Chapter 01

Fundamental of Insurance
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Introduction
History of Insurance in India
The Fundamental underlying principle of insurance
Insurance Industry A SWOT Analysis
Factors Responsible for the Success of Insurance Companies
Why are more people taking Insurance Policies?

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

The insurance industry in India has registered a growth of 10.5 % in the life insurance market
and a 13% growth in the non-life insurance market. This is primarily because of the
liberalization of the insurance sector and the consumer awareness drive launched by both L.I.C
and private sector players. As the consumer of insurance is waking up to newer needs. The
Indian insurer is also getting there to meet them. Through product and market research and no
doubt through observation of consumer behaviour changes are effected in the kind of products
and features coming out into the market.

The business of insurance is related to the protection of the economic value of an asset for which
a normal life time exists during which it is expected to perform. However, if the asset gets
Damaged, Destroyed or is made non-functional by the occurrence of some unfortunate event the
owner of the assets suffers. Insurance is a mechanism to reduce the financial implications of such

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consequences.
The mechanism involves people who are exposed to the same risk come together and agree that
if any one of the members suffers a loss the others will share the loss. Thus people facing
common risk come together and make their contribution towards a common fund whose amount
is determined beforehand on the basis of past data and experiences.

DEFINITION:

Insurance is a contract (policy) in which an individual or entity receives financial protection or

reimbursement against losses from an insurance company. The company pools clients' risks to
make payments more affordable for the insured.

BREAKING DOWN 'Insurance'

When shopping around for an insurance policy, look for the best priced package that is right for
you - prices can vary from one insurance company to the next. And make sure you know what
you want. Some individuals, for example, prefer 24-hour claims service or face-to-face contact
with an insurance representative. Also consider the claims settlement process, the amount of the
deductible and the extent of the replacement coverage. Insurance companies and the policies they
offer are not all the same, so think about more than just the price.

HISTORY OF INSURANCE IN INDIA

In India, insurance has a deep-rooted history. It finds mention in the writings of Manu
(Manusmrithi), Yagnavalkya (Dharmasastra) and Kautilya (Arthasastra). The writings talk in
terms of pooling of resources that could be re-distributed in times of calamities such as fire,
floods, epidemics and famine. This was probably a pre-cursor to modern day insurance. Ancient
Indian history has preserved the earliest traces of insurance in the form of marine trade loans and
carriers contracts. Insurance in India has evolved over time heavily drawing from other
countries, England in particular.

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1818 saw the advent of life insurance business in India with the establishment of the Oriental
Life Insurance Company in Calcutta. This Company however failed in 1834. In 1829, the Madras
Equitable had begun transacting life insurance business in the Madras Presidency. 1870 saw the
enactment of the British Insurance Act and in the last three decades of the nineteenth century, the
Bombay Mutual (1871), Oriental (1874) and Empire of India (1897) were started in the Bombay
Residency. This era, however, was dominated by foreign insurance offices which did good
business in India, namely Albert Life Assurance, Royal Insurance, Liverpool and London Globe
Insurance and the Indian offices were up for hard competition from the foreign companies.

In 1914, the Government of India started publishing returns of Insurance Companies in India.
The Indian Life Assurance Companies Act, 1912 was the first statutory measure to regulate life
business. In 1928, the Indian Insurance Companies Act was enacted to enable the Government to
collect statistical information about both life and non-life business transacted in India by Indian
and foreign insurers including provident insurance societies. In 1938, with a view to protecting
the interest of the Insurance public, the earlier legislation was consolidated and amended by the
Insurance Act, 1938 with comprehensive provisions for effective control over the activities of
insurers.

The Insurance Amendment Act of 1950 abolished Principal Agencies. However, there were a
large number of insurance companies and the level of competition was high. There were also
allegations of unfair trade practices. The Government of India, therefore, decided to nationalize
insurance business.

An Ordinance was issued on 19 January 1956 nationalizing the Life Insurance sector and Life
Insurance Corporation came into existence in the same year. The LIC absorbed 154 Indian, 16
non-Indian insurers as also 75 provident societies - 245 Indian and foreign insurers in all. The
LIC had monopoly till the late 90s when the Insurance sector was reopened to the private sector.

The history of general insurance dates back to the Industrial Revolution in the west and the
consequent growth of sea-faring trade and commerce in the 17th century. It came to India as a
legacy of British occupation. General Insurance in India has its roots in the establishment of
Triton Insurance Company Ltd., in the year 1850 in Calcutta by the British. In 1907, the Indian

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Mercantile Insurance Ltd, was set up. This was the first company to transact all classes of
general insurance business.

1957 saw the formation of the General Insurance Council, a wing of the Insurance Association of
India. The General Insurance Council framed a code of conduct for ensuring fair conduct and
sound business practices.

In 1968, the Insurance Act was amended to regulate investments and set minimum solvency
margins. The Tariff Advisory Committee was also set up then.

In 1972 with the passing of the General Insurance Business (Nationalization) Act, general
insurance business was nationalized with effect from 1 January 1973. 107 insurers were
amalgamated and grouped into four companies, namely National Insurance Company Ltd., the
New India Assurance Company Ltd., the Oriental Insurance Company Ltd and the United India
Insurance Company Ltd. The General Insurance Corporation of India was incorporated as a
company in 1971 and it commence business on January 1sst 1973.

This millennium has seen insurance come a full circle in a journey extending to nearly 200 years.
The process of re-opening of the sector had begun in the early 1990s and the last decade and
more has seen it been opened up substantially. In 1993, the Government set up a committee
under the chairmanship of RN Malhotra, former Governor of RBI, to propose recommendations
for reforms in the insurance sector. The objective was to complement the reforms initiated in the
financial sector. The committee submitted its report in 1994 wherein, among other things, it
recommended that the private sector be permitted to enter the insurance industry. They stated that
foreign companies be allowed to enter by floating Indian companies, preferably a joint venture
with Indian partners.

Following the recommendations of the Malhotra Committee report, in 1999, the Insurance
Regulatory and Development Authority (IRDA) was constituted as an autonomous body to
regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in
April, 2000. The key objectives of the IRDA include promotion of competition so as to enhance

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customer satisfaction through increased consumer choice and lower premiums, while ensuring
the financial security of the insurance market.

The IRDA opened up the market in August 2000 with the invitation for application for
registrations. Foreign companies were allowed ownership of up to 26%. The Authority has the
power to frame regulations under Section 114A of the Insurance Act, 1938 and has from 2000
onwards framed various regulations ranging from registration of companies for carrying on
insurance business to protection of policyholders interests.

In December, 2000, the subsidiaries of the General Insurance Corporation of India were
restructured as independent companies and at the same time GIC was converted into a national
re-insurer. Parliament passed a bill de-linking the four subsidiaries from GIC in July, 2002.

Today there are 28 general insurance companies including the ECGC and Agriculture Insurance
Corporation of India and 24 life insurance companies operating in the country.

The insurance sector is a colossal one and is growing at a speedy rate of 15-20%. Together with
banking services, insurance services add about 7% to the countrys GDP. A well-developed and
evolved insurance sector is a boon for economic development as it provides long- term funds for
infrastructure development at the same time strengthening the risk taking ability of the country.

THE FUNDAMENTAL UNDERLYING PRINCIPLE OF INSURANCE IS:

1) Losses must be definite and discreet in time and place

2) Losses must not be fortuitous in nature and beyond the control of the insured
3) Losses must be large enough to cause a financial burden
4) Losses must be measurable or calculable and a monetary amount should be determined to
compensate the loss
5) Past history of the specific losses should exist to help the actuaries to estimate frequency
severity and costs involved and determine fair rates of insurance.
6) The cost of insurance should be affordable by the parties and should be a fraction of the
value of the insured Item.
Thus we see that a large number of homogenous units (people. companies, Entitles) with a
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similar potential for loss exposure must be available for insurance and this is generally referred
to as The Law of large numbers.

INSURANCE INDUSTRY A SWOT ANALYSIS

Strengths:
Premium rates are increasing and so are commissions
The variety of products is increasing.
Prospects expect more services from their brokers
Flexibility in payment of premium
Flexibility in investment option.
Open office structure.
Competitive environment.

Weaknesses:
Insurance companies are often slow to respond to changing needs.
There is an increasing trend of financial weakness among the companies.
There are more competitors for agencies to compete with banks and Internet players

Opportunities:
The ability to cross sells financial services is barely being tapped and can still be
developed by collaborative efforts.
Technology is improving to the point that paperless transactions are available.
The client's increasing need for an "insurance consultant" can open new ways to service
the client and generate income.

Threats:
The increasing cost and need for insurance might hit a point where a backlash with occur.
Government regulations on issues like health care, mold and terrorism can quickly

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 change the direction of insurance. Increasing expenses and lower profit margins will hit
hard on the smaller agencies and insurance companies.
Increasing expenses and lower profit margins will hit hard on the smaller agencies and
insurance companies.
Increasing in the number of private players in the market.

FACTORS RESPONSIBLE FOR THE SUCCESS OF INSURANCE

COMPANIES:

Several factors are responsible for the success of the various Insurance companies; viz.
The change in the attitude of the population
An open and transparent environment created under the IRDA. 3 A well-established
distribution network.
Trained professionals to build and sell the product.
A more rational approach to the investment criteria
Encouragement of newer and better products.
A stringent accounting practice to prevent failures amongst the insurers.
A level playing field at all stages of development in the sector for all the players.

WHY ARE MORE PEOPLE TAKING INSURANCE POLICIES?

One of the major reasons for an increasing number of people availing insurance policies in India
is the growing level of awareness. People nowadays value their lives, their health, and their
families even more than before given the tough economic circumstances and so want to make
sure that everything is fine even if they are not there. Yet another reason for the growing
popularity of insurance policies is the benefit of tax exemption that is provided to family oriented
and individual plans. Majority of the private insurers also provide lucrative returns and are now
being availed by a section of the Indian society with greater disposable earnings. There is an
aspect of psychological comfort attached to the insurance policies as well - whenever an

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insurance is availed the policyholder can be more or less assured of a safe future for that
particular part of his or her life.

Chapter 02

Fundamental of Life Insurance

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Introduction
Life Insurance in India
Basic Concept of Life Insurance
Insurance Sector Reforms

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INTRODUCTION
Almost 4,500 years ago, in the ancient land of Babylonia, traders used to bear risk of the
caravan trade by giving loans that had to be later repaid with interest when the goods arrived
safely. In 2100 BC, the Code of Hammurabi granted legal status to the practice. That, perhaps,
was how insurance made its beginning. Life insurance had its origins in ancient Rome, where
citizens formed burial clubs that would meet the funeral expenses of its members as well as help
survivors by making some payments. As European civilization progressed, its social institutions
and welfare practices also got more and more refined. With the discovery of new lands, sea
routes and the consequent growth in trade, Medieval guilds took it upon themselves to protect
their member traders from loss on account of fire, shipwrecks and the like. Since most of the
trade took place by sea, there was also the fear of pirates. So these guilds even offered ransom
for members held captive by pirates. Burial expenses and support in times of sickness and
poverty were other services offered. Essentially, all these revolved around the concept of
insurance or risk coverage. That's how old these concepts are, really. In 1347, in Genoa,
European maritime nations entered into the earliest known insurance contract and decided to
accept marine insurance as a practice.

