A

Project Study Report

On

ANALYSIS OF ICICI PRUDENTIAL

LIFE INSURANCE

Submitted in partial fulfillment for the

Award of degree of

Master of Business Administration

Submitted by Submitted to
Miss Saloni Garg Miss Swati jain
PSOM 2nd Year

POORNIMA SCHOOL OF MANAGEMENT

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 CERTIFICATE

This is to certify that MS. SALONI GARG of MBA fourth semester of POORNIMA
COLLEGE OF ENGINEERING, Jaipur, has completed her project report on the topic of
“ICICI PRUDENTIAL LIFE INSURANCE” under the supervision of MS. SWATI
JAIN, Faculty member, PSOM

To best of my knowledge the report is original and has not been copied or submitted
anywhere else. It is an independent work done by her.

MS. SWATI JAIN

Faculty, PSOM, Jaipur.

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 ACKNOWLEDGEMENT

I express my sincere thanks to my project guides, Ms. SWATI JAIN, MS.

MAUSAMI BANDYOPADHAYAY (Faculty) Department of Management Studies,
Poornima College of Engineering, Jaipur and Mr. SACHIN JAIN for guiding me right
from the inception till the successful completion of the project. I sincerely acknowledge
him for extending their valuable guidance, support for literature, critical reviews of
project and the report and above all the moral support he had provided to me with all
stages of this project.

I would like to thank RAJASTHAN TECHINICAL UNIVERSITY for giving an

opportunity to work on a valuable project.

I would also like to thank the supporting staff of Poornima school of management,
for their help and cooperation throughout our project.

Saloni garg
MBA 4th Sem.
(psom)

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 PREFACE

This project report has been prepared as per the requirement of the syllabus of
MBA course structure under which the students are required to undertake real
life short term corporate study. The vision of this project study is to evaluate
which brand of detergent is prefer by customers at Jaipur city in Rajasthan.

Performing such study and surveying the market was a firsthand experience for
me. I was exposed to the professional set-up and faced the market, which was
really a great experience.

During project period, I had very touching experiences. When business is

involved, experiences counts a lot, as we know, experience are an instrument,
which leads towards success. We all know that working in market on the grass
route level has always been a pleasure.

Now I take this opportunity to present the project report and sincerely hope that it
will be as much knowledge enhancing to the readers as it was to use during the
fieldwork and the completion of the report.

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 EXECUTIVE SUMMARY
ICICI PRUDENTIAL Life insurance is the oldest life insurance company in the
world. It is the largest insurer in the UK and is the 28th largest company in the
world. In India, the company is marketing life insurance products and unit linked
investment plans. From my research at ICICI , I found that the company has a lot
of competition from other private insurers like HDFC, Aviva, Birla Sun Life and
Tata AIG. It also faces competition from LIC. To compete effectively ICICI
PRUDENTIAL could launch cheaper and more reasonable products with small
premiums and short policy terms (the number of year’s premium is to be paid).
The ideal premium would be between Rs. 5000 – Rs. 25000 and an ideal policy
term would be 10 – 20 years.

ICICI must advertise regularly and create brand value for its products and
services. Most of its competitors like Aviva, HDFC, Max, Reliance and LIC use
television advertisements to promote their products. The Indian consumer has a
false perception about insurance – they feel that it would not benefit them if they
do not live through the policy term. Nowadays however, most policies are unit
linked plans where a customer is benefited even if their death does not occur
during the policy term. This message should be conveyed to potential customers
so that they readily invest in insurance.

Family responsibilities and high returns are the two main reasons people invest
in insurance. Optimum returns of 16 – 20 % must be provided to consumers to
keep them interested in purchasing insurance.

TABLE OF CONTENTS
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1. Intoduction to the industry
2. Introduction to the organization
3. Research Methodology
3.1 Title of the study
3.2 Duration of the study
3.3 Objective of the study
3.4 Type of research
3.5 Sample size
3.6 Scope of the study
3.7 Limitation of the study
4. Interpretation & analysis
5. Facts & findings
6. SWOT
7. Conclusion
8. Recommendation
9. Appendix
10. Bibliography

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 “life insurance is the bridge which covers the economic gap
between the time a man dies & the time he should die”

INTRODUCTION OF INDUSTRY

Insurance is a legal Contract that protects people from the financial costs those
results from loss of life, loss of health, lawsuits, or property damage. Insurance
provides a means for individuals & society to cope up with some of the risks
faced in every day life by every body. People purchase contracts of insurance,
called a Policy, from various insurance companies.

Insurance can be divided into three categories:

1) Life Insurance
2) General Insurance
3) Health Insurance

Life insurance is a contract for payment of a sum of money to the person assured
on the happening of the event insured against. Usually the contract provides for
the payment of an amount on the date of maturity or at specified intervals or at
unfortunate death. The contract also provides for payment of premium
periodically to the corporation by the assured.

General insurance includes many areas of insurance like marine, motor,

engineering, health, fire, etc. The contract provides for the payment of an amount
on the happening of some contingency. These types of contracts are annual in
nature.

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History of insurance

In some sense we can say that insurance appears simultaneously with the
appearance of human society. We know of two types of economies in human
societies: money economies (with markets, money, financial instruments and so
on) and non-money or natural economies (without money, markets, financial
instruments and so on). The second type is a more ancient form than the first. In
such an economy and community, we can see insurance in the form of people
helping each other. For example, if a house burns down, the members of the
community help build a new one. Should the same thing happen to one's
neighbour, the other neighbours must help. Otherwise, neighbours will not
receive help in the future. This type of insurance has survived to the present day
in some countries where modern money economy with its financial instruments is
not widespread (for example countries in the territory of the former Soviet Union).

Turning to insurance in the modern sense (i.e., insurance in a modern money

economy, in which insurance is part of the financial sphere), early methods of
transferring or distributing risk were practised by Chinese and Babylonian traders
as long ago as the 3rd and 2nd millennia BC, respectively.[8] Chinese merchants
travelling treacherous river rapids would redistribute their wares across many
vessels to limit the loss due to any single vessel's capsizing. The Babylonians
developed a system which was recorded in the famous Code of Hammurabi, c.
1750 BC, and practised by early Mediterranean sailing merchants. If a merchant
received a loan to fund his shipment, he would pay the lender an additional sum
in exchange for the lender's guarantee to cancel the loan should the shipment be
stolen.

Achaemenian monarchs of Ancient Persia were the first to insure their people
and made it official by registering the insuring process in governmental notary
offices. The insurance tradition was performed each year in Norouz (beginning of
the Iranian New Year); the heads of different ethnic groups as well as others

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willing to take part, presented gifts to the monarch. The most important gift was
presented during a special ceremony. When a gift was worth more than 10,000
Derrik (Achaemenian gold coin) the issue was registered in a special office. This
was advantageous to those who presented such special gifts. For others, the
presents were fairly assessed by the confidants of the court. Then the
assessment was registered in special offices.

The purpose of registering was that whenever the person who presented the gift
registered by the court was in trouble, the monarch and the court would help him.
Jahez, a historian and writer, writes in one of his books on ancient Iran:
"[W]henever the owner of the present is in trouble or wants to construct a
building, set up a feast, have his children married, etc. the one in charge of this in
the court would check the registration. If the registered amount exceeded 10,000
Derrik, he or she would receive an amount of twice as much.

A thousand years later, the inhabitants of Rhodes invented the concept of the
'general average'. Merchants whose goods were being shipped together would
pay a proportionally divided premium which would be used to reimburse any
merchant whose goods were jettisoned during storm or sinkage.

The Greeks and Romans introduced the origins of health and life insurance c.
600 AD when they organized guilds called "benevolent societies" which cared for
the families and paid funeral expenses of members upon death. Guilds in the
Middle Ages served a similar purpose. The Talmud deals with several aspects of
insuring goods. Before insurance was established in the late 17th century,
"friendly societies" existed in England, in which people donated amounts of
money to a general sum that could be used for emergencies.

Separate insurance contracts (i.e., insurance policies not bundled with loans or
other kinds of contracts) were invented in Genoa in the 14th century, as were
insurance pools backed by pledges of landed estates. These new insurance
contracts allowed insurance to be separated from investment, a separation of

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roles that first proved useful in marine insurance. Insurance became far more
sophisticated in post-Renaissance Europe, and specialized varieties developed.

Toward the end of the seventeenth century, London's growing importance as a

centre for trade increased demand for marine insurance. In the late 1680s,
Edward Lloyd opened a coffee house that became a popular haunt of ship
owners, merchants, and ships’ captains, and thereby a reliable source of the
latest shipping news. It became the meeting place for parties wishing to insure
cargoes and ships, and those willing to underwrite such ventures. Today, Lloyd's
of London remains the leading market (note that it is not an insurance company)
for marine and other specialist types of insurance, but it works rather differently
than the more familiar kinds of insurance.

Insurance as we know it today can be traced to the Great Fire of London, which
in 1666 devoured 13,200 houses. In the aftermath of this disaster, Nicholas
Barbon opened an office to insure buildings. In 1680, he established England's
first fire insurance company, "The Fire Office," to insure brick and frame homes.

The first insurance company in the United States underwrote fire insurance and
was formed in Charles Town (modern-day Charleston), South Carolina, in 1732.
Benjamin Franklin helped to popularize and make standard the practice of
insurance, particularly against fire in the form of perpetual insurance. In 1752, he
founded the Philadelphia Contributionship for the Insurance of Houses from Loss
by Fire. Franklin's company was the first to make contributions toward fire
prevention. Not only did his company warn against certain fire hazards, it refused
to insure certain buildings where the risk of fire was too great, such as all wooden
houses. In the United States, regulation of the insurance industry is highly
Balkanized, with primary responsibility assumed by individual state insurance
departments. Whereas insurance markets have become centralized nationally
and internationally, state insurance commissioners operate individually, though at
times in concert through a national insurance commissioners' organization. In

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recent years, some have called for a dual state and federal regulatory system
(commonly referred to as the Optional federal charter (OFC)) for insurance
similar to that which oversees state banks and national banks.

FEATURES OF INDIAN INSURANCE INDUSTRY:

• Low market penetration.

• Ever-growing middle-class component in population.
• Growth of consumer movement with an increasing demand for better
insurance products.
• Inadequate application of information technology for business.
• Adequate fillip from the Govt. in the form of tax incentives to the insured.

59% of the advisors are satisfied by the commission provided by the co. Those
who are not satisfied said that the commission provided is very low as compared
other players in the industry. Most of the advisors are satisfied by the working
conditions.

This need has become even more important due to steady disintegration of the
prevalent joint family system, and emergence of nuclear families. The need to
protect your family’s ever growing needs is why you need Life Insurance.

Following are the reasons:

 Lifestyle Maintenance.
 Costs of Education.
 Mortgage and Debt protection.
 Hardships Protection.
 Replacement of Income.
 Retirement Expenses.

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 Principles of insurance

Commercially insurable risks typically share seven common characteristics.

1. A large number of homogeneous exposure units. The vast

majority of insurance policies are provided for individual members of very
large classes. Automobile insurance, for example, covered about 175
million automobiles in the United States in 2004.[2] The existence of a large
number of homogeneous exposure units allows insurers to benefit from
the so-called “law of large numbers,” which in effect states that as the
number of exposure units increases, the actual results are increasingly
likely to become close to expected results. There are exceptions to this
criterion. Lloyd's of London is famous for insuring the life or health of
actors, actresses and sports figures. Satellite Launch insurance covers
events that are infrequent. Large commercial property policies may insure
exceptional properties for which there are no ‘homogeneous’ exposure
units. Despite failing on this criterion, many exposures like these are
generally considered to be insurable.
2. Definite Loss. The event that gives rise to the loss that is subject to the
insured, at least in principle, take place at a known time, in a known place,
and from a known cause. The classic example is death of an insured
person on a life insurance policy. Fire, automobile accidents, and worker
injuries may all easily meet this criterion. Other types of losses may only
be definite in theory. Occupational disease, for instance, may involve
prolonged exposure to injurious conditions where no specific time, place
or cause is identifiable. Ideally, the time, place and cause of a loss should
be clear enough that a reasonable person, with sufficient information,
could objectively verify all three elements.
3. Accidental Loss. The event that constitutes the trigger of a claim
should be fortuitous, or at least outside the control of the beneficiary of the
insurance. The loss should be ‘pure,’ in the sense that it results from an

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 event for which there is only the opportunity for cost. Events that contain
speculative elements, such as ordinary business risks, are generally not
considered insurable.
4. Large Loss. The size of the loss must be meaningful from the
perspective of the insured. Insurance premiums need to cover both the
expected cost of losses, plus the cost of issuing and administering the
policy, adjusting losses, and supplying the capital needed to reasonably
assure that the insurer will be able to pay claims. For small losses these
latter costs may be several times the size of the expected cost of losses.
There is little point in paying such costs unless the protection offered has
real value to a buyer.
5. Affordable Premium. If the likelihood of an insured event is so high,
or the cost of the event so large, that the resulting premium is large
relative to the amount of protection offered, it is not likely that anyone will
buy insurance, even if on offer. Further, as the accounting profession
formally recognizes in financial accounting standards, the premium cannot
be so large that there is not a reasonable chance of a significant loss to
the insurer. If there is no such chance of loss, the transaction may have
the form of insurance, but not the substance. (See the U.S. Financial
Accounting Standards Board standard number 113)
6. Calculable Loss. There are two elements that must be at least
estimable, if not formally calculable: the probability of loss, and the
attendant cost. Probability of loss is generally an empirical exercise, while
cost has more to do with the ability of a reasonable person in possession
of a copy of the insurance policy and a proof of loss associated with a
claim presented under that policy to make a reasonably definite and
objective evaluation of the amount of the loss recoverable as a result of
the claim.
7. Limited risk of catastrophically large losses. The essential risk
is often aggregation. If the same event can cause losses to numerous

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 policyholders of the same insurer, the ability of that insurer to issue
policies becomes constrained, not by factors surrounding the individual
characteristics of a given policyholder, but by the factors surrounding the
sum of all policyholders so exposed. Typically, insurers prefer to limit their
exposure to a loss from a single event to some small portion of their
capital base, on the order of 5 percent. Where the loss can be aggregated,
or an individual policy could produce exceptionally large claims, the capital
constraint will restrict an insurer's appetite for additional policyholders. The
classic example is earthquake insurance, where the ability of an
underwriter to issue a new policy depends on the number and size of the
policies that it has already underwritten. Wind insurance in hurricane
zones, particularly along coast lines, is another example of this
phenomenon. In extreme cases, the aggregation can affect the entire
industry, since the combined capital of insurers and reinsurers can be
small compared to the needs of potential policyholders in areas exposed
to aggregation risk. In commercial fire insurance it is possible to find single
properties whose total exposed value is well in excess of any individual
insurer’s capital constraint. Such properties are generally shared among
several insurers, or are insured by a single insurer who syndicates the risk
into the reinsurance market.

Types of insurance

Any risk that can be quantified can potentially be insured. Specific kinds of risk
that may give rise to claims are known as "perils". An insurance policy will set out
in detail which perils are covered by the policy and which are not. Below are
(non-exhaustive) lists of the many different types of insurance that exist. A single
policy may cover risks in one or more of the categories set out below. For
example, auto insurance would typically cover both property risk (covering the
risk of theft or damage to the car) and liability risk (covering legal claims from
causing an accident). A homeowner's insurance policy in the U.S. typically

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includes property insurance covering damage to the home and the owner's
belongings, liability insurance covering certain legal claims against the owner,
and even a small amount of coverage for medical expenses of guests who are
injured on the owner's property.

Business insurance can be any kind of insurance that protects businesses

against risks. Some principal subtypes of business insurance are (a) the various
kinds of professional liability insurance, also called professional indemnity
insurance, which are discussed below under that name; and (b) the business
owner's policy (BOP), which bundles into one policy many of the kinds of
coverage that a business owner needs, in a way analogous to how homeowners
insurance bundles the coverages that a homeowner needs.[9]

Auto insurance

Auto insurance protects you against financial loss if you have an accident. It is a
contract between you and the insurance company. You agree to pay the
premium and the insurance company agrees to pay your losses as defined in
your policy. Auto insurance provides property, liability and medical coverage:

1. Property coverage pays for damage to or theft of your car.

2. Liability coverage pays for your legal responsibility to others for bodily
injury or property damage.
3. Medical coverage pays for the cost of treating injuries, rehabilitation and
sometimes lost wages and funeral expenses.

An auto insurance policy comprises six kinds of coverage. Most countries require
you to buy some, but not all, of these coverages. If you're financing a car, your
lender may also have requirements. Most auto policies are for six months to a
year.

