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CONTENT
Declaration iv
Acknowledgment v
Preface vi
Executive summary 8-9
Insurance Sector Reforms 10
Current Scenario of the Industry 11-12
Indian Insurance Industry Forecast 13-14
New Avenue for Growth 15-17
Changing Scenario of Insurance Industry 18-19
Life Insurance in India 20-21
Distribution Channel of Life Insurance 22-26
Challenges for Regulatory 27
Glossary 28-35
Competitor 36
Introduction 37-38
Company Profile 39-40
Objective of Research 41
Market Definition 42
Selection and Training of Agents 43-45
History of company 46-68
IIMT Professional College

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SWOT Analysis 69-72
Research Methodology 73-74
Data Analysis & Interpretations 75-83
Findings 84
Suggestions and Recommendations 85
Conclusion 86
Limitations 87
Bibliography 88
Annexure 89-91

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Executive Summary
Tata-AIG entered into micro insurance as a condition for acquiring a license to sell
insurance in India. Unlike many other insurance companies, the CEO of Tata-AIG, Mr
Ian J. Watts, and Joy deep K. Roy, the Director Alternate Channels, immediately saw
the benefits of micro insurance. These included fulfilment of corporate social
responsibility; use of the micro insurance to get the brand into a new market (today’s
micro clients may be tomorrow’s high premium clients); and as a means of developing a
good relationship with the Indian insurance regulator. The Insurance Regulatory and
Development Authority (IRDA) feels strongly about the importance of micro insurance
and the need for private insurers to play a role in serving the rural and social sectors. The
CEO realised that micro insurance would require innovative thinking because insurance
products for low-income households was not just normal insurance with lower premiums
and benefits. In particular, he realised that selling micro insurance would require a new
distribution mechanism.
He created a specialised micro insurance department within Tata-AIG called the rural and
social team and provided it with the support and resources it needed. In particular, he did
not pressure it to make immediate profits and gave it latitude to consider alternative
distribution strategies. He appointed Vijay Athreye (one of the co-authors of this paper)
to head up the team and he was tasked with developing micro insurance distribution
models.
At first, the rural and social team decided to collaborate with MFIs using a partner-agent
model. The MFI became the agent selling and servicing the products in return for
commission income. The limitations of this strategy soon became clear. Many insurers
were seeking to develop relationships with microfinance institutions, but there were not
enough good MFIs to go around.
So the rural and social team developed a model of micro-agents. In this model, Tata-AIG

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would obtain recommendations of NGOs that had a good relationship with a local
community in an area it wished to sell micro insurance. It would develop a partnership
with the NGO. In return for a consulting fee, the NGO would provide suggestions on
members of the Community who could be good agents for micro insurance policies
(micro-agents).
If the suggested people show an interest in becoming micro-agents, they are asked to
form into groups of peers. The group, referred to in the Tata-AIG model as a community
rural insurance group (CRIG), operates in a similar fashion to an insurance agent’s firm.
Tata-AIG helps the group leader obtain an agent’s license. The members of the group all
refer policies for their own account, but the leader with the agent’s license submits the
policies and receives an additional commission for the extra work she does. The model
relies on direct marketing similar to that used by firms such as Tupperware and Avon.
The NGO can do a variety of tasks in this model including aggregating the premiums and
sending them on as a single sum to Tata-AIG, allowing the agents to use their offices to
conduct business, playing a role in the training of micro-agents, and helping to distribute
benefits. The model thus has some additional positive externalities by providing a new
income stream for rural NGOs and for micro-agents.
Tata-AIG’s rural and social team is in the process of developing and establishing in
distribution network. Consequently, the current figures on number of clients served and
the costs of servicing need to be read with caution. To date, Tata-AIG has sold 34 100
term and endowment life policies from March 2002 to June 2005, of which more than
half were sold to women. These products have thus far generated a premium income of
$122 000. The total cost of establishing the channel to date is $234 000.1
This paper provides a broad overview of how the micro insurance programme at TATA-
AIG emerged and how it operates. It places particular focus on the micro-agent. Because
of the low value of micro insurance premiums, low cost distribution is critical in micro
insurance. In its micro-agent model, TATA-AIG has introduced a new and exciting
distribution methodology to micro insurance in India.

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Insurance Sector Reforms
In 1993, Amphora Committee, headed by former Finance Secretary and RBI Governor
was formed to evaluate the Indian insurance industry and give its recommendations. The
committee came up with the following major provisions
• Private Companies with a minimum paid up capital of Rs.1bn should be allowed

to enter the industry
• Foreign companies may be allowed to enter the industry in collaboration with the
domestic companies
• Only one State Level Life Insurance Company should be allowed to operate in
each state
 It was after this committee came into affect the regulatory body for insurance
sector was formed with the name of IRDA
IRDA: The IRDA since its incorporation as a statutory body has been framing
regulations and registering the private sector insurance companies. IRDA being an
independent statutory body has put a framework of globally compatible regulations.

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Current Scenario of the Industry
INSURANCE MARKET IN INDIA
India with about 200 million middle class household shows a huge untapped potential for
players in the insurance industry. Saturation of markets in many developed economies
has made the Indian market even more attractive for global insurance majors. The
insurance sector in India has come to a position of very high potential and
competitiveness in the market. Innovative products and aggressive distribution have
become the say of the day. Indians, have always seen life insurance as a tax saving
device, are now suddenly turning to the private sector that are providing them new
products and variety for their choice. Life insurance industry is waiting for a big growth
as many Indian and foreign companies are waiting in the line for the green signal to start
their operations. The Indian consumer should be ready now because the market is going
to give them an array of products, different in price, features and benefits. How the
customer is going to make his choice will determine the future of the industry.
India is the world's 23rd largest insurance market. In 2000 total premium amounted to
$9.93bn (Rs.481 bn) an amount equal to 0.41% share of the world market. Global
insurers and reinsurers re gradually gaining access to the Indian insurance market with
significant potential based on its population over one billion. It is estimated that by 2010,
the industry would have reached a market size of Rs.1.8 trillion ($37bn).
Over the past ten years, India has gradually opened its doors to foreign and domestic
private involvement and is internationally regarded as a potential business center. This is

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largely due to encouraging growth figures and an expanding middle class of prospective
investors.
Opportunities presented by liberalization of the insurance sector have also given way to
an increase in bank ownership of insurers. In April 2000, the Reserve bank of India
increased the limit of bank ownership from 30% to 50% and will allow investments of up
to 74% on a selective basis.
Many foreign insurers interested in undertaking business in India are attracted by the
option to invest in Indian banks and foreign banks are also seeking to enter the business.
The national reinsures General Insurance Corporation of India (GIC) will generate
revenues through a compulsory cession of 20% from all non-life providers in the Indian
market.

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Indian Insurance Industry Forecast
The market research report “Indian Insurance Industry Forecast (2007-2009)” gives an
in-depth analysis of the present and future of the Indian Insurance Industry. The market
research report looks in to the details as well as gives an overview of the Indian insurance
market with focus on the performance of the key players.
With the initiation of the deregulation in the Indian insurance market, the monopoly of
big public sector companies in life insurance as well as general (non-life insurance)
market has been broken. New private players have entered the market and with their
innovative approaches and better use of distribution channels and technology, they are
eating in to the shares of established public sector companies in Indian Insurance Market.
Since the deregulation have been put in to place, the market share of LIC has come down
to 71.4% in life insurance market while the private players have captured around 17%
market in the general insurance segment. Having said that, public sector insurance
companies such as LIC and New India Assurance are registered impressive double-digit
growths, which reflects on the overall health of the Indian insurance sector.
This report includes the key private players in the insurance market such as ICICI
Prudential, Bajaj Allianz, Birla Sun life, ICICI Lombard and TATA AIG. It also includes
the leading competitors in the life insurance and general insurance segments along with
their market shares.

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Key Highlights and scope of the "Indian Insurance Industry Forecast (2007-2009)"
Report
- Global insurance industry scenario

- Indian insurance industry in global perspective
- Analysis of market performance of key players with charts and graphs, forecast and
opportunity and challenges faced by the players in Indian insurance industry
- Recent trends and developments in insurance market in India.
- Key driving forces in Indian insurance industry

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New Avenue For Growth 2012
With an annual growth rate of 15-20% and the largest number of life insurance policies in
force, the potential of the Indian insurance industry is huge. Total value of the Indian
insurance market (2004-05) is estimated at Rs. 450 billion (US$10 billion). According to
government sources, the insurance and banking services’ contribution to the country's
gross domestic product (GDP) is 7% out of which the gross premium collection forms a
significant part. The funds available with the state-owned Life Insurance Corporation
(LIC) for investments are 8% of GDP.
Till date, only 20% of the total insurable population of India is covered under various life
insurance schemes, the penetration rates of health and other non-life insurances in India is
also well below the international level. These facts indicate the of immense growth
potential of the insurance sector.
The year 1999 saw a revolution in the Indian insurance sector, as major structural
changes took place with the ending of government monopoly and the passage of the
Insurance Regulatory and Development Authority (IRDA) Bill, lifting all entry
restrictions for private players and allowing foreign players to enter the market with some
limits on direct foreign ownership.
Though, the existing rule says that a foreign partner can hold 26% equity in an insurance
company, a proposal to increase this limit to 49% is pending with the government. Since
opening up of the insurance sector in 1999, foreign investments of Rs. 8.7 billion have
poured into the Indian market and 21 private companies have been granted licenses.