The first step...

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Insurance as we know it today owes its existence to 17th century England. In fact, it began
taking shape in 1688 at a rather interesting place called Lloyd's Coffee House in London, where
merchants, ship-owners and underwriters met to discuss and transact business. By the end of the
18th century, Lloyd's had brewed enough business to become one of the first modern insurance
companies.
Insurance and Myth...
Back to the 17th century. In 1693, astronomer Edmond Halley constructed the. First mortality
table to provide a link between the life insurance premium and the average life spans based on
statistical laws of mortality and compound interest. In 1756, Joseph Dodson reworked the table,
linking premium rate to age.

Enter companies...
The first stock companies to get into the business of insurance were chartered in England in
1720. The year 1735 saw the birth of the first insurance company in the American colonies in
Charleston, SC. In 1759, the Presbyterian Synod of Philadelphia sponsored the first life
insurance corporation in America for the benefit of ministers and their dependents. However, it
was after 1840 that life insurance really took off in a big way. The trigger: reducing opposition
from religious groups.

The growing years...

The 19th century saw huge developments in the field of insurance, with newer products being
devised to meet the growing needs of urbanization and industrialization. In 1835, the infamous
New York fire drew people's attention to the need to provide for sudden and large losses. Two
years later, Massachusetts became the first state to require companies by law to maintain such
reserves. The great Chicago fire of 1871 further emphasized how fires can cause huge losses in
densely populated modern cities. The practice of reinsurance, wherein the risks are spread among
several companies, was devised specifically for such situations. There were more offshoots of
the process of industrialization. In 1897, the British government passed the Workmen's
Compensation Act, which made it mandatory for a company to insure its employees against
industrial accidents. With the advent of the automobile, public liability insurance, which first
made its appearance in the 1880s, gained importance and acceptance? In the 19th century, many
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societies were founded to insure the life and health of their members, while fraternal orders
provided low-cost, members-only insurance. Even today, such fraternal orders continue to
provide insurance coverage to members as do most labor organizations. Many employers
sponsor group insurance policies for their employees, providing not just life insurance, but
sickness and accident benefits and old-age pensions. Employees contribute a certain percentage
of the premium for these policies.
LIFE INSURANCE IN INDIA
Although insurance in its present form has been brought to India by the British and other colonial
powers the concept of collective co-operation to share a particular risk is as old as the dawn of
human civilization. India was a major trading power in ancient times and some examples of
sharing risks can be found such as ships carried cargo of several traders together instead of a
single individual. In the Mogul army a life annuity was granted to the family on the demise of a
soldier against some regular contribution in his life time. The Joint family system of India is also
an embodiment of the same concept.

Early attempts
Life insurance in its modern form came to India from England in 1818 with the formation of the
Oriental Life Insurance Company in Kolkata and with the passage of time Indians were also
covered by this company. By 1868 there were 285 companies operating in India and were
primarily into insuring the European lives, those Indians who were offered were charged an extra
premium of 15 to 20% and treated as substandard lives.

First Indian Company

The first insurance company under the title "the Bombay life insurance society" started its
operations in 1870 and started insuring lives of Indians at standard rates. Later "oriental Govt.
life insurance co." was established in 1874 which emerged as the leading insurance company in
India.

Pre Independence history

With the various freedom movements various leaders encouraged domestic life insurance
companies to enter the fray. In 1914 there were only 44 companies and in 1940 this number grew
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to 195.From here on the growth of life insurance was quiet steady except in 1947-48 during the
partition of India.

Nationalization of Insurance Business 1956

After Independence our nation was moving towards a Socialistic pattern of society and with the
main aim of spreading the concept to rural areas and to channel the money into nation building
activities the government of India Nationalized the life insurance business and formed "The Life
Insurance Corporation of India" by merging about 250 life insurance companies. The Life
Insurance Corporation of India started functioning from 1.9.1956 and today is the largest insurer
in the country with one central office, seven zonal offices and over 2,048 branch offices with a
workforce of 1,25,000 employees and over 8,00,000 life insurance agents.

Evaluate your life insurance needs:

Life Insurance is one of the most popular savings/ investment vehicles in India. Ironically, its
probably the least understood too. An insurance policy offers much more than just tax planning
and investment returns. It offers the ability to plan for unforeseen events that could affect
family's financial profile adversely.

Factors to consider:
Financial profile and needs are different from person to person, and the same is true for insurance
needs. However, irrespective of the differences, the number of dependents PH has and their
financial needs are the most important factors to consider.

Issues to consider while evaluating the above factors include:

1) The wealth, income and expense levels of PH dependents,
2) Their significant foreseeable expenses,
3) The inheritance PH would leave on them, and
4) The lifestyle PH wants to provide for them.

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How much insurance does a person need?
Obviously the above factors mean nothing to the insurance planning process unless they are
quantified. Globally, the time-tested approach used by insurance and financial planners is the
capital needs analysis method.

When should you re-evaluate?

Whenever any of the factors discussed above change.

Risk cover versus investment returns:

Insurance options range from policies with low premium that offers a PH almost no returns to
those with high premium that effectively offer post-tax returns of around 8% to 9.5% p.a. These
returns are at the lower end of fixed-income returns available today and hence are relatively
unattractive. I recommend PH buy an insurance policy skewed towards investment returns only
if you are in the high-tax bracket, prefer to invest in low-risk, fixed-income options and have
exhausted all the other such investment options available. See Financial Investment Options and
Government Schemes Directory for details of low-risk, fixed-income investment options
available.

Whole life versus limited period:

As PH grow older, he may not have as many dependents (his children would become self-
dependent) or his wealth may reach a level where it can support his dependents financial needs
in the event of his death. These possibilities bring us to the interesting question on whether he
should insure himself, for whole life or for a limited term. Obviously, the cost of insurance for
the latter is lower. I recommend him to insure for whole life only if he never expect his wealth to
reach a level where it can support the financial needs of his dependents.

Tax Planning:
The premium paid for an LIC policy also qualifies for tax rebate under Section 88 of the Income
Tax Act. The maximum premium amount that can qualify for rebate is Rs60, 000 per annum and
you get a rebate equivalent to 20% of the premium paid, from your tax liability for the year.
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Understand how much insurance PH need:
This is the single most important factor to evaluate before PH select a life insurance policy. For
this, he must consider the current expense profile of his dependents and the current wealth level
of his family. Also, consider what is his dependents risk tolerance level is. Is he adequately
Insured, this planning tool can take him step-by-step in addressing this issue.
Selecting Premium Paying Term (PPT):
How long he wants to pay his insurance premium for? Key factors this decision could depend
upon are: -

1) How many years he sees himself earning a regular income

2) The level of his regular savings
3) The amount he can commit to paying regularly as insurance premium
4) How long he wants to be insured versus how long he expects to pay a premium for?

Other important questions to ask besides understanding how much insurance he need and
letting his premium-paying term, he need to consider some other Key factors, such as

1) Does he want to participate in bonus/ profit share?

2) What is the primary objective of his seeking insurance
3) Mainly risk cover, mostly investment returns?
4) Does he want accident cover?

For a detailed understanding of the factors he need to consider while selecting a life insurance
policy, and the rationale for the same, use Insurance Planner. This planning tool will also take
him step by step and arrive him at a shortlist of life insurance policies appropriate for him, based
on his personal profile.

BASIC CONCEPTS OF LIFE INSURANCE

WHAT IS LIFE INSURANCE?

Robert Frost- The woods are lovely, dark, deep but I have promises to keep and miles to go
before I sleep.

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Life is valuable and so are the promises we make in them. Life is full of dreams and aspirations
not just ours but also of our loved ones. We have responsibilities to fulfil. Responsibilities that
can be fulfilled with the right tools and planning.

Life insurance is a protection + savings financial tool that one can use to achieve long term
financial goals of life and to protect the financial well-being of family against risks of untimely
death. Life Insurance is that integral part of financial planning that secures the familys future. It
is important to take life insurance on the earning member(s) of the family so that in the event of
his/her untimely death, future expenses of family can be managed.

Let us understand this in simple terms:

When one buys a life insurance policy, he/she becomes the Life Assured or Insured to the
extent of the Life Cover or Sum Assured selected. At this point, he/she will also select the
Nominee or Beneficiary who will receive the benefit in case of his/her untimely death.

The insurance company that sells the life insurance policy is the Insurer (Example: ICICI
Prudential Life Insurance).

Life Cover or Sum Assured is the amount that the Insurer will pay to the Nominee upon
death of the Life Assured.In case of some policies, if the Life Assured survives the policy
term, the Insurer pays a certain lump sum of money also known as the Maturity Amount.

Payments called Life Insurance Premium have to be made to the Insurer. These payments
can be on a regular basis or just once, also known as the Payment Term.

Now lets see an example:

Mr. Kumar (Insured) pays ICICI Prudential Life Insurance (Insurer) an annual amount
(Life Insurance Premium) over 5 years (Payment Term) to make sure (Insure) that his
wife (Nominee) gets a certain assured sum of money (Life Cover) if something
unfortunate were to happen (his demise) before the contract (Life Insurance Policy)
expires after 10 years (Policy Term or Maturity).

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 Depending upon the type of policy, if Mr. Kumar (Insured) survives till the end of 10
years (Policy Term), then he gets a certain sum of money (Maturity Amount). In some
types of policies there is only a Life Cover payable on death (no maturity amount).

Life insurance not only covers the risk arising out of the unforeseen event of death of the
earning family member(s), but also gives additional benefits like savings, or funds
accumulated over a period of time and tax benefits. A carefully planned and bought
insurance plan from a trusted company can help one get long term risk cover plus savings:
dual benefits from one solution.

KEY BENEFITS OF LIFE INSURANCE

You may be asking yourself these questions:

Should life insurance be part of my financial plan?

Should I buy life insurance only to cover risk?

How much life cover should I buy so that my family is financially secure when I am not
around?

Are there other aspects I should consider while looking at a life insurance policy?

How can I be sure that the life insurance policy being offered is the right choice for me?

In order to get the answers, you need to know the key benefits of life insurance. A good
insurance policy would offer you these benefits:

Life Cover: This is the key benefit that will make the difference in your life, or after your life.
Life cover simply means that if you have taken a life insurance policy and if tomorrow
misfortune strikes leading to your death, then your family stays financially protected. This is
because the life insurer will pay a lump-sum amount to your family. However, you need to be
sensitive about how much life cover you need. Remember, life insurance is taken to cover the

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risk of an earning member not being there. The Life Cover amount should be sufficient to take
care of the familys expenses. A good thumb rule is to ensure that your life insurance cover is
at least 10-15 times your annual income. For example, if your annual income is Rs 15 lakh
then your life cover should be at least Rs 1.5 Crore. Similarly, if your annual income is Rs 2 lakh
per year, then your life cover should be at least Rs 20 lakh. To understand this better, you need to
ask the following questions. Imagine if tomorrow you are not around for your family, then:

o How much money will your spouse or parents need to manage daily expenses?

o If you & your loved ones had planned to buy a house or a new car, then how much
money will they require if you are not around to fund it?

o How much money will your children require to complete their education?

o How much liability have you already accumulated from which the family needs to be
protected?