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In the United States, your insurance company should notify you by mail when it’s
time to renew the policy and to pay your premium

Home insurance

Home insurance provides compensation for damage or destruction of a home

from disasters. In some geographical areas, the standard insurances excludes
certain types of disasters, such as flood and earthquakes, that require additional
coverage. Maintenance-related problems are the homeowners' responsibility.
The policy may include inventory, or this can be bought as a separate policy,
especially for people who rent housing. In some countries, insurers offer a
package which may include liability and legal responsibility for injuries and
property damage caused by members of the household, including pets.[11]

Health

Health insurance policies by the National Health Service in the United Kingdom
(NHS) or other publicly-funded health programs will cover the cost of medical
treatments. Dental insurance, like medical insurance, is coverage for individuals
to protect them against dental costs. In the U.S., dental insurance is often part of
an employer's benefits package, along with health insurance.

Disability

• Disability insurance policies provide financial support in the event the

policyholder is unable to work because of disabling illness or injury. It
provides monthly support to help pay such obligations as mortgages and
credit cards.
• Disability overhead insurance allows business owners to cover the
overhead expenses of their business while they are unable to work.

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 • Total permanent disability insurance provides benefits when a person is
permanently disabled and can no longer work in their profession, often
taken as an adjunct to life insurance.
• Workers' compensation insurance replaces all or part of a worker's wages
lost and accompanying medical expenses incurred because of a job-
related injury.

Casualty

Casualty insurance insures against accidents, not necessarily tied to any specific
property.

• Crime insurance is a form of casualty insurance that covers the

policyholder against losses arising from the criminal acts of third parties.
For example, a company can obtain crime insurance to cover losses
arising from theft or embezzlement.
• Political risk insurance is a form of casualty insurance that can be taken
out by businesses with operations in countries in which there is a risk that
revolution or other political conditions will result in a loss.

Life

Life insurance provides a monetary benefit to a decedent's family or other

designated beneficiary, and may specifically provide for income to an insured
person's family, burial, funeral and other final expenses. Life insurance policies
often allow the option of having the proceeds paid to the beneficiary either in a
lump sum cash payment or an annuity.

Annuities provide a stream of payments and are generally classified as insurance

because they are issued by insurance companies and regulated as insurance
and require the same kinds of actuarial and investment management expertise
that life insurance requires. Annuities and pensions that pay a benefit for life are

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sometimes regarded as insurance against the possibility that a retiree will outlive
his or her financial resources. In that sense, they are the complement of life
insurance and, from an underwriting perspective, are the mirror image of life
insurance.

Certain life insurance contracts accumulate cash values, which may be taken by
the insured if the policy is surrendered or which may be borrowed against. Some
policies, such as annuities and endowment policies, are financial instruments to
accumulate or liquidate wealth when it is needed.

In many countries, such as the U.S. and the UK, the tax law provides that the
interest on this cash value is not taxable under certain circumstances. This leads
to widespread use of life insurance as a tax-efficient method of saving as well as
protection in the event of early death.

In U.S., the tax on interest income on life insurance policies and annuities is
generally deferred. However, in some cases the benefit derived from tax deferral
may be offset by a low return. This depends upon the insuring company, the type
of policy and other variables (mortality, market return, etc.). Moreover, other
income tax saving vehicles (e.g., IRAs, 401(k) plans, Roth IRAs) may be better
alternatives for value accumulation. A combination of low-cost term life insurance
and a higher-return tax-efficient retirement account may achieve better
investment return.

Property

This tornado damage to an Illinois home would be considered an "Act of God" for
insurance purposes

Property insurance provides protection against risks to property, such as fire,

theft or weather damage. This includes specialized forms of insurance such as

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fire insurance, flood insurance, earthquake insurance, home insurance, inland
marine insurance or boiler insurance.

• Automobile insurance, known in the UK as motor insurance, is probably

the most common form of insurance and may cover both legal liability
claims against the driver and loss of or damage to the insured's vehicle
itself. Throughout the United States an auto insurance policy is required to
legally operate a motor vehicle on public roads. In some jurisdictions,
bodily injury compensation for automobile accident victims has been
changed to a no-fault system, which reduces or eliminates the ability to
sue for compensation but provides automatic eligibility for benefits. Credit
card companies insure against damage on rented cars.
o Driving School Insurance insurance provides cover for any
authorized driver whilst undergoing tuition, cover also unlike other
motor policies provides cover for instructor liability where both the
pupil and driving instructor are equally liable in the event of a claim.
• Aviation insurance insures against hull, spares, deductibles, hull wear and
liability risks.
• Boiler insurance (also known as boiler and machinery insurance or
equipment breakdown insurance) insures against accidental physical
damage to equipment or machinery.
• Builder's risk insurance insures against the risk of physical loss or damage
to property during construction. Builder's risk insurance is typically written
on an "all risk" basis covering damage due to any cause (including the
negligence of the insured) not otherwise expressly excluded.
• Crop insurance "Farmers use crop insurance to reduce or manage various
risks associated with growing crops. Such risks include crop loss or
damage caused by weather, hail, drought, frost damage, insects, or
disease, for instance.
• Earthquake insurance is a form of property insurance that pays the
policyholder in the event of an earthquake that causes damage to the

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 property. Most ordinary homeowners insurance policies do not cover
earthquake damage. Most earthquake insurance policies feature a high
deductible. Rates depend on location and the probability of an earthquake,
as well as the construction of the home.
• A fidelity bond is a form of casualty insurance that covers policyholders for
losses that they incur as a result of fraudulent acts by specified
individuals. It usually insures a business for losses caused by the
dishonest acts of its employees.
• Flood insurance protects against property loss due to flooding. Many
insurers in the U.S. do not provide flood insurance in some portions of the
country. In response to this, the federal government created the National
Flood Insurance Program which serves as the insurer of last resort.
• Home insurance or homeowners' insurance: See "Property insurance".
• Landlord insurance is specifically designed for people who own properties
which they rent out. Most house insurance cover in the U.K will not be
valid if the property is rented out therefore landlords must take out this
specialist form of home insurance.
• Marine insurance and marine cargo insurance cover the loss or damage of
ships at sea or on inland waterways, and of the cargo that may be on
them. When the owner of the cargo and the carrier are separate
corporations, marine cargo insurance typically compensates the owner of
cargo for losses sustained from fire, shipwreck, etc., but excludes losses
that can be recovered from the carrier or the carrier's insurance. Many
marine insurance underwriters will include "time element" coverage in
such policies, which extends the indemnity to cover loss of profit and other
business expenses attributable to the delay caused by a covered loss.
• Surety bond insurance is a three party insurance guaranteeing the
performance of the principal.
• Terrorism insurance provides protection against any loss or damage
caused by terrorist activities.

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 • Volcano insurance is an insurance that covers volcano damage in Hawaii.
• Windstorm insurance is an insurance covering the damage that can be
caused by hurricanes and tropical cyclones.

Liability

Liability insurance is a very broad superset that covers legal claims against the
insured. Many types of insurance include an aspect of liability coverage. For
example, a homeowner's insurance policy will normally include liability coverage
which protects the insured in the event of a claim brought by someone who slips
and falls on the property; automobile insurance also includes an aspect of liability
insurance that indemnifies against the harm that a crashing car can cause to
others' lives, health, or property. The protection offered by a liability insurance
policy is twofold: a legal defense in the event of a lawsuit commenced against the
policyholder and indemnification (payment on behalf of the insured) with respect
to a settlement or court verdict. Liability policies typically cover only the
negligence of the insured, and will not apply to results of wilful or intentional acts
by the insured.

• Directors and officers liability insurance protects an organization (usually a

corporation) from costs associated with litigation resulting from mistakes
made by directors and officers for which they are liable. In the industry, it
is usually called "D&O" for short.
• Environmental liability insurance protects the insured from bodily injury,
property damage and cleanup costs as a result of the dispersal, release or
escape of pollutants.
• Errors and omissions insurance: See "Professional liability insurance"
under "Liability insurance".
• Prize indemnity insurance protects the insured from giving away a large
prize at a specific event. Examples would include offering prizes to

21
 contestants who can make a half-court shot at a basketball game, or a
hole-in-one at a golf tournament.
• Professional liability insurance, also called professional indemnity
insurance, protects insured professionals such as architectural corporation
and medical practice against potential negligence claims made by their
patients/clients. Professional liability insurance may take on different
names depending on the profession. For example, professional liability
insurance in reference to the medical profession may be called
malpractice insurance. Notaries public may take out errors and omissions
insurance (E&O). Other potential E&O policyholders include, for example,
real estate brokers, Insurance agents, home inspectors, appraisers, and
website developers.

Credit

Credit insurance repays some or all of a loan when certain things happen to the
borrower such as unemployment, disability, or death.

• Mortgage insurance insures the lender against default by the borrower.

Mortgage insurance is a form of credit insurance, although the name credit
insurance more often is used to refer to policies that cover other kinds of
debt.

Other types

• Collateral protection insurance or CPI, insures property (primarily vehicles)

held as collateral for loans made by lending institutions.
• Defense Base Act Workers' compensation or DBA Insurance provides
coverage for civilian workers hired by the government to perform contracts
outside the U.S. and Canada. DBA is required for all U.S. citizens, U.S.
residents, U.S. Green Card holders, and all employees or subcontractors
hired on overseas government contracts. Depending on the country,

22
 Foreign Nationals must also be covered under DBA. This coverage
typically includes expenses related to medical treatment and loss of
wages, as well as disability and death benefits.
• Expatriate insurance provides individuals and organizations operating
outside of their home country with protection for automobiles, property,
health, liability and business pursuits.
• Financial loss insurance protects individuals and companies against
various financial risks. For example, a business might purchase coverage
to protect it from loss of sales if a fire in a factory prevented it from
carrying out its business for a time. Insurance might also cover the failure
of a creditor to pay money it owes to the insured. This type of insurance is
frequently referred to as "business interruption insurance." Fidelity bonds
and surety bonds are included in this category, although these products
provide a benefit to a third party (the "obligee") in the event the insured
party (usually referred to as the "obligor") fails to perform its obligations
under a contract with the obligee.
• Kidnap and ransom insurance
• Locked funds insurance is a little-known hybrid insurance policy jointly
issued by governments and banks. It is used to protect public funds from
tamper by unauthorized parties. In special cases, a government may
authorize its use in protecting semi-private funds which are liable to
tamper. The terms of this type of insurance are usually very strict.
Therefore it is used only in extreme cases where maximum security of
funds is required.
• Nuclear incident insurance covers damages resulting from an incident
involving radioactive materials and is generally arranged at the national
level. See the Nuclear exclusion clause and for the United States the
Price-Anderson Nuclear Industries Indemnity Act)
• Pet insurance insures pets against accidents and illnesses - some
companies cover routine/wellness care and burial, as well.

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 • Pollution Insurance, which consists of first-party coverage for
contamination of insured property either by external or on-site sources.
Coverage for liability to third parties arising from contamination of air,
water, or land due to the sudden and accidental release of hazardous
materials from the insured site. The policy usually covers the costs of
cleanup and may include coverage for releases from underground storage
tanks. Intentional acts are specifically excluded.
• Purchase insurance is aimed at providing protection on the products
people purchase. Purchase insurance can cover individual purchase
protection, warranties, guarantees, care plans and even mobile phone
insurance. Such insurance is normally very limited in the scope of
problems that are covered by the policy.
• Title insurance provides a guarantee that title to real property is vested in
the purchaser and/or mortgagee, free and clear of liens or encumbrances.
It is usually issued in conjunction with a search of the public records
performed at the time of a real estate transaction.

Travel insurance is an insurance cover taken by those who travel abroad, which
covers certain losses such as medical expenses, loss of personal belongings,
travel delay, personal liabilities, etc.

MAJOR PLAYERS IN INSURANCE SECTOR

LIFE INSURANCE NON-LIFE INSURANCE BUSINESS

BUSINESS
Life Insurance Corporation General Insurance Corporation

ICICI Prudential Life Insurance National Insurance Company

24
HDFC Standard Life Insurance The New India Assurance Company

Max New York Life Insurance The Oriental Insurance Company

Birla Sun Life Insurance United India Insurance Company

OM Kotak Mahindra Life Insurance Reliance General Insurance

Reliance Life Insurance TATA-AIG Insurance

Allianz Bajaj Life Insurance Royal Sundaram Alliance General Ins.

Dabur CGU Life Insurance Bajaj Allianz General Insurance

ING Vyasa Life Insurance ICICI Lombard Insurance

SBI Life Insurance

PNB Life Insurance

BOB Life Insurance

Insurance financing vehicles

• Fraternal insurance is provided on a cooperative basis by fraternal benefit

societies or other social organizations.[13]
• No-fault insurance is a type of insurance policy (typically automobile
insurance) where insureds are indemnified by their own insurer regardless
of fault in the incident.
• Protected Self-Insurance is an alternative risk financing mechanism in
which an organization retains the mathematically calculated cost of risk
within the organization and transfers the catastrophic risk with specific and
aggregate limits to an insurer so the maximum total cost of the program is
known. A properly designed and underwritten Protected Self-Insurance

25
 Program reduces and stabilizes the cost of insurance and provides
valuable risk management information.
• Retrospectively Rated Insurance is a method of establishing a premium on
large commercial accounts. The final premium is based on the insured's
actual loss experience during the policy term, sometimes subject to a
minimum and maximum premium, with the final premium determined by a
formula. Under this plan, the current year's premium is based partially (or
wholly) on the current year's losses, although the premium adjustments
may take months or years beyond the current year's expiration date. The
rating formula is guaranteed in the insurance contract. Formula:
retrospective premium = converted loss + basic premium × tax multiplier.
Numerous variations of this formula have been developed and are in use.
• Formal self insurance is the deliberate decision to pay for otherwise
insurable losses out of one's own money. This can be done on a formal
basis by establishing a separate fund into which funds are deposited on a
periodic basis, or by simply forgoing the purchase of available insurance
and paying out-of-pocket. Self insurance is usually used to pay for high-
frequency, low-severity losses. Such losses, if covered by conventional
insurance, mean having to pay a premium that includes loadings for the
company's general expenses, cost of putting the policy on the books,
acquisition expenses, premium taxes, and contingencies. While this is true
for all insurance, for small, frequent losses the transaction costs may
exceed the benefit of volatility reduction that insurance otherwise affords.
• Reinsurance is a type of insurance purchased by insurance companies or
self-insured employers to protect against unexpected losses. Financial
reinsurance is a form of reinsurance that is primarily used for capital
management rather than to transfer insurance risk.
• Social insurance can be many things to many people in many countries.
But a summary of its essence is that it is a collection of insurance
coverages (including components of life insurance, disability income

26
 insurance, unemployment insurance, health insurance, and others), plus
retirement savings, that requires participation by all citizens. By forcing
everyone in society to be a policyholder and pay premiums, it ensures that
everyone can become a claimant when or if he/she needs to. Along the
way this inevitably becomes related to other concepts such as the justice
system and the welfare state. This is a large, complicated topic that
engenders tremendous debate, which can be further studied in the
following articles (and others):
o National Insurance
o Social safety net
o Social security
o Social Security debate (United States)
o Social Security (United States)
o Social welfare provision
• Stop-loss insurance provides protection against catastrophic or
unpredictable losses. It is purchased by organizations who do not want to
assume 100% of the liability for losses arising from the plans. Under a
stop-loss policy, the insurance company becomes liable for losses that
exceed certain limits called deductibles.

Closed community self-insurance

Some communities prefer to create virtual insurance amongst themselves by

other means than contractual risk transfer, which assigns explicit numerical
values to risk. A number of religious groups, including the Amish and some
Muslim groups, depend on support provided by their communities when disasters
strike. The risk presented by any given person is assumed collectively by the
community who all bear the cost of rebuilding lost property and supporting people
whose needs are suddenly greater after a loss of some kind. In supportive
communities where others can be trusted to follow community leaders, this tacit
form of insurance can work. In this manner the community can even out the

27
extreme differences in insurability that exist among its members. Some further
justification is also provided by invoking the moral hazard of explicit insurance
contracts.

In the United Kingdom, The Crown (which, for practical purposes, meant the Civil
service) did not insure property such as government buildings. If a government
building was damaged, the cost of repair would be met from public funds
because, in the long run, this was cheaper than paying insurance premiums.
Since many UK government buildings have been sold to property companies,
and rented back, this arrangement is now less common and may have
disappeared altogether.

Insurance companies

Insurance companies may be classified into two groups:

• Life insurance companies, which sell life insurance, annuities and

pensions products.
• Non-life, General, or Property/Casualty insurance companies, which sell
other types of insurance.

