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A study of comparative analysis of HDFC bank with other banks

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  1. 1. Summer Training Project Report On “A Study on customer’s perception with special reference to HDFC SLIC & its major competitors” Submitted in Partial Fulfillment of the requirement for Award of degree of MASTER OF BUSINESS ADMINISTRATION Of Mahamaya Technical University, Noida By (PREETI SINGH) Roll No:1019370017 2011 United College of Engineering & Research Greater Noidai|P a g e
  2. 2. ACKNOWLEDGMENTI would like to thank my project guide Mr. Shudhir, Channel Development ManagerHDFC Life Insurance, NOIDA for guiding me through my summer internship andresearch project. His encouragement, time and effort are greatly appreciated.I would like to thank all of my faculty staff for supporting me during this project andproviding me an opportunity to learn outside the class room. It was a truly wonderfullearning experience.I would like to dedicate this project to my colleagues and all those who help me tocomplete this project. Without their help and constant support this project would nothave been possible.Lastly I would like to thank all the respondents who offered their opinions andsuggestions through the survey that was conducted by me in Noida.ii | P a g e
  3. 3. EXECUTIVE SUMMARYHDFC Life insurance is the oldest life insurance company in the world. It is thelargest insurer in the UK and is the 28th largest company in the world. In India, thecompany is marketing life insurance products and unit linked investment plans. Frommy research at HDFC Life, I found that the company has a lot of competition fromother private insurers like ICICI, Aviva, Birla Sun Life and Tata AIG. It also facescompetition from LIC. To compete effectively HDFC Life could launch cheaper andmore reasonable products with small premiums and short policy terms (the number ofyear’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.HDFC must advertise regularly and create brand value for its products and services.Most of its competitors like Aviva, ICICI, Max, Reliance and LIC use televisionadvertisements to promote their products. The Indian consumer has a false perceptionabout insurance – they feel that it would not benefit them if they do not live throughthe policy term. Nowadays however, most policies are unit linked plans where acustomer is benefited even if their death does not occur during the policy term. Thismessage should be conveyed to potential customers so that they readily invest ininsurance.iii | P a g e
  4. 4. Family responsibilities and high returns are the two main reasons people invest ininsurance. Optimum returns of 16 – 20 % must be provided to consumers to keepthem interested in purchasing insurance.On the whole HDFC Life insurance is a good place to work at. Every new recruit isprovided with extensive training on unit linked funds, financial instruments and theproducts of HDFC. This training enables an advisor/sales manager to market thepolicies better. HDFC was ranked 13 in the Best Places to Work survey. The companyshould try to create awareness about itself in India. In the global market it is alreadyvery popular. With an improvement in the sales techniques used, a fair bit ofadvertising and modifications to the existing product portfolio, HDFC would be all setto capture the insurance market in India as it has around the globe.iv | P a g e
  5. 5. TABLE OF CONTENTS Introduction to Insurance 1-9 Company Profile of HDFC SLIC 16 Competitive analysis 51 Marketing problems 57 Analysis and Interpretation 58 Future line of research 82 List of Findings Conclusion 83 Limitation of the study List of References Questionnairev|P a g e
  6. 6. OBJECTIVES OF THE STUDYObjectives of Study  To analysis the product details of HDFC Standard life Insurance Company limited and other insurance company.  To find ‘Points of Parity’ and ‘Points of Difference’ of HDFC Standard Life Insurance Company Limited and other insurance company.  To find out factors that influence customers to purchase insurance policies and give suggestions for further | P a g e
  8. 8. THE INSURANCE INDUSTRY IN INDIA AN OVERVIEWWith the largest number of life insurance policies in force in the world, Insurancehappens to be a mega opportunity in India. It’s a business growing at the rate of 15-20per cent annually and presently is of the order of Rs 1560.41 billion (for the financialyear 2006 – 2007). Together with banking services, it adds about 7% to the country’sGross Domestic Product (GDP). The gross premium collection is nearly 2% of GDPand funds available with LIC for investments are 8% of the GDP.Even so nearly 65% of the Indian population is without life insurance cover whilehealth insurance and non-life insurance continues to be below international standards.A large part of our population is also subject to weak social security and pensionsystems with hardly any old age income security. This in itself is an indicator thatgrowth potential for the insurance sector in India is immense.A well-developed and evolved insurance sector is needed for economic developmentas it provides long term funds for infrastructure development and strengthens the risktaking ability of individuals. It is estimated that over the next ten years India wouldrequire investments of the order of one trillion US dollars. The Insurance sector, tosome extent, can enable investments in infrastructure development to sustain theeconomic growth of the country.viii | P a g e
  9. 9. HISTORICAL PERSPECTIVEIn India, insurance has a deep-rooted history. It finds mention in the writings of Manu( Manusmrithi), Yagnavalkya ( Dharmasastra ) and Kautilya ( Arthasastra ). Thewritings talk in terms of pooling of resources that could be re-distributed in times ofcalamities such as fire, floods, epidemics and famine. This was probably a pre-cursorto modern day insurance. Ancient Indian history has preserved the earliest traces ofinsurance in the form of marine trade loans and carriers’ contracts. Insurance in Indiahas evolved over time heavily drawing from other countries, England in particular.1818 saw the advent of life insurance business in India with the establishment ofthe Oriental Life Insurance Company in Calcutta. This Company however failed in1834. In 1829, the Madras Equitable had begun transacting life insurance business inthe Madras Presidency. 1870 saw the enactment of the British Insurance Act and inthe last three decades of the nineteenth century, the Bombay Mutual (1871), Oriental(1874) and Empire of India (1897) were started in the Bombay Residency. This era,however, was dominated by foreign insurance offices which did good business inIndia, namely Albert Life Assurance, Royal Insurance, Liverpool and London GlobeInsurance and the Indian offices were up for hard competition from the foreigncompanies.In 1914, the Government of India started publishing returns of Insurance Companiesin India. The Indian Life Assurance Companies Act, 1912 was the first statutorymeasure to regulate life business. In 1928, the Indian Insurance Companies Act wasenacted to enable the Government to collect statistical information about both life andnon-life business transacted in India by Indian and foreign insurers includingprovident insurance societies. In 1938, with a view to protecting the interest of theix | P a g e