There could be other questions like these that are personally relevant to you but need to be asked
so that if tomorrow you are not around, your loved ones should still be able to meet expenses &
aspirations. Buy a Pure Protection plan or a Savings + Protection plan that will provide sufficient
Life Cover to secure your familys financial future.

Long Term Savings: Life Insurance is also a good way to systematically save and build up
funds for the future. It is an ideal long term savings tool that can help you meet your financial
needs after retirement or even fulfil a future goal like your childs marriage. Thus with life
insurance you get dual benefits of Protection + Savings.

Tax Advantage: You can get tax benefits on premium paid towards Life Insurance policies under
Section 80C, Pension policies under section 80CCC and Health policies under section 80D of
Income Tax Act 1961. So, when you buy life insurance, you get protection over a long term basis
and you also get tax benefits.

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 TYPES OF LIFE INSURANCE

Pure protection

Term Plans: are also known as Pure Protection plans. These plans are the cheapest form of life
insurance and provide life cover for a specific period of time. In the unfortunate event of the
death of the Life Assured during the Policy Term, the Insurer pays the Life Cover (death benefit)
to the Nominee. Term plans are designed purely to protect your familys future.

Example: Mr. Kumar and Mr. Kapoor bought term plans in Jan 1995 with life cover of Rs 50
lakh, a policy term of 20 years and paid life insurance premium regularly. In 2005, Mr. Kapoor
died of a heart attack. Within a weeks time, his wife (nominee) contacted the insurance company
and provided all the relevant documents and forms. She received the full life cover of Rs 50 lakh.
Mr. Kumar survived the policy term and in Jan 2015 his policy was closed with no payout. Now,
you may be wondering Whats the use of having a plan when I cant get my money back? Here
is why:

Term insurance is the simplest and cheapest form of life insurance. You can get a large
amount of coverage at a small premium. For example, a 25-year-old healthy male can get life
insurance cover of Rs 1 Crore for just Rs 27 per day with an annual premium of Rs 9,888.
These rates are for ICICI Pru iCare II Option I with a policy term of 30 years and are
inclusive of all taxes.

If you feel that the life insurance premium is expensive, think about this - Your life is more
valuable than your car. For car insurance, one may spend between Rs 2,000 and Rs 20,000
for the yearly premium. If you believe that a car is worth insuring, then insuring your life is
something you should never delay. Its important to have the peace of mind that your
family will always be protected against financial hardships. Its a small price to pay to
provide financial security.

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Protection + savings

Participating Endowment Plans: are insurance policies which provide both guaranteed and
non-guaranteed benefits. The Life Cover is a guaranteed benefit and is paid upon the death of the
Insured. Participating policyholders are allowed to participate or share in the profits of the
insurance companys participating fund. This is paid in the form of bonuses which are non-
guaranteed benefits.

Non-Participating Endowment Plans: are insurance policies which pay just the Life Cover
upon death of the insured. The policyholder does not participate or share in the profits of the
insurance companys participating fund and is not entitled to any non-guaranteed benefits.

Unit Linked Insurance Plans (ULIPs): In case of ULIPs, the policyholders money is invested
in capital markets. A part of the premium that the policyholder pays goes toward providing Life
Cover and the remaining is invested in different funds like equity and debt. Apart from benefits
like disciplined savings, tax deductions and life cover, ULIPs are ideal wealth creation
instruments which provide:

Potential for good returns through investment in equity and debt

Flexibility and control of your investments through:

Fund switch (movement of money between funds)

Premium redirection (future allocation of premiums in chosen funds)

Partial withdrawals (withdrawal of a specific amount from the complete investment in

case of emergencies)

Top-ups (increase of existing investment if you have liquid funds)

Unlike traditional savings plans, both the rewards & risks of investment in ULIPs are with
the policyholder.

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Retirement or Pension plans: are designed to provide the policyholder with a regular income
after they retire. In these plans, the policyholder has to invest either a lump sum amount or
regular premiums during the payment term. In return, the policyholder will get regular income
(pension) for life. In some retirement plans, in case of death of the policyholder, the surviving
spouse continues to get the regular income. Then on death of the spouse, the nominee (e.g. child)
gets a lump sum payout. Retirement plans are available as traditional and ULIP plans.

WHICH LIFE INSURANCE SOLUTION CAN HELP ACHIEVE YOUR GOALS?

Your need for life insurance changes as you progress through life. You start working, get
married, have children, watch them grow and then eventually, you retire. Whichever way you
look at it, its important to secure important days like these so that you can focus on what really
matters - making good memories. We have broken down each life stage into categories that you
can identify with.

Young and single: As a young adult, you start your career and become financially
independent. At this point of time you may think that you dont need insurance. But, if
something were to happen to you, your family could encounter financial hardships. You
would have dependents like parents. So it is ideal to buy life insurance at this stage of your
life, since the premium rates would be lower. If you have any debts (like a home loan) you
should consider purchasing enough life insurance to cover these expenses. The best option
here would be to buy a Term plan with a longer payment term (like 20-30 years). The basic
wealth management principle says save before you spend. It is the stage where you are single
and can save for your future. If you want to save for the future, you can choose to invest in a
ULIP plan. ULIPs provide benefits like market linked growth, life cover and some plans also
provide capital protection (so your investment is always secure).

Recently married: Recently married couples typically dont have any specific urgency to
buy life insurance. If both spouses are working and contributing to household finances and
dont have any debts, then the demise of any one person would be a big emotional loss but

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 would not financially affect the other in a big way. This situation changes once you have
financial responsibilities like a home loan. Even if both spouses have good salaries, the
burden of the home loan may be more than the surviving spouse can afford on a single
income. Other debts and expenses can further contribute to the financial strain. To make sure
either spouse can carry on financially after the death of the other, both should purchase life
insurance with a big life cover. At the very least, it will provide peace of mind knowing that
both you and your spouse are protected. Again, your life insurance needs increase
significantly if you are caring for an aging parent. Life insurance becomes extremely
important in these situations, because these dependents must be provided for, in case you are
not around. The savings angle comes in at this stage as well (actually it applies to every stage
in life). If you have financial goals like a car or a house or an exotic vacation, it always
makes good sense to plan and save for it. Ulips can be ideal instruments to secure long term
financial goals.

Married with children: At this stage of life (family), the requirements change to saving a
substantial amount to secure your childrens welfare like a good education or marriage. A
unique concept available with life insurance plans is the option to save for your childs
future. With these policies, in case of death of the policyholder (the parent) the policy
continues the insurance company pays the premium and the child gets the accumulated
fund value at the end of the policy term. It is also important to start saving for retirement at
this stage, considering the ever-increasing rates of inflation, since this will affect your
purchasing power in the future. With a good retirement plan, you can get a regular pension
for life and can do this by investing a small amount regularly to secure your golden years. In
case of some retirement plans, in case of your death, the same regular pension will be
provided to your spouse and upon death of your spouse, the legal heir will get a lump sum
payout.

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 Nearing retirement: Your priorities change again when you get closer to retirement. At this
stage you will have fewer dependents, your debts would have paid off and you would have
accumulated substantial financial assets. Here, your need for life insurance protection will
reduce and having a comfortable retired life will become crucial.

Remember this: Its never too late to start. So if you have not planned yet, dont worry
start today and secure your future. Invest in life insurance and always revisit your plan every
time you pass through a major life stage (marriage, children and retirement). Do check out
our financial calculators that can help you understand and arrive at the correct amount of life
insurance you need at every life stage.

THINGS TO KEEP IN MIND BEFORE BUYING A LIFE INSURANCE SOLUTION

Only you know your current situation and only you can decide on which life insurance solution
is right for you. You could consult a life insurance agent or a certified financial planner to take
informed decisions. Here are some guidelines you should keep in mind while deciding on a life
insurance plan:

Identify your financial goals: The insurance plan you buy should be based on your financial
goals at your current stage of your life. Keep your financial goals clear, specific, measurable
and attainable. For instance, " I want to have a comfortable retirement " is not a specific and
measured goal. " I want to send my son to a good school " is not a concrete or quantified
objective. A specific goal could be "I want to send my son/daughter to an international
business school which has a fee structure of Rs 25 lakh and I need to plan for it ". Another
specific goal can be " When I die, my family should receive Rs 1 Crore as a lump sum to pay
for all expenses" or " When I retire, there should at least Rs 50 lakhs in my bank account and
I should have a regular monthly income of Rs 10000 ".

Understand your current financial & personal situation - Age, income, expenses and
dependents: You must have a clear picture of your life stage including the number of years

~ 21 ~
 required to achieve your financial goals, your income and expenses. Your insurance plan
should cover all risks and give you an affordable premium which will have to be paid along
with your routine expenses.

Calculate the amount of life cover that you need: This would depend on the liabilities you
have, the number of dependents, current and future income, and other factors. Your life cover
should be at least 10 times your yearly income. Similarly, you should save at least 30% of
your income to secure your retirement.

For maximum protection & savings always choose the longest possible term: The power
of compounding and concepts of time value of money ensure that your money always grows
significantly over time. This makes it obvious that you should protect your loved ones and
save for the future keeping as long a time frame as possible. Also keep in mind that, the
longer is the term, the lower will be your premiums.

Understand all charges & features of the life insurance solution: Always take time to
understand the charges attached to your life insurance plan. A good life insurance provider
will always give you all the details regarding the benefits and cost structure of the plan. You
should also check the tax benefits available under the insurance policy.

Check the claims settlement ratio of the life insurance company: Claim settlement ratio is
an indication of the claims settled as compared to the number of claims received by the
insurer. A company with high claims settlement would be favorable, simply because if
something were to happen to you, your family members would get the insured amount
quickly. The claim settlement ratio is also a reflection of smooth and efficient processes that

~ 22 ~
 are set up to ensure that the nominee gets all formalities and documentation done in a quick
and efficient way.

Be informed about all servicing options offered by the life insurance company: This is
necessary to understand the full range of services being offered by the insurance company. In
today's day and age, you can get complete control of your policy at your fingertips by getting
your Online User Account.

HOW TO MAKE THE MOST OF TAX BENEFITS FROM LIFE INSURANCE,

PENSION AND HEALTH?

Life Insurance plays a critical role in tax-planning. By investing in a life insurance plan, you can
claim deductions of the premiums paid from your taxable income as per the provisions of the
Income Tax Act, 1961. This means that the insurance premiums you pay, helps in reducing your
tax liabilities. In case of some life insurance products, maturity proceeds also come under
exempted incomes. This means, no tax is payable on benefits received on maturity or on death
subject to provisions of section 10(10D). Hence Life Insurance products are the best choice that
ensures your family is always protected and you get additional savings through tax benefits.

