Professional Documents
Culture Documents
AN OVERVIEW OF INSURANCE
Contents
Serial no. Topic 1 Acknowledgement 2 Preface 3 Executive Summary Chapter 1-Introduction 5 6 7 8 9 10 11 Classes of Insurance Functions of Insurance Life Insurance Roles of the Life Insurance Importance of Life Insurance Insurance Cycle How Premiums are collected? Page No. 5 6 7 8 10 11 12 12 13 14 16 19 21 23 23 29 30 32 33 39
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Chapter-2 Introduction to Indian Industry 12 13 14 15 16 17 Brief History of the Insurance Indian Insurance market How big is insurance market Role of IRDA Act 1999 Name of insurance companies with logos Market Share of private players
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Acknowledgement
Sometimes words fall short to show gratitude, the same happened with me during this project. The immense help and support received from Tata AIG Insurance Company overwhelmed me during the project. I also thank Mrs.Nidhi Arora Kumar the faculty member of BLS who sincerely supported me with valuable insights for this project. My sincere gratitude to Rajiv Dhar(Regional Head Tata AIG,Kolkata) for providing me with an opportunity to work with TATA AIG Life Insurance company. I am highly indebted to Musawwar Hossain(Branch Manager),Tata Aig,Kolkata) and company project guide, who has provided me with the necessary information and his valuable suggestion and comments on bringing out this report in the best possible way. I am grateful to all of the members of Tata AIG Insurance Company,(GirishParkBranch,Kolkata) Last but not the least; my heartfelt love for my parents, whose constant support and blessings has helped me throughout this project. Vivek Srivastava
PREFACE
The liberalization of the Indian insurance sector has been the subject of much heated debate for some years. The policy makers where in the catch 22 situation wherein for one they wanted competition, development and growth of this insurance sector which is extremely essential for channeling the investments in to the infrastructure sector. At the other end the policy makers had the fears that the insurance premium, which are substantial, would seep out of the country; and wanted to have a cautious approach of opening for foreign participation in the sector. As one of the rare occurrences the entire debate was put on the back burner and the IRDA saw the day of the light thanks to the maturing polity emerging consensus among factions of different political parties. Though some changes and some restrictive clauses as regards to the foreign participation were included the IRDA has opened the doors for the private entry into insurance. Whether the insurer is old or new, private or public, expanding the market will present multitude of challenges and opportunities. But the key issues, possible trends, opportunities and challenges that insurance sector will have still remains under the realms of the possibilities and speculation. What is the likely impact of opening up Indias insurance sector?
EXECUTIVE SUMMARY This project has been a great learning experience for me; at the same time it gave me enough scope to implement my analytical ability. Tata Group is one of the India's largest and most respected business groups. Tata Group is one of the India's largest and most respected business groups. Tata Groups name is synonymous with India's industrialization. Tata AIG Insurance Solutions is one of the leading insurance companies that provide both life insurance as well as general insurance. This pioneer company is a joint collaboration between the American International Group, Inc. (AIG) and Tata Group. They own the company in the ratio of 26:74. It is a leading financial institution that has carved a niche for itself all over the world. Tata AIG Insurance Company is having different insurance policies. At the end of the project people will be knowledgeable about various insurance organizations. Project is on the Overview of of Tata AIG Insurance Company in Kolkata City. To get to know a questionnaire has been prepared which contains open ended and close ended questions.For collecting the data field survey method, personal interview technique has been used. Secondary data has been collected from the company. The data collected are represented into suitable tabular forms for drawing inferences. Quantitative techniques like averages, percentages, range, two-way tables, chi- square tests
analysis has been applied as per the requirement. The level of preference, perception of the customers about the product and company were identified by means of a scoring scheme. For the representation of data various charts and graphs are used as per requirement.
