Awareness of life insurance products in Indian market.

(With respect to HDFC SL) Carried out at

Submitted Towards the partial fulfillment of Bachelor Of Business Administration (CAM)

Submitted by: Arun Lohia 3rd SEM Roll No.: 0021211906 Batch: 2006-09 Submitted to: Mrs. Bhawana Sharma

DAV INSTITUTE OF MANAGEMENT FARIDABAD

ACKNOWLEDGEMENT
1

This project has been prepared as a part of an internship required during the completion of BBA (cam) program at DAVIM, FARIDABAD. I was involved with HDFC STANDARD LIFE INSURRANCE C.P BRANCH NEW DELHI, for a period of 1 months, and I came across a lot of people who put in their time and effort towards acclimatizing me to the workings of their organization. I express my thanks to my company guide Mr. MUKESH Kr SRIVASTAVA, who was there to introduce me to the idea of Insurance business and what goes behind it. Also under him guidance and leadership I was able to enhance my marketing as well as inter-personal skills. I would also like to thank him for him immense support and guidance in the selection of the project, its study and preparation of the report. I would also like to wish a special thanks to my Internal Project guide Mrs. Bhawana Sharma without her guidance this project would have been a distant dream. Last, but definitely not the least, I express my gratitude to the entire staff of HDFC Standard Life Insurance. These past 1 months were of utmost importance as they added value towards my path of knowledge. I would like to end this acknowledgement by thanking the customers, distributor people at large with whom I have interacted during the course of my training.

ARUN LOHIA

DECLARATION

The summer project on AWARENESS OF LIFE INSURANCE PRODUCTS IN INDIAN MARKET. (WITH RESPECT TO HDFC SL) In HDFC STANDARD LIFE INSURANCE Is the original work done by me. This is the property of the Institute and use of this report without prior permission of the Institute will be considered illegal and actionable.

DATE: PLACE: DELHI

ARUN LOHIA

Table of contents
3

Page no.
Chapter 1. Introduction: 1) Introduction to insurance 2) Insurance in India 3) Insurance sector reforms 4) IRDA 5) History of insurance Research methodology Company profile: 1) Introduction to HDFC 2) Introduction to Standard life 21 3) Introduction to HDFC standard life 4) Market outlook Product of HDFCSL: 1) Unit link young star Competitors: 1) Market Share 2) Impressive growth of HDFC SL 3) Swot analysis Data analysis 7 8 9 11 12 16 18 24 32 37

Chapter 2. Chapter 3.

Chapter 4.

Chapter 5.

47 50 53 55

Chapter 6.

Chapter 7.

Conclusion and suggestions Bibliography Annexure 1) Questionnaire Miscellaneous

66-68 69 70

Glossary

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INDEX OF FIGURES & TABLES Figures 5.1 The Insurance Life and Non-life accounted for merely 5.2 Premium collected in term of GDP 5.3 Growth of GDP 5.4 Premium in US $ in India in 2005 3.2 Rolling year performance 1.1 Market Share of different companies 1.2 Market share of private and public 1.3 Premium collected in year 2005 1.4 increase in market share of private players Tables 3.1 Returns 2.1 Financial result of HDFC SL 14 14 15 15 36 46 47 47 65 32 52

1). INTRODUCTION TO INSURANCE

Insurance is a system by which the losses suffered by few are spread many; exposed to similar risk. It is the protection against financial loss arising on happening of any unexpected event like; Flood Draught Earthquake
Insurance is essential for: The calamity is either natural or unexpected. The insured person does not gain out of this arrangement It covers both the financial and non financial risk

Benefits of Insurance: Safe guard oneself and ones family for future requirement. Peace of mind in case of financial loss Encourage saving Tax rebate Protection from the claim made by creditor security against personal loan, housing loan or other type of loan

Provide a protection covers to industries, agriculture, home and child.

2). INSURANCE IN INDIA

The Insurance sector in India has become a full circle from being an open Competitive market to Nationalization and back to a Liberalized market again. Tracing the developments in the Indian Insurance sector reveals the 360-degree turn witnessed over a period of almost two centuries. The business of life insurance in India in its existing from started in India in the year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta.

Some of the important milestones in the Life Insurance Business in India are: 1912- The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business. 1928- The Indian Insurance Companies Act enacted to enable the government to collect statically information about both life and non-life businesses 1938- Earlier legislation consolidated and amended by the Insurance act with the objective of protecting the interest of the insuring public. 1956- 245 Indians and foreign insurers and provident societies taken over by the central government and nationalized.

3). INSURANCE SECTOR REFORMS

In 1993, Malhotra committee, headed by the former Finance secretary and RBI Governor R.N Malhotra was formed to evaluate the Indian insurance industry and recommended its future direction. The Malhotra committee was set up with the objective of complementing the reforms initiated in the financial sector. The reforms were aimed at creating a more efficient and competitive financial system required for the requirements of the economy keeping in mind the structural changes currently underway and recognizing that the insurance is an important part of the over all financial system where it was necessary to address the need for similar reforms. In 1994, the committee submitted the report and some of the key recommendation included.

I) Structure:
Government stake in the insurance Companies to be brought down to 50% Government should take over the holdings of GIC and its subsidiaries so that these subsidiaries can act as independent corporations all the insurance companies should be given greater freedom to operate

ii) Competition
Private Companies with a minimum paid up capital of Rs.1bn should be allowed to enter the industry No Company should deal in both Life and General Insurance through a single entity foreign companies may be allowed to enter the industry in collaboration with the domestic companies Postal Life Insurance should be allowed to operate in the rural market only one State Level Life Insurance Company should be allowed to operate in each state

iii) Regulatory Body

The Insurance Act should be changed An Insurance Regulatory body should be set up Controller of Insurance (Currently a part from the Finance Ministry) should be made independent

iv) Investments
Mandatory Investments of LIC Life Fund in government securities to be reduced from 75% to 50% GIC and its subsidiaries are not to hold more than 5% in any company (There current holdings to be brought down to this level over a period of time)

v) Customer Service
LIC should pay interest on delays in payments beyond 30 days Insurance companies must be encouraged to set up unit linked pension plans Computerization of operations and updating of technology to be carried out in the insurance industry The committee emphasized that in order to improve the customer services and increase the coverage of the insurance industry should be opened up to competition. But at the same time, the committee felt the need to exercise caution as any failure on the part of new players could ruin the public confidence in the industry. Hence, it was decided to allow competition in a limited way by stipulating the minimum capital requirement of Rs.100 cr. The committee felt the need to provide greater autonomy to insurance companies in order to improve their performance and enable them to act as independent companies with economic motives. For this purpose, it had proposed setting up an independent regulatory body.

