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INTRODUCTION TO INSURANCE

Insurance is a contract between two parties whereby one party

called insurer undertakes in exchange for a fixed amount of money

on the happening of a certain event.

Insurance is a protection against financial loss arising on the

happening of an unexpected event.

The primary purpose of Life Insurance is the protection of the

family.

Insurance in its various forms protects against such misfortunes by

having the losses of the unfortunate few paid by the contribution ofthe many who are exposed to the same risk.

This is the essence of insurance- the sharing of losses and

substitution of certainty for uncertainty.

Insurance companies collect premiums to provide for this

protection.

A loss is paid out of the premiums collected from the insuring public

and the insurance companies act as trustees of the amount collected. It is a system by which the losses suffered by a few are spread over

many, exposed to similar risks.

The private players got entry to this industry in 1999.

The biggest beneficiary of the competition is the consumer.


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BENEFITS OF TAKING A LIFE

INSURANCE POLICY

Protection against risk of untimely death

Life insurance is a product, which offers protection against the risk of

death the full sum assured is made available under a life assurance policy, whereas

under other savings schemes, the total accumulated savings alone will be available.

Forced savingsPayment of life insurance premiums is compulsory and

becomes a habit. Savings in other scheme can be easilywithdrawn and may be used for less worthy purpose. Termination

of a life insurance policy by the policyholder usually results

insubstantial loss in benefits under the policy to the

policyholder. One is thus encouraged to save and keep ones

policy alive.

Marketability and suitability for borrowingAfter 3 years, if the policyholder finds that he is unable to

continue payment

of premiums he can surrender a policy for a cash sum. A life

insurance policy is accepted as a security for a commercial loan.

Tax benefitsThe Indian income tax act provides tax concessions to the

policyholder both

on payment of premium and on the maturity amount. Under sec

88 the tax benefits on premium paid by an individual for life


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insurance policies on his own life\on the life of spouse \children

minor or major, including married daughters.

INTRODUCTION TO ICICI PRUDENTIAL

The Indian government in the year 2000 had done a survey on the insured

population of India and the survey showed that only 22% of the population

was insured and that too not adequately insured by Life InsuranceCorporation of India which was backed by the Indian government.

At this point of time and feedback from many institution of social welfare

the government thought of privatizing insurance.

ICICI was one of the few chosen banks, because to start an insurance

company without the backing of government was a huge investment with a

breakeven span of 7 years only a few banks and public ltd company could

manage to take the license from IRDA with one foreign collaboration.

ICICI Prudential, a joint venture between ICICI Bank and Prudential UK,

has been around ever since the private sector was allowed to sell life

insurance policies. Equity base of Rs. 6.75 billion, with ICICI Bank and

Prudential Plc. holding 74% and 26% stake respectively

ICICI chose prudential as its collaboration because prudential was a 150 yr

old insurance company. It was one of the companys which had insured the

passengers of the titanic which crashed in mid sea ,at the start prudential had

a stake of 27% which slowly reduced over a period of years.


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Since then the tribe of life insurers has grown from 12 to 16, but ICICI still

leads the private sector pack. With a portfolio of over 6.5 million policies,

India's biggest private sector life insurer has not merely held on to its share

but grown it; at the end of January 2008, the firm commanded 29 per cent of

the share owned by private sector players. Quite some way below was Bajaj]

Allianz with 21 per cent.

ICICI got its license to start its operation and its functioning in December

2000 from then on it has never looked back and has been rated as AAA

Company.

ULIPs started giving various option of investment and withdrawals

according to the choice of the investors.

For three years in a row, ICICI Prudential has been voted as India's Most

Trusted Private Life Insurer(The Economic Times)

MANAGEMENT TEAMThe ICICI Prudential Life Insurance Company Limited

Management team comprises reputed people from the finance

industry both from India and abroad.

Ms. Chanda D. Kochhar, ChairpersonMs. Shikha Sharma, Managing Director & CEO

Mr. N. S. Kannan, Executive Director


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ICICI Prudential's premium income grew at about 100 per cent between March

2003 and March 2007. Interestingly enough, the insurer started out with the

traditional endowment products and was not the first to introduce the more popular

Unit Linked Insurance Policy (Ulip): the credit for that goes to Birla Sun life.