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Innovative products, smart marketing, and aggressive distribution have enabled fledgling
private insurance companies to sign up Indian customers faster than anyone expected.
Indians, who had always seen life insurance as a tax saving device, are now suddenly
turning to the private sector and snapping up the new innovative products on offer.
The life insurance industry in India grew by an impressive 36%, with premium income
from new business at Rs. 253.43 billion during the fiscal year 2004-2005, braving stiff
competition from private insurers. This report, “Indian Insurance Industry: New Avenues
for Growth 2012”, finds that the market share of the state behemoth, LIC, has clocked
21.87% growth in business at Rs.197.86 billion by selling 2.4 billion new policies in
2004-05. But this was still not enough to arrest the fall in its market share, as private
players grew by 129% to mop up Rs. 55.57 billion in 2004-05 from Rs. 24.29 billion in
2003-04.
Though the total volume of LIC's business increased in the last fiscal year (2004-2005)
compared to the previous one, its market share came down from 87.04 to 78.07%. The 14
private insurers increased their market share from about 13% to about 22% in a year's
time. The figures for the first two months of the fiscal year 2005-06 also speak of the
growing share of the private insurers. The share of LIC for this period has further come
down to 75 percent, while the private players have grabbed over 24 percent.

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There are presently 12 general insurance companies with four public sector companies
and eight private insurers. According to estimates, private insurance companies
collectively have a 10% share of the non-life insurance market.
Though the focus of this market research report is on the potential growth on the Indian
Insurance Sector, it also talks about the market size, market segmentation, and key
developments in the market after 1999. The report gives an instant overview of the Indian
non-life insurance market, and covers fire, marine, and other non-life insurance. The data
is supplied in both graphical and tabular format for ease of interpretation and analysis.
This report also provides company profiles of the major private insurance companies.

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CHANGING SCENARIO OF INSURANCE INDUSTRY
Law Commission Member Secretary has commented that Insurers should draft their
policies in plain language to make it understandable to the common man. There is a need
to look at the insurance laws comprehensively.
The Insurance Act 1938 has phrases and concepts which are no longer relevant. The
need to bring in a comprehensive law also stems from the fact that there were thousands
of litigations in the insurance and banking sectors due to the old provisions.
Inadequate laws and lack of good insurance schemes are the reasons for poor
development of the health insurance sector.
The consultation paper has been drawn up by the Law Commission on a comprehensive
law by merging Insurance Act of 1938 and IRDA Act of 1999.
The Chairman Justice M.J.Rao has reacted that lot of provisions in the two Acts have
become redundant and have to be removed. Relevant to emerging changes and needs, the
Government has favored a comprehensive law including an alternate dispute resolution
and appellate authority in line with that of the securities market and telecom sector. There
is a need for a Regional Grievance Authority to resolve most of the insurance disputes
referred to consumer forums. The main objective is access to justice.

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The insurance disputes are not very often resolved through mediation and reconciliation.
Consumer courts are made to interpret difficult insurance laws.
The tendencies of insurers of not settling the claims taking advantage of the complex
legal provisions, is increasing the burden on courts. The discrepancies in the case of
nominations in life and general insurance sector are leading to further litigations which is
not within the reach of common man.

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Life Insurance In India
Life Insurance in its existing form came to India from the United Kingdom with
the establishment of a British firm Oriental Life Insurance Company in Calcutta in 1818
followed by Bombay Life Assurance Company in 1823. The Indian Life Assurance
Companies Act, 1912 was the first statutory measure to regulate life insurance business.
Later in 1928 the Indian Insurance Companies Act was enacted to enable the
Government to collect statistical information about both life and non-life insurance
business transacted in India by Indian and foreign insurers including provident insurance
societies. In 1938 with a view to protecting the interest of insuring public earlier
legislation was consolidated and amended by the Insurance Act 1938 with comprehensive
provisions detailed and effective control over the activities of insurers. The Act was
amended in 1950 resulting in far reaching changes in the insurance sector. These
included a statutory requirement of equity capital for companies carrying on life
insurance business, ceiling on share holdings in such companies, stricter control on
investments, submission of periodical returns relating to investments and such other
information to the controller.
The controller could also call for appointment of administrators and put a ceiling on
expenses of management and agency commission for mismanaged companies. By 1956,
1.54 Indian insurers, 16 foreign insurers and 75 provident societies were carrying on life
insurance business in India. Life insurance business was concentrated in urban areas and
confined to the higher strata of the society. On January 19, 1956, the management of life

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insurance business of 245 Indian and foreign insurers and provident societies then
operating in India were taken over by the Central Government. An Act of Parliament
formed Life Insurance Corporation in September 1956, viz. LIC Act 1.956 with a capital
contribution of Rs.50 mn.
CHALLENGES BEFORE THE INDUSTRY POST PRIVATISATION
The new as well as the old insurers will have to face a number of challenges in the
liberalized market.
New Insurers - The new insurers will have to invest a minimum capital of Rs.100 crores.
The normal gestation period is of five years. The generation of profit normally starts in
the sixth year. Hence the new insurers will have to be ready for locking up their capital
for at least 5 years before earning any profits. Besides they will face problems of
shortage of trained manpower for the insurance industry. The setting up of various
offices and distribution network is a time consuming process. Further the new insurers
will have to compete with the established insurance companies like LIC and GIC, which
have a corporate image and market presence for several years.
EXPECTATION OF THE CONSUMERS
Today LIC has more than 60 products and GIC has more than 180 products to offer in the
market. But most of them are outdated, as they are not suitable to the needs of the
consumers. Hence old as well as new insurers will have to offer innovative products to
the consumers. The consumers are particularly expecting good pension plans, health
insurance, term insurance and investment products like unit linked insurance, from the
life insurers.

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Similarly the consumers expect innovative products from the general insurers for
managing healthcare, property insurance, accident insurance and other products related to
the personal line of insurance.
The consumers also expect reduction in the premium of the insurance products as the
mortality rate in India has come down by three times in the last 50 years.
Distribution Channel
In the liberalized insurance market, there will be a multiple distribution channel, which
will include agents, brokers, corporate intermediaries, bank branches, affinity groups and
direct marketing through telesales and Internet. Some channels will be cheaper than
others. Hence there will be competition among the channels. The new insurers will
operate with the help of multiple distribution channels but the existing insurers may be
forced to operate only with the help of agents. Hence, intense competition will grow
among the old and new insurers in the market to win the consumers.
This will pose a great challenge to the insurers in the liberalized insurance market. Till
date insurance agents still remain the main source through which insurance products are
sold. The concept isvery well established in the country like India but still the increasing
use of other sources is imperative. It therefore makes sense to look at well- balanced,
alternative channels of distribution.
LIC has already well established and have an extensive distribution channel and
presence. New players may find it expensive and time consuming to bring up a
distribution network to such standards. Therefore they are looking to the diverse areas of
distribution channel to have an advantage. At present the distribution channels that are
available in the market are:

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• Direct selling
• Corporate agents
• Group selling
• Brokers and cooperative societies
Bancassurance
To make all these channels a success the companies have to be very alert and skillful to
know how to use these channels in a proper way. Bancassurance is on of the most
upcoming channels of distribution and therefore is being discussed in details.

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BANCASURANCE
India has an extensive bank network established over the years. What Insurance
companies have to do is to just take advantage of the customers' long-standing trust and
relationships with banks. This is a mutually beneficial situation as banks can also expand
their range of products on offer to customers, while the insurance company will also earn
profits from the exposure. Another advantage is that banks, with their network in rural
areas, help to fulfill rural and social obligations stipulated by the Insurance Regulatory
and Development Authority (IRDA) recently. Insurance companies should see
bancassurance as a tool for increasing their market penetration in India. It is also good for
the one who sees bancassurance in terms of reduced price, high quality product and
delivery at doorsteps. Everybody is a winner here. The creation of bancassurance
operations has made an important impact on the financial services industry at large. This
is though a new concept but it has gained a lot of importance in the industry at present
and has a great future.
CONSUMER EDUCATION
Very soon the market will be flooded by a large number of products by a fairly large
number of insurers operating in the Indian market. Even with limited range of products
offered by LIC and GIC, the consumers are confused in the market. Their confusion will
further increase in the face of a large number of products in the market. The existing
level of awareness of the consumers for insurance products is very low, it is so because

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only 62% of the population of India is literate and less than 20% well educated. Even the
educated consumers are ignorant about the various products of insurance. Hence it is
necessary that all the insurers should undertake the extensive plan for education of
consumers. The consumer organizations and the media also can play very important role
in education of the consumers. This will result in expansion of the insurance market and
will also enable the needy consumer to purchase appropriate products.
CONSUMER GRIEVANCE REDRESSAL
The insurers will have to face an acute problem of the redressal of the consumers,
Grievances for deficiency in products and services. The Insurance Regulatory
Development Authority (IRDA), the regulatory body has already appointed Ombudsman
for looking into the grievances of the policy holders, his judgment will be binding on
insurers. Further, under Consumer Protection Act 1986, the consumer courts are
operating at district, state and the national level. In the competitive market, awareness
level of the consumers will increase and it will help consumers to fight for their le-al right
for deficiency in services. Hence the number of legal cases filed by the consumers
against insurers is likely to increase substantially in future. This will be a challenge to
the insurers.
CUSTOMER SERVICE
Consumers remain the most important centre of the insurance sector. After the entry of
the foreign players the industry is seeing a lot of competition and thus improvement of
the customer service in the industry. Computerization of operations and updating of
technology has become imperative in the current scenario. Foreign players are bringing in
international best practices in service through use of latest technologies. The one time
monopoly of the LIC and its agents are now going through a through revision and
training program to catch up with the other private players. Though lot is being done for
the increased customer service and adding technology to it but there is a long way to go

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and various customer surveys indicate that the standards are still below customer
expectation levels.
PRODUCT INNOVATION
There has been a plethora of new and innovative products offered by the new players.
Customers have tremendous choice from a large variety of products from pure term (risk)
insurance to unit-linked investment products. Customers are offered unbundled products
with a variety of benefits as riders from which they can choose. More customers are
buying products and services based on their true needs and not just traditional money-
back policies, which is not considered very appropriate for long-term protection and
savings. There is lots of saving and investment plans in the market. However, there are
still some key new products yet to be introduced - e.g. health products.

