Insurance 1

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Uploaded for projectsparadise.com
Project Report On
RELIANCE LIFE INSURANCE
COMPANY
LIMITED
SUBMMITED FOR
Partial fulfillment of the requirements of two years full time
Master of Business Management (MBA)
Projects, Thesis, Dissertation – projectsparadise.com 2
CONTENTS
Preface--------------------------------------------------- (3)
Certificate------------------------------------------------ (4)
Acknowledgement-------------------------------------- (5)
Executive Summary------------------------------------- (6)
Index----------------------------------------------------- (7)
EXECUTIVE SUMMARY
Anil Dhirubhai Ambani Group (ADAG) announces the
acquisition of 100
percent shareholding in AMP Sanmar Life Insurance
Company Limited.
Reliance Life Insurance Company Limited is officially
launched on
February 1, 2006. This was after obtaining the required
regulatiry approvals
from the Registrar of Companies and the Insurance
Regulatory and
Development Authority. Reliance Life Insurance is the part of
the Reliance
Capital.
Reliance Life Insurance has plenty of plans on the anvil. It
has also 118
branches, with strong presence in South and a bouquet of
products catering
savings protection and investment need of individuals and
corporate. The
head-office of it is at Chennai.
The company has already added 600 employees in addition
to the 1000 plus
staff of the erstwhile AMP Sanmar Life Insurance Company
Limited.
Reliance Life Insurance aims to be the consumer’s preferred
life insurer by
understanding and meeting his needs.
Think Bigger, Think Better!
INDEX
CHAPTER
NO.
SUBJECT PAGE
NO.
1 INSURANCE INDUSTRY
1.1 Meaning of Insurance
1.2 Importance of Insurance
1.3 Difference between Insurance and Assurance
1.4 Principles of Insurance
1.5 History of Insurance
1.6 Time line in Insurance history
1.7 Meaning of Life Insurance
1.8 History of Life Insurance
1.9 Key features of Life Insurance
1.10 Benefits of Life Insurance
1.11 Role of Life Insurance in the growth of economy
10
11
12
13
15
17
19
20
24
27
28
2 INTRODUCTION TO THE COMPANY
2.1 About Reliance Life Insurance
2.2 History
2.3 Journey so far
2.4 Role of IT at Reliance Life Insurance
2.5 Mission
2.6 Core Values
2.7 Future Plans
2.8 Head – Office
2.9 Branches
30
32
32
33
36
36
37
37
38
3 PRODUCT MIX
3.1 Traditional Plans
3.2 Unit linked Plans
40
48
4 HUMAN RESOURCE MANAGEMENT
4.1 Recruitment
4.2 Selection
4.3 Training and Development
4.4 Career Development
4.5 Communication
4.6 Incentives
4.7 Services
4.8 Performance Appraisal
4.9 Organizational form and Structure
4.10 Department
53
53
56
56
57
59
59
60
61
61
5 MARKETING DEPARTMENT
5.1 Distribution Channel
5.2 Promotional Programmes and Target segment
5.3 Comparative Study
63
66
71
6 RESEARCH METHODOLOGY
6.1 Objective of the study
6.2 Questionnaire
6.3 Sampling Method and Sampling Size
6.4 Limitations
6.5 Analysis of Questionnaire
6.6 SWOT Analysis
79
79
80
82
83
96
7 FINANCE DEPARTMENT 99
8 CONLUSION 106
9 BIBLIOGRAPHY AND REFRENCES 108
10 APPENDIX 110
CHAPTER-1
INSURANCE INDUSTRY
1.1MEANING OF INSURANCE
Insurance may be described as a social device to reduce or
eliminate risk of
loss to life and property. Insurance is a collective bearing of
risk. Insurance
is a financial device to spread the risks and losses of few
people among a
large number of people, as people prefer small fixed liability
instead of big
uncertain and changing liability.
Insurance can be defined as a “legal contract between two
parties whereby
one party called insurer undertakes to pay a fixed amount of
money on the
happening of a particular event, which may be certain or
uncertain.” The
other party called insured pays in exchange a fixed sum
known as premium.
Insurance is desired to safeguard oneself and one’s family
against possible
losses on account of risks and perils. It provides financial
compensation for
the losses suffered due to the happening of any unforeseen
events.
1.2 IMPORTANCE OF INSURANCE
Insurance constitutes one of the major segments of the
financial market.
Insurance services play predominant role in the process of
financial
intermediary. Today insurance industry is one of the most
growing sectors in
India. There is lot of potential in the Indian Insurance
Industry.
There are many issues, which require study. The scope of
the study of
insurance industry of India would be very great as there are
ongoing
developments in the industry after the opening of the sector.
The major issue right now is the hike in FDI (Foreign Direct
Investment)
limit from 26% to 49% in the insurance sector. Government
may in near
future allow 49% FDI in Insurance. This would lead to more
capital inflow
by foreign partners.
Another major issue is the effects on LIC after the entry of
private players in
the market. Though market share of LIC has been affected, it
has improved
in terms of efficiency.
There are number of other hot topics like penetration of
Health Insurance,
Rural marketing of insurance, new distribution channels, new
product
ranges, insurance brokers’ regulation, incentive scheme of
development
officers of LIC etc. So it offers lot of scope for studying the
insurance
industry.
Right now the insurance industry has great opportunities in a
country like
India or China which huge population. Also the penetration of
insurance in
India is very low in both life and non-life segment so there is
lot potential to
be tapped.
Before starting the discussion on insurance industry and
related issues, we
have to start with the basics of insurance. So first we
understand what is
insurance? How the word ‘insurance’ is different from the word
‘assurance’? etc.
1.3 DIFFERENCE BEETWEN INSURANCE
AND ASSURANCE
Assurance is older in history and it was used to describe all
types of
insurances. From 1826, the term assurance came to be used
only for the risks
covered by life insurance and the term insurance was
exclusively used to
denote the risks covered by marine, fire, etc.
The word assurance indicated certainty. In life insurance,
there is an
assurance from the insurance company to make payment
under the policy
either on the maturity or at earlier death. On the other hand
the word
insurance was used to denote indemnity type of insurances
where the
insurance company was liable to pay only in case of the loss
damage the
property.
The insured event was bound to happen sooner or later
under assurance but
the event insured against may or may not happen under
insurance.
The principle of “indemnity” applies to “insurance
contracts”(non-life) only.
The scope of the word, insurance is wider.
1.4 PRINCIPLES OF INSURANCE
An insurance contract is based on some basic principles of
insurance.
(1) Principle of “Uberrima Fides” or Principle of utmost good
faith
It means “maximum truth”. Both the parties should disclose
all
material information regarding the subject matter of
insurance.
(2) Principle of indemnity
This means that if the insured suffers a loss against which
the policy has
been made, he shall be fully indemnified only to the extent
of loss. In
other words, the insured is not entitled to make a profit on
his loss.
(3) Principle of subrogation
This means the insurer has the right to stand in the place of
the insured
after settlement of claims in so far as the insured’s right of
recovery from
an alternative source is involved. The insurer before the
settlement of the
claim may exercise the right. In other words, the insurer is
entitled to
recover from a negligent third party any loss payments
made to the
insured. The purposes of subrogation are to hold the
negligent person
responsible for the loss and prevent the insured from
collecting twice for
the same loss. The concept of ‘Third Party Claims’ is based
on the same
principle.
(4) Principle of causa proxima
The cause of loss must be direct and an insured one in order
to claim of
compensation.
(5) Principle of insurable interest
The assured must have insurance interest in the life or
property insured.
Insurable interest is that interest which considerably alters
the position of
the assured in the event of loss taking place and if the event
does not take
placed, he remains in the same old position.
1.5 HISTORY OF INSURANCE
The concept of insurance is believed to have emerged
almost 4500 years ago
in the ancient land of Babylonia where traders used to bear
risk of the
carvan by giving loans, which were later repaid with interest
when the goods
arrived safely.
The concept of insurance as we know today took shape in
1688 at a place
called Lloyd’s Coffee House in London where risk bearers
used to meet to
transact business. This coffee house became so popular that
Lloyd’s became
the one of the first modern insurance companies by the end
of the eighteenth
century.
Marine insurance companies came into existence by the end
of the
eighteenth century. These companies were empowered to
write fire and life
insurance as well as marine. The Great Fire of London in
1966 caused huge
loss of property and life. With a view to providing fire
insurance facilities,
Dr. Nicholas Barbon set up in 1967 the first fire insurance
company known
as the Fire office.
The early history of insurance in India can be traced back to
the Vedas. The
Sanskrit term ‘Yogakshema’ (meaning well being), the name of
Life
Insurance Corporation of India’s corporate headquarters, is
found in the Rig
Veda. The Aryans practiced some form of ‘community
insurance’ around
1000 BC.
Life insurance in its modern form came to India from England
in 1818. The
Oriental Life Insurance Company was the first insurance
company to be set
up in India to help the widows of European community. The
insurance
companies, which came into existence between 1818 and
1869, treated
Indian lives as subnormal and charged an extra premium of
15 to 20 per
cent. The first Indian insurance company, the Bombay
Mutual Life
Assurance Society, came into existence in 1870 to cover
Indian lives at
normal rates.
