commutation of the annuity at the time of retirement.

Group Immediate Annuities: In addition to the annuities offered to existing superannuation

customers, we offer immediate annuities to superannuation funds not managed by us.

Group Term Plan: ICICI Pru's 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.

19
Flexible Rider Options

ICICI Pru Life offers flexible riders, which can be added to the basic policy at a marginal cost,
depending on the specific needs of the customer.

1. Accident & disability benefit: If death occurs as the result of an accident during the
term of the policy, the beneficiary receives an additional amount equal to the rider sum
assured under the policy. If an accident results in total and permanent disability, 10% of
rider sum assured will be paid each year, from the end of the 1st year after the disability
date for the remainder of the base policy term or 10 years, whichever is lesser. If the
death occurs while traveling in an authorized mass transport vehicle, the beneficiary will
be entitled to twice the sum assured as additional benefit.
2. Critical Illness Benefit: protects the insured against financial loss in the event of 9
specified critical illnesses. Benefits are payable to the insured for medical expenses prior
to death.
3. Waiver of Premium: In case of total and permanent disability due to an accident, the
future premiums continue to be paid by the company till the time of maturity. This rider
is available with Smart Kid, Life Time Plus, Life Time Super and Life Time Super
Pension.
4. Income Benefit: In case of death of the life assured during the term of the policy, 10% of
the sum assured is paid annually to the nominee on each policy anniversary till the
maturity of the rider.

The company does believe that it is on the threshold of an exciting new opportunity, where
it can play a significant role in redefining and reshaping the sector. Given the quality of its
parentage and the commitment of its team, there are no limits to our growth.

20
 ICICI Pru Life Time Plus Plan
Suitability
This policy is a long-term market linked total protection plan. The plan offers protection
for life at the same time allows the policyholder to get market-linked returns. It is a single
product combining the benefits of both investment product and insurance plan. This apart, the
product offers a lot of flexibility.

KEY BENEFITS OF LIFE TIME PLUS

 This policy offers the policyholder the protection of Sum Assured and Fund Value, in
case of an unfortunate event of death.
 Potentially higher returns are offered over the long-term by investing in market linked
funds.
 Provision of additional allocation of units at regular intervals to enhance the investment.
 Options to withdraw the money systematically over a period of 5 years on maturity of the
policy.
 Provides cover continuance option, which ensures continuance of life insurance cover
even if the policyholder takes a temporary break in premium payment.
 The policyholder can enjoy tax benefits on premium paid & benefits received under this
policy, as per the prevailing Income Tax Laws.

How does the policy work?

 The policyholder needs to choose the premium amount, term &Sum Assured for which he
wish to take the policy.
 After deducting premium allocation charges, the balance amount is invested in the
investment fund(s) of policyholders’ choice.
 The policyholder can opt for add-on riders available under the policy for a nominal extra
amount.
 On survival, the maturity benefit is paid to the policyholder. If the unfortunate event of death,
the nominee receives the Sum Assured and the Fund Value

Benefits in detail
Death Benefit
In the unfortunate event of death during the term of the policy, the nominee shall receive
the Sum Assured AND Fund Value.
Maturity Benefit
Based on the term chosen for this policy, the policyholder will be entitled to receive the
Fund Value at the time of maturity.

21
 Switching Option
With this option, the policy holder can switch between the investment funds at any time
provided the policy is in force], depending on the policy holders' financial priorities 7
investment decision. In any policy year, 4 switches are free of charge. The minimum
switch amount is 2,000

Partial Withdrawal Benefit

Partial withdrawal will be allowed after completion of 3 policy years & on payment of
full 3 years’ premium. The minimum partial withdrawal amount is Rs.2, 000.

Cover Continuance Option

This option ensures that the insurance cover continues in case policyholder is unable to
pay premiums, anytime after the payment of first 3 years’ premium. All applicable
charges will be automatically deducted from the units available in his fund. The
policyholder can restart premium payment any time thereafter. The policyholder needs to
opt for cover continuance option, if he wishes to avail of this benefit.
Additional Protection with Riders
The policyholder can further customize his policy by adding riders, to enjoy additional
protection at a nominal extra cost, as given below:
 Accident & Disability Benefit Rider- In the event of death or disability due to an
accident, the rider benefit would be paid.
 Critical illness benefit Rider- In the event of the Life Assured contracting any of the
specified critical illness, the rider benefit amount would be paid.
 Waiver of Premium Rider- In case of total and permanent disability due to an
accident all further premiums till maturity would be paid by the company.

Rider charges for opted riders will be recovered by cancellation of units.

Other Conditions

 Minimum/Maximum Entry Age : 0-65 years

 Minimum/maximum Term : 10-30 years
 Minimum/Maximum Premium : Rs.20,000 - Rs.300,000 per annum
 Premium Payment Frequency : Yearly, Half-yearly, Monthly
 Minimum Sum Assured : Annual Premium x (Term/2)

22
 Charges applicable under the policy
Premium allocation charge
Annual Year 1 Year 2 Year 3 Year 4 Year 5
Premium onwards
Rs.20,000 to 25% 25% 3% 3% 1%
Rs300,000

Other Charges
 Switching Charges- 4 free switches allowed every policy year. Subsequent switches
will be charged at Rs100 per switch.
 Policy Administration Charge- There would be a fixed policy administration charge
of Rs60 per month.
 Mortality charge- Mortality charges will be deducted on a monthly basis on the Sum
Assured.
Indicative charges per thousand Sum Assured for a healthy male life is shown below:
Age(yrs) 20 30 40 50
Rs. 1.33 1.46 2.48 5.99

 Fund Management Charge- The annual fund management charge, which will be
adjusted from the Net Asset Value of various Funds, are as follows:

Fund Maximiser ll Balancer ll Protector Preserver

Charge 1.50% p.a. 1.00% p.a. 0.75% p.a. 0.75% p.a.