General insurance companies can be further divided into these sub categories.

• Standard Lines
• Excess Lines

In most countries, life and non-life insurers are subject to different regulatory
regimes and different tax and accounting rules. The main reason for the
distinction between the two types of company is that life, annuity, and pension
business is very long-term in nature — coverage for life assurance or a pension
can cover risks over many decades. By contrast, non-life insurance cover usually
covers a shorter period, such as one year.

28
In the United States, standard line insurance companies are "mainstream"
insurers. These are the companies that typically insure autos, homes or
businesses. They use pattern or "cookie-cutter" policies without variation from
one person to the next. They usually have lower premiums than excess lines and
can sell directly to individuals. They are regulated by state laws that can restrict
the amount they can charge for insurance policies.

Excess line insurance companies (aka Excess and Surplus) typically insure risks
not covered by the standard lines market. They are broadly referred as being all
insurance placed with non-admitted insurers. Non-admitted insurers are not
licensed in the states where the risks are located. These companies have more
flexibility and can react faster than standard insurance companies because they
are not required to file rates and forms as the "admitted" carriers do. However,
they still have substantial regulatory requirements placed upon them. State laws
generally require insurance placed with surplus line agents and brokers not to be
available through standard licensed insurers.

Insurance companies are generally classified as either mutual or stock

companies. Mutual companies are owned by the policyholders, while
stockholders (who may or may not own policies) own stock insurance
companies. Demutualization of mutual insurers to form stock companies, as well
as the formation of a hybrid known as a mutual holding company, became
common in some countries, such as the United States, in the late 20th century.
Other possible forms for an insurance company include reciprocals, in which
policyholders 'reciprocate' in sharing risks, and Lloyds organizations.

Insurance companies are rated by various agencies such as A. M. Best. The

ratings include the company's financial strength, which measures its ability to pay
claims. It also rates financial instruments issued by the insurance company, such
as bonds, notes, and securitization products.

29
Reinsurance companies are insurance companies that sell policies to other
insurance companies, allowing them to reduce their risks and protect themselves
from very large losses. The reinsurance market is dominated by a few very large
companies, with huge reserves. A reinsurer may also be a direct writer of
insurance risks as well.

Captive insurance companies may be defined as limited-purpose insurance

companies established with the specific objective of financing risks emanating
from their parent group or groups. This definition can sometimes be extended to
include some of the risks of the parent company's customers. In short, it is an in-
house self-insurance vehicle. Captives may take the form of a "pure" entity
(which is a 100% subsidiary of the self-insured parent company); of a "mutual"
captive (which insures the collective risks of members of an industry); and of an
"association" captive (which self-insures individual risks of the members of a
professional, commercial or industrial association). Captives represent
commercial, economic and tax advantages to their sponsors because of the
reductions in costs they help create and for the ease of insurance risk
management and the flexibility for cash flows they generate. Additionally, they
may provide coverage of risks which is neither available nor offered in the
traditional insurance market at reasonable prices.

The types of risk that a captive can underwrite for their parents include property
damage, public and product liability, professional indemnity, employee benefits,
employers' liability, motor and medical aid expenses. The captive's exposure to
such risks may be limited by the use of reinsurance.

Captives are becoming an increasingly important component of the risk

management and risk financing strategy of their parent. This can be understood
against the following background:

• heavy and increasing premium costs in almost every line of coverage;

• difficulties in insuring certain types of fortuitous risk;

30
 • differential coverage standards in various parts of the world;
• rating structures which reflect market trends rather than individual loss
experience;
• insufficient credit for deductibles and/or loss control efforts.

There are also companies known as 'insurance consultants'. Like a mortgage

broker, these companies are paid a fee by the customer to shop around for the
best insurance policy amongst many companies. Similar to an insurance
consultant, an 'insurance broker' also shops around for the best insurance policy
amongst many companies. However, with insurance brokers, the fee is usually
paid in the form of commission from the insurer that is selected rather than
directly from the client.

Neither insurance consultants nor insurance brokers are insurance companies

and no risks are transferred to them in insurance transactions. Third party
administrators are companies that perform underwriting and sometimes claims
handling services for insurance companies. These companies often have special
expertise that the insurance companies do not have.

The financial stability and strength of an insurance company should be a major

consideration when buying an insurance contract. An insurance premium paid
currently provides coverage for losses that might arise many years in the future.
For that reason, the viability of the insurance carrier is very important. In recent
years, a number of insurance companies have become insolvent, leaving their
policyholders with no coverage (or coverage only from a government-backed
insurance pool or other arrangement with less attractive payouts for losses). A
number of independent rating agencies, such as Best's, Fitch, Standard & Poor's,
and Moody's Investors Service, provide information and rate the financial viability
of insurance companies.

31
Global insurance industry

Life insurance premia written in 2005

Non-life insurance premia written in 2005

Global insurance premiums grew by 11% in 2007 (or 3.3% in real terms) to reach
$4.1 trillion. The macro-economic environment was characterised by slower
economic growth in 2007 and rising inflation. Profitability improved in life
insurance and fell slighlty in the non-life sector during the year. Life insurance
premiums grew by 12.6%, accelerating in the advanced economies with the
exception of Japan and Continental Europe. Non-life insurance premiums grew
by 7.6% during the year. Figures for premium income are not yet available for
2008, but the insurance industry is likely to see a slowdown in new business and
falling investment revenue.

Advanced economies account for the bulk of global insurance. With premium
income of $1,681bn, Europe was the most important region, followed by North
America ($1,330bn) and Asia ($814bn). The top four countries accounted for
nearly 60% of premiums in 2007. The US and UK alone accounted for 42% of
world insurance, much higher than their 7% share of the global population.
Emerging markets accounted for over 85% of the world’s population but
generated only around 10% of premiums.

Complexity of insurance policy contracts

Insurance policies can be complex and some policyholders may not understand
all the fees and coverages included in a policy. As a result, people may buy
policies on unfavorable terms. In response to these issues, many countries have
enacted detailed statutory and regulatory regimes governing every aspect of the
insurance business, including minimum standards for policies and the ways in
which they may be advertised and sold.

32
For example, most insurance policies in the English language today have been
carefully drafted in plain English; the industry learned the hard way that many
courts will not enforce policies against insureds when the judges themselves
cannot understand what the policies are saying.

Many institutional insurance purchasers buy insurance through an insurance

broker. While on the surface it appears the broker represents the buyer (not the
insurance company), and typically counsels the buyer on appropriate coverage
and policy limitations, it should be noted that in the vast majority of cases a
broker's compensation comes in the form of a commission as a percentage of the
insurance premium, creating a conflict of interest in that the broker's financial
interest is tilted towards encouraging an insured to purchase more insurance
than might be necessary at a higher price. A broker generally holds contracts
with many insurers, thereby allowing the broker to "shop" the market for the best
rates and coverage possible. Insurance may also be purchased through an
agent. Unlike a broker, who represents the policyholder, an agent represents the
insurance company from whom the policyholder buys. An agent can represent
more than one company. An independent insurance consultant advises insureds
on a fee-for-service retainer, similar to an attorney, and thus offers completely
independent advice, free of the financial conflict of interest of brokers and/or
agents. However, such a consultant must still work through brokers and/or
agents in order to secure coverage for their clients.

Redlining

Redlining is the practice of denying insurance coverage in specific geographic

areas, supposedly because of a high likelihood of loss, while the alleged
motivation is unlawful discrimination. Racial profiling or redlining has a long
history in the property insurance industry in the United States. From a review of
industry underwriting and marketing materials, court documents, and research by
government agencies, industry and community groups, and academics, it is clear

33
that race has long affected and continues to affect the policies and practices of
the insurance industry.

All states have provisions in their rate regulation laws or in their fair trade practice
acts that prohibit unfair discrimination, often called redlining, in setting rates and
making insurance available.

In determining premiums and premium rate structures, insurers consider

quantifiable factors, including location, credit scores, gender, occupation, marital
status, and education level. However, the use of such factors is often considered
to be unfair or unlawfully discriminatory, and the reaction against this practice
has in some instances led to political disputes about the ways in which insurers
determine premiums and regulatory intervention to limit the factors used.

An insurance underwriter's job is to evaluate a given risk as to the likelihood that

a loss will occur. Any factor that causes a greater likelihood of loss should
theoretically be charged a higher rate. This basic principle of insurance must be
followed if insurance companies are to remain solvent. Thus, "discrimination"
against (i.e., negative differential treatment of) potential insureds in the risk
evaluation and premium-setting process is a necessary by-product of the
fundamentals of insurance underwriting. For instance, insurers charge older
people significantly higher premiums than they charge younger people for term
life insurance. Older people are thus treated differently than younger people (i.e.,
a distinction is made, discrimination occurs). The rationale for the differential
treatment goes to the heart of the risk a life insurer takes: Old people are likely to
die sooner than young people, so the risk of loss (the insured's death) is greater
in any given period of time and therefore the risk premium must be higher to
cover the greater risk. However, treating insureds differently when there is no
actuarially sound reason for doing so is unlawful discrimination.

What is often missing from the debate is that prohibiting the use of legitimate,
actuarially sound factors means that an insufficient amount is being charged for a

34
given risk, and there is thus a deficit in the system. The failure to address the
deficit may mean insolvency and hardship for all of a company's insureds. The
options for addressing the deficit seem to be the following: Charge the deficit to
the other policyholders or charge it to the government (i.e., externalize outside of
the company to society at large).

Insurance patents

New assurance products can now be protected from copying with a business
method patent in the United States.

A recent example of a new insurance product that is patented is Usage Based

auto insurance. Early versions were independently invented and patented by a
major U.S. auto insurance company, Progressive Auto Insurance (U.S. Patent
5,797,134) and a Spanish independent inventor, Salvador Minguijon Perez
(EP patent 0700009).

Many independent inventors are in favor of patenting new insurance products

since it gives them protection from big companies when they bring their new
insurance products to market. Independent inventors account for 70% of the new
U.S. patent applications in this area.

Many insurance executives are opposed to patenting insurance products

because it creates a new risk for them. The Hartford insurance company, for
example, recently had to pay $80 million to an independent inventor, Bancorp
Services, in order to settle a patent infringement and theft of trade secret lawsuit
for a type of corporate owned life insurance product invented and patented by
Bancorp.

There are currently about 150 new patent applications on insurance inventions
filed per year in the United States. The rate at which patents have issued has
steadily risen from 15 in 2002 to 44 in 2006. Inventors can now have their

35
insurance U.S. patent applications reviewed by the public in the Peer to Patent
program. The first insurance patent application to be posted was US2009005522
“Risk assessment company”. It was posted on March 6, 2009. This patent
application describes a method for increasing the ease of changing insurance
companies

The insurance industry and rent seeking

Certain insurance products and practices have been described as rent seeking
by critics. That is, some insurance products or practices are useful primarily
because of legal benefits, such as reducing taxes, as opposed to providing
protection against risks of adverse events. Under United States tax law, for
example, most owners of variable annuities and variable life insurance can invest
their premi

LIFE INSURANCE

Life insurance is the only tool to secure out life in future. It also provides a safe
guard to the uncertainty of our life. Life insurance is the cheapest investment tool
in which we can earn more in a short period of time.

In the words of D S Hansell “Insurance may be defined as a social device

providing financial compensation for the effects of misfortune, the payment being
made from the accumulated contributions of all the parties participating in the
scheme”.

The function of insurance is to protect you against losses you can’t afford.
Insurance reduces anxiety over a possible loss and absorbs the financial brunt of
its consequences.

India has traditionally been a high savings oriented country being on par with the
thrifty Japan. Insurance sector in the United States of America is as big in size as
the banking industry there. This gives us an ideal of how important the sector is.
36
Insurance sector changeless the savings of the people to long- term investments.
In India where infrastructure is said to be of critical importance, this sector will
bring the nations own money for the nation.

• The global life insurance market stands at $ 1,521.2 billion while the
non-life insurance market is placed at $922.4 billion.

• India takes the 23rd position with US $ 9.933 billion annual premium
collections and a meager 0.41% share.

Out of the billion people is India; only 35 million people are covered by insurance.

• Indian insurance market is set to touch $25 billion by 2010, on the

assumption of a 7 per cent real annual growth in GDP.

In 3 years time we would expect the 10% of the population to be under some sort
of an insurance cover. This assuming a premium of Rs. 5000 on an average,
amounts to 100 million x Rs. 5000= Rs. 500 bn.

This has made the sector the hottest one in India after IT. With social security
and security to the people at large being the agenda for opening the sector, the
role of the regulator becomes all the more serious and one that would be
carefully watched at every step.

ABOUT LIFE INSURANCE:

The life insurance corporation was established on 01.09.1956 and has been the
sole corporation to write the life insurance business in India.

The Indian insurance industry saw a new sun when the Insurance regulatory &
Development Authority (IRDA) invited the applications for registration as insurers
in August, 2000. With the liberalization and opening up of the sector to private
players, the industry has presented promising prospects for the coming future.

37
The transition has also resulted into introduction complete opportunities for the
professionals.

Life insurance or life assurance is a contract between the policy owner and the
insurer, where the insurer agrees to pay a sum of money upon the occurrence of
the insured individual's or individuals' death or other event, such as terminal
illness or critical illness. In return, the policy owner agrees to pay a stipulated
amount called a premium at regular intervals or in lump sums. There may be
designs in some countries where bills and death expenses plus catering for after
funeral expenses should be included in Policy Premium. In the United States, the
predominant form simply specifies a lump sum to be paid on the insured's
demise.

As with most insurance policies, life insurance is a contract between the insurer
and the policy owner whereby a benefit is paid to the designated beneficiaries if
an insured event occurs which is covered by the policy.

The value for the policyholder is derived, not from an actual claim event, rather it
is the value derived from the 'peace of mind' experienced by the policyholder,
due to the negating of adverse financial consequences caused by the death of
the Life Assured.

To be a life policy the insured event must be based upon the lives of the people
named in the policy.

Insured events that may be covered include:

• Serious illness

Life policies are legal contracts and the terms of the contract describe the
limitations of the insured events. Specific exclusions are often written into the
contract to limit the liability of the insurer; for example claims relating to suicide,
fraud, war, riot and civil commotion.

38
Life-based contracts tend to fall into two major categories:

• Protection policies - designed to provide a benefit in the event of specified

event, typically a lump sum payment. A common form of this design is
term insurance.
• Investment policies - where the main objective is to facilitate the growth of
capital by regular or single premiums. Common forms (in the US anyway)
are whole life, universal life and variable life policies.

• Types of life insurance

• Life insurance may be divided into two basic classes – temporary and
permanent or following subclasses - term, universal, whole life and
endowment life insurance.

TEMPORARY TERM

• Term assurance: provides for life insurance coverage for a specified term
of years for a specified premium. The policy does not accumulate cash
value. Term is generally considered "pure" insurance, where the premium
buys protection in the event of death and nothing else.
• The three key factors to be considered in term insurance are: face amount
(protection or death benefit), premium to be paid (cost to the insured), and
length of coverage (term).
• Various insurance companies sell term insurance with many different
combinations of these three parameters. The face amount can remain
constant or decline. The term can be for one or more years. The premium
can remain level or increase. A common type of term is called annual
renewable term. It is a one year policy but the insurance company

39
 guarantees it will issue a policy of equal or lesser amount without regard
to the insurability of the insured and with a premium set for the insured's
age at that time. Another common type of term insurance is mortgage
insurance, which is usually a level premium, declining face value policy.
The face amount is intended to equal the amount of the mortgage on the
policy owner’s residence so the mortgage will be paid if the insured dies.
• A policy holder insures his life for a specified term. If he dies before that
specified term is up, his estate or named beneficiary receives a payout. If
he does not die before the term is up, he receives nothing. In the past
these policies would almost always exclude suicide. However, after a
number of court judgments against the industry, payouts do occur on
death by suicide (presumably except for in the unlikely case that it can be
shown that the suicide was just to benefit from the policy). Generally, if an
insured person commits suicide within the first two policy years, the
insurer will return the premiums paid. However, a death benefit will usually
be paid if the suicide occurs after the two year period.

Permanent Life Insurance

• Permanent life insurance is life insurance that remains in force (in-line)

until the policy matures (pays out), unless the owner fails to pay the
premium when due (the policy expires OR policies lapse). The policy
cannot be canceled by the insurer for any reason except fraud in the
application, and that cancellation must occur within a period of time
defined by law (usually two years). Permanent insurance builds a cash
value that reduces the amount at risk to the insurance company and thus
the insurance expense over time. This means that a policy with a million
dollar face value can be relatively expensive to a 70 year old. The owner
can access the money in the cash value by withdrawing money, borrowing
the cash value, or surrendering the policy and receiving the surrender
value.