The Insurance Act, 1938, the first comprehensive legislation
governing both
life and non-life branches of insurance were enacted to
provide strict state
control over insurance business. This amended insurance Act
looked into
investments, expenditure and management of these
companies.
By the mid- 1950s there were 154 Indian insurers, 16 foreign
insurers, and
75 provident societies carrying on life insurance business in
India. Insurance
business flourished and so did scams, irregularities and
dubious investment
practices by scores of companies. As a result the
government decided to
nationalize the life assurance business in India. The Life
Insurance
Corporation of India (LIC) was set up in 1956. The
nationalization of life
insurance was followed by general insurance in 1972.
1.6 TIME LINE IN INSURANCE HISTORY
(MAJOR LANDMARKS)
� 1818 British introduced the life insurance to India with the
establishment of the Oriental Life Insurance Company
. in Calcutta.
� 1850 Non life insurance started with Triton Insurance
Company.
� 1870 Bombay Mutual Life Assurance Society is the first
India
owned life insurer.
� 1912 The Indian Life Assurance Company Act enacted to
regulate the life insurance business.
� 1938 The Insurance Act was enacted.
� 1956 Nationalization took place. Government took over 245
Indian and foreign insurers and provident societies.
� 1972 Non-life business nationalized, General Insurance
Corporation (GIC) came into being.
� 1993 Malhotra committee was constituted under the
chairmanship of former RBI chief R. N. Malhotra to
draw a blue print for insurance sector reforms.
� 1994 Malhotra committee recommended reentry of private
players.
� 1997 IRDA (Insurance Regulatory and Development
Authority) was set up as a regulator of the insurance
market in India.
� 2000 IRDA started giving license to private insurers. ICICI
Prudential, HDFC were first private players to sell
insurance Policies.
� 2001 Royal Sundaram was the first non-life private player
to
sell an insurance policy.
� 2002 Bank allowed to sell insurance plans as TPAs enter
the
scene, insurers start setting non-life claims in the
cashless mode.
1.7 MEANING OF LIFE INSURANCE
There are three parties in a life insurance transaction: the
insurer, the
insured, and the owner of the policy (policyholder), although
the owner and
the insured are often the same person.
Another important person involved in a life insurance policy
is the
beneficiary. The beneficiary is the person or persons who will
receive the
policy proceeds upon the death of the insured.
Life insurance may be divided into two basic classes – term
and permanent.
• Term life insurance provides for life insurance coverage for
a
specified term of years for a specified premium. The policy
does not
accumulate cash value.
• Permanent life insurance is life insurance that remains in
force until
the policy matures, unless the owner fails to pay the
premium when
due.
• Whole life insurance provides for a level premium, and a
cash value
table included in the policy guaranteed by the company. The
primary
advantages of whole life are guaranteed death benefits,
guaranteed
cash values, fixed and known annual premiums, and
mortality and
expense charges will not reduce the cash value shown in the
policy.
• Universal life insurance (UL) is a relatively new insurance
product
intended to provide permanent insurance coverage with
greater
flexibility in premium payment and the potential for a higher
internal
rate of return. A universal life policy includes a cash account.
Premiums increase the cash account.
If you want insurance protection only, and not a savings and
investment
product, buy a term life insurance policy.
If you want to buy a whole life, universal life, or other cash
value policy,
plan to hold it for at least 15 years.
Canceling these policies after only a few years can more
than double your
life insurance costs. Check the National Association of
Insurance
Commissioners website (www.naic.org/cis) or your local
library for
information on the financial soundness of insurance
companies.
1.8 HISTORY OF LIFE INSURANCE
Risk protection has been a primary goal of humans and
institutions
throughout history. Protecting against risk is what insurance
is all about.
Over 5000 years ago, in China, insurance was seen as a
preventative
measure against piracy on the sea. Piracy, in fact, was so
prevalent, that as a
way of spreading the risk, a number of ships would carry a
portion of
another ship's cargo so that if one ship was captured, the
entire shipment
would not be lost.
In another part of the world, nearly 4,500 years ago, in the
ancient land of
Babylonia, traders used to bear risk of the caravan trade by
giving loans that
had to be later repaid with interest when the goods arrived
safely. In 2100
BC, the Code of Hammurabi granted legal status to the
practice. It
formalized concepts of “bottomry” referring to vessel
bottoms and
“respondentia” referring to cargo. These provided the
underpinning for
marine insurance contracts. Such contracts contained three
elements: a loan
on the vessel, cargo, or freight; an interest rate; and a
surcharge to cover the
possibility of loss. In effect, ship owners were the insured
and lenders were
the underwriters.
Life insurance came about a little later in ancient Rome,
where burial clubs
were formed to cover the funeral expenses of its members,
as well as help
survivors monetarily. With Rome's fall, around 450 A.D.,
most of the
concepts of insurance were abandoned, but aspects of it did
continue through
the Middle Ages, particularly with merchant and artisan
guilds. These
provided forms of member insurance covering risks like fire,
flood, theft,
disability, death, and even imprisonment.
During the feudal period, early forms of insurance ebbed
with the decline
of travel and long-distance trade. But during the 14th to 16th
centuries,
transportation, commerce, and insurance would again
reemerge.
Insurance in India can be traced back to the Vedas. For
instance,
yogakshema, the name of Life Insurance Corporation of
India's corporate
headquarters, is derived from the Rig Veda. The term
suggests that a form of
"community insurance" was prevalent around 1000 BC and
practiced by the
Aryans.
And similar to ancient Rome, burial societies were formed in
the Buddhist
period to help families build houses, and to protect widows
and children.
� Modern Insurance
Illegal almost everywhere else in Europe, life insurance in
England was
vigorously promoted in the three decades following the
Glorious Revolution
of 1688. The type of insurance we see today owes it's roots
to 17th century
England. Lloyd's of London, or as they were known then,
Lloyd's Coffee
House, was the location where merchants, ship owners and
underwriters met
to discuss and transact business deals.
While serving as a means of risk-avoidance, life insurance
also appealed
strongly to the gambling instincts of England's burgeoning
middle class.
Gambling was so rampant, in fact, that when newspapers
published names of
prominent people who were seriously ill, bets were placed at
Lloyd’s on
their anticipated dates of death. Reacting against such
practices, 79 merchant
underwriters broke away in 1769 and two years later formed
a “New Lloyd’s
Coffee House” that became known as the “real Lloyd’s.”
Making wagers on
people's deaths ceased in 1774 when parliament forbade the
practice.
� Insurance moves to America
The U.S. insurance industry was built on the British model.
The year 1735
saw the birth of the first insurance company in the American
colonies in
Charleston, SC. The Presbyterian Synod of Philadelphia in
1759, sponsored
the first life insurance corporation in America for the benefit
of ministers
and their dependents. And the first life insurance policy for
the general
public in the United States was issued, in Philadelphia, on
May 22, 1761.
But it wasn't until 80 years later (after 1840), that life
insurance really took
off in a big way. The key to its success was reducing the
opposition from
religious groups.
In 1835, the infamous New York fire drew people's attention
to the need to
provide for sudden and large losses. Two years later,
Massachusetts became
the first state to require companies by law to maintain such
reserves. The
great Chicago fire of 1871 further emphasized how fires can
cause huge
losses in densely populated modern cities. The practice of
reinsurance,
wherein the risks are spread among several companies, was
devised
specifically for such situations.
With the creation of the automobile, public liability
insurance, which first
made its appearance in the 1880s, gained importance and
acceptance?
More advancement was made to insurance during the
process of
industrialization. In 1897, the British government passed the
Workmen's
Compensation Act, which made it mandatory for a company
to insure its
employees against industrial accidents.
During the 19th century, many societies were founded to
insure the life and
health of their members, while fraternal orders provided low-
cost, membersonly
insurance. Even today, such fraternal orders continue to
provide
insurance coverage to members, as do most labor
organizations. Many
employers sponsor group insurance policies for their
employees, providing
not just life insurance, but sickness and accident benefits
and old-age
pensions. Employees contribute a certain percentage of the
premium for
these policies.
� Final Thoughts
Even though the American insurance industry was greatly
influenced by
Britain, the US market developed somewhat differently from
that of the
United Kingdom. Contributing to that was America's size;
land diversity
and the overwhelming desire to be independent. As America
moved from a
colonial outpost to an independent force, from a farming
country to an
industrial nation, the insurance business developed from a
small number of
companies to a large industry.
Insurance became more sophisticated, offering new types of
coverage and
diversified services for an increasingly complex country.
1.9 KEY FEATURES OF LIFE INSURANCE
1) Nomination: -
When one makes a nomination, as the policyholder you
continue to be the
owner of the policy and the nominee does not have any right
under the
policy so long as you are alive. The nominee has only the
right to receive the
policy monies in case of your death within the term of the
policy.
2) Assignment: -
If your intention is that your policy monies should go only to
a particular
person, you need to assign the policy in favor of that person.