INTRODUCTION "Insurance is a contract between two parties whereby one party called insurer undertakes in exchange for a fixed sum called
premiums, to pay the other party called insured a fixed amount of money on the happening of a certain event. Insurance may be described as a social device to reduce or eliminate risk of life and property. Under the plan of insurance, a large number of people associate themselves by sharing risk, attached to individual. With the help of Insurance, large number of people exposed to a similar risk makes contributions to a common fund out of which the losses suffered by the unfortunate few, due to accidental events, are made good. Insurance is a tool by which fatalities of a small number are compensated out of funds collected. from plenteous. Gradually as competition increased benefits given by industry to its customers. increased by leaps and bounds. Insurance is a basic form of risk management which provides protection against possible loss to life or physical assets. Person who seeks protection against such loss is termed as insured, and company that promises to honor claim, in case such loss is actually incurred by insured, is termed as Insurer. In order to get insurance, insured is required to pay to insurance company a certain amount called premium. Premium is collected by insurance companies which acts as trustee to pool created through contributions made by persons seeking to protect themselves from common risk. Any loss to the insured in case of happening of an uncertain event is paid out of this pool.
Classes of insurance
Insurance business is divided into four classes: Life Insurance Fire Marine Miscellaneous Insurance. Insurance provides: Protection to investor. Accumulation of savings. Channeling these savings into sectors needing huge long term investment
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FUNCTION OF INSURANCE: The primary function of insurance is to provide protection against future risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can certainly provide for the losses of risk. Insurance is actually a protection against economic loss, by sharing the risk with others. Small capital to cover larger risk: Insurance relieves the businessmen from security investments,by paying small amount of premium against larger risks and uncertainty. Contributes towards the development of industries: Insurance provides development opportunity to those larger industries having more risks in their setting up. Even the financial institutions may be prepared to give credit to sick industrial units which have insured their assets including plant and machinery. Means of savings and investment: Insurance serves as savings and investment, insurance is a compulsory way of savings and it restricts the unnecessary expenses by the insured's For the purpose of availing incometax exemptions also, people invest in insurance. Source of earning foreign exchange: Insurance is an international business. The country can earn foreign exchange by way of issue of marine insurance policies and various.
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Risk free trade: Insurance promotes exports insurance, which makes the foreign trade risk free with the help of different types of policies under marine insurance cover. LIFE INSURANCE : Life insurance is a contract under which the insurer (Insurance Company) in Consideration of a premium paid undertakes to pay a fixed sum of money on The death of the insured or on the expiry of a specified period of time Whichever is earlier. In case of life insurance, the payment for life insurance policy is certain. The Event insured against is sure to happen only the time of its happening is not known. So life insurance is known as Life Assurance. The subject matter of insurance is life of human being. Life insurance provides risk coverage to the life of a person. On death of the person insurance offers protection against loss of income and compensate the titleholders of the policy. ROLES OF THE LIFE INSURANCE: Life insurance as an investment: - Insurance products yield more than any other investment instruments and it also provides added incentives or bonus offered by insurance companies. Life insurance as risk cover: - Insurance is all about risk cover and protection of life. Insurance provides a unique sense of security that no other form of invest can provide. Life insurance as tax planning: - Insurance serves as an excellent tax saving mechanism too.
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IMPORTANCE OF THE LIFE INSURANCE: Protection against untimely death: - Life insurance provides protection to the dependents of the life insured and the family of the assured in case of his untimely death. The dependents or family members get a fixed sum of money in case of death of the assured. Saving for old age: After retirement the earning capacity of a person reduces. Life insurance enables a person to enjoy peace of mind and a sense of security in his/her old age.
Promotion of savings: Life insurance encourages people to save money compulsorily. When life policy is taken, the assured is to pay premiums regularly to keep the policy in force and he cannot get back the premiums, only surrender value can be returned to him. In case of surrender of policy, the policyholder gets the surrendered value only after the expiry of duration of the policy.
Initiates investments: Life Insurance Corporation encourages and mobilizes the public savings and canalizes the same in various investments for the economic development of the country. Life insurance is an important tool for the mobilization and investment of small savings.
Credit worthiness: Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of business. 13
Life insurance is important for the society as a whole also. Life insurance enables a person to provide for education and marriage of children and for construction of house. It helps a person to make financial base for future.