  10. 10. Insurance public, the earlier legislation was consolidated and amended by theInsurance Act, 1938 with comprehensive provisions for effective control over theactivities of insurers.The Insurance Amendment Act of 1950 abolished Principal Agencies. However, therewere a large number of insurance companies and the level of competition was high.There were also allegations of unfair trade practices. The Government of India,therefore, decided to nationalize insurance business.An Ordinance was issued on 19th January, 1956 nationalizing the Life Insurancesector and Life Insurance Corporation came into existence in the same year. The LICabsorbed 154 Indian, 16 non-Indian insurers as also 75 provident societies—245Indian and foreign insurers in all. The LIC had monopoly till the late 90s when theInsurance sector was reopened to the private sector.The history of general insurance dates back to the Industrial Revolution in the westand the consequent growth of sea-faring trade and commerce in the 17 th century. Itcame to India as a legacy of British occupation. General Insurance in India has itsroots in the establishment of Triton Insurance Company Ltd., in the year 1850 inCalcutta by the British. In 1907, the Indian Mercantile Insurance Ltd, was set up. Thiswas the first company to transact all classes of general insurance business.1957 saw the formation of the General Insurance Council, a wing of the InsuranceAssociation of India. The General Insurance Council framed a code of conduct forensuring fair conduct and sound business practices.In 1968, the Insurance Act was amended to regulate investments and set minimumsolvency margins. The Tariff Advisory Committee was also set up then.x|P a g e
  11. 11. In 1972 with the passing of the General Insurance Business (Nationalization) Act,general insurance business was nationalized with effect from 1st January, 1973. 107insurers were amalgamated and grouped into four companies, namely NationalInsurance Company Ltd., the New India Assurance Company Ltd., the OrientalInsurance Company Ltd and the United India Insurance Company Ltd. The GeneralInsurance Corporation of India was incorporated as a company in 1971 and itcommence business on January 1sst 1973.This millennium has seen insurance come a full circle in a journey extending to nearly200 years. The process of re-opening of the sector had begun in the early 1990s andthe last decade and more has seen it been opened up substantially. In 1993, theGovernment set up a committee under the chairmanship of R N Malhotra, formerGovernor of RBI, to propose recommendations for reforms in the insurance sector.The objective was to complement the reforms initiated in the financial sector. Thecommittee submitted its report in 1994 where in, among other things, it recommendedthat the private sector be permitted to enter the insurance industry. They stated thatforeign companies be allowed to enter by floating Indian companies, preferably ajoint venture with Indian partners.Following the recommendations of the Malhotra Committee report, in 1999, theInsurance Regulatory and Development Authority (IRDA) was constituted as anautonomous body to regulate and develop the insurance industry. The IRDA wasincorporated as a statutory body in April, 2000. The key objectives of the IRDAinclude promotion of competition so as to enhance customer satisfaction throughincreased consumer choice and lower premiums, while ensuring the financial securityof the insurance market.xi | P a g e
  12. 12. The IRDA opened up the market in August 2000 with the invitation for applicationfor registrations. Foreign companies were allowed ownership of up to 26%. TheAuthority has the power to frame regulations under Section 114A of the InsuranceAct, 1938 and has from 2000 onwards framed various regulations ranging fromregistration of companies for carrying on insurance business to protection ofpolicyholders’ interests.In December, 2000, the subsidiaries of the General Insurance Corporation of Indiawere restructured as independent companies and at the same time GIC was convertedinto a national re-insurer. Parliament passed a bill de-linking the four subsidiariesfrom GIC in July, 2002.Today there are 14 general insurance companies including the ECGC and AgricultureInsurance Corporation of India and 14 life insurance companies operating in thecountry.The insurance sector is a colossal one and is growing at a speedy rate of 15-20%.Together with banking services, insurance services add about 7% to the country’sGDP. A well-developed and evolved insurance sector is a boon for economicdevelopment as it provides long- term funds for infrastructure development at thesame time strengthening the risk taking ability of the country.xii | P a g e
  13. 13. KEY MILESTONES1912: The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance business.1928: The Indian Insurance Companies Act enacted to enable the government to collect statistical information about both life and non-life insurance businesses.1938: Earlier legislation consolidated and amended by the Insurance Act with the objective of protecting the interests of the insuring public.1956: 245 Indian and foreign insurers along with provident societies were taken over by the central government and nationalized. LIC was formed by an Act of Parliament- LIC Act 1956- with a capital contribution of Rs. 5 crore from the Government of India. INDUSTRY REFORMSReforms in the Insurance sector were initiated with the passage of the IRDA Bill inParliament in December 1999. The IRDA since its incorporation as a statutory bodyin April 2000 has fastidiously stuck to its schedule of framing regulations andregistering the private sector insurance companies. Since being set up as anindependent statutory body the IRDA has put in a framework of globally compatibleregulations.The other decision taken simultaneously to provide the supporting systems to theinsurance sector and in particular the life insurance companies was the launch of theIRDA online service for issue and renewal of licenses to agents. The approval ofinstitutions for imparting training to agents has also ensured that the insurancecompanies would have a trained workforce of insurance agents in place to sell theirproducts.xiii | P a g e