3) Death Benefit: -
The primary feature of a life insurance policy is the death
benefit it provides.
Permanent policies provide a death benefit that is
guaranteed for the life of
the insured, provided the premiums have been paid and the
policy has not
been surrendered.
4) Cash Value: -
The cash value of a permanent life insurance policy is
accumulated
throughout the life of the policy. It equals the amount a
policy owner would
receive, after any applicable surrender charges, if the policy
were
surrendered before the insured's death.
5) Dividends: -
Many life insurance companies issue life insurance policies
that entitle the
policy owner to share in the company's divisible surplus.
6) Paid-Up Additions: -
Dividends paid to a policy owner of a participating policy can
be used in
numerous ways, one of which is toward the purchase of
additional coverage,
called paid-up additions.
7) Policy Loans: -
Some life insurance policies allow a policy owner to apply for
a loan against
the value of their policy. Either a fixed or variable rate of
interest is charged.
This feature allows the policy owner an easily accessible loan
in times of
need or opportunity.
8) Conversion from Term to Permanent: -
When in need of temporary protection, individuals often
purchase term life
insurance. If one owns a term policy, sometimes a provision
is available that
will allow her to convert her policy to a permanent one
without providing
additional proof of insurability.
9) Disability Waiver of Premium
Waiver of Premium is an option or benefit that can be
attached to a life
insurance policy at an additional cost. It guarantees that
coverage will stay in
force and continue to grow
1.10 BENEFITS OF LIFE INSURANCE
1) Risk cover: -
Life Insurance contracts allow an individual to have a risk
cover against any
unfortunate event of the future.
2) Tax Deduction: -
Under section 80C of the Income Tax Act of 1961 one can
get tax deduction
on premiums up to one lakh rupees. Life Insurance policies
thus decrease the
total taxable income of an individual.
3) Loans: -
An individual can easily access loans from different financial
institutions by
pledging his insurance policies.
4) Retirement Planning: -
What had provided protection against the financial
consequences of
premature death may now be used to help them enjoy their
retirement years.
Moreover the cash value can be used as an additional
income in the old age.
5) Educational Needs: -
Similar to retirement planning the cash values that flow from
ones life
insurance schemes can be utilized for educational needs of
the insurer or his
children.
1.11 ROLE OF LIFE INSURANCE IN THE
GROWTH OF THE ECONOMY
The Life Insurance Industry has an enviable track record
among public
sector units. It has a Consistent profit and dividend paying
record
accompanied by a steady growth in its financial resources.
Through
investments in the Government sector and socially- oriented
sectors the
Industry has contributed immensely to the nation's
development. The
industry is recognized as one of the largest financial
Institutions in the
country. The ventures initiated by the industry in the areas
of Mutual Fund,
Housing Finance has done exceedingly well in recent years.
To protect the
country's foreign exchange reserves, the reinsurance
arrangement are so
organized that maximum retention is made possible within
the country while
at the same time protecting interests of the policy holders.
CHAPTER-2
INTRODUCTION TO THE COMPANY
2.1 ABOUT RELIANCE LIFE INSURANCE
Reliance Life Insurance Company Limited is a part of
Reliance Capital Ltd.
of the Reliance - Anil Dhirubhai Ambani Group. Reliance
Capital is one of
India’s leading private sector financial services companies,
and ranks among
the top 3 private sector financial services and banking
companies, in terms
of net worth. Reliance Capital has interests in asset
management and mutual
funds, stock broking, life and general insurance, proprietary
investments,
private equity and other activities in financial services.
Reliance Capital Limited (RCL) is a Non-Banking Financial
Company
(NBFC) registered with the Reserve Bank of India under
section 45-IA of
the Reserve Bank of India Act, 1934.
Reliance Capital sees immense potential in the rapidly
growing financial
services sector in India and aims to become a dominant
player in this
industry and offer fully integrated financial services.
Reliance Life Insurance is another steps forward for Reliance
Capital
Limited to offer need based Life Insurance solutions to
individuals and
Corporate.
2.2 HISTORY
Reliance Capital Limited announced the launch of its life
insurance business
on February 1, 2006. This was after obtaining the required
regulatory
approvals from the Registrar Of Companies and the
Insurance Regulatory
and Development Authority.
It was in August 2005 that the ball was set rolling when
Reliance Capital
Limited, the financial arm of Reliance – Anil Dhirubhai
Ambani Group
(ADAG) – announced the requisition of 100% shareholding in
AMP Sanmar
Life Insurance Company Limited; and the formal transfer of
shares took
place in October 2005. The company will issue all policy
contracts under the
Reliance Life Insurance Company limited name. All the
existing policy
contracts also stand transferred to the Reliance Life
Insurance entity with all
the original contractual terms and commitments intact.
2.3 JOURNEY SO FAR…
� 2005
August: Anil Dhirubhai Ambani Group (ADAG) announces the
acquisition of 100 percent shareholding in AMP Sanmar Life
Insurance
Co Ltd.
� 2006
January 17: Mr. Nandgopal participates in a one-day
conference on
‘Optimising growth opportunities through Distribution Matrix:
‘Emerging Bancassurance’ organized by the Asia Insurance
Post at the
Taj President, Mumbai.
February 1: Rliance Life Insurance officially launched.
February 16, 17, 18: Strategy meet at the Reliance
Management
Institute. Amongst those who participate are the CEO, COO,
Functional
Heads, Regional Managers and Regional Sales Managers.
February 26: A Puja held at the Churchgate office situated in
Express
Building, 4th Floor, 14 ‘E’ Road, Mumbai.
March 1: Churchgate office inaugurated by Mr. Amitabh
Jhunjhunwala, Mr. Amitabh Chaturvedi and Mr. Nandgopal.
March 6: Shifting to the new premises at Churchgate
commences.
March 7: The new office at Chennai, at the Trapezium, First
Floor, #
39, Nelson Manickam Road, inaugurated by their CEO Mr.
Nandgopal,
Mr. KV Srinivasan and Mr. Sureshbabu also graced the
occasion.
2.4 ROLE OF IT AT RELIANCE LIFE
INSURANCE
1) World Class Data Centre: -
They plan to establish a Primary Data Centre at Navi Mumbai
(Dhirubhai Ambani Knowledge City) which will cater to their
company
needs across India, with fail-over capability to their Chennai
Data Centre
within the same business day in occurance if an incident or
Disaster
happens.
2) Inter Office Connectivity: -
All their Branch / Area and Regional offices will be
interconnected to their Data Centre with a 24x7 access to
Core
Applications like Lotus Mail, Life-Asia and Internet
Applications. This
will enable their associates to work faster and better with
high-speed
Internet connectivity and also ensure faster Turn Around
Time for their
customers.
3) Customer Care Centre: -
They will host a centralized Customer Care Centre at
Dhirubhai Ambani Knowledge City at Navi Mumbai, which
cater
services to internal and external queries and complications.
A customer
Relationship Management Tool (CRM) and Lead Management
System
(LMS) are in progress.
4) Web Portal: -
This portal will be an interface between both internal
employees
and their external users. Some of the functions included in
their portal are
Policy Tracking Systems, Corporate News, Quality Checking
System,
Under Writing Medical System, and Agent Management
System etc.
5) R World: -
Reliance Mobile R-World will provide online information
about
their Company, Products, and Policy Services to their
existing customers,
Agents/Advisors and Lead Generators.
6) SMS Alerts: -
SMS Alerts will be provided to their Sales Managers about
the
latest happenings like Contests and Campaigns, Employee
Alerts will
include Company News and Welcome/Birthday/Anniversary
message
etc. Customer Alerts will include
Welcome/Birthday/Anniversary
message, Policy Dispatch Details, Policy Servicing SMS like
Premium
Receipt and Renewal Premium reminders etc.
7) Life and Group Asia: -
Single Life and Group Life details will be captured and
managed
by Life and Group Asia. A common middleware between
these
applications will enable Group Life Customers to view their
individual
Single Life Insurance Plan details taken with Reliance Life
Insurance and
vice versa.
8) Advisor Lounge: -
It is a dedicated area for Reliance Life Insurance
Agents/Advisors in all the branches across India. This Lounge
will be
equipped with desktops and printers with Internet
connectivity, where
their Advisors can bring in the prospects and can have
discussions across
the table and they can create and print quotes. The
Agents/Advisors can
use this area to service their existing customers.
9) Document Management System: -
DMS will enable both policy issuance and contract servicing
through an automated workflow, which yields a faster Turn
around Time
to both internal and external users. This application will
enable them to
have a paperless office and thus mitigate the risk of losing
vital
records/papers.
10) Wireless Data Access: -
This will enable identified Top Sales Managers and Top
Advisors
to access real time data for both LMS and CRM on the fly
through Handheld
PDA device.
11) SAP – ERP Modules: -
SAP (Finance and HR Modules), will automate the Expense,
Travel and Leave Management Systems.
2.5 MISSION
The mission of Reliance Life Insurance Company Limited is to
be the best in
every sphere- business results, customer care and employee
focus. The aim
of the company is to Think Bigger and Think Better.