Partial Withdrawal Charge- One partial withdrawal in a policy Year would be free. All
subsequent partial withdrawals in that policy year would be charged at Rs100 per withdrawal.

(These charges will be deducted by cancellation of units)

23
 Unit Link Insurance Plans
ULIPS are a category of goal based financial solutions that combine the safety of insurance
protection with wealth creation opportunities. In ULIPS, a part of investment goes towards
providing you life cover. The residual portion of the ULIP is invested in a fund which in
turn invests in stocks or bonds; the value of investments alters with the performance of
underlying fund opted by you.

WORKING OF ULIPS

When you decide the amount of premium to be paid and the amount of life cover you want
from ULIP, the insurer deducts some portion of ULIP premium upfront. This portion is
known as Premium allocation change, and varies from product to product. The rest of
premium is invested in fund or mixture of funds chosen by you.

Unit Linked Insurance Plans of ICICI Prudential and its

Competitors

ICICI PRUDENTIAL

Offering insurance plans with flexibility and tax benefits. The various options for the customers
to invest in ULIP :-

 ICICI Pru Life Stage RP : Offers a wide range opf benefits to policyholders , many of them
are still not market savvy
 ICICI Pru Lifestage Assure: Offers a clear advantage by providing guaranteed returns
(maturity additions) on the 1st year premiums.
 ICICI Pru LifeLink Super: “Single premium “unit linked investment cum Insurance plan.
 ICICI Pru LifeTime Gold :Regular premium unit linked plan & offers attractive additional
allocation units at regular intervals
 ICICI Pru PremierLife Gold:Offers short term premium payment terms and provides
policyholder with flexible investment options.

ULIPS OF BAJAJ ALLIANZ

Market linked insurance plans invest the premium in to the equity, debt and cash markets by
the way of allocating units, which like any other mutual fund have a NAV and the customer
is free to switch between one fund class to another depending on the risk factor he wishes to
be in. Bajaj Allianz Life Insurance has developed a number of ULIP products which range
from single premium to a regular premium. Various plans are:

24
UNIT GAIN PLUS GOLD

A Unique plan with the combination of protection and prospects of earning attractive returns
with investments in various mix of securities that makes a perfect plan to last you a lifetime of
prosperity and happiness. High Allocation upto 85%.Guaranteed Life Cover with a choice of 7
Investment Funds.

 New Unit Gain Super

 New Unit Gain Plus
 New Unit Gain
B Single Premium

 New Unit Gain Premier Sp

 New Unit Gain Plus SP
ULIPS OF LIC

Unit plans are investment plans for those who realize the worth of hard- earned money. These
plans help you see your savings yield rich benefits and help you save tax even if you don’t have
consistent income .Various plans are:

 Market Plus 1: This is a unit linked pension plan wherein the pension is payable after a
specified period. Though primarily a pension product, the plan has many attractive
features and options which make it an ideal retirement solution for the future.
 Profit Plus
 Fortune Plus
 Money Plus
ULIPS OF RELIANCE LIFE INSURANCE

The plan allows you to experience the joys of life and provide for your family’s needs.
Various plans are:

Reliance Premier Life

Under this plan the investment risk in the investment portfolio is borne by the policyholder.
This is a regular premium, unit linked savings plan. The plan offers the twin benefit of insurance
cover along with savings, by investing in market linked securities.

 Reliance Super Invest assure Plan

 Reliance Wealth + Health Plan
 Reliance Cash Flow Plan

25
 Khan, M.K. (1978) attempts to know the opportunities and prospects in the career of a life
insurance sector. He explains about what a good career is and how a good career should be for
selling of life insurance products. There is no age barrier and it requires no previous occupational
experience but one must be a professional and capable of creating opportunities in building
personality. The relationship of life Insurance agent with clients is not temporary and the service
rendered has no substitutes. He also observes that life insurance agent remains, in a sense,
permanent server to the clients.

Ramesh Jain (1980) conducts a case study at Sagar branch, Calcutta, of Life Insurance
Company view the spread of life insurance in a particular area and tochannelize the mobilized
saving for nation building activities. Analyzing the processing of procurement of insurance
business and administration of Life Insurance Company in branch level, the study also brings out
the growth of total new business and about 30% of Life Insurance Companies individual
assurance business originated from the rural sector - it adds to the privilege of Life Insurance
Company to contribute their investments to many of the vital projects and schemes under 20
point programmes. The findings of the study were to establish servicing center to have
continuous interaction with the policyholders and the sagar branch has still greater potentialities
of expansion in rural area.

Rajkumar (1985) views that advertising is to influence a customer, who has a limited spending
power and it seems to operate through familiarizing spreading news over cog inertia and image
building improving market share, educating, informative and to have staff support. As far as
insurance industry is concerned, misconception is a common problem and the pre-testing
revealed that most of the rich people are associated with insurance and he viewed that the
treatment of Life Insurance Company to the public is always unfair.

Shesha Ayyar, V. (1986) in his article entitled “Product Development” has discussed various
issues connected with developing new polices such as the importance of developing new
schemes and various problems involved in the development of new schemes in Company. He
suggested the need for including ancillary benefits such as accident benefits, disablement and
hospitalization benefits.

