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Transcript of tata aia
TABLE OF
CONTENT
TABLE OF CONTENT
Declaration
Students Certificate
Acknowledgement
Preface
Chapter-1Introduction
Industry profile Contribution to the Indian economy Role of IRDA
Chapter-2
Company profile TATA AIG life insurance Ltd Company mission TATA Group AIG Group
Chapter-3
Services TATA AIG product details
Claim Process in Life insurance
7 | P a g e
Chapter-4Human Resource
Definition of agent Functions/ Responsibilities of agent
Chapter 5
Marketing Key business strategy Distribution channel of TATA AIG
Chapter 6
Research Methodology Research Design Sources of Data Collection
Objective of the study
Scope of the study
Chapter 7
Conceptual Discussion Theory and concept used in the project Function of insurance
Why we need insurance
Chapter 8
Data Analysis & Interpretation
Chapter 9
Findings, Recommendation & Conclusion
Bibliography
Annexure8 | P a g e
9 | P a g e
Chapter - 1INTRODUCTION
10 | P a g e
INTRODUCTION
INDUSTRY PROFILE
Insurance 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 two centuries.
Life Insurance is the fastest growing sector in India since 2000 as Government allowed Private
players and FDI up to 26% and recently Cabinet approved a proposal to increase it to 49%. Life
Insurance in India was nationalized by incorporating Life Insurance Corporation (LIC) in 1956.
All private life insurance companies at that time were taken over by LIC.
In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map for
privatisation of the life insurance sector.
While the committee submitted its report in 1994, it took another six years before the enabling
legislation was passed in the year 2000, legislation amending the Insurance Act of 1938 and
legislating the Insurance Regulatory and Development Authority Act of 2000. The same year the
newly appointed insurance regulator - Insurance Regulatory and Development Authority IRDA
—started issuing licenses to private life insurers.
11 | P a g e
A brief history of the Insurance sector
The business of life insurance in India in its existing form started in India in the
year 1818 with the establishment of the Oriental Life Insurance Company in Calcutta. Some
of the important milestones in the life insurance business in India are:
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.
12 | P a g e
A BRIEF HISTORY OF THE INSURANCE SECTOR:
The business of life insurance in India in its existing form started in India in the year 1818 with
the establishment of the Oriental Life Insurance Company in Calcutta. Some of the important
milestones in the life insurance business in India are given in the following table.
Years Important milestones in the Indian life insurance business
1912: The Indian Life Assurance Companies Act came into force for regulating the life
insurance business.
1928: The Indian Insurance Companies Act was enacted for enabling the government to
collect statistical information on both life and non-life insurance businesses.
1938: The earlier legislation consolidated the Insurance Act with the aim of safeguarding
the interests of the insuring public.
1956: 245 Indian and foreign insurers and provident societies were taken over by the
central government and they got nationalized. LIC was formed by an Act of
Parliament, viz. LIC Act, 1956. It started off with a capital of Rs. 5 crore and that
too from the Government of India.
13 | P a g e
The General insurance business in India, on the other hand, can trace its roots to the Triton
Insurance Company Ltd., the first general insurance company established in the year 1850 in
Calcutta by the British. Some of the important milestones in the general insurance business in
India are given in the following table
Years Important milestones in the Indian general insurance business
1907 The Indian Mercantile Insurance Ltd. was set up
which was the first company of its type to transact
all general insurance business.
1957 General Insurance Council, an arm of the Insurance
Association of India, framed a code of conduct for
guaranteeing fair conduct and sound business
patterns.
1968 The Insurance Act improved for regulating
investments and set minimal solvency levels and
the Tariff Advisory Committee was set up.
1972 The General Insurance Business (Nationalization)
Act, 1972 nationalized the general insurance
business in India. It was with effect from 1st
January 1973.
14 | P a g e
1996 setting up of (interim) Insurance Regulatory Authority (IRA) Recommendations of the
IRA. 1997 Mukherjee Committee Report submitted but not made public 1997 The Government
gives greater autonomy to LIC, GIC and its subsidiaries with regard to the restructuring of
boards and flexibility in investment norms aimed at channeling funds to the infrastructure sector.
1998 The cabinet decides to allow 40% foreign equity in private insurance companies-26% to
foreign companies and 14% to NRI‟s, OCB‟s and FII‟s
. 1999 The Standing Committee headed by Murali Deora decides that foreign equity in private
insurance should be limited to 26%. The IRA bill is renamed the Insurance Regulatory and
Development Authority (IRDA) Bill. 1999 Cabinet clears IRDA Bill. 2000 President gives
Assent to the IRDA Bill.
INDIAN INSURANCE MARKET (HISTORY):
Insurance has a long history in India. Life Insurance in its current form was introduced in 1818
when Oriental Life Insurance Company began its operations in India. General Insurance was
however a comparatively late entrant in 1850 when Triton Insurance company set up its base in
Kolkata. History of Insurance in India can be broadly bifurcated into three eras: a) Pre
Nationalization b) Nationalization and c) Post Nationalization. Life Insurance was the first to be
nationalized in 1956. Life Insurance Corporation of India was formed by consolidating the
operations of various insurance companies. General Insurance followed suit and was nationalized
in 1973. General Insurance Corporation of India was set up as the controlling body with New
India, United India, National and Oriental as its subsidiaries. The process of opening up the
insurance sector was initiated against the background of Economic Reform process which
commenced from 1991. For this purpose Malhotra Committee was formed during this year who
submitted their report in 1994 and Insurance Regulatory Development Act (IRDA) was passed in
999. Resultantly Indian Insurance was opened for private companies and Private Insurance
Company effectively started operations from 2001.
15 | P a g e
HOW BIG IS THE INSURANCE MARKET?
The insurance sector was opened up for private participation four years ago. For years now, the
private players are active in the liberalized environment. The insurance market have witnessed
dynamic changes which includes presence of a fairly large number of insurers both life and non-
life segment. Most of the private insurance companies have formed joint venture partnering well
recognized foreign players across the globe. There are now 29 insurance companies operating in
the Indian market – 14 private life insurers, nine private non-life insurers and six public sector
companies. With many more joint ventures in the offing, the insurance industry in India today
stands at a crossroads as competition intensifies and companies prepare survival strategies in a
detariffed scenario. There is pressure from both within the country and outside on the
Government to increase the foreign direct investment (FDI) limit from the current 26% to 49%,
which would help JV partners to bring in funds for expansion. There are opportunities in the
pensions sector where regulations are being framed. Less than 10 % of Indians above the age of
60 receive pensions. The IRDA has issued the first license for a standalone health company in
the country as many more players wait to enter. The health insurance sector has tremendous
growth potential, and as it matures and new players enter, product innovation and enhancement
will increase. The deepening of the health database over time will also allow players to develop
and price products for larger segments of society. Insurance is a Rs.400 billion business in
India, and together with banking services adds about 7% to India's Gap.
INDIAN SCENERIO:-
Indian economy is the 12th largest in the world, with a GDP of $1.25 trillion and 3rd largest in
terms of purchasing power parity. With factors like a stable 8-9 per cent annual growth, rising
foreign exchange reserves, a booming capital market and a rapidly expanding FDI inflows, it is
on the hinge of an ever increasing growth curve. Indians have a tendency to invest in properties
and gold followed by bank deposits. They selectively invest in shares also but the percentage is
very small--4-5%. This in itself is an indicator that growth potential for the insurance sector is
immense. It’s a business growing at the rate of 15-20%
16 | P a g e
per annum and presently is of the order of $47.9 billion. India is a vast market for life insurance
that is directly proportional to the growth in premiums and an increase in life density. With the
entry of private sector players backed by foreign expertise, Indian insurance market has become
more vibrant. Competition in this market is increasing with company’s continuous effort to lure
the customers with new product offerings. However, the market share of private insurance
companies remains very low -- in the 10-15% range. Even to this day, Life Insurance
Corporation (LIC) of India dominates Indian insurance sector. The heavy hand of government
still dominates the market, with price controls, limits on ownership, and other restraints. The
upward growth trend started from 2000 was mainly due to economic policies adopted by the then
Indian government. This year saw initiation of an era of economic liberalization and
globalization in the Indian economy followed by several reforms and long-term policies that
created a perfect roadmap for the success of Indian financial markets
The general insurance industry grew by 16% in 2006-07 as private insurers continued their
robust performance, while public sector players like New India Assurance and Oriental
Insurance improved their show. Despite continuous fall in business of government-owned
National Insurance, the 12 non-life insurers collected Rs 20,378 crore in first year premium in
the last fiscal compared to Rs 17,531 crore collected in 2005-06, according to data compiled by
regulator IRDA. New India Assurance collected Rs 4,762 crore in premium and continued to
lead the non-life sector by cornering 23.36% of the market. National Insurance was at the second
17 | P a g e
spot by collecting Rs 3,524 crore in premium, a decline of 7%, but had a market pie of 17.29%.
Oriental Insurance mopped up Rs 3,518 crore in premium income after logging 16.6% growth in
business to corner a market share of 17.26%. Another PSU insurer United India grew by a
modest 6.8% to collect Rs 3,147 crore in premium and had 15.44% of the market. The eight
private players expanded their business by 52% to collect Rs 5,427 crore in premium income and
increased their combined market share to 26.6% from 20.2% a year ago. ICICI Lombard led the
private players by logging 80% growth in premium at Rs 1,592crore, followed by Bajaj Allianz,
which grew by 50% to collect Rs 1,287 crore in premium. ICICI Lombard had a market share of
7.81% and Bajaj Allianz had 6.31% of the market.
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.
•
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 In su rance Ac t amended t o r egu l a t e i nves tmen t s and s e t m in imum
solvency margins and the Tariff Advisory Committee set up.
•
1972:
The General Insurance Business (Nationalization) Act, 1972 nationalized t he
gene ra l i n su rance bus ine s s i n Ind i a w i th e f f ec t f r om 1s t J anua ry 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.
18 | P a g e
FUNCTION OF INSURANCE:
Provide protection: The primary function of insurance is to provide protection against future
risk, accidents and uncertainty. Insurance cannot check the happening of the risk, but can
certainly provide for the losses of risk. Insurance is actually a protection against economic loss,
by sharing the risk with others.
Collective bearing of risk: Insurance is an instrument to share the financial loss of few among
many others. Insurance is a mean by which few losses are shared among larger number of
people. All the insured contribute the premiums towards a fund and out of which the persons
exposed to a particular risk is paid.
Assessment of risk: Insurance determines the probable volume of risk by evaluating various
factors that give rise to risk. Risk is the basis for determining the premium rate also.
Provide certainty: Insurance is a device, which helps to change from uncertainty to certainty.
Insurance is device whereby the uncertain risks may be made more certain.
Small capital to cover larger risk: Insurance relieves the businessmen from security
investments, by paying small amount of premium against larger risks and uncertainty.
Contributes towards the development of industries: Insurance provides development
opportunity to those larger industries having more risks in their setting up. Even the financial
institutions may be prepared to give credit to sick industrial units which have insured their assets
including plant and machinery.
19 | P a g e
Means of savings and investment: Insurance serves as savings and investment, insurance is a
compulsory way of savings and it restricts the unnecessary expenses by the insured's For the
purpose of availing income-tax exemptions also, people invest in insurance.
Source of earning foreign exchange: Insurance is an international business. The country can
earn foreign exchange by way of issue of marine insurance policies and various other ways.
Risk free trade: Insurance promotes exports insurance, which makes the foreign trade risk free
with the help of different types of policies under marine insurance cover.
ROLES OF THE LIFE INSURANCE:
Life insurance as an investment: -
Insurance products yield more than any other investment instruments and it also provides added
incentives or bonus offered by insurance companies.
Life insurance as risk cover: -
Insurance is all about risk cover and protection of life. Insurance provides a unique sense of security
that no other form of invest can provide.
Life insurance as tax planning: -
Insurance serves as an excellent tax saving mechanism
20 | P a g e
IMPORTANCE OF THE LIFE INSURANCE:
Protection against untimely death: -
Life insurance provides protection to the dependents of the life insured and the family of the
assured in case of his untimely death. The dependents or family members get a fixed sum of
money in case of death of the assured.
Saving for old age: -
After retirement the earning capacity of a person reduces. Life insurance enables a person to
enjoy peace of mind and a sense of security in his/her old age.