2.6 CORE VALUES
Reliance Life Insurance Company Limited has some core
values which are
listed as follows:
1) Result Oriented
2) Performance Driven
3) Customer Focused
4) Learning and Development Oriented
5) Employee Centric
6) Informal and Fun
2.7 FUTURE PLANS
� Forty-four new branches to be opened across the country
in the
coming months; and a pan India presence with 162 branches
in the
coming year.
� A state-of-the-art customer care centre will provide
continuous,
responsive services to the caller and promptly address
queries, collate
feedback and suggestions from the caller, who may be both
prospective and existing clientele and from channel partners
in
Chennai and Mumbai.
� It will be launching additional products aimed at providing
unparalleled service to its valued clientele.
2.8 HEAD – OFFICE
Reliance Life Insurance Company Limited,
The Trapezium,
39, First Floor,
Nelson Manickam Road,
Chennai – 600 029.
2.9 BRANCHES
They have so many branches and substations in the India.
They have around
160 branches in the India. And they have planned to open
more branches
across the country in the coming months.
CHAPTER – 3
PRODUCT MIX
3.1 TRADITIONAL PLAN:-
Life insurance products are designed to suit the
requirements
of customers. Fundamentally the product provide for:
� Risk cover
� Investment
� Health cover
In every product, to a certain degree, risk cover is imperative
for it to fall under the category of insurance. Based on the
coverage of the
product, the premiums are calculated and the customer pays
accordingly. In
order to suggest the right product, it is essential for an agent
to understand
the requirements of the customer well.
Reliance Life Insurance Company Limited has offered 9
traditional plans to the customers, which are listed as
follows:
1) Reliance Term Plan
2) Reliance Whole Life Plan
3) Reliance Child Plan
4) Reliance Endowment Plan
5) Reliance Special Endowment Plan
6) Reliance Cash Flow Plan
7) Reliance Credit Guardian Plan
8) Reliance Special Credit Guardian Plan
Each of the above traditional plans is discussed as follows:
1) Reliance Term plan: -
This insurance policy is designed for those who only want life
cover for the
protection of their family, and do not wish to save for
themselves. It can also
be useful to business firms that wish to provide financial
security to their
business against the sudden loss of partners or valuable
manpower. Since
there is no saving element or bonus provision, the premium
is very low.
Hence, this is a high-risk plan with a low premium.
� Features: -
a) Purely a term plan
b) Entry age minimum 18 years and maximum 65 year
c) Maximum premium paying term is 30 year
d) Loan facility N.A.
e) Maturity amount = Sum assured
2) Reliance Whole Life Plan: -
This insurance policy is designed for people who do not wish
to avail of any
benefits themselves but wish to create an immediate estate
to protect their
family by availing of insurance cover on their life at a very
low cost.
� Features: -
a) It is a whole life insurance policy with profits
b) Low cost life cover
c) Maturity age is 85 year or 99 years last birthday as chosen
d) Maturity amount = Sum assured + Vested bonus
e) Tax benefit is available
3) Reliance Child Plan: -
This insurance policy is designed for people who wish to save
money for a
future time when there will be a recurring need for
substantial amounts of
money. This is especially true when it comes to paying large
sums of money
for higher education as and when your son or daughter is
studying to become
an Engineer, a Doctor or specialize in some other field, or is
perhaps
planning to go abroad.
This money is payable in equal installments over the last 4
years of the
policy term.
� Features: -
I. Minimum entry age is 20 year and maximum 60 year
a) Minimum sum assured is Rs. 25,000.
b) Minimum premium paying term is 5 year and maximum
20 year
c) Tax benefit is available
d) Maturity amount = Four equal installment of sum insured
in last four year plus vested bonus in the last year
e) Loan facility is available
4) Reliance Endowment Plan: -
Reliance Life Insurance’s Reliance Endowment Plan is the
key to all your
financial needs. It is an inexpensive and easy way to protect
you, your
family or your business.
In a nutshell this plan will keep you financially prepared for
all the special
occasions in your life - your daughter’s wedding, your child’s
university
education or even a new office for your business - by
eliminating the burden
that a shortage of money creates.
In the event of your untimely death, Reliance Endowment
Plan will also
assist your loved ones through this difficult time by the
financial support that
it provides.
Reliance Endowment Plan also gives you the additional
benefit of
participating in the company’s profits, which you will receive
at the end of
the policy period.
� Features: -
a) Entry age minimum is 5 year and maximum 65 year
b) Maturity age minimum is 18 year and maximum 75 year
c) Minimum premium paying term is 5 year and maximum
35
year in case of regular and in case of single 15 year
d) Minimum sum assured is Rs. 25,000 or as determined by
the
minimum premium
e) Maximum sum assured is Rs. 5,00,000 (entry age below
18
years and no limit for entry age 18 and above)
f) Premium mode annual, half yearly, quarterly and monthly
(by salary deduction only)
g) Loan up to 90% of the surrender value of the policy
h) Maturity amount = Guaranteed sum assured +
Reversionary
bonus
5) Reliance Special Endowment Plan: -
This insurance policy is designed for people who wish to
combine savings
with extended security. The unique feature of this policy is
that life
protection continues for five years after you have stopped
the payment of
premium. Payment of sum assured at the end of premium
paying term and
extension of life cover thereafter for the full sum assured for
a period of 5
years, are characteristics of the policy.
This plan also participates in the profits.
� Features: -
a) Entry age minimum 12 year and maximum 65 year
b) Minimum sum assured is Rs. 25,000
c) Minimum premium paying term is 10 year and maximum
40
year
d) Unique feature of this policy is that five year life
protection
continues after you have stopped the payment of premium
e) Tax benefit is available
f) Under this policy bonus is compounded yearly
g) Loan facility is available
h) Maturity amount = Full sum assured before maturity date
+
Vested bonus at the time of maturity date
6) Reliance Cash Flow Plan: -
This insurance policy is designed for those who have a
recurring need for
reinvestment in business or look for short-term investment
channels. The
advantage of the policy is that they need not part with a
sizable amount of
money at any one time, but create, through regular premium
payments, a
periodic return of lump sums which become available for
reinvestment at
higher returns, while providing simultaneously, substantial
life cover.
Alternatively, it can be used to meet any immediate financial
crisis in the
family like your son's college admission, your daughter's
engagement, and
renovation of your home or perhaps, a holiday abroad.
The money is payable in installments. The first installment is
paid at the end
of the 4th year and thereafter at the end of every 3rd year.
� Features:-
a) Plan with profits
b) Minimum entry age is 15 year and maximum is 63 year
c) Maximum premium paying term is 34 year
d) Loan facility is not available
e) In case of death full sum assured + accrued bonuses up to
the date of death is payable immediately
f) In case of survival up to maturity date all premium paid
g) Rider accident death and critical illness
h) Mode of payment is available
7) Reliance Credit Guardian Plan: -
This insurance policy is designed for those who not only
safeguards
individuals but also families and businesses from the
financial hardship that
could arise from unfortunate and unexpected death.
� Features: -
a) Loan protection against home, home improvement, two
wheelers and four wheelers
b) In case of death remaining loan amount paid immediately
c) In case of survival no benefit is available
d) Premium payment option for single and regular is
available
e) Premium paying term is 2/3 of loan period and remaining
period paid by the company
8) Reliance Special Credit Guardian Plan: -
This insurance policy is designed for those who not only
safeguards
individuals but also families and businesses from the
financial hardship that
could arise from unfortunate and unexpected death,
disability or critical
illnesses.
� Features: -
a) Loan protection against home, home improvement, two
wheelers and four wheelers
b) In case of death remaining loan amount paid immediately
c) In case of survival no benefit is available
d) Premium payment option for regular and single is
available
e) Premium payment term is 2/3 of loan period and
remaining
period paid by the company
f) Maturity amount = All the premium paid amount
g) Tax benefit is available
3.2 UNIT LINKED PLAN
A unit-linked policy is a life assurance policy in which the
benefits
depend on the performance of a portfolio of shares.
Each premium paid by the insured person is split: a part is
used to
provide life assurance cover, while the balance (after the
deduction of costs,
expenses, etc.) is used to buy units in a unit trust.
In this way, a small investor can benefit from investment in a
managed
fund without making a large financial commitment. As they
are linked to the
value of shares, unit linked policies can go up or down in
value.
Policyholders can surrender the policy at any time and the
surrender value is
the selling price of the units purchased by the date of
cancellation 9less
expense). A small part of the contribution is used for
providing life cover
and the balance is invested in unit. Legal heirs are entitled to
the amount of
insurance cover and entitled units in case of death of the
insured.
Reliance Life Insurance Company Limited has also offered
the two
Unit Linked Plans, which are listed as follows:
1) Reliance Market Return Plan
2) Reliance Golden Years Plan
Amongst the above plans the Reliance Market Return Plan is
the
largest selling plan of the Reliance Life Insurance Company
Limited. The
above two ULIP plans are discussed as follows:
1) Reliance Market Return Plan: -
Reliance Market Return Fund is the unit-linked product that
helps you invest
in the financial markets in a combination of investment
instruments of your
choice. You can enjoy the returns from the markets without
the trouble of
monitoring and managing your own investment portfolio and
keeping track
of the market movements. At the same time your
investment premiums
provide you with insurance cover. Reliance Market Return
Fund unit-linked
insurance plan provides you with a basket of fund options
that balances your
return and risk exposure while providing life cover at the
same time.