Rajan Saxena (1986) in his article entitled “Life Insurance Services” discusses various issues
relating to life insurance. The author insists on the importance of life insurance and discusses on
various strategies of life insurance.

Mishra, M.N. (1987) made a study to appraise the strategies of Life Insurance Company.
While reviewing the strategies, the author felt that before 1960 Life Insurance Company did not
give much attention to the objective of customer satisfaction, but from 1980 onwards the
corporation has taken several remedial measures to provide better customer service and improve
the customer satisfaction.

26
Ashis Deb Roy (1987) in his article entitled “We Care for our Customers” has examined the
nature and importance of better customer services to policyholders and has emphasized the need
for quality in service. He has given a detailed note on the various steps to be taken by Life
Insurance Company to improve the customer service such as training programmes conducted by
Company to its agents and employees, opening new branches and introduction of computers in
insurance branch offices.

Venkatesh, N.C. (1987) in his article entitled “On the Trail of Better Service” has discussed
the importance of better and personal servicing to the customers and has emphasized the
importance of satisfying the policyholders.

The Planning Wing of the LIC Divisional Office, Thanjavur (1987) has conducted a sample
survey on “Customer Satisfaction”. The objectives of the study found the level of consumer
satisfaction regarding the services, on particularaspects such as timely dispatch of discharge
forms, reminders, the cooperation given by agents or development officers, courtesy and
sympathy of Company officials, receipt of the policy amount within the due date etc. The results
of the study revealed the following points. They are:

• Discharge forms are received before the due date by seventy nine per cent of the
policyholders.
• Eleven per cent of the policyholders approached the agent or development officer for help
in the submission of the requirement and they are happy with the services rendered by them.
• Twenty one per cent of the policyholders submitted the requirements after receiving a
reminder from the branch office.
• Six per cent of the policyholders approached the branch office for discharge 67
• A few policyholders, who expressed their grievances at the delay, could have been satisfied,
if some courteous and prompt attention had been paid to them when they came to office.

Rao, B.S.R. and Appa Rao Machiraju (1988) in their article entitled “Life Insurance and
Emerging Trends in Financial Services Market”, contends that the agents of life insurance should
improve their services to the level of financial experts. The authors felt that the change in the
economic scenario would help the corporation in better services field.

Raghunadhan, R. (1988) in his article “Population - Insurable and Insured” made an attempt to
analyze the insurance coverage of the insurable population and concluded that more self
employed and agricultural labourers are to be tapped. The author gave a suggestion to improve
and introduce new schemes to satisfy the groups.

theRamakrishna Reddy and Raghunadha Reddy (2000) attempt to study the issues and relate
conclusion on certain matters like whether premium rates reflect the life expectancy or the policy
designed only for government employees or semi - government employees or reputed
commercial firms etc. The spirit of the policyholders to know about the working, drawbacks and

27
short comings of the Life Insurance Company is discussed. The study reveals that the rates of
premium charged under postal life insurance are less and cheaper compared to the rates of
premium of Life Insurance Company. As it is covered for a confined class of selective masses, it
is felt necessary to concentrate on uncovered areas and non-salaried class as potential Market
segments. The foremost change required is to provide transparency of information to the
community, as they have the freedom to access any information about the working of Company.

Malliga, R. (2000) in her study examines the association between Socio Economic Status,
Personality Traits of the Agents and the Performance in Tirunelveli, Tuticorin and kanyakumari
districts. Further, the impact of marketing strategies and attitude of the agents towards the
organization and their performance is studied with a sample of 100 respondents using stratified
random sampling. The results of the data show that performance of the agents in terms of
number of policies, the Sum Assured and the total commission received was found to be
dependent on the Socio-economic status. There is a significant correlation between the marketing
strategies of the agents and their performance.

Sankariah, Rudra Saibaba and Pervaram Sreenath (2001) attempt to articulate the
objectives like marketing strategies, progress in Life Insurance Company, different facilities to
meet risk coverage and highlights of the new policies offered by the insurance companies in the
context of privatization, liberalization and globalization. On comparing with private firms, the
study elicited that different varieties of policies offered by Life Insurance Company are not
available with other insurance companies as they offered only endowment and money back
policies. The progress of Company is highly remarkable which recorded only 9.32 Lakhs. New
policies in the year 1956 as against 148.43 Lakhs new policies in the year 2000. There is every
possibility in the growth of insurance business as 57.6% of the insurable population is still
uncovered. LIC intends shifting from mass - marketing to target marketing of individuals and
extends reaching out to customer in the most cost effective way with target offers.

Mahesh Chandra Garg (2001) brings out the new paradigm in the insurance industry by
imposing the increase in life expectancy of individuals and disintegration of joint family system.
According to his view, the rate of insured which was around 7 per cent of the population in 1999
has to grow very fast because private sector operator in collaboration with their overseas
partners are likely to bring in more professional and focused approach. Once competition grows,
lower premium may also become a reality and the regulatory body has to ensure a balance in the
enactment of the regulation in the overall development and maturity of the insurance industry.

Shuvro Bakshi (2002) in his study attempts to know the theoretical concepts and examines the
post liberalization Scenario in the existence of Insurance Regulatory and Development Authority
and the strategies for the future must be based on customers, as the customers are the major
driving force for the private players and is not easy to achieve especially when insurers are
preparing themselves up for a competition. Insurance premium in India accounts for mere 2-3%
of Gross Domestic Product and percentage of savings is barely 5.95% in India. The factors

28
discussed in the study is to retain the customers, in spite of private entry are strong distribution
network, strategic selection of segments, reputation, creditability and financial stability. As per
Financial Times, May 14, 2002, Company records to the extent of 23 million numbers of Policies
sold, compared to other private companies.