Promotion of savings: -
Life insurance encourages people to save money compulsorily. When life policy is taken, the
assured is to pay premiums regularly to keep the policy in force and he cannot get back the
premiums, only surrender value can be returned to him. In case of surrender of policy, the
policyholder gets the surrendered value only after the expiry of duration of the policy.
Initiates investments: -
Life Insurance Corporation encourages and mobilizes the public savings and canalizes the same
in various investments for the economic development of the country. Life insurance is an
important tool for the mobilization and investment of small savings.
Credit worthiness: -
Life insurance policy can be used as a security to raise loans. It improves the credit worthiness of
business.
21 | P a g e
Social Security: -
Life insurance is important for the society as a whole also. Life insurance enables a person to
provide for education and marriage of children and for construction of house. It helps a person to
make financial base for future.
INSURANCE CYCLE:
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.
22 | P a g e
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.
23 | P a g e
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.
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.
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.
24 | P a g e
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
25 | P a g e
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. 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.
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.
26 | P a g e
List of Life Insurers (as of November 2011)
Apart from TATA AIG, the public sector life insurer, there are 23 other private sector life
insurers, most of them joint ventures between Indian groups and global insurance giants.
Life Insurer in Public Sector
1. Life Insurance Corporation of India
Life Insurers in Private Sector
1. SBI Life Insurance
2. PNB Metlife India Life Insurance
3. ICICI Prudential Life Insurance
4. Bajaj Allianz Life
5. Max Life Insurance
6. Sahara Life Insurance
7. Tata AIA Life
8. HDFC Life
9. Birla Sun Life Insurance
10. Kotak Life Insurance
11. Life Insurance Corporation of India
12. Aviva Life Insurance
13. Reliance Life Insurance Company Limited - Formerly known as AMP Sanmar LIC
14. ING Vysya Life Insurance
15. Shriram Life Insurance
16. Bharti AXA Life Insurance Co Ltd
17. Future Generali Life Insurance Co Ltd
27 | P a g e
18. IDBI Fedaral Life Insurance
19. AEGON Religare Life Insurance
20. DLF Pramerica Life Insurance
21. CANARA HSBC Oriental Bank of Commerce
22. Star Union Dia-ichi Life Insurance Co. Ltd
23. Edelweiss Tokio Life Insurance Company Ltd
Types of Insurance
There are basically two types of Insurance. They can be classified into following two categories,
28 | P a g e
INSURANCE
LIFE INSURANCE GENERAL INSURANCE
LIFE INSURANCE :
Your family counts on you every day for financial support, food. Shelter, transportation,
education, and much more. Insurance provides you with that unique sense of security that no
other form of investment provides.
Life insurance is all about making sure your family has adequate financial resources to make
those plans and dreams come true. It provides financial protection to help your family or
business to manage after your death.
Whole life policies – cover the insured for life. The insured does not receive money while he is
alive; the nominee receives the sum assured plus bonus upon death of the insured.
Endowment Policies – Cover the insured for a specific period. The insured receives money on
survival of the term and is not covered thereafter.
Money back policies – The nominee receives money immediately on death of the insured. On
survival the insured receives money at regular
Intervals during the term. These policies cost more than endowment with profit policies.
29 | P a g e
Annuities / Children’s policies – The nominee receives a guaranteed amount of money at a pre-
determined time and not immediately on death of the insured. On survival the insured receives
money at the same pre-determined time. These policies are best suited for planning children’s
future education and marriage costs.
Pension schemes – There are policies that provide benefits to the insured only upon retirement.
If the insured dies during the term of the policy, his nominee would receive the benefits either as
a lump sum or as a pension every month.
Since a single policy cannot meet all the insurance objectives, one should have a portfolio
covering all the needs.
30 | P a g e
GENERAL INSURANCE :
Every asset has a value and the business of general insurance is related to the protection of
economic value of assets. Assets would have been created through the efforts of owner, which
can be in the form of building, vehicles, machinery and other tangible properties.
Concepts of insurance have been extended beyond the coverage of tangible asset. Now the risk
of losses due to sudden changes in currency exchange rates, political disturbance, negligence and
liability for the damages can also be covered.
But if a person judiciously invests in insurance for his property prior to any unexpected
contingency then he will be suitably compensated for his loss as soon as the extent of damage is
ascertained.
Property Insurance – The home is most valued possession. The policy is designed to cover the
various risks under a single policy. It provides protection for property and interest of the insured
and family.
Health Insurance – It provides cover, which takes care of medical expenses following
hospitalization from sudden illness or accident.
Personal Accident Insurance – This insurance policy provides compensation for loss of life
or injury (partial or permanent) caused by an accident. This includes reimbursement of cost
of treatment and the use of hospital facilities for the treatment.
31 | P a g e
Travel Insurance – the policy covers the insured against various eventualities while
traveling abroad. It covers the insured against personal accident, medical expenses and
repatriation, loss of checked baggage, passport etc.
Liability Insurance – This policy indemnifies the Directors or Officers or other
professionals against loss arising from claims made against them by reason of any wrongful
Act in their Official capacity.
Motor Insurance – Motor Vehicles Act states that every motor vehicle plying on the road
has to be insured, with at least Liability only policy. There are two types of policy one
covering the act of liability, while other covers insurers all liability and damages caused to
one’s vehicles.
Since a single policy cannot meet all the insurance objectives, one should have a
portfolio covering all the needs.
32 | P a g e
CONTRIBUTION TO THE INDIAN ECONOMY
Insurance is the only sector which garners long term savings
Insurers are increasingly introducing innovative products to meet the specific needs of
the prospective policyholders. An evolving insurance sector is of vital importance for economic growth.
While encouraging savings habit it also provides a safety net to both enterprises and Individuals.
Insurance Companies receive, without much default, a steady cash stream of premium or
contributions to pension plans. Various actuary studies and models enable them to predict, relatively
accurately, their expected cash outflows.
Liabilities of Insurance companies being long-term or contingent in nature, liquidity is
excellent and their investments are also long-term in nature. Since they offer more than the return on
savings in the shape of life-cover to the investors, the rate of return guaranteed in their insurance policies is
relatively low. Consequently, the need to seek high rates of returns on their investments is also low. The
risk-return tradeoff is heavily tilted in favor of risk.
As a combined result of all this, investments of insurance companies have been largely in
bonds floated by GOI, PSUs, state governments, local bodies, corporate bodies and mortgages of long term
nature.
Generates Long term funds for infrastructure and strong positive correlation between
development of capital markets and insurance/pension sector.
For GDP to grow at 8 to 10%, qualitative improvement in infrastructure is essential.
Estimates of funds required for development of infrastructure vary widely. An investment of
6,19,600crore is anticipated in the next 5 years.
33 | P a g e
Tenure of funding required for infrastructure normally ranges from 10 to 20 years. The
insurance industry also provides crucial financial intermediary services, transferring funds from the
insured to capital investment, critical for continued economic expansion and growth, simultaneously
generating long-term funds for infrastructure development.
In fact infrastructure investments are ideal for asset-liability matching for life insurance
companies given their long term liability profile. According to preliminary estimates published by the
Reserve Bank of India, contribution of insurance funds to financial savings was 14.2 per cent in 2005-06,
viz., 2.4 per cent of the GDP at current market prices. Development of the insurance sector is thus
necessary to support continued economic transformation. Social security and pension reforms to benefit
from a mature insurance industry.
The insurance sector in India, which was opened up to private participation in the year 1999,
has completed over seven years in liberalized environment. With an average annual growth of 37 per cent
in the first year premium in the life segment and 15.72 per cent growth in the nonlife segment,
together with the largest number of life insurance policies in force, the potential of the Indian
insurance industry is still large.
Life insurance penetration in India was less than 1 per cent till1990-91. During the 1990s, it
was between 1 and 2 per cent and from2001 it was over 2 per cent. In 2005 it had increased to 2.53 per
cent.
34 | P a g e
Spread of financial services in rural areas and amongst socially lessprivileged
IRDA Regulations provide certain minimum business to be done
1. In rural areas
2. In the socially weaker sections
Life Insurance offices are spread over nearly 1400 centres. Presence of representative in every tehsil ± deeper
penetration in rural areas.
Insurance agents numbering over 6.24 lakhs in rural areas.Policies sold in rural areas (2004-05) - No. of policies -
55 lakhs, Sumassured 46,000 crores. Social security - No. of lives covered 2003-04 17.4lakhs 2004-05 42.1 lakhs
Employment generation
Life insurance industry provides increased employment opportunities.Employees in insurance sector as
on 31st March, 2005 is around 2 lakhs.Many agents depend on insurance for their livelihood. No. of
agents on31st March 2004 ± 15.59 lakhs. Brokers, corporate agents, trainingestablishments provide extra
employment opportunities. Many of theseopenings are in rural sectors.
Foreign Direct Investment (FDI) Policy in Insurance Sector
As per the current (March 2006) FDI norms, foreign participation in an Indian insurance
company is restricted to 26.0% of its equity / ordinary share capital. The Insurance Regulator has
stipulated that foreign investment in Indian Insurance companies be limited to 26% of total
equity issued (FDI limit) with the balance being funded by Indian promoter entities. The limit to
foreign investment includes both direct and indirect investment and has been a cause of
significant lobbying by foreign insurance companies for a change in regulations to increase
the FDI limit to 49% of equity issued.
35 | P a g e
The Indian government has supported an increase in the FDI limit, which requires a change in
the Insurance Act. The Union Budget for fiscal 2005 had recommended that the ceiling on
foreign holding be increased to 49.0%.
A change in the Insurance Act requires a passage of the bill in both houses of Parliament. The
Indian government has tabled the bill in the Upper House of Parliament in August 2010.
Initial Public Offer (IPO) rules for Indian Life Insurance Companies
A key piece of legislation impacting on the Life Insurance industries capital raising abilities is
the lock-in period of 10 years for investment to be limited to promoter group equity investments.
Under the Insurance Guidelines, Indian Life Insurance companies can opt for a public issue of
equity through an Initial Public Offer (IPO) after 10 years of operations.
In October 2010, the securities market regulator, Securities and Exchange Board of India (SEBI),
issued disclosure norms for Indian Life Insurance Companies seeking to make an initial public
offer for sale of equity shares to the public.
The Insurance Regulatory and Development Authority
Insurance Regulatory and Development Authority (IRDA) is an autonomous apex
statutory body which regulates and develops the insurance industry in India. It was constituted
by a Parliament of India act called Insurance Regulatory and Development Authority Act, 1999 [1]
[2] and duly passed by the Government of India. [3]
The agency operates its headquarters at Hyderabad, Andhra Pradesh where it shifted from Delhi
in 2001. The Insurance regulatory and Development Authority (IRDA), batted for a hike in the
foreign direct investment (FDI) limit to 49 per cent in the sector from the present 26 per cent.
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“I am in favour of hike in the FDI limit for the insurance sector. Unless we go for 49 per cent, we
will not have the kind of capital required to underpin the
growth of the industry. This sector requires a lot of
money,’’ IRDA Chairman J. Hari Narayan(till feb,2013)
said on the sidelines of a summit here.
The Insurance Laws (Amendment) Bill has been pending
before Parliament for about four years as there has been
no consensus among political parties on the issue of
raising the FDI limit to 49 per cent.
Coming under pressure from its allies, the UPA II
government, in May this year, had postponed a decision
on raising the FDI limit in the sector to 49 per cent. The
FDI limit in this sector was raised to 49% in July 2013.
Earlier, Mr. Hari Narayan said the IRDA would develop ten standard products in consultation
with industry bodies which could be launched by insurance companies without seeking the
regulatory nod.
“We will have to work closely with the Life Insurance Council and the General Insurance
Council to see if we can develop such products,’’ he added.
The insurance regulator said the persistence level was very low in the industry and there was a
need to bring in complete understanding of the market and insurance companies.
The persistence level refers to client retention by insurance companies. He said `Use and
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File’ would not be in the general interest of the policy-holders since the persistence ratio was
high. Recently the Finance Minister of India announced the setting of insurance repository
system.
An Insurance Repository is a facility to help policy holders buy and keep insurance policies in
electronic form, rather than as a paper document. Insurance Repositories, like Share Depositories
or Mutual Fund Transfer Agencies, will hold electronic records of insurance policies issued to
individuals and such policies are called “electronic policies” or “e Policies”.