� Features: -
a) Minimum entry age is 30 days and maximum entry age
is 65 year
b) Maximum policy term 40 year and minimum policy
term 5 year
c) Mode of premium as annual, quarterly, half yearly and
monthly Rs. 1000 (for salary deduction only) and Rs.
2500 (standing order/credit card)
d) Top up premium minimum Rs. 2500
e) Option of investment fund
i. Capital secure 100% fixed interest securities
ii. Balanced minimum 80% fixed interest securities
and maximum 20% in equity
iii. Equity 100% equity
iv. Growth minimum 60% fixed interest securities and
maximum 40% in equity
f) Loan facility is not available
g) One switches every year free and subsequent switches
charged 1% of the amount switched
h) Partial withdrawals per year under regular and single
premium options is 2 times
i) Lock in period till today is 3 year
j) Minimum unit account balance after each withdrawals
is Rs. 10,000
2) Reliance Golden Years Plan: -
Reliance Golden Years Plan….. The Reliance Life Insurance
‘no-worry stay
happy’retirementplan. Reliance Golden Years Plan is a
flexible package that
provides freedom of choice in choosing the type of
investment, life cover,
vesting options such as commuting and annuity options.
Contributions
provide Income tax savings as well.
Reliance Golden Years Plan, a flexible pension product is
available for all
individuals who are between the ages of 18 and 65.
� Features: -
a) Entry age minimum is 18 year and maximum 65 year
b) Minimum premium amount Rs. 10,000 and maximum
is unlimited
c) Mode of premium payment is available
d) Pension plan with risk cover and without risk cover
e) Choice of investment
i. Capital secure fund – 80% in equity and 20% in
government security
ii. Balanced fund – 80% in government and 20%
in equity
f) No loan facility is available
g) Tax benefit is available
h) Annuity options
i. Annuity payable for life
ii. Annuity payable for 5/10/15 years certain and
thereafter with life
iii. Annuity payable for life with return of capital
on death of the annuitant
CHAPTER – 4
HUMAN RESOURCE MANAGEMENT
4.1 RECRUITMENT
Recruitment is the process of finding and attracting capable
applicants for
employment. The process begins when new recruits are
sought and ends
when their applications are submitted. The result is a pool of
applicants from
which new employees are selected.
In this company the Sales Manager, who recruits the
advisors/agents for
selling the products of the company, does the recruitment.
The advisors
should have at least passed the S.S.C. examination. They
must pass the prerecruitment
examination, which is conducted by the Insurance Institute
of
India, Mumbai, or any other approved examination body.
After clearing the
examination the code will be provided to them and the
license will also be
given to them, the validity the license would be 3 years.
After all these
requirements, the person will become an insurance advisor
in the company.
4.2 SELECTION
Selection is the process of picking individuals (out of the pool
of job
applications) with requisite qualifications and competence to
fill job in the
organization. In simple words, it is the process of
differentiating between
applicants in order to identify these with a greater likelihood
of success in a
job.
The Branch Manager, which includes-, will conduct the
process of selection
of Sales Manager
1) Personal Interview: -
The first step of selection of Sales Manager in the
Reliance Life Insurance Company Limited is to conduct a
personal interview
of an applicant by the Branch Manager.
2) Project 40 Interview: -
After clearing the personal interview, the project 40
interview will be taken by the Branch Manager. In this step,
the applicant
should have to make a list of 40 and then start the business
with them.
3) Interview with Regional Head: -
After clearing the project 40 interview, the applicant
should be interviewed by the Regional Head, who will check
his/her
performance.
4) Negotiation: -
After clearing the interview with Regional Head, the
negotiation will be provided to the applicant.
5) Medical Examination: -
After that, the medical check up should e made to the
applicant.
6) Selection: -
After clearing all the above steps the applicant should be
appointed/selected as a Sales Manager in the company.
� Requirements of Sales Manager:-
The Sales Manager should possess the
following things-
1. They should be an M.B.A.
2. The age of them should be between 25 to 35 years.
3. They should have good communication skill.
4. They should have at least sales experience of 3 years.
5. They should have the capability to handle the team.
6. Their job profile includes recruitment, training, guiding,
motivating
and in turn getting business out of a team.
4.3 TRAINING AND DEVELOPMENT:-
Training and Development is any attempt to improve current
or future
employee performance by increasing an employee’s ability
to perform
through learning usually by changing the employee’s
attitude or increasing
his/her skills and knowledge. The need for training and
development is
determined by the employee’s performance deficiency,
computed as follows:
Training & Development = Standard Performance – Actual
Performance
They are providing 100 hours training to their advisors, who
are newly recruited. They are also providing the product
training to their
advisors and Sales Managers, who are newly recruited. The
100 hours
training is to be conducted at Net Bios Computer Academy
whereas the
product training is to be conducted at NIS SPARTA. The NIS
SPARTA
Institute has more than 150 batches and is trained over
3000 agents for most
of the private insurance companies. This institute is
approved by IDRA to
train agents/advisors.
4.4 CAREER DEVELOPMENT
They are also providing career development plans, which will
identify
potential and create avenues for growth.
4.5 COMMUNICATION
Communication is the process through which an individual
can exchange
their beliefs, things, information, and experience to others.
In simple words,
it is the process of exchanging the information from one
person to another.
They are providing an open environment, which enabling
free interaction
between all levels. The communication is provided in the
following manner:
BRANCH
BRANCH BRANCH
REGIONAL
CMO
REGIONAL
REGIONAL
CHANNEL
HEAD
CEO
� Explanations of the diagram:-
The communication is flow between Branch to Branch.
Within a branch, it flows between Branch Manager to Sales
Managers and
Sales Managers to Agents/Advisors, and then Branch Head to
Regional
Head, then different Regional Head to Regional Head, then
Regional Head
to Channel Head, then to Chief Marketing Officer (CMO), then
to Chief
Executive Officer (CEO).
4.6 INCENTIVES
Incentives are monetary benefits paid to workmen in
recognition of their
outstanding performance. They are providing an aggressive
reward and
recognition plans, which are including sales incentives.
4.7 SERVICES
They are offering following certain services to their
employees.
1) They are providing knowledge sharing and certification
practices.
2) They are planned team building and fun events.
3) They are creating Reliance Life Insurance family, which
includes
employees, associates and their families.
4) Reliance Life Insurance in a team building mode and is
looking for
performance driven, achievement oriented and challenge
loving
performance.
4.8 PERFORMANCE APPRAISAL
Performance appraisal is the systematic evaluation of the
individual with
respect to his/her performance on the job and his/her
potential for
development. Performance appraisal is a formal, structured
system of
measuring and evaluating an employee’s job related
behaviors and outcomes
to discover how and why the employee is presently
performing on the job
and how the employee can perform more effectively in the
future so that the
employee, organization and society all benefit.
They are providing a balanced scorecard approach for
strategy deployment
and performance measurement, which goals and measure
financial, customer
focused, process related and employee development related
initiatives. In
addition to this, the Branch Manager should measure the
performance of the
Sales Managers at every six months and the Sales Manager
should measure
the performance of the advisors/agents. If the performance
is best then
he/she will be prompted.
4.9 ORGANIZATION FORM AND
STRUCTURE
4.10 DEPARTMENT
They are providing following areas or departments:
1) Retail Sales
2) Under Writing
3) Actuarial
4) Insurance Operations
5) Customer Service
6) Quality and Processes
7) Human Resources
CEO
CMO
Channel Head
Regional Head
Branch Head
SalesC MEOanager
Advisors/Agents
Customers
8) Finance
CHAPTER – 5
MARKETING DEPARTMENT
5.1 DISTRIBUTION CHANNEL
Reliance Life Insurance Company Limited is using five types
of
distribution channel, which are as follows:
1) Agency: -
Independent insurance agents represent a number of
companies
and can research these companies’ products to find the right
combination
for their clients. Independent agents & insurance producer
groups are
growing in prevalence. Although producer groups are in their
infancy,
their emergence may potentially be realignment in the
distribution of
financial services. Independent shops realized that by
pooling production
and funding a central support office, they had increased
buying power.
The one type of distribution channel, which Reliance Life
Insurance Co. Ltd is using, is an agency. This channel works
as follows:
Branch
Managers
Advisors
Customers
2) Bank Assurance: -
While a lot of bank relationships with insurance companies
have been established, life insurance sales have been slower
than one
would expect he primary bank insurance activities have
been the
distribution of annuities, credit life, and direct marketing
insurance.
Banks are failing to incorporate successful sales tactics used
to sell other
financial services like investments.
Another type of distribution channel is bank assurance. This
channel is tie up with banks. In this channel the advisors
using or
targeting the bank customers to make a business with them
i.e., to sell the
policy of the company.