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Challenges For Regulatory
The Insurance Regulatory and Development Authority (IRDA) have twin roles -
regulation as well as development. It is said that no game is possible without rules but
too many rules spoil the game. Hence the regulator has to ensure a balance in the
enactment of the regulations. The insurance industry for its effective development needs
fair competition. This has to be ensured.
Further, a large number of insurers with initiative, commitment and financial resources
should be encouraged to enter the insurance market. The entry rules should be easy and
simple so that compliance may be easier by the potential insurers.

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Glossary
1. Accelerated death benefit rider: A life insurance policy providing for payment
of an additional cash benefit related to the face amount of the base policy when
death occurs by accidental means.
2. Accidental death insurance: Insurance providing payment if the insured's death

results from an accident.
3. Attained Age: Your current age. Your attained age is one of the factors life
insurance companies use to determine your premiums.
4. Backdating: A procedure for making the effective date of a policy earlier than
the application date. Backdating is often used to make the age of the consumer at
issue lower than it actually was, in order to get lower premium.
5. Beneficiary: The person designated to receive the death benefit when the insured
dies.
6. Cash value: The equity amount or 'saving' accumulation in a whole life policy.
7. Claim: Notification to an insurance company that payment of an amount is due

under the terms of the policy.

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8. Conditional receipt: Given to policy owners when they pay a premium at time of
application. Such receipts bind the insurance company if the risk is approved as
applied for, subject to any other conditions stated on the receipt / proposal form /
policy document.
9. Contestable clause: A provision in an insurance policy setting forth the

conditions under which or the period of time during which the insurer may contest
or void the policy.
10. Coverage: Another word for insurance. Insurance companies use the term
coverage to mean the Rupee amount of insurance purchased.
11. Convertible term: A policy that may be changed to another form by contractual
provision and without evidence of insurability. Most term policies are convertible
into permanent insurance.
12. Death benefit: The amount of money paid to the beneficiary when the insured
person dies.
13. Double indemnity: Payment of twice the basic benefit in the event of loss
resulting from specified causes or under specified circumstances.
14. Evidence of insurability: Any statement or proof of a person's physical

condition, occupation, etc. affecting acceptance of the applicant for insurance.
15. Exclusions: Specific hazards listed in a policy for which benefits will not be paid.
16. Expiry: The termination of a term life insurance policy at the end of its period of
coverage.

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17. Face amount: The amount of insurance provided by the terms of an insurance
contract, usually found on the first page of the policy. In a life insurance policy,
the death benefit.
18. Final expenses: Expenses incurred at the time of a person's death. These include,
funeral costs, court expenses associated with probating his or her will, current
bills or debt, and taxes. Depending on their circumstances, the survivors may also
want to pay the outstanding balances of mortgage and loans.
19. Fixed benefit: A death benefit, the amount of which does not vary.
20. Grace period: Period of time after the due date of a premium, during which the
policy remains in force.
21. Lapse: Termination of a policy upon the policy owner's failure to pay the
premium within the grace period.
22. Level term insurance: Term coverage on which the face value and premia
remain unchanged from the date the policy comes into force to the date the policy
expires.
23. Life expectancy: The average number of years remaining for a person of a given
age to live as shown on the mortality or annuity table used as a reference.
24. Life insurance: An agreement that guarantees the payment of a stated amount of
monetary benefits upon the death of the insured.

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25. Limited pay policy: A type of whole life insurance designed to let the policy
holder pay higher premiums over a specific period such as 10 or 20 years and then
not pay any premium for the rest of his or her life.
26. Medical questionnaire / form: A document completed by a physician or another

approved medical examiner and submitted to an insurer to supply medical
evidence of insurability (or lack of insurability) or in relation to a claim.
27. Medical expenses: Reasonable charges for medical, surgical, X-ray, dental,
ambulance, hospital, professional nursing, prosthetic devices, and funeral
expenses. (The insurance company defines what is reasonable.)
28. Mortality charge: The charge for the element of pure insurance protection in the
life insurance policy.
29. Mortality cost: The first factor considered in life insurance premium rates.
Insurers have an idea of the probability that any person will die at any particular
age; this is the information shown in a mortality table.
30. Mortality rate: A table showing the incidence of death at specified ages.
31. Non medical insurance: A contract of life insurance underwritten on the basis of
an insured's statement of his health with no medical examination required.
32. Occupational hazard: A condition in an occupation that increases the peril of

accident, sickness, or death. It usually will mean higher premiums.
33. Offer and acceptance: The offer may be made by the applicants completing and
signing the application, paying the first premium and, if necessary, submitting to
physical examination. Policy issuance, as applied for, constitutes acceptance by
the Insurer.

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34. Original age: The age you were when you bought the policy.
35. Ownership: All rights, benefits and privileges under life insurance policies are
controlled by their owners. Policy owners owner.
36. Para-med (paramedical) examination: The medical examination of applicants

for life insurance.
37. Permanent life insurance: A term loosely applied to life insurance policies other
than Group and Term, usually Cash Value Life Insurance, such as Whole Life
Insurance.
38. Policy: The printed document issued to the policyholder by the Insurer stating the
terms of the insurance contract.
39. Policyholder: The person who owns a life insurance policy. This is usually the
insured person, but it may also be a relative of the insured, a partnership or a
corporation.
40. Preferred risk: The person who owns a life insurance policy. This is usually the
insured person, but it may also be a relative of the insured, a partnership or a
corporation.
41. Preferred risk: A risk whose physical condition, occupation, mode of living and
other characteristics indicate a prospect for longevity superior to that of the
average longevity of unimpaired lives of the same age.
42. Premium: The periodic payment required to keep an insurance policy in force.

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43. Premium flexibility: The policyholder's right to vary the amount of premium
paid each month towards a life policy.
44. Primary beneficiary: In life insurance the beneficiary designated by the insured
as the first to receive policy benefits.
45. Primary policy: The insurance policy that pays first when you have a loss that's
covered by more than one policy.
46. Probate costs: The legal fees and other costs incurred in the probate process,
which is the legal processing of your will.
47. Provisions : Statements contained in an insurance policy which explain the

benefits, conditions and other features of the insurance contract.
48. Rated: Coverages issued at a higher than standard premium because of some
health condition or impairment of the insured.
49. Reinstatement: Putting a lapsed policy back in force by producing satisfactory

evidence of insurability and paying past due premiums required.
50. Renewable Term: Insurance that may be renewed for another term without
evidence of insurability.
51. Representation: Statements made by applicants on their applications for

insurance that they represent as being substantially true to the best of their
knowledge and belief.

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52. Revocable beneficiary: The beneficiary in a life insurance policy in which the
owner reserves the right to revoke or change the beneficiary. Most policies are
written with a revocable beneficiary.
53. Rider: An attachment to a policy that modifies its conditions by expanding or

restricting benefits or excluding certain conditions from coverage.
54. Risk: The chance of injury, damage or loss.
55. Risk selection: The method an underwriter uses to choose applicants that the
insurance company will accept. The underwriter must determine whether risks are
standard, substandard or preferred and set the premium rates accordingly.
56. Secondary beneficiary: An alternate beneficiary designated to receive payment

usually in the event the original beneficiary predeceases the insured.
57. Standard risk: Person who according to a company's underwriting standards is

entitled to insurance protection without extra rating or special restrictions.
58. Substandard risk: Person who is considered an under-average or impaired

insurance risk because of physical conditions family or personal history of
disease, occupation, residence in unhealthy climate or dangerous habits.
59. Term insurance: Protection during limited number of years expiring without
value if the insured survives the stated period, which may be one or more years
but usually is between five to twenty years, because such periods usually cover
the needs for temporary protection.