40
• The four basic types of permanent insurance are whole life, universal life,
limited pay and endowment.

Whole life coverage

• Whole life insurance provides for a level premium, and a cash value table
included in the policy guaranteed by the company. The primary
advantages of whole life are guaranteed death benefits, guaranteed cash
values, fixed and known annual premiums, and mortality and expense
charges will not reduce the cash value shown in the policy. The primary
disadvantages of whole life are premium inflexibility, and the internal rate
of return in the policy may not be competitive with other savings
alternatives. Riders are available that can allow one to increase the death
benefit by paying additional premium. The death benefit can also be
increased through the use of policy dividends. Dividends cannot be
guaranteed and may be higher or lower than historical rates over time.
Premiums are much higher than term insurance in the short-term, but
cumulative premiums are roughly equal if policies are kept in force until
average life expectancy.
• Cash value can be accessed at any time through policy "loans". Since
these loans decrease the death benefit if not paid back, payback is
optional. Cash values are not paid to the beneficiary upon the death of the
insured; the beneficiary receives the death benefit only. If the dividend
option: Paid up additions is elected, dividend cash values will purchase
additional death benefit which will increase the death benefit of the policy
to the named beneficiary.

Universal life coverage

• Universal life insurance (UL) is a relatively new insurance product

intended to provide permanent insurance coverage with greater flexibility

41
 in premium payment and the potential for a higher internal rate of return.
There are several types of universal life insurance policies which include
"interest sensitive" (also known as "traditional fixed universal life
insurance"), variable universal life insurance, and equity indexed universal
life insurance.
• A universal life insurance policy includes a cash account. Premiums
increase the cash account. Interest is paid within the policy (credited) on
the account at a rate specified by the company. Mortality charges and
administrative costs are then charged against (reduce) the cash account.
The surrender value of the policy is the amount remaining in the cash
account less applicable surrender charges, if any.
• With all life insurance, there are basically two functions that make it work.
There's a mortality function and a cash function. The mortality function
would be the classical notion of pooling risk where the premiums paid by
everybody else would cover the death benefit for the one or two who will
die for a given period of time. The cash function inherent in all life
insurance says that if a person is to reach age 95 to 100 (the age varies
depending on state and company), then the policy matures and endows
the face value of the policy.
• Actuarially, it is reasoned that out of a group of 1000 people, if even 10 of
them live to age 95, then the mortality function alone will not be able to
cover the cash function. So in order to cover the cash function, a minimum
rate of investment return on the premiums will be required in the event that
a policy matures.
• Universal life insurance addresses the perceived disadvantages of whole
life. Premiums are flexible. Depending on how interest is credited, the
internal rate of return can be higher because it moves with prevailing
interest rates (interest-sensitive) or the financial markets (Equity Indexed
Universal Life and Variable Universal Life). Mortality costs and
administrative charges are known. And cash value may be considered

42
 more easily attainable because the owner can discontinue premiums if the
cash value allows it. And universal life has a more flexible death benefit
because the owner can select one of two death benefit options, Option A
and Option B.
• Option A pays the face amount at death as it's designed to have the cash
value equal the death benefit at maturity (usually at age 95 or 100). With
each premium payment, the policy owner is reducing the cost of insurance
until the cash value reaches the face amount upon maturity.
• Option B pays the face amount plus the cash value, as it's designed to
increase the net death benefit as cash values accumulate. Option B offers
the benefit of an increasing death benefit every year that the policy stays
in force. The drawback to option B is that because the cash value is
accumulated "on top of" the death benefit, the cost of insurance never
decreases as premium payments are made. Thus, as the insured gets
older, the policy owner is faced with an ever increasing cost of insurance
(it costs more money to provide the same initial face amount of insurance
as the insured gets older).

Limited-pay

• Another type of permanent insurance is Limited-pay life insurance, in

which all the premiums are paid over a specified period after which no
additional premiums are due to keep the policy in force. Common limited
pay periods include 10-year, 20-year, and paid-up at age 65.

Endowments

• Endowments are policies in which the cash value built up inside the policy,
equals the death benefit (face amount) at a certain age. The age this
commences is known as the endowment age. Endowments are
considerably more expensive (in terms of annual premiums) than either

43
 whole life or universal life because the premium paying period is
shortened and the endowment date is earlier.
• In the United States, the Technical Corrections Act of 1988 tightened the
rules on tax shelters (creating modified endowments). These follow tax
rules as annuities and IRAs do.
• Endowment Insurance is paid out whether the insured lives or dies, after a
specific period (e.g. 15 years) or a specific age (e.g. 65).

Accidental Death

• Accidental death is a limited life insurance that is designed to cover the

insured when they pass away due to an accident. Accidents include
anything from an injury, but do not typically cover any deaths resulting
from health problems or suicide. Because they only cover accidents, these
policies are much less expensive than other life insurances.
• It is also very commonly offered as "accidental death and dismemberment
insurance", also known as an AD&D policy. In an AD&D policy, benefits
are available not only for accidental death, but also for loss of limbs or
bodily functions such as sight and hearing, etc.
• Accidental death and AD&D policies very rarely pay a benefit; either the
cause of death is not covered, or the coverage is not maintained after the
accident until death occurs. To be aware of what coverage they have, an
insured should always review their policy for what it covers and what it
excludes. Often, it does not cover an insured who puts themselves at risk
in activities such as: parachuting, flying an airplane, professional sports, or
involvement in a war (military or not). Also, some insurers will exclude
death and injury caused by proximate causes due to (but not limited to)
racing on wheels and mountaineering.
• Accidental death benefits can also be added to a standard life insurance
policy as a rider. If this rider is purchased, the policy will generally pay
double the face amount if the insured dies due to an accident. This used

44
 to be commonly referred to as a double indemnity coverage. In some
cases, some companies may even offer a triple indemnity cover.

• Related Life Insurance Products

• Riders are modifications to the insurance policy added at the same time
the policy is issued. These riders change the basic policy to provide some
feature desired by the policy owner. A common rider is accidental death,
which used to be commonly referred to as "double indemnity", which pays
twice the amount of the policy face value if death results from accidental
causes, as if both a full coverage policy and an accidental death policy
were in effect on the insured. Another common rider is premium waiver,
which waives future premiums if the insured becomes disabled.
• Joint life: insurance is either a term or permanent policy insuring two or
more lives with the proceeds payable on the first death or second death.
• Survivorship life: is a whole life policy insuring two lives with the proceeds
payable on the second (later) death.
• Single premium whole life: is a policy with only one premium which is
payable at the time the policy is issued.
• Modified whole life: is a whole life policy that charges smaller premiums
for a specified period of time after which the premiums increase for the
remainder of the policy.
• Group life insurance: is term insurance covering a group of people, usually
employees of a company or members of a union or association. Individual
proof of insurability is not normally a consideration in the underwriting.
Rather, the underwriter considers the size and turnover of the group, and
the financial strength of the group. Contract provisions will attempt to
exclude the possibility of adverse selection. Group life insurance often has
a provision that a member exiting the group has the right to buy individual
insurance coverage.
• Senior and preneed productS: Insurance companies have in recent years
developed products to offer to niche markets, most notably targeting the

45
 senior market to address needs of an aging population. Many companies
offer policies tailored to the needs of senior applicants. These are often
low to moderate face value whole life insurance policies, to allow a senior
citizen purchasing insurance at an older issue age an opportunity to buy
affordable insurance. This may also be marketed as final expense
insurance, and an agent or company may suggest (but not require) that
the policy proceeds could be used for end-of-life expenses.

Preneed (or prepaid) insurance policies: are whole life policies that, although
available at any age, are usually offered to older applicants as well. This type of
insurance is designed specifically to cover funeral expenses when the insured
person dies. In many cases, the applicant signs a prefunded funeral arrangement
with a funeral home at the time the policy is applied for. The death proceeds are
then guaranteed to be directed first to the funeral services provider for payment
of services rendered. Most contracts dictate that any excess proceeds will go
either to the insured's estate or a designated beneficiary um payments in the
stock market and defer or eliminate paying any taxes on their investments until
withdrawals are made. Sometimes this tax deferral is the only reason people use
these products.[citation needed] Another example is the legal infrastructure which allows
life insurance to be held in an irrevocable trust which is used to pay an estate tax
while the proceeds themselves are immune from the estate tax

Criticism of insurance companies

Some people believe that modern insurance companies are money-making

businesses which have little interest in insurance. They argue that the purpose of
insurance is to spread risk so the reluctance of insurance companies to take on
high-risk cases (e.g. houses in areas subject to flooding, or young drivers) runs
counter to the principle of insurance.

46
Other criticisms include:

• Insurance policies contain too many exclusion clauses. For example,

some house insurance policies do not cover damage to garden walls.
• Many insurance companies now use call centres and staff attempt to
answer questions by reading from a script. It is difficult to speak to
anybody with expert knowledge. While policyholders find their premium
payments decrease when dealing with companies who sacrifice the use of
trained insurance agents, they also risk greater financial loss due to
inadequate coverage protection. Those companies who invest in educated
insurance agents provide a valued service to the community.
Policyholders who work with knowledgeable insurance agents are more
likely to identify needs, evaluate options, purchase sufficient insurance
protection, and minimize the risk of heavy financial loss for themselves
and their family.

47
ABOUT THE ORGANISATION

Company Profile

Overview
ICICI Bank is India's second-largest bank with total assets of Rs. 3,744.10 billion
(US$ 77 billion) at December 31, 2008 and profit after tax Rs. 30.14 billion for the
nine months ended December 31, 2008. The Bank has a network of 1,438
branches and about 4,644 ATMs in India and presence in 18 countries. ICICI
Bank offers a wide range of banking products and financial services to corporate
and retail customers through a variety of delivery channels and through its
specialized subsidiaries and affiliates in the areas of investment banking, life and
non-life insurance, venture capital and asset management. The Bank currently
has subsidiaries in the United Kingdom, Russia and Canada, branches in United
States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International
Finance Centre and representative offices in United Arab Emirates, China, South
Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has
established branches in Belgium and Germany.

48
ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and
the National Stock Exchange of India Limited and its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). ICICI
Prudential Life Insurance Company is a joint venture between ICICI Bank, a
premier financial powerhouse, and prudential plc, a leading international financial
services group headquartered in the United Kingdom. ICICI Prudential was
amongst the first private sector insurance companies to begin operations in
December 2000 after receiving approval from Insurance Regulatory
Development Authority (IRDA).

ICICI Prudential equity base stands at Rs. 925 crores with ICICI Bank and
Prudential policy holding 74% and 26% stake respectively. In the period April-
December 2004, the company garnered Rs 860 crores of new business
premiums for a total sum assured of over Rs 7,360 crores and wrote nearly
345,000 policies. Today the company is the No. 1 private life insurer in the
country.

History
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI
Bank was reduced to 46% through a public offering of shares in India in fiscal
1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000,
ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation
in fiscal 2001, and secondary market sales by ICICI to institutional investors in
fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World
Bank, the Government of India and representatives of Indian industry. The
principal objective was to create a development financial institution for providing
medium-term and long-term project financing to Indian businesses. In the 1990s,
ICICI transformed its business from a development financial institution offering
only project finance to a diversified financial services group offering a wide
variety of products and services, both directly and through a number of

49
subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian
company and the first bank or financial institution from non-Japan Asia to be
listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of
the emerging competitive scenario in the Indian banking industry, and the move
towards universal banking, the managements of ICICI and ICICI Bank formed the
view that the merger of ICICI with ICICI Bank would be the optimal strategic
alternative for both entities, and would create the optimal legal structure for the
ICICI group's universal banking strategy. The merger would enhance value for
ICICI shareholders through the merged entity’s access to low-cost deposits,
greater opportunities for earning fee-based income and the ability to participate in
the payments system and provide transaction-banking services. The merger
would enhance value for ICICI Bank shareholders through a large capital base
and scale of operations, seamless access to ICICI's strong corporate
relationships built up over five decades, entry into new business segments,
higher market share in various business segments, particularly fee-based
services, and access to the vast talent pool of ICICI and its subsidiaries. In
October 2001, the Boards of Directors of ICICI and ICICI Bank approved the
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with
ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank
in January 2002, by the High Court of Gujarat at Ahmadabad in March 2002, and
by the High Court of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
ICICI Bank has formulated a Code of Business Conduct and Ethics for its
directors and employees.

ICICI Prudential Life Insurance Company is a joint venture between ICICI Bank,
and Prudential Policy, a leading international financial services group which has
its headquarters in U.K.ICICI Prudential was amongst the first private sector

50
companies to begin operation in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). ICICI Prudential total equity
is 6.75 Bn with ICICI Bank & Prudential Policy In the end of year 2003-04, ICICI
Prudential had issued over 7.8 lackhs policies, for a total sum assured of over
16000 crores and premium collection is over 951 crores.

The company has a network of about 33000 advisors: as well as 12 banc

assurance tie-ups. Today the company stands first in private life insurance in
India with a market share of nearly 40%.

Foundation of ICICI
• 1955 The Industrial Credit and Investment Corporation of India Limited
(ICICI) was incorporated at the initiative of World Bank, the Government of
India and representatives of Indian industry, with the objective of creating
a development financial institution for providing medium-term and long-
term project financing to Indian businesses.
• 1994 ICICI established Banking Corporation as a banking
subsidiary.formerly Industrial Credit and Investment Corporation of India.
Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'.
ICICI founded a separate legal entity, ICICI Bank, to undertake normal
banking operations - taking deposits, credit cards, car loans etc.
• 2001 ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a
Chettiar bank, and had acquired Chettinad Mercantile Bank (est. 1933)
and Illanji Bank (established 1904) in the 1960s.
• 2002 The Boards of Directors of ICICI and ICICI Bank approved the
reverse merger of ICICI, ICICI Personal Financial Services Limited and
ICICI Capital Services Limited, into ICICI Bank. After receiving all
necessary regulatory approvals, ICICI integrated the group's financing and
banking operations, both wholesale and retail, into a single entity.
Also in 2002, ICICI Bank bought the Shimla and Darjeeling branches that
Standard Chartered Bank had inherited when it acquired Grind lays Bank.

51
 ICICI started its international expansion by opening representative offices
in New York and London.
• 2003 ICICI opened subsidiaries in Canada and the United Kingdom (UK),
and in the UK it established an alliance with Lloyds TSB.
It also opened an Offshore Banking Unit (OBU) in Singapore and
representative offices in Dubai and Shanghai.
• 2004 ICICI opens a rep office in Bangladesh to tap the extensive trade
between that country, India and South Africa.
• 2005 ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank
with about US$4mn in assets, head office in Balabanovo in the Kaluga
region, and with a branch in Moscow. ICICI renamed the bank ICICI Bank
Eurasia.
Also, ICICI established a branch in Dubai International Financial Centre
and in Hong Kong.
• 2006 ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI
opened representative offices in Bangkok, Jakarta, and Kuala Lumpur.
• 2007 ICICI amalgamated Sangli Bank, which was headquartered in
Sangli, in Maharashtra State, and which had 158 branches in Maharashtra
and another 31 in Karnataka State. Sangli Bank had been founded in
1916 and was particularly strong in rural areas
• .ICICI also received permission from the government of Qatar to open a
branch in Doha. ICICI Bank Eurasia opened a second branch, this time in
St. Petersburg.
• 2008 The US Federal Reserve permitted ICICI to convert its
representative office in New York into a branch.
ICICI also established a branch in Frankfurt.

52
 ICICI Group

ICICI Bank also has banking subsidiaries in UK, Canada and Russia

Bank Profile:-

In 1955, the Government, in World Bank and a steering committee of 5

prominent businessmen and other to cater to private sector needs of longs-term
finance promoted ICICI. Since then, the capital structure of the company has
undergone significant changes with that role of the government getting
minimized. In the last fiscal, the company created history by becoming the first
Indian Company to list it shares on NYSE.

53
The company has presence in various businesses in the financial sector. The
prominent ones are Infrastructure Finance, Structured Finance, Project Finance,
Treasury Services, Corporate Finance, Advisory services, Demat Services etc.

Due to the increase competition in the financial markets and fund-based

business getting affected by lower margins and higher level of NPAs, the
company is typing to get a major possible through the various subsidiaries, which
the company has floated and through expansion of the distribution network.

The company had realized the growing importance of technology revolution in

the market and has taken major initiatives to enter the e-commerce segment in
the year 1999-2000. It has launched a number of portals and has also entered
into alliances with other major portals in the market.