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4). THE INSURANCE REGULAROTY & DEVELOPMENT AUTHORITY (IRDA)

It is the regulatory body for insurance companies operating in India, formed by the act of parliament. It protects interest of policyholders, to regulate, promote and ensure orderly growth of the insurance industry. Reforms in the Insurance sector were initiated with the passage of the IRDA Bill in Parliament in December 1999. The IRDA since its incorporation as a statutory body in April 2000 has fastidiously stuck to its schedule of framing regulations and registering the private sector insurance companies. The other decisions taken simultaneously to provide the supporting systems to the insurance sector and in particular the life insurance companies were the launch of the IRDAs online service for issue and renewal of licenses to agents. The approval of institutions for imparting training to agents has also ensured that the insurance companies would have a trained workforce of insurance agents in place to sell their products, which are expected to be introduced by early next year. Since being set up as an independent statutory body the IRDA has put in a framework of globally compatible regulations. In the private sector 12 life insurance and 6 general insurance companies have been registered.

Objective of IRDA:
1) To make available long term funds for infrastructure 2) To introduce new and innovative products 3) To affect the improvement in the quality of service to the customers

Functions of IRDA:
1) To regulate the investment of funds by insurance companies 2) To adjudicate disputes between the insurance companies and the intermediaries 3) To supervise the tariff advisory committee.

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5). HISTORY OF INSURANCE (PAST AND PRESENT)

Insurance industry has always been a growth-oriented industry globally. On the Indian seen too, the insurance industry has always been a noticeable growth as comparing to other industry. Insurance has been divided into two types: General Insurance Life Insurance

GENERAL INSURANCE: Triton Insurance Company Ltd was the first General
Insurance Company to be established in India in 1850, whose share was mainly held by the British. The first General Insurance Company to be set up by India was Indian Mercantile Insurance Company Ltd which was established in 1907. There emerged many players in Indian scenario thereafter. The General Insurance was nationalized after the promulgation of General Insurance (Nationalization Act, 1972). The General Insurance Corporation of India (GIC) and its four subsidiaries undertook the post nationalization General Insurance business: 1. Oriented Insurance Company Ltd 2. New India Assurance Company Ltd 3. National Insurance Company Ltd 4. United India Insurance Company Ltd Towards the end of 2000, the relation ceased to exist and therefore companies at present operating as independent companies. There after private insurance came into the picture as the concept of insurance and population of India is growing and the present scenario is General \Insurance Company grew by 16% in 2005-2006 as the private insurance company continued there robust performance, while public there show.

12

Then LIFE INSURANCE CORPORATION was established on 01.09.1956 and

has become the sole corporation to write Life Insurance Business in India. It has the monopoly over fifty years starting from 1956, but covered only 26% of the Indian population in 2000. So, the Private players came into the market to cover rest of the Indian population as Indian population is in the growing mood. Then the Insurance industry saw a new sun when IRDA invited the application for the registration as insurers in august 2000, with the liberation and opening up the sector to private players; the industry has presented promising prospect for the coming future as the population of India is growing very fast. The transition has also resulted into introduction of ample opportunities for the professionals like MBA, Chatter account etc.

The Indian Industry is featured by the following attributes:

Not withstanding the rapid insurance penetration at 3.25% from 1.9% for the last three to four years. Ever growing middleclass income group composition in population Growth of consumer movement which is an increasing demand for better insurance product Inadequate application of information technology for business Adequate fillip from the government in the form of Tax incentives to be insured The industry formation need to keep vigil on these characteristics of the Indian market and formulate there strategies to entail maximum contribution to the output of the sector.

13

The Insurance Life and Non-life accounted for merely

Fig: 5.1

The term Insurance market Penetration broadly measures the contribution of the Indian industry in relation to a Nations entire economic productivity.

Fig. 5.2 The economic growth in the service sector is 54% as over all GDP growth was 8.4% during

2005-06, surpassing the 8.1% growth estimated by the Central Statistical Organization in the advance estimates the economy grew by 9.3%. 14

Fig: 5.3

The term Insurance destiny reflects the insurance purchasing power. The premium per capita in India is amounted:

Fig: 5.4

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RESEARCH METHODOLOGY
Research is defined as a scientific and systematic search for pertinent information on a specific topic. The function of a marketing research is to provide information, which assist marketer in recognizing and reacting to marketing opportunities and problems. In essence/ researchers mix managers to take the better decision. Research methodology is a way to systematically solve the research problem. It has many dimensions and methods, which constitute a part of research methodology. When we talk of research methodology we not only talk of research methods but also consider the logic behind these methods we use in the context of our research study. This we explain by using a particular method or technique. The knowledge of research methodology provides good training to new research worker and enables to do better research. The study of the research methodology gives the student the necessary training in gathering materials and arranging them, participation in the fieldwork and also training in the techniques for the collection of data to particular problems. Research methodology helps in the use of questionnaires and controlled experimentation and in recording evidence and interpreting it.

16

METHODOLOGY

APPROACH 1. Developing questionnaire to conduct a survey: A questionnaire was developed to gauge Awareness of various private insurance companies Types of plans sold in the market Purpose for buying insurance policies Awareness of life insurance & its products with emergence of private players in the market.

2. The primary data was collected by using structured questionnaire. . Getting questionnaire filled up by respondents picked up spontaneously by simple random sampling and face-to-face interview was conducted to collect the data.