INSURANCE CYCLE:
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years.Acceptance Upon receipt of a properly completed and timely submitted insurance application, the insurance provider will accept and process the application, unless the applicant is determined to be ineligible under the contract or Federal statute or regulation. The insurance provider will issue a summary of coverage and the appropriate policy documents to the applicant. After the application is accepted, the policyholder may not cancel the policy for the initial crop year.
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payouts
for
Premium Billing The annual premium is earned and payable at the time insurance coverage begins. The insurance provider shall issue a premium billing based upon the information contained in the acreage report no earlier than the premium billing date specified in the crop actuarial documents. The premium billing will specify the amount of premium and any administrative fees that may be due. If the premium or administrative fees are not paid by the date specified in the actuarial documents or policy, the insurance provider may assess interest on the outstanding premium balance.
Notice of Damage or Loss A written notice of damage or loss for each unit is to be filed by the policyholder within 72 hours of the policyholder's initial discovery of damage or loss but not later than 15 days after the calendar date for the end of the insurance period unless otherwise stated in the individual crop policy. The policyholder should refer to the individual crop provisions for additional requirements in the event of damage or loss. These notifications provide the opportunity for the insurance provider to inspect the crop and determine the
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extent of damage or potential production before the crop is harvested or otherwise disposed of.
CHAPTER 2
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distribution techniques and the IT tools has increased the scope of the industry in the longer run.
A BRIEF HISTORY OF THE INSURANCE SECTOR: The business of life insurance in India in its existing form 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 given in the following table. Some of the important milestones in the life insurance business in India are:
Year 1912
Milestones in the life insurance business in India The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses
1928
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1938
Earlier legislation consolidated and amended to by the Insurance Act with the objective of protecting the interests of the insuring public. 245 Indian and foreign insurers and provident societies taken over by the central government and nationalized. LIC formed by an Act of Parliament, viz. LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of India.
1956
The General insurance business in India, on the other hand, can trace its roots to the Triton Insurance Company Ltd., the first general insurance company established in the year 1850 in Calcutta by the British. Some of the important milestones in the general Insurance business in India are given in the following table. Year 1907 Milestones in the general insurance business in India The Indian Mercantile Insurance Ltd. set up, the first company to transact all classes of general insurance business General Insurance Council, a wing of the Insurance Association of India, frames a code of conduct for ensuring fair conduct and sound business practices
1957
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1968
The Insurance Act amended to regulate investments and set minimum solvency margins and the Tariff Advisory Committee set up. The General Insurance Business (Nationalization) Act, 1972 nationalized the general insurance business in India with effect from 1st January 1973. 107 insurers amalgamated and grouped into four companies viz. the National Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental Insurance Company Ltd. and the United India Insurance Company Ltd. GIC incorporated as a company Setting up of Malhotra Committee Recommendations of Malhotra Committee Setting up of Mukherjee Committee Setting up of (interim) Insurance Regulatory Authority(IRA) Recommendations of the IRA. Mukherjee Committee Report submittedbut not public made
1972
The Government gives greater autonomy to LIC, GIC and its subsidiaries with regard to the restructuring of boards and flexibility in investment norms aimed at channeling funds to the infrastructure sector. 1998 The cabinet decides to allow 40% foreign equity in private insurance companies-26% to foreign companies and 14% to NRIs, OCBs and FIIs. Cabinet clears IRDA Bill. President gives Assent to the IRDA Bill.
1999 2000
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INDIAN INSURANCE MARKET (HISTORY): Insurance has a long history in India. Life Insurance in its current form was introduced in 1818 when Oriental Life Insurance Company began its operations in India. General Insurance was however a comparatively late entrant in 1850 when Triton Insurance company set up its base in Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre Nationalization b) b) Nationalization and c) Post Nationalization. Life Insurance was the first to be nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the operations of various insurance companies. General Insurance followed suit and was nationalized in 1973. General Insurance Corporation of India was set up as the controlling body with New India, United India, National and Oriental as its subsidiaries. The process of opening up the insurance sector was initiated against the background of Economic Reform process which commenced from 1991. For this purpose Malhotra Committee was formed during this year who submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in 24 1999. Resultantly Indian Insurance was opened for private companies and Private Insurance Company effectively started operations from 2001.