Over the year, ICICI has gained prominence in most of the segments in financial
sector through its various subsidiaries. Some of the important ones are:
ICICI Bank
ICICI Securities
ICICI Personal financial
Services
ICICI Infotech
ICICI Web Trade

Over the years ICICI promoted a number of specialized Financial Institutions like
HDFC, CRISIL, TDICI etc.

ICICI Bank is India’s second largest bank and largest private sector
bank with over 50 years of financial experience and with assets of Rs. 2416.79
Billions as on July 31, 2007. ICICI Bank offers a comprehensive range of deposit
and loan products at its branches to cater to different customer profiles and

54
needs. ICICI Bank has over 746 branches and extension counters and over 2270
ATM’s spread across the country. The bank services its large customer base of
more than 17.5 million customers’ accounts through a multi-channel delivery
network of branches. ATM’s call centers and Internet Banking
(www.icicibank.com) to ensure that customers have access to its services at all
times.
ICICI Bank has emerged as India’s fastest growing retail bank. It offers
individuals a broad spectrum of deposit, investment and credit policies. The bank
is often credited for bringing in the retail finance phenomenon to India by
pioneering the effort to make retail loans much more accessible and affordable
enabling the rising Indian middle class to fund their lifestyle requirements across
the country. The bank has market leadership in retail credit, which comprises
mortgages, car loans, two wheeler, credit cards, personal loans etc.
ICICI Bank is also India’s foremost technology bank. ICICI Bank uses IT as a
strategic tool in all the business operation, so as to gain competitive advantages.
ICICI Bank offers a wide range of baking products and financial services to
corporate and retail customers through a variety of delivery channels and through
its specialized subsidiaries and affiliates in the areas of investment banking, life
and non-life insurance, venture capital, asset management and information
technology. ICICI Bank’s equity shares are listed in India on stock exchanges at
Chennai, Delhi, Kolkata and Vadodara, the Stock Exchange, Mumbai and the
National Stock Exchange of India Limited and its American Depositary Receipts
(ADRs) are listed on the New York Stock Exchange (NYSE).
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial
institution and was reduce to 46% through a public offering of shares in India in
fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal
2000, ICICI Bank’s acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional
investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative
of the World Bank, the Government of India and representatives of Indian

55
industry. The principal objective was to create a development financial institution
offering only project financing to Indian businesses. In the 1990s, ICICI
transformed its business from a diversified financial services group offering a
wide variety of products and services, both directly and through a number of
subsidiaries and affiliates like ICICI Bank. In 1999. ICICI become the first Indian
company and the first bank or financial institution from non-Japan Asia to be
listed on the NYSE.
After consideration of various corporate structuring alternatives in the context of the
emerging competitive scenario in the Indian banking industry, and the move towards
universal banking, the management of ICICI and ICICI Bank formed the view that the
merger of ICICI with ICICI Bank would be the optimal strategic alternative for 0both
entities, and banking strategy.

The company has seven ban assurance tie-ups, having agreements with ICICI
Bank, Federal Bank, South Indian Bank, Bank of India, Lord Krishna Bank and
some co-operative banks, as well as over 160 corporate agents and brokers. It
has also tied up with Specialized like Dhan for distribution of Salaam Zindagi, a
policy for the socially and economically underprivileged sections of society.

ICICI Prudential has recruited and trained about 50,000 insurance advisors to
interface with and advise customers. Further, it leverages its state-of-the-art IT
infrastructure to provide superior quality of service to customers.ICICI (Industrial
Credit and Investment Corporation of India):

The World Bank; the Government of India and the Indian Industry, to promote
industrial development of India by providing project and corporate finance to
Indian industry, established ICICI Ltd. In 1955.

ICICI has thus far financed all the major sectors of the economy, covering 6,848
companies and 16,851 projects As of March 31st, 2000. ICICI had disbursed a
total of Rs. 1, 13,070 crores, since inception.

56
 VISION

The company’s vision is “to make ICICI Prudential the dominant Life and
Pensions player built on trust by world-class people and service.”

They hope to achieve this by:

 Understanding the needs of customers and offering them superior

products and service.
 Leveraging technology to device customers quickly, efficiently and
conveniently.
 Developing and implementing superior risk management and investment
strategies to offer sustainable and stable returns to their policyholders.
 Providing an enabling environment to foster growth and learning for their
employees.
 And above all, building transparency in all their dealings

The success of the company is due to its unflinching commitment to 5 core

values-

• Integrity,
• Customer First,
• Ownership,
• Passion,

57
. MISSION OF THE ICICI BANK

• To identify and support initiatives, which are, designed to improve the

capacity
of the poorest of the poor to participate in the larger economy.
• These initiatives must be cost effective, capable of large-scale replication
and
should have the potential for both near and long-term impact.
• To leverage technology in order to overcome constraints and enhance the

Present Scenario
ICICI Bank has its equity shares listed in India on Bombay Stock Exchange and
the National Stock Exchange of India Limited. Overseas, its American Depositary
Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). As of
December 31, 2008, ICICI is India's second-largest bank, boasting an asset
value of Rs. 3,744.10 billion and profit after tax Rs. 30.14 billion, for the nine
months, that ended on December 31, 2008.

FUNCTION

 ICICI Prudential offers exciting career opportunities for people from a

variety of streams. Find out more about how each of the functions
contribution growing business.

58
SALES DISTRIBUTION

 Tied Agency is the largest distribution channel of ICICI Prudential,

comprising a large advisor force that targets various customer segments.
The strength of tied agency lies in an aggressive strategy of expanding
and procuring quality business. With focus on sales & people
development, tied agency has emerged as a robust, predictable and
sustainable business model.

 BANK ASSURANCE AND ALLIANCES

 ICICI Prudential was a pioneer in offering life insurance solutions through
banks and alliances. Within a short span of two years, and with nearly a
large number of partners, B & A has emerged as a vital component of the
company's sales and distribution strategy, contributing to approximately
one third of company's total business.
The business philosophy at B&A is to leverage distribution synergies with
our partners and add value to its customers as well as the partners.
Flexibility, adaptation and experimenting with new ideas are the hallmarks
of this channel.

GROUP

 The Group Business of ICICI Prudential has been in existence for over 2
years. Today, we are the Number 1 player among private life insurance
companies in Group Business excluding Mortgage Reducing Term
Assurance (MRTA) with a market share of 26 %( FY 2004-2005). We offer
the entire gamut of products including Gratuity, Superannuation Term
Insurance, Leave Encashment, Employee Deposit Linked Insurance
(EDLI), Mortgage Reducing Term Assurance (MRTA) & Informal Group
Term covers.

59
CUSTOMER SERVICE & OPERATIONS

 The Operations department oils the work processes between the

customer and the company to ensure consistent and quality service to the
customer. To streamline the operations, the Operations department
interfaces between the clients and the agents, the branches and the
underwriters, and manages work processes.
The Vision at Customer Service is to deliver 'World Class Service' at every
opportunity. Units such as the 9 to 9 contact centre, Outbound Call
Centre, Customer Care and Query Resolution Unit are all committed to
providing effective solutions to over lakhes of customers across the
country.

INFORMATION TECHNOLOGY

 The Information Technology function at ICICI Prudential is committed to

enable business through the use of technology. It is segmented into 4
groups to enable highest levels of delivery to the customers: Life Asia
Solutions Group that provides flexibility in designing better product
offerings to end-users, the Solutions Group- Web that provides real-time
information to customers and is responsible for customer relationship
management, IT Architecture & Corporate Solutions Group is in charge of
developing and maintaining a blueprint for the IT architecture for the
enterprise as a whole. This team works as an in house R&D Solution
Group, exploring new technological initiatives and also caters to
information needs of corporate functions in the organization. IT
Infrastructure group is responsible for providing hardware, software,
network services to the whole organization. This group runs the 'Digital
Nervous System' of the Enterprise at the highest levels of efficiency and

60
 provide robust, scalable and highly available platform for deployment of
business application.

MARKETING

 The Marketing function at ICICI Prudential covers an array of activities -

brand and media management, channel support, direct marketing and
corporate communications. The Brand and Communications team is in
charge of advertising, consumer research, media planning & buying and
Public Relations; that helps develop and nurture ICICI Prudential's
corporate identity while effectively communicating its varied product
offerings to the customer. Channel marketing provides support to the
sales force by streamlining the design and development of collaterals and
sales tools across distribution channels. The Direct marketing team was
set up to generate high quality leads for profitable business. The team
achieves this through target database acquisition and communicating
customized product information through e-mailers, telemarketing and
innovative direct mailers.

FINANCE

 Finance function in ICICI Prudential is committed to create an

infrastructure that is aligned to shareholder expectations. Finance
basically comprises of four functions. . Corporate Planning and MIS
provide feedback on business strategies. This includes driving the
budgeting process, providing strategic inputs for decision-making and
management reporting and analysis. The Accounts function includes
preparation and maintenance of financial records, funds management,
and expense processing and treasury operations. Compliance ensures
that every action is within the regulatory framework. This includes
reviewing compliance requirements and supporting the ethical framework

61
 of ICICI Prudential life. Internal audit provides assurance to the
management over the organizations' control framework and includes
process risk management, information security assessment and business
continuity assessment.

HUMANRE SOURCE

 The people strategy of ICICI Prudential is "To build a committed team with
a culture of innovation, learning and growth. The Human Resource
Function at ICICI Prudential drives the people strategy of the business.
With its initial focus on operational excellence to deliver benefits and
services to staff members, HR is now committed to building capability
through state of the art processes. A robust performance management
system, compensation system and a segmented training architecture
enable it to deliver value to the organization.

BUSINESS

 Excellence the Business Excellence function is committed to building a

quality mindset across the organization. ICICI Prudential is the first
organization in the Insurance Industry that has adopted the Six Sigma
Methodology for process efficiency and measurement. The team is also
driving the Malcolm Baldrige framework across the organization, an
intervention that examines management of key inputs for Business
Excellence.

Strategy-
1. Identify and support projects and programmes that are within its focus areas
and,
• have a large- scale and measurable – impact

62
 • are replicable in a cost effective manner; and
• are time –bound.
2. Identify and support pilot projects within its focus areas.
3. Contribute towards improving the efficacy of assisted organizations through:
• capacity building
• providing access to research and information; and providing platforms for
an

Business Overview

Assets Globally held

> Rs.1, 25,000 (ADR, FII
Crores stake)
Second largest
Bank in India

Rated by First Indian

Moody’s Bank to be
above listed on NYSE
sovereign
rating

63
ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659
crore at March 31, 2006 and profit after tax of Rs. 2,005 crore for the year ended
March 31, 2006 (Rs. 1740 crore in fiscal 2004). ICICI Bank has a network of
about 570 branches and extension counters and over 2200 ATMs. ICICI Bank
offers a wide range of banking products and financial services to corporate and
retail customers through a variety of delivery channels and through its
specialised subsidiaries and affiliates in the areas of investment banking, life and
non-life insurance, venture capital and asset management. ICICI Bank set up its
international banking group in fiscal 2002 to cater to the cross border needs of
clients and leverage on its domestic banking strengths to offer products
internationally. ICICI Bank currently has subsidiaries in the United Kingdom,
Canada and Russia, branches in Singapore and Bahrain and representative
offices in the United States, China, United Arab Emirates, Bangladesh and South
Africa.

ICICI Bank's equity shares are listed in India on the Stock

Exchange, Mumbai and the National Stock Exchange of India Limited and its
American Depositary Receipts (ADRs) are listed on the New York Stock
Exchange (NYSE).

As required by the stock exchanges, ICICI Bank has formulated a

Code of Business Conduct and Ethics for its directors and employees.

At April 4, 2006 ICICI Bank, with free float market capitalization* of about Rs.
308.00 billion (US$ 7.00 billion) ranked third amongst all the companies listed on
the Indian stock exchanges.

ICICI Bank was originally promoted in 1994 by ICICI Limited, an

Indian financial institution, and was its wholly-owned subsidiary. ICICI's

64
shareholding in ICICI Bank was reduced to 46% through a public offering of
shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the
NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-
stock amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at
the initiative of the World Bank, the Government of India and representatives of
Indian industry.
The principal objective was to create a development financial
institution for providing medium-term and long-term project financing to Indian
businesses. In the 1990s, ICICI transformed its business from a development
financial institution offering only project finance to a diversified financial services
group offering a wide variety of products and services, both directly and through
a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the
first Indian company and the first bank or financial institution from non-Japan
Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry, and
the move towards universal banking, the managements of ICICI and ICICI Bank
formed the view that the merger of ICICI with ICICI Bank would be the optimal
strategic alternative for both entities, and would create the optimal legal structure
for the ICICI group's universal banking strategy. The merger would enhance
value for ICICI shareholders through the merged entity's access to low-cost
deposits, greater opportunities for earning fee-based income and the ability to
participate in the payments system and provide transaction-banking services.
The merger would enhance value for ICICI Bank shareholders through a large
capital base and scale of operations, seamless access to ICICI's strong
corporate relationships built up over five decades, entry into new business
segments, higher market share in various business segments, particularly fee-
based services, and access to the vast talent pool of ICICI and its subsidiaries. In
October 2001, the Boards of Directors of ICICI and ICICI Bank approved the

65
merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI
Personal Financial Services Limited and ICICI Capital Services Limited, with
ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank
in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and
by the High Court of Judicature at Mumbai and the Reserve Bank of India in April
2002. Consequent to the merger, the ICICI group's financing and banking
operations, both wholesale and retail, have been integrated in a single entity.
*Free float holding excludes all promoter holdings, strategic investments and
cross holdings among public sector entities.

Awards & Recognitions

ICICI Bank 2009

• ICICI Bank bags the “Best bank in SME financing (Private Sector)” at the
Dun & Bradstreet Banking awards 2009.
• ICICI Bank NRI services wins the “Excellence in Business Model
Innovation Award” in the eighth Asian Banker Excellence in Retail
Financial Services Awards Programme.
• ICICI Bank's Rural Micro Banking and Agri-Business Group wins
WOW Event & Experiential Marketing Award in two categories - “Rural
Marketing programme of the year” and “Small Budget On Ground
Promotion of the Year”. These awards were given for Cattle Loan
'Kamdhenu Campaign' and 'Talkies on the move campaign' respectively.
• ICICI Bank's Rural Micro Banking and Agri-Business Group wins
WOW Event & Experiential Marketing Award in two categories - “Rural
Marketing program of the year” and “Small Budget On Ground Promotion
of the Year”. These awards were given for Cattle Loan 'Kamdhenu
Campaign' and 'Talkies on the move campaign' respectively.
• ICICI Bank's Germany Branch has been certified by “Stiftung
Warrentest”. ICICI Bank is ranked 2nd amongst 57 savings products
across 19 banks

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• ICICI Bank Germany won the yearly banking test of the investor
magazine €uro in the “call money”category.
• The ICICI Bank was awarded the runner's up position in Gartner
Business Intelligence and Excellence Award for Asia Pacific for its
Business Intelligence functions.
• ICICI Bank's Organizational Excellence Group was recently
awarded ISO 9001:2008 certification by TUV Nord. The scope of
certification comprised processes around consulting and capability
building on methods of quality & improvements.
• ICICI Bank has been awarded the following titles under The Asset
Triple A Country Awards for 2009:
• Best Transaction Bank in India
• Best Trade Finance Bank in India
• Best Cash Management Bank in India
• Best Domestic Custodian in India
ICICI Bank has bagged the Best Cash Management Bank in India award
for the second year in a row. The other awards have been bagged for the
third year in a row.
• ICICI Bank Canada received the prestigious Canadian Helen Keller
Award at the Canadian Helen Keller Centre's Fifth Annual Luncheon in
Toronto. The award was given to ICICI Bank its long-standing support to
this unique training centre for people who are deaf-blind.

Performance of ICICI Bank

• Profit before tax for FY2009 was Rs. 51.17bn compared to Rs. 50.56bn for
FY2008.

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 Profit after tax for FY2009 was Rs. 37.58bn compared to Rs. 41.58bn for
FY2008 due to the higher effective tax rate on account of lower proportion
of income taxable as dividends and capital gains.
• 15% increase in net interest income from Rs. 73.04bn in FY2008 to Rs.
83.67bn in FY2009.
NIM increased from 2.2% in FY2008 to 2.4% in FY2009.
• Fee income decreased marginally from Rs. 66.27bn in FY2008 to Rs.
65.24bn in FY2009.Lower corporate fees in H2-2009 due to slowdown in
corporate activity.
Reduced third party distribution and low disbursals impacted retail fees

• Operating expenses (including direct marketing agency expenses)

decreased 14% to Rs. 68.35bn in FY2009 from Rs. 79.72bn in FY2008.
The cost/average asset ratio for FY2009 was 1.8% compared to 2.2% for
FY2008.
• Operating profit increased 12% from Rs. 79.61bn in FY2008 to Rs.
89.25bn in FY2009 as lower treasury and other income were offset by
higher net interest income and lower operating and DMA expenses.