History
The IRDA Act, 1999 was passed as per the major recommendation of the Malhotra Committee
report (1994) which recommended establishment of an independent regulatory authority for
insurance sector in India. Later, It was incorporated as a statutory body in April, 2000. The IRDA
Act, 1999 also allows private players to enter the insurance sector in India besides a maximum
foreign equity of 26 per cent in a private insurance company having operations in India.
The FDI limit in insurance sector was raised to 49% in July 2013. It serves as an Authority to
protect the interests of holders of insurance policies, to regulate, promote and ensure orderly
growth of the insurance industry and for matters connected therewith.
IRDA role is to protect rights of policy holders & they provides registration certification to life
insurance companies & responsible for renewal, modification, cancellation & suspension of this
registered certificate.
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Organizational structure
IRDA is a ten member body consisting of:
A Chairman,
Five whole-time members and
Four part-time members.
All members are appointed by the Government of India.
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Chapter - 2COMPANY PROFILE
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COMPANY PROFILE
Tata AIG Life Insurance Ltd.
Tata AIG Life Insurance Company Limited (Tata AIG Life) is a joint venture company, formed
by the Tata Group and American International Group, Inc. (AIG). Tata AIG Life combines the
Tata Group’s pre-eminent leadership position in India and AIG’s global presence as
one of the world’s leading international insurance and financial services organization.
The Tata Group holds 74 per cent stake in the insurance
venture with Inho l d i n g t h e b a l a n c e 2 6 p e r
c e n t . T a t a A I G L i f e p r o v i d e s i n s u r a n c e
s o l u t i o n s t o individuals and corporates. Tata AIG Life
Insurance Company was licensed to operate in India on
February 12, 2001 and started operations on April 1, 2001.
Tata AIG General Insurance Company Limited is an Indian
general insurance company, and a joint venture between the
Tata Group and American International Group (AIG).[1] 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 to
individuals and corporates. It offers a range of general insurance products including insurance for
automobile, home, personal accident, travel, energy, marine, property and casualty as well as
several specialized financial
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lines. The Company's products are available through various channels of distribution like agents,
brokers, banks (through bank assurance tie ups) and direct channels like Telemarketing, Digital
Marketing, worksite etc.
Integrity
Are consistently honest, follows through on commitments, stand up for their convictions, act responsibly,
take accountability for their actions.
Direction setting
Communicate a clear vision, implement strategies and plans, manage strategic objectives, control
expenses, hold others accountable for results, and achieve objectives with limited resources.
Customer focus
Gather information from customers to understand their needs, anticipate customers' challenges, take
action to meet customers' needs, establish goals with the customer in mind.
Operating style
Pursue initiatives with energy and urgency, change course when appropriate, are entrepreneurial, make
timely decisions, are resilient, work effectively under pressure, demonstrate a drive to win, attend to
details.
Working across boundaries
Build relationships with people in different parts of Tata AIG, communicate effectively with people at all
levels, collaborates with internal and external resources to get the job done.
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TATA GROUP IN INSURANCE:
Tata AIG General Insurance Company Ltd, and Tata AIG Life Insurance Company Ltd.,
(collectively "Tata AIG") are joint venture companies between the Tata group India's most
trusted industrial house and American International Group, Inc. (AIG), the leading U. S. based
international insurance and financial services organization. The Late Sir Dorab Tata, was the
founder Chairman of New India Assurance Co. Ltd., a group company incorporated way back in
1919. Government of India took over the management of this company as a part of
nationalization of general insurance companies in 1972. Not deterred by the move, Tata group
have ventured into risk management services having tied up with AIG group, back in 1977, with
the incorporationbusiness conglomerates, with revenues in 2006-07 of $28.8 billion (Rs129,994
crore), the equivalent of about 3.2 per cent of the country's GDP, and a market capitalization of
$72.2 billion as on December 6, 2007. Tata companies together employ some 289,500 people.
ABOUT TATA-AIG:
Tata AIG Insurance Solutions is one of the leading insurance companies that provide both life
insurance as well as general insurance. This pioneer company is a joint collaboration between the
American International Group, Inc. (AIG) and Tata Group. They own the company in the ratio of
26:74. It is a leading financial institution that has carved a niche for itself all over the world.
Tata AIG Insurance provides facilities to both corporate and individuals. Starting its operations
on April 1, 2001, it seeks to serve different categories of people. It acquired its license for
carrying out operations in India on February 12, 2001. Tata AIG Insurance Solutions is one of
the most prestigious organizations in the business world. It employs thousands of employees and
offers various opportunities to people to build a prospective career. As a leading name in the
financial world, it identifies the potential and experience of the individual. This insurance
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company identifies the clients‟ needs and works accordingly. It stresses on innovative aspect and
opening of new markets. It believes in new economy and latest Internet technology. Tata AIG
Insurance offers a number of products for the General Insurance holders. General insurance
products include:
Individual insurance
Small business insurance
Corporate insurance
Tata AIG Insurance offers flexible life insurance to the individuals, business organization and
other association. For the corporate, there are various insurance products like group pensions,
employee benefits, work place solutions and credit life. For the individuals, Tata AIG Insurance
offers various products for adults, children and for retirement planning.
Change leadership
Develop creative solutions to address business problems, encourage innovation and original thinking, support
risk-taking, monitor progress toward goals, make persuasive presentations, express optimism about the future,
balance multiple priorities, learns from mistakes and encourage others to do so.
Business acumen
Solve problems by addressing root causes, identify critical information, work toward bottom-line goals,
understand current issues facing Tata AIG, consider the business overall when making decisions.
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History
Tata AIG General Insurance Company Limited (Tata AIG General) is a business
Collaboration of the Tata Group and American International Group, Inc. (AIG). Tata AIG
General merges two major finance organizations i.e. the Tata Group's prominent headship place
in India and AIG's global presence as the world's leading international insurance and financial
services Organization. This joint venture has started its operations in India from 22nd January
2001. The company provides both corporate and personal insurance services. The organization
offers an array of general insurance covers which are well thought-out under commercial and
consumer demands. The commercial sector covers Energy, Marine, Property and several
specialized Financial covers, while the consumer insurance service offers a variety of general
Insurance products such as insurance for Automobiles, personal accident, casualty, home, health
and travel. The company has made the availability for its services from end to end channels of
distribution like agents, banks (through banc assurance tie ups), brokers and direct channels like
tele-marketing, e-commerce, website, etc. The headquarters of the company is situated in
Mumbai. The company has provided the employment to more than 2000 qualified professionals
across the country in more than 160 locations.
Tata AIG Life Insurance Company to be now called Tata AIA Life Insurance
Company
The company announces a net profit of 260.31 crore for FY 2011-12
Profit goes up 402 percent - from Rs.51.79 crore to Rs. 260.31 crore
New business premium from traditional business at 45 percent - up from 29 percent
Operating expenses to total premium ratio drops to 21 percent from 24 percent
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AUM grows by 15 percent
Mumbai: Tata AIG Life Insurance Company, the life insurance joint venture formed by Tata
Sons and AIA Group (AIA), today announced that it has changed its name to Tata AIA Life
Insurance Company (Tata AIA Life).
The company was set up as a joint venture between the leading Indian conglomerate Tata group
and the leading international insurance organisation American International Group (AIG). It
was licensed to operate in India on February 12, 2001, and started operations on April 1, 2001.
Since its inception, Tata Sons owns 74 percent stake in joint venture, with the remaining 26
percent share held by AIA, a 100 percent owned subsidiary of AIG at that time.
In 2010, AIA went public in Hong Kong and raised $20.51 billion through an initial public
offering (IPO). The IPO was the third largest globally at the time of listing, after which AIA
emerged as the largest independent publicly listed Pan-Asian life insurance group in the world.
AIA has a strong heritage and fundamentals of over 90 years in the Asian insurance market. It
has wholly-owned main operating subsidiaries or branches in 14 markets in Asia Pacific.
To create a uniform identity of AIA owned companies post this IPO, the two promoters of this
joint venture have chosen to change the company’s name to Tata AIA Life. However, the
company makes this transition just in its name; its single-minded focus in protecting the
financial well-being of its customers remains unchanged.
Commenting on the occasion, Farrokh K Kavarana, chairman, Tata AIA Life, said, “The Tata
group, along with our valued partner AIA, continue to remain committed to the Indian market
and our valued customers and partners through our renamed entity Tata AIA Life.
Over the past 11 years, we as a company have strived to build a solid foundation of providing
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financial protection to our customers. We are confident that this strong foundation will enable
us to stand unwaveringly in good stead and realise full potential of the vast Indian market.”
Huynh Thanh Phong, executive vice president and regional chief executive, AIA, said, “In
order to reflect the true brand identity of AIA and communicate its unique market position,
history and its ongoing commitment to customers and partners in Asia Pacific region, the
promoters of the joint venture have chosen to change the name of the company from Tata AIG
Life Insurance to Tata AIA Life Insurance.
The rechristened Tata AIA Life will continue to focus on building a premier agency sales force
to meet the savings and protection needs of the customers in India with protection-centric
products.”
Suresh Mahalingam, managing director, Tata AIA Life, elaborated, “While we make this
transition in our name, nothing else will change. The promoters, the distribution network, the
teams, the products, the technology and more importantly, our commitment towards putting the
customers at the centre of everything we do, remain unchanged. The foundation of trust that our
company has been built upon will continue to be strengthened with the vast expertise that AIA
brings with over 90 years of leadership in the life insurance business in the Asia Pacific
region.”
Performance of Tata AIA Life for the financial year 2011-12
Tata AIA Life also announced its financial results for the fiscal 2011-12, posting a net profit of
Rs260.31 crore.
The total premium income for the financial year ending March 2012 stood at Rs3,630 crore as
against Rs3,985 crore posted for the financial year 2010-11. Of this, the new business premium
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collection stood at Rs940 crore. The renewal premium for the same period was at Rs2,690
crore, as against Rs2,653 crore in the last fiscal. Traditional business accounted for 45 percent
of the new business premium as against 29 percent in the last fiscal.
During the financial year, the company further enhanced its operating efficiencies resulting in
the reduction of the operating expenses to total premium ratio to 21 percent against 24 percent
in the previous financial year.
The total assets under management of the company has increased by 15 percent to Rs14,519
crore from Rs12,622 crore in the last fiscal. As on March 31, 2012, the paid-up capital of the
company stood at Rs1,954 crore.
Commenting on the company's performance, Mr Mahalingam said, “The company has
maintained focus on optimum utilisation of resources and a healthy balance in the product mix
between traditional and unit linked business. The cost management effectively delivered
profitable growth for the company with statutory profit of Rs260.31 crore. A solvency margin
of 284 percent further underlines the robust financial health of the company.”
Recent Performance of AIA
For the year that ended November 30, 2011, AIA reported record new business growth with a
40 percent increase in value of new business and 22 percent increase in annualised new
premium. For the same period, AIA’s embedded value stood at $27,239 million, up by $2,491
million from $24,748 million as on November 30, 2010. It had total assets of $114,461 million
as of November 30, 2011.
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Tata AIG General Insurance won the Claims Service Company of the Year and the Best Non-
Urban Coverage Award at the India Insurance Awards 2012 held in Mumbai on June 7, 2012.
For any customer, the moment of truth arrives when he or she claims against their policy. The
Insurers’ promise made to their policy holders to protect them for the risks they are insured
against is tested at the time of making a claim.
Tata AIG believes that Claims servicing is about empathy for a customer's loss. With this in
mind, the Company has focused on deploying the latest in technology and systems, which
utilized by a team of experienced claims professionals; ensure a smooth experience for
customers from time of claim notification to resolution.
Recognizing this commitment to effective and speedy claims settlement and the Company’s
leadership in claims servicing, India Insurance Awards awarded Tata AIG with The Claims
Service Company of the Year Award 2012. The jury honoured the Company for maintaining the
highest levels of client service, satisfaction and focus in claims handling in the fiscal year 2011-
12.
The award citation mentions, “Tata AIG General has maintained high standards in claims
servicing through leadership in claims settlement and average turnaround times.” It further adds,
“The Company’s customer commitment in this area is reflected through initiatives such as an in-
house multi-lingual call center for claims, an online claims registration and tracking system for
ease of contact, mobile claims for cars and green channel settlement for faster service.”