  14. 14. PRESENT SCENARIO - LIFE INSURANCE INDUSTRY IN INDIAThe life insurance industry in India grew by an impressive 47.38%, with premiumincome at Rs. 1560.41 billion during the fiscal year 2007-2008. Though the totalvolume of LICs business increased in the last fiscal year (2007-2008) compared tothe previous one, its market share came down from 85.75% to 81.91%.The 17 private insurers increased their market share from about 15% to about 19% ina years time. The figures for the first two months of the fiscal year 2008-09 alsospeak of the growing share of the private insurers. The share of LIC for this periodhas further come down to 75 percent, while the private players have grabbed over 24percent.With the opening up of the insurance industry in India many foreign players haveentered the market. The restriction on these companies is that they are not allowed tohave more than a 26% stake in a company’s ownership.Since the opening up of the insurance sector in 1999, foreign investments of Rs. 8.7billion have poured into the Indian market and 19 private life insurance companieshave been granted licenses.Innovative products, smart marketing, and aggressive distribution have enabledfledgling private insurance companies to sign up Indian customers faster than anyoneexpected. Indians, who had always seen life insurance as a tax saving device, are nowsuddenly turning to the private sector and snapping up the new innovative products onoffer. Some of these products include investment plans with insurance and goodreturns (unit linked plans), multi – purpose insurance plans, pension plans, child plansand money back plans.xiv | P a g e
  15. 15. INSURANCE REGULATORY AND DEVELOPMENT AUTHORITYReforms in the Insurance sector were initiated with the passes of the IRDA Bill inParliament in December 1999. The IRDA since its incorporation as a statutory bodyin April 2000 has fastidiously such to its schedule of framing regulations andregistering the private sector insurance companies.The other decision taken simultaneously to provide the supporting systems to theinsurance sector and in particular the life insurance companies was the launch of theIRDA online service for issue and renewal of licenses to agents.Section 14 of IRDA Act, 1999 lays down the duties, powers and functions of IRDA.(1) Subject to the provisions of this Act and any other law for the time being in force,the Authority shall have the duty to regulate, promote and ensure orderly growth ofthe insurance business and re-insurance business.(2) Without prejudice to the generality of the provisions contained in sub-section (1),the powers and functions of the Authority shall include,(a) Issue to the applicant a certificate of registration, renew, modify, withdraw,suspend or cancel such registration;(b) Protection of the interests of the policy holders in matters concerning assigning ofpolicy, nomination by policy holders, insurable interest, settlement of insurance claim,surrender value of policy and other terms and conditions of contracts of insurance;(c) Specifying requisite qualifications, code of conduct and practical training forintermediary or insurance intermediaries and agents;(d) Specifying the code of conduct for surveyors and loss assessors;(e) Promoting efficiency in the conduct of insurance business;xv | P a g e
  16. 16. (f) Promoting and regulating professional organizations connected with the insuranceand re-insurance business;(g) Levying fees and other charges for carrying out the purposes of this Act;(h) Calling for information from, undertaking inspection of, conducting enquiries andinvestigations including audit of the insurers, intermediaries, insurance intermediariesand other organizations connected with the insurance business;(i) Control and regulation of the rates, advantages, terms and conditions that may beoffered by insurers in respect of general insurance business not so controlled andregulated by the Tariff Advisory Committee under section 64U of the Insurance Act,1938 (4 of 1938);(j) Specifying the form and manner in which books of account shall be maintainedand statement of accounts shall be rendered by insurers and other insuranceintermediaries;(k) Regulating investment of funds by insurance companies;(l) Regulating maintenance of margin of solvency;(m) Adjudication of disputes between insurers and intermediaries or insuranceintermediaries;(n) Supervising the functioning of the Tariff Advisory Committee;(o) Specifying the percentage of premium income of the insurer to finance schemesfor promoting and regulating professional organizations referred to in clause(p) Specifying the percentage of life insurance business and general insurancebusiness to be undertaken by the insurer in the rural or social sector; and(q) Exercising such other powers as may be prescribedxvi | P a g e
  17. 17. OVERVIEW OF CHAPTER SCHEMECHAPTER 1:Introduction to insurance - An overview of the insurance industry in India, history,key milestones, reforms in the industry, present scenario in India IRDA.CHAPTER 2:Research Design - Introduction, title of the study, statement of the problem,objectives of the study, research methodology, sampling, plan of analysis and studyarea.CHAPTER 3:Company profile of HDFC SLIC – Introduction of HDFC SLIC, Board members,HDFC Profile, Standard life Profile, Join venture, products and services, Awards andAccolades, Distribution Strategy , Achievements, Limitation, Field methodologyCHAPTER 4:Competitive analysis – Information about the plans offered by LIC, ICICI prudential,Birla Sun Life, Bajaj Allianz and Tata AIG.CHAPTER 5:Marketing problems - The techniques used to market insurance and their advantagesand disadvantages along with suggestions for improvement.CHAPTER 6:xvii | P a g e
  18. 18. Analysis and Interpretation – A survey on factors that influence people to purchaseLife Insurance Policy.CHAPTER 7:Future Line Of Research – Future topic for research.CHAPTER 8:Conclusion.xviii | P a g e