Important Sections:

Section 80C - Premium paid on Life Insurance policies: You can claim deduction of life
insurance premium paid from your taxable income as per the provisions of section 80C.
Actual deduction is restricted to 10% of the minimum capital sum assured or premium paid
whichever is lower. Further, the overall limit of deduction available under section 80C is Rs.
1,50,000/-.

Section 80CCC: Premium paid on Pension policies: You can get deduction from your
taxable income towards premium paid for Pension policies up to a limit of Rs 1,50,000/-.
Surrender of the Plan or Pensions/ Annuities received are taxable as per prevailing tax laws.
~ 23 ~
 Section 80CCE: Under this section, the overall limit for deduction under Sections 80C,
80CCC and 80CCD (1) is Rs. 1,50,000/-.

Section 80D - Premium paid on Health Insurance policies: You can get deduction of
premium paid towards health insurance policy taken for self, spouse, dependent children and
parents. Limits are as follows:

o Rs. 25,000 deductions are allowed for self, spouse and dependent children (Limit is
Rs. 30,000 if the age of insured is 60 years or more)

o Additional deduction of Rs. 25,000 towards health insurance premium paid for
covering parents (Limit is Rs. 30,000 if the age of insured is 60 years or more).

Section 10(10D): Proceeds from Life Insurance policies are exempt subject to conditions of
section 10(10D).

Section 10(10A): Payment received on commutation of a Pension policy is exempt from tax.

Please note: The Tax write-up above is for general understanding and reference. The
reader will have to verify the facts, law and content with the prevailing tax statutes and
seek appropriate professional advice before acting on the basis of the above information.
Tax laws are subject to amendments from time to time. ICICI Prudential Life Insurance
Company Limited expressly disclaims any liability to any person, if tax benefits stated
above are denied to the customer. W/II/127/2015-16.

INSURANCE SECTOR REFORMS

Why It became Inevitable

Despite the phenomenal success of The Life Insurance Corporation of India the government and
the public at large were not satisfied with it and by signing the GATT accord the Government of
India was committed to open up the insurance sector to both domestic and international firms. A
committee under the chairmanship of late Mr. R.N Malhotra was formed (ex-governor RBI) and

~ 24 ~
came to conclude that the monopoly of LIC lead to the lack of sensitivity towards policy holders
and only 22% of the insurable population was insured. The committee thus recommended a
number of measures to revamp LIC and to allow foreign companies to operate in India with an
Indian partner. It felt that this would lead to a greater scope in product innovation and service
improvement as well. In 1999 the Insurance Regulatory and Development Authority Bill was
passed by the government to facilitate the growth and regulate the newly opened insurance sector
and to guarantee the investments made by the people. On August 15, 2000 the sector was finally
opened for foreign sector participation.

Deregulation came with certain conditions:

Firstly, all new foreign players entering the Indian market must set up a joint venture with a local
company. Secondly, the maximum share the foreign player can hold is 26%, with the local
company (or companies) holding the balance. Regulators are currently reconsidering the foreign
equity cap of 26%.

Proactive steps taken by the IRDA for development of the market:

1) Market regulation by prudential norms.
2) Registration of players who have the necessary financial strength to withstand the
demands of a growing and nascent market.
3) Implementation of a solvency regime that ensures continuous financial stability.
4) Presence of an adequate number of insurers to provide competition and choice to the
customers.
5) Development of market capacity by asking insurers to retain bulk of the premium within
the country and to exhaust local market

Capacity before reinsuring abroad.

In todays highly competitive financial services environment, effective organizations will employ
technology in a strategic role to achieve competitive edge. Technology will play an increasing
role in aiding design and administering of products, as well in efforts to build life-long customer
relationships.

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 Chapter 03

Overview on ICICI Prudential

=====================================================================

Introduction
Networks of ICICI
About ICICI Prudential Life Insurance Company
Vision & Values
Board of Directors of ICICI Pru
ICICI Pru in News
Best Life Insurer Award
Products of ICICI Pru
About the Promoters of ICICI Pru

=====================================================================

INTRODUCTION

The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated (1955)
at the initiative of the World Bank, the Government of India and representatives of Indian
industry, with the objective of creating a development financial institution for providing
medium-term and long-term project financing to Indian businesses. Mr. A. Ramaswami Mudaliar
elected as the first Chairman of ICICI Limited. ICICI emerges as the major source of foreign
currency loans to Indian industry. Besides funding from the World Bank and other multi-lateral
agencies, ICICI was also among the first Indian companies to raise funds from international
markets.

ICICI NETWORKS:
ICICI Bank
ICICI Bank is India's largest private sector bank with total assets of Rs. 6,461.29 billion (US$
103 billion) at March 31, 2015 and profit after tax Rs. 111.75 billion (US$ 1,788 million) for
the year ended March 31, 2015. ICICI Bank currently has a network of 4,183 Branches and
13,617 ATM's across India. ICICI Bank was originally promoted in 1994 by ICICI Limited,
~ 26 ~
 an Indian financial institution, and was its wholly-owned subsidiary. ICICI Bank offers a
wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through its group companies. ICICI Bank's Board
members include eminent individuals with a wealth of experience in international business,
management consulting, banking and financial services. All the latest, in-depth information
about ICICI Bank's financial performance and business initiatives. Explore diverse openings
with India's second-largest bank. Time and again our innovative banking services has been
recognized and rewarded world over. Catch up with ICICI Bank's latest business and social
initiatives, as well as innovative product launches. ICICI Bank is deeply engaged in human
and economic development at the national level. The Bank works closely with ICICI
Foundation across diverse sectors and programs. Catch up with ICICI Bank's latest
communication related to Acknowledgements, information on regulatory notices, banking
ombudsman schemes and others.

ICICI Securities
ICICI Securities Ltd is an integrated securities firm offering a wide range of services
including investment banking, institutional broking, retail broking, private wealth
management, and financial product distribution. ICICI Securities sees its role as 'Creating
Informed Access to the Wealth of the Nation' for its diversified set of client that include
corporates, financial institutions, high net-worth individuals and retail investors.
Headquartered in Mumbai, ICICI Securities operates out of 66 cities and towns in India and
global offices in Singapore and New York. ICICI Securities Inc., the stepdown wholly owned
US subsidiary of the company is a member of the Financial Industry Regulatory Authority
(FINRA) / Securities Investors Protection Corporation (SIPC). ICICI Securities Inc. activities
include Dealing in Securities and Corporate Advisory Services in the United States. ICICI
Securities Inc. is also registered with the Monetary Authority of Singapore (MAS) and
operates a branch office in Singapore.

ICICI Securities Primary Dealership Limited

~ 27 ~
 ICICI Securities Primary Dealership Limited is an acknowledged leader in the Indian fixed
income and money markets, with a strong franchise across the spectrum of interest rate
products and services institutional sales and trading, resource mobilization and research.
One of the first entities to be granted Primary Dealership license by RBI, I-Sec PD has made
pioneering contributions since inception to debt market development in India. The I-Sec PD
desks trade actively in government securities, swaps and corporate bonds markets. In each of
these markets, it enjoys dominant position, accounting for a significant share of trading
turnover. Innovation and insight in rate markets drive I-Sec PDs relationship with clients.
We actively assist clients in providing interest rate structures to suit their objectives. I-Sec PD
Sales team has developed a strong network of relationships covering institutional investors
such as banks, mutual funds, insurance companies, provident funds and non-banking finance
companies. These relationships are serviced by a wide distribution network with footprints
across the country. The Capital Markets desks profound understanding of resource
requirements of clients coupled with I-Sec PDs client relationships make us Arranger of
choice. I-Sec PD is also credited with pioneering debt market research in India. Our in-depth
research and independent and well-considered market commentaries are widely read and
acclaimed. I-Sec PDs expertise and leadership position have been consistently recognised by
domestic and international agencies. I-Sec PD has been recognized as the Best Domestic
Bond House in India by Asiamoney for 2002, 2004, 2005 and 2007. It has also been awarded
the prestigious Best Bond House by Financeasia.com for the years - 2001, 2004, 2005,
2006, 2007 and 2009. It was also awarded as the Best Domestic Bond House 2009 by AAA
Asset Asian Awards. These awards are a strong testimony of our capabilities and continuing
dominant position in the market.

ICICI Lombard General Insurance Company

ICICI Lombard GIC Ltd. is a joint venture between ICICI Bank Limited and Fairfax
Financial Holdings Limited, a Canada based diversified financial services company engaged
in general insurance, reinsurance, insurance claims management and investment
management. ICICI Lombard GIC Ltd. is one of the leading private sector general insurance

~ 28 ~
 companies in India with a Gross Written Premium (GWP) of Rs 69.14 billion for the year
ended March 31, 2015. The company issued over 13.87 million policies and settled over 3.41
million claims as on March 31, 2015. ICICI Lombard was conferred with the 'E-Business
Leader' Award in the General Insurance Category at the 5th annual edition of the Indian
Insurance Award 2015 for its performance, growth, product and market innovation, customer
service and technology. The company also received the Golden Peacock Innovation
Management Award 2015 for innovation across multiple functions of its business operations
and promoting the 'culture of innovation', with specific acclaim for the company's approach
in 'Mobility Solutions' and 'Customer Centric Initiatives'. ICICI Lombard was also named as
the "Best Travel Insurance Company" by CNBC Awaaz Travel Awards 2015.

ICICI Prudential Asset Management Company

ICICI Prudential Asset Management Company Ltd. is the second largest asset management
company (AMC) in the country (as per average assets under management as on June 30,
2014) focused on bridging the gap between savings & investments and creating long term
wealth for investors through a range of simple and relevant investment solutions. (Data
source: AMFI) The AMC is a joint venture between ICICI Bank, a well-known and trusted
name in financial services in India and Prudential Plc, one of UKs largest players in the
financial services sectors. Throughout these years of the joint venture, the company has
forged a position of pre-eminence in the Indian Mutual Fund industry. The AMC manages
significant Assets under Management (AUM) in the mutual fund segment. The AMC also
caters to Portfolio Management Services for investors, spread across the country, along with
International Advisory Mandates for clients across international markets in asset classes like
Debt, Equity and Real Estate. The AMC has witnessed substantial growth in scale; from 2
locations and 6 employees at the inception of the joint venture in 1998, to a current strength
of 900 employees with a reach across around 120 locations reaching out to an investor base
of around 2.6 million investors. The companys growth momentum has been exponential and
it has always focused on increasing accessibility for its investors. Driven by an entirely
investor centric approach, the organization today is a suitable mix of investment expertise,
resource bandwidth and process orientation. The AMC endeavours to simplify its investors
journey to meet their financial goals, and give a good investor experience through
~ 29 ~
 innovation, consistency and sustained risk adjusted performance.