Arunajatesan (2002) in his study attempts to find the reason for poor penetration of insurance
and influencing factors like awareness of Life Insurance Products, preferred mode of saving,
insurable population, reasons for buying etc. The findings of the study were that 70% of the
population is aware of insurance through Television, Newspapers and agents and among them
only 24% are insured. Regarding the knowledge of schemes, less than 15% are known and
reasons for buying insurance is only for tax planning and risk cover only.

Azhagaiah and Varadharajan, R. (2003) in their study view that out of one billion people in
India; only 35 million people are covered by insurance. With the entry of Private insurance
Players, people have a host of schemes to choose with distinguished features, giving importance
to the return on investment. Life Insurance Company has been withdrawing many of its assured
return plans, due to the factors like changing customer behavior, deregulation and government
intervention, competition etc. The ICICI prudential tops the rank with 40% progress followed by
Max New York with 13% progress in the insurance business of India.

Ziaudeen, A. (2003) in his dissertation “Marketing of Life Insurance Services by Life

Insurance Corporation of India at Thanjavur district” has discussed various aspects relating to
product line, product development process, product mix, premium fixation, modification,
facilities provided to policyholders, accessibility of Life Insurance Company services in
Thanjavur location, training, motivation and the problem involved in it. He suggested that the
level of awareness among the consumers has to be improved more in order to tap the market
entirely. The marketing of LIC is found satisfactory in Thanjavur district.

Mony, S.V. (2005) in his article entitled “New Initiatives in the Insurance Sector Opportunities
and Challenges Stressed that the Co-operative Sector and the Micro-Credit Organizations”,
might help in the penetration of insurance in the rural areas by formulating low cost polices. He
also stressed that good customer service and information technology might help insurance
companies in the penetration of insurance products into urban areas.

Krishnamurthy, S. (2005) in his article entitled insurance sector challenges of competition and
future scenario concludes that the limited availability of data on policyholders, the low
awareness among policyholders the inadequate infrastructure and technology are the major
problems of the insurance industry in marketing its product

Patil, P.B. and Thakkar, P.N. (2007) “Impact of Disinvestment on Banking and Insurance
Sector” revealed that a strong competition among the insurance companies has led to better
services being provided by customer satisfaction can be known from the customer retention ratio.

29
Now most of the companies are customer centric approach, rather than product centric approach
which is leading to customer-retention ratio.

A study conducted by Keerthi, P. and Vijayalakshmi, R. (2009) “A Study on the

Expectations and Perceptions of the Services in Private Life Insurance Companies” reveals that
the policyholders’ expectations are well met in the case of certain factors reacting to service
quality. But in the case of other variables, there exists a significant gap which means that
policyholders have experienced low levels of service as against their expectations. If all the
players in the Life insurance industry focus on the effective delivery of services, they can win the
hearts of customers and anticipate their increased market share.

Praveen Sanu, Gaurav Jaiswal and Vijay Kumar Panday (2009) in their article, “A Study of
Buying Behaviour of Consumers towards Life Insurance Company”, Prestige institute of
Management and Research, Gwalior, revealed that in present Indian market, the investment
habits of Indian consumers are changing very frequently. The individuals have their own
perception towards various types of investment plans.

Selvavinayagam, K. and Mathivanan, R. (2010) has revealed that the competitive climate in
the Indian insurance market has changed dramatically over the last few years. At the same time,
changes have been taking place in the government regulations and technology. The expectations
of policyholders are also changing. The existing insurance companies have to introduce many
new products in the market, which have competitive advantage over the products of life
insurance companies.

Ramanathan, K.V. (2011) research has resulted in the development of a reliable and valid
instrument for assessing customer perceived service quality, awareness level, and satisfaction
level of customers towards life insurance industry. Here, service quality needs to be measured
using a six dimensional hierarchal structure consisting of assurance, competence, personalized
financial planning, corporate image, tangibles and technology dimensions. This would help the
service managers to efficiently allocate resources, by focusing on important dimensions first.
There is no right and wrong in this. The success of marketing insurance depends on
understanding the social and cultural needs of the target population, and matching the market
segment with the suitable intermediary segment

30
Research is commonly known to be search for knowledge. Research is an art of scientific search
for specific information. According to Clifford Woody, research comprises defining and
redefining problems, formulating hypothesis or suggested solutions, collecting, organizing and
evaluating data, making deductions and reaching conclusion and further testing the conclusion
whether they fit into formulating hypothesis. Research Methodology is a scientific and
systematic way of finding problem to a solution. In this research, researcher has studied various
steps as mentioned above for research associated problem along with the logic behind them. For
this study, researcher must know various research techniques like mean, mode, median,
frequency distribution, standard deviation or CHI-Square and need to analyze that which of these
techniques are relevant to his or her research. Thus for any systematic research study, a scientific
approach is necessary. It is therefore, essential to conceive and plan a systematic design to arrive
at an appropriate conclusion. All the business undertakings are operating in the world of
uncertainty, but research design, more than any other procedure, can minimize the degree of
uncertainty to a greater extent.