3) Corporate:-
To gain a better understanding of the demand amongst
independent advisors for trust services and to gain a better
feel for how
independent advisors handle trust services, a research was
performed
with independent advisors across several broker/dealers and
custodians.
The interviews revealed that demand is greatest for living
trusts among
independent advisors, followed by demand for corporate
trustee services.
Another type of distribution channel is corporate, which are
for employee benefits. This channel is tie up with corporate
or small
enterprises. Through these small enterprises, the advisors
will sell the
products/policy to customers of the small enterprises.
4) Rural Benefits:-
Brokerage firms have gained much of the institutional and
personal trust business lost by the banks. These firms have
steadily
captured assets, primarily at the expense of the banks. The
number of
non-bank trust companies has increased in recent years as
independent
trust companies have emerged and more broker/dealers are
integrated
services. Insurance companies view full-service brokers as a
potentially
new distribution channel as well.
Another type of distribution channel is rural benefits. This
channel works as a dealership. In this channel, the dealers
will sell the
policy to the target customers.
5) Web World:-
Direct sales of life insurance are growing rapidly, but many
of
the traditional full-serve players seem to be letting it go.
Across all
financial services, consumers are expressing a willingness to
deal with a
variety of providers on the web. Web sites are starting to
pop up offering
consumer insurance products especially designed for
distribution over the
web.
Another type of distribution channel is web world. This
channel
is tie up with customer database. In this channel, the
advisors will sell the
policy to the target customers, which are taken from the
customer
database, are listed in the website.
5.2 PROMOTIONAL PROGRAMMES &
TARGET SEGMENT
Promotional programmes and target segment are related to
each other.
The promotional programmes are made to motivate the
advisors/agents
and sales managers to do more business i.e., to sell the
more policies. The
Reliance Life Insurance Co. Ltd has made three promotional
schemes,
which are as follows:
1) Shubh – Arambh:-
This promotional scheme is detailed as follows:
SLAB (WRP) REWARD
ACHIEVERS
30,000 Reliance Life T-Shirt
50,000 Table Top Clock
75,000 Leather Bag
1,00,000 World Space Radio
1,50,000 L.G. Microwave- 19L
2,00,000 DVD/VCD/MP3 Player
3,00,000 Sony Music System
SUPER ACHIEVERS
5,00,000 LG Refrigerators GL-233
7,50,000 LG Air Conditioner 1T
10,00,000 Sony Digital Camcorder
15,00,000 Trip to Dubai 3D/4N
20,00,000 Hero Honda Splender
STAR ACHIEVERS
50,00,000 Maruti Alto Std.
75,00,000 Maruti Swift Lxi
1,00,00,000 GM Aveo 1.4LS
Login: 1st April to 31st May ‘06
Issuance till 15th June ‘06
2) R.A.R.E.:-
The full form of R.A.R.E. is Reliance Advisor’s Reward
Experience. This programs consists of
1. New Advisor Incentive Program
2. Board of Advisors
3. Annual Discovery Series
4. Advisor Career Progression
5. RARE Club – Loyalty Program
The above programs are described as follows
1. R.A.R.E. Program New Advisor Incentives:-
� Criteria
There will be two levels in the New Advisor Incentive
program
A. Launch Pad
B. Take Off
2. R.A.R.E. Program Board of Advisors:-
� Criteria
There will be two levels in the Board of Advisors program
A. Time Period
B. Parameters
3. R.A.R.E. Program Discovery Series:-
� Criteria
There will be six levels in the Discovery Series program
A. Qualification period
B. Business criteria
C. The qualification criteria will be the same for both the
Global
and the National Discovery Series
D. Qualification for the Global Discovery Series
E. Qualification for the National Discovery Series
F. The top 150 will bb calculated based on WRP (Weighted
Recd
Premium)
4. R.A.R.E. Program Advisor Career Progression:-
� Advisor Career Progression
A. Business Associate
B. Sales Manager
5. R.A.R.E. Privilege Club:-
� Levels
A. The RARE Club will have 6 different levels
B. The criteria for entry into each level will be based on
I. Business (WRP)
II. Persistency
III. Product Mix
C. The qualification period is
I. Logins from 1st Apr ’06 to 31st Mar ‘07
II. Issuances from 1st Apr ’06 to 15th Apr ‘07
� Qualification Criteria
Level WRP (Rs) Traditional
Products
Persistency
Topaz 1,50,000 60% 80%
Pearl 5,00,000 60% 80%
Sapphire 10,00,000 60% 80%
Emerald 15,00,000 50% 85%
Ruby 25,00,000 50% 85%
Diamond 50,00,000 50% 85%
3) Elite Club Scheme:-
In this scheme the advisor, who have login the regular
premium of Rs. 2, 00,000 will be eligible for the Elite Club
Membership.
5.3 COMPARATIVE STUDY
Presently there are 15 Life insurance companies in the
country.
There is only one public sector company LIC and the rest 14
are private
sector. Although LIC has been dominating the Life Insurance
business since
past few years the private players have now started to take
the momentum.
1) Major Market Players: -
� Birla Sun Life Insurance Company: -
Birla Sun Life Insurance Company is a 74:26 joint venture
between Birla group and Sun Life Financial. It is a private
sector company.
The company was registered on 31/1/2001. The market
share for FY 2005-
06 was 1.89%.
� HDFC – Standard: -
HDFC standard is a 74:26 joint venture between HDFC and
Standard Life. It is a private sector company. The company
was registered
on 23/10/2000. The market share for FY 2005-06 was 2.87%.
� ICICI Prudential Life Insurance: -
ICICI Prudential Life is a 74:26 joint venture between ICICI
and Prudential. It is a private sector company. The company
was registered
on 24/11/2000. The market share for FY 2005-06 was 7.35%.
� Life Insurance Corporation of India (LIC): -
Life Insurance Corporation of India is a 100% government
held
Public Sector Company. Being the first to be established LIC
is the
forerunner in the Life Insurance sector. The market share for
FY 2005-06
was 71.44%.
� Kotak Mahindra OLD Mutual: -
Kotak Mahindra OLD Mutual is a 74:26 joint venture between
Kotak Mahindra bank and Old Mutual. It is a private sector
company. The
company was registered on 10/1/2001. The market share for
FY 2005-06
was 1.11%.
� Max New York Life: -
Max New York Life is a 74:26 joint venture between J & Bank,
Pallonji & Co and MetLife. It is a private sector company. The
company was
registered on 6/8/2001. The market share for FY 2005-06
was 1.23%.
� Aviva Life Insurance India: -
Aviva Life insurance is a 74:26 joint venture between Aviva
and
Dabur. It is a private sector company. The company was
registered on
14/5/2002. The market share for FY 2005-06 was 1.14%.
� ING Vysya Life insurance: -
ING Vysya Life Insurance is joint venture between Exide
(50%), Gujarat Cements (14.87%), Enam (9.13%) and ING
(26 %). It is a
private sector company. The company was registered on
2/8/2001. The
market share for FY 2005-06 is 0.79%.
� Met Life India: -
Met Life India is a 74:26 joint venture between 74:26 JV
between J & Bank, Pallonji & Co and MetLife. It is a private
sector
company. The company was registered on 6/8/2001. The
market share for
FY 2005-06 was 0.40%.
� Bajaj Allianz Life Insurance Co.: -
Bajaj Allianz Life Insurance Company is a 74: 26 Joint
venture between Bajaj Auto limited and Allianz AIG. The
company was
registered on 3/8/2001. The market share for FY 2005-06
was 7.56%.
� SBI Life Insurance Company Ltd: -
SBI Life Insurance Company is a 74: 26 Joint venture
between
SBI and Cardiff S.A. The company was registered on
31/3/2001.It is a
private sector company. The market share for FY 2005-06
was 2.31%.
� The TATA AIG Group: -
TATA AIG group is a 74:26 JV between Tata Group and AIG. It
belongs to the private sector. The company was registered
on 12/2/2001. The
market share for FY 2005-06 was 1.29%.
� Sahara India Life Insurance Company Ltd.: -
First Wholly Indian Owned Private Life Insurance Company.
The Company commenced operations from 30th October
2004. The market
share for FY 2005-06 was 0.06 %.
� Shriram life insurance company Ltd: -
Shriram Life is a recent entrant into the life insurance sector
It is a 74:26 joint venture between the Shriram group
through its Shriram
Financial Holdings and Sanlam Life Insurance Limited, South
Africa. The
company expects to start operations soon.
2) Market Share: -
Sr. No Insurer Market Share (%)
1 LIC 71.44
2 Bajaj Allianz 7.56
3 ICICI Prudential 7.35
4 HDFC Standard 2.87
5 SBI Life 2.31
6 Birla SunLife 1.89
7 Tata AIG 1.29
8 Max New York 1.23
9 Aviva 1.14
10 Kotak Mahindra OLD Mutual 1.11
11 ING Vysya 0.79
12 Reliance Life 0.54
13 MetLife 0.4
14 Sahara Life 0.06
15 Shriram Life 0.03
Now let’s depict the market share of these players on
diagram
Market Share(%)
1LIC
2 Bajaj A llianz
3 ICICI Prudential
4 HDFC Standard
5 SBI Life
6 Birla SunLife
7 Tata AIG
8 M ax New York
9 Aviva
10 Kotak M ahindra OLD
Mutual
11ING Vysya
12 Reliance Life
13 M etLife
14 Sahara Life
15 Shriram Life
Here we can see from the diagram that LIC is the market
leader and it
commands the major part of the total life insurance market.