ICICI Venture
ICICI Venture is a specialist alternative assets manager based in India. The firm is a wholly
owned subsidiary of ICICI Bank, the largest private sector financial services group in India.
ICICI Venture has been at the forefront of driving entrepreneurship in India for over two
decades, both as a partner and capital provider for individuals with a clear common objective,
the passion to pursue business ideas in the quest for creating value for all stakeholders and
for the larger good of the nation. Till date, various funds managed by the firm have invested
in over 500 companies. ICICI Venture continues to remain committed to this mission. The
firm has played a key role in establishing the foundation for several new age businesses in
India, by providing growth capital funding to companies in sectors as diverse as Information
Technology, Life Sciences and Healthcare, Media & Entertainment, Banking & Financial
Services, Infrastructure, Retail, Aviation, Auto Components, Construction services, Real
Estate, Biotechnology, Textiles, Fine Chemicals, Consumer Products, Logistics, etc. The firm
played a pioneering role in the Indian Venture Capital industry during the 1990s but shifted
focus to other alternative asset classes during the past decade in line with the evolution of
Indian industry. Across sectors, the firm has helped in establishing several new business
models to enable productivity improvements, technology upgradation and import substitution
as a means of enhancing the competitive advantage of Indian industry in a rapidly changing
global market environment. The firm is widely regarded as a prime mover in the Indian
alternative assets industry, having established a successful track record of investing and
nurturing companies across economic cycles and across various classes of alternative assets
such as Private Equity, Real Estate and Mezzanine Finance, with Infrastructure & Special
Situations being the latest additions to its spectrum of activities. Going forward, the firm
continues to explore new avenues within the alternative assets industry as a means of
addressing funding requirements of Indian entrepreneurs and also as a means of offering a
comprehensive alternative asset management platform to long term investors who are
interested in participating in India's economic development.

ICICI Home Finance Company

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 ICICI Home Finance Company Limited ("ICICI Home Finance" or "ICICI HFC") is one of
the leaders in the Indian mortgage finance and realty space. Part of the ICICI Group, we have
been driving innovation and growth in this sector. ICICI Bank is India's second-largest bank
with total assets of 4,736.47 billion (US$ 93 billion) at March 31, 2012 and profit after tax
Rs. 64.65 billion (US$ 1,271 million) for the year ended March 31, 2012 The Bank has a
network of 2,755 branches and 9,363 ATMs in India, and has a presence in 19 countries,
including India. Our vision as a growing housing finance company is to make the dream of
owning a new home come true, for millions of Indians. Our range of innovative products,
from different type of home loans to property related services will help meet these dreams.

ABOUT ICICI PRUDENTIAL LIFE INSURANCE COMPANY

ICICI Prudential Life Insurance Company (ICICI Prudential Life) is a joint venture between
ICICI Bank Ltd., India's largest private sector bank, and Prudential plc, a leading international
financial services group headquartered in the United Kingdom. ICICI Prudential Life was
amongst the first private sector life insurance companies to begin operations in December 2000
after receiving approval from Insurance Regulatory Development Authority of India (IRDAI).
ICICI Prudential Life's capital infused stands at Rs. 48.16 billion (as of March 31, 2015) with
ICICI Bank Ltd. and Prudential plc holding 74% and 26% stake respectively. For the financial
year 2015, the company garnered a total premium of Rs. 153.07 billion. The company has assets
under management of Rs. 1001.83 billion as on March 31, 2015. For over a decade, ICICI
Prudential Life has maintained its dominant position (on new business retail weighted basis)
amongst private life insurers in the country, with an array of products to match the different life
stage requirements of customer and enable them to achieve their long term financial goals.

About Prudential:

Prudential plc is an international financial services group with significant operations in Asia, the
US and the UK. We serve more than 23 million insurance customers and have 427 billion of
assets under management. Understanding and responding to our customers' needs is at the heart
of our business. It is something we have been doing for over 160 years. We generate sustainable
value for our shareholders through a relentless focus on meeting our customers savings, income
~ 31 ~
and protection needs and a disciplined approach to investing in the most profitable growth
opportunities.

The Group is structured around four main business units:

Prudential Corporation Asia (PCA)

Prudential is a leading life insurer that spans 12 markets in Asia, covering Cambodia, China,
Hong Kong, India, Indonesia, Japan, Korea, Malaysia, The Philippines, Singapore, Taiwan,
Thailand and Vietnam. With more than 350,000 agents across the region, Prudential has a robust
multi-channel distribution platform providing a comprehensive range of savings, investment and
protection products. Eastspring Investments manages investments across Asia on behalf of a
wide range of retail and institutional investors, with about half of its assets sourced from life and
pension products sold by Prudential plc. It is one of the regions largest asset managers with
operations in 11 Asian markets and the United States. It has 53.8 billion in assets under
management (as at 30 June 2012), managing funds across a wide range of asset classes including
equities and fixed income.

Jackson National Life Insurance Company

Jackson is one of the largest life insurance companies in the US, providing retirement savings
and income solutions with more than 2.9 million policies and contracts in force. Jackson is also
one of the top three providers of variable annuities in the US. Founded 50 years ago, Jackson has
a long and successful record of providing advisers with the products, tools and support to design
effective retirement solutions for their clients.

Prudential UK & Europe (PUE)

Prudential UK is a leading life and pensions provider to approximately 7 million customers in

the United Kingdom. Their expertise in areas such as longevity, risk management and multi-asset
investment, together with our financial strength and highly respected brand, means that the
business is strongly positioned to continue pursuing a value-driven strategy built around our core
strengths in with-profits and annuities.

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M&G

M&G is Prudential's UK and European fund management business with total assets under
management of 204 billion (at 30 June 2012). M&G has been investing money for individual
and institutional clients for over 80 years. Today it is one of Europe's largest active investment
managers as well as being a powerhouse in fixed income.

VISION & VALUES

Our vision:

To be the dominant Life, Health and Pensions player built on trust by world-class people and
service. This we hope to achieve by:

Understanding the needs of customers and offering them superior products and service;

Leveraging technology to service customers quickly, efficiently and conveniently;

Developing and implementing superior risk management and investment strategies to

offer sustainable and stable returns to our policyholders;

Providing an enabling environment to foster growth and learning for our employees;

And above all, building transparency in all our dealings.

Our values:

The success of the company will be founded in its unflinching commitment to 5 core values --
Integrity, Customer First, Boundary-less, Humility and Passion. Each of the values describe what
the company stands for, the qualities of our people and the way we work. Every member of the
ICICI Prudential team is committed to the 5 core values and these values shine forth in all we do.

Boundary less I will treat organization agenda as paramount

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Integrity What I do when nobody is watching me

Humility Openness to learn a change

Customer First Service excellence towards Internal and External Customers

Passion Demonstrates infectious energy and enthusiasm

We do believe that we are on the threshold of an exciting new opportunity, where we can play a
significant role in redefining and reshaping the sector. Given the quality of our parentage and the
commitment of our team, there are no limits to our growth.

BOARD OF DIRECTORS OF ICICI PRU

The ICICI Prudential Life Insurance Company Limited Board comprises reputed people from the
finance industry both from India and abroad.
Mr. K. V. Kamath (Chairman)
Mr. Mark Norbom
Mr. Lalita D. Gupte
Mrs. Kalpana Morparia
Mrs. Chanda Kochhar
Mr. Kevin Holmgren
Mr. M.P. Modi
Mr. R Narayanan
Ms. Shikha Sharma (Managing Director)

Management Team:

1. Ms. Shikha Sharma (Managing Director)

2. Mr. Sandeep Batra (Chief Financial Officer & Company Secretary)
3. Mr. Shubhro J. Mitra (Chief Human Resources)
4. Mr. Puneet Nanda (Investments Head)
5. Ms. Anita Pai, Chief (Customer Service and Operations)
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 6. Mr. V. Rajagopalan (Appointed Actuary)
7. Mr. Dipan Bhattacharya (Chief Information Technology)
ICICI PRU IN NEWS:

ICICI Prudential Life Insurance Companys Assets under Management crosses Rs. 1
trillion

February 25, 2015: ICICI Prudential Life Insurance Company has crossed the Rs. 1 trillion
mark in Assets under Management (AUM). This is the first time in the history of the Indian life
insurance industry that a private life insurer has achieved this milestone. Having started
operations in December 2000, the AUM garnered for the year ending March 31, 2001, was a
little over Rs. 1 billion. The journey over the last fourteen years, since then, to ` 1 trillion has
been an exciting one of protecting lives, enabling dreams and growing together. The focus of the
Company has always been on customer centricity. The digitization drive of the company ensured
a hassle free on-boarding experience for customers, simultaneously enhancing organizational
efficiencies and built capacity for the distribution network. The digital platform empowered the
customers to take informed buying decisions with their active participation. Mr. Sandeep
Bakhshi, MD & CEO said, We are delighted to have achieved this milestone. This has been
possible due to the faith reposed in us by customers, our distribution network and employees.
The Assets under Management for a life insurer qualitatively symbolize the amount of trust
placed by policyholders in the Company. The technology initiatives implemented, have
contributed significantly enabling us to provide better service to customers and becoming more
efficient. He added, The Assets under Management, is in a way, the culmination of various
initiatives implemented by the Company towards qualitatively increasing New Business
premium, Renewal premium, providing cost effective products, best in class customer service,
consistent fund performance over the long term, a hassle free claims settlement process and last
but not the least providing a working environment which nurtures committed employees. It has
always been our endeavour to simplify life insurance for customers. To us, it is the barometer of
the trust placed in us by all stakeholders, since life insurance is a long term product.

ICICI Bk approves 6% stake sale in ICICI Pru Life Insurance

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November 27, 2015: The transaction is valued at Rs 32,500 crore. Private bank ICICI Bank
today approved a 6 percent sale in ICICI Prudential Life Insurance. After the deal, the bank will
hold 68 percent stake, while the Prudential PLC (the joint venture partner) will hold 26 percent.
The remaining 6 percent stake will be sold to Premji Investment and Compassvale Investment.
The transaction is valued at Rs 32,500 crore. The appointment is subject to prior clearance of
RBI, other regulatory and shareholder approvals and would be effective on the date of receipt of
approval. Last month, ICICI Bank decided to sell additional 9 percent stake in its general
insurance arm for about Rs 1,550 crore to Prem Watsa run Fairfax Financial Holdings of Canada.
Upon completion of the transaction, ICICI Bank will hold about 64 percent in ICICI Lombard
General Insurance Company Ltd, while Fairfax have 35 percent.