Balance Sheet Highlights

Continued focus on capital, liquidity and risk containment.

• Total capital adequacy of 15.5% and Tier-1 capital adequacy of 11.8% as
per RBI’s revised Basel II framework.
• Maintained high liquidity levels in domestic business and overseas
subsidiaries.
• Decrease in loan book by 3.2% (decline of 8.4% excluding impact of
exchange.

• Credit rating

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Senior Debt & Deposit Ratings of ICICI Bank Limited

ICICI Bank
Agency India
Limited
Moody's FC - Long Term Baa2 Baa2
FC - Long Term BBB- BBB-
S&P
FC - Short Term A-3 A-3
JCRA FC - Long Term BBB+ BBB+
Rupee - Long Term Care - AAA
CARE Fixed Deposits Care - AAA
Rupee - Short Term PR1+
Rupee - Long Term LAAA

ICRA Term Deposit MAAA

Rupee - Short Term A1+

Moody's: Moody's Investor Services

S & P: Standard & Poor’s
JCRA: Japan Credit Rating Agency
CARE: Credit Analysis & Research Limited, India
ICRA : ICRA Limited, India
FC : Foreign Currency

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OVERVIEW

India's Number One private life insurer, ICICI Prudential Life Insurance Company
is a joint venture between ICICI Bank-one of India's foremost financial services
companies-and prudential plc- a leading international financial services group
headquartered in the United Kingdom. Total capital infusion stands at Rs. 20.60
billion, with ICICI Bank holding a stake of 74% and Prudential plc holding 26%.
We began our operations in December 2000 after receiving approval from
Insurance Regulatory Development Authority (IRDA). Today, our nation-wide
team comprises of over 580 offices, over 234,000 advisors; and 22 bank
assurance partners.ICICI Prudential was the first life insurer in India to receive a
National Insurer Financial Strength rating of AAA (Ind) from Fitch ratings. For
three years in a row, ICICI Prudential has been voted as India's Most Trusted
Private Life Insurer, by The Economic Times - AC Nielsen ORG Marg survey of
'Most Trusted Brands'. As we grow our distribution, product range and customer
base, we continue to tirelessly uphold our commitment to deliver world-class
financial solutions to customers all over India.

Promise a fixed income after you retire or Health insurance that arms you with
the funds you might need to recover from a dreaded disease.

1. Ensure that our customers can access them easily and quickly. To this
end, ICICI Prudential has an advisor base across the length and breadth
of the country, and also partners with leading banks, corporate agents and
brokers to distribute our products.
2. Robust risk management and underwriting practices form the core of our
business. With clear guidelines in place, we ensure equitable costing of
risks, and thereby ensure a smooth and hassle-free claims process.
3. Entrusted with helping our customers meet their long-term goals, we adopt
an investment philosophy that aims to achieve risk adjusted returns over
the long-term.
4. Last but definitely not the least, our 16,000 plus strong team is given the
opportunity to learn and grow, every day in a multitude of ways.

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Key attributes

Services are said to have several key attributes:

• Intangibility - They cannot be seen, handled, smelled, etc. There is no

need for storage. Because they are difficult to conceptualize, services

marketing require creative visualizations to effectively make the intangible

more concrete. From the customer’s point of view, this makes it difficult to

evaluate or compare services prior to experiencing the service.

• Perishability - Unsold service time is "lost", that is, it cannot be regained. It

is a lost economic opportunity. For example a doctor who is booked for

only two hours a day can never regain that economic opportunity.

• Lack of transportability - Services must be consumed at the point of

"production".

• Lack of standardization - Services are typically custom designed for each

client or each new situation. Mass production of services is very difficult.

This can be seen as a problem of inconsistent quality. Both inputs and

outputs are highly variable making it difficult to maintain consistent quality.

• Labour intensity - Services usually involve considerable human activities.

Human resource management is important. The human factor is often the

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 key success factor in service industries. It is difficult to achieve economies

of scale or gain dominant market share.

• Demand fluctuations - It is very difficult to estimate demand. Demand can

vary by season, time] of day, business cycle, etc.

• Buyer involvement - Most service provision requires a high degree of

interaction between client and service provider.

Parties to contract

There is a difference between the insured and the policy owner (policy holder),
although the owner and the insured are often the same person. For example, if
Joe buys a policy on his own life, he is both the owner and the insured. But if
Jane, his wife, buys a policy on Joe's life, she is the owner and he is the insured.
The policy owner is the guarantee and he or she will be the person who will pay
for the policy. The insured is a participant in the contract, but not necessarily a
party to it.

The beneficiary receives policy proceeds upon the insured's death. The owner
designates the beneficiary, but the beneficiary is not a party to the policy. The
owner can change the beneficiary unless the policy has an irrevocable
beneficiary designation. With an irrevocable beneficiary, that beneficiary must
agree to any beneficiary changes, policy assignments, or cash value borrowing.

In cases where the policy owner is not the insured (also referred to as the celui
qui vit or CQV), insurance companies have sought to limit policy purchases to
those with an "insurable interest" in the CQV. For life insurance policies, close
family members and business partners will usually be found to have an insurable

72
interest. The "insurable interest" requirement usually demonstrates that the
purchaser will actually suffer some kind of loss if the CQV dies. Such a
requirement prevents people from benefiting from the purchase of purely
speculative policies on people they expect to die. With no insurable interest
requirement, the risk that a purchaser would murder the CQV for insurance
proceeds would be great. In at least one case, an insurance company which sold
a policy to a purchaser with no insurable interest (who later murdered the CQV
for the proceeds), was found liable in court for contributing to the wrongful death
of the victim (Liberty National Life v. Weldon, 267 Ala.171 (1957)).

Contract terms

• Special provisions may apply, such as suicide clauses wherein the policy
becomes null if the insured commits suicide within a specified time
(usually two years after the purchase date; some states provide a
statutory one-year suicide clause). Any misrepresentations by the insured
on the application is also grounds for nullification. Most US states specify
that the contestability period cannot be longer than two years; only if the
insured dies within this period will the insurer have a legal right to contest
the claim on the basis of misrepresentation and request additional
Sinformation before deciding to pay or deny the claim.

The face amount on the policy is the initial amount that the policy will pay at the
death of the insured or when the policy matures, although the actual death
benefit can provide for greater or lesser than the face amount. The policy
matures when the insured dies or reaches a specified age (such as 100 years
old).

Costs, insurability, and underwriting

The insurer (the life insurance company) calculates the policy prices with intent to
fund claims to be paid and administrative costs, and to make a profit. The cost of

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insurance is determined using mortality tables calculated by actuaries. Actuaries
are professionals who employ actuarial science, which is based in mathematics
(primarily probability and statistics). Mortality tables are statistically-based tables
showing expected annual mortality rates. It is possible to derive life expectancy
estimates from these mortality assumptions. Such estimates can be important in
taxation regulation

The three main variables in a mortality table have been age, gender, and use of
tobacco. More recently in the US, preferred class specific tables were introduced.
The mortality tables provide a baseline for the cost of insurance. In practice,
these mortality tables are used in conjunction with the health and family history of
the individual applying for a policy in order to determine premiums and
insurability. Mortality tables currently in use by life insurance companies in the
United States are individually modified by each company using pooled industry
experience studies as a starting point. In the 1980s and 90's the SOA 1975-80
Basic Select & Ultimate tables were the typical reference points, while the 2001
VBT and 2001 CSO tables were published more recently. The newer tables
include separate mortality tables for smokers and non-smokers and the CSO
tables include separate tables for preferred classes.

Recent US select mortality tables predict that roughly 0.35 in 1,000 non-smoking
males aged 25 will die during the first year of coverage after underwriting.
Mortality approximately doubles for every extra ten years of age so that the
mortality rate in the first year for underwritten non-smoking men is about 2.5 in
1,000 people at age 65.Compare this with the US population male mortality rates
of 1.3 per 1,000 at age 25 and 19.3 at age 65 (without regard to health or
smoking status).

The mortality of underwritten persons rises much more quickly than the general
population. At the end of 10 years the mortality of that 25 year-old, non-smoking
male is 0.66/1000/year. Consequently, in a group of one thousand 25 year old

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males with a $100,000 policy, all of average health, a life insurance company
would have to collect approximately $50 a year from each of a large group to
cover the relatively few expected claims. (0.35 to 0.66 expected deaths in each
year x $100,000 payout per death = $35 per policy). Administrative and sales
commissions need to be accounted for in order for this to make business sense.
A 10 year policy for a 25 year old non-smoking male person with preferred
medical history may get offers as low as $90 per year for a $100,000 policy in the
competitive US life insurance market.

The insurance company receives the premiums from the policy owner and
invests them to create a pool of money from which it can pay claims and finance
the insurance company's operations. Contrary to popular belief, the majority of
the money that insurance companies make comes directly from premiums paid,
as money gained through investment of premiums can never, in even the most
ideal market conditions, vest enough money per year to pay out claims

Rates charged for life insurance increase with the insurer's age because,
statistically, people are more likely to die as they get older.

Given that adverse selection can have a negative impact on the insurer's
financial situation, the insurer investigates each proposed insured individual
unless the policy is below a company-established minimum amount, beginning
with the application process. Group Insurance policies are an exception.

This investigation and resulting evaluation of the risk is termed underwriting.

Health and lifestyle questions are asked. Certain responses or information
received may merit further investigation. Life insurance companies in the United
States support the Medical Information Bureau (MIB), which is a clearinghouse of
information on persons who have applied for life insurance with participating
companies in the last seven years. As part of the application, the insurer receives
permission to obtain information from the proposed insured's physicians.[5]

75
Underwriters will determine the purpose of insurance. The most common is to
protect the owner's family or financial interests in the event of the insurer's
demise. Other purposes include estate planning or, in the case of cash-value
contracts, investment for retirement planning. Bank loans or buy-sell provisions
of business agreements are another acceptable purpose.

Life insurance companies are never required by law to underwrite or to provide

coverage to anyone, with the exception of Civil Rights Act compliance
requirements. Insurance companies alone determine insurability, and some
people, for their own health or lifestyle reasons, are deemed uninsurable. The
policy can be declined (turned down) or rated Rating increases the premiums to
provide for additional risks relative to the particular insured

Many companies use four general health categories for those evaluated for a life
insurance policy. These categories are Preferred Best, Preferred, Standard, and
Tobacco

Preferred Best is reserved only for the healthiest individuals in the general
population. This means, for instance, that the proposed insured has no adverse
medical history, is not under medication for any condition, and his family
(immediate and extended) have no history of early cancer, diabetes, or other
conditions. Preferred means that the proposed insured is currently under
medication for a medical condition and has a family history of particular illnesses

Most people are in the Standard category. Profession, travel, and lifestyle factor
into whether the proposed insured will be granted a policy, and which category
the insured falls. For example, a person who would otherwise be classified as
Preferred Best may be denied a policy if he or she travels to a high risk
country.Underwriting practices can vary from insurer to insurer which provide for
more competitive offers in certain circumstances.

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Life insurance contracts are written on the basis of utmost good faith. That is, the
proposer and the insurer both accept that the other is acting in good faith. This
means that the proposer can assume the contract offers what it represents
without having to fine comb the small print and the insurer assumes the proposer
is being honest when providing details to underwriter.

Death proceeds

Upon the insured's death, the insurer requires acceptable proof of death before it
pays the claim. The normal minimum proof required is a death certificate and the
insurer's claim form completed, signed (and typically notarized If the insured's
death is suspicious and the policy amount is large, the insurer may investigate
the circumstances surrounding the death before deciding whether it has an
obligation to pay the claim.

Proceeds from the policy may be paid as a lump sum or as an annuity, which is
paid over time in regular recurring payments for either a specified period or for a
beneficiary's lifetime.

REGULATIONS – THE AGENCY LAWS

The basics of the insurance business in India are governed by the Agency Law,
which is part of the Indian Contracts Act, 1872. Further, after the industry got
opened up the regulatory authority has been the Insurance Regulatory &
Development Authority (IRDA).

Agent: The Definition

According to the section 182 of the Indian Contract Act, 1872, “an agent is a
person employed to do any act for another or to represent another in dealing with

77
a third person”. In the insurance sector the term “Agent” is ordinarily applied to a
person engaged by the insurer to procure new business.

Powers of the Agent

An agent can act only to the extent of authority may be expressed or implied. An
authority is said to be expressed when it is given by words spoken or written. It is
implied when it is to be inferred from the circumstances of the case.

Life Insurance Agent

The Insurance Act, 1938 defines as agent as “one who is licensed under the act
& is paid consideration of his soliciting or procuring insurance business including
business relating to continuance, renewal or revival of policies of insurance”.

Investment policies

Some policies allow the policyholder to participate in the profits of the insurance
company these are with-profits policies. Other policies have no rights to
participate in the profits of the company, these are non-profit policies.

With-profits policies are used as a form of collective investment to achieve capital

growth. Other policies offer a guaranteed return not dependent on the company's
underlying investment performance; these are often referred to as without-profit
policies which may be construed as a misnomer.

Investment Bonds

Main article: Insurance bond

Pensions: Pensions are a form of life assurance. However, whilst basic life
assurance, permanent health insurance and non-pensions annuity business
includes an amount of mortality or morbidity risk for the insurer, for pensions

78
there is a longevity risk.

A pension fund will be built up throughout a person's working life. When the
person retires, the pension will become in payment, and at some stage the
pensioner will buy an annuity contract, which will guarantee a certain pay-out
each month until death.

Annuities

An annuity is a contract with an insurance company whereby the purchaser pays

an initial premium or premiums into a tax-deferred account, which pays out a
sum at pre-determined intervals. There are two periods: the accumulation (when
payments are paid into the account) and the annuitization (when the insurance
company pays out).

Tax and life insurance

Premiums paid by the policy owner are normally not deductible for federal and
state income tax purposes.

Proceeds paid by the insurer upon death of the insured are not included in gross
income for federal and state income tax purposes; however, if the proceeds are
included in the "estate" of the deceased, it is likely they will be subject to federal
and state estate and inheritance tax.

Cash value increases within the policy are not subject to income taxes unless
certain events occur. For this reason, insurance policies can be a legal and
legitimate tax shelter wherein savings can increase without taxation until the
owner withdraws the money from the policy. On flexible-premium policies, large
deposits of premium could cause the contract to be considered a "Modified
Endowment Contract" by the Internal Revenue Service (IRS), which negates
many of the tax advantages associated with life insurance. The insurance

79
company, in most cases, will inform the policy owner of this danger before
applying their premium.

Tax deferred benefit from a life insurance policy may be offset by its low return in
some cases. This depends upon the insuring company, type of policy and other
variables (mortality, market return, etc.). Also, other income tax saving vehicles
(i.e. Individual Retirement Account (IRA), 401K or Roth IRA) may be better
alternatives for value accumulation. This will depend on the individual and their
specific circumstances.

The tax ramifications of life insurance are complex. The policy owner would be
well advised to carefully consider them. As always, the United States Congress
or the state legislatures can change the tax laws at any time.

Taxation of life assurance in the United Kingdom

Premiums are not usually allowable against income tax or corporation tax,
however qualifying policies issued prior to 14 March 1984 do still attract LAPR
(Life Assurance Premium Relief) at 15% (with the net premium being collected
from the policyholder).

Non-investment life policies do not normally attract either income tax or capital
gains tax on claim. If the policy has as investment element such as an
endowment policy, whole of life policy or an investment bond then the tax
treatment is determined by the qualifying status of the policy.

Qualifying status is determined at the outset of the policy if the contract meets
certain criteria. Essentially, long term contracts (10 years plus) tend to be
qualifying policies and the proceeds are free from income tax and capital gains
tax. Single premium contracts and those run for a short term are subject to
income tax depending upon your marginal rate in the year you make a gain. All
(UK) insurers pay a special rate of corporation tax on the profits from their life

80
book; this is deemed as meeting the lower rate (20% in 2005-06) liability for
policyholders. Therefore a policyholder who is a higher rate taxpayer (40% in
2005-06), or becomes one through the transaction, must pay tax on the gain at
the difference between the higher and the lower rate. This gain is reduced by
applying a calculation called top-slicing based on the number of years the policy
has been held. Although this is complicated, the taxation of life assurance based
investment contracts may be beneficial compared to alternative equity-based
collective investment schemes (unit trusts, investment trusts and OEICs). One
feature which especially favors investment bonds is the '5% cumulative
allowance' – the ability to draw 5% of the original investment amount each policy
year without being subject to any taxation on the amount withdrawn. If not used
in one year, the 5% allowance can roll over into future years, subject to a
maximum tax deferred withdrawal of 100% of the premiums payable. The
withdrawal is deemed by the HMRC (Her Majesty's Revenue and Customs) to be
a payment of capital and therefore the tax liability is deferred until maturity or
surrender of the policy. This is an especially useful tax planning tool for higher
rate taxpayers who expect to become basic rate taxpayers at some predictable
point in the future (e.g. retirement), as at this point the deferred tax liability will
not result in tax being due.