  20. 20. HDFC STANDARD LIFE INSURANCE COMPANY LIMITEDIntroduction:HDFC Standard Life Insurance Company Limited. is one of Indias leading privateinsurance companies, which offers a range of individual and group insurancesolutions. It is a joint venture between Housing Development Finance CorporationLimited (HDFC Limited), Indias leading housing finance institution and a GroupCompany of the Standard Life Plc, UK. As on February 28, 2009 HDFC Ltd. holds72.43% and Standard Life (Mauritius Holding) 2006, Ltd. holds 26.00% of equity inthe joint venture, while the rest is held by others.As a joint venture of leading financial services groups, HDFC Standard Life has thefinancial expertise required to manage your long-term investments safely andefficiently.HDFC SLIC have a range of individual and group solutions, which can be easilycustomized to specific needs. Group solutions have been designed to offer completeflexibility combined with a low charging structure.The gross premium income, for the year ending March 31, 2009 stood at Rs. 5,564.69Crore.The company has covered over 8,33,070 lives as on March 31, 2009.HDFC Standard Life believes that establishing a strong and ethical foundation is anessential prerequisite for long-term sustainable growth. To ensure this, we haveconcentrated our focus on expansion of branch network, organising an efficient andwell trained sales force, and setting up appropriate systems and processes withxx | P a g e
  21. 21. optimum use of technology. As all these areas form the basic infrastructure forestablishing the highest possible customer service standards.Our core values are drilled down to all levels of employees, as these are inviolable.We continue to promote high integrity in business practices and shun short cuts andunethical practices, as we wish to be perceived as an institution with high moralstanding. Since our inception in 2000, when the Indian insurance space was openedfor private participation, we have consistently focused on setting benchmarks in allaspect on insurance business. Being the first private player to be registered with theIRDA and the first to issue a policy on December 12, 2000, our differentiators are:Strong PromoterHDFC Standard Life is a strong, financially secure business supported by two strongand secure promoters – HDFC Ltd and Standard Life. HDFC Ltd’s excellent brandstrength emerges from its unrelenting focus on corporate governance, high standardsof ethics and clarity of vision. Standard Life is a strong, financially secure businessand a market leader in the UK Life & Pensions sector.Preferred and Trusted BrandOur brand has managed to set a new standard in the Indian life insurancecommunication space. We were the first private life insurer to break the ice using theidea of self-respect instead of ‘death’ to convey our brand proposition (Sar Utha KeJiyo). Today, we are one of the few brands that customers recognize, like and preferto do business. Moreover, our brand thought, Sar Utha Ke Jiyo, is the most recalledcampaign in its category.xxi | P a g e
  22. 22. Investment PhilosophyWe follow a conservative investment management philosophy to ensure that ourcustomer’s money is looked after well. The investment policies and actions areregularly monitored by a formal Investment Committee comprising non-executivedirectors and the Principal Officer & Executive Director.As a life insurance company, we understand that customers have invested theirsavings with us for the long term, with specific objectives in mind. Thus, ourinvestment focus is based on the primary objective of protecting and generating good,consistent, and stable investment returns to match the investor’s long-term objectiveand return expectations, irrespective of the market condition.Need-Based Selling ApproachDespite the criticality of life insurance, sales in the industry have been characterizedby over reliance on tax benefits and limited advice-based selling. Our eight-stepstructured sales process ‘Disha’ however, helps customers understand their latentneeds at the first instance itself without focusing on product features or tax benefits.Need-based selling process, Disha, the first of its kinds in the industry, looks at thewhole financial picture. Customers see a plan not piecemeal product selling.Risk Control FrameworkHDFC Standard Life has fully implemented a risk control framework to ensure thatall types of risks (not just financial) are identified and measured. These are regularlyreported to the board and this ensures that the company management and boardmembers are fully aware of any risks and the actions taken to ensure they aremitigatedxxii | P a g e
  23. 23. Focus on TrainingTraining is an integral part of our business strategy. Almost all employees haveundergone training to enhance their technical skills or the softer behavioral skills to beable to deliver the service standards that our company has set for itself. Besides themandatory training that Financial Consultants have to undergo prior to being licensed,we have developed and implemented various training modules covering variousaspects including product knowledge, selling skills, objection handling skills and soon.Focus on Long-Term ValueHDFC Standard Life don’t focus in the business of ramping up the topline only, but tocreate maximization of stakeholders value. Today, we are extremely satisfied with thebase that we have created for the long-term success of this company.Transparent DealingWe are one of the few companies whose product details, pricing, clauses are clearlycommunicated to help customers take the right decision.xxiii | P a g e
  24. 24. Strict Compliance with Regulations We have initiated and implemented many new processes, some of which were found useful by the IRDA and later made mandatory for the entire industry. The agents who successfully completed this training only, were authorized by the company to sell ULIPs. This has now been made compulsory by IRDA for all insurance companies under the new Unit Linked Guidelines. Diversified Product Portfolio HDFC Standard Life’s wide and diversified product portfolio help individuals meet their various needs, be it:•Protection: Need for a sound income protection in case of your unfortunate demise•Investment: Need to ensure long-term real growth of your money•Savings: Save for the milestones and protect your savings too•Pension: Need to save for a comfortable life post retirement•Health: Cover for health related exigencies xxiv | P a g e
  25. 25. BOARD MEMBERSBrief Profile of The Board of DirectorsMr. Deepak S. Parekh is the Chairman of the Company. He is also the ExecutiveChairman of Housing Development Finance Corporation Limited (HDFC Limited).He joined HDFC Limited in a senior management position in 1978. He was inductedas a whole-time director of HDFC Limited in 1985 and was appointed as its ExecutiveChairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh isa Fellow of the Institute of Chartered Accountants (England & Wales).Sir Alexander M. Crombie joined the Board of Directors of the Company in April,2002. He has been with the Standard Life Group for 34 years holding various seniormanagement positions. He was appointed as the Group Chief Executive of theStandard Life Group in March 2004. Sir Crombie is a fellow of the Faculty ofActuaries in Scotland.Mr. Keki M. Mistry joined the Board of Directors of the Company in December,2000. He is currently the Managing Director of HDFC Limited. He joined HDFCLimited in 1981 and became an Executive Director in 1993. He was appointed as itsManaging Director in November, 2000. Mr. Mistry is a Fellow of the Institute ofChartered Accountants of India and a member of the Michigan Association ofCertified Public Accountants.Ms. Marcia D. Campbell is currently the Group Operations Director in the StandardLife group and is responsible for Group Operations, Asia Pacific Development,Strategy & Planning, Corporate Responsibility and Shared Services Centre. Ms.Campbell joined the Board of Directors in November 2005.xxv | P a g e