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60. Term: Period for which the policy runs. In life insurance, this is to the end of the
term period for term insurance.
Tertiary beneficiary: In life insurance, a beneficiary designated as third in line to

receive the proceeds or benefits if the primary and secondary beneficiaries do not
survive the insured.
61. Third-party owner: A policy owner who is not the prospective insured. The
policy owner and the insured may be and often are the same person. Like, you
apply for and are issued an insurance policy on your own life.
62. If, however, your mother applies for and is issued a policy on your life, then she is
the policy owner and you are the insured.
63. Underwriter: The company employee who decides whether the company should
assume a particular risk or not and if yes, at what extra premium.
64. Uninsured risk: A person who is not acceptable for insurance due to excessive
risk.
65. Whole life insurance: Life insurance that is kept in force for a person's whole life
as long as the scheduled premiums are maintained. All whole life policies build
up cash values. Most whole life policies are guaranteed as long as the scheduled
premiums are maintained. The variable in a whole life policy is the bonus which
could vary depending on how well the Insurer is doing. If the Insurer is doing well
and the policies are not experiencing a higher mortality than projected, premiums
are paid back to the policy holder in the form of bonus. Policyholders can use the
cash from bonus in many ways. The three main uses are that it can be used to

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lower or off-set premiums, it can be used to purchase more insurance or it can be
used to pay for term insurance.
Competitor
India, Insurance is a national matter, in which life and general insurance is yet a booming
sector with huge possibilities for different global companies, as life insurance premiums
account to 2.5% and general insurance premiums account to 0.65% of India's GDP. The
Indian Insurance sector has gone through several phases and changes, especially after
1999, when the Govt. of India opened up the insurance sector for private companies to
solicit insurance, allowing FDI up to 26%. Since then, the Insurance sector in India is
considered as a flourishing market amongst global insurance companies. However, the
largest life insurance company in India is still owned by the government.
Insurance Companies In India
• Bajaj Allianz Life Insurance Company Limited

• Birla Sun Life Insurance Co. Ltd
• HDFC Standard life Insurance Co. Ltd
• ICICI Prudential Life Insurance Co. Ltd.
• ING Vysya Life Insurance Company Ltd.
• Life Insurance Corporation of India
• Max New York Life Insurance Co. Ltd
• Met Life India Insurance Company Ltd.
• Kotak Mahindra Old Mutual Life Insurance Limited

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• SBI Life Insurance Co. Ltd
• Tata AIG Life Insurance Company Limited
• Reliance Life Insurance Company Limited.
• Aviva Life Insurance Co. India Pvt. Ltd.
• Shriram Life Insurance Co, Ltd.
• Sahara India Life Insurance
• Bharti AXA Life Insurance
• Future Generali Life Insurance
• IDBI Fortis Life Insurance
Introduction to the company
Tata AIG General Insurance Company Limited (Tata AIG General) is a joint venture
company, formed by the Tata Group and American International Group, Inc. (AIG). Tata
AIG General combines the Tata Group's pre-eminent leadership position in India and
AIG's global presence as the world's leading international insurance and financial
services organization. The Tata Group holds 74 per cent stake in the insurance venture
with AIG holding the balance 26 percent. Tata AIG General Insurance Company, which
started its operations in India on January 22, 2001, provides insurance solutions to
individuals and corporate. It offers a complete range of general insurance products
including insurance for automobile, home, personal accident, travel, energy, marine,
property and casualty as well as several specialized financial lines. The Company
believes in offering innovative and relevant insurance solutions in the retail and
commercial space. Each product offering is backed by expertise and an unparalleled
claims service. The Company's products are available through various channels of
distribution like agents, brokers, banks (through banc assurance tie ups) and direct
channels like Tele Marketing, Digital Marketing, worksite etc.
Our Vision : To be India's most preferred General Insurance Company.

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Our Purpose To create unmatched value for our customers, employees, business
: partners and shareholders by delivering remarkable service that is
consistent, fair and transparent.
Our Values : We share a set of 6 core values: Customer First, People, Passion,
Performance, Integrity and Empathy.
Tata Group Profile
The Tata Group companies operate in seven business sectors: Communications and
Information Technology, Engineering, Materials, Services, Energy, Consumer Products
and Chemicals. The Group was founded by Jamsetji Tata in the mid 19th century, a
period when India had just set out on the road to gaining independence from British rule.
Consequently, Jamsetji Tata and those who followed him aligned business opportunities
with the objective of nation building. This approach remains enshrined in the Group's
ethos to this day.
The Tata Group is one of India's largest and most respected business conglomerates, with
revenues in 2007-08 of $ 62.5 billion (Rs. 251,543 crore). Tata companies together
employ some 350,000 people. The Group's 27 publicly listed enterprises have a
combined market capitalization of some $ 60 billion and a shareholder base of 3.2
million. The major Tata Companies are Tata Steel, Tata Consultancy Services, Tata
Motors, Tata Chemicals, Tata Communications, Tata Power, Indian Hotels and Tata Tea.
The Tata Group has operations in more than 85 countries across six continents, and its
companies export products and services to 80 countries.
The Tata family of companies shares a set of five core values: integrity, understanding,
excellence, unity and responsibility. These values, which have been part of the Group's
beliefs and convictions from its earliest days, continue to guide and drive the business
decisions of Tata companies. The Group and its enterprises have been steadfast and

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distinctive in their adherence to business ethics and their commitment to corporate social
responsibility. This is a legacy that has earned the Group the trust of many millions of
stakeholders in a measure few business houses anywhere in the world can match.

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Company Profile
TATA-AIG Life Insurance Company is a joint venture between the Tata Group (74%
equity stake) and American International Group Inc. (AIG) (26% equity stake). The
company offers a broad range of life insurance products to individuals and groups. The
products offered to individuals are variations of term life with or without a savings
element, e.g., endowment policies and money back policies. TATA-AIG Life has been in
operation since April 2001 (incorporated on Aug 23, 2000). While the company itself is
relatively new, the Tata group is widely known in Indian households.
The Tata Group is one of the oldest and largest industrial conglomerates in India.
Established in 1868, it has interests in engineering, consumer products, chemicals,
financial services, hotels, information technology and telecommunications. With over 80
companies, and with revenues close to 1.8% of the country’s GDP, the Tata brand is very
well respected across the socioeconomic classes. Most importantly, it manufactures a
large variety of goods that are highly visible to low-income households, like consumer
goods, trucks and automobiles that bear the Tata logo. Having been around for over a
century, the name Tata introduces immediate credibility in its micro insurance operations.
Agents selling micro insurance products are able to assure potential clients that such a
large conglomerate would have little interest in stealing their miniscule (in relative terms)
premiums. AIG is the one of the world’s largest insurers. Aside from its massive pool of
in-house technical capacity, it has experience working on micro insurance in Uganda.7
Although Tata is the largest shareholder in Tata-AIG; AIG manages the company with
strategic guidance from AIG’s Hong Kong office.
Tata-AIG was among the few private sector insurance players to have a well-known,
reputable local brand, but it did not have a strategic banking alliance with domestic banks
or branch presence in smaller towns that could enable it to promote microinsurance sales.

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As a result, its micro insurance strategy had to be developed around other
partner organizations to enable the insurer to penetrate rural areas. Rural India comprises
of over 650 000 villages with over half of them having a population of less than 500.
Even the state relies on NGOs to provide services to remote and poorly connected
locations. For Tata-AIG’s rural programme, it was evident that the main partners would
need to be NGOs. Fortunately, Tata has the reputation of having contributed to
community development over the years. Substantial parts of the group’s profits go into a
trust and several social organizations across the country receive grants and assistance
from these trusts. The link with Tata helped to create a climate in which many NGOs
were favourably disposed towards Tata- AIG.
Although AIG was forced to find a local partner to get a license to do business in India,
the choice of Tata, with its excellent reputation in the development community, made it
an invaluable partnership. This was especially significant in India where many
multinational corporations have faced significant difficulties in entering the Indian
market.
Tata AIG Insurance Solutions is one of the leading insurance companies that provide
both life insurance as well as general insurance. This pioneer company is a joint
collaboration between the American International Group, Inc. (AIG) and Tata Group.
They own the company in the ratio of 26:74. It is a leading financial institution that has
carved a niche for itself all over the world.

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Objective
 To provide the information of different policies of TATA AIG insurance

company to the people.
 To motivate the people for investment in the TATA AIG insurance company.
 To identifying the problems which the people facing in taking the policies of
TATA AIG insurance company.
 To study the customer relationship management approach of the company.

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Market Definition
The insurance market consists of the non-life insurance sector and the life insurance
sector. The value of the market is shown in terms of gross premium incomes. The life
insurance sector consists of mortality protection and annuity. The non-life insurance
sector consists of accident and health, and property and casualty insurance segments.
The insurance market depends on a variety of economic and non-economic factors, and
future performance is difficult to predict. The forecast given in this report is not based on
a complex economic model, but is intended as a rough guide to the direction in which the
market is likely to move.
This forecast is based on a correlation between past market growth and growth of base
drivers, such as house price growth, GDP growth and long-term interest rates.
All currency conversions have been calculated at constant 2007 annual average exchange
rate. Asia-Pacific comprises Australia, China, Japan, India, Singapore, South Korea and
Taiwan.

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Selection and Training of Agents
The NGO partner is enlisted on the basis of recommendations from donor agencies and
others in the Indian development community. Once the NGO partner is selected, Tata-
AIG asks the NGO to draw a list of appropriate persons based on a Tata-AIG’s profile of
ideal micro- agents. For example, the criteria for the selection of a CRIG leader include:
1. Must be a resident of the community in which she will sell and service policies.
2. Preferably having passed the 12th school year or at least the 10th—this is to ensure
That she is eligible to be licensed (an IRDA requirement).
3. Married: Since MI is long-term commitment to policyholders, an unmarried CRIG
Leader may migrate to her (future) husband’s village, leaving the CRIG and the
Policy holders in the lurch.
4. Ability to write English: Since the underwriting at the head office is in English, it
is imperative that the proposal forms are filled in English.
5. Good track record of integrity: Money handling is integral part of her duty as a leader.
6. Effective leadership qualities: She has to manage a group of 4 other women.
7. Public speaking ability: She will be required to address large gatherings to
promote Tata-AIG’s products.