companies. With many more joint ventures in the offing, the insurance industry in India today stands at a crossroads as competition intensifies and companies prepare survival strategies in a detariffed scenario. There is pressure from both within the country and outside on the Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%, which would help JV partners to bring in funds for expansion. There are opportunities in the pensions sector where regulations are being framed. Less than 10 % of Indians above the age of 60 receive pensions. The IRDA has issued the first license for a standalone health company in the country as many more players wait to enter. The health insurance sector has tremendous growth potential, and as it matures and new players enter, product innovation and enhancement will increase. The deepening of the health database over time will also allow players to develop and price products for larger segments of society. Insurance is a Rs.400 billion business in India, and together with banking services adds about 7% to India's Gap. Gross premium collection is about 2% of Gap and has been growing by 15-20% per annum. India also has the highest number of life insurance policies in force in the world, and total investible funds with the LIC are almost 8% of GDP. Yet more than three-fourths of India's 25 insurable population has no life insurance or pension cover. Health insurance of any kind is negligible and other forms of non-life insurance are much below international standards.
INDIAN SCENARIO:
Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest in terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth, rising foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, it is on the hinge of an ever increasing growth curve. Indians have a tendency to invest in properties and gold followed by bank deposits. They selectively invest in shares also but the percentage is very small--4-5%. This in itself is an indicator that growth potential for the insurance sector is immense. Its a business growing at the rate of 15-20% per annum and presently is of the order of $47.9 billion. India is a vast market for life insurance that is directly proportional to the growth in
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premiums and an increase in life density. With the entry of private sector players backed by foreign expertise, Indian insurance market has become more vibrant. Competition in this market is increasing with companys continuous effort to lure the customers with new product offerings. However, the market share of private insurance companies remains very low -- in the 10-15% range. Even to this day, Life Insurance Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of government still dominates the market, with price controls, limits on ownership, and other restraints. The upward growth trend started from 2000 was mainly due to economic policies adopted by the then Indian government. This year saw initiation of an era of economic liberalization and globalization in the Indian economy followed by several reforms and long-term policies that created a perfect roadmap for the success of Indian financial markets. On the basis of several macroeconomic factors like increase in literacy rate & per capita income, decrease in death rate and unemployment, better tax rebates, growing GDP etc., we estimate that the Indian insurance sector will grow by $28.65 billion and reach $76.54 billion by 2011 with a CAGR of 12.44% and a growth of 59.82%. The Indian life insurance market generated total revenues of $41.36 billion in 2007, thus representing a compound annual growth rate (CAGR) of 11.84% for the period spanning 2000-2007. Life insurance market had a growth of $22.46 billion within a period of 7 years with a growth rate of 118.24%. Estimated life premiums rose from INR1, 470,800 million ($36.77 billion) in 2006 to INR1, 301,540 million ($32.54billion) in 2005. We envisage that life premiums in 2011 will be $65.96 billion, a growth larger than they were in 2007. The performance of the market is forecast to accelerate, with an anticipated CAGR of 9.78% for the four-year period 2007-2011 expected to drive the market to a value of $65.96 billion by the end of 2011. There would be a growth of $24.6 billion i.e. 59.48% in the next 4 years. Non-life premiums in India were $6.53 billion in 2007. Gross written premium (GWP) in the Indian non-life insurance market reached a value of $5.75 billion in 2006, this representing an annual growth of 13.55% for the period spanning 2006-2007. Estimated non-life premiums rose from INR230 billion ($5.75 billion) in 2006 to INR261 billion ($6.53 billion) in 2007. We anticipate that non-life premiums will grow by a CAGR of 9.40%
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between 2007-2011. We are looking for non-life premiums to rise by $405 million over the five years to the end of 2011 with a growth rate of 62.02%.