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1). INTRODUCTION OF HDFC

The first private sector retail Housing Finance Company in India was incorporated in 1977 with almost 90% of the initial share holding in the hands of domestic institution and retail investors and currently 77% of the shares hold by foreign institutional investors and a primary objective of meeting a social needs of the common mass of India as well as promoting home ownership by providing long-term finance to house holds for their needs. However, the needs was according to National Building Organization The demand was estimate at 2 million units per year and the total housing shortfall is estimated to be 19.4 million units with the division of 12.76 million for rural and 6.64 million for urban. It is listed on both BSE (Bombay Stock Exchange) and NSE (National Stock Exchange) and having the market capitalization of Rs79 billion (2002 June). It has 118 offices and having the second largest employment generator in India with the staff strength of 1029.

FINANCIAL STRENGTH
Was promoted with an initial share capital of 100 million. Asset Base more than Rs21459 cr. AAA (High Security and High Safety) rated for seven consecutive years.

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HDFC IS A HIGHLY DIVERSIFIED GROUP. ITS GROUP COMPANIES ARE:

HDFC Limited HDFC was incorporated in 1977 with the primary objective of meeting a social need - that of promoting home ownership by providing long-term finance to households for their housing needs. HDFC was promoted with an initial share capital of Rs.100.

HDFC Bank Limited The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive approval from the Reserve Bank of India to set up a bank in the private sector. The bank was incorporated in August 1994 in the name of HDFC Bank Limited, with its registered office in Mumbai.

HDFC Securities Limited HDFC Securities Ltd was promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base of the HDFC Group and other investors, a capability to transact in the Stock Exchanges & other financial market transactions. HDFC securities, provides you with the necessary tools to allocate, select and manage your investments wisely, and also support it with the highest standards of service, convenience and hasslefree trading tools.

HDFC Asset Management Company Limited 19

HDFC Fund is a dominant player in the Indian mutual fund space, recognized for its high levels of ethical and professional conduct and a commitment towards enhancing investor interests.

HDFC Realty Limited HDFC Realty is a new, organized electronic marketplace for properties. HDFC realty provides the entire gamut of real estate services, bringing together the "clicks world" and the "bricks world" in a revolutionary and user-friendly way. Making available the best guidance and the most professional, transparent, efficient service to the real estate customer.

With over one century of experience in the field of non-life insurance from Chubb and HDFCs expertise from the financial segment, HDFC Chubb General Insurance Company Limited has the consumer insight to make its product range world class and comprehensive.

HDFC STANDARD LIFE INSURANCE HDFC STANDARD LIFE is the name, which is working as one of the best private insurance company in insurance sector. HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.It got the certificate of registration on 23rd October.

2). INTRODUCTION OF STANDARD LIFE:

20

Standard was incorporated in 1825. It is mainly a UK based company having 31 branches in UK itself and many other branches in all over the world. It is also renounced as the European Largest Mutual Life Insurance Company and recently voted Company of the Decade by independent financial adviser in UK.

Some Facts about the Company

Founded in 1825 Mutual Life Insurance Company since 1925 Largest mutual life insurance company in Europe Assets under management over Rs707836 corers ( 89.2 billions) Total assets under management: Rs.707836 Corers New premium income 2003: Rs.76277 Corers AAA rated by Standard & Poors and Moodys

Financial Security
21

Standard Life has the financial strength to remain secure and competitive. Company aims to offer products that provide competitive returns to their customers while maintaining an adequate level of financial strength to ensure their security. Standard Life places a great deal of importance on getting customers money to work hard for them; that's why they believe customer can have confidence in them.

MISSION
To be the top new life insurance company in the country.
VALUES

SERVICE Offer a high quality customer service (pre & post sales) And trained consultants who would advice the customers in choosing the right product for him.

TRUST Commitment to the Indian market to establish themselves as the most professional Life Insurance Company in India.

INNOVATION Commitment for developing quality products for the specific needs of the Indian customers Use latest technology.

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Worldwide Operations and Presence

Head Office - Edinburgh, Scotland (UK) United Kingdom: Canada Ireland Germany Austria Spain Hong Kong China 31 branches 11 7 " 1 " 1 sales office 31 branches 1 representative office 2 representative office "

Awards and Recognition

Year 2003 2002 2001 2000 Award Company of the Year Company of the Year Best Personal Pension Provider Company of the Year

MONEY MARKETING AWARDS Company of the Year every year from 1999 to 2005 Best Pension Provider 2004 and 2005 Best Group Pension Provider every year from 1998 to 2003 Best Personal Pension Provider every year since 1998 to 2003

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3). INTRODUCTION OF HDFC STANDERD LIFE The Joint Venture HDFC Standard Life

Be granted license by the IRDA to operate in life insurance sector. Each of the JV HDFC Standard Life Insurance Company Limited was one of the first companies to player is highly rated and been conferred with many awards. HDFC is rated 'AAA' by both CRISIL and ICRA. Similarly, Standard Life is rated 'AAA' both by Moody's and Standard and Poors. These reflect the efficiency with which HDFC and Standard Life manage their asset base of Rs.15, 000 Cr and Rs.600, 000 Cr respectively.

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The Partnership:
HDFC and Standard Life first came together for a possible joint venture, to enter the Life Insurance market, in January 1995. It was clear from the outset that both companies shared similar values and beliefs and a strong relationship quickly formed. In October 1995 the companies signed a 3-year joint venture agreement.

Around this time Standard Life purchased a 5% stake in HDFC, further strengthening the relationship. The next three years were filled with uncertainty, due to changes in government and ongoing delays in getting the IRDA (Insurance Regulatory and Development authority) Act passed in parliament. Despite this both companies remained firmly committed to the venture. In October 1998, the joint venture agreement was renewed and additional resource made available. Around this time Standard Life purchased 2% of Infrastructure Development Finance Company Ltd. (IDFC). Standard Life also started to use the services of the HDFC Treasury department to advise them upon their investments in India. Towards the end of 1999, the opening of the market looked very promising and both companies agreed the time was right to move the operation to the next level. Therefore, in January 2000 an expert team from the UK joined a hand picked team from HDFC to form the core project team, based in Mumbai. Around this time Standard Life purchased a further 5% stake in HDFC and a 5% stake in HDFC Bank. In a further development Standard Life agreed to participate in the Asset Management Company promoted by HDFC to enter the mutual fund market. The Mutual Fund was launched on 20th July 2000.