Ortel gets Rs 46.3 cr from Axis MF & ICICI Pru Life

March 04, 2015: Ortel Communications has allotted 25,57,425 equity shares at Rs 181 apiece to
Axis Mutual Fund and ICICI Prudential Life Insurance. The company raised Rs 46.29 crore
through issue of shares to these anchor investors. Ortel Communications has allotted 25,57,425
equity shares at Rs 181 apiece to Axis Mutual Fund and ICICI Prudential Life Insurance. The
company raised Rs 46.29 crore through issue of shares to these anchor investors. "Amongst
anchor investors, Axis Mutual Fund (Midcap Fund) has been allotted 6 lakh shares; Axis Mutual
Fund (Small Cap Fund) 3 lakh shares and ICICI Prudential Life Insurance has been allotted
16.57 lakh shares aggregating to 25,57,425 lakh shares," the company said in its release. Ortel
Communications' public issue of 1.2 crore shares has opened for subscription on March 3 and the
same will close on March 5. The company is a regional cable television and high speed
broadband services provider focused in the Indian states of Odisha, Chhattisgarh, West Bengal
and Andhra Pradesh. The price band is fixed at Rs 181-200 per equity share. The issue comprises
a fresh issue to the public of up to 60 lakh shares (fresh issue) and an offer for sale of up to 60
lakh shares (offer for sale) by NSR-PE Mauritius LLC (selling shareholder). The minimum bid
lot is 75 equity shares and in multiples of 75 equity shares thereafter. The issue constitutes 39.25
percent of the fully diluted post-issue paid up equity share capital of the company. The equity
shares are proposed to be listed on the NSE and the BSE. The book running lead manager to the
issue is Kotak Mahindra Capital Company Limited.

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ICICI Prudential buys 5.22 lakh shares Mahindra Life

February 25, 2016: On February 24, 2016 ICICI Prudential Life Insurance Company Ltd
bought 5,22,000 shares of Mahindra Lifespace Developers at Rs 469.91. On February 24, 2016
Ashish Dhawan sold 2,69,026 shares of Mahindra Lifespace Developers at Rs 469.86 on the
NSE. However, ICICI Prudential Life Insurance Company Ltd bought 5,22,000 shares at Rs
469.91. On Wednesday, Mahindra Lifespace Developers ended at Rs 455.65, down Rs 14.35, or
3.05 percent on the NSE. The share touched its 52-week high Rs 581.20 and 52-week low Rs
401.00 on 28 February, 2015 and 19 June, 2015, respectively. The company's trailing 12-month
(TTM) EPS was at Rs 25.50 per share. (Dec, 2015). The stock's price-to-earnings (P/E) ratio was
17.96. The latest book value of the company is Rs 322.47 per share. At current value, the price-
to-book value of the company was 1.42. The dividend yield of the company was 2.62 percent.

ICICI Prudential Mutual Fund ties up with Money View

March 9, 2016: In order to facilitate investors to grow their money smartly, ICICI Prudential
Mutual Fund has tied up with Money View to jointly launch an app based solution - Green
account that will exclusively offer the company's products. Green Account will offer two
exclusive products Savings+ and Tax Saver+. Savings+ is designed to get users in the habit of
saving money regularly for their short and medium term goals. Tax Saver+, the second product
offered through this partnership, helps users save on their tax by investing in Equity Linked
Savings Scheme (ELSS) option provided by ICICI Prudential Mutual Fund. Users can save up to
Rs. 46,350 in taxes depending on their tax rate by investing up to Rs. 1.5 lakh annually. ICICI
Prudential Mutual Fund and Money View have integrated their systems to make this offering
completely digital. "This partnership is aligned with our objective to lead the way in digital
initiatives in the personal finance and investment management segment," Abhijit Shah - Head -
Marketing, Digital and Customer Experience, ICICI Prudential Mutual Fund said. "Our
association with Money View - will help us tap into this large segment of people who are smart,
tech-savvy and open to a digitally-driven way of managing and growing their savings." From
within the Money View app users can start investing, manage their portfolio, invest more or
withdraw funds. Money view has seen over 3 million downloads over the last one year. While,
~ 37 ~
the number of active users on the app is not clear the company claims its user base is substantial.
"Our existing app helps people to smartly manage their finances and save more money," Puneet
Agarwal, Co-Founder, Money View said. "With this association, we are now helping people to
not just Manage and Save but aim to Grow these savings with the schemes offered by ICICI
Prudential Mutual Fund."

BEST LIFE INSURER AWARD:

Winner: ICICI PRUDENTIAL

In the short span since the insurance sector was opened up, ICICI Prudential Life Insurance
has literally dictated the markets evolution. Catering to all age and income segments, the
company started out with the traditional insurance policies that were easy to understand. The
idea was to entire customers used to LIC' style of functioning. Soon, ICICI Prudential began
exploring new areas. It introduced modern products, like the market-linked product where
returns are linked to the market performance of the underlying assets. ICICI Prudential leads
in virtually all parameters: size of agent force, number of policies sold, total sum assured,
premium income and productivity of agents. It has set exact standards for its range of
products, riders offered, quality of information in promotional material and even in the
insurance awareness events organized. What has been in favor of ICICI Prudential is its range
of products in each segment of life insurance-traditional, unit-linked and single-premium
options, be they for retirement plans or child plans. With such a comprehensive bouquet, it
caters to all financial goals of a customer. ICICI Prudential also has a strong sales network
and tie-ups with banks to offer bank assurance products. Its supplementary marketing
channels contribute close to 30 per cent of its premium income. The company is now reaching
out to new and untapped markets. ICICI Prudential works closely with NGOs and micro-
finance institutions to spread awareness about the concept of insurance in rural areas. This
helps meet the social obligations mandated by IRDA, but the company has gone a step ahead
by actively involving the villagers and working closely with them. The gap between ICICI
Prudential and the second-in-line private insurer is vast. In fact, this hiatus has led some
analysts to wonder if the company isnt a trifle too aggressive. But others say this has more to

~ 38 ~
do with the companys customer-centric focus, its Pan-India presence and superior risk
management and investment strategies. ICICI Prudential is not, however, resting on its
laurels. The company will continue to innovate and set the standards. For the project on
Digitization, ICICI Prudential Life Insurance has won the 1st Prize for Innovation at the
Qimpro Awards 2014. ICICI Prudential Life featured as the top Life Insurance Brand in the
BrandZ Top 50 Most Valuable Indian Brands 2014 study conducted by the global research
agency Millward Brown & WPP. This study recognizes Indias most outstanding brands
across categories that have built a good reputation for themselves over the years.

PRODUCTS OF ICICI PRU

Insurance solutions for individuals:

ICICI Prudential Life Insurance offers a range of innovative, customer-centric products that meet
the needs of customers at every life stage.

Savings Solutions
SecurePlus is a transparent and feature-packed savings plan that offers 3 levels of protection.
CashPlus is a transparent, feature-packed savings plan that offers 3 levels of protection as
well as liquidity options.
Save?n?Protect is a traditional endowment savings plan that offers life protection along with
adequate returns.
CashBak is an anticipated endowment policy ideal for meeting milestone expenses like a
child?s marriage, expenses for a child?s higher education or purchase of an asset.
LifeTime & LifeTime II offer customers the flexibility and control to customize the policy
to meet the changing needs at different life stages. Each offer 4 fund options? Preserver,
Protector, Balancer and Maximiser.
LifeLink II is a single premium Market Linked Insurance Plan which combines life
insurance cover with the opportunity to stay invested in the stock market.
Premier Life is a limited premium paying plan that offers customers life insurance cover till
the age of 75.

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 Invest Shield Life is a Market Linked plan that provides capital guarantee on the invested
premiums and declared bonus interest.
Invest Shield Cash is a Market Linked plan that provides capital guarantee on the invested
premiums and declared bonus interest along with flexible liquidity options.
InvestShield Gold is a Market Linked plan that provides capital guarantee on the invested
premiums and declared bonus interest along with limited premium payment terms.

Protection Solutions
LifeGuard is a protection plan, which offers life cover at very low cost. It is available in 3
options? level term assurance, level term assurance with return of premium and single
premium.
Child Plans
SmartKid education plans provide guaranteed educational benefits to a child along with
life insurance cover for the parent who purchases the policy. The policy is designed to
provide money at important milestones in the childs life. Smart Kid plans are also
available in unit-linked form? both single premium and regular premium.
Retirement Solutions
ForeverLife is a retirement product targeted at individuals in their thirties.
SecurePlus Pension is a flexible pension plan that allows one to select between 3 levels
of cover.
Market-linked retirement product
LifeTime Pension II is a regular premium market-linked pension plan.
LifeLink Pension II is a single premium market-linked pension plan.
InvestShield Pension is a regular premium pension plan with a capital guarantee on the
investible premium and declared bonuses. ICICI Prudential also launched Salaam
Zindagi? a social sector group insurance policy targeted at the economically
underprivileged sections of the society.

Group Insurance Solutions

ICICI Prudential also offers Group Insurance Solutions for companies seeking to enhance
~ 40 ~
benefits to their employees.
ICICI Pru Group Gratuity Plan: ICICI Prus group gratuity plan helps employers fund
their statutory gratuity obligation in a scientific manner. The plan can also be customized to
structure schemes that can provide benefits beyond the statutory obligations.
ICICI Pru Group Superannuation Plan: ICICI Pru offers a flexible defined contribution
superannuation scheme to provide a retirement kitty for each member of the group.
Employees have the option of choosing from various annuity options or opting for a partial
commutation of the annuity at the time of retirement.
ICICI Pru Group Term Plan: ICICI Pru?s flexible group term solution helps provide
affordable cover to members of a group. The cover could be uniform or based on
designation/rank or a multiple of salary. The benefit under the policy is paid to the
beneficiary nominated by the member on his/her death

Flexible Rider Options:

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

Accident & disability benefit: If death occurs as the result of an accident during the term of
the policy, the beneficiary receives an additional amount equal to the sum assured under the
policy. If the death occurs while traveling in an authorized mass transport vehicle, the
beneficiary will be entitled to twice the sum assured as additional benefit.
Accident Benefit: This rider option pays the sum assured under the rider on death due to
accident.
Critical Illness Benefit: protects the insured against financial loss in the event of 9 specified
critical illnesses. Benefits are payable to the insured for medical expenses prior to death.
Major Surgical Assistance Benefit: provides financial support in the event of medical
emergencies, ensuring benefits are payable to the life assured for medical expenses incurred
for surgical procedures. Cover is offered against 43 surgical procedures.
Income Benefit: This rider pays the 10% of the sum assured to the nominee every year, till
maturity, in the event of the death of the life assured. It is available on SmarKid, SecurePlus
and CashPlus.

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 Waiver of Premium: In case of total and permanent disability due to an accident, the
premiums are waived till maturity. This rider is available with SecurePlus and CashPlus

ABOUT THE PROMOTERS OF ICICI PRU

ICICI Bank

ICICI Bank Limited (NYSE: IBN) is India's leading private sector bank, with consolidated total
assets of Rs 8260.79 bn. as at March 31, 2015. ICICI Bank's subsidiaries include India's leading
private sector insurance companies, the largest online retail brokerage and among its largest
mutual funds and private equity firms. ICICI Bank's presence currently spans 17 countries,
including India.

About Prudential Plc

Prudential plc is a company incorporated and with its principal place of business in England, and
its affiliated companies constitute one of the world's leading financial services groups. It
provides insurance and financial services through its subsidiaries and affiliates throughout the
world. It has been in existence for more than 166 years and has 496 billion in assets under
management (as at 31 December 2014). Prudential plc is not affiliated in any manner with
Prudential Financial, Inc., a company whose principal place of business is in the United States of
America.