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8. Training skills: Since she is the only one trained on insurance, she has to train the
other four.
9. Must have a positive influence among the target market. Each leader, in her area,
should preferably be a woman who is admired for her integrity, forward looking,
and progressive nature, and must be able to use this influence to enable her CRIG
members to achieve their targets.
10. Preferably, she should have some previous work experience in the social sector.
This profile is constantly updated to reflect new learning from operations across the
country. On reflection, the skills required to become a CRIG leader are considerable and
may restrict the replication of the model in states with a scarcity of such skills among the
rural poor, especially women.
Once Tata-AIG has a list of candidates, they take a written test to assess whether they
have the comprehension and analytical skills required for the job. This examination is
mandated by the regulator and it’s conducted by an external examiner. The successful
candidates then go through three days of micro insurance product training where they
learn about administrative processes.
After being licensed and forming their CRIGs, the agents start selling. Three months into
their insurance careers, most agents qualify for a soft skills development programme that
Tata-AIG refers to as the retraining module. There are three retraining modules held over
a period of a year and each lasts three days. These modules impart basic knowledge on
retail finance including insurance, analysing company data, advice on objection handling,
team building, communications development, leadership practices, as well as general
instruction on the relevance of micro insurance to the poor.

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Training is also provided on computer usage, particularly the Internet to facilitate the use
of the agent’s portal. The entire programme is in vernacular and based on activities and
role plays.
Tata-AIG has recently started outsourcing the delivery of some of soft skills training
sessions, such as team building and communication, to the NGO partners. The NGOs
learn how to offer the training by attending an existing micro-agent training course and
then receiving the training material and support from Tata-AIG.

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History of company
Risk Management
Tata AIG Risk Management - Adding value to your organization

Insurance business is nothing but a "transfer of risk" by an insured to an insurer; hence,
insurer's prudent approach to risk management is only way to protect insured's interest in
long run. Good financial health of insurers by practicing effective risk management
programme makes the insurers possible to fulfill their commitment in the event of any
unforeseen eventuality resulting in severe losses to the insured.
We at Tata AIG always believe in minimization of risk for our clients. To achieve this
objective, we have a team of highly experienced Risk Management / Loss Control
Specialists on board who undertake risk management activities for your plant. The risk
management activities of Tata AIG in India are supported by AIU (American
International Underwriters), a division of AIG (American International Group).
Established in 1919 and operating in more than 130 countries worldwide, AIG has vast
experience in the field of risk management. The risk engineers of Tata AIG have been
trained by AIU to enable them to conduct risk surveys as per AIU Global Standards.
Insurance covers normally direct or tangible losses, which is just the tip of the iceberg;
however, intangible uninsured losses such as goodwill, market share, shareholders'
confidence, employees' morale etc. will have severe impact on the insured. Hence, Risk
Management services and loss control measures offered by Tata AIG are very crucial in
terms of insured's overall business perspectives.
The Risk Management Service offered by Tata AIG would assist the insured in a loss
prevention programme in a number of ways:
• Surveying the insured's facility, the risk engineer would identify loss causing
events which could result in property damages and business interruption.
• Reviewing probability and severity of the loss causing events, the risk engineer
would advise insured on loss control measures.
• Risk Engineer would update the insured on latest risk management tools being
practiced globally.

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• This would not only lead to better risk management, but also a possible reduction
in premium for the insured.
AIC PRODUCTS
Like many Insurance Companies in India, AIC provides agriculture insurance,

agriculture being the primary occupation of the people in rural India. The
earlier products of AIC are:
• PCIS
• CCIS
• ECIS
• PSSCI
• FIIS
• Sookha Suraksha Kavach
Presently, AIC has launched some useful insurance services such as:
• NAIS
• WBCIS
• Wheat Insurance
• Rabi Weather Insurance
• Mango Insurance
• Poppy Insurance
• USBY
• Potato Insurance
• Grapes Insurance
• Varsha Bima/Rainfall Insurance
• RISC
• Bio-Fuel Tree/Plant Insurance
• Pulpwood Tree Insurance
• Coconut Insurance
• Rubber Insurance

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In the coming days, AIC will be coming up with many new schemes related to:
• Sugarcane Insurance
• Tea Insurance
• Basmati Rice Insurance
• Aromatic & Medicinal plants Insurance
• Contract Farming Insurance

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Insurance industry
Insurance in its basic form is defined as “ A contract between two parties whereby one
party called insurer undertakes in exchange for a fixed sum called premiums, to pay the
other party called insured a fixed amount of money on the happening of a certain event."
In simple terms it is a contract between the person who buys Insurance and an Insurance
company who sold the Policy. By entering into contract the Insurance Company agrees to
pay the Policy holder or his family members a predetermined sum of money in case of
any unfortunate event for a predetermined fixed sum payable which is in normal term
called Insurance Premiums.
Insurance is basically a protection against a financial loss which can arise on the
happening of an unexpected event. Insurance companies collect premiums to provide for
this protection. By paying a very small sum of money a person can safeguard himself and
his family financially from an unfortunate event.
For Example if a person buys a Life Insurance Policy by paying a premium to the
Insurance company , the family members of insured person receive a fixed compensation
in case of any unfortunate event like death.
There are different kinds of Insurance Products available such as Life Insurance , Vehicle
Insurance, Home Insurance, Travel Insurance, Health or Med claim Insurance etc.
Insurance other than ‘Life Insurance’ falls under the category of General Insurance.
General Insurance comprises of insurance of property against fire, burglary etc, personal
insurance such as Accident and Health Insurance, and liability insurance which covers
legal liabilities. There are also other covers such as Errors and Omissions insurance for
professionals, credit insurance etc.
Non-life insurance companies have products that cover property against Fire and allied
perils, flood storm and inundation, earthquake and so on. There are products that cover

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property against burglary, theft etc. The non-life companies also offer policies covering
machinery against breakdown, there are policies that cover the hull of ships and so on. A
Marine Cargo policy covers goods in transit including by sea, air and road. Further,
insurance of motor vehicles against damages and theft forms a major chunk of non-life
insurance business.
In respect of insurance of property, it is important that the cover is taken for the actual
value of the property to avoid being imposed a penalty should there be a claim. Where a
property is undervalued for the purposes of insurance, the insured will have to bear a
rateable proportion of the loss. For instance if the value of a property is Rs.100 and it is
insured for Rs.50/-, in the event of a loss to the extent of say Rs.50/-, the maximum claim
amount payable would be Rs.25/- (50% of the loss being borne by the insured for
underinsuring the property by 50%). This concept is quite often not understood by most
insured.
Personal insurance covers include policies for Accident, Health etc. Products offering
Personal Accident cover are benefit policies. Health insurance covers offered by non-life
insurers are mainly hospitalization covers either on reimbursement or cashless basis. The
cashless service is offered through Third Party Administrators who have arrangements
with various service providers, i.e., hospitals. The Third Party Administrators also
provide service for reimbursement claims. Sometimes the insurers themselves process
reimbursement claims.
Accident and health insurance policies are available for individuals as well as groups. A
group could be a group of employees of an organization or holders of credit cards or
deposit holders in a bank etc. Normally when a group is covered, insurers offer group
discounts.
Liability insurance covers such as Motor Third Party Liability Insurance, Workmen’s
Compensation Policy etc offer cover against legal liabilities that may arise under the
respective statutes— Motor Vehicles Act, The Workmen’s Compensation Act etc. Some
of the covers such as the foregoing (Motor Third Party and Workmen’s Compensation

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policy) are compulsory by statute. Liability Insurance not compulsory by statute is also
gaining popularity these days. Many industries insure against Public liability. There are
liability covers available for Products as well.
There are general insurance products that are in the nature of package policies offering a
combination of the covers mentioned above. For instance, there are package policies
available for householders, shop keepers and also for professionals such as doctors,
chartered accountants etc. Apart from offering standard covers, insurers also offer
customized or tailor-made ones.
Suitable general Insurance covers are necessary for every family. It is important to
protect one’s property, which one might have acquired from one’s hard earned income. A
loss or damage to one’s property can leave one shattered. Losses created by catastrophes
such as the tsunami, earthquakes, cyclones etc have left many homeless and penniless.
Such losses can be devastating but insurance could help mitigate them. Property can be
covered, so also the people against Personal Accident. A Health Insurance policy can
provide financial relief to a person undergoing medical treatment whether due to a
disease or an injury.
Industries also need to protect themselves by obtaining insurance covers to protect their
building, machinery, stocks etc. They need to cover their liabilities as well. Financiers
insist on insurance. So, most industries or businesses that are financed by banks and other
institutions do obtain covers. But are they obtaining the right covers? And are they
insuring adequately are questions that need to be given some thought.
Indian Insurance Industry: Insurance may be described as a social device to reduce or

eliminate risk of life and property. Under the plan of insurance, a large number of people
associate themselves by sharing risk, attached to individual.
The risk, which can be insured against include fire, the peril of sea, death, incident, &
burglary. Any risk contingent upon these may be insured against at a premium
commensurate with the risk involved.