Its market share
was approximately 98% before 2000 but after the entry of
private players it
has significantly decreased.
Among private players Bajaj Allianz stands first. It has the
market share of
approximately 7.56% in the total market and it constitutes
40% of the market
share among private players.
HDFC Standard comes third. SBI Life insurance Company
Limited comes
fourth. ICICI Prudential is also one of the fastest growing life
insurance
companies in India.
Rest of the players has market share below 2%.
3) Capital Fund: -
Capital Fund of Private Companies
( Rs in Crore )
ICICI Prudential 375
Max New York 250
HDFC Standard 218
Bajaj Allianz 200
Tata AIG 183
Birla Sun Life 180
AVIVA 155
OM Kotak 153
Reliance Life 126
SBI Life 125
Met Life 110
ING Vysya 110
CHAPTER – 6
RESEARCH METHODOLOGY
6.1 OBJECTIVES OF STUDY
1) To get some good market exposure by dealing with the
prospects
face to face.
2) To improve our ability to sell a financial product like life
insurance.
3) To know the perception of the consumer about life
insurance.
4) To get a deep knowledge of the financial product like
insurance.
5) To get some information about the market share of
Reliance Life
Insurance as compared to the giants like LIC and to know the
standing of the company in the market.
6.2 QUESTIONNAIRE
It is most common instrument whether administered in
person
by phone or online questionnaires are very flexible. The form
of each
question is also important. Closed end question include all
the possible
answers and subjects matters choices among them.
I have used open-end questions so that customers can write
answer in their own words.
I have also used closed-end questions, which provide
answers that are easier to interpret and tabulate. I have
taken care in the
wording and ordering of questions. I have used simple,
direct, unbiased
wording questions, which are arranged in a logical order. I
have asked
personal questions at last so that respondent does not
become defensive.
� Questionnaire of the customer
I have made questionnaire consisting seventeen questions to
get customer’s view about life insurance. I have asked
personal questions
at last so that they do not become defensive. I have tried to
know their
performance i.e. whether they want to invest, where thy
want to invest,
up to what amount and since when.
6.3 SAMPLING METHOD AND SAMPLE SIZE
� Introduction:-
Any organization whether big or small, private or public need
different types of information are to know its popularity. I
have gathered
secondary data and primary data and collected information
from the
combination of these two data.
� Secondary data: -
Secondary data consist of information that already exists
somewhere,
having been collected for another purpose. I have gathered
secondary data
from website of different operators, different magazines,
newspapers and
libraries.
� Primary data: -
I have taken great care while collecting primary data to
answer that it is
relevant, accurate, current and unbiased. I have taken a
sample of 50 people.
I have visited them personally to get data.
� Sample size: -
I have taken sample size of 50 respondents. Because the
population is too
large so it is difficult to survey.
6.4 LIMITATIONS
I am a human hang, so there is some limitation of the human
hangs which is reflected in this research.
The following are the limitation of this research study.
1) The sample size of 50 might not represent the perception
of whole
population, as the sample size is too small for total
population of
Ahmedabad city.
2) The opinion expressed by the respondents may be biased.
3) The attitude of the research might be biased.
4) One of the most influencing and most critical limitations is
that I
am not trained for the research study and this is my first
study. I
tried hard to come at conclusion, but there is lack of
expertise.
5) Another limitation is that there is lack of time. If I give
more time
then studies will be more effective.
There are some limitations of this study. But in spite of their
limitation I
worked with the enthusiasm. And I tried to give the best
results to the
research of this report.
6.5 ANALYSIS OF QUESTIONNAIRE
Here I have formed a questionnaire to study why people go
for life
insurance. What is people’s major motive behind investing in
life insurance?
Do they decide upon their own or they take guidance of an
agent? What is
their perception about Reliance Life Insurance Company
Limited?
� Questions:-
There are 7 questions in the questionnaire. Out of these 7
questions, 6
questions are close ended and one question is an open
ended one.
� Target Population:-
I had conducted this survey among 50 people, and the target
group was a
mix of people from the society. I asked the questions to
Doctors,
Professionals, Professors, Advocates, Engineers, and general
public.
� Analysis:-
I have used pie charts, and some other statistical measures
to analyze the
questions.
Q.1 What is your main motive behind investing in life insurance?
(a) Tax Benefit
(b) Savings
(c) Risk Cover
(d) Return/Yield
There could be any motive of
people behind investing in a
life insurance policy. The main
purpose of life insurance is the
Risk cover of one’s life. But some people consider different
advantages of a
life insurance policy. Some people consider Tax benefit as
the main
advantage of life insurance. Some believe that life insurance
is an
investment so they tend to invest in life insurance. While
some people
believe that it is a compulsory saving. Now let’s see what all
people say
TAX
SAVING
RISK
COVERAGE
RETURN/YIELD
MOTIVE NO.
TAX 20
SAVING 5
RISK COVERAGE 23
RETURN/YIELD 2
TOTAL 50
Here we can see that majority of the people tend to invest in
life insurance
for the risk coverage. The next preferred option is Tax
Saving. We founded
from the discussion with public and some experts that those
people with a
low income tend to invest in life insurance to gain tax
benefit.
Saving motive constitutes very small part of the total
sample. Return comes
last.
But this is the general conclusion of 50 people. If we take a
larger sample,
we can get a different result.
As the private players have launched ULIPs, more and more
people are
turning towards these products so the Investment motive
has been gaining
command. Also the number of those people who wish to
invest for return is
also increasing.
According to a life insurance expert (Vinod Thakkar ), life
insurance is for
protection first then for Savings and Tax benefits all those
things.
Q.2 Rank the above motives according to your preference
MOTIVE OF INVESTMENT
TAX BENEFIT SAVINGS RISK COVER RETURN/YIELD
Preference
1 21 3 24 1
2 19 11 16 4
3 8 25 7 10
4 2 11 3 35
05
10
15
20
25
30
35
40
Preference
1
2
3
4
TAX BENEFIT
SAVINGS
RISK COVER
RETURN/YIELD
We can see from the table and the graph that the number
one motive of
people about investing in life insurance is risk coverage,
which is the main
theme of life insurance followed by Tax benefit. The third
position is of
saving and fourth is Return. This shows that still people
consider other
financial tools more viable for return and life insurance is for
Tax benefit
and risk cover.
Q.3 How do you decide about investing in life insurance?
(a) On my own
(b) family decision
(c) Employer decides
(d) as per the guidance of agent
This is a very crucial question as most of the people are not
much familiar
about different life insurance plans offered by different life
insurance
companies so people take help of the life insurance agent
and as he guides
understanding the needs of the individual, people would
invest.
Here one hazardous factor is the moral hazard. People tend
to invest in life
insurance plans to maintain relations though they are not in
need of life
insurance.
Also sometimes it depends upon the convincing power of the
agent.
ON MY OWN
FAMILY
DECISION
EMPLOYER
DECIDES
AGENT
GUIDANCE
Here we can see that majority people (58%) decides on their
about investing
in life insurance. 28% persons decides as per the guidance of
the agent.
SOURCE NO.
ON MY OWN 29
FAMILY DECISION 7
EMPLOYER DECIDES 0
AGENT GUIDANCE 14
TOTAL 50
There is no contribution of employers in the decision of one’s
investment in
life insurance. 14% people invest in life insurance as per the
family decision.
Q.4. Which life insurance policy would you prefer to buy?
(a) Term Assurance
(b) Whole Life
(c) Endowment
(d) Combination of Whole Life and Endowment
(e) Unit Linked
This is another crucial question as there are number of
products offered by
life insurance companies. The products range from pure
Term Assurance
Plans to Unit Linked Insurance Plans, which are relatively
new entrant in the
market.
We have already explained all these policies ahead.
Now let’s find out what people have to say:
Type of policy N0.
Term Assurance 9
Whole Life 9
Endowment 7
Combined 19
ULIPs 6
TOTAL 50
Term
Assurance
Whole Life
Endowment
Combined
ULIPs
As it is evident from the chart and the table 38% people
prefer combination
of Whole Life and Endowment product. It gives people
double advantage.
The person would get some amount at the end of the
stipulated period; for
instance 20 years, and after that period the risk cover
continues and the rest
of the amount would be paid when the person dies.
Q.5 Would you prefer Reliance Life Insurance or LIC for buying the
life insurance policy?
(a) Reliance Life Insurance
(b) LIC
This is the most important question as it reflects the scope of
the study. It is
the main theme of this questionnaire.
Prior to 2000 LIC was the only player in the life insurance
market and it had
the total market. So people had to go to LIC for buying life
insurance policy.
But after the entry of private players in 2000, some people
have also turned
to private life insurers.