Commenting on the Award, Gaurav D. Garg, MD & CEO of Tata AIG General said, “With
cutting-edge knowledge, sound judgment born of experience, and innovative technology, our
professionals are well prepared to ensure that claims servicing is a pleasant experience for our
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policy holders.” “This award further exemplifies Tata AIG’s dedication to build a customer-
focused claims network that is committed to service excellence.” He added.
Tata AIG was recognized not just for its exemplary claims service but also for its commitment to
excel in its social obligations. India Insurance Awards awarded Tata AIG with the Best Non-
Urban Coverage Award 2012.
The Best Non-Urban Coverage Award honours Tata AIG as a general insurer focused on and
exceeding its commitments to the non-urban Indian market; in the process pushing the frontiers
by creating newer markets for insurance offerings for both, the company and other players to
partake of. The award citation elaborates, “Tata AIG demonstrated excellence in reach, business
volumes, focused product offerings and innovative business models and partnerships to service
non urban India.”
Tata AIG considers Rural Insurance an integral part of its’ business. With this objective in mind
the Company has strengthened its focus in the non-urban market and has more than doubled its
top line, expanding in newer geographies as well as consolidating its base in existing areas in
non-urban India.
The Company has expanded its mass insurance capabilities, covering lakhs of customers through
retail and government deals. The Company also plans to introduce a new product line - weather
insurance, while selling traditional motor, health and commercial insurance products in the rural
markets.
The India Insurance Awards presented on June 7, 2012 in Mumbai honour performance, growth,
product and market innovation, customer service and technology. The awards were given out in
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various categories ranging across growth, claims servicing, geographical coverage, product and
technology innovation and social contribution.
In the well-attended presentation ceremony, 24 awards were given out across the Life, General,
Health and Overall segments to 17 best performing insurers in the country. Tata AIG General
Insurance won the Claims Service Company of the Year Award 2012 and Best Non-Urban
Coverage Award 2012.
Tata AIG General Insurance Company
Tata AIG General Insurance Company provides insurance solutions to individuals and
corporates. 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. Tata AIG 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.
Tata AIG’s products are available through various channels of distribution like agents, brokers,
banks (through bancassurance tie ups) and direct channels like Tele Marketing, Digital
Marketing, worksite management etc. Tata AIG has its operations in 59 cities.
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Tata AIG Life Insurance
Has a deep rooted commitment to improve the quality of life of its customers,
employees and stakeholders.We do t h i s by ou r e f fo r t s wh ich s t r i ve t o make
Ta t a AIG L i f e Insurance a corporate with values.
Increase Customer Value.
Integrated efforts
THE JOINT VENTURE:
Tata AIG Life Insurance Co. Ltd. is capitalized at Rs. 185 crores of which 74 per cent has
been brought in by Tata Sons and the American partner brings in the balance 26 per cent.
Mr. George Oommen has been named managing director of Tata AIG Life. Tata-AIG
plans to provide broad array of life insurance plans to cover to both individuals and
groups. The company headquartered in Mumbai, with branch operations in Delhi,
Chennai, Hyderabad, Bangalore Calcutta, Pune and Chandigarh.
Tata Enterprises with 82 companies, spread over seven sectors and with an annual turnover
exceeding US $ 8.8 billion, employs more than 262,000 people. Tata Group has shown over
years that it is a value driven company and has pioneering contributions in various fields
including insurance, aviation, iron and steel. In terms of capital market performance as many as
40 listed Tata companies account for nearly 5% of the total market capitalization of all listed
companies. The Group has had a long association with India's insurance sector having been the
largest insurance company in India prior to the nationalization of insurance.
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THE TATA GROUP
Tata is a rapidly growing business group based in India with significant
international operations. Revenues in 2007-08 are USD 62.5 billion (around Rs.
251,543 crores), of which 61% was from business outside India. The Group’s Net Profit for
2007-08 is USD5 .4 b i l l i on ( a round Rs .
21 ,578 c ro r e s ) . The Group emp loys
a round 350 ,000 peop l e wor ldwide . The
bus ine s s ope ra t i ons o f t he Ta t a Group
cu r r en t l y encompass s even business sectors
- Communications and Information Technology,
Engineering, Materials, Services, Energy,
Consumer Products and Chemicals. The
Group's 28 publicly listed en t e rp r i s e s have
a combined marke t c ap i t a l i z a t i on o f
a round $60 b i l l i on , among t he highest
among Indian business houses, and a shareholder
base of 2.9 million. The major companies in the
Group include Tata Steel, Tata Motors, Tata
Consultancy Services (TCS), Tata Power, Tata
Chemicals, Tata Tea, Indian Hotels, Tata
Teleservices and Tata Communications.
Tata Group remains a family-owned business, as the descendants of the founder (from the Tata
family) own a majority stake in the company. The current chairman of the Tata group is Cyrus
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Pallonji Mistry, who took over from Ratan Tata in 2012. Tata Sons is the promoter of all key
Tata companies and holds the bulk of shareholding in these companies. The chairman of Tata
Sons has traditionally been the chairman of the Tata group. About 66% of the equity capital of
Tata Sons is held by philanthropic trusts endowed by members of the Tata family.
Tata Group is an Indian multinational conglomerate company headquartered in Mumbai,
Maharashtra, India.[3] It encompasses seven business sectors: communications and information
technology, engineering, materials, services, energy, consumer products and chemicals. Tata
Group was founded in 1868 by Jamsetji Tata as a trading company.
It has operations in more than 80 countries across six
continents. Tata Group has over 100 operating companies
each of them operates independently. Out of them 32 are
publicly listed. The major Tata companies are Tata Steel,
Tata Motors, Tata Consultancy Services (TCS), Tata Power,
Tata Chemicals, Tata Global Beverages,
Tata Teleservices, Titan Industries, Tata Communications and Taj Hotels. The combined market
capitalization of all the 32 listed Tata companies was INR 6 Trillion ($96.87 billion) as of Sep
2013.[6] Tata receives more than 58% of its revenue from outside India.
Tata Group remains a family-owned business, as the descendants of the founder (from the Tata
family) own a majority stake in the company. The current chairman of the Tata group is Cyrus
Pallonji Mistry, who took over from Ratan Tata in 2012. Tata Sons is the promoter of all key
Tata companies and holds the bulk of shareholding in these companies. The chairman of Tata
Sons has traditionally been the chairman of the Tata group. About 66% of the equity capital of
Tata Sons is held by philanthropic trusts endowed by members of the Tata family.
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The Tata Group and its companies & enterprises is perceived to be India's best-known global
brand within and outside the country as per an ASSOCHAM survey. The 2009, annual survey by
the Reputation Institute ranked Tata Group as the 11th most reputable company in the world.
The survey included 600 global companies. The Tata Group has helped establish and finance
numerous quality research, educational and cultural institutes in India. The group was awarded
the Carnegie Medal of Philanthropy in 2007 in recognition of its long history of philanthropic
activities.
AIG GROUPAmerican International Group, Inc. (AIG), a
world leader in insurance and financial services, is
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the leading international insurance organization with operations in more than130 countries and
jurisdictions. AIG companies serve commercial, institutional and individual
customers through the most extensive worldwide property-casualty and life
insurance networks of any insurer. In addition, AIG companies are leading
providers of retirement services, financial services and asset management around
the world. AIG's common stock is listed on the New York Stock Exchange, as well as the
stock exchanges in Ireland and Tokyo.
American International Group, Inc. — also known as AIG — is a multinational insurance
corporation with over 63,000 employees globally.
AIG companies serve customers in more than 130 countries around the world; the company is a
provider of property casualty insurance, life insurance and retirement services, and mortgage
insurance.
AIG’s corporate headquarters are in New York City, its British headquarters are in London,
continental Europe operations are based in La Défense, Paris, and its Asian headquarters are in
Hong Kong. According to the 2013 Forbes Global 2000 list,
AIG was the 62nd-largest public company in the world. As of April 21, 2013, it had a market
capitalization of $57.53 billion.
In the United States, AIG is the largest underwriter of commercial and industrial insurance, and
AIG acquired American General Life Insurance in August 2001.
During the 1980s, AIG continued expanding its market distribution and worldwide network by
offering a wide range of specialized products, including pollution liability and political risk.
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History
The Early Years: 1919 to 1939
AIG traces its roots back to 1919, when American Cornelius Vander Starr (1892-1968)
established a general insurance agency, American Asiatic Underwriters (AAU), in Shanghai,
China. Business grew rapidly, and two years later, Mr. Starr formed a life insurance operation.
By the late 1920s,
AAU had branches throughout China and
Southeast Asia, including the Philippines,
Indonesia, and Malaysia.
In 1926, Mr. Starr opened his first office in the United States, American International
Underwriters Corporation (AIU).
He also focused on opportunities in Latin America and, in the late 1930s, AIU entered Havana,
Cuba. The steady growth of the Latin American agencies proved significant as it would offset
the decline in business from Asia due to the impending World War II.] In 1939, Mr. Starr moved
his headquarters from Shanghai, China, to New York City.
International and Domestic Expansion: 1940 to 1959
After World War II, American International Underwriters (AIU) entered Japan and Germany, to
provide insurance for American military personnel. Throughout the late 1940s and early 1950s,
AIU continued to expand in Europe, with offices opening in France, Italy and the United
Kingdom. In 1952,
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Mr. Starr began to focus on the American market by acquiring Globe & Rutgers Fire Insurance
Company and its subsidiary, American Home Fire Assurance Company. By the end of the
decade, C.V. Starr's general and life insurance organization included an extensive network of
agents and offices in over 75 countries.
Reorganization and Specialization: 1960 to 1979
In 1960, C.V. Starr hired Maurice R. Greenberg to develop an international accident and health
business. Two years later, Mr.Greenberg reorganized one of C.V. Starr’s U.S. holdings into a
successful multiple line carrier.
Greenberg focused on selling insurance through independent brokers rather than agents to
eliminate agent salaries. Using brokers, AIG could price insurance according to its potential
return even if it suffered decreased sales of certain products for great lengths of time with very
little extra expense.
In 1967, American International Group, Inc. (AIG) was incorporated as a unifying umbrella
organization for most of C.V. Starr’s general and life insurance businesses. In 1968, Starr named
Greenberg his successor.
The company went public in 1969. The 1970s presented many challenges for AIG as operations
in the Middle East and Southeast Asia were curtailed or ceased altogether due to the changing
political landscape.
However, AIG continued to expand its markets by introducing specialized energy, transportation,
and shipping products to serve the needs of niche industries. By 1979, with a growing workforce
and a worldwide network of offices, AIG offered clients superior technical and risk management
skills in an increasingly competitive marketplace.[
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ORGANISATION STRUCTURE
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Chapter – 3Services
TATA AIG PRODUCT DETAILS
There are two types of products:
1. Traditional.
2. Ulips.
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Tata AIG Life Comprehensive Superannuation Scheme Policy
Meaning
Our traditional Superannuation product acts as valuable tool to enhance the company’s image whilst
providing for a dignified retired life for the employees.
Key Features
1) Plan design and advice on Trust Formation/Deed of Variation.
2) Actuarial valuation for Defined Benefit Scheme as per internationally accepted practices once in a
year.
3) Scheme registration and ongoing legislative compliance.
4) Investment management and reporting to trustees.
5) Administration services and benefit payments.
Superannuation Schemes can be of two types:
1) Defined Benefit (DB)
This defines the amount of benefit that an employee receives at retirement. Actuarial valuation is
conducted to determine the funding rate. A pooled fund is maintained for all members of the
scheme.
Upon retirement of a member, the amount required to secure the benefit is drawn from the pooled
fund. The pooled fund should achieve the required funding level to enable the employer to meet the
benefit obligations.
2) Defined Contribution (DC)
This defines the annual contribution that the employer wills deposit into the scheme for each
employee. Contributions are usually fixed as a percentage of the employee’s salary. Individual
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employee accounts reflecting the contributions and the interest accumulations are maintained.
Upon retirement, the individual account is released to provide funds to secure the benefits under the
scheme.
Benefit Payments:
Upon the retirement of the member from employment or on cessation of employment, benefits,
subject to the provisions of the company’s rules, can be utilized in the following manner:
1) Upon Retirement
To provide for payment of the commuted value relating to the portion of the pension which the
member may, in accordance with the Rules, elect to commute; and / or to purchase an annuity in
accordance with the company’s Rules.