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The general insurance industry grew by 16% in 2006-07 as private insurers continued their robust performance, while public sector players like New India Assurance and Oriental Insurance improved their show. Despite continuous fall in business of governmentowned National Insurance, the 12 non-life insurers collected Rs 20,378 crore in first year premium in the last fiscal compared to Rs 17,531 crore collected in 2005-06, according to data compiled by regulator IRDA. New India Assurance collected Rs 4,762 crore in premium and continued to lead the non-life sector by cornering 23.36% of the market. National Insurance was at the second spot by collecting Rs 3,524 crore in premium, a decline of 7%, but had a market pie of 17.29%. Oriental Insurance mopped up Rs 3,518 crore in premium income after logging 16.6% growth in business to corner a market share of 17.26%. Another PSU insurer United India grew by a modest 6.8% to collect Rs 3,147 crore in premium and had 15.44% of the market. The eight private players expanded their business by 52% to collect Rs 5,427 crore in premium income and increased their combined market share to 26.6% from 20.2% a year ago. ICICI Lombard led the private players by logging 80% growth in premium at Rs 1,592 crore, followed by Bajaj Allianz, which grew by 50% to collect Rs 1,287 crore in premium. ICICI Lombard had a market share of 7.81% and Bajaj Allianz had 6.31% of the market.
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AND
An act to provide for the establishment of an authority to protect the interests of policyholders, to regulate, to promote and ensure orderly growth of the insurance industry and for matters connected therewith for incidental thereto and further to amend, the Life Insurance Corporation Act, 1956 and the insurance Act, 1938 and General Insurance Business Act 1972. Spread Life Insurance much more widely and in particular to the rural areas and to the socially and economically backward classes with a view to reaching all insurable persons in .the country and providing them adequate financial cover against death at a reasonable Cost. Maximize mobilization of people's savings by making insurance linked savings adequately attractive. Bear in mind, in the investment of funds, the primary obligation to its policyholders, whose money it holds in trust, without losing sight of the interest of the; community as a whole; the funds to be deployed to the best advantage of the investors as well as the community as a whole, keeping in view national priorities and obligations of attractive return. Conduct business with utmost economy and with the full realization that the moneys belong to: the policyholders. Act as trustees of the insured public in their individual and collective capacities. Meet the various life insurance needs of the community that would arise in the changing social and economic environment. Involve all people 29
working in the Corporation to the best of their capability in furthering the interests of the insured public by providing efficient service with courtesy. Promote amongst all agents and employees of the Corporation a sense of participation, pride and job satisfaction through discharge of their duties with ded1cat1on towards achievement of Corporate Objective.
LOGO
NATURE OF Private
ICICI Prudential
Private
Private
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Private
Private
Private
Private
Bajaj Allianz
Private
The general insurance industry grew by 16% in 2006-07 as private insurers continued their robust performance, while public sector players like New India Assurance and Oriental Insurance improved their show. Despite continuous fall in business of governmentowned National Insurance, the 12 non-life insurers collected Rs 20,378 crore in first year premium in the last fiscal compared to Rs 17,531 crore collected in 2005-06, according to data compiled by regulator IRDA. New India Assurance collected Rs 4,762 crore in premium and continued to lead the non-life sector by cornering 23.36% of the market. National Insurance was at the second spot by collecting Rs 3,524 crore in premium, a decline of 7%, but had a market pie of 17.29%. Oriental Insurance mopped up Rs 3,518 crore in premium income after logging 16.6% growth in business to corner a market share of 17.26%. Another PSU insurer United India grew by a modest 6.8% to collect Rs 3,147 crore in premium and had 31
15.44% of the market. The eight private players expanded their business by 52% to collect Rs 5,427 crore in premium income and increased their combined market share to 26.6% from 20.2% a year ago. ICICI Lombard led the private players by logging 80% growth in premium at Rs 1,592 crore, followed by Bajaj Allianz, which grew by 50% to collect Rs 1,287 crore in premium. ICICI Lombard had a market share of 7.81% and Bajaj Allianz had 6.31% of the market. Above all the company they are having various types of insurance plans. All the plans are giving a good rate of return after a certain period of time. But all the plans dont get success in the market. Many of the companies they are having almost same type of plan but sometimes it happens one of them is successful and another is not. Always it doesnt depend on the plan of the insurance sometimes it depends on the marketing strategies, promotion of the product, reputation of the company, employees of the company etc.