Chapter 04

Life Insurance Market in India

=====================================================================

Introduction
Market Size
Investment

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 Government Initiatives
Road Ahead
Indian Insurance Industry Growth in Last few Years
Top 10 Life Insurance Companies in India
India Market Life Insurance Update
Comparison of Life Insurance Market

=====================================================================

INTRODUCTION

The insurance industry of India consists of 53 insurance companies of which 24 are in life
insurance business and 29 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Apart from that, among the non-life
insurers there are six public sector insurers. In addition to these, there is sole national re-insurer,
namely, General Insurance Corporation of India (GIC Re). Other stakeholders in Indian
Insurance market include agents (individual and corporate), brokers, surveyors and third party
administrators servicing health insurance claims. Out of 29 non-life insurance companies, five
private sector insurers are registered to underwrite policies exclusively in health, personal
accident and travel insurance segments. They are Star Health and Allied Insurance Company Ltd,
Apollo Munich Health Insurance Company Ltd, Max Bupa Health Insurance Company Ltd,
Religare Health Insurance Company Ltd and Cigna TTK Health Insurance Company Ltd. There
are two more specialized insurers belonging to public sector, namely, Export Credit Guarantee
Corporation of India for Credit Insurance and Agriculture Insurance Company Ltd for crop
insurance.

MARKET SIZE

India's life insurance sector is the biggest in the world with about 360 million policies which are
expected to increase at a Compound Annual Growth Rate (CAGR) of 12-15 per cent over the
next five years. The insurance industry plans to hike penetration levels to five per cent by 2020.
The countrys insurance market is expected to quadruple in size over the next 10 years from its
~ 43 ~
current size of US$ 60 billion. During this period, the life insurance market is slated to cross US$
160 billion. The general insurance business in India is currently at Rs 78,000 crore (US$ 11.7
billion) premium per annum industry and is growing at a healthy rate of 17 per cent. The Indian
insurance market is a huge business opportunity waiting to be harnessed. India currently
accounts for less than 1.5 per cent of the worlds total insurance premiums and about 2 per cent
of the worlds life insurance premiums despite being the second most populous nation. The
country is the fifteenth largest insurance market in the world in terms of premium volume, and
has the potential to grow exponentially in the coming years.

INVESTMENTS

The following are some of the major investments and developments in the Indian insurance
sector.

Foreign Direct Investment in the insurance sector stood at US$ 341 million in March-
September, 2015, showing a growth of 152 per cent compared to the same period last year.

Insurance firm AIA Group Ltd has decided to increase its stake in Tata AIA Life Insurance
Co Ltd, a joint venture owned by Tata Sons Ltd and AIA Group from 26 per cent to 49 per
cent.

Canada-based Sun Life Financial Inc. plans to increase its stake from 26 per cent to 49 per
cent in Birla Sun Life Insurance Co Ltd, a joint venture with Aditya Birla Nuvo Ltd, through
buying of shares worth Rs 1,664 crore (US$ 249 million).

Nippon Life Insurance, Japan's second largest life insurance company, has signed definitive
agreements to invest Rs 2,265 crore (US$ 348 million) in order to increase its stake in
Reliance Life Insurance from 26 per cent to 49 per cent.

~ 44 ~
 The Central Government is planning to launch an all-in-one insurance scheme for farmers
called the Unified Package Insurance Scheme (Bhartiya Krishi Bima Yojana). The proposed
scheme will have various features like crop insurance, health cover, personal accident
insurance, livestock insurance, insurance cover for agriculture implements like tractors and
pump sets, student safety insurance and life insurance.

Government launched a special enrolment drive, Suraksha Bandhan Drive comprising of sale
of gift cheques and launch of deposit schemes in bank branches, to facilitate enrolment under
Pradhan Mantri Suraksha Bima Yojana (PMSBY) and Pradhan Mantri Jeevan Jyoti Bima
Yojana (PMJJBY).

To increase the subscriber base and ensure wider reach, the Central Government has eased
several norms for its flagship insurance scheme Atal Pension Yojana (APY), in terms of more
options for periodical contributions, voluntary and premature exits and simplified penalty for
payment delays.

Bennett Coleman and Co. Ltd (BCCL), the media conglomerate with multiple publications in
several languages across India, is set to buy Religare Enterprises Ltds entire 44 per cent
stake in life insurance joint venture Aegon Religare Life Insurance Co. Ltd. The foreign
partner Aegon is set to increase its stake in the joint venture from 26 per cent to 49 per cent,
following governments reform measure allowing the increase in stake holding by foreign
companies in the insurance sector.

GIC Re and 11 other non-life insurers have jointly formed the India Nuclear Insurance Pool
with a capacity of Rs 1,500 crore (US$ 226 million) and will provide the risk transfer
mechanism to the operators and suppliers under the CLND Act.

State Bank of India has announced that BNP Paribas Cardif is keen to increase its stake in
SBI Life Insurance from 26 per cent to 36 per cent. Once the foreign joint venture partner
increases its stake to 36 per cent, SBIs stake in SBI Life will get diluted to 64 per cent.

~ 45 ~
 Bangladesh has granted permission to the Life Insurance Corporation of India (LIC) to run its
business, making it the second foreign insurance company to operate in the country.

Reliance Life Insurance Company (RLIC) today said it will add 20,000 agents across India in
this financial year as part of its expansion plans. It will increase their agency force by 20 per
cent which now stands at 100,000.

GOVERNMENT INITIATIVES

The Government of India has taken a number of initiatives to boost the insurance industry. Some
of them are as follows:

The Insurance Regulatory and Development Authority (IRDA) of India has formed two
committees to explore and suggest ways to promote e-commerce in the sector in order to
increase insurance penetration and bring financial inclusion.

IRDA has formulated a draft regulation, IRDAI (Obligations of Insures to Rural and
Social Sectors) Regulations, 2015, in pursuance of the amendments brought about under
section 32 B of the Insurance Laws (Amendment) Act, 2015. These regulations impose
obligations on insurers towards providing insurance cover to the rural and economically
weaker sections of the population.

The Government of India has launched two insurance schemes as announced in Union
Budget 2015-16. The first is Pradhan Mantri Suraksha Bima Yojana (PMSBY), which is a
Personal Accident Insurance Scheme. The second is Pradhan Mantri Jeevan Jyoti Bima
Yojana (PMJJBY), which is the governments Life Insurance Scheme. Both the schemes
offer basic insurance at minimal rates and can be easily availed of through various
government agencies and private sector outlets.

~ 46 ~
 The Uttar Pradesh government has launched a first of its kind banking and insurance
services helpline for farmers where individuals can lodge their complaints on a toll free
number.

The select committee of the Rajya Sabha gave its approval to increase stake of foreign
investors to 49 per cent equity investment in insurance companies.

Government of India has launched an insurance pool to the tune of Rs 1,500 crore (US$
226 million) which is mandatory under the Civil Liability for Nuclear Damage Act
(CLND) in a bid to offset financial burden of foreign nuclear suppliers.

ROAD AHEAD

India's insurable population is anticipated to touch 750 million in 2020, with life expectancy
reaching 74 years. Furthermore, life insurance is projected to comprise 35 per cent of total
savings by the end of this decade, as against 26 per cent in 2009-10. The future looks promising
for the life insurance industry with several changes in regulatory framework which will lead to
further change in the way the industry conducts its business and engages with its customers.
Demographic factors such as growing middle class, young insurable population and growing
awareness of the need for protection and retirement planning will support the growth of Indian
life insurance. Exchange Rate Used: INR 1 = US$ 0.015 as on December 17, 2015

INDIA INSURANCE INDUSTRY GROWTH IN LAST FEW YEARS

The life insurance companies have performed the best when it comes to growth with an increase
of almost 70% in new premium that has been collected in the initial 5 months of 2012. As per
IRDA data, in April-August 2010 the insurance companies earned $11.73 billion in new premium
~ 47 ~
in the corresponding period in the previous year the amount stood at 6.9 billion dollars. LIC, a
state held insurer, had been the biggest profit maker at that time with an addition of 88% to their
existing business. The privately owned insurers together had seen a leap of 34% to their policy
sales. ICICI Prudential earned 576.60 million dollars at that time. During April-August 2009 SBI
Life had earned $379.20 million in sales of new policies and that figure went up to $531.87
million in the corresponding period in 2010 making it an increase of 40%. HDFC Standard Life
also experienced a good growth of 54% in new sales. IRDA data shows that between April and
October 2010 the general insurance industry experienced a year-on-year growth of 22.76% with
regards to underwritten gross premium. The total value of that premium was 5.29 billion dollars
while the same figure stood at $4.31 billion in April-October 2009. For the public sector
companies, the year-on-year growth rate was 21.09 percent between April-October 2010 and
April-October 2009. In the same period the privately held insurers saw an increase of 25.19
percent in terms of premium collected. Among the publicly owned entities, New India Insurance
was one of the better performers with a premium income of 916.77 million dollars in April-
October 2010. At the same period in 2009 they had earned 770.25 million dollars which implies
a growth rate of 19.04%. The IRDA Summary Report of Motor Data of Public and Private Sector
Insurers 2009-10 states that in the same period almost 28.4 million policies were sold and the
aggregate worth of premium collected was $2.31 billion. The health insurance sector, according
to the RNCOS' research report named "Booming Health Insurance in India" posted
unprecedented growth rates in 2008-09 and 2009-10. The report also estimates that between the
2009-10 and 2013-14 the sector would see a compound annual growth rate (CAGR) of at least
25%.

LIST OF TOP 10 LIFE INSURANCE COMPANIES IN INDIA:

1. Life Insurance Corporation of India (LIC): In my article top 10 Insurance Companies in

India the LIC of India is the 1st position. LIC of India is the largest Insurance Company in
India founded in 1956 and it is an Indian state-owned insurance group Headquartered in
~ 48 ~
 Mumbai, India. LIC offers to its customers such as insurance plans, pension plans, special
plans and group schemes.

2. SBI Life Insurance Company Limited: SBI Life Insurance is the 2nd position in the List of
Top 10 Life Insurance Companies in India. It is a joint venture life insurance company
between State Bank of India (SBI) & BNP Paribas Assurance. SBI owns 74% & BNP Paribas
Assurance owns 26% of the Capital. Founded in March2001 & Headquarter in Mumbai,
India. SBI Life Insurance Offers Life Insurance & Pension Plan. Employee strength with
over 7,500 on-roll employees & 96,000 agents are available.

3. Birla Sun Life Insurance Company Limited (BSLI): BSLI is the next position of my Top
10 Life Insurance Companies List. It is a joint venture between the Aditya Birla Group &
Sun Life Financial Inc. Established in 2000 and has approx. 1,33,000 active employees. The
company is more than ten years old and present value is 21062 Crores.

4. Reliance Life Insurance Company (RLIC): The 4th place for Reliance Life Insurance
(RLIC) in my list. It is a part of Reliance Group, Indias largest private sector financial
services company. Founded in 2001 & Headquarter in Navi Mumbai, India. RLIC offers
Individual and Group Insurance Plans. Total Assets approx. 15000 Crores with 1,24,000
active agents, 1230 branches & 7 Million Policy Holders.