2) Upon Death
To provide for payment of annuity/pension on the life of the beneficiary, in accordance with the
Trust rules as framed by the company.
3) Upon Withdrawal
1. To transfer the value of vested benefits to another Superannuation Scheme, if permissible by
Trust rules framed by the respective Trustees.
2. To retain the value of the vested benefits under the policy and provide for a pension from the
normal retirement date to the member or to the beneficiary in the event of death of the
member prior to his retirement date.
3. To provide for immediate payment of the pension benefit in accordance with Trust rules as
framed by the company.
Tax Benefits under Income Tax Act, 1961:
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For the employer
1. Annual contributions are treated as deductible business expenses/s 36(1)(iv)
2. Maximum ordinary annual contribution an employer can make is27% (Provident Fund +
Superannuation) of employees annual salary - Rule 87
3. 3. Entire income of the fund is tax free u/s 10(25)(iii)
Tata AIG Life Retirement Assure Group Gratuity Scheme Policy
Meaning
As per the Payment of Gratuity Act 1972, an employer is obliged to pay gratuity to an employee
after he/she has rendered continuous service of at least 5 years. Gratuity is payable to such an
employee on:
1) Normal retirement
2) Resignation/early retirement
Death or disablement due to accident or disease (completion of 5 years of service is not necessary
in such cases).
How will the Employer/Trustee contribute to the Gratuity Scheme?
Employer/Trustee of the Gratuity Scheme shall fund for gratuity liability by:
1) Remitting the recommended contribution for the past service and an annual contribution for the
future service
2) Transferring existing assets if any to Tata AIG Life based on mutually agreed asset valuation.
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How does the Unit Linked Gratuity Plan Structure work?
1) The Fund will be managed on a unitized basis.
2) Any contribution received will be converted into units based on the applicable fund unit price.
3) The fund value of the Gratuity Fund at any given time is based on the unit price declared at the
close of business on the date on which the units are allocated.
Tax Benefits for the Employer*
1) Employers contribution to approved gratuity fund is an deductible business expenditure U/s
36(1)(v) as under:
2) Initial Contribution is allowed as deductible business expense to the extent of 8.33% of the
member's salary for each year of employee’s past service. (Rule 104)
3) Ordinary annual contributions are allowed to the extent of 8.33% of the employee’s salary.
Interest Income on the fund is nontaxable in the hands of the Trustees u/s 10(25) (IV).
Tax Benefits for the Employee*
Gratuity received is exempt from tax up to half a month’s salary for every completed year of service or Rs.
3.5 lakhs, whichever is less u/s 10(10).
* Tax benefits are available as per the provisions of Income-tax Act, 1961 and subject to amendments
thereof from time to time. To know whether you are eligible for above mentioned tax benefits, please
consult your own professional advisors and Tata AIG Life Insurance Company Limited is not responsible in
case you do not get any tax benefits stated above. Please note that the prevailing andapplicable tax laws
shall be final and conclusive on the matter and Tata AIG Life Insurance Company Limited is not responsible
for the same at any time.́
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In Built Death Benefit
1) As part of the scheme, an additional benefit of Life Insurance Cover is included.
2) In the unfortunate event of a serving employee's death, the coverage would provide for a lump
sum payment equal to sum assured depending on the life cover opted by the Trustees with a
minimum of Rs. 1,000/-.
Tata AIG Life Assure Golden Years Plan
Meaning
Tata AIG Life Assure Golden Years (Assure Golden Years) is an endowment policy that provides both
safety and steady returns. In the unfortunate event of your death, your dependents will receive the
sum assured; otherwise your savings will continue to grow. Should you live past the term of the
policy, you will receive both the sum assured as well as a host of bonuses.
Key Features
1) A guaranteed addition of 10% of the sum assured if the policy has been in force for 10 years or
more, is payable on death or maturity.
2) A reversionary bonus is payable on death or maturity.
3) A Terminal bonus paid on maturity or death if the policy has been in force for a minimum 10
years.
4) Reversionary and Terminal bonuses are non-guaranteed and are dependent on Company
performance.
Tax Benefits, Riders and Age Eligibility
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1) Premiums paid under this plan are eligible for tax benefits under Section 80C of the Income Tax
Act, 1961. Any sum received under this plan is exempt from tax under section 10(10D) of the
Income Tax Act, 1961.*
2) Term, Accident, Disability and Critical Illness riders are available for added protection.
3) Policy duration runs from the time of purchase up to age 60.
4) Policy is available for persons between 18 to 50 years of age.
Tata AIG Life Maha Life Gold Plan
Meaning
This unique policy is an ideal planning vehicle to fund your retirement. It provides a steady income
and insurance coverage for life. Premiums are payable only for the first 15years, and can be used
to cover the future expenses of your children.
Key Features
1) A guaranteed annual coupon of 5% of the sum assured every year for the rest of the insured’s
term from the 10th policy anniversary.
2) Yearly cash dividends are available from the 6th policy anniversary onwards (depending on
Company performance).
3) The entire sum assured is paid tax-free as per current Income Tax Laws.
Tax Benefits, Riders and Age Eligibility
1) The guaranteed 5% coupon and non-guaranteed cash dividends are tax free as per current
Income Tax Laws.
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2) Premiums paid under this plan are eligible for tax benefits under Section 80C of the Income Tax
Act, 1961. Any sum received under this plan is exempt from tax under section 10(10D) of the
Income Tax Act, 1961.*
3) Disability, Accident, Term and Critical Illness riders are available for added protection at a
nominal extra cost. (For juveniles, only Payer Benefit Rider is available).
4) Policy available for persons between 0 years and 60 years of age.
Tata AIG Life Nirvana plus Plan
Meaning
The Tata AIG Life Nirvana Plus (Nirvana Plus) policy is Indian’s first and only pension policy with a
guaranteed addition of 10% of the sum assured every 5 years. You can choose from three levels of
cover, which is your amount of Sum Assured: Rs. 1 lakh, 2 lakhs & 4 lakhs. You can also decide the
age you want to retire: 55, 58 or 60 years of age.
Key Features
1) 10% of sum assured is added to your sum assured for every 5 years of paid premiums.
2) Rs. 1 lakh will be paid directly to you should you be diagnosed with a covered critical illness (after
a 30 day survival period) for first 3 years of the policy.
3) Deaths that occur during the period of the policy will result in an immediate payment of the full
sum assured to your beneficiary, plus guaranteed additions and bonuses (if any).
4) Deaths that occur due to accidental causes during the plan period will result in an immediate
payment of double the sum assured, plus guaranteed additions and bonuses (if any).
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5) Payment of up to one third of your Sum Assured as lump sum cash upon reaching your chosen
retirement age. The remainder is used to buy a monthly income plan that will generate a monthly
cash income.
6) A reversionary bonus will be declared and credited from the 6th policy anniversary onwards.
7) A terminal bonus will be paid upon maturity or death if the policy has been in force for 10 years.
8) Bonus is not guaranteed and will depend on the performance of the company.
CLAIMS PROCESS IN LIFE
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INSURANCE
Filing a Life Insurance Claim
Claim settlement is one of the most important services that an insurance company can provide to its
customers. Insurance companies have an obligation to settle claims promptly. You will need to fill a claim
form and contact the financial advisor from whom you bought your policy. Submittal relevant documents
such as original death certificate and policy bond to your insurer to support your claim. Most claims are
settled by issuing a cheque within 7 days from the time they receive the documents. However, if your
insurer is unable to deal with all or any part of your claim, you will be notified in writing.
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Types of claims
1) Maturity Claim
On the date of maturity life insured is required to send maturity claim /discharge form and original
policy bond well before maturity date tenable timely settlement. Most companies offer/issue
postdated cheques and/ or make payment through ECS credit on the maturity date. In case of delay
in settlement kindly refer to grievance redressal.
2) Death Claim (including rider claim)
In case of death claim or rider claim the following procedure should be followed.
Follow these four simple steps to file a claim:Claim intimation/notification
The claimant must submit the written intimation as soon as possible tenable the insurance company to
initiate the claim processing.
The claim intimation should consist of basic information such as policy number, name of the insured, date
of death, cause of death, place of death, name of the claimant.
The claimant can also get a claim intimation/notification form from the nearest local branch office of the
insurance company or their insurance advisor/agent. Alternatively, some insurance companies also
provide the facility of downloading the form from their website.
Documents required for claim processing
The claimant will be required to provide a claimant's statement, original policy document, death certificate,
police FIR and post mortem exam report (for accidental death), certificate and records from the treating
doctor/hospital (for death due to illness) and advance discharge form for claim processing. Based on the
sum at risk, cause of death and policy duration, insurance companies may also request some additional
documents.
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Submission of required documents for claim processing
For faster claim processing, it is essential that the claimant submits complete documentation as early as
possible. A life insurer will not be able to take a decision until all the requirements are complete. Once all
relevant documents, records and forms have been submitted, the life insurer can take a decision about the
claim.
Settlement of claim
As per the regulation 8 of the IRDA (Policy holder's Interest) Regulations, 2002, the insurer is
required to settle a claim within 30 days of receipt of all documents including clarification sought by the
insurer. However, the insurance company can set a practice of settling the claim even earlier. If the claim
requires further investigation, the insurer has to complete its procedures within six months from receiving
the written intimation of claim.
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Chapter – 4Human Resource
DEFINITION OF AGENT
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A businessman who buys or sells for another in exchange for a commission.
A person who sells insurance policies. There are two main types of insurance agents: Adaptive agent can
sell only the insurance policies of the company that employs him or her. An independent agent sells the
policies of many different companies and attempts to find the best policy for the insurance buyer. An
independent agent may also be called an insurance broker.
Procedure followed by an applicant to be an insurance agent
Short title and commencement
These regulations may be called Insurance Regulatory and Development Authority (Licensing of
Insurance Agents) Regulations, 2000.They shall come into force on the date of their publication in the
Official Gazette.
Definitions
In these regulations, unless the context otherwise requires, -
1. ‘Act́ means the Insurance Act, 1938 (4 of 1938);4. HUMAN RESOURCES
2. ‘Approved Institution ́means an Institution engaged in education and/or training particularly in the area
of insurance sales, service and marketing, approved and notified by the Authority;
3. ‘Authority´ means the Insurance Regulatory and Development Authority established under the
provisions of Section 3 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999);
4. ‘Composite insurance agent́ means an insurance agent who holds a license to act as an insurance agent
for a life insurer and a general insurer;
5. ‘Corporate Agent́ means a person other than an individual as specified in clause (i);
6. ‘Designated person´ means an officer normally in charge of marketing operations, as specified by an
insurer, and authorized by the Authority to issue or renew licenses under these regulations;
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7. ‘Examination Body´ means an Institution, which conducts pre-recruitment tests for insurance agents
and which is duly recognized by the Authority;
8. ‘License ́means a certificate of license to act as an insurance agent issued under these regulations;
9. ‘Person ́means
1. An individual
2. A firm
3. A company formed under the Companies Act, 1956 (1 of 1956), and includes a banking company
as defined in clause (4A) of section 2of the Act;
Issue or renewal of license
A person desiring to obtain or renew a license (hereinafter referred to as ‘the applicant́ ) to act as an
insurance agent or a composite insurance agent shall proceed as follows:-
The applicant shall make an application to a designated person.
1. In form irda-agents-va, if the applicant is an individual
2. In form irda-agents-vc, if the applicant is a firm or a company
If the designated person refuses to grant or renew a license under this regulation, he shall give the reasons
therefor to the applicant.
Qualifications of the applicant
The applicant shall possess the minimum qualification of a pass in 12thStandard or equivalent
examination conducted by any recognized Board/Institution, where the applicant resides in a place with a
population of five thousand or more as per the last census, and a pass in 10thStandard or equivalent
examination from a recognized Board/ Institution if the applicant resides in any other place.
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Practical Training
1) The applicant shall have completed from an approved institution, at least, one hundred hours practical
training in life or general insurance business, as the case may be, which may be spread over three to
four weeks, where such applicant is seeking license for the first time to act as insurance agent.
Provided that the applicant shall have completed from an approved institution, at least, one hundred fifty
hours practical training in life and general insurance business, which may be spread over six to eight
weeks, where such applicant is seeking license for the first time to act as a composite insurance agent.