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INCORPORATION OF HDFC STANDARD LIFE INSURANCE COMPANY LIMITED:

The company was incorporated on 14th August 2000 under the name of HDFC Standard Life Insurance Company Limited. Companys ambition from as far back as October 1995, was to be the first private company to re-enter the life insurance market in India. On the 23rd of October 2000, this ambition was realized when HDFC Standard Life was the only life company to be granted a certificate of registration. HDFC and Standard Life have a long and close relationship built upon shared values and trust. The ambition of HDFC Standard Life is to mirror the success of the parent companies and be the yardstick by which all other insurance companies in India are measured.

VISION AND VALUES OF HDFC STANDARD LIFE

The most successful and admired life insurance company, which mean that we are the most trusted company, the easiest to deal with, offer the best value for money, and set the standards in the industry. In short, the most obvious choice for all.

COMPANYS VALUES:
1. INTRGRETY Honest and trustful in every action Transparency Stick to principles irrespective of every action Be just fair to every one

26

2. INNOVATION Building a storehouse of treasure through experience. Looking at every product and process through fresh eyes every day.

3. CUSTOMER CENTRIC Understand his expectations by keeping him as a centric point Listen actively Understand customer needs and deliver solutions Customer interest always supreme

4. PEOPLE CARE: Genuinely understanding the people we work with Guiding their development through training and support Helping them develop requisite skills to reach their true potential Know them on a personal front Create an environment of trust and openness Respect for the time of others

5. TEAM WORK: Whole team take the ownership of the deliverables Consult or involved, understand and arrive at a common objective Cooperate and support across department boundaries Identify strengths and weakness accordingly allocate responsibility to achieve common objective

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AWARDS AND ACCOLADES

Shield for the best presented accounts for banks and financial institutions - over 11 times (8 years in a row) 1999 IMC Ramakrishna Bajaj National Quality Award in the service category CII-EXIM Bank Commendation Certificate for commitment to Total Quality Management - 2000 Asia money declared HDFC as the second best managed company in India - 2001 Euro money identified HDFC as one of Asias top 10 best managed companies in the finance sector - 2001 Rated as the Best Non-Banking Financial Company in Asia by Institutional Investor Research Group.

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The organizational structure of HDFC SL is of vertical type where MD & CEO (Mr. Deepak satwakar) is on the top in the organizational structure followed by the different department of Sales Operations Finance and accounts Information technology Legal and secretarial Human resource Which are further sub divided into sub departments.

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RETAIL TEAM SET-UP

The retail team has a vertical type of classification where in GM-Sales (Mr. Suresh mangalm) leads the structure or set-up and all the strategies is planned by the same. Followed by head of retail sales (Mr. Dilip gujrao) Subdivided into zonal manager (Mr. Vikas Seth (northern)) who look out the performances and duties in a particular zone i.e. North, East, West and South Regional manager (Mr.Satish Soni (Delhi)) Area sales manager (Mr. Mukesh)

30

 Branch Manager (Mr. Akash manchanda (C.P Branch)) who looks after SDMs in his branch and repots area sales manger. Sales Development Manger acts as a team leader and manages the team to bring out the sales from them. Each SDM has a team of about 35-50 FCs (Financial Consultants) who act as an advisor. Financial Consultants who act as an advisor and these FCs work as a member of sales member and meet with customer and make sales happen for the company. For any organization sales force is the most crucial part now a days as they represent the organization and deal with the customer. 80% of the revenue for these sales force member contributes the company and its the responsibility of the organization manage this sales force in most appropriate manner.

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4). MARKET OUTLOOK

Equity Markets
"Victory belongs to the most Persevering"- Napoleon Bonaparte. We had mentioned in our last 2 equity updates that value is emerging in the midcap space, once confirmation of the strong first quarter results is seen. Indices movements in August 2006 reflected the same.

Table: 3.1 The 3-month return for the Mid and Small Cap indices is looking better now due to last months strong performance. Global Equity markets, especially the emerging markets, rallied in August 2006 on improved investor confidence and falling crude prices. The Indian market was one of the highest gainers at over 9% for the month and with YTD returns of 21%. While FIIs pumped in Rs. 4,774 crores (USD 1.02 billion) in the Indian equity markets, mutual funds invested Rs. 426 crores (USD 91 million) in Aug 2006, again proving the point on how dependent the Indian market is on FII money. Auto, Capital Goods, Banking and Oil & Gas were out-performers during the month while Metals and FMCG underperformed.

Observations:

32

1) We are concerned on the lower trading volumes during August 2006, a drop of more than 20% as compared to the YTD monthly average. Though it improved in the last week of August, rise in indices on low volumes is misleading at times 2) Outstanding position in the Futures and Options markets have again increased significantly (25% month-on-month) indicating optimism amongst investors but was also one of the reasons for the May 2006 market correction when the high outstanding positions unwound

3) While overall monsoon has been normal, the distribution geographically has been pretty uneven. Second quarter results of affected companies could be lower than expectation due to combination of disruption in normal life activities as well damage to the factories 4) Currency movements could become a key factor going forward with India Inc. gearing to borrow aggressively overseas for their huge expansion plans. Past experience has shown that rupee appreciation always aids FII flows and vice versa. 5) Sensex at around 11,900 levels is trading at around 18.5 times forward multiples, higher than its average trading range of 12-15 times 6) Our medium to long-term outlook remains positive. We would however expect the equity markets to stabilize in the short term, up to Dec 2006, around these levels, before moving up again, based on the additional comfort of another 2 quarter results behind them, thereby justifying the higher valuations.

What should the investors do?