The proceeds of a life policy will be included in the estate for death duty (in the
UK, inheritance tax (IHT)) purposes, except that policies written in trust may fall
outside the estate. Trust law and taxation of trusts can be complicated, so any
individual intending to use trusts for tax planning would usually seek professional
advice from an Independent Financial Adviser (IFA) and/or a solicitor.

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 PRODUCTS OF THE COMPANY

Insurance Solutions for Individuals

ICICI Prudential Life Insurance offers a range of innovative, customer-centric

products that meet the needs of customers at every life stage. Its 20 products
can be enhanced with up to 6 riders, to create a customized solution for each
policyholder.

Savings Solutions

• Secure Plus is a transparent and feature-packed savings plan that

offers 3 levels of protection.
• Cash Plus is a transparent, facture-packed savings plan that offers 3
levels of protection as well as liquidity options.
• Save n Protect is a traditional endowment savings plan that offers life
protection along with adequate returns.
• Cash Bank is an anticipated endowment policy ideal for meeting
milestone expenses like a child’s marriage, expenses for a child’s higher
education or purchase of an asset.
• Life Time & Life Time II offer customers the flexibility and control to
customize the policy to meet the changing needs at different life stages. Each
offer 4 fund options? Preserver, Protector, Balancer and Maxi miser.
• Life link II is a single premium Market Linked Insurance Plan which
combines life insurance cover with the opportunity to stay invested in the stock
market.
• Premier Life is a limited premium paying plan that offers customers life
insurance cover till the age of 75.
• Invest Shield Life is a Market Linked plan that provides capital
guarantee on the invested premiums and declared bonus interest.

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

Pension Term Assurance

Although available before April 2006, from this date pension term assurance
became widely available in the UK. Most UK product providers adopted the name
"life insurance with tax relief" for the product. Pension term assurance is
effectively normal term life assurance with tax relief on the premiums. All
premiums are paid net of basic rate tax at 22%, and higher rate tax payers can
gain an extra 18% tax relief via their tax return. Although not suitable for all, PTA
briefly became one of the most common forms of life assurance sold in the UK
until the Chancellor, Gordon Brown, announced the withdrawal of the scheme in
his pre-budget announcement on 6 December 2006. The tax relief ceased to be
available to new policies transacted after 6 December 2006, however, existing
policies have been allowed to enjoy tax relief so far.

Market trends

Life insurance premiums written in 2005

According to a study by Swiss Re, the EU was the largest market for life
insurance premiums written in 2005 followed by the USA and Japan.

Criticism

Although some aspects of the application process (such as underwriting and

insurable interest provisions) make it difficult, life insurance policies have been

83
used in cases of exploitation and fraud. In the case of life insurance, there is a
motivation to purchase a life insurance policy, particularly if the face value is
substantial, and then kill the insured. Usually, the larger the claim, and/or the
more serious the incident, the larger and more intense will be the number of
investigative layers, consisting in police and insurer investigation, eventually also
loss adjusters hired by the insurers to work independently.

The television series Forensic Files has included episodes that feature this
scenario. There was also a documented case in 2006, where two elderly women
are accused of taking in homeless men and assisting them. As part of their
assistance, they took out life insurance on the men. After the contestability period
ended on the policies (most life contracts have a standard contestability period of
two years), the women are alleged to have had the men killed via hit-and-run car
crashes

Recently, viatical settlements have thrown the life insurance industry into turmoil.
A viatical settlement involves the purchase of a life insurance policy from an
elderly or terminally ill policy holder. The policy holder sells the policy (including
the right to name the beneficiary) to a purchaser for a price discounted from the
policy value. The seller has cash in hand, and the purchaser will realize a profit
when the seller dies and the proceeds are delivered to the purchaser. In the
meantime, the purchaser continues to pay the premiums. Although both parties
have reached an agreeable settlement, insurers are troubled by this trend.
Insurers calculate their rates with the assumption that a certain portion of policy
holders will seek to redeem the cash value of their insurance policies before
death. They also expect that a certain portion will stop paying premiums and
forfeit their policies. However, viatical settlements ensure that such policies will
with absolute certainty be paid out. Some purchasers, in order to take advantage
of the potentially large profits, have even actively sought to collude with
uninsured elderly and terminally ill patients, and created policies that would have

84
not otherwise been purchased. Likewise, these policies are guaranteed losses
from the insurers' perspective.

The criticism goes also in the direction of pointing out much lower payouts for life
insurance than for health or disability insurance in some countries (for example,

UK).

Benefits
Both cash value life and term life insurance have their benefits.
The most significant benefit of cash value life insurance is its ability to offer
coverage for the entire life of the policyholder. Many people take advantage of
buying this type of insurance when they are young when they need it most. Cash
value accounts may also be borrowed against or drawn from during the life of the
policy. Policyholders are also not required to pay taxes on any interest or
earnings attached to cash value accounts.
Individuals and corporations also benefit from term life insurance. The biggest
advantage of term life are the often very cheap premiums, especially when a
person is young and healthy. It is possible, in many situations, for significantly
large face amounts to be purchased for monthly costs of $20 to $30. Term life is
good for covering obligations that will eventually end, such as mortgages,
automobile loans and educational needs.

How to Buy Life Insurance Online

One of the advantages of purchasing life insurance online is getting an idea of

how much life insurance might cost you.

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Instructions
Things you’ll need:

• Financial Calculator
• Internet Access
• Computers
• Life Insurance

Step1
Roughly estimate the amount of insurance you need by multiplying your gross
annual income by 6, 7, or 8 (if under 40), or 4, 5, or 6 (if over 40). If you have a
mortgage to pay off, consider adding that amount to whatever result you have.
Step2
Go to ICICI insure.com Web sites that feature life insurance quotes.
Step3
Fill out the questionnaires as honestly as possible; if in doubt about any health
question, be a little pessimistic - at least for a quote.
Step4
A medical or paramedical exam is necessary, schedule the exam time in the
morning, if possible, for best results.
Step5
After successful underwriting, check your policy carefully for errors or
inaccuracies.
Step6
Sign the delivery documents and return them to the insurance company along
with your first premium check to put the coverage in force.
Step7
Keep your insurance policy in a safe place, treating it like any other legal
document.

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Step8
Make sure your beneficiary knows the policy's location and/or provide that person
with a full copy of the policy.

Protection Solutions:

Life Guard is a protection plan, which offers life covers at very low cost. It is
available in 3 options?

Child Plans:

Smart Kid education plans provide guaranteed educational benefits to a child

along with life insurance cover for the parents who purchase the policy. The
policy is designed to provide money at important milestones in the child’s life.
Smart Kid plans are also available in unit-linked from?

Retirement Solutions:

• Forever Life is a retirement product targeted at individuals in their thirties.

• Secured plus Pension is a flexible pension plan that allows one to select

between 3 of cover.

Market-linked retirement products:

• Life Time Pension II is a regular premium market-linked pension plan.

• Life Link Pension II is a single premium market-linked pension plan.
• Invest Shield Pension is a regular premium pension plan with a capital
guarantee on invest able premium and declared bonuses.

ICICI Prudential also launched? Salaam Zindagi. A social sector group insurance
policy targeted at the economically underprivileged sections of the society.

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Group Insurance Solutions:

ICICI Prudential also offers Group Insurance Solutions for companies seeking to
enhance benefits to their employees.

ICICI Prudential Group Gratuity Plan: ICICI Prudential? Group gratuity plan helps
employers fund their statutory gratuity obligation in a scientific manner. The plan
can also be customized to structure schemes that can provide benefits beyond
the statutory obligations.

ICICI Prudential Group Super annuity Plan: ICICI Prudential offers a flexible
defined contribution Super annuity scheme to provide a retirement kitty for each
member of the group. Employees have the option of choosing from various
annuity options of opting for a partial commutation of the annuity at the time of
retirement.

ICICI Prudential Group Term Plan: ICICI Prudential flexible group term solution
helps provide affordable cover to members of a group. The cover could be
uniform or based on designation rank or a multiple of salary. The benefit under
the policy is paid to the beneficiary nominated by the member on his/her death.

Flexible Rider Options:

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

• Accident & disability benefit: If death occurs as the result of an

accident during the tern of the policy, the beneficiary receivers an
additional amount equal to the sum assured under the policy. Accident
Benefit. This rider option pays the sum assured under the rider on
death due to accident.

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 • Critical Illnesses Benefit: protects the insured against financial loss in
the event of 9 specific critical illnesses. Benefits are payable to the
insured for medical expanses prior to death.
• Major Surgical Assistance Benefit: provides financial support in the
event of medical emergencies, ensuring benefits are payable to the life
assured for medical expenses incurred for surgical procedures. Cover
is offered against 43 surgical procedures.
• Income Benefit: This rider pays the 10% of the sum assured to the
nominee every year till maturity, in the event of the death of the life
assured. It is available on Secure Plus and Cash Plus.
• Waiver of Premiums: In case of total and permanent disability due to
an accident the premiums are waived till maturity. This rider is
available with Secure Plus and Cash Plus.

Types of mortgage protection life insurance

Consumers interested in mortgage protection life insurance have two choices:

level term insurance and decreasing term insurance.

Level term mortgage protection life insurance is designed for homeowners

with an unchanging principle balance. Commonly this occurs when the
homeowner has an interest-only mortgage. As the name suggests, with an
interest-only mortgage, the homeowner pays the interest on the loan. The
principle balance remains the same throughout the term of the mortgage.
Because the mortgage principle does not change, the amount of the mortgage
protection life insurance benefit remains the same throughout the term of the
coverage.

Decreasing term mortgage protection life insurance is for homeowners with

fixed-rate loans or adjustable-rate loans in which the loan principal is reduced
over time. Since the amount needed to pay off the mortgage decreases, the

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amount of the mortgage protection life insurance benefit decreases as well. The
two sums—the principle balance and the death benefit—are matched throughout
the term of the insurance. When the mortgage protection life insurance
policyholder pays off the home loan, the amount of the benefit becomes zero.

Low-cost alternative

There is no surrender value on either type of mortgage protection life insurance

policy. Once the mortgage is paid off or the property is sold, the policy becomes
void. For this reason, mortgage protection life insurance is less expensive than
most traditional life insurance.

Hurdling the health barrier

The cost of traditional life insurance is calculated based on the policyholder’s

health and life expectancy. Young, healthy people have lower premiums than
young unhealthy people, older healthy people, and older unhealthy people.
Because of existing health conditions, some people find they do not qualify for
traditional health insurance. They are uninsurable. Others are insurable, but the
premiums are so high that they cannot afford them. In these cases, traditional life
insurance cannot be used to protect a home. Many people who cannot afford
traditional life insurance find that they can easily afford mortgage protection life
insurance.

Mortgage protection life insurance is often dismissed as inflexible

compared to traditional life insurance, but the truth is that many life
insurance beneficiaries use the money to pay off their homes. Mortgage
protection life insurance guarantees that the pay-off will be made in a timely,
cost-effective, and hassle-free manner at a time when family members have little
inclination to engage in large financial transactions. In worst case scenarios,
mortgage protection life insurance may be the only thing that keeps a
family from losing its home. It can be a home saver.

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ADVANTAGES OF LIFE INSURANCE

It is a general belief that life insurance is meant only for those with families. It is
true that Life Insurance Policies like whole-life insurance, joint-life-insurance,
pension-life-insurance etc are essential for family's financial security, but they are
equally important for individuals. Term Insurance policies protect your financial
resources against the uncertainties of life so you can protect your family's future.

Some of the life insurance advantages are:

• If an estate owner has not accumulated enough assets for his family,
• Insurance quote helps create an instant estate for the sake of the Family’s
security.
• Life Insurance provides the option to pass equal assets to the children
who are not active in the Family business at the time the family business
is passed on.
• Life Insurance policies can help secure the future of children for
college/educational purposes as the amount of life Insurance Policy
increases on a minor’s or parent’s life.
• The growth of a cash-value policy is tax-deferred - you do not pay taxes
on the cash value accumulation until you withdraw funds from the policy.
• Life Insurance can be useful in paying estate taxes, along with other
estate settlement amounts. Federal Estate Taxes are due nine months
after death.
• If there’s a Business Transfer, life insurance can provide ready cash to
finance a transaction between business owners who are ready to buy the
deceased owner’s share from his or her estate after death.
• If there’s a home mortgage, one can pass the family residence to their
spouse/children to free them of any mortgage if one has a Life Insurance
Policy for the same. It is preferred to have a decreasing term policy that
decreases in face amount as the mortgage balance is paid down.

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 • Life Insurance helps retain your Business from the loss of a key employee.
Untimely death of a key employee can pose severe financial loss to the
business.
• The right insurance proceeds can provide liquidity to pay off personal
loans or business loans.
• Charitable Remainder Trusts provide tax benefits. Life Insurance helps
replace a charitable gift.
• A lot of Insurance products presently provide good returns, which could be
a beneficial way for saving necessary funds for retirement years.
• Benefits are available immediately and may be used to help pay expenses
such as final illness and funeral costs, eliminating the need to sell estate
assets to cover these costs.

Disadvantages

• Premiums increase as you grow older.

• Coverage may terminate at the end of the term or may become too
expensive to continue.
• Generally, the policy doesn't offer cash value or paid-up insurance. Life
insurance, to many, is a necessary evil. Many policyholders swear by
them in protecting their families from loss of income and hefty debt
obligations in the event of their untimely death. With several types of life
insurance on the market, generally speaking, two varieties still remain the
most popular: term and whole life, or "cash value" life insurance. Both
varieties have pros and cons.

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The importance of advisors:

ICICI Prudential Life Insurance Co. Ltd. Aspires to provide state of the art of
customer’s service & opportunities & avenues for enterprising people to grow &
prosper. The company wish to grow exponentially that is backed by the latest
technology, hence offering its customers:

 Faster & more accurate service.

 Multi-channel distribution systems.
 Highly trained professional sales people offering quality pre & post sales
service.

It is in the above mentioned areas of personal specialization where the

importance of an advisor clearly stands out the advisor not only contribute in
bring in new business for the company, but also plays an important part in
offering world-class pre & post sales service to the clients to the clients with the
support of the organization. But the company in its principles clearly states out
that an advisor to means “much more than a salesman or a saleswoman, we at
ICICI Prudential recognize out advisors as the ambassadors of our organization
in the market place & we consider the advisor force would be our biggest
differentiating factor in the coming years”. The advisor is an important asset not
only for the organization from the business point of view but also to the society
on the whole as he/she is someone who provide valuable service to the
community be helping people attain financial security & build funds for their future
needs thereby assisting them in getting their financial freedom.

If looked from the other side of the business where the company is operating the
competitive Indian market & more so in the business of life insurance where the
customers looks for self-belief & faith then the advisor certainly holds the vital link
in the overall business proposition. They represent the company’s face & words

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on which the customers can trust because the customers know that face. The
advisor helps to create a web for the business to grow & driving the customer to
come to the company with complete trust & faith.

Roles of life insurance

Risks and uncertainties are part of life's great adventure -- accident, illness, theft,
natural disaster - they're all built into the working of the Universe, waiting to
happen.

Role 1: Life insurance as "Investment"

Insurance is an attractive option for investment. While most people recognize the
risk hedging and tax saving potential of insurance, many are not aware of its
advantages as an investment option as well. Insurance products yield more
compared to regular investment options, and this is besides the added incentives
(read bonuses) offered by insurers.

You cannot compare an insurance product with other investment schemes for the
simple reason that it offers financial protection from risks, something that is
missing in non-insurance products.

In fact, the premium you pay for an insurance policy is an investment against
risk. Thus, before comparing with other schemes, you must accept that a part of
the total amount invested in life insurance goes towards providing for the risk
cover, while the rest is used for savings.

In life insurance, unlike non-life products, you get maturity benefits on survival at
the end of the term. In other words, if you take a life insurance policy for 20 years
and survive the term, the amount invested as premium in the policy will come
back to you with added returns. In the unfortunate event of death within the
tenure of the policy, the family of the deceased will receive the sum assured.