  26. 26. Ms. Renu S. Karnad is the Executive director of HDFC Limited, is a graduate in lawand holds a Masters degree in economics from Delhi University. She has beenemployed with HDFC Limited since 1978 and was appointed as the ExecutiveDirector in 2000. She is responsible for overseeing all aspects of lending operations ofHDFC Limited.Mr. Norman K. Skeoch is currently the Chief Executive in Standard LifeInvestments Limited and is responsible for overseeing Investment Process & ChiefExecutive Officer Function. Prior to this, Mr. Skeoch was working with M/s. JamesCapel & Co. holding the positions of UK Economist, Chief Economist, ExecutiveDirector, Director of Controls and Strategy HSBS Securities and Managing DirectorInternational Equities. He was also responsible for Economic and Investment Strategyresearch produced on a worldwide basis. Mr. Skeoch joined the Board of Directors inNovember 2005.Mr. Gautam R. Divan is a practising Chartered Accountant and is a Fellow of theInstitute of Chartered Accountants of India. Mr. Divan was the Former Chairman andManaging Committee Member of Midsnell Group International, an InternationalAssociation of Independent Accounting Firms and has authored several papers ofprofessional interest. Mr. Divan has wide experience in auditing accounts of largepublic limited companies and nationalised banks, financial and taxation planning ofindividuals and limited companies and also has substantial experience in structuringoverseas investments to and from India.Mr. Ranjan Pant is a global Management Consultant advising CEO/Boards onStrategy and Change Management. Mr. Pant, until 2002 was a Partner & Vice-xxvi | P a g e
  27. 27. President at Bain & Company, Inc., Boston, where he led the worldwide UtilityPractice. He was also Director, Corporate Business Development at General Electricheadquarters in Fairfield, USA. Mr. Pant has an MBA from The Wharton School andBE (Honours) from Birla Institute of Technology and Sciences.Mr. Ravi Narain is the Managing Director & CEO of National Stock Exchange ofIndia Limited. Mr. Ravi Narain was a member of the core team to set-up theSecurities & Exchange Board of India (SEBI) and is also associated with variouscommittees of SEBI and the Reserve Bank of India (RBI).Mr. Gerald E. Grimstone was appointed Chairman in May 2007, having beenDeputy Chairman since March 2006. He became a director of The Standard LifeAssurance Company in July 2003. He is also Chairman of Candover Investments plcand was appointed as one of the UK’s Business Ambassadors by the Prime Ministerin January 2009. Gerry held senior positions within the Department of Health andSocial Security and HM Treasury until 1986. He then spent 13 years with Schrodersin London, Hong Kong and New York, and was Vice Chairman of Schroders’worldwide investment banking activities from 1998 to 1999. He is the AlternateDirector to Sir Alexander Crombie.Mr. Paresh Parasnis is the Principal Officer and Executive Director of the companysince November 14, 2008. A fellow of the Institute of Chartered Accountants of India,he has been associated with the HDFC Group since 1984. During his 16-year tenure atxxvii | P a g e
  28. 28. HDFC Limited, he was responsible for driving and spearheading several keyinitiatives. As one of the founding members of HDFC Standard life, Mr. Parasnis hasbeen responsible for setting up branches, driving sales and servicing strategy, leadingrecruitment, contributing to product launches and performance management system,overseeing new business and claims settlement, customer interactions etc.HDFC Incorporated in 1977 with a share capital of Rs 10 Crores, HDFC has sinceemerged as the largest residential mortgage finance institution in the country. Thecorporation has had a series of share issues raising its capital to Rs. 119 Crores. Thegross premium income for the year ending March 31, 2007 stood at Rs. 2,856 Croresand new business premium income at Rs. 1,624 Crores. The company has coveredover 8,77,000 lives year ending March 31, 2007.HDFC operates through almost 450 locations throughout the country with itscorporate head quarters in Mumbai, India. HDFC also has an International Office inDubai, UAE with service associates in Kuwait, Oman and Qatar. HDFC is the largesthousing company in India for the last 27 years.xxviii | P a g e
  29. 29. SNAPSHOT - I  Incorporated in 1977 as the first specialized Mortgage Company in India.  Almost 90% of initial shareholding in the hands of domestic institutes and retail investors. Current 77% of shares held by foreign institutional investors.  Besides the core business of mortgage HDFC has evolved into a financial conglomerate with holdings In:  HDFC Standard Life insurance Company- HDFC holds 78.07 %.  HDFC Asset Management Company – HDFC holds 50.1%  HDFC Bank- HDFC holds 22.25%.  Intelenet Global (Business Process Outsourcing) – HDFC holds 50%.  HDFC Chubb General Insurance Company – HDFC holds 74%.SNAPSHOT-II • Loan Approvals (up to Dec 2007) ` 805 billion (US $ 18.30 billion.) • Loan Disbursements (up to Dec. 2007) `669 billion (US $ 15.20 billion) • Housing Units Financed `2.5 million. • Distribution  Offices 181  Outreach Programs 90xxix | P a g e
  30. 30. KEY PLAYERSMr. Deepak S Parekh is the Chairman of the Company. He is also the ExecutiveChairman of Housing Development Finance Corporation Limited (HDFC Limited).He joined HDFC Limited in a senior management position in 1978. He was inductedas a whole-time director of HDFC Limited in 1985 and was appointed as its ExecutiveChairman in 1993. He is the Chief Executive Officer of HDFC Limited. Mr. Parekh isa Fellow of the Institute of Chartered Accountants (England & Wales).Mr. Deepak M Satwalekar is the Managing Director and CEO of the Company sinceNovember, 2000. Prior to this, he was the Managing Director of HDFC Limited since1993. Mr. Satwalekar obtained a Bachelors Degree in Technology from the IndianInstitute of Technology, Bombay and a Masters Degree in Business Administrationfrom The American University, Washington DC. GROUP COMPANIESHDFC Bank: World Class Indian Bank- among the top private banks in India.HDFC AMC: One of the top 3 AMCs in India- Preferred investment manager.Intelenet Global: BPO services for international customers.CIBIL: Credit Information Bureau India Limited.HDFC Chubb: Upcoming Private companies in the field of General Insurance.HDFC Mutual FundHDFC Helps to search properties in all major cities in IndiaHDFC securitiesxxx | P a g e