5. ICICI Prudential Life Insurance: In my List of Top 10 Life Insurance Companies in India,
ICICI Prudential the 5th position. It is a joint venture between ICICI Bank and Prudential
Plc, a leading international financial services group headquartered in the United Kingdom.
ICICI Prudential established in the year of 2000. The company has approx. 15000 employees
and over 950 branches. ICICI Prudential offers wide range of Insurance Products including
Health, Wealth, Life Insurance & Medical Insurance etc.

6. Tata AIG Life Insurance: List of Top 10 Life Insurance Companies in India, Tata AIG is the
6th place of this list. It is a joint venture between the Tata Group and American International
Group (AIG). The partnership ratio is Tata Groups hold 74 % and AIG hold 26%. Founded in
the year of 2001and Headquarter in Mumbai, India. The company has provided the

~ 49 ~
 employment to more than 2000 qualified professionals across the country in more than 160
locations. Tata AIG offer Motor, Travel, Health & Accidental Insurance.

7. ING Vysya Life Insurance: ING Vysya is the 7th position of best Life Insurance Company
in India. Established in 2001 and Headquarter in Bangalore, India. The company is a joint
venture between Exide Industries and ING Insurance International B.V. ING Life Insurance
India is present in over 200 cities and serves over 1 million policy holders in India with 7500
employees. ING Vysya is an insurance company offers insurance policies and retiral plans.

8. Bajaj Allianz Life Insurance: Bajaj Allianz Life Insurance is the next position (8th) in the
list about Top 10 Life Insurance Companies in India. It is a joint venture between Bajaj Auto
Limited and Allianz. Founded in 2001 and Headquarter in Pune, India. Bajaj Allianz offers a
wide range of life insurance plans i.e. Term Plans, ULIPs, Traditional Plans, Life & Health
Insurance Plans, Pension Plans & Women Insurance Plans etc.

9. Max Life Insurance: Top 10 Life Insurance Companies in India, Max Life Insurance is the
9th place in this list. It is a Joint venture between Max India Ltd. and Mitsui Sumitomo
Insurance Co. Ltd. Max India is a leading Indian multi-business corporation while Mitsui
Sumitomo Insurance is a member of MS & AD Insurance Group. Founded in 2000 by Analjit
Singh and Headquarters in New Delhi, India. Max Life Insurance offers different type of
Insurance Policies I.e. Individual Insurance and Group Insurance.

10. HDFC Standard Life Insurance: In the List of Top 10 Life Insurance Companies in India,
HDFC Standard Life Insurance is the 10th & the last position in the list. It is a joint venture
between Housing Development Finance Corporation Ltd (HDFC) and Standard Life PLC.
Founded in 2000 by Hasmukhbhai Parekh and Headquarters in Mumbai, India. HDFC Life
has about 15500 and 500 branches in India. HDFC Life's offers Protection, Pension, Savings,
Investment, Health along with Children and Women plans products.

India insurance industry market share of leading companies

The following table shows the market share of top insurers in India in the period till April 2011:

COMPANY APPROXIMATE MARKET SHARE

~ 50 ~
 LIC 50%
ICICI 10%
SBI 5%
Bajaj 4%
Reliance 5%
HDFC 6%
Birla 4%
Max New York 3%
Tata 2%
Met Life 1%
Kotak 2%
Others 8%

INDIA MARKET LIFE INSURANCE UPDATE

Industry statistics
Private life insurers recorded a double digit year-on-year growth of 17.8% in weighted new
business premium collections in the period April to June 2015. While the state-owned insurer
LIC witnessed a fall of 8.9%, the industry recorded a modest overall growth of 2% for the
quarter.

Industry new business performance

~ 51 ~
~ 52 ~
As per statistics released by the IRDAI, life insurance industry in India collected weighted new
business premiums of over INR99 billion in the first three months of FY2015-16, representing a
growth of 2.0% over the corresponding period in FY2014-15.

State-owned LIC witnessed a fall of 8.9% in its weighted new business premium collections in
the first three months of FY2015-16, resulting in its market share declining from 59.1% to 52.7%
corresponding to the same period in FY2014-15. LIC recorded a decline in individual business
by 11.9% and a marginal growth of 0.9% in group business. Despite registering a decline in
weighted new business premium collections, LIC witnessed a year-on-year rise of 17.2% in its
unweighted new business premium collections on the back of a significant rise in single premium
business by 35.3%. Weighted new business premiums are calculated as 10% of single premium
and 100% of regular new business premiums.

Private life insurers maintained their strong performance from the recently concluded financial
year and recorded a double digit growth of 17.8% in their weighted new business premium
collections in the first quarter of FY2015-16, resulting in a corresponding rise in their overall
market share from 40.9% to 47.3%. Private players recorded a growth in both individual and

~ 53 ~
group business of 14.2% and 27.4% respectively, and an increase of 43.8% and 16.5% in single
and regular premium collections, respectively.

The relative shift in market shares of LIC and private insurers can be attributed to the absence of
unit-linked plans from LICs product offerings until the end of first quarter, while private sector,
reportedly, recorded a rise in unit-linked sales on the back of upsurge in stock markets.

With an impressive growth of 40.5% in weighted new business premiums, ICICI Prudential
Life has retained its position as the market leader among private life insurers in first quarter of
FY2015-16. All private life insurers amongst the top 10 in terms of weighted new business
premium collections, recorded a positive growth in their new business volumes during the first
quarter of FY2015-16 with the exception of Reliance Life and Max Life. Reliance Life
witnessed a steep fall in its year-on-year weighted new business premium collections of 49.5%
and moved down from second to seventh rank. On the other hand, Star Union Dai-ichi Life has
made its entry into the top 10 private insurers, moving up from fourteenth to ninth rank, riding
on an eight-fold rise in its regular premium group business.

Buoyed by the strong performance in the first quarter, the life insurance industry has expressed
optimism with a number of companies making press statements indicating double digit planned
new business growth for the year.

Expenses of private life insurers

~ 54 ~
Expenses of life insurers have received increased attention recently with ongoing deliberations
among industry participants on the appropriate limit for expenses of management. Further,
increasing attention is being paid to allocation of total company expenses by line of business, as
expenses allocated to participating business are directly shared with the policyholders. High
expense ratios remain a general concern for the industry as most players continue to experience
expense over-runs relative to long term expense loadings allowed for in pricing despite nearly a
decade and a half since privatisation. Nevertheless, the overall expense ratio for the life
insurance industry (excluding Aviva Life and Sahara Life) has come down from 18.7% for
FY2013-14 to 16.3% for FY2014-15 as concerted efforts are being made towards expense
rationalization. The chart below represents the operating expense ratios of private life insurers
for FY2014-15. The expense ratio is expressed as a percentage of total operating expenses
relating to the insurance business over the total premiums. Besides the expense ratios, the chart
also illustrates the size of the insurer in terms of total premium income through the relative
bubble size and the primary distribution channel for individual business adopted by the company
through the horizontal axis.

A comparison of the expense ratios for FY2014-15 with those for FY2013-14, reported in our
India Market Life Insurance Update, Edition 56, shows that each of the top five private life
insurers, in terms of total premium collection, have witnessed an improvement in their expense
ratios during the year. SBI Life notably has the lowest expense ratio among all private players
~ 55 ~
with 9.5%, nearly same as that of the state-owned insurer, LIC. DHFL Pramerica Life has
managed to substantially reduce its expense ratio by around 40% in absolute terms. Among other
notable movements since the prior year, expense ratio of Bharti AXA Life also reduced by 9.4%
while that of Shriram Life increased by 9.9% during FY2014-15. While the above analysis
pertains to overall expense ratios, the following chart provides an indication of allocation of
expenses by line of business for private life insurers where such information is available.
Notably, expense ratio for participating business are higher than the overall company level
expense ratio for four out of six insurers covered in the analysis.

COMPARASION OF LIFE INSURANCE MARKET

The insurance industry of India consists of 52 insurance companies of which 24 are in life
insurance business and 28 are non-life insurers. Among the life insurers, Life Insurance
Corporation (LIC) is the sole public sector company. Out of 28 non-life insurance companies,
there are six public sector insurers, which include two specialised insurers namely Agriculture
Insurance Company Ltd for Crop Insurance and Export Credit Guarantee Corporation of India
for Credit Insurance. Moreover, there are 5 private sector insurers are registered to underwrite
policies exclusively in Health, Personal Accident and Travel insurance segments. They are Star
Health and Allied Insurance Company Ltd, Apollo Munich Health Insurance Company Ltd, Max
Bupa Health Insurance Company Ltd, Religare Health Insurance Company Ltd and Cigna TTK
Health Insurance Company Ltd. In addition to 52 insurance companies, there is sole national re-
insurer, namely, General Insurance Corporation of India. Other stakeholders in Indian Insurance
market include approved insurance agents, licensed Corporate Agents, Brokers, Common
Service Centres, Web-Aggregators, Surveyors and Third Party Administrators Servicing Health
Insurance claims. Insurance Laws (Amendment) Act, 2015 provides for enhancement of the
Foreign Investment Cap in an Indian Insurance Company from 26% to an Explicitly Composite
Limit of 49% with the safeguard of Indian Ownership and Control. Insurance penetration of
India i.e. Premium collected by Indian insurers is 3.30% of GDP in FY 2014-15. Per capita
premium underwritten i.e. insurance density in India during FY 2014-15 is US$ 55.0.

Here are some performance highlights of the Indian insurance industry.

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 2014-15 2013-14
Life Insurance Business Performance:
Public Sector Private Sector Public Sector Private Sector

Premium Underwritten (Rs in Crores) 239667.65 88433.49 236942.30 77340.90

New Policies Issued (in Lakhs) 201.71 57.37 345.12 63.60

Number of Offices 4877 6156 4839 6193

Benefits Paid (Rs in Crores) 144125 67054 158081 58380

Individual Death Claims (Number of Policies) 755901 121927 760334 125027

Individual Death Claims Amount Paid (Rs in Crores) 9055.18 2733.49 8475.26 2385.33

Group Death Claims (Number of lives) 273794 192989 267296 158682

Group Death Claims Amount Paid (Rs in Crores) 2037.27 1483.55 1882.83 1222.25

Individual Death Claims (Figures in per cent of policies) 98.19 89.40 98.14 88.31

Group Death Claims (Figures in per cent of lives covered) 99.64 91.20 99.65 90.45

No. of Grievances reported during the year 80944 198048 85284 289336

Grievances resolved during the year 80944 193119 85828 288836

Grievance Resolved (in percent) 100.00 97.51 100.64 99.83

In this statement we can easily compare the market of life insurance. Out of 24 life insurance
companies there is only one public life insurance company in India namely LIC (Life Insurance
Corporation). Then also the market of the public company is more than the other 23 private life
insurance companies. As compare to last year and current year market of Life Insurance the
public sector is double than private sector in both the year. But compare to the offices of public
as well as private sector the private sector is having more office than public companies.

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