2) Where the applicant, referred to under sub-regulation (1), is
1. An associate/fellow of the institute of chartered accountants of India, New Delhi.
2. An associate/fellow of the institute of costs and works accountants of India, Calcutta.
3. An associate/fellow of the institute of company secretaries of India, New Delhi.
4. An associate/fellow of the actuarial society of India, Mumbai.
5. A master of business administration of any institution / university recognized by any state
government or the central government.
6. Possessing any professional qualification in marketing from any institution / university
recognized by any state government or the central government.
3) An applicant, who has been granted a license after the commencement of these regulations, before
seeking renewal of license to act as an insurance agent, shall have completed, at least twenty-five hours
practical training in life or general insurance business, as the case maybe, from an approved institution.
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Examination
The Applicant shall have passed the pre-recruitment examination in life or general insurance business, or
both, as the case may be, conducted by the Insurance Institute of India, Mumbai, or any other examination
body.
Fees payable
1. The fees payable to the Authority for issue or renewal of license to act as insurance agent or a composite
insurance agent shall be rupees two hundred and fifty.
2. The additional fees payable to the Authority, under the circumstances mentioned in sub-section (3) of
section 42 of the Act, shall be rupees one hundred.
Cancellation of license
The designated person may cancel a license of an insurance agent, if the insurance agent suffers, at any
time during the currency of the license, from any of the disqualifications mentioned in sub-section (4) of
section 42 of the Act, and recover from him the license and the identity card issued earlier.
Issue of duplicate license
The Authority may issue a duplicate license replace a license lost, destroyed, or mutilated on payment a fee
of rupees fifty.
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FUNCTIONS/RESPONSIBILITIES OF AGENT
Every Insurance Agent shall,
1. Identify himself and the insurance company of whom he is an insurance agent.
2. Disclose his license to the prospect on demand.
3. Disseminate the requisite information in respect of insurance products offered for sale by his
insurer and take into account the needs of the prospect while recommending a specific insurance
plan.
4. Disclose the scales of commission in respect of the insurance product offered for sale, if asked by
the prospect.
5. Indicate the premium to be charged by the insurer for the insurance product offered for sale.
6. Explain to the prospect the nature of information required in the proposal form by the insurer, and
also the importance of disclosure of material information in the purchase of an insurance contract.
7. Bring to the notice of the insurer any adverse habits or income inconsistency of the prospect, in the
form of a report (called ‘insurance agent’s confidential report́ ) along with every proposal
submitted to the insurer, and any material fact that may adversely affect the underwriting
decision of the insurer as regards acceptance of the proposal, by making all reasonable enquiries
about the prospect.
8. Inform promptly the prospect about the acceptance or rejection of the proposal by the insurer.
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No insurance agent shall
1. Solicit or procure insurance business without holding a valid license.
2. Induce the prospect to omit any material information in the proposal form.
3. Induce the prospect to submit wrong information in the proposal former documents
submitted to the insurer for acceptance of the proposal.
4. Behave in a discourteous manner with the prospect.
5. Interfere with any proposal introduced by any other insurance agent.
6. Offer different rates, advantages, terms and conditions other than those offered by
his insurer.
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Chapter – 5CONCEPTUAL DISCUSSION
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THEORY & CONCEPTS USED IN THE PROJECT
WHAT IS AN INVESTMENT?
Investment is the commitment of money or capital to purchase financial instruments o r o the r
a s se t s i n o rde r to gain profitable returns i n t h e f o r m o f interest,.
I t i s r e l a t ed t o saving or deferring consumption.
Investment is involved in many areas of the economy, such a s business management
and finance no matter for households, firms, or governments.
An investment involves the choice by an
individual or an organization such as a pension fund, after some analysis or thought,
to place or lend money in a vehicle, instrument or asset, such as property, commodity,
stock, bond, financial derivatives (e.g. futures or options), or the foreign asset denominated
in foreign currency, that has certain level of risk and provides the possibility of
generating returns over a period of time.
WHAT IS INSURANCE?
GENERAL DEFINITION:
In the words of John Magee, “Insurance is a plan by themselves which large
number of people associate and transfer to the shoulders of all, risks that attach to
individuals. "
FUNDAMENTAL DEFINITION:
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In t he words o f D .S .Hanse l l , “ In su rance accumula t ed con t r i bu t i ons
o f a l l pa r t i e s participating in the Scheme.”
CONTRACTUAL DEFINITION:
In the words of Justice Tindall,"Insurance is a contract in which a sum of money is paid
to the assured as consideration of insurer’s incurring the risk of paying a large sum upon
given contingency."
CHARACTERISTICS OF INSURANCE
Sharing of risks
Cooperative device
Evaluation of risk
Payment on happening of a special event
The amount of payment depends on the nature of losses incurred.
Insurance is a plan, which spreads the risk and losses of few people among a large
number of people.
The insurance plan is a plan in which the insured transfers his risk on the insurer.
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FUNCTIONS OF INSURANCE
PRIMARY FUNCTIONS
Provide protection: -
Insurance cannot check the happening of the risk, but can provide for the losses
of risk.
Collective bearing of risk:
Insurance is a device to share the financial losses of few among many others.
Assessment of risk: -
In su rance de t e rmines t he p robab l e vo lume o f r i sk by evaluating various
factors that give rise to risk.
SECONDRY FUNCTIONS:
Prevention of losses: -
Insurance cautions businessman and individuals to adopt suitable device to prevent
unfortunate consequences of risk by observing safety instructions.
Small capital to cover large risks: -
Insurance relives the businessman from security investment, by paying small
amount of insurance against larger risks and uncertainty.
WHY WE NEED INSURANCE84 | P a g e
Premature Death
1 out of 4 people don’t reach the age of 60.
1. You are providing your family with a lifestyle.
2. This lifestyle is dependent on your continued income generating capability.
Living too long
7 out of 10 people endure retirement instead of enjoying it.
1. Do you want financial independence post retirement?
2. Imagine living beyond your working years on a depleted income.
3. My responsibility is to help you secure a financially stable future post retirement.
Children’s Future
To get a premier MBA degree in year 2015 will cost Rs. 18 lakh.
1. It is your responsibility to provide your children with best possible education they can
have.
2. Do you want to compromise on their future?
My responsibility is to help you build financial assets for your children’s future.
DO I NEED INSURANCE?
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HUMAN LIFE CONCEPT
Your l i f e i s you r mos t va luab l e a s se t . Th i s i s e a s i l y p roved i f we
we re t o a s s i gn m onetary value to your life; this value depends on your income-
earning potential or your Human Life Value.
Your income supports your family. Helps them to get the most out of life.
Month after month, year after year, you and your dependents live the best way you can
use the money you earn. This money enables your household to run smoothly, your
children to college, takes care of the medical bills, your vacations and helps maintain
your lifestyle.
On the basis of your income or earning potential, we can calculate your
Human Life Value. A simple rule of thumb to compute it as follows: multiply
your present annual income by the number of years until you plan to retire.
This does not take in factors such as inflation or an increase in your income
over time. The re fo re , you r Human L i f e Va lue i s a g r ea t dea l h ighe r
t han t he amoun t c a l cu l a t ed above.
What if an unfortunate incident happens in your life and you were unable to work?
Your income would stop. Your family is then, at a risk of losing all your
future income. The potential cost of losing your income is too great to ignore.
WHAT ARE MUTUAL FUNDS?
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A mutual fund is a professionally managed type of collective investment scheme that pools
money from many investors and invests it in stocks, bonds, short-term money market
instruments and other securities.
Mutual funds have a fund manager who invests the money on behalf of the investors by buying /
selling stocks, bonds etc.
It is substitute for those who are unable to invest directly in equities or debt because of resource,
time or knowledge constraints. Benefits include professional money management, buying in
small amounts and diversification.
Mutual fund units are issued and redeemed by the Fund Management Company based on the
fund's Net Asset Value (NAV), which is determined at the end of each trading session. NAV is
calculated as the value of all the shares held by the fund, minus expenses, divided by the number
of units issued.
Mutual Funds are usually long term investment vehicle though there are some categories of
mutual funds, such as money market mutual funds which are short term instruments.
Currently, the worldwide value of all mutual funds totals more than $US 26 trillion. The United
States leads with the number of mutual fund schemes. There are more than 8000 mutual fund
schemes in the U.S.A.
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Comparatively, India has around 1000 mutual fund schemes, but this number has grown
exponentially in the last few years. The Total Assets under Management in India of all Mutual
funds put together touched a peak of Rs. 5,44,535 crs. At the end of August 2008.
WHAT ARE GOVT. BONDS?A bond is a debt investment in which an investor loans a certain amount of money, for ascertain
amount of time, with a certain interest rate, to a company. A government bond
Is a bond issued by a national government denominated in the country's own currency? Bonds
issued by national governments in foreign currencies are normally referred to as sovereign
bonds.
The first ever government bond was issued by the English government in 1693 to raise money to
fund a war against France. It was in the form of a tontine. Government bonds are usually referred
to as risk-free bonds, because the government can raise taxes to redeem the bond at maturity.
Some counter examples do exist where government has defaulted on its domestic currency debt,
such as Russia in 1998 (the “ruble crisis"), though this is very rare. As an example, in the US,
Treasury securities are denominated in US dollars.
In this instance, the term "risk-free" means free of credit risk. However, other risks still exist,
such as currency risk for foreign investors (for example on-US investors of US Treasury
securities would have received lower returns in 2004 because the value of the US dollar declined
against most other currencies).
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Secondly, there is inflation risk, in that the principal repaid at maturity will have less
purchasing power than anticipated if the inflation outturn is higher than expected. Many
governments issue inflation-indexed bonds, which should protect investors against inflation risk.
WHAT ARE FIXED DEPOSITS?Fixed deposits are loan arrangements where a specific amount of funds is placed on
deposit under the name of the account holder. The money placed on deposit earns a fixed rate of
interest, according to the terms and conditions that govern the account.
The actual amoun t o f t he f i xed r a t e c an be i n f l uenced by such f ac to r s a t t he
t ype o f cu r r ency involved in the deposit, the duration set in place for the deposit,
and the location where the deposit is made. Fixed deposits are a credible way to make a
return on investment that is somewhat higher than a standard savings.
The u se o f f i xed depos i t s c an a l so be he lp fu l when working with various
types of currency. By establishing what is known as a Foreign Currency Fixed Deposit
or FCFD, it is possible to choose the type of currency involved in the deposit and lock in a
rate of interest.
If the choice of currency is a good one, this means the investor can enjoy a healthy fixed
deposit currency rate for the duration of the deposit and earn more than with a standard
fixed deposit strategy. However, going with an FCFD does contain a slightly higher
amount of risk, since the funds deposited must be converted to the currency of choice and then
converted back when the deposit is fulfilled.
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If the currency did not fare well in the interim, there is some chance of obtaining a loss, due to
the changes in the rate of exchange from the time the fixed deposit was activated
until the time the deposit is considered complete.
The interest rate varies between 4 and 11 percent. The tenure of an FD can vary from 10, 15 or
45 days to 1.5 years and can be as high as 10 years. These investments are safer than Post Office
Schemes as they are covered under the Deposit Insurance & Credit Guarantee Scheme of India.
They also offer income tax and wealth tax benefits.
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Chapter – 5Marketing
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TATA AIG LIKE KEY BUSINESS STRATEGY
Sound underwriting process is important to ensure long term sustenance.
Life insurance is a long term business.
Regular persistent business is the key to profitable business.
Pricing rightly is another key for profitable business.
At Tata AIG life, we believe in persistent regular business, year on year.
Tata AIG life wants to be the best in the business.
This is only possible when our customers rank us as the best.
We are on the right track.
Market of different private players of 2009
Distribution Channels in Bank & Insurance
Traditionally, insurance products have been promoted and sold principally through
agency systems in most countries. With new developments in consumers behaviors,
evolution of technology and deregulation, new distribution channels have been developed successfully and rapidly
in recent years. Bank& insurance make use of various distribution channels:
1. Career Agents
2. Special Advisers
3. Salaried Agents
4. Bank Employees / Platform Banking
5. Corporate Agencies and Brokerage
6. Firms Direct
7. Response
8. Internet
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9. E-Brokerage
10. Outside Lead Generating Techniques
The main Characteristics of each of these Channels are
1. Career Agents
Career Agents are full-time commissioned sales personnel holding an agency contract. They are generally
considered to be independent contractors. Despite this limitation on control, career agents with suitable training,
supervision and motivation can be highly productive and cost-effective. . Moreover their level of customer service
is usually very high due to the renewal commissions, policy persistency bonuses, or other customer service-related
awards paid to them.