The methodology is the general research strategy that outlines the way in which research is to be
undertaken and, among other things, identifies the methods to be used in it. These methods,
described in the methodology, define the means or modes of data collection or, sometimes, how
a specific result is to be calculated. Methodology does not define specific methods, even though
much attention is given to the nature and kinds of processes to be followed in a particular
procedure or to attain an objective.
When proper to a study of methodology, such processes constitute a constructive generic
framework, and may therefore be broken down into sub-processes, combined, or their sequence
changed.
A paradigm is similar to a methodology in that it is also a constructive framework. In theoretical
work, the development of paradigms satisfies most or all of the criteria for
methodology. An algorithm, like a paradigm, is also a type of constructive framework, meaning
that the construction is a logical, rather than a physical, array of connected elements.
Any description of a means of calculation of a specific result is always a description of a method
and never a description of a methodology. It is thus important to avoid using methodology as a
synonym for method or body of methods. Doing this shifts it away from its
true epistemological meaning and reduces it to being the procedure itself, or the set of tools, or
the instruments that should have been its outcome. A methodology is the design process for
carrying out research or the development of a procedure and is not in itself an instrument, or
method, or procedure for doing things.
Methodology and method are not interchangeable. In recent years, however, there has been a
tendency to use methodology as a "pretentious substitute for the word method".
Using methodology as a synonym for method or set of methods leads to confusion and
misinterpretation and undermines the proper analysis that should go into designing research.

31
OBJECTIVE OF THE STUDY
The study was carried with the following objectives:

o To obtain general awareness about the insurance sector.

o To compare ULIP of ICICI with its competitors.

o To gain an insight of ICICI Prudential and other various Insurance Companies.

o To do a study on customer perception about the various Insurance Companies.

o To identify the improvement opportunities and make appropriate suggestion.

o To do the market awareness about the Unit Link Insurance Plan

32
Scope of Study:

 To understand the concept of financial planning.

 To compare traditional investment instruments (Mutual Funds etc.) with investment in
Insurance.
 To analyze various Unit Linked Plans offered by ICICI prudential Company.

33
RESEARCH DESIGN

The formidable problem that follows the task of defining the research problem is the preparation
of the design of the research project, popularly known as “Research Design”. Research design is
a plan, structure and strategy of investigation conceived to obtain answers to research questions
and to control variance.

A research design can be defined as “Arrangement of condition for collection and analysis of
data in the manner that aims to combine relevance to the research purpose with economy in
procedure.” It consists of the blue print for the collection measurement and analysis of data. The
research used here is descriptive research.

34
DESCRIPTIVE RESEARCH

In my study, I am interested in knowing the proportion of people in a given population who has
behaved in a particular manner, making projections of certain thing and determining the
relationship between two or more variables in some areas. As the set up has been well structured
and is a rigid one, which could not be changed by giving sufficient thought in frail-ling question,
deciding type of data to be collected and procedure that has been used gives the, proof of using
description research.In descriptive research also there has been use of cross sectional studies just
because the researcher has taken only a sample of elements from the given population. In the
cross sectional study the survey research has been selected, as a detailed study has to be obtained
from a sample of large population.

DATA COLLECTION METHOD

The data that is used in study in collected by two methods.

1. Primary data

2. Secondary data

35
 Primary Data

The primary data does not exist already in records and publications. The researcher has to gather
primary data a fresh for a specific survey. The primary data can be gathered by way of
observation method where the research mix with the people concerned with the use of particular
product and not important clauses by observing the respondents. The second method of
collection of primary data is by way of experimentation method where some variables are
allowed to vary under a controlled environment and its cause and effect relationship is studied.

The third method of collection of data is by way of conducting a survey. This method is used for
collection of primary data. The primary data was collected from customers in India city. For this
research study, data was collected from various account holders of the CitiFinancial. Data
collection was carried out using personal interview method guided by questionnaire as follows:

. Open-ended questions

. Closed ended questions

. Dichotomous questions

. Multiple-choice questions

. Ranking questions

. Rating questions
SECONDARY DATA

It is needed for conducting this research work collected from the various business magazines,
bank brouchers, statistical and management book, market research books etc. which are
presented in the literature various in details

SAMPLING DESIGN

The precision and accuracy of survey results are affected by the manner in which the sample has
been chosen. The first thing for a sample plan is definition of the population to be investigated.
Defining the population is often one of the most difficult things to do in sampling. Although
ideal conditions might indicate threat the census would be preferable, such ideal conditions

36
rarely exist in the real world. A census is not feasible practically, therefore sample is used. Two
of major advantages of using a sample rather than a census are speed and timeliness. A survey
based on sample takes much less time to compete than based on census. In this particular
research study sample survey is done. Sample design is the most important heart of sample
planning. Sample design includes type of sample to use and the appropriate sampling unit.

Sampling Size

The sampling size in this research is restricted to 100 and samples were collected in different
areas of faridabad

Sample Description

The sample consists of all income groups which include employees, students, unemployed -
employed people.

Actual Collection of Data

The sources of data are primary and secondary data.

Primary Data:

The primary data was collected through the questionnaire.

Secondary Data:

Secondary data was collected by

 Browsing different website

 Referring various articles, reports, journals, magazines on insurance.

Analysis method:-
Analysis is done on the basis of responses taken from the respondents by making use of tables,
charts, diagrams and graphs

37
Limitations of the study

 An underlying assumption for the entire project is that the details and the feedback
received from the population is true.
 Sample of only 100 respondents is selected from the population.
 Some of the respondents were not ready to fill the questionnaires and some of them
were not ready to come out openly.
 Lack of financial assistance caused the study to be limited over a confined area.