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Insurance is actually a contract between 2 parties whereby one party called
insurer undertakes in exchange for a fixed sum called premium to pay the other party
happening of a certain event.
Insurance is a contract whereby, in return for the payment of premium by the insured, the
insurers pay the financial losses suffered by the insured as a result of the occurrence of
unforeseen events. With the help of Insurance, large number of people exposed to a
similar risk makes contributions to a common fund out of which the losses suffered by
the unfortunate few, due to accidental events, are made good.
India’s insurance industry, private and public, has its roots in the 19th century. The
British Government set up state-run social protection schemes for its colonial officials,
many of which evolved into today’s schemes. The first private insurance company was
the Oriental Life Insurance Company, which started in Calcutta in 1818. Under British
rule, many insurers operated in India. In 1938, the British passed the Insurance Act,
comprehensive insurance Legislation, which remains the cornerstone of the insurance
industry today.
Regulated insurers are divided into two categories: life and general insurance. Life
insurance includes products like endowments policies and retirement annuities. General
insurance covers all other types of insurance. In 1956, the Indian government
nationalized the life Insurance industry. The reasons given at the time were high levels of
fraud in the industry and a desire to spread insurance more widely, as Nehru noted at time
in parliament, “We require life insurance to spread rapidly all over the country and to
bring a measure of security to our people.” The government combined 154 insurance
providers and formed the Life Insurance Corporation of India.
General insurance remained in private hands until 1973 when it too was nationalized.
Prior to nationalization, 68 Indian and 45 non-Indian entities sold insurance. All of these
were absorbed into one giant corporation, the General Insurance Corporation (GIC) with
its four subsidiaries: Oriental Insurance Company Limited, New India Assurance
Company Limited, National Insurance Company Limited, and United India Insurance
Company Limited.

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General insurance remained in private hands until 1973 when it too was nationalized.
Prior to nationalization, 68 Indian and 45 non-Indian entities sold insurance. All of these
were absorbed into one giant corporation, the General Insurance Corporation (GIC) with
its four subsidiaries: Oriental Insurance Company Limited, New India Assurance
Company Limited, National Insurance Company Limited, and United India Insurance
Company Limited.
When the ideological winds of change blew in the early the early 1990s, the Indian
government set about liberalizing its insurance markets. It set up a commission of enquiry
under the chairmanship of R N Malhotra. The central outcome of the commission was
the establishment of the Insurance Regulatory and Development Authority (IRDA) that
in turn laid the framework for the entry of private (including foreign) insurance
companies.
At the beginning of 2005, there were 14 lives and 14 non-life insurers operating in
India.3 India’s insurance penetration (premiums as a percent of gross domestic product)
in 2003 is low at 2.9 percent, and ranks 54th in the world. In premium collection, the
record is better, at 19th position collecting US$17 billion in 2003. The 2003 ratio of
premiums collected per capita.
(Insurance density) is 16.4. Compared with a world average of 469.6, India’s insurance
industry is still at a very nascent stage. Of the US$16.4 per capita expenditure on
insurance, a mere US$3.5 is spent on general insurance. This is primarily because in
India, non-life insurance is not considered important and people perceive it as an
unnecessary expenditure.

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Insurance sector in India
The insurance sector in India has come a full circle from being an open competitive
market to nationalization and back to a liberalized market again. Tracing the
developments in the Indian insurance sector reveals the 360-degree turn witnessed over a
period of almost 190 years.
The business of life insurance in India in its existing form started in India in the year
1818 with the establishment of the Oriental Life Insurance Company in. Calcutta.
Some of the important milestones in the life insurance business in India are:
• 1912 - The Indian Life Assurance Companies Act enacted as the first statute to
regulate the life insurance business.
• 1928 - The Indian Insurance Companies Act enacted to enable the government to
collect statistical information about both life and non-life insurance businesses.
• 1938 - Earlier legislation consolidated and amended to by the Insurance Act with
the objective of protecting the interests of the insuring public.
• 1956 - 245 Indian and foreign insurers and provident societies taken over by the
central government and nationalized. LIC formed by an Act of Parliament, viz.
LIC Act, 1956, with a capital contribution of Rs. 5 crore from the Government of
India.
The General insurance business in India, on the other hand, can trace its roots to
the Triton Insurance Company Ltd., the first general insurance company
established in the year 1850 in Calcutta by the British.
Some of the important milestones in the general insurance business in India are:
• 1907 - The Indian Mercantile Insurance Ltd. set up, the first company to transact all
classes of general insurance business.

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• 1957 - General Insurance Council, a wing of the Insurance Association of India,
frames a code of conduct for ensuring fair conduct and sound business practices.
• 1968 - The Insurance Act amended to regulate investments and set minimum
solvency margins and the Tariff Advisory Committee set up.
• 1972 - The General Insurance Business (Nationalization) Act, 1972 nationalized the
general insurance business in India with effect from 1st January 1973.
107 insurers amalgamated and grouped into four companies viz. the National
Insurance Company Ltd., the New India Assurance Company Ltd., the Oriental
Insurance Company Ltd. and the United India Insurance Company Ltd. GIC
incorporated as a company.

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Lending Credibility to Sales Operations
Tata-AIG collaborates with NGOs in part to build sales credibility. For example, when
there are claims payouts, the NGO is invited to a public claim distribution ceremony.
Tata-AIG has also developed general literature on the nature of insurance, which is
distributed by the NGO. There is no mention of Tata-AIG or its products in this literature.
By promoting the literature, the NGO is establishing the legitimacy of insurance, which
has the knock-on effect of building the creditability of Tata-AIG.
Partnerships with NGOs have played a central role in the success of Tata-AIG micro
insurance. They have helped select agents; they have been hired to provide a range of
cheap front-end services including policy servicing and training of agents. Most crucially,
they have lent credibility in a market where many low-income clients are suspicious of
multinational companies in general, and insurance companies in particular, an issue that
is covered in detail in Section 3.3.

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Profit Allocation and Distribution
Tata-AIG is private company and all profits generated by the company go to its owners
(shareholders). The exception to this is with endowment policies where regulations
require that 90% of profits must be returned to policyholders. Reinsurance
The sum assured of micro insurance has been deemed too small to present any systemic
risk to Tata-AIG and hence no reinsurance has been sought on the micro insurance
portfolio. Tata- AIG typically seeks reinsurance on products with sums assured from Rs 1
million ($22 222) and upwards. The products sold by the rural and social team represent
less than 0.1% of the total possible liabilities of Tata-AIG.

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Socio-economic Profile of Target Market
Approximately 74% of households in India are in rural areas. Close to 80% of these have
an
annual household income of less than US$1800 (Rs 81 000).
The characteristics of this market are:
1. Potential micro insurance clients live in households of 5 or more sharing income and
access to financial services. This has important implications for access to micro
insurance. A policy can be bought by one member who has access to the insurer on
behalf of another household member.
2. Agricultural labour is the main source of income. The implications of this are that
much of the income is irregular and seasonal. Not all income derives from agriculture, as
households tend to pursue multiple livelihood activities with off-farm income as a
component. Premium collection must take into account the particular variances ofthis
market’s seasonal income.
3. The poverty of the target market means that they present a higher than average risk
profile for many types of insurance. The lack of sanitation, unavailability of clean water,
hazardous working conditions and poor nutrition all contribute to disease and higher rates
of death.
4. On the other hand, small rural communities often have better internal surveillance than
large urban sprawls and so there may be opportunities for controlling fraud and moral
hazard.
5. Low levels of literacy imply that marketing needs to be done without written media,
for example film, radio, street theatre and word-of-mouth.

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6. The rural poor often live in areas with poor road and telecommunications
infrastructure, which increases the costs of selling and servicing policies
7. There is a often no definitive socio-economic data for this target group, such as
mortality rates, which makes rate making difficult.
In general, private insurance companies are using the data from LIC as a basis for their
own assessment. Although this is the most comprehensive database, it does not cover
detailed information specific to the situation of poor and low-income groups. Tata-AIG
has had to obtain its mortality figures in part through its own experience. Its products
have been sold mostly in the rural areas of Southern India to clients aged between 18 and
45 years (55 years with a lower sum assured for one term product). In the last three years,
the insurer estimates a mortality rate of just less then 3 per thousand.

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Risks and Vulnerabilities
The poor by definition own few assets. In contrast to the urban poor, many of the rural
poor own their dwelling and the land that it is constructed on. Income for the landless
poor is largely a function of daily agricultural labour rates and the number of days such
work is available.
The insurable perils are:
1- Loss of life. Most household members contribute to household income, except those
too old, young or infirm to work.
2- Critical illness. This has the dual impact of loss earnings/household labour as well as
treatment expenses.
3- Sickness. Reduces the working days, and thus productivity, and also generates
expenses, though at a smaller level then critical illness.
4- Old age. There are few income options for the elderly. In addition, there is some
evidence of emerging social trends in which the obligation of the young to take care of
the old is weakening.
5- Risk of lowered agricultural productivity or returns e.g., through low levels of rainfall
or natural catastrophes.
6- Asset loss, especially those assets used to generate income.

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One of the few general microfinance demand studies carried out in the region identified
the needs for micro insurance based on major adverse events that a rural household has
experienced in the previous 10 years.8 The researchers found that 44% of households
reported losses due to flood/heavy rains, 39% drought and 27% pest attack. The average
value of loss per annum was Rs 2 641 ($60) per household. The survey also found that
64% of respondents wanted some form of insurance: 50% wanted life cover, 30%
livestock, and 20% crop and other asset insurance. Only 15% already possessed an
insurance policy, mostly because it was a condition for getting a loan.