33

1) Stay Invested Investors are advised to stay invested in the equity markets keeping in mind the long-term growth potential. Investing is more about Patience and Discipline and less about timing. 2) Decide and stick to your asset allocation While equity will deliver a higher return than bonds over a longer period of time, commensurate with the higher risk, investors should stick to their decided asset-allocation strategy. E.g. If your equity allocation is 50% and market rises 10%, decide your review period (6 months or 1 year) and book profits to bring your asset allocation in equity back to 50%. Vice versa if the market falls. In this regard, keep a watch out for debt investments after the next 2 3 quarters. With yields rising to around 8-9%, they will become very attractive when the interest rate cycle reverses. 3) Stick to quality Indian companies have realized, in the last few years, that their target audience is now the global market and no longer only the Indian market. This is a paradigm shift from a strategy perspective. A number of companies, including the larger ones will grow manifold by 2010, both in volume and earnings, as compared to their current size. E.g. Maruti, Tata Motors, Siemens. Reduced debt and lower cost of new borrowings over the last few years has improved the financials and balance sheets of the Indian corporate. Using their de-leveraged balance sheets, the market leaders are able to acquire companies, enter new markets faster and bring in their cost-effective processes, employed in their existing markets. Any price corrections will have lesser impact on these companies.

4) Diversify The Indian market will have different themes at different points of time. It is difficult for any investor to time the market or any particular sector. Diversification, amongst quality players, will continue to pay-off.

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Debt Markets Consolidation in the Bond Market

10 year Government Security, which was trading at 8.29% on 2 Aug, ended the month at 7.88% and has further rallied to 7.69% as of 8 Sep 2006, a gain of over 57 bps in about a months period. The rally was aided primarily by the following events: 1) Confirmation of a US slowdown from Ben Bernake established a positive trend in global bond markets including India. Market participants believe that the Fed rate hikes over the last 2 years, from 1% to 5.25%, will now pause and therefore RBI too will maintain a status-quo going forward on local interest rates. The above belief is being aided by a drop in international crude prices from US 78 to around US 66 currently, which could reduce inflation pressures in the Indian context. 2) What also aided the bullishness was a clarification from the Ministry of Finance that oil bonds to be issued to oil companies will not be classified as SLR investments. This implied that Banks will have to meet their SLR requirement by buying additional Government Securities from the market and not substitute it with the oil bonds.

Market view
We believe that domestic interest rates have an upward bias and that another 50 bps rise in rates from these levels in the next 6 9 months is a real possibility. This is actually being reflected in the price of short-term instruments (1-2 years), which have not rallied in line with the 10-year G-Sec. Furthermore there could be some tightening of liquidity as we move into the festive season.

35

Fig.: .3.2

PRODUCT OF HDFCSLIC
Products are the plans offered by the HDFC SL Categorized into: Traditional plans Term assurance Money Back plan Children Plan

36

Unit Linked Investment Plans

Unit Link Young Star Endowment Plus Unit Link pension Plan

1). Unit link young star plan

It is the insurance policy linked to the market. Its aim is to offer: Choice of investment Flexibility in premium payment Flexibility in risk cover

37

BENEFITS: A parent is the Life assured which means money would be available on Death or Critical Illness. DEATH BENEFITS:
On the death of the life assured under the ULIPS: HDFCSLIC will pay the sum assured Waive all future premium

HDFCSLIC will pay premium at the level chosen at inception from the date of critical illness till the date of maturity HDFCSLIC will pay the policy value on the date of maturity THE ILLNESSES COVERED ARE: Cancer Coronary Artery Bypass Graft Sugary Heart attack Kidney Failure Major Organ Transplant Stroke MATURITY BENEFITS: On maturity the unitized fund value will be paid and the policy will terminate.

SURRENDER BENEFITS: The policy can be surrender at any time. The amount payable will be the policy Value less the surrender charges. At present the charges is 25% of three years Outstanding premium.

38

Example

WITHDRAW BENEFITS: The policyholder has the option to withdraw Lump sum amount at any time, the conditions are: The minimum amount withdraw is Rs 10,000 and more The policy fund value after the withdrawal and the withdrawal charges if any is not less than the higher of: The minimum fund limit which is Rs 15000 at present The surrender charges if any The cancellation charges if applicable to withdrawals

Presently no charge for withdrawals and cancellation. PAID UP BENEFITS: Policy converted into paid up provided 3 years premium have been paid, The policy acquired sufficient value, presently Rs 15000.

39

Choose your investment fund:

In this plan the investment risk in your chosen investment portfolio is borne by you. This means that the premiums you pay in this plan are subject to investment risk associated with the capital markets. The unit price of the funds may go p or down, reflecting changes in the capital markets. So, the balance your level of risk and return, making the right investment choice is very important and you are responsible for the choices you make.

The different funds options are as follows: Growth fund

100% in equity market Risk & return rating=very high Equity managed

Equity Fund

40%

60%

40

 60-100% in equity market 0-40% in government securities Risk & return rating=very high

Balanced managed

30-60% in equity market 70-40 in government security Risk & return rating= high

Defensive managed

41

 15-30% in equity market 85-70% in government security Risk & return rating= moderate

Secure managed

100% in govt. securities & bonds Risk & return rating=low moderate Liquid fund

42

 100% in bank deposits & money market Risk & return rating=low

Allocation rate of the premium

Regular 1 and 2 year Up to 1,99, 999 2 L to 4, 99, 999 5 L to 9, 99, 999 10 L to 19, 99, 999 Above 20, 00, 000 3 years onwards Single premium top up (1 and 2 year) Single premium top-up (3 year onwards) 70% 80% 85% 90% 95% 99% 97.5% 99%

Fund Management Charge: of Rs 0.80% of the fund per annum will be charge on a daily basis. This charge deducted from the Net Asset Values of the units. Policy Fee: An amount of Rs15 per month. Risk Charge: A monthly charge will be collected by cancellation of the units towards the risk cover opted under the policy. The charge will depend on sum at risk cover chosen. Sum at Risk =Sum Assured withdrawal made during last two years-value of the fund.

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Surrender Charges: The present surrender charge is 30% of the difference between the regular premiums expected and those paid, in the first 2 years of contract.