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Now, let us compare insurance as an investment options. If you invest Rs 10,000
in PPF, your money grows to Rs 10,950 at 9.5 per cent interest over a year. But
in this case, the access to your funds will be limited. One can withdraw 50 per
cent of the initial deposit only after 4 years.

The same amount of Rs 10,000 can give you an insurance cover of up to

approximately Rs 5-12 lakh (depending upon the plan, age and medical condition
of the life insured, etc) and this amount can become immediately available to the
nominee of the policyholder on death.

Thus insurance is a unique investment avenue that delivers sound returns in

addition to protection.

Role 2: Life insurance as "Risk cover"

First and foremost, insurance is about risk cover and protection - financial
protection, to be more precise - to help outlast life's unpredictable losses.
Designed to safeguard against losses suffered on account of any unforeseen
event, insurance provides you with that unique sense of security that no other
form of investment provides. By buying life insurance, you buy peace of mind and
are prepared to face any financial demand that would hit the family in case of an
untimely demise.

To provide such protection, insurance firms collect contributions from many

people who face the same risk. A loss claim is paid out of the total premium
collected by the insurance companies, who act as trustees to the monies.

Insurance also provides a safeguard in the case of accidents or a drop in income

after retirement. An accident or disability can be devastating, and an insurance
policy can lend timely support to the family in such times. It also comes as a

95
great help when you retire, in case no untoward incident happens during the term
of the policy.

With the entry of private sector players in insurance, you have a wide range of
products and services to choose from. Further, many of these can be further
customized to fit individual/group specific needs. Considering the amount you
have to pay now, it's worth buying some extra sleep

Role 3: Life insurance as "Tax planning"\

Insurance serves as an excellent tax saving mechanism too. The Government of

India has offered tax incentives to life insurance products in order to facilitate the
flow of funds into productive assets. Under Section 88 of Income Tax Act 1961,
an individual is entitled to a rebate of 20 per cent on the annual premium payable
on his/her life and life of his/her children or adult children. The rebate is
deductible from tax payable by the individual or a Hindu Undivided Family. This
rebate is can be availed upto a maximum of Rs 12,000 on payment of yearly
premium of Rs 60,000. By paying Rs 60,000 a year, you can buy anything
upwards of Rs 10 lakh in sum assured. (depending upon the age of the insured
and term of the policy) This means that you get a Rs 12,000 tax benefit. The
rebate is deductible from the tax payable by an individual or a Hindu Undivided
Family.

FAQS ON TAXATION:

What are the tax rebates available to an individual in respect of premium

paid on life insurance policies?

Life insurance premium paid by an individual qualifies for rebate under section 88
of income tax act. An individual can claim rebate on premium paid for a
maximum of Rs. 70000 in each financial year.

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How is tax rebate under section 88 calculated?

Calculation of tax rebate under section 88 depends on the individual’s gross total
income and contribution made towards life insurance premium.

Thus if the gross total income is:

• Less than Rs. 150000 rebate is calculated at 20% of the premium paid
towards life insurance.
• Greater than Rs. 150000 but less than Rs. 500000, rebate is computed at
15% of the premium paid.
• Greater than Rs. 150000 the individual is not eligible to claim any tax
benefit on the Life insurance premium paid.

Are maturity life insurance and pension policies taxable?

The maturity process of life insurance policies is not taxable. However under
pension plans, any amount received on surrender of the plan shall be deemed to
be the assessed income and taxed accordingly.

Can a tax rebate to be calculated of the premium is paid by an individual on

his/her spouses polices.

An individual can make payment on his/her spouse’s policy and the premium
paid will qualify for rebate under section 88.

What are the tax benefits available under plans?

Under section 88CC where an assess has paid/deposited any amount towards
any annuity plan receiving pension fund, he/she will be allowed deduction up to
Rs. 100 from the total income. Where the amount paid/deposited into
consideration for the purpose of claming deduction a rebate where reference to
shall not be allowed under section 88.

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If a person discontinues premium on his insurance or a pension policy, does he
get tax benefit

If a person stops paying premium amount on his/her life insurance policy, it

amounts to discontinues of the policy; hence he is not entitled to claim any tax
benefits.

If a tax payer discontinues the life insurance policy before premiums have been
paid of a period of 2 years from the commencement of the policy, no tax
deduction is allowed is respect of any premium paid on that policy in the year in
which the policy s terminated. Further the amount of tax deduction allowed for
the premium paid in the preceding year is also treated as the tax payable for the
year in which the policy is terminated.

If a person participating in a unit linked insurance plan (ULIP) terminates

his policy, and he claim any rebate on the same?

If a person participates as unit linked plan (ULIP) and terminates his participation,
he will no be entitled to claim ant rebate.

Is the amount received on maturity of UTI ULIP scheme taxable?

No, the maturity proceeds of UTI ULIP scheme are exempt from tax under
section 10(33) subject to the same being received on or after April, 2002.

What are the deductions is available in respect of medical insurance

premium?

The premium paid under financial insurance premium qualifies for rebate under
section 80D as follows:

• Insurance premium paid or Rs. 10000 whichever is lower.

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 • The aforesaid limit is Rs. 15000, where the individual or his spouse of
dependent parent’s or any member of the family (for whom such premium
is paid is a senior citizen (i.e. one who is resident in India and who is at
least 65 years of age at any time during the previous years).

RESEARCH METHODOLOGY

In this section of my project, the requirement is to describe the sources of

collecting primary and secondary data. For collecting primary data, method
adopted was focus group method.

Source of primary data

1. Natural Market
• Relatives

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 • Friends
• Neighbors
2. Stall Operation
3. Survey
4. Seminar (Focus Group)

Source of Secondary Data

1. Yellow Pages
2. Database of different companies LI\GI Agents

3. Tele calling leads

Title of the study

Analysis of icici prudential life insurance

Duration of the study

3 months

Objective of the study

Analitical study of the icici prudential

Type of research
Discriptive research

This chapter discusses the types of quantitative study that fall under the broad
heading of descriptive quantitative research. This type of research involves either
identifying the characteristics of an observed phenomenon or exploring possible
correlations among two or more phenomena. In every case, descriptive research
examines a situation as it is. It does not involve changing or modifying the

100
situation under investigation, nor is it intended to detect cause–effect
relationships. Examples of descriptive research that yields quantitative data are
correlation studies, developmental designs, observation studies, and survey
research.

Sample size and method of selecting sample

Sample size- 50
Method of selecting sample- judgemental

LIMITATIONS

 As the movement throughout the city is not possible due to certain

constraints so the movement was quite restricted.
 People are not ready to go for training. As the training period is of 17 days
and it involves full day, so it becomes difficult for them to leave their offices
or shops for such a long time.
 The compulsion of selling 12 policies in a year also restricts them from
becoming advisors. If they do not fulfill this target, then their license is
cancelled after a year.
 Lack of trust on any company of Private Sector.
 Lack of knowledge about the products of ICICI Prudential and their total and
blind faith on LIC.
 Sometimes, fresh graduates want to become advisors but the company
denies making them an advisor as they are very fickle-minded and also
unreliable.
 There is a problem in targeting Chartered Accountants. ICAI, which is the
governing body of Chartered Accountants, does not allow them to become
advisors. However, now they have permitted some CA’s to become
advisors, but these are only those ones who are doing jobs somewhere and

101
 not allowed the ones who are doing their practice. So, still this decision is
very dicey.
 Sometimes, even those people want to become advisors for the company
who are not a localities but then the major problem that they face is that
they have got no natural market, so they are very susceptible about their
performance and whether they will be able to generate business for the
company or not, so they avoid to take up this challenge.
 It was a great problem to get appointments form people in the month of
March, as most of them were busy in filing their returns.
 Some people ask about comparative analysis with LIC.
 Some people consider IRDA fees of Rs. 1000 as a constraint.
 Non-availability of part-time training.
 All small towns are not open for doing this business.
 One person cannot take Life Insurance Agency of two different Companies.

Time constraint is the biggest constraint in taking up the stud

DATA ANALYSIS

1.What is your annual income?

a) less than 100000
b) 100000-300000
c) 300000-500000
d) more than 500000

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As per the analysis we can say that most of the people fall under the group of
annual income of Rs.300000-500000 i.e.40% they can be called as middle
income group. The next 30% are under or have annual income of Rs.100000-
300000. Only 15% have income more than 500000 and remaining 10% have less
than 100000as their annual income

2. Do you have any insurance plan?

a) yes
b)no

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• It can be interpreted from the chart that 84% of the people have insurance
plans and most have them have life insurances, it means that they are
less aware about other insurances or are less interested in taking
insurance for their vehicle, house etc. Only 16% people do not have or
are not interested in taking insurance.

3.What is your motive of taking insurance plan?

a) protection
b) saving
c) tax benefits
d) investment

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People have or want to have insurance plans mostly for the safety or
protectioni.e.30% it is the basic reason behind taking insurance. 26% have it for
savings, and 22% for tax rebateand remaining 22% for investment purpose.

4.In which scheme you have invested or would like to invest?

a) traditional

b) modern

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 • It can be said that people have equal preference for making investment or
have invested in Traditional and Modern scheme i.e.57% and
43%respectively.

5.which company you would prefer?

a) icici prudential
b) hdfc standerd life
c) LIC
d) others

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 a ) ic ic i p ru d e n tia l
d ) o th e r a ) ic ic i
6% p ru d e n tia l
b ) h d fc sta n d e rd
30% life
c) L IC
c) L IC
44% b ) h d fc
sta n d e rd life d ) o th e r
20%

The most preferred company is LIC . people still have preference for
public company and they have more trust on LICi.e.44%, the next
preferred company is HDFC(32%), 16% prefer ICICI and remaining 8%
go for other companies

6. Why?
a) efficient financial advisor
b) brand value
c) others

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 • People prefer a particular company mostly because of its brand valuei.e.
64% , 26% prefer because of efficient financial advisors and remaining
10% for other reasons. Still people see brand or the companies name as
the criteria for purchasing insurance rather the advice or services of
financial advisors.

7. Which fund do you prefer?

a) government securities
b) equity fund
c) debentures

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 • customers have somewhat equal preference for Government securities,
debentures and equity fund. As they like to have safety and assured
returns out of their investments.

8. Is it a right time to invest in unit linked insurance plan?

a) yes
b) no

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• People are not interested in investing their money in ULIP in this scenerio
or time of recession ,it does not seem them to be a safe option.

FACTS AND FINDINGS

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  We find that 47% of the respondents fall in the age group of 18 – 25 years, 25%
fall in the age group of 26 – 35 years and 17% fall in the age group of 36 – 49
years. Therefore most of the respondents are relatively young (below 26 years of
age). These individuals could be induced to purchase insurance plans on the
basis of its tax saving nature and as an investment opportunity with high returns.

 In India, the largest life insurance company is Life Insurance Corporation of India.
It has been in existence in India since 1956 and is completely owned by the
Government of India. Today the organization has grown to 2048 offices serving
18 crore policies and has a corpus of over 340000 crore INR.

 The outlook of insurance as a product should be changed from something which

you pay for your whole life (whole life policy) and do not receive any benefit (the
nominee only receives the benefit in case of your death) to an extremely useful
investment opportunity with the prospects of good returns on savings, tax saving
opportunities as well as providing for every milestone in your life like marriage,
education, children and retirement.

 ICICI PRUDENTIAL is faced with a large amount of competition. There are 18

insurance companies in India inclusive of LIC. Hence to capture a larger part of
the market the company could introduce more reasonable plans with lesser
premium payable per annum.

SWOT ANALYSIS
111
 Environmental Scan

Internal Analysis External Analysis

Strength Weaknesses Opportunities Threats

SWOT Matrix

STRENGTH

ICICI Prudential Life Insurance Company Limited is right now the market leader
in Private Insurer segment.

• Strong brand name

• Customer loyalty
• Product Quality
• Good reputation among customers

WEAKNESS

The company right now has lesser number of agents (i.e. financial advisors) than
LIC of India, which affects their sales in comparison to LIC of India.

• Insufficient product promotion

• Unawareness about the product
OPPURTUNITY

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ICICI Prudential Life Insurance Company Limited can give LIC of INDIA agents
an opportunity to join ICICI Prudential Life Insurance Company Limited as ICICI
Prudential has got more incentive packages & servicing quality better than LIC of
INDIA. Doing this they can reduce their cost of training and can exploit their
experience.

THREAT

Other big brand names like BIRLAS, TATA, HDFC, SBI and AVIVA, RELIANCE
etc.

• Emergence of substitute products

• Resistance to change
• Non- response from the target customers .

POLITICAL

Right one ICICI Prudential Life Insurance Company Limited, can go for opening
up more & more offices, as the present political environment is business friendly.

ECONOMIC

Insurance as we have already discussed is very essential for every person on

this face of earth. Being an insurance company, the responsibility of the company
also increases by many multiples, as they have to keep an eye on each & every
happening going around & provide better & fast service to customers. Along with
this, insurance is also very important for building up the infrastructure of any
country. The money collected from the people is invested in many sectors to
develop the infrastructure & hence ultimately make the life of the citizens better.

SOCIAL

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ICICI Prudential Life Insurance Company Limited enjoys a good brand name;
they can use it for their profit.

TECHNOLOGICAL

ICICI Prudential Life Insurance Company Limited uses latest technology for their
operations, which give them an edge over the competition.

Support provided by the Unit Manager

 Fields visits for the incumbents.

 Training on products & selling skills.
 Regular business reviews to monitor the progress.
 The UM acts both as a coach & a mentor.
 The UM recognizes the high performers.
 Helps in becoming financially independent.
 But the expectations from the team

 To achieve the sales targets given.

 To participate in all the meetings being placed
 Attending all the training programs being arranged.
 Report for the weekly reviews at the office.
 Regularly following the sales process.
 And the advisors are also required to follow the weekly reporting process

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CONCLUSION

1. ICICI PRUDENTIAL has interested and profitable planes for different age
group.

2. There are lots of scopes of life insurance in Indian only 2.5 people are
secure with life insurance so the insurance sector is its booming stage this
boom will more increase in 2 or 3 years.
3. Good profile insurance advisor could do the better job. If ICICI
PRUDENTIAL mentions the level of advisor them they may give great
sales to the company.
4. ICICI PRUDENTIAL has tuff competition with LIC as well as TATA AIG,
BAJAJ ALLIAZE, BIRLA SUNLIFE INSURANCE, SAHARA, ING VYSYA,
OM KOTAK MAHINDRA, HDFC INSURANCE, SBI LIFE AND RELIANCE
LIFE INSURANCE, PNB LIFE INSURANCE.
5. ICICI PRUDENTIAL LIFE INSURANCE COMPANY has great goodwill in
market in liberalized Indian market there are approximately 13 big
companies in Indian market and ICICI PRUDENTIAL is the No.1 private
insurance company. I found this fact in my recent survey.
6. If the company starts to concentrate on village segment market. Then
company can get great business.
7. I got the good profile people near by bank and share market. When I
concentrated on the 20-25 year age group people I found good result.
8. Within 20-25 year age group the sincerity level is high. They are career
oriented and want to earn more.
9. In the age group people made interest to purchase the kids plan and
pension plan and money back plan.
10. In the age group of 30-35 years the people who earning more then 3 lakh
p.a. made interest to purchase ULIP.
11. I found that in insurance sector a person should have great
communication and convenience skill.

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12. People made interest in the business opportunity of ICICI PRUDENTIAL
because there are lots of chances to increase earning and make high
place in the company.
13. People took interest in pinnacle programme and also life the professional
environment of the company.
14. In my survey I found that low percentage of people is aware with the life
insurance.
15. It was great experience to communicate with different people. I learnt
through cross-question by peoples.

AWARDS

India's Most Customer Responsive Insurance Company

Avaya Global Connect - Economic Times
Customer Responsiveness Awards

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RECOMMENDETATION

After going through the above table regarding market share of various companies
in the financial year 2003-04, there is no reason why ICICI prudential should
rejoice of being the number one company in the country. The growth that
companies like BIRLA SUNLIFE, SBI LIFE INSURANCE, TATA-AIG, BAJAJ
ALLIANZ, OM KOTAK MAHINDRA, AVIVA, ING VYASA, METLIFE & AMP
SANMAR have produced that can be quite a big unseen threat for the company
in the coming years. So the company should start thinking of what they want from
the market & where they want to see themselves after a span of 10 years
because if the popularity of these companies continues then one day they will
become good competitors of ICICI Prudential & then the consequences can be
quite disturbing for the company.

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BIBLIOGRAPHY

• Philip Kotler Marketing Management

• Fact sheets of ICICI standard Life Company

Websites

• www.google.com

• www.yahoo.com

• www.wikipedia.com

Newspapers

• Economics times
• Times of India

Magazines

•Business Today
•Business World

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