 Lack of awareness among people about insurance as a investment product remained

the cause for not getting proper responses from some of the people.

 As the Unit Linked plans are market dependent and have certain amount of risk

associated with them, people do not easily trust them.

 Aggressive sales strategy of Private insurance players may cause inconvenience to

some people. Thus they do not furnish correct information in the questionnaire filled

by them

38
1) Where would people like to insured if given chance ?

Table 1
PARTICULAR INSURE
ICICI 60
LIC 25
BAJAJ ALLIANZE 5
SBI 8
KOTAK MAHINDRA 2

GRAPH 1

INSURED
70
60
60
50
40
30 25 INSURE
20
8
10 5
2
0
ICICI LIC BAJAJ SBI KOTAK
ALLIANZE MAHINDRA

INTERPRETATION 1
The above diagram shows that most of the people like ICICI prudential for insured because
people are comfortable in having business with govt. owned companies as they feel its safe
& secure to have insured with them which is followed by SBI as it is the biggest bank as like
ICICI prudential is also a biggest bank so many like to insure in ICICI prudential .

39
2) What is people’s main concern while taking a insurance policy (ULIP)?

Table 2
PARTICULAR NO OF RESPONDENT
SECURITY 40%
RETURNS 28%
TAX REBATE 32%
TOTAL 100%

GRAPH 2

NO OF RESPONDENT
45%
40%
40%
35% 32%
30% 28%

25%
20% NO OF RESPONDENT
15%
10%
5%
0%
SECURITY RETURNS TAX REBATE

INTERPRETATION 2
The above diagram shows that people main concern while taking insurance (ULIP) is security.
The People invest in insurance mainly because of security concern because every one wants
security in scenario .

40
3) How many people are aware about the policy functioning

TABLE 3
AWARENESS NO OF RESPONDENT % OF RESPONDENT
YES 88 88%
NO 12 12%
TOTAL 100 100%

GRAPH 3

% OF RESPONDENT
100%
88%
90%
80%
70%
60%
50%
% OF RESPONDENT
40%
30%
20% 12%
10%
0%
YES NO

INTERPRETATION 3

The above diagram shows that 88% of population know the policy functioning and 12% have
no knowledge about the policy functioning. it is clear that most of the policy holders know the
policy functioning that are provided by the company.

41
4) How many respondents know about the insurance policy
TABLE 4

Policy No of respondent % of respondent

Traditional 48 48%
Ulips 52 52%
Total 100 100

GRAPH 4

% of respondent
53%
52%
52%

51%

50%

49% % of respondent
48%
48%

47%

46%
Traditional Ulips

INTERPRETATION4

The above diagram reveals that after the launching of ULIP like an investment cum insurance
product 52% of the sample population have opted for the policy .Thus, ULIP is better than any
insurance product in present market. So the company can exploit it in a better way

42
5) Which feature of ULIP is mostly prefer by respondent?

TABLE 5

ULIP features No of respondent % of respondent

High returns 29 29%
Insurance cover 25 25%
Tax benefit 18 18%
Partial & full withdrawals 23 23%
Other 5 5%
Total 100 100%

GRAPH 5

% of respondent
35% 29%
30% 25% 23%
25%
18%
20%
15%
10% 5%
5%
0% % of respondent

INTERPRETATION 5

The above diagram shows that 29% of sample population are getting the High Returns from
their existing insurer, 25% are getting Insurance Cover from their existing insurer, 23% are
getting Partial & full Withdrawals Facilities from their insurer , 18% are getting Tax Benefit ,
and only 5% are getting other benefits like Flexibility, Liquidity, Savings etc.,

43
6) What type of investment preferred in ulip by different respondent

TABLE 6

TYPE OF INVESTMENT NO OF RESPONDENT % OF RESPONDENT

Rich 73 73%
Flexi growth 18 18%
Flexi balance 0 0
Balancer 0 0
Protector 0 0
Presever 9 9%
Total 100 100

GRAPH 6

% OF RESPONDENT
80% 73%
70%
60%
50%
40%
30%
18% % OF RESPONDENT
20%
9%
10% 0 0 0
0%

INTERPRETATION 6

From the above diagram it is quite clear that around 73% of the sample population like to invest
in R.I.C.H. which is an Equity Fund Investment option. So ULIP like Equity Fund Investment
has a good opportunity in the future. 18 % of sample population invests in Flexi Growth, and
only 9% invest in Preserver. Because everyone want profit in future.

44
7) What is the perception of people regarding life insurance

TABLE 7

Perception People (%)

Saving 24

Tax Saving 40

Investment 13

Future Protection 23

GRAPH 7

People (%)
45
40
40
35
30
24 23
25
20
People (%)
15 13
10
5
0
Saving Tax Saving Investment Future
Protection

INTERPRETATION 7

The above diagram shows the perception of the people regarding the life insurance i.e some
people thinking that it’s a saving and are tax saving and investment and some are that its
important for future protection. Therefore most of people are taking life insurance because of tax
saving .

45
8) How many respondents ready to invest in the ulip of ICICI prudential

TABLE 8

READY TO INVEST IN NO OF RESPONDENT % OF RESPONDENT

ULIP OF ICICI
PRUDENTIAL
YES 40 40%
NO 60 60%
TOTAL 100 100%

GRAPH 8

% OF RESPONDENTS
70%
60%
60%

50%
40%
40%

30% % OF RESPONDENT

20%

10%

0%
YES NO

INTERPRETATION 8

The above diagram shows that 40% of sample population is ready to insure their life with ULIP
of ICICI Prudential and remaining 60% are not ready to invest with ULIP of ICICI Prudential. It
is clear that the company has to create the awareness about the ULIP in the market in order to
increase the sales in future .