2. Special Advisers
Special Advisers are highly trained employees usually belonging to the insurance partner, who distribute
insurance products to the bank’s corporate clients. Banks refer complex insurance requirements to these advisors.
The Clients mostly include affluent population who require personalized and high quality service. Usually Special
advisors are paid on a salary basis and they receive incentive compensation based on their sales.
3. Salaried Agents
Having Salaried Agents has the advantages of them being fully under the control and supervision of bank &
insurance. These agents share the mission and objectives of the bank & insurance. The only difference in terms of
their remuneration is that they are paid on a salary basis and career agents receive incentive compensation based on
their sales.
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4. Platform Bankers
Platform Bankers are bank employees who spot the leads in the banks and gently suggest the customer to walk
over and speak with appropriate representative within the bank. The platform banker may be a teller or personal
loan assistant and the representative being referred to may be attained bank employee or a representative from the
partner insurance company.
5. Direct Response
In this channel no salesperson visits the customer to induce a sale and no face-to-face contact between consumer
and seller occurs. The consumer purchases products directly from the bank & insurance by responding to the
company's advertisement, mailing or telephone offers.
6. Internet
Internet banking is already securely established as an effective and profitable basis for conducting banking
operations. The reasonable expectation is that personal banking services will increasingly be delivered by Internet
banking. Bank& insurance can also feel confident that Internet banking will also prove an efficient vehicle for
cross selling of insurance savings and protection products.
7. E-Brokerage
Banks can open or acquire an e-Brokerage arm and sell insurance products from multiple insurers. The changed
legislative climate across the world should help migration of bank & insurance in this direction. The advantage of
this medium is scale of operation, strong brands, easy distribution and excellent synergy with the internet
capabilities.
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DISTRIBUTION CHANNEL OFTATA AIG
The winds of liberations initiated vast changes in the functions of the industry today. Increasing
number of multinational partnership with private insurer have paved the way for a radical shift in insurance selling
through number of new distribution channels besides bringing about more awareness on the need for insurance
and also stressing on the important role technology can play.
In the developed markets, many insurer have a prefer
mode of distribution. In India many players are hedging their bets because the need for or the sale outweighs
consideration of focus and because non-agency distribution, which is presently operational for the last two years,
forms a basis for studies.
TATA AIG has a corporate agency channel, which
handles its corporate agents and has tie-ups with 38 corporate houses. Insurer wants to lower distribution costs by
finding more efficient channels. The new private players are developing multiple channel models; many insurer
use are plan to use several banks as distributors .because most of bank have strong religion bias, in this regards has
agreement with HBSC through that it’s doing both life insurance and general insurance. Because most banks have
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strong religious bias, Insurer can use banks without creating large overlap. Many large are sourcing product several
insurer acting as manufacturer.
As important distribution challenge facing insures is the
ruler and social sector legislative requirements stipulated in terms of markets opening. For Tata Aig its takes ruler
insurance as an opportunity and not an obligation. For achieving objective in an rural area it has also tie with
NGOs.in this project mainly focus on distribution channel of life insurance of Tata aig also.as the whole topic
of distribution channel can be known for the both company of Tata aig. Gradually channels are incorporating day
by day for the growth of business.
Chapter – 6Research Methodology
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RESEARCH METHODOLOGY
The research is carried on in a proper planned and systematic manner. This methodology
includes:
Familiarization with the concept of insurance and its various terms.
Thorough study of the information collected.
Conclusions based on findings. The research methodology which is adopted to conduct this study
is both qualitative as well as quantitative.
Quantitative
In order to understand the market segmentation of insurance products and to study the various
factors which influence the purchase decision of insurance products require the quantitative
study.
RESEARCH DESIGN
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DESCRIPTIVE RESEARCH
This study is based on a descriptive research design wherein the risks and r e tu rns associated with
the various products have been studied and the reasons for customer perception
regarding these products have been found out.
SAMPLE SIZE
Total sample of 100 was selected.
SAMPLE DESIGN
As the research is based on analyzing the consumer preference among various investment for
that a sample size of 100 was taken , which was picked up on random basis for the
purpose of survey. Simple Random Sampling has been adopted to conduct this study.
SAMPLE UNIT
The sample unit considered for this study is Investor who invests in various avenues
available in the market. The respondents have been selected from the Universe
defined above.
SOURCES OF DATA COLLECTION:
Both the Primary and Secondary sources have been used to collect the desired data
for the study.
Primary data
Collection has been done through the means of:
Questionnaires
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In order to get the primary data, a close ended questionnaire has been design to conduct the
study.
Interviews-
In addition to the questionnaire, some other relevant questions were also asked to get the
information regarding their marked choices.
Secondary data:
These i nc lude books , t he i n t e rne t , company b rochu re s , p roduc t brochures, the
company website, competitor’s websites etc., newspaper articles etc.
OBJECTIVES OF THE STUDY
The objectives mark the right direction to carry out any study. So, the objectives of this study are
as under:-
To learn and understand the market segmentation of insurance products.
To identify the insurance needs of the Indian population with respect to their emotional,
physical and financial conditions.
To study the various factors which influence the purchase of insurance products
To match the needs of the population with the products in hand or else design a new
product.
To understand the focus of the competitors.
To understand the real life situation of the insurer.
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Chapter – 8DATA ANALYSIS & INTERPRETATION
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DATA ANALYSIS
1. What is your age?
(a) Less Than 20 (b) 30-45
(c) 20-30 (d) More Than 45
SAMPLE SIZE 100 FREQUENCY PERCENTAGELess than 20 yr 12 1220-30 yr 37 3730-45yr 33 33Above 45 yrs 18 18TOTAL 100 100
less than 20 20-30 30-45 more than 450
5
10
15
20
25
30
35
40
12
3733
18
Sales
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Inference
It can be observed from the pie-chart that:
12% of the investors are less than that of 20 years of age. 37% lie in the age group of 20-30 years as such investors are returns oriented and are risk
takers. 33% lie in the age group of 30-45 years as these investors want safe products. Only 18% of the investors lie in the age group of more than 45 years. Such investors are
risk averse
2. What is your marital status?
(a) Married (b) Unmarried
married unmarried0
102030405060708090 82
18
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SAMPLE SIZE 100 FREQUENCY PERCENTAGEMarried 82 82
Unmarried 18 18TOTAL 100 100
Inference
It can be seen from the pie-chart that:-
82% of the investors are married as they have dependents so they are more conscious towards the health and life of their family members.
18% of the investors are unmarried.
3. What is your annual income?
Less than 1,00,000 More than 5,00,000
1,00,000-2,50,000 2,50,000-5,00,000
less than 1lac 1-2.5 lac 2.5-5 more than 50
5
10
15
20
25
30
35
40
45
15
36
40
9
data
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
Income less than 1 Lac 15 15
1-2.5 Lac 36 36
2.5- 5 40 40
More than 5 Lac 9 9
TOTAL 100 100
InferenceIt can be derived from the pie-chart that
15% of the investors are in the income group of less than 1 lac.
36% of the investors lie in the income slab of 1-2.5 lacs.
40% of the investors are in the income group of 2.5-5 lacs.
9% of the investors lie in the age group of more than 5 lacs.
4. Which Avenues do you prefer for investment?
Stock Market Mutual funds
Govt. Bonds’ Fixed deposit
stock market mutual funds govt. bonds fixed deposit05
10152025303540 37
22
32
9
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
Stock Market 37 37Mutual Funds 22 22Govt. Bonds 32 32Fixed Deposit 9 9TOTAL 100 100
Inferences-It can be inferred from the pie-chart that
37% of the investors invest in stock market due to its high returns capability and investors are risk takers as well.
22% of the investors invest in mutual funds as they are quite structured avenues, offer good returns and are safe too.
32% of the investors invest in govt. bonds as they are safe investment options and risk associated is less.
9% of the investors invest in fixed deposits as they are the traditional investment avenues
5. Are you aware about the benefits of Insurance?
o Yes
o No
yes No0
102030405060708090
100 91
9
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
Yes 91 91No 09 09
TOTAL 100 100
Inference-
It can be seen from the pie-chart that
91% of the investors are aware about the benefits of insurance.
7% of the investors are unaware of the benefits of insurance
6. Are you and your family members insured?
All members including you Only you
No one
all members including you
only you no one0
10
20
30
40
50
60
70
80
90
77
13 10
Column1
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
All members including you 77 77
Only you 13 13No one 10 10
TOTAL 100 100
Inference-
It can be derived from the pie-chart that
77% of the investors have taken insurance plans for their family as well as themselves as
they are concerned about their dependents.
13% of the investors have taken insurance plans for themselves only.
10% o f t he i nves to r s have ne i t he r t aken i n su rance p l ans fo r their
family nor for themselves
7. If yes, from which company are you insured?
LIC ICICI
HDFC TATA AIG
OTHERS
LIC ICICI HDFC TATA AIG0
5
10
15
20
25
30
2220
15
25
DATA
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
LIC 22 22ICICI 20 20HDFC 15 15TATA AIG 25 25Others 18 18Total 100 100
Inference-
It can be observed from the pie-chart that 47% of the investors invest in LIC insurance plans due to their good records of returns
and safety. 27% the investors invest in ICICI as it holds a good record in private sector insurers and
has a huge customer equity. 11% of the investors have taken insurance plans from HDFC due to their
goodexperiences with it. 10% have taken plans from other insurance companies like birla sun life, SBI life
8. Which of the following features which affects your purchase?
Brand Returns
Time Period EMI
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
Brand 32 32
EMI 08 08
Returns 43 43
Time period 17 17
TOTAL 100 100
brand Emi returns time period0
10
20
30
40
50
32
8
43
17
Column1
Inference-It can be seen from the pie-chart that
32% of the investors are affected by the brand image of the company in the market as it reflects their past performances as well.
8% of the investors are affected by EMIs that is demanded by the plan. 43% are concerned with the returns offered by the plan. 17% are concerned with the tenure of the plans
9. What is the annual premium you are paying?
5000-10000 10000-25000
25000-50000 Above 50000
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
5000-10000 09 9
10000-25000 36 36
25000-50000 38 38
Above 50000 17 17
TOTAL 100 100
9
36
38
17 5000-10000
10000-25000
25000-50000
Above 50000
Inference-It can be seen from the pie-chart that 9% of the investors pay an annual premium between Rs.5000-10000. 36% pay an annual premium in the range of Rs.10000-25000. 38% pay an annual premium of Rs.25000-50000. 17% of the investors pay an annual premium above Rs.50000
Q10.Which type of plan you prefer now?
Traditional plans
ULIPs
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SAMPLE SIZE 100 FREQUENCY PERCENTAGE
Traditional 12 12
ULIPs 88 88
TOTAL 100 100
12%
88%
Traditional ULIP
Inference:
It can be observed from the pie-chart that
88% of the investors prefer ULIPs over Traditional plans due to several benefits they offer.
12% of the investors still prefer Traditional plans over ULIPs due to unawareness about the products and its benefits.
11. If your preferred avenue has been changed then please mentions the reason
Potential for better returns. Greater transparency
Flexibility in investment. Higher liquidity
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SAMPLE SIZE 100 FREQUENCY PERCENTAGEPotential for better return 52 52
Greater transparency 20 20
Flexibility in investment 18 18
Higher liquidity 10 10
TOTAL 100 100
52
20
18
10 Potential for better return
Greater Transparency
Flexibility in Investment
Higher Liquidity
Inference-It can be seen from the pie-chart that 52% of the investors are interested in potential for better returns. 20% of the investors prefer transparent services. 18% of the investors want flexibility in investment. 10% of the investors invest according to the company’s liquidity.
12. Occupation Wise classification:
Occupation No Of Respondent
Serviceman 40
Businessman 25
Student 20
Housewive 15
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45%
23%
17%
15%
OCCUPATIONseviceman Businessman STUDENT HOUSEWIVE
Interpretation: -
This charts depicts that 40% servicemen and25% business men are respondent in my report.
13. Which kind of policies do you have?
NO POLICIES N0 of Respondent PARCENTAGE1 LIFE INSURANCE 18 25%2 HEALTH
INSURANCE8 11%
3 GENERAL INSURANCE
10 14%
4 ALL OF THEM 36 50%5 TOTAL 72 100%
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Interpretation: -
It is clear from the chart that 50% people come to take all policies it’s mean customer have more aware to the all type of insurance.