However, in the first full year of operations itself, it started offering Ulip policies

and was selling more policies than anyone else. Today, Birla Sunlife doesn't find a

place in the top five and players such as HDFC [ Get Quote ] Standard Life, which

were late to cotton on to Ulips, may be regretting it.

According to Shika Sharma, Ulips allowed the customer to engage with the

product unlike in the case of endowment products where there was little

transparency. Also, customers were unhappy with endowment products because it

meant the money was locked in for a long time."

Our vision:

To be the dominant Life, Health and Pensions player built ontrust 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 to service customers quickly,

efficiently and conveniently.

Developing and implementing superior riskmanagement and investment strategies to offersustainable and stable returns to our policyholders.

Providing an enabling environment to foster growth andlearning for our employees.

Every member of the ICICI Prudential team is committed to 5

core values:
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ICICI remains among the top advertisers: ad spends, as a percentage of new

business premium, range between 0.5 per cent and 0.75 per cent.

In the more recent campaigns, such as the "Jeetey raho" one, the pitch has

changed somewhat, becoming more rational rather than emotive mainly

because the category today is no longer new. The idea now, explains

Sharma, is to encourage long-term financial planning with protection.

Interestingly, even though the target customer is actually a person in themiddle- to high-income group and in the 35-45 age bracket, the insurer's

advertising campaigns target the 30- to 40-year age group.

The average age of ICICI Prudential's policyholders is about eight years

lower than those of LIC. The idea of reaching out to people in that age group

is that insurance is a long-term product with maturities of 15 and 20 years.

(The advertising idea, which was encapsulated in symbols of protection from the

initial print campaign, culminated in the corporate film where SINDOOR was used

as an endearing and lasting symbol of protection.)

If ICICI Prudential has managed to sign on 6.5 million policy holders, it is

because the company has built up a strong agent network, who bring in 60

per cent of the total premium. Today the insurer has nearly 250,000 agentsworking for it, even though it doesn't hand out the best commissions in the

industry.

Bajaj Allianz's network is about 275,000- strong.. Says Sharma, "Our

commissions are at the lower end compared with peers but we are trying to

compensate them by ensuring that they do better volumes."


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The insurer is also rolling out offices at a furious pace; by the end of March

2010, ICICI Prudential will have around 1,500 offices from around 1,100

currently, of which nearly 900 will have come up in 2008-09. Bajaj Allianz,

too, has around 1,000 offices as of now. "We may slow down the pace

somewhat but we should have in excess of 3,500 branches in five years, "says Kannan

The industry believes ICICI Prudential has a big advantage in that it can

leverage the customer base of its parent ICICI Bank. Says a competitor,

"ICICI Bank is the largest private sector bank in the country and they have

strong relationships with customers."

Bajaj Allianz, for instance, didn't have that advantage. Bancassurance today

fetches about 27 per cent of ICICI's premium; apart from ICICI Bank, the

insurer sells through Bank of India, Federal Bank [ Get Quote ], South

Indian Bank and some co-operative and rural banks.

According to Saurabh Tripathi, partner and director, The Boston Consulting

Group, , "Companies that have focused on distribution have been the

winners because product differentiation is difficult in a market where it is

easy to copy."

If ICICI's parent has played a key role in its success, so has its partner.Therearen't too many joint ventures that work well but in this instance, each of the

partners appears to have managed to leverage the strength of the other and

work as a team.

While ICICI Prudential has done well to stay at the top, the next seven years

will certainly be more difficult than the last seven.

Competition is getting more keen - in the past couple of years, Bajaj Allianz

is believed to have written more policies than Prudential. SBI Life has a

stronger distribution now that it has signed on many more agents and
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newcomers like Reliance are growing at a fast pace. But the strong growth in

the industry has surprised everyone.

Says Sharma, "We didn't expect to grow 100 per cent in 2006-07 and at over

50 per cent on that base in the current year."