Reliance Life Insurance Company Limited is newly launched
company. So it
has fewer customers as compared to LIC. But the ULIP plans
are sold more
of Reliance life insurance as compared to LIC in today’s
environment.
Now let’s see what people say:
Reliance Life
Insurance
LIC
As evident from the chart that 30% of people would prefer
Reliance Life
Insurance while 70% would prefer LIC.
Particulars No.
Reliance Life Insurance 15
LIC 35
TOTAL 50
� Personal Details: -
1) Age
(a) 18 to 30
(b) 31 to 50
(c) 51 to 65
Age No.
18 to 30 5
31 to 50 30
51 to 65 15
TOTAL 50
18 to 30
31 to 50
51 to 65
As evident from the chart that I have taken a sample of 50.
Out of
which 10% people are aged between 18 to 30, 60% people
are aged between
31 to 50, and remaining 30% people are aged between 51 to
65.
2) Occupation
(a) Service
(b) Business
(c) Profession
(d) Housewife
(e) Retired
Occupation No.
Service 5
Business 15
Profession 10
Housewife 5
Retired 15
TOTAL 50
Service
Business
Profession
Housewife
Retired
As the evident from the chart that out of 50 respondents
10% are of service
men, 30% are of business men, 20% are of professions, 10%
are of
housewives and remaining 30% are of retired.
3) Income
(a) 50,000 to 1,00,000
(b) 1,00,000 to 5,00,000
(c) More than 5,00,000
50,000 to
1,00,000
1,00,000 to
5,00,000
More than
5,00,000
As the evident from the chart out of 50 respondents 20% are
earning
annually between 50,000 to 1,00,000, 50% are earning
between 1,00,000 to
5,00,000 and 30% are earning more than 5,00,000.
4) Family members
(a) 2
(b) 3
(c) 4
(d) More than 4
Income (Per Annum) No.
50,000 to 1,00,000 10
1,00,000 to 5,00,000 25
More than 5,00,000 15
TOTAL 50
Family Members No.
25
3 15
4 20
More than 4 10
TOTAL 50
2
3
4
More than 4
As the evident from the chart out of 50 respondents 10%
have 2 family
members, 30% have 3 family members, 40% have 4 family
members and
remaining 20% have more than 4 family members.
6.6 SWOT ANALYSIS
SWOT analysis is the analysis of the internal and external
factors, which
have impact on the survival of any organization. Now let’s
make SWOT
analysis for reliance Life Insurance Company Limited.
☻STRENGTHS:
1) Reliance Life Insurance Company Limited is the part of the
Reliance Capital.
2) The brand name is enough to sell the products easily.
3) Private placement of Rs. 10,000 crs worth of securities
with RBI
by the government. Led to an improvement in market
securities.
4) Strong liquidity from FII was the major reason for the up
move.
5) Range of products
6) Reliance has a long and strong history of solvency,
financial
stability.
▼WEAKNESSES:
1) Newly established company, so people seems it risky.
2) Lack of staff.
3) Lack of advertisement, so most of the customers are not
aware
of the Reliance Life Insurance.
☼ OPPORTUNITY:
1) There is a vast untapped market in India. The life
insurance
penetration in India is approximately 2.5%. So it has large
potential.
2) Intention of traditional products is to encourage long term,
regular and disciplined savings to systematically build up a
target fund.
3) The average insurance premium being collected by the
company has been growing exponentially year on year.
● THREATS:
1) The main threat is from the other players who have
grabbed
approximately 15% of the market share.
2) As the government has scrapped the rebate on the life
insurance
premium, the people who used to invest in life insurance for
the
sole motive of tax benefit may turn to other instruments.
CHAPTER – 7
FINANCE DEPARTMENT
� FUND PERFORMANCE:-
There are four fund options, which Reliance Life Insurance
Company Limited has offered, which are as follows:
1) Capital Secure Fund:-
This fund is for Reliance Golden Years Plan, and Reliance
Market Return Plan.
In line with the objective of protecting the capital against
any erosion, 61.4%
of the funds were invested in short-term Government
Securities (Gilts) and
to meet liquidity requirement higher about 40% of funds are
kept in short
term bank deposits. The net return credited to policyholders
and the asset
composition ratios are given in the boxes below.
Net Returns during last 1 month (Mar.’06) 0.36%
Net Returns during the last 3 months (Jan.-Mar.’06) 1.10%
Net Returns during the last 12 months (Apr.’05-Mar.’06)
4.09%
Net Returns since Inception in Feb’03 (Annualized) 3.89%
Bank Fixed Deposits
Asset Name % of total assets
Total Bank Deposit 38.60
Gilts
6.75% GOI 2006 6.75
11.68% GOI 2006 13.69
11.75% GOI 2006 40.96
Total Gilts 61.40
Total 100.00
� Asset Allocation:-
Gilts
Bank Deposits
2) Balanced Fund:-
Market
Return Plan.
To take advantage of the bullish trend in the equity market,
the
equity holdings in the fund was maintained as close as
possible to the
maximum of 20% allowed for the fund. Bank deposits were
maintained only
for the purpose of liquidity management. To reflect their
bearish view on the
debt market the duration of the fixed income portfolio was
kept low. Within
the fixed income portfolio, allocation to Gilts was higher than
corporate
bonds. All the bonds in the portfolio are top rated. The asset
composition,
the details of the portfolio and the net returns are disclosed
below.
13.83%
Asset Name % of Total Asset
Equity 20
Corporate Bonds & Debentures 22
Gilts 53
Bank Deposits 5
Total 100.00
Equity
Corporate Bonds
& Debentures
Gilts
Bank Deposits
3) Growth Fund:-
Market
Return Plan.
To take advantage of the bullish trend in the equity market,
the equity
holdings in the fund was maintained as close as possible to
the maximum of
20% allowed for the fund. To reflect their bearish view on the
debt market
the duration of the fixed income portfolio was kept low. All
the bonds in the
portfolio are top rated. The asset composition, the details of
the portfolio and
the net returns are disclosed below.
24.90%
Equity 9
Corporate Bonds & Debentures 40
Gilts 45
Bank Deposits 6
Total 100.00
Equity
Corporate Bonds
& Debentures
Gilts
Bank Deposits
4) Equity Fund:-
This fund is for Reliance Market Return Plan. In line with the
stated asset allocation pattern and their view of the market,
the entire corpus
of the fund was invested in equities. Net returns earned
since inception and
the full portfolio are disclosed below.
64.46%
Equity 98.93
Mutual Fund/Bank Deposits 1.07
Total 100.00
Equity
Mutual Fund/Bank
Deposits
CHAPTER – 8
CONCUSION
� After the deep study of insurance sector of India, I can tell
that this is
the sector, which has most business opportunities perhaps in
India.
� Insurance industry is one of the fastest sectors in India.
Insurance
sector has been growing by 25% to 30% and it is expected
to increase
by 50% in coming 5 years. After the opening up of the
insurance
sector, it has become much competitive and insurance
awareness
among people has increased.
� As far as the comparison of Reliance Life Insurance and
other players
is concerned, there are both positive as well as negative
impacts on
both the sides.
� For Reliance Life Insurance, the negative aspect is that its
market
share is low.
� For private players the negative aspect is that they have
to fight with
the public sector giant which is established player with a
high brand
value.
� But the positive impact is that the life insurance
awareness has
increased and the business of Reliance Life Insurance has
increased.
CHAPTER – 9
BIBLIOGRAPHY AND REFERENCES
� www.reliancelife.com
� www.indiainfoline.com
� www.bimaonline.com
� www.google.com
� Life Time Magazine of Reliance Life Insurance
� Net Bios Computer Academy’s Life Insurance Book
� Broachers of Reliance Life Insurance
CHAPTER – 10
ANNEXURE
� Questionnaire
Survey by student of R.K.C.B.M.
On
Life Insurance
NAME: ___________________________________________
Q.1 What is your main motive behind investing in life insurance?
(a) Tax Benefit
(b) Savings
(c) Risk Cover
(d) Return/Yield
Q.2 Rank the above motives according to your preference
MOTIVE OF INVESTMENT
TAX BENEFIT SAVINGS RISK COVER RETURN/YIELD
Preference
1234
Q.3 How do you decide about investing in life insurance?
(a) On my own
(b) family decision
(c) Employer decides
(d) as per the guidance of agent
Q.4. Which life insurance policy would you prefer to buy?
(a) Term Assurance
(b) Whole Life
(c) Endowment
(d) Combination of Whole Life and Endowment
(e) Unit Linked
Q.5 Would you prefer Reliance Life Insurance or LIC for buying the
life insurance policy?
(a) Reliance Life Insurance
(b) LIC
PERSONAL DETAILS
1) Age
(a) 18 to 30
(b) 31 to 50
(c) 51 to 65
2) Occupation
(a) Service
(b) Business
(c) Profession
(d) Housewife
(e) Retired
3) Income
(a) 50,000 to 1,00,000
(b) 1,00,000 to 5,00,000
(c) More than 5,00,000
4) Family members
(a) 2
(b) 3
(c) 4
(d) More than 4

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