  31. 31. STANDARD LIFEStandard Life is Europe’s largest mutual life assurance company. Standard Life,which has been in the life insurance business for the past 175 years is a moderncompany surviving quite a few changes since selling its first policy in 1825. Thecompany expanded in the 19th century from kits original Edinburgh premises, openingoffices in other towns and acquitting other similar businesses.Standard Life Currently has assets exceeding over £ 70 billion under its managementand has the distinction of being accorded “AAA” rating consequently for the six yearsby Standard and Poor.SNAPSHOT • Founded in 1875, company supporting generation for last 179 years. • Currently over 5 million Policy holders benefiting from the services offered. • Europe’s largest mutual life insurer.xxxi | P a g e
  32. 32. JOINT VENTUREHDFC Standard Life Insurance Company Limited was one of the first companies tobe granted license by the IRDA to operate in life insurance sector. Reach of the JVplayer is highly rated and been conferred with many awards. HDFC is rated ‘AAA ’by both CRISIL and ICRA. Similarly, Standard Life is rated ‘AAA’ both by Moody’sand Standard and Poor’s. These reflect the efficiency with which HDFC and StandardLife manage their asset base of Rs. 15,000 Cr and Rs. 600,000 Cr. respectively.HDFC Standard Life Insurance Company Ltd was incorporated on 14th August 2000.HDFC is the majority stakeholder in the insurance JV with 81.4% staple and Standardof as a staple 18.6% Mr. Deepak Satwalekar is the MD and CEO of the venture.HDFC Standard Life Insurance Company Ltd. Is one of India’s leading Private LifeInsurance Companies, which offers a range of individual and group Insurancesolutions. It is a joint venture between Housing Development Finance CorporationLimited (HDFC Ltd.) India’s leading housing finance institution and the StandardLife Assurance Company, a leading provider of financial services from the UnitedKingdom. Both the promoters are will known for their ethical dealings and financialxxxii | P a g e
  33. 33. strength and are thus committed to being a long-term player in the life Insuranceindustry- all important factors to consider when choosing your insurer. BUSINESS GROWTHTrack Record so farThe gross premium income of HDFC, for the year ending March 31, 2007 stood atRs. 2,856 crores and new business premium income at Rs. 1,624 crores.The company has covered over 8,77,000 lives year ending March 31, 2007. Companyalso declared our 5th consecutive bonus in as many years for our ‘with profit’policyholders. KEY STRENGTHFinancial ExpertiseAs a joint venture of leading financial services groups. HDFC standard Life has thefinancial expertise required to manage long-term investments safely and efficiently.Range of SolutionsHDFC SLIC has a range of individual and group solutions, which can be easilycustomized to specific needs. These group solutions have been designed to offercomplete flexibility combined with a low charging structure.Strong Ethical Values:HDFC SLIC is an ethical and Cultural Organization. False selling or falsecommitment with the customers is not allowed.xxxiii | P a g e
  34. 34. Most respected Private Insurance CompanyHDFC SLIC was awarded No-1 Private Insurance Company in 2004 by the WorldClass Magazine Business World for Integrity, Innovation and Customer Care. CORPORATE OBJECTIVEVisionThe most successful and admired life insurance company, which means that we arethe most trusted company, the easiest to deal with, offer the best value for money, andset the standards in the industry.The most obvious choice for all.ValuesIntegrity InnovationCustomer centric People Care One for allTeamwork Joy and Simplicity PRODUCTS & SERVICESThe right investment strategies wont just help plan for a more comfortable tomorrow-- they will help you get “Sar Utha ke Jiyo”. At HDFC SLIC, life insurance plans arecreated keeping in mind the changing needs of family. Its life insurance plans aredesigned to provide you with flexible options that meet both protection and savingsneeds. It offers a full range of transparent, flexible and value for money products.HDFC SLIC products are modern and contemporary unitized products that offerxxxiv | P a g e
  35. 35. unique customer benefits like flexibility to choose cover levels, indexation and partialwithdrawals. PLANS THAT ARE OFFERED BY HDFC STANDARDS LIFE INSURANCE Individual ProductsProtection PlansA person can protect his family against the loss of his income or the burden of a loanin the event of his unfortunate demise, disability or sickness. These plans offervaluable peace of mind at a small price. Protection range includes ourTerm Assurance Plan & Loan Cover Term Assurance Plan.Investment PlansHDFC SLIC’s Single Premium Whole of Life plan is well suited to meet long terminvestment needs. This provides attractive long term returns through regular bonuses.Pension PlansPension Plans help to secure financial independence even after retirement. Pensionrange includes Personal Pension Plan, Unit Linked Pension, Unit Linked PensionPlus.Savings PlansSavings Plans offer a flexible option to build savings for future needs such as buyinga dream home or fulfilling your children’s immediate and future needs.Savings range includes Endowment Assurance Plan, Unit Linked Endowment, UnitLinked Endowment Plus, Unit Linked Endowment Plus II, Money Back,xxxv | P a g e
  36. 36. Unit Linked Enhanced Life Protection II, Childrens Plan, Unit Linked Young Star,Unit Linked Young Star Plus, Unit Linked Young Star Plus II.Group ProductsOne-stop shop for employee-benefit solutionsHDFC Standard Life has the most comprehensive list of products for progressiveemployers who wish to provide the best and most innovative employee benefitsolutions to their employees. It offers different products for different needs ofemployers ranging from term insurance plans for pure protection to voluntary planssuch as superannuation and leave encashment.HDFC SLIC offers the following group products to esteemed corporate clients: A) Group Term Insurance B) Group Variable Term Insurance C) Group Unit-Linked PlanAn investment solution that provides funding vehicle to manage corpuses withGratuity, Defined Benefit or Defined Contribution Superannuation or LeaveEncashment schemes of your companyAlso suitable for other employee benefit schemes such as salary saving schemes andwealth management schemes.xxxvi | P a g e