In fact, that's one reason why the insurer has chosen to invest in the future

and postpone profits. The 900-odd offices will cost the company

approximately Rs 300 crore (Rs 3 billion) and Sharma says that could push

the break-even beyond the 2009-10 time frame planned earlier; the

accounting profit net of expenses is now expected sometime in 2011-12.

That may mean some pain in the near term but it could turn out to be the best

policy that ICICI Prudential wrote.

RELIANCE LIFE INSURANCE

Reliance Life Insurance is one of the major market players in insurance sector. It is

an associate company of Reliance Capital Ltd., a part of Reliance - Anil Dhirubhai

Ambani Group.

Being one of the top 3 private sector financial services companies in India,

Reliance Insurance aims at "empowering everyone live their dreams". Reliance

Life Insurance or RLIC has insured more than 1.7 Million people in 2 years of

operation. Not only this, it is certified ISO 9001:2000 for all the processes. To add

another feather to its hat, Reliance Life Insurance was awarded the Jamnalal Bajaj


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Uchit Vyavahar Puraskar 2007- Certificate of Merit.

HDFC STANDARD LIFE INSURANCE

HDFC Standard Life Insurance Company Limited., being one of the key players in

the insurance sector in India, offers a host of individual and group insurance

solutions, suiting customer requirements. It happens to be a joint venture between

Housing Development Finance Corporation Limited (HDFC Limited), and a Group

Company of the Standard Life Plc, UK. It was per the data on February 28, 2009

that HDFC Ltd. held 72.43% and Standard Life (Mauritius Holding) 2006, Ltd.

held 26.00% of equity in the JV. The remaining stake is held by others.

WHY ICICI PRUDENTIAL IS BETTER

THAN OTHER COMPETITORS?

1) ICICI has the most coveted browsing, since it has the banking of ICICI Bank

and Prudential of UK.

2) Qualified and well trained advisors.

3) Quick processing of application and claims (The earliest claim that was settled

was 5 working days which is a record)

4) ULIP Plan has given the best return because portfolio management is done by

one of the best investment management headed by Mr. Puneet Nanda

5) Training is conducted in every branch. Every branch has a trainer so that

advisors are updated on daily basis on products which helps them to converse and


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update the clients on the development or services required by them for the products

they have invested with.

6) They have received many awards in the past nine years for SERVICE &

CLAIMS SETTLED.

7) Many social service camps organized in rural areas for MEDICAL

TREATMENT & advised by top city medical practitioner free of cost.

8) Insurance branches spread all over India and abroad for client assistant.

9) NO. 1 COMPANY FOR OVER 7 YEARS IN PRIVATE INSURANCE sector.

10) Good working condition and wide telephone network which helps advisors to

work under good ethics and hence convert more policies which is not available

with the competitors

11) clients get very good front desk service since ICICI Prudential is customer

oriented and clients do not have to travel great distance to get services.

12) Toll Free call centre numbers so that the policies are transparent and client can

get any information regarding their policies.

CONCLUSION

The financial markets have continued to witness unprecedented

liberalization,

growth and reforms over the last decade prompted by regulatory

compulsions and a rapid integration between domestic and global markets.

And as a result, one has seen substantial growth in the number of financial

firms (insurance companies, mutual funds, brokerages, banks etc.) and in thenumber and variety of financial products and services offered by them.

As the need of the people is changing so is changing the investment

habits of the people and this has brought in a spate of new products and

schemes where people can invest.


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The concept of insurance as an investment option has arrived where

people first identify the varying needs of money then converts the needs into

specific amount of money and time required to achieve the objective of

investments plans.

The objective of insurance as an investment is to ensure that investments aredriven by pre determined and well thought out investment plan and that the

investments are suitable and adequate to meet these plans. But for this the

planner must understand the universe of investments options. He/she must

be well informed on the risk and return attributes of these options.

In addition to the above, companies should also innovate to come up with

better

products that would suit the Indian population and should also try to market

and sell their products through new channels of distribution that can beeffective in selling their products to the masses.

People should identify their needs and then decide on the type of policy they

want to invest in.

Insurance is a good investment option for those people who do not know

where to invest and who do not want to the risk of capital erosion.

BIBLIOGRAPHY:

www.google.com www.iciciprulife.com

Questionnaire
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