14. Are you aware all the plans and updates from company?
PLANS AND UPDATES N0 of Respondent PARCENTAGEYES 48 67%NO 24 33%TOTAL 72 100%
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Interpretation: -
It is clear from the chart that 48 people say yes and 24say no . It’s mean customer have more aware to the all plans and updates for the company.
15. How do you come to know about this company product?
NO SOURCE NO OF RESPONDENT
PARCENTAGE
1 NEWS PAPER 14 19%2 AGENT 32 45%3 ADVERTISMENT 14 19%4 MOUTH OF
SPREAD12 17%
5 TOTAL 72 100%
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0
5
10
15
20
25
30
35
News paper Agent Advertisment Mouth of spreadSeries 1 14 32 14 12
Interpretation: -
This chart shows that agent is the most communicational tool for insurance company.
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Chapter – 9Findings,
Recommendations &Conclusion
FINDINGS
After collecting primary data and analyzing them graphically it can be concluded that:
12% of the investors are less than that of 20 years of age.37% lie in the age group of 20-30
years as such investors are returns oriented and are risk takers.33% lie in the age group of 30-
45 years as these investors want safe products with assured returns.Only 18% of the investors
lie in the age group of more than 45 years. Such investors are risk averse.
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It was found that in a sample of 100, 36 (36%) of people had annual income between
Rs.100000-250000. Out of these 36, 14 people pay a premium below Rs. 10000, 22 pay
premiums between Rs. 10000-20000.
In the same sample of 100, 40 (40%) people had annual income between Rs. 250000-500000.
Out of these 25, 7 people pay premium between Rs. 10000-20000, 14 people pay premium
between Rs. 20000-50000, and 9 of them pay premium above Rs. 500000.
The highest market share from the sample was of LIC with 47% respondents having LIC
policy, followed by ICICI PRUDENTIAL with a market share of 27%, HDFC STANDARD
LIFE with 11% share , TATA AIG with 5% and OTHERS with 10% share.
Most people choose LIC for its Brand Image and since it is a PSU, also it offers to its
customers’ low EMIs, but on the other hand private players offer better returns.
It was found that most of the people considered “Returns 43%” as a major factor while
buying insurance with positive responses, 32% “Brand Image” as the prime factor, 8(8%)
prefer “EMI” and 17(14%) prefer “Time Period”.
The most preferred avenue for investment was found out to be Stock Market preferred by
37% respondents, followed by Mutual Fund preferred by 22% respondents, 32% preferred
Govt. Bonds, 9% preferred Fixed Deposit.
Out of the entire sample of 100, 78(78%) preferred Traditional Insurance Plans, and 22(22%)
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preferred ULIPs 3 years ago but in present scenario 12% prefer Traditional Plans and 88%
prefer ULIPs. Among the reasons for this change 52(52%) respondents prefer “Potential for
better returns”, 20(20%) prefer “Greater Transparency”, 18(18%) prefer “Flexibility in
investment” and 10(10%) prefer “Higher liquidity”.
RECOMMENDATIONS
Recommendations for whole Insurance Industry
As it can be seen that that most of the investors are inclined toward stock market and
mutual funds there is a strong need to take some important steps on the part
of government and insurance companies which would help this sector grow at
a faster pace.
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The government should make life insurance mandatory, because most of the people live
with the myth “I don’t need insurance”, so this myth should be eradicated
from the mind of the consumers by highlighting the benefits of life insurance,
government can launch campaigns to increase awareness especially in the rural sector.
The companies should highlight the advantages of life insurance in comparison together
investment avenues such as mutual funds, stock market, as only ULIPs
offer returns plus life cover which other investment options do not provide,
also capital gains or maturity amount is exempted from tax under Section 10(10) D of
the Income Tax Act.
There should be strong distribution channel of the insurance companies so
that they are closely connected to consumers, distribution channel that is the agents of
life insurance companies are foundation of life insurance business, they must be properly
trained by the companies to sell products according to the needs of the customer, give
suitable suggestions to the customer to make his/her future secure.
RECOMMENDATIONS TO THE COMPANY:
Being the best product player in the private sector, but still survey TATA AIG needs to
improvement regarding its premium charges and advertisement to its target customers.
A) Premium charges
Owing to its high premium charges (Tata AIG Apex Plan, Premium RS. 90000/-) customers
perception about the company’s product has become that its only for the upper middle class
people. Whereas TATA AIG do has some policy with low premium but the charges of allocation 120 | P a g e
are too high. So we would like to suggest slowing down its premium charges to some extend by
reducing administration charges and other charges.
b) Advertisement:
During survey we have found that due to lack of advertisements about the products and agents
selling the products in which they get high commissions customers are somewhere mislead and
they know about very few products though TATA AIG has wide range of variety of the products.
So we would recommend TATA AIG to invest more in advertisement in form of TV
commercials, pamphlets and hoardings.
c) Wrong perception:
AIG is on the edge of filing bankruptcy. So Tata AIG is also going to on the brink of filling
bankruptcy. But insurance in India is a highly regulated industry. Any company that wants to set
up an insurance business has to follow very stringent norms given by the Insurance Regulatory
& Development Authority (IRDA). So company should take positive measure to remove this
wrong perception from the people.
d) Sample size:
For this research study only hundred sample size has been taken. The result will be more
appropriate if a large sample size is considered.
Recommendations for Tata AIG Life Insurance
If Tata AIG Life Insurance wants to become a market leader it has to work on
certain areas:
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Tata AIG Life Insurance employs around 4328 people in its various
businesses and has 112 branches across 108 cities as compared to ICICI
Prudential has 735o f f i c e s , 22 Bank a s su rance pa r t ne r s and ove r 2 .4
l akh adv i so r s t he r e fo re TATA AIG should increase its offices.
Tata AIG Life Insurance has a limited number of trainers in its branches, because of
which advisors are not properly trained, so it should work on developing its
training department.
Increase expenditure on promotion and advertising to make people think of
Tata AIG Life Insurance whenever they think of insurance.
Transparency in the system i.e. conductance and training of Life Advisers,
in customer relationships, reporting should be there
BENEFITS TO THE COMPANY AND US:
During the survey time sales have been done. It is a win-win Situation for both company and me.
The benefits of this summer internship program are discussed below.
1. Benefit to the company:
a) This survey has been done in Gwalior region on comparison of TATAAIG‟s product and its
competitor can give an idea of this position in the market. As TATA AIG leads in most of the
parameters so it should continue to serve in the same manner.
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b) The survey also shows the customers perception about TATA AIG‟s life Insurance product
with which it can improve its impression better than now. c) The recommendation has given in
this report will help TATA AIG to position its product properly to the target customers d)
Moreover the sales has been done during this internship have done a good business for the
company.
2. Benefit to us:
a) Doing internship in TATA AIG have given me immense experience in the insurance industry
for these fourteen weeks.
b) Interaction with the customers for survey and sales has developed our marketing skills.
c) Working in the office premises has given exposure to corporate world and an experience in
working in corporate pressure.
CONCLUSION
Earlier Life Insurance was taken as an option for risk cover or a tax saving by people. Burin the
present scenario the mind set and outlook of people has changed a lot. They now
consider Life insurance as an investment opportunity in long run. Clients have also shifted a lot
from traditional plans to Unit linked insurance plan (ULIP).
ULIP provide t he i nves to r w i th bene f i t s l i ke Po t en t i a l f o r be t t e r r e t u rn s .
Unde r IRDA gu ide l i ne s , traditional plans have to invest at least 85% in debt instruments
which results in low returns. On the other hand, Ulips invest in market linked instruments with
varying debt and equity proportions and if you wish you can even choose 100% equity option.
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The state owned insurance companies such as LIC and GIC have limited number of policies to
offer to their subscribers while in case of private insurance companies, their policy numbers are
many more and the premium amount as well as the maturity period is much competitive as
against those of government insurance companies. The private sector insurance players have
started exploring the rural markets in which until recently, the state owned companies had the
monopoly.
Here it can be concluded that the summer internship program, done for partial fulfillment of the
MBA course in UPTU University, in TATA AIG Life Insurance Co. Ltd. has been completed
successfully.
Following are the achievements done during the summer internship from 20th JUNE 2013 to
14 AUG 2013.
a) Survey done with interest of TATA AIG has been conducted successfully and results are
discussed above.
b) Sales done during the time have done great business to the company.
c) The experience gained during the internship has sharpen my skills and given a corporate
exposure.
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SCOPE OF THE STUDY
In the present scenario as our economy is growing and the per capita income is
rising people at large have got more money with them to invest in the market, who according to
their choice invest in share market, government bonds, life insurance, mutual funds, real-
e s t a t e .
I f a c o n s u m e r c h o o s e s t o i n v e s t i n m u t u a l f u n d s t h e r e a r e 3 3
m u t u a l f u n d companies, if one chooses to invest in stock market there are
hundreds of companies l i s t ed on t he s t ock exchange , i f he choose s t o i nves t
i n l i f e i n su rance t he r e a r e 16 companies present such as ICICI PRUDENTIAL., AVIVA
LIFE INSURANCE, KOTAK LIFE INSURANCE, SBI LIFE INSURANCE, TATA AIG
LIFE INSURANCE, LIC, BAJAJ ALLIANZ, etc.;
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so in order to study the consumer preferences, the various factors that influence the buying
behavior of a consumer buying life insurance, a sample of 50 was chosen from
ALIGARH.
LIMITATION OF THE STUDY
By working on this project, a lot of knowledge about the insurance sector in INDIA
has been ga ined . Howeve r , t he r e we re many l im i t a t i ons o r p rob l ems t ha t I
f a ced wh i l e working on this project. The following are the limitations:
Small Sample Size:
The study was relied more on the primary data and the data was collected from a
small population of 50, therefore, the findings may not be applicable in their true sense
when it is applied in general.
Time Constraint:
As the duration of internship was only 8 weeks, therefore, it was very difficult to
conduct the entire study about the vast insurance sector
Small Universe:
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The s t udy i s r e s t r i c t ed t o some a r ea s o f A l iga rh .
Biased Responses:
The answers of the customers could have been biased which may affect the analysis of
the study.
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BIBLIOGRAPHY
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BIBLIOGRAPHY
BOOKS
Insurance Distribution – An Introduction, Insurance Series,
ICFAI University
Kothari , C .R: Research methodology , 2nd e d i t i o n , 1 9 9 0 ,
n e w a g e international (p) ltd, New Delhi
IC-24, Legal Aspect of Life Insurance issued by IRDA
Marketing Management –Philip Kotler,13th edition
WEBSITES
http://www.tata AIGlifeinsurance.com
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http://www.irdaindia.org/
www.google.com
http://economictimes.indiatimes.com
Annexure
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QUESTIONNAIRE
1. What is your age?
Less Than 20
30-45
20-30
More Than 45
2. What is your marital status?
Married
Unmarried
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3. What is your annual income?
Less than 1,00,000
More than 5,00,000
1,00,000-2,50,000
2,50,000-5,00,000
4. Which Avenues do you prefer for investment?
Stock Market
Mutual funds
Govt. Bonds’
Fixed deposit
5. Are you aware about the benefits of Insurance?
Yes
No
Q6. Are you and your family members insured?
All members including you
Only you
No one
Q7. If yes, from which company are you insured?
LIC
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HDFC
TATA AIG
Any other
Q8. Which of the following features affect your purchase?
Brand
EMI
Return
Time period
Q9. What is the annual premium you are paying?
5000-15000
15000-30000
30000-50000
More than 50000
Q10. Which type of plan you prefer now?
Traditional
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UPILs
Q11. If your preferred avenue has been changed then please mention the
reason?
Potential for better return
Greater transparency
Flexibility in investment
Higher liquidity
12. Occupation Wise classification:
13. Which kind of policies do you have?
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Occupation No Of Respondent
Serviceman
Businessman
Student
Housewive
LIFE INSURANCEHEALTH INSURANCEGENERAL INSURANCEALL OF THEMTOTAL
14. Are you aware all the plans and updates from company?
YESNO
15. How do you come to know about this company product?
NEWS PAPERAGENTADVERTISMENTMOUTH OF SPREADTOTAL
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THANK YOU
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