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Insurance Cycle
Insurance cycle source:www.rms.usda.gov
Policy Renewal/Change Options/Application
The Insurance Cycle begins each year with the insurance offer. Actuarial documents are
published annually by the Risk Management Agency (RMA). The actuarial documents
list the plan of insurance, crop, type, variety, and practice that may be insured in a state
and county, and show the amounts of insurance, available insurance options, levels of
coverage, price elections, applicable premium rates, and subsidy amounts. The Special
Provisions of Insurance list program calendar dates, and general and special statements
which may further define, limit, or modify coverage.

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Sales Closing/Cancellation/Termination Dates
Insurance applications must be completed and signed no later than the sales closing date
specified in the crop actuarial documents. Applications signed after the crop sales closing
date may be rejected by the insurance provider.
Insurance coverage is continuous and can be cancelled by either the insurance provider or
the policyholder for the following crop year by providing a written notice to the other
party no later than the cancellation date specified in the crop policy. For a policyholder
insured the previous crop year, any changes he or she wishes to make to the policy
coverage must be made on or before the crop sales closing date. The policy will
automatically renew for the subsequent crop year unless the policyholder cancels the
policy in writing on or before the crop cancellation date.
Insurance coverage may be terminated by the insurance provider for the following crop
year for nonpayment of outstanding debt by providing a written notice to the policyholder
no later than the termination date specified in the crop policy. The insurance provider
may terminate coverage on a crop if no premium is earned for three consecutive years.
Acceptance
Upon receipt of a properly completed and timely submitted insurance application, the
insurance provider will accept and process the application, unless the applicant is
determined to be ineligible under the contract or Federal statute or regulation. The
insurance provider will issue a summary of coverage and the appropriate policy
documents to the applicant. After the application is accepted, the policyholder may not
cancel the policy for the initial crop year.

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Insurance Attaches
For annual crops, insurance attaches annually when planting begins on the insurance unit.
The crop must be planted on or before the crop's published final planting date unless late
or prevented planting provisions apply. If prevented planting provisions apply, and the
crop cannot be timely planted due to the causes specified in the crop provisions, such
acreage may be eligible for a prevented planting payment.
For perennial crops, insurance attaches each crop year on the calendar date specified in
the crop provisions.
Acreage Reports
The policyholder must annually report for each insured crop in the county the number of
insurable and uninsurable acres planted or prevented from being planted if prevented
planting is available for the crop, the date the acreage was planted, share in the crop, the
acreage location, farming practices used, and types or varieties planted to the insurance
provider on or before the applicable acreage reporting date specified in the crop actuarial
documents. This report is used by the insurance provider to establish the amount of
coverage and premium for the crop. Insurance providers may deny coverage if the
acreage report is filed after the applicable crop acreage reporting date.
Summary of Coverage
The insurance provider will process a properly completed and timely filed acreage report,
and issue to the policyholder a summary of coverage that specifies the insured crop, the
insured acres and amount of insurance or guarantee for each insurance unit. The
policyholder may make changes to the filed acreage report, if permitted by the insurance
provider.

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Premium Billing
The annual premium is earned and payable at the time insurance coverage begins. The
insurance provider shall issue a premium billing based upon the information contained in
the acreage report no earlier than the premium billing date specified in the crop actuarial
documents. The premium billing will specify the amount of premium and any
administrative fees that may be due. If the premium or administrative fees are not paid by
the date specified in the actuarial documents or policy, the insurance provider may assess
interest on the outstanding premium balance.
Notice of Damage or Loss
A written notice of damage or loss for each unit is to be filed by the policyholder within
72 hours of the policyholder's initial discovery of damage or loss but not later than 15
days after the calendar date for the end of the insurance period unless otherwise stated in
the individual crop policy. The policyholder should refer to the individual crop provisions
for additional requirements in the event of damage or loss. These notifications provide
the opportunity for the insurance provider to inspect the crop and determine the extent of
damage or potential production before the crop is harvested or otherwise disposed of.
Inspection
After the insurance provider receives the written notice of damage or loss, it will be
processed and, if necessary, a loss adjuster will be sent to inspect the damaged crop and
gather pertinent information concerning the damage. If the policyholder wishes to destroy
or not harvest the crop, the loss adjuster will gather the appropriate information, conduct
an appraisal to establish the crop's remaining value and complete any forms needed. If the
crop has been harvested or will not be harvested by the end of the insurance period, and
the policyholder wishes to file a claim for indemnity, the loss adjuster will gather the
appropriate information and assist the policyholder in filing the claim for indemnity.

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It is the policyholder's responsibility to establish the time, location, cause, and amount of
any loss.
Indemnity Claim
After the claim for indemnity is processed by the insurance provider, an indemnity check
and a summary of indemnity payment will be issued showing any deductions to the
amount of indemnity for outstanding premium, interest, or administrative fees.

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Contract Change Date
Changes to the insurance program may be made by RMA from one year to the next. The
insurance provider will notify the policyholder in writing of any changes to the policy,
actuarial documents, or the Special Provisions of Insurance prior to the calendar date for
contract changes specified in the crop policy. The policyholder will have the opportunity
to review the changes and, if he/she desires, continue the insurance coverage for the
following crop year, change the policy coverage, or cancel the insurance coverage. Any
changes to the policy coverage that the policyholder makes must be made no later than
the crop sales closing date. If the policyholder wishes to cancel the policy, a written
notice must be submitted to the insurance provider on or before the crop cancellation
date.

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Distribution channel
Actually in Tata-AIG the distribution channel is very good, they use the BA model.
In which the product is distributed by advisors, through networking.
In this method both agent as well as their upper agents is also benefited. Because Agents
only motivated through money, if they get more money then they will work otherwise
they will left their job. In this distribution channel, agents can expect their promotion in a
very less time. Because Tata- AIG gives such opportunities to their advisors for
promotion that a minimum and average agents can also get the promotion with average
working hour of 4-5 in a day.
In this model both newly agent as well as upper agent work with hand in hand and help
each other so that both of them get the promotion.

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SWOT ANALYSIS
Strengths
 Market image of Tata-AIG:- As it having a good market image of Tata in

India, so we can expect better for the Tata-AIG.
 Quick Service:- It provides a quick service to its customers. It is one of the main
strength about the Organization.
 Product/plan Diversification: - There is a wide range of plan or schemes in
Tata-AIG, so it is the second strength about the organization to increase its market
share.
Weakness
 There is no deep penetration in the rural market. Actually for every

organization, it is a high time for the profit to regulate its product or plan for
the rural areas.

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Opportunities
 New customers is the opportunities for Tata-Aig is the opportunities for Tata-AIG
because it is the main funda for any insurance company “ more hands more
money”
 Start new schemes which have not run by competitors.
Threats
 Market competitors like LIC of India, because every one have a blind faith on
LIC.

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Age of successful Advisors
Actually in insurance field age factor does not make any effect rather than the creativity
and market understanding affects more. As insurance field is depend upon marketing of
plans and way of communicating and convincing the clients, but it is watched that the age
of 21-35 is more successful advisors.
Because in this age they are more cheerful and enjoying the life style of market. In this
they can competitive in the market and give more business to the company for maximum
revenue generation. This age gave them more freedom for doing any thing, at this age
they have less responsibilities to stop them. For running in the market your health,
strategy and motivation of earning money is much high so this age is more applicable for
success of an agent. After this age you have not much efficiency to generation new
business the BA model gives you support to stand in the company.
Recently in Tata-AIG on of the BA get promotion to become a SBA and he is the age of
34. And many of the successful agents have the age group of 25-35.

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Pressure and Advisors
Every where in the market, pressure exist either FMCG or INSURANCE or MUTUAL
FUND. If you gave more pressure on your advisors then this tendency make them
worried for fulfilling the target but if your not motivate them then they also not done their
best, so for a manger it is necessary to motivate them in a very soft skilled manner and by
friendly behaviour.
But you can’t leave them just that so there should be a good communication between
advisors and officials either through telephone or e-mails. Because communication make
a good and forever relation with agents and official to high up the business and profit.
Your communication with advisors should be in a proper official’s language but
sometime for more convincing your advisors you should communicate unofficial manner
In a familiar manner. It is best for officials to communicate the advisors and convince
them either in financial term or in facilities term.

Page 7
RESEARCH METHODOLOGY
An exploratory research has been carried out to study the behavior of customers. To
meet the research objective researches format, to collect information from the
respondents was made and the information were collected through secondary
data & the primary data.
In the case of exploratory research, the focus is on the discovery ideas. In a business
where sales have been declining for the past few months, the management may
conduct a quick study to find out what could be the possible explanations – the
sales might have declined on account of a number of factors, such as the
deterioration in the quality of the product, increased competition, inadequate or
ineffective advertising, lack of efficient and trained salesmen or used to the
wrong channels of distribution. In such a case an exploratory study may be
conducted to find the most likely cause.
A) PRESCRIBED READING
To get insight of the product, the research was involved in important discussion
with the relevant people. Researcher was also provided with Products catalogues,
stickers.
B) SURVEY
Primary data was collected as a data collection technique. The data was collected
from the categories of the customer by personal interviews through questionnaire.