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If we see market share of different private players in the financial year 2009 then from the above chart we can understand ICICI Prudential is holding the maximum market share i.e. 21.6%. After that SBI Life and Bajaj Allianz is holding 14.8% and 13.2% respectively. Reliance Life Birla Sun life and HDFC Standard they are also holding a good market share all over the India. Tata AIG is holding 3.3% of market share all over the India.
CHAPTER 3
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Introduction to Tata-Aig
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Tata AIG Insurance Company Tata Enterprises with 82 companies, spread over seven sectors and with an annual turnover exceeding US $ 8.8 billion, employs more than 262,000 people. Tata Group has shown over years that it is a value driven company and has pioneering contributions in various fields including insurance, aviation, iron and steel. In terms of capital market performance as many as 40 listed Tata companies account for nearly 5% of the total market capitalization of all listed companies. The Group has had a long association with India's insurance sector having been the largest insurance company in India prior to the nationalization of insurance.
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International Building in New York City. The British headquarters are located on Fenchurch Street in London, continental Europe operations are based in La Dfense, Paris, and its Asian HQ is in Hong Kong. According to the 2008 Forbes Global 2000 list, AIG was the 18th-largest company in the world.
Company Background: AIG's history dates back to 1919, when Cornelius Vander Starr established an insurance agency in Shanghai, China. Starr was the first Westerner in Shanghai to sell insurance to the Chinese. In 1962, Starr gave management of the company's less than successful U.S. holdings to Maurice R. \"Hank\" Greenberg, who shifted the company's U.S. focus from personal insurance to high-margin corporate coverage. The company went public in 1969. American International Group, Inc is the leading U.S. based international insurance and financial services organization and the largest underwriter of commercial and industrial insurance in the United States. Its member companies write a wide range of commercial and personal insurance products through a variety of distribution channels in over 130 countries and jurisdictions throughout the world. AIG's Life Insurance operations comprise of the most extensive worldwide network of any life insurer. AIG's global businesses also include financial services and asset management, including aircraft leasing, financial products, trading and market making, consumer finance, institutional, retail and direct investment fund asset management, real estate investment management, and retirement savings products.
THE JOINT VENTURE: Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent has been brought in by Tata Sons and the American partner brings in the balance 26 per cent. Mr. George Oommen has been named managing director of Tata AIG Life. Tata-AIG plans to provide broad array of life insurance plans to cover to both individuals and groups. The company headquartered in Mumbai, with branch operations in Delhi, Chennai, Hyderabad, Bangalore Calcutta, Pune and Chandigarh.
ABOUT TATA-AIG:
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Tata AIG Insurance Solutions is one of the leading insurance companies that provide both life insurance as well as general insurance. This pioneer company is a joint collaboration between the American International Group, Inc. (AIG) and Tata Group. They own the company in the ratio of 26:74. It is a leading financial institution that has carved a niche for itself all over the world. Tata AIG Insurance provides facilities to both corporate and individuals. Starting its operations on April 1, 2001, it seeks to serve different categories of people. It acquired its license for carrying out operations in India on February 12, 2001. Tata AIG Insurance Solutions is one of the most prestigious organizations in the business world. It employs thousands of employees and offers various opportunities to people to build a prospective career. As a leading name in the financial world, it identifies the potential and experience of the individual. This insurance company identifies the clients needs and works accordingly. It stresses on innovative aspect and opening of new markets. It believes in new economy and latest Internet technology. Tata AIG Insurance offers a number of products for the General Insurance holders. General insurance products include: Individual insurance Small business insurance Corporate insurance Tata AIG Insurance offers flexible life insurance to the individuals, business organization and other association. For the corporate, there are various insurance products like group pensions, employee benefits, work place solutions and credit life. For the individuals, Tata AIG Insurance offers various products for adults, children and for retirement planning . DISTRIBUTION CHANNELS OF TATA AIG: The winds of liberalization initiated vast changes in the functioning of the industry today. Increasing number of multinational partnership with private insurers have paved the way for a radical shift in insurance selling- through a number of new distribution channels besides bringing about more awareness on the need for