HDFC Standard Life does not charge on: Premium Redirections Fund switches Partial Withdrawals Policy Alteration and servicing request. Switching charges 24 switches instructions free in a policy year. Any additional switch will be charged at Rs. 100 per switch. Policy administration charges Rs. 20 per month Service tax and education Cess on risk premium Current arte is 12.24% TAXATION The premium is paid under the policy will qualify for deduction under sec (80c) of the Income Tax Act 1961. Since, the policy has an integrated critical illness benefit, which is charged by cancellation of units, the same will not be shown separately in the premium receipts. The total amount of premium paid will be eligible for the deduction under sec (80c) of the Income Tax Act 1961. In case the premium paid in any year does not exceed 20% of the sum assured, under the policy, the maturity amount will be tax free under sec (10) 10D of the Income Tax Act.

44

45

COMPETITORS
In presently there are 16 life insurance corporation companies are working and performing in India. So definitely HDFC Standard life has good competition with other. The main competitors are as following. LIFE Insurance Corporation. ICICI Prudential Life Insurance. BAJAJ Allianz. SBI Life Insurance. BIRLA Sun Life. AVIVA. TATA Aig.

1). MARKET SHARE OF THE LIFE INSURANCE COMPANY

Life Insurance sector grew by 41% in 2005-2006 due to the better performance of Life Insurance Corporation of India and the private players like Bajaj Alliance and ICICI Prudential. Therefore 16 Life Insurance Company in India and the Collection made by them is Rs 35898cr in this fiscal year ended March.

Figure: 1.1

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Market share In terms of private n public players

Figure: 1.2

Premium collection in year 2005-06 of different companies

Figure: 1.3

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Steady increase of Market share of the Private Players

The reason behind the steady increase of the private players is concentrating on the ULIPS Plan, which covers barely 15% for MRTA products. Growth in terms of Premium Collection of Private and Public Insurance Company:

Figure: 1.4

REASON FOR SUCH A GROWTH IN TERMS OF PREMIUM COLLECTIONS GOES TO TWO ASPECTS
ADVERTISING OF DIFFERENT PLAYERS IN MARKET Advertising playing a major role in the Insurance sector. To strengthen their brand recall insurance companies are emerging as major spenders on advertising and marketing. The major factors responsible for canalizing the growth of the insurance sector are Product Innovation, Distribution Network, Investment Management, Customer Service and Education. In this type of Scenario the role of advertising and promotion has un-doubted become emphatic with time. Television media is one of the most popular mediums of generating awareness and overall existence of any Companys product. So, the companies are changing their strategies by

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sifting from pitching insurance as a security to the investment of long term as well as short term. To keep this momentum, advertisements are being made and telecasted as a complete financial solution offering stable return coupled with total protection. So, these companies are spending close to Rs 650cr in 2005-2006, which is a 38% increase over the premium year. Of this LIC have accounted for nearly 80-85%. LIC-Life Insurance Corporation of India: Rs175 for advertising as they wanted it to be place as a vibrant brand by erasing the image of state owned entity. ICICI Prudential: Rs 21.6cr in 2005 from April to December. The products highlighted were: Children Product Pension Product.

Promotion
To explore the different promotional channels for attracting more consumers, the respondents of our survey opines that news paper and business magazines can be an effective tool to grab the attention of the customers. The advertising strategy adopted by LIC in this regard is quite fruitful as a large section of the people associate an offer made in newspaper and business magazines very closely. Even though Internet medium is treated with skepticism, still the potential of the medium cannot be totally ruled out. The educated class of people swears by the Internet comprising of all the income categories. Thus net marketing can play an important role in the promotion of HDFC SLIC in the market in general. Similarly mobile marketing can equally be effective. This can be related to collection of customer database from prestigious clubs, associations, telecom service providers and messaging them to induce the customers to enquire more about the company.

2). IMPRESSIVE GROWTH OF HDFC SL

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7th February 2006, HDFC standard life records impressive growth Premium Income grows by 150%
HDFC Standard Life has recorded a strong growth of 150% for the period April-December 2005, in comparison to the same period last year; with new business first year premium of Rs.599 corers while the overall private insurance industry grew by 91%. HDFC Standard Lifes Effective Premium Income (EPI) grew by 175% from Rs.181 Cr. to Rs.496 Cr. HDFC Standard Lifes growth in new business premium is a result of strong growth in policies sold as well as, an increase in the average premium. For the individual business, volume measured by the number of policies sold, witnessed an 80% growth, from under 125,000 in the first half of FY 2004-2005 to over 220,000 in the first half of FY 20052006. The average effective premium on the other hand increased to Rs.28, 000 from approximately Rs.15, 000 for the same period last year. Commenting on the consistently strong performance of the company, Mr. Deepak Satwalekar, MD and CEO, HDFC Standard Life said, We believe that our success is a result of our efforts in giving customers, the best solutions to take care of their insurance needs. Our endeavor to provide high quality insurance solutions to customers through quality pre-sales advice, based on a sound need-based solutions approach, and post-sales service has started to pay off.

16th may 2006, HDFC standard life records impressive growth

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Premium income grows by 112% HDFC Standard Lifes growth in new business is a result of number of lives insured as well as, an increase in the average premium. For the individual business, volume measured by the number of lives insured, witnessed a 32% growth. The average premium also increased by 62% from Rs.17, 000 in 2004-05 to Rs. 27,500 in 2005-06. Commenting on the huge potential that exists in the Indian market today, Mr. Deepak Satwalekar, Managing Director & CEO of HDFC Standard Life emphasized, The GDP has been growing over 8% per annum and 47% of all savings are now in financial saving forms; 16% of savings is in the form of insurance premiums and another 16% is in Provident Fund and Pensions i.e., 32% of Indias financial savings of the household sector are available to be tapped. Therefore, growth for the private life insurance industry is inevitable and HDFC Standard Life is confident of maintaining a steady growth pace. HDFC Standard Lifes offerings of Employee Benefit Solutions, to the corporate sector, through Group Business, have met with increased success with year on year growth of 174%. Commenting on the strong growth of HDFC SLs Group Business, Mr. Satwalekar said, Our excellent fund performance on retirement products and increase in our client base with 150 clients cutting across a spectrum of industries spanning from multinationals to PSUs to the older business houses, have been the highlights of the year. Ongoing training for conventional products and specialized training for unit linked products for more than 33,000 of our financial consultants has also helped its customers choose the products best suited for their need for protection, savings, investments and pensions. HDFC Standard Life is the only company requiring its sales force to undergo specific training in ULIPs before they are permitted to sell the same.