  37. 37. Social ProductDevelopment Insurance PlanDevelopment Insurance plan is an insurance plan which provides life cover tomembers of a Development Agency for a term of one year. On the death of anymember of the group insured during the year of cover, a lump sum is paid to thosemember beneficiaries to help meet some of the immediate financial needs followingtheir loss.EligibilityMembers of the development agency and their spouses with:Minimum age at the start of the policy 18 years last birthdayMaximum age at the start of policy 50 years last birthdayEmployees of the Development Agency are not eligible to join the group. The groupto be covered is only eligible if it contains more than 500 members.Premium PaymentsThe premium to be paid will be quoted per member in the group and will be the samefor all members of the group. The premium can only be paid by the DevelopmentAgency as a single lump sum that includes all premiums for the group to be covered.Cover will not start until the premium and all the member information in our specifiedformat has been received.xxxvii | P a g e
  38. 38. BenefitsOn the death of each member covered by the policy during the year of cover a lumpsum equal to the sum assured will be paid to their beneficiaries or legal heirs. Wherethe death is as a result of an accident, an additional lump sum will be paid equal tohalf the sum assured. There are no benefits paid at the end of the year of cover andthere is no surrender value available at any time.The role of the Development AgencyDue to the nature of the groups covered, HDFC Standard Life will be passing certainadministrative tasks onto the Development Agency. By passing on these tasks thepremium charged can be lower. These tasks would include: • Submission of member data in a specified computer format • Collection of premiums from group members • Recording changes in the details of group members • Disbursement of claim payments and the mortality rebate (if any) to group membersThese tasks would be in addition to the usual duties of a policyholder such as: • Payment of premiums • Reporting of claims • Keeping policy holder information up to dateTraining and support will be available to give guidance on how to complete the tasksappropriately. Since these additional tasks will impose a burden on the Developmentxxxviii | P a g e
  39. 39. Agency, the Development Agency may charge a Rs. 10 administration fee to theirmembers.Prohibition of rebatesSection 41 of the Insurance Act, 1938 statesNo person shall allow or offer to allow, either directly or indirectly, as an inducementto any person to take out or renew or continue an insurance in respect of any kind ofrisk relating to lives or property in India, any rebate of the whole or part of thecommission payable or any rebate of the premium shown on the policy, nor shall anyperson taking out or renewing or continuing a policy accept any rebate, except suchrebate as may be allowed in accordance with the published prospectus or tables of theinsurerIf any person fails to comply with sub regulation (previous point) above, he shall beliable to payment of a fine which may extend to rupees five hundredxxxix | P a g e
  40. 40. INTROUCTION TO UNIT LINKED FUNDSUnit linked plans are based on the component of the premium or the contribution ofthe customer towards the plan. This contribution can be in different modes like yearly,half yearly, quarterly and monthly. Unit linked plans have multiple benefits like lifeprotection, rider protection, savings, transparency, investment choices, liquidity andplanning for taxes. These plans work like mutual funds.The premium is collected from the policy holder. He is allotted a certain number ofunits based of his contribution. The Net Asset Value is the value of each unit of thefund. It is found by subtracting the charges and current liabilities from the currentassets and investments and dividing this number by the total number of outstandingunits.Let us take an example. There are 100 investors and each invests Rs. 10 in a fund. Thetotal value of the fund is Rs. 1000 and each person is allotted 1 unit of Rs 10. Now themoney (Rs. 1000) is invested in the debt or equity market. Suppose the fund valueincreased by 20%. As a result the Rs. 1000 invested became Rs. 1200. Hence thevalue of every investor is now Rs. 12 and not Rs. 10.xl | P a g e
  41. 41. UNIT LINKED VERSUS OTHER FINANCIAL INSTRUMENTSParameters RBI Bonds Fixed Deposits Mutual Funds Unit linked Safety High High Medium High Liquidity None High High High Returns Low Low High HighLife Cover 1 time amount 1 time amount 1 time amount 10 timesTax benefits Tax free Taxed Taxed Tax freeWe find that life insurance unit linked plans is a good area to invest money in as itprovides liquidity, safety, high returns, life cover and tax benefits in a single plan.HDFC SLIC offers the option of indexation to beat inflation. Risk is reduced to alarge extent as the company invests in a diversified portfolio of stocks.xli | P a g e
  42. 42. Tax BenefitsINCOME TAX GROSS ANNUAL HOW MUCH TAX HDFC STANDARDSECTION SALARY CAN YOU SAVE? LIFE PLANSSec. 80C Across All income Upto Rs. 33,990 All the life insurance Slabs saved on investment plans. of Rs. 1,00,000.Sec. 80 CCC Across all income Upto Rs. 33,990 All the pension plans. slabs. saved on Investment of Rs.1,00,000.Sec. 80 D Across all income Upto Rs. 3,399 saved All the health slabs on Investment of insurance riders Rs. 10,000. available with the conventional plans.TOTALSAVINGS Rs37,389POSSIBLE Rs. 33,990 under Sec. 80C and under Sec. 80 CCC , Rs.3,399 under Sec. 80 D, calculated for a male with gross annual income exceeding Rs. 10,00,000.Sec. 10 (10)D Under Sec. 10(10D), the benefits you receive are completely tax-free, subject to the conditions laid down therein.xlii | P a g e
  43. 43. Awards & AccoladesSept, 2008Received 2008 CIO Bold 100 and CIO Security AwardsHDFC Standard Life has received the 2008 CIO Bold 100 Award. This annual awardrecognizes organizations that exemplify the highest level of operational and strategicexcellence in information technology. This years award theme, ‘The Bold 100,’recognized those executives and organizations that embraced great risk for the sake ofgreat reward.HDFC Standard Life has also been one of the five recipients of the Special 2008 CIOSecurity Award aimed at CIOs, whose pioneering implementations have taken theirenterprise security to the next level. This award category identifies innovative andgroundbreaking deployment of technologies aimed at creating a secure businessinfrastructure.The company received the 2008 CIO Bold Award for its mobile workforce portal andthe CIO Security Award for its initiatives for a secure computing environment,including identity management.xliii | P a g e