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C) SAMPLING DESIGN
1. TYPE OF UNIVERSE: - In this case an finite universe (i.e., the number of items
is certain) was selected. And the universe of my study was the number of policy
holders in Saharanpur.
2. SAMPLING UNIT: - My sampling unit is state (Saharanpur).
3. SOURCE LIST: - It contains the names of all items of a universe (in case of
finite universe only). Our source list is students, employees, businessmen,
working women & housewives.
4. SIZE OF SAMPLE: - This refers to the number of items to be selected from the
universe to constitute a sample. Our optimum sample is 100
D) DATA COLLECTION TECHNIQUES

Data for this study has been collected primary sources
For the collection of data CONVENIENCE SAMPLING has
been used.
1. PRIMARY DATA: Primary data was collected with
The help of:
(a)QUESTIONNAIRE METHOD: A Prepared questionnaire has been given to get
the information. This method helps in collecting the inner view of the respondent
and their suggestion about the product.
(b)PERSONAL INTERVIEW: Personal Interview was conducted. A mixed type
of questions was asked.
2. SECONDERY DATA: Secondary data have collected through referred books,
magazines, various articles, Internet etc.

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Data Analysis
Q.1) would you like to join the TATA AIG insurance company?
a) Yes B) No
15%
85%
Yes No
Interpretations: - On the basis of this question we can say that only 15% people
interested to join the TATA AIG and the rest have different views regarding Tata AIG.

Page 7
Q.2) On which company would you like to trust more?
A) ICICI
B) HDFC
C) LIC
D) Reliance
E) TATA AIG
11% 14%
5%
12%
58%
ICICI HDFC LIC Reliance TATA AIG
Interpretation: - On the basis of this question we can say that 58% people want to
join LIC because of its attractive offers in comparison to others where as Tata AIG is a
form of new policy Provider Company. So the people are getting feared to join this
company.

Page 7
Q.3) which factors attracts you to join the TATA AIG?
A) High Growth
B) Modern life style
C) More freedom to meet with new person
D) Others Factors
20%
30%
25%
25%
High Growth
Mordern life style
More freedom to meet with new person
Others Factors
Interpretations: - We can say that people wants to join the TATA AIG because there is a
high growth possibility.

Page 7
Q.4) Which type of policy of TATA AIG is more in demand now a days?
A) Money back Policy
B) Children plan
C) Education Plan
D) Others
20%
35%
20%
25%
Money back Policy Children plan

Education Plan others
Interpretations: - on the basis of this question we can say that money back policy is more
demand now a day.

Page 7
Q.5) What are the obstacle, which you are facing in purchasing the Insurance policy of
TATA AIG?
A) Communication
B) Uneducated
C) Less Idea about the product plan
D) Others
11%
22% 45%
22%
Communication
Uneducation
Less Idea about the product plan
Others
Interpretations: - Communication is the main obstacle during purchasing any insurance

policy. Because people does not deals properly.

Page 7
Q.6) Who are the Niche -Buyer?
A) Businessman
B) Serviceman
C) Middle class family
D) Others
10% 15%
15%
60%
Businessman Serviceman Middle class family Others
Interpretations: - Mostly 60% servicemen are the niche buyer.

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Q.7) Do you feel that TATA AIG is a better option to make your career?
A) Yes B) No
40%
60%
Yes No
Interpretation: - 60% people think that TATA AIG is good to make our career. Because
it give lots of target to get the higher post.

Page 7
Q.8) which promotional tool used by TATA AIG to attract the customers?
A) Advertising
B) Personal selling
C) Public relation
D) Direct selling
Interpretation: We can see that 40% people attract by advertising and public relation
by 30% and direct selling by 20% and personal selling by 10%.

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Q 9) which services of TATA AIG attract you most?
a) Credit facility
b) Demat account
c) Mutual fund
d) Fixed deposit
Interpretation: according to question 40% people attract by credit facility and 30% by
demat account and 20%by mutual fund and 10% by fixed deposit.

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FINDINGS
 People have lack of knowledge about the policies of TATA AIG insurance
company due to which they have fear to take the policies.
 People are not interested to invest in TATA AIG insurance policies because they
have more faith in LIC as it is Government Company & TATA AIG charges more
than others.
 Customer attract mostly by advertising of TATA AIG insurance company.
 Being private new player in the market TATA AIG provides more credit
facility rather than other companies.
 Money Back policy is the most demanded policy offer by TATA AIG.
 Serviceman is the Niche Buyers of TATA AIG.

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SUGGESTIONS AND RECOMMENDATIONS
 Through various policies of advertisement and trial demonstration, they can

make it very common in general societies.
 Companies should be promoting more and more their products through their
websites.
 People should be analytical while purchasing of insurance policies.
 Purchasing of insurance policies is very convenient for the people in both sides
from cost as well as time also.

Page 7
Conclusion
Tata AIG Insurance Solutions is one of the most prestigious organizations in the business
world. It employs thousands of employees and offers various opportunities to people to
build a prospective career. As a leading name in the financial world, it identifies the
potential and Experience of the individual.
For good business advisors must be active and officials must have to communicate time
to time. For activating the advisors there must be the many factor because advisors wants
more money than other, if your company gave them more money then it is more easier
for an official to convince and communicate them. For easy convincing the insurance
office starts some unique and interesting prizing session like Monsoon Fiesta, Summer
Fiesta etc for attracting more business through advisors in a specific month.
There should be an optimum type of pressure so that advisors feel a boundation of time
and target through the office. Many of the advisors belong from villages so there must be
a good trainer and training system so that village person can also be including in any
prosperous company for business orientation.
During survey, it is watched that many agents are positive before fulfilling the target but
as the target day comes near they didn’t fulfil their promise, only 30-40% is done by the
advisors. So you must have the right communication with the agents so that they can do
their best time to time.

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LIMITATIONS
 Most of the respondents are not understand the questions and they not give the
favorable response.
 Some of the respondents are not responding in proper manner.
 Survey was time consuming and it’s very costly also.
 Due to lack of knowledge about insurance policies among the respondent it was
very difficult to get favorable response for report.
 Absence of expert research was big problem.

Page 7
BIBLIOGRAPHY
BOOKS REFERED
Kotler, Philip, Marketing, Management, Pearson Education, 12thEdition, ‘2008’,

New Delhi
Cherunilam, Francis, Business, Environment, Pearson Education, 12th edition,

2008, New Delhi
SITES VISITED:
www.tataaig.com
www.irdaindia.org
www.google.com
www.wikipedia.com

Page 7
Annexure
Questionnaire
"PERCEPTION OF THE PEOPLE ABOUT THE TATA AIG
INSURANCE COMPANY"
Q.1) would you like to join the TATA AIG insurance company?
a) Yes B) No
Q.2 On which company would you like to trust more?
A) ICICI
B) HDFC
C) LIC
D) Reliance
Q.3) Which factors attracts you to join the TATA AIG?

A) High Growth
B) Modern life style
C) More freedom to meet with new person
D) Others Factors

Page 7
Q.4) Which type of policy of TATA AIG is more in demand now a days?
A) Money back Policy
B) Children plan
C) Education Plan
D) Others
Q.5) who are the Niche -Buyer?

A) Businessman
B) Serviceman
C) Middle class family
D) Others
Q.6) What are the obstacle, which you are face during selling any Insurance policy to
customer?
A) Communication
B) Uneducation
C) Less Idea about the product plan
D) Others

Page 7
Q.7) Do you feel that TATA AIG is a better option to make your career?
A) Yes B) No
Q.8) which promotional tool used by TATA AIG to attract the customers?
A) Advertising
B) Personal selling
C) Public relation
D) Direct selling
Q 9) which services of TATA AIG attract you most?
a) Credit facility
b) Demat account
c) Mutual fund
d) Fixed deposit
Q.10) If you will the sales manager then what you will, do for betterment of advisor&
customer relationship
Comment:-………………………………

Page 7

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CONTENT

Executive summary 8-9

Insurance Sector Reforms 10

Current Scenario of the Industry 11-12

Indian Insurance Industry Forecast 13-14

New Avenue for Growth 15-17

Changing Scenario of Insurance Industry 18-19

Life Insurance in India 20-21

Distribution Channel of Life Insurance 22-26

Challenges for Regulatory 27

Company Profile 39-40

Selection and Training of Agents 43-45

History of company 46-68

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Research Methodology 73-74

Data Analysis & Interpretations 75-83

Suggestions and Recommendations 85

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• Private Companies with a minimum paid up capital of Rs.1bn should be allowed

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INSURANCE MARKET IN INDIA

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- Global insurance industry scenario

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CHALLENGES BEFORE THE INDUSTRY POST PRIVATISATION

EXPECTATION OF THE CONSUMERS

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CONSUMER GRIEVANCE REDRESSAL

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2. Accidental death insurance: Insurance providing payment if the insured's death

7. Claim: Notification to an insurance company that payment of an amount is due

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9. Contestable clause: A provision in an insurance policy setting forth the

14. Evidence of insurability: Any statement or proof of a person's physical

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26. Medical questionnaire / form: A document completed by a physician or another

32. Occupational hazard: A condition in an occupation that increases the peril of

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36. Para-med (paramedical) examination: The medical examination of applicants

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47. Provisions : Statements contained in an insurance policy which explain the

49. Reinstatement: Putting a lapsed policy back in force by producing satisfactory

51. Representation: Statements made by applicants on their applications for

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53. Rider: An attachment to a policy that modifies its conditions by expanding or

54. Risk: The chance of injury, damage or loss.