Financial result for HDFC SL for year 2005-2006

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Table Showcasing Financial Results: Parameters Apr-Mar Apr-Mar 2004-05 2005-06 % Growth (Rs. Cr.) (Rs. Cr.) Total received premium i. New Business ii. Renewal 668.40 486.15 182.25 436.08 Effective Premium Income (Total) Group Business Premium (EPI) 49.40 135.15 173.58 1532.21 1028.94 503.27 887.30 129.23 111.65 176.14 103.47

Table: 2.1
Total received premium has shown the tremendous There has been tremendous increase in the term of increase of 129% new business premium, renewal and group business income as clear from the above table

3). SWOT ANALYSIS OF HDFC SL

STRENGTHS:
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HDFC SLs strengths are many, to mention a few: a) Global Presence:

Its collaborations and joint ventures with international companies such as Standard life, and partnership with chub, enable it to bring the best service available worldwide to its consumers.

b)

Fast paced and flexible work culture, which provides its employees autonomy to accomplish the task without much pressure from the higher authorities. Thus, employees are motivated to give their best to the organization. The core strength of HDFC SL is the talent and innovativeness of its people, which enables it to provide the right solution at the right time.

c)

The mass markets handled through a chain of financial consultants usage closer to the individual. It has very strong distribution network.

d) e) f) g) h)

Its pool of competencies: mutual funds, sum assured, etc

Ability to understand customer's business and offer right technology.

Long-standing relationship with customers.

Pan India support & service infrastructure. Best-value-for-money offerings.

WEAKNESSES: a) b)
HDFC SL Could not able to match LIC in remote area services. Always emphasizes on numbers and fast results.

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c) d)

After sales service. Less promotional campaigns.

OPPORTUNITIES: a) b) c) d) e)
Insurance industry booming at a rate of 45% every year. Increasing consumer awareness about Insurance and its use. Tremendous untapped potential of Insurance products in India. Increasing competition. Tie-ups with various MNCs enable to extract their core competencies.

THREATS: a) b) c)
New private players are coming in the market e.g. RELIANCE Insurance. Entry of MNCs giving direct competition. Govt. instability has a long-term repercussion affecting companys policies & its growth.

DATA ANALYSIS

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SAMPLING DETAILS
Sample Size 65 Samples were selected on random basis

AGE GROUP
26%

43%

31%

Below 28

28 - 35
Figure: 1.1

Above 35

Highest number of Respondents from Age group below 28, mostly BPO executives 43%
MARITAL STATUS

30 25 20 15 10 5 0

26 14 6 2 Below 28 28 -35 55 Single Married 0 Above 35 17

Figure 1.2

Total number of single respondents 32 Total number of married respondents 33

INCOME DISTRIBUTION

16 14 12 10 8 6 4 2 0

15

9 6 3 Below 1.5 lacs 4 4 3

8 6 4 1 1.5 - 3 lacs
56

3 - 5 lacs Above 5 lacs Above 35

Below 28

28- 35

Figure: 1.3
Respondents reluctant in providing actual/real figures Highest, 23 respondents in income bracket 1.5 3 lakhs, which comprises mainly of age group below 28 years. Minimum, 9 respondents in income bracket of above 5 lakhs, 6 of which are in age group of above 35 years.

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N u m b e r o f p e o p le A w a re o u t o f 6 5

IC IC I P ru d e n tia l TA TA A IG 17 29 38 7 61 55 H D F C S ta n d a d r L ife B irla s u n life A viva M a x N e w Y o rk L ife 37 26 42 53 O M K o ta k M a h in d ra IN G V y s y a M e tlife S B I L ife

Figure: 1.4

ICICI Prudential has the highest Brand Recall 94% HDFC Standard life has Brand Recall of 82%

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are you aware about ULIP Plans?

38%

62%

yes no

Figure: 1.5

Only 24 respondents are aware about ULIP Plans out of 65 respondents It shows that large section of society are not aware about ULIP Plans

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LIFE COVERED
22%

78%

Respondents having Insurance cover Respondents not having Insurance Cover

Figure: 1.6

78 % of respondents have insurance cover on own life and on life of their family

members

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PENETRATION LEVEL OF Pvt. COMPANIES

12, 24%

27, 52% 12, 24%

Only LIC policy

Only Pvt. Companies policy

Figure:1.7

Both

52% of respondents have insurance cover provided by LIC 24% of respondents have insurance cover provided by private Companies Other 24% have got insurance from both LIC and private Companies Total number of LIC policies sums up to 55 (68%) and total number of private

Companies policies sold sums up to 26 (32%). (This includes multiple policies bought by one respondent from different companies)

Data provides that private Companies are fast making a mark in the market

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TYPES OF PLANS SOLD

17% 31% 15%

10% 27%

Money back ULIP

Endowment Not aware

Figure: 1.8

Pension

Money back and endowment plans have been most popular plans till now

ULIPs are fast gaining popularity A large number of respondents were not even aware of type of plan, mainly because policy was not bought by them directly

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PURPOSE FOR BUYING INSURANCE

Analysis for age group below 28 years (Sample size 28)
Frequency Order of Preference Risk Cover Investment Tax Purpose Old Age Provision
I II III IV

10 6 7 5

8 11 5 4

5 6 8 9

5 5 8 10

Risk cover is the most important purpose for buying insurance followed by option as investment and old age provision

Analysis for age group 28 35 years (Sample size 20)

Frequency Order of Preference Risk Cover Investment Tax Purpose Old Age Provision I 13 2 3 2 II 4 5 7 4 III 2 10 4 4 IV 1 3 6 10

Risk cover is the most important purpose for buying insurance followed by option as investment and old age provision

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Analysis for Age Group above 35 years (Sample size 17)

Frequency Order of Preference Risk Cover Investment Tax Purpose Old Age Provision I 12 2 1 2 II 3 3 3 8 III 2 8 5 2 IV 0 4 8 5

Risk cover remains the most important purpose for buying insurance followed by old age provision with increase in age

Analysis for total Sample

Frequency II III 15 19 15 16 9 24 17 15

Order of Preference Risk Cover Investment Tax Purpose Old Age Provision

I 35 10 11 92

IV 6 12 22 25

Risk cover remains the most important purpose for buying insurance followed by option as investment ULIPs are responsible for increasing popularity of insurance as an investment tool

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More Awarareness with emergence of Private players?