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insurance and also stressing on the important role technology can play. In the developed markets, many insurers have a preferred mode of distribution. In India, many players are hedging their bets because the need for scale outweighs considerations of focus and because non-agency distribution, which is presently operational for the last two years, forms a basis for study. Tata AIG has a corporate agency channel, which handles its corporate agents and has tie-ups with 38 corporate houses. Insurers want to lower distribution costs by finding more efficient channels. The new private players are developing multiple channel models; many insurers use or plan to use several banks as distributors. Because most banks have strong regional bias, in this regards Tata AIG has agreement with HSBC (corporate agency distribution) through that it is doing both life insurance and general insurance business.. Because most banks have a strong regional bias, Insurers can use several banks without creating large overlap. An important distribution challenge facing insurers is the need to meet the rural and social sector legislative requirements stipulated in terms of market opening. For Tata AIG, it takes rural insurance as an opportunity and not an obligation. For achieving objective in rural area it has also tie with NGOs (Bridge stone for Karnataka and Kerala). In this project mainly focus is distribution channel of Life Insurance of Tata AIG and little bit of distribution of General Insurance of Tata AIG also. So as the whole topic of distribution can be known for the both company of Tata AIG (Life and General insurance). Gradually channels are incorporating day by day for the growth of business. In the span of two to three years Tata AIG achieve much more business growth what it expected at the time of entrance in Indian market. It happened because it has quality people, innovative management, be able to employ technology effectively besides having right products with effective and modern distribution channel
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Chapter 4
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Being the best product player in the private sector, but still survey TATA AIG needs to improvement regarding its premium charges and advertisement to its target customers. a) Premium charges Owing to its high premium charges (Tata AIG Apex Plan, Premium RS. 90000/-) customers perception about the company s product has become that its only for the upper middle class people. Whereas TATA AIG do has some policy with low premium but the charges of allocation are too high. So we would like to suggest slowing down its premium charges to some extend by reducing administration charges and other charges. b) Advertisement: During survey we have found that due to lack of advertisements about the products and agents selling the products in which they get high commissions customers are somewhere mislead and they know about very few products though TATA AIG has wide range of variety of the products. So we would recommend TATA AIG to invest more in advertisement in form of TV commercials, pamphlets and hoardings. c) Wrong perception: AIG is on the edge of filing bankruptcy. So Tata AIG is also going to on the brink of filling bankruptcy. But insurance in India is a highly regulated industry. Any company that wants to set up an insurance business has to follow very stringent norms given by the Insurance Regulatory & Development Authority (IRDA). So company should take positive measure to remove this wrong perception from the people.
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d) Sample size:
For this research study only hundred sample size has been taken. The result will be more appropriate if a large sample size is considered.
2. Benefit to us:
a)Doing internship in TATA AIG have given me immense experience in the insurance industry for these fourteen weeks. b) Interaction with the customers for survey and sales has developed our marketing skills. c) Working in the office premises has given exposure to corporate world and an experience in working in corporate pressure.
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Chapter-5
CONCLUSION
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Conclusion
Indian insurance sector is likely to register unprecedented growth of 200% and attain a size of Rs. 2000 billion ($51.2 billion) by 2009-10, in which a private sector insurance business will achieve a growth rate of 140% as a result of aggressive marketing technique being adopted by them against 35-40% growth rate of state owned insurance companies. The rural market offers tremendous growth opportunities for insurance companies and insurers should develop viable and cost-effective distribution channels; build consumer awareness and confidence. The state owned insurance companies such as LIC and GIC have limited number of policies to offer to their subscribers while in case of private insurance companies, their policy numbers are many more and the premium amount as well as the maturity period is much competitive as against those of government insurance companies. The private sector insurance players have started exploring the rural markets in which until recently, the state owned companies had the monopoly. Here it can be concluded that the summer internship program, done for partial fulfillment of the MBA course in ICFAI University, in TATA AIG Life Insurance Co. Ltd. has been completed successfully. Following are the achievements done during the summer internship from 24th February 2009 to 23rd May 2009. a) Survey done with interest of TATA AIG has been conducted successfully and results are discussed above. b) Sales done during the time have done great business to the company. c) The experience gained during the internship has sharpen my skills and given a corporate exposure.
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References
For the references different books, journals, and newspapers have been used and different websites have been used.
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