46
9) Satisfaction level on insurance cover by the ICICI prudential

TABLE 9

FACTORS INSURANCE COVER

Extremely good 28%
Good 11%
Average 11%
Below average 11%
Inadequate 39%
Total 100

GRAPH 9

INSURANCE COVER
45% 39%
40%
35%
28%
30%
25%
20%
15% 11% 11% 11%
10% INSURANCE COVER
5%
0%

INTERPRETATION 9

The above diagram shows the satisfaction level on Insurance Cover. Here 28%of sample
population responded in the scaling of Extremely Good, 11% Good , 11% Average , 11% Below
Average, and for remaining 39% inadequate . So from the above interpretation we can conclude
that most of the sample population are not satisfied with Insurance Cover.

47
10) Which companies come into the mind of people while thinking of insurance
companies .

TABLE 10

Companies People (%)

LIC 14

BAJAZ ALLIANZ 6

ICICI PRUDENTIAL 75

KOTAK MAHINDRA 3

OTHERS 2

GRAPH 10

People (%)
80 75
70
60
50
40
30
20 14
6 3 2 People (%)
10
0

INTERPRETATION 10

The above diagram show that most of the people thinking about the ICICI prudential for
insurance because they provides the best facilities as compare to others companies

48
11) The minimum and maximum age for entry

Table 11
Particular Min age Max age
ICICI 0 65
LIC 12 55
BAJAJ ALLIANZ 0 60
RELIANCELIFE 0 65
INSURANCE

Graph 11
70 65 65
60
60 55

50

40

30 Min age
20 Max age
12
10
0 0 0
0
Icici Lic Bajaj allianz Reliance life
insurance

Interpretation 11
 From the above data it is observed that a person with an age of 0 years can take this
policy in ICICI Prudential and Bajaj Allianz, in LIC it is 12 years and Reliance Life
Insurance entry age is 30 days.
 In ICICI Prudential and Reliance Life Insurance a person can take policy up to the age of
65 years while in Bajaj Allianz 60 years and LIC 55 years.

49
12) What are the minimum premium provide by companies

TABLE 12

particular Min premium

ICICI prudential 20000
LIC 5000
Bajaj Allianz 10000
Reliance life insurance 10000

Graph 12

Min premium
25000
20000
20000

15000
10000 10000
10000 Min premium
5000
5000

0
ICICI LIC Bajaj Allianz Reliance life
prudential insurance

Interpretation 12
In the above diagram it shows that the lowest premium is paid by LIC customers and the
maximum premium is paid by ICICI customers. Apart from this, as per the recent survey it
shows that most of the customers prefer policies having low premium.

50
13) What is the minimum sum assured provide by the company

TABLE 13
PARTICULAR MIN SUM ASSURED
ICICI PRUDENTIAL 100000
LIC 50000
BAJAJ ALLIANZE 100000
RELIANCE LIFE 50000
INSURANCE

GRAPH 13

MIN SUM ASSURED

120000
100000 100000
100000
80000
60000 50000 50000
40000
20000 MIN SUM ASSURED
0

Interpretation13
The above table shows the sum assured provide by the different companies . The ICICI
PRUDENTIAL provide 100000 and where as other company like LIC, BAJAJ ALLIANZE
,RELIANCE LIFE INSURANCE i.e 50000 and 100000.

51
14) Traditional plan respondents.

TABLE 14

POLICY NAME NO OF RESPONDENTS % OF RESPONDENTS

Life guard sp 5 5%
Cash back 40 40%
Save and protect 5 5%
Life guard rop 5 5%
Smart kid 45 45%
Total 100 100

GRAPH 14

% OF RESPONDENTS
50% 45%
45% 40%
40%
35%
30%
25%
20% % OF RESPONDENT
15%
10% 5% 5% 5%
5%
0%
Life guard Cash back Save and Life guard Smart kid
sp protect rop

INTERPRETATION 14

The above table of traditional plan reflects 45% of sample population invest in Smart Kid and
40% invest in Cash Back policy but most of the respondents who have taken traditional policy
opted for Smart Kid .

52
 Findings
1. There is a common opinion that ULIP has a good future as it will satisfy all the wants of an
investor including return.
2. Around 29% of sample population is ready to invest if they get High Returns, apart from
Tax Benefit & Partial & Full Withdrawal Facilities.
3. 42% of the sample population is ready to invest in ULIP.
4. Around 58% like to invest in private life insurance companies.
5. Even though majority of the people have a good awareness but still they have a negative
attitude towards investing in insurance and related securities.
6. 25% of sample populations are not satisfied with their High Returns from the Existing
Insurer.
7. 35% of sample population is satisfied with Tax Benefits provided by the existing insurance
companies.
8. About 39% of sample population is not satisfied with the insurer regarding Insurance
Coverage.
9. 31% of sample population is Below Average in their satisfaction level regarding Partial
and Full Withdrawal facilities provided by the existing insurer.
10. Investments in insurance related options are given the least priority than ever before.
11. 45% of sample population is ready to invest in the ULIP of ICICI Prudential and the
remaining 55% are ready to invest in other ULIP providing insurance companies.
12. 40% of sample population are ready to insure the life with ULIP of ICICI Prudential
Insurance Company
13. 60% of sample population are not ready to invest with ULIP of ICICI Prudential Insurance
Company
14. 60% of sample population insure their life with different insurance companies
15. 40% of sample population still has not insured their life. So there is a huge demand for
insurance products to exploit the market

53
 SUGGESTIONS
After analyzing the customer feedback it is clear that at present at ICICI Prudential is having
an edge over other various life insurance companies. There are a few areas where ICICI
Prudential could rework on its strategies to outperform its competitors in the future.