10%

yes no

90%
Figure: 1.9

Most of the respondents said yes to the question that with emergence of private players in the life insurance industries they are more aware about the insurance products Only 15% of respondents said no to the above question.

This shows that with the entry of private players the awareness among the masses is more as compare with earlier stages.

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CONCLUSION
Marketing is a very crucial activity in every business organization. Every product produced within an industry has to be marketed other wise it will remain as unsold stock, which will be of no value. In this project we found that the investor in insurance industry are taking interest to have interest not only for security in a long term policy but also doing investment for the short term policy which is presently called the ULIPS market. ICICI Prudential, TATA AIG have better awareness in the market then HDFC SL in private companies Risk cover remains the most important purpose for buying insurance followed by option as investment Premium income for HDFC SL grows by 132% for financial year 2004-2005. the company generated new business premium income of Rs.486 crore Unit linked products accounted for over 50% of the new business premium HDFC Standard Life continues to have one of the widest reaches among new insurance companies. The company doubled the number of offices to 104 across the country. Through these offices, the company today services customer needs in over 440 towns. The company also increased its depth in existing markets by increasing its Financial Consultant strength from 17,000 as on 31st March 2004 to over 23,000 as on 31st March 2005.

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 The company expanded its portfolio of products by launching plans to cover Superannuating and Leave Encashment needs, thereby offering a wide range of employee benefit solutions to its corporate clients. Alternate Channels including bancassurance have recorded an impressive growth of over 400% to contribute 37% to the Effective Premium Income (EPI).

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SUGGESTIONS

HDFC SL is having large number of channel partners but it is not supporting & taking care all of them equally which results in increasing discontentment among new channel partners because its not possible for company to support all of them equally. Company should take some positive action against it.

Company executive should visit customer on regular basis.

They should pay proper attention towards checking of various components of insurance before end user delivery. Otherwise it tends towards defame of brand name in comparison to rivals.

Need to expend customer care center as the consumer base of HDFC SL is increasing with tremendously fast pace.

Proper attention should be paid for advertisement planning otherwise it may lead to problem for customer as well as for company.

Company should tie up with some event management company to organize various promotional activities like canopy, Carnival.

Company should make policy for fixed end user price for all customers so that fair game will be played & customer would not to compromise on their margin.

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Bibliography WEBSITES

www.hdfc.com www.hdfcstandardlife.com www.irda.gov.in www.legalpundits.com

BOOKS Business research by C.R. kothari IC-33 LIFE INSURANCE (Revised) by INSURANCE INSTITUTE OF INDIA Indian Financial System by P.N. Varshney & D.K. Mittal NEWSPAPERS The times of India Economic times

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Annexure Questionnaire
Name:.... Age:................ Marital status: Single Sex: M F Married

Occupation:...................... Contact no.: Annual Income: 1) Up to 1.5 lacs 1.5 (2 3) 3lacs 5 lacs 4 lacs 3 lacs )above 5 lacs

Q1. Mention the names of pvt. Life insurance companies you have heard of I) IV) II) V) III) VI).

Q2. Are you aware about ULIP plans ? YES/NO Q3. Have you taken life insurance on your own life or on life of any of you family members? YES/NO If Yes, Please mention: No. of Policies LIC Private Companies (With Names) ____ _____ Average coverage ____________ _________________ Type of Plan ____________ _____________ _____________ __________________ ___________________ ___________________

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Q4. What was you purpose/will is your likely purpose of taking insurance? (Rank in order of Preference) I) Protection of Family________ III) Tax benefit_____________ II) Investment__________ IV) Old age provision________

Q5. Do you feel opening up of the private sector has created more insurance awareness among the public? YES / NO Q6. Now that the private sector has been opened, would you prefer to buy insurance for self and family through? LIC / Private Insurers Please give reasons for your response _____________________________________________________________________ ___ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ _________________________________________________________________________ ________

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MISCELLANEOUS

Glossary
1) Sum assured: sum assured is the guaranteed amount, net of the permissible partial withdrawals, of the benefit that is payable on death of the life assured. 2) Top-up premium: a top-up premium is an amount paid at irregular interval during the period of the contract. This is an additional amount of premium over and above the contractual basic premium charged at the commencement of the contract. 3) Fund value: fund value at any point of time represent the value of the units at that point of time i.e. number of units multiplied by the price of the units. 4) Partial withdrawal: any part of the fund that is enchased/withdrawn by the policyholder during the period of the contract is referred to as partial withdrawal. 5) Switches: this is the facility allowing the policyholder to change the investment pattern by moving from one fund to another fund (s) amongst the fund offered under the underlying product of the insurer. 6) Surrender: surrender means terminating the contract once for all. On surrender a surrender value is payable, which is usually expressed as fund value less the surrender charge.

7) Regular premium contracts: ULIPs where the premium payment is level and paid at regular intervals like yearly, half-yearly etc. 8) Single premium contracts: ULIPs where the premium payment made by a single contributions (a one time payment) at the inception.

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9) Death benefit: the amount of benefit which is payable on death as specified in the policy document. That is stated at the inception of the contract. 10) Maturity benefit: the amount of benefit which is payable on maturity i.e. at the end of the term, as specified in the policy document. 11) Units: this is a portion or a part of the underlying segregated unit-linked fund. 12) Allocation: creating the units at the prevailing unit price offered by the life insurer. This is applicable in case of premium payments and switches. 13) Premium allocation charge: this is the percentage pf the premium appropriated towards the charges from the premium received. 14) Fund management charge: this is the charge levied as a percentage of the value of the assets and shall be appropriated by adjusting the Net Asset Value as prescribed. 15) Mortality charge: this is the cost of the life insurance cover. It is exclusive of any expense loadings levied either by cancellation of units or by debiting the premium but not both. This charge is levied at the beginning of each policy month from the fund.

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