 ICICI Prudential could introduce more customer friendly feature on its policies like
unlimited free switches, lower administration charges, more allocation to the units in the
first year etc.
 ICICI Prudential can unquestionably make good use of more advertisement to promote its
products and to improve its brand awareness and brand image.
 Company can give more importance to the new age insurance solutions.
 Company should introduce more innovative pension and child ULIP plans as they have
more demand.
 From the customer’s point of view, ICICI Prudential is just another private insurer trying
to sell whatever they have. Instead the company must modify its product range in such a
way that the company could clearly distinguish its products from that of its competitors.
 ICICI Prudential must exploit its reputation as successful banking and insurance
company. Even today many people don’t know that ICICI and Prudential plc is the same
company they trust as banking and insurance company.
 ICICI must clearly introduce ULIP products with low premium because the low profile
customers who want to invest in ICICI Prudential have no option other than going to
other private players.

If all these factors are addressed properly, there is a very high probability for the company to be
the best and the biggest private life insurance company in Indian life insurance industry in future

54
 CONCLUSION
The size of the market has grown and the size of the insurable population in India is really huge
and the existing player has managed to cover about one-fourth of it. The opportunities before the
players are, therefore, huge in terms of target audience. The falling interest rates, the collapse of
many small-time financial institutions, the scope for entering related areas like banking and
pensions in a bid for synergy and the promise of E-Commerce provide opportunities for the new
products like ULIP’s in the insurance market as it gives high returns and insurance coverage to
the customers. As it provides benefits of mutual funds and endowment plans most of the people
like to take a policy. Life insurance has today become a core of market economy since it offers
plenty of scope for generating large sum of money with the time by offering its customers perfect
products to satisfy their financial need. It is, therefore, essential to invest in insurance sector if
we want to have a worry-free future.

55
 BIBLIOGRAPHY
BOOKS AND MAGAZINES:

 STUDY GUIDE- PRINCILES & PRACTICES OF LIFE / GENERALINSURANCE, by

AIMA.

 Books published by INSURANCE INSTITUTE OF INDIA

 LIFE-INSURANCE, by Mc GILL

 INSURANCE WATCH.

 MONEY OUTLOOK.

 BUSINESS JOURNALS
 INDIA TODAY
 OUTLOOK MONEY

WEBSITES REFFERED:

 WWW.CIFAINSURANCE.COM

 WWW.MONEYOUTLOOK.COM

 WWW.INSURANCE.IND.COM

 WWW.ICICIPRULIFE.COM

 WWW.GOOLGE.COM

REPORTS/ARTICLES REFFERED:

o REPORT: ISSUES & CHALLENGES FACING THE INSURANCE

INDUSTRY…. Dec2005.

o BRIEF PROFILE OF LIC, INDIA…Dec 2006.

o REPORT: COPING WITH COMPETITION…Jan2007

56
NEWS PAPERS:

 Times of India
 The Hindu
 The Indian Express
 Economic Times
 Greater Kashmir
 The Kashmir Times

OTHERS:

Companies Broachers and other product detail books

57
 QUESTIONNAIRE

ICICI PRUDENTIAL LIFE INSURANCE

Name: ____________________________________
Address: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
____________________________________
DOB ________________
Occupation: _ _ _ _ _ _ _ _ _ _ _ _ _ _ Annual Income _ _ _ _ _ _ _ _ _ _ _
Tel (Res) _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ Mobile: _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

Q1 where would people like to insured if given chance ?

LIC ( )
ICICI ( )
BAJAJ ALLIANZ ( )
SBI ( )
KOTAK MAHINDRA ( )

Q2 What is people’s main concern while taking a insurance policy (ULIP)?

SECURITY ( )
TAX REBATE ( )
RETURN ( )

Q3 How many people are aware about the policy functioning?

YES ( )
NO ( )

Q4 How many respondents know about the insurance policy?

TRADITIONAL ( )
ULIP ( )

58
Q5 Which feature of ULIP is mostly prefer by respondent?

HIGH RETURN ( )
INSURANCE COVER ( )
TAX BENEFIT ( )
PARTIAL AND FILL WITH DRAWALS ( )
OTHER ( )

Q6 What type of investment preferred in ulip by different respondent?

RICH ( )
FLEXI GROWTH ( )
FLEXI BALANCE ( )
BALANCER ( )
PROTECTOR ( )
PRESERVER ( )

Q7 What are the perception of people regarding life insurance?

SAVING ( )
TAX SAVING ( )
INVESTMENT ( )
FUTURE PROTECTION ( )

Q8 How many respondents ready to invest in the ulip of icici prudential?

YES ( )
NO ( )

Q9 Satisfaction level on insurance cover by the ICICI prudential

EXTREMELY GOOD ( )
GOOD ( )
AVERAGE ( )
BELOW AVERAGE ( )
INADEQUATE ( )

59
Q10 which companies come into the mind of people while thinking of insurance
companies.
LIC ( )
ICICI PRUDENTIAL ( )
BAJAJ ALLIANZ ( )
KOTAK MAHINDRA ( )
OTHER ( )

60