  44. 44. May, 2008Received PC Quest Best IT Implementation Award 2008HDFC Standard Life received the PC Quest Best IT Implementation Award 2008 forConsultant Corner, the applications for its financial consultants, providing centralizedcontrol over a vast geographical spread for key business units such as inventory,training, licensing, etc. Read more about the ‘Consultant Corner’ tool in the‘HDFCSL in News’ Section.HDFC Standard Life has won the PC Quest Best IT Implementation Award for twoyears consequently. Last year, the company received the award for Wonders, its path-breaking implementation of an enterprise-wide workflow system.March, 2008Silver Abby at Goa fest 2008HDFC Standard Lifes radio spot for Pension Plans won a Silver Abby in the radiowriting craft category at the Goa fest 2008 organized by the Advertising AgenciesAssociation of India (AAAI). The radio commercial ‘Pata nahin chala’ touchedseveral changes in life in the blink of an eye through an old man’s perspective. Theobjective was drive awareness and ask people to invest in a pension plan to live life tothe fullest even after retirement, without compromising on one’s self-respectxliv | P a g e
  45. 45. March, 2008Unit Linked Savings Plan Tops Mint Best TV Ads SurveyThe Unit Linked Savings Plan advertisement of HDFC Standard Life, one of theleading private insurance companies in India, has topped Mint’s Top TelevisionAdvertisement survey conducted, for February 2008. HDFC Standard Life’s UnitLinked Savings Plan advertisement was ranked 4th in terms of a combined score of adawareness and brand recall and 3rd in terms of ad diagnostic scores (likeability,enjoyment, believability, and claim). The respondents were between 18 and 40 years.Mint’s exclusive report, ‘New voices in a makeover’ outlines the survey in detail.February, 2008Deepak M Satwalekar Awarded QIMPRO Gold Standard Award 2007Mr Deepak M Satwalekar, Managing Director and CEO, HDFC Standard Life,received the QIMPRO Gold Standard Award 2007 in the business category at the 18thannual Qimpro Awards function. The award celebrates excellence in individualperformance and highlights the quality achievements of extraordinary individuals inan era of global competition and expectations.January, 2008Sar Utha Ke Jiyo Among India’s 60 Glorious Advertising MomentsHDFC Standard Life’s advertising slogan honoured as one of ‘60 GloriousAdvertising & Marketing Moments over the last 60 years in India,’ by 4Ps Businessand Marketing magazine. The magazine said that HDFC Standard Life is one of thefirst private insurers to break the ice using the idea of self respect (Sar Utha Ke Jiyo)instead of death to convey its brand proposition. This was then, followed by othersxlv | P a g e
  46. 46. including ICCI Prudential, thus giving HDFC Standard Life the credit of bringing upone such glorious advertising and marketing moment in the last 60 years. DISTRIBUTION STRATEGYWhy HDFC is better …? 1. Investment returns: investment returns and business growth provided by HDFC is validated by bajaj Capital report. HDFC pacify the need of invertors up to healthy level and make the strong relationship with them. 2. Financial Background and Experience: HDFC existing in the market since 1977. It has a very handsome experience in the field of finance because it completely involved in finance Sector only where as the others are running in many other field also like Reliance (Petroleum, Textile, Telecom etc.) 3. Ethics and Values: HDFC is an ethical and cultural organization which prevents the false selling and prohibit the false commitment to the customer. 4. Sales Force: Properly trend licensed and Educated People are the strength of the company. So that they could give the best customer service. 5. Huge branch network HDFC is having 450 branches in all over the country. 6. Online accessibility: It makes the process faster and make the customer delighted.xlvi | P a g e
  47. 47. Who can be the financial consultant: ?Section 42(4) of the amended Insurance Act, 1938 states an agent to be one who isnot: A minor. • Found to be sound mind by a court of competition jurisdiction. • Found guilty of criminal background. • Found guilty of having knowingly participated in or connived at any fraud dishonesty or misrepresentation against an insured.Work of financial consultant:The FC is the interface between the customer and insurance company. The agentshould be able to accomplish the following service. • Assessing and analyzing the clients risk profile. • Finding the best product or products available in the market. • Negotiating the best deal available. • Continuity of service throughout the period of insurance.Objective of FC:Recruitment of Financial consultant (FCs) of a excellent profile and their retentionstrategies and what are their benefit that company going to provided for retention oftheir FCs.(A) What type of people are we looking for ? 1. Committed people who have the drive, determination and ability to become professional financial consultants.xlvii | P a g e
  48. 48. 2. Ability to sell a range of financial products. (A) What do We Expect from financial Consultant ? 1. Devote a time and energy during training. 2. Sell at least 5 policies each month once after licensed with company. 3. We look forward to a long term mutually beneficial relationship.(A) Why should financial consultant choose HDFC standard life? Brand value and the reputation of the partners (HDFC Limited) Market leader inhousing finance: 15 lakhs home financed. 11 lakhs retail deposits customer base.  Reputation for providing the higher standards of customer service.  Financial Strength of the partners.  Brand value and the reputation of the partners standard life:  175 years experience in life insurance.  Largest mutual life insurer in Europe.  Product innovation.Strategies for recruitment of FC:Strategies Employed to achieve the target are as follows:- • Telecalling • Contacting the person directly (interview) • Collect references.Some important steps to make effective telecalling:-Open the call in a friendly and positive way.State the name, position and company name.xlviii | P a g e
  49. 49. Check the prospect has time to speak.State the reason for the call.Clearly succinctly explain how the meeting will be benefiting the prospect.AchievementsRecruited eight financial consultants for company.Increase in confidence level.Got the knowledge about, how to differentiate our product form that of LIC.Made more and more people aware about my companies Products (Policies)Taken some appointments for policies and got positive response from 8 persons withthe help of my BDM. Limitations:-So though the study aim to achieve the above mentioned Objective in full earnest andaccuracy, it may be hampered due to certain limitation. Some of the limitations are asfollows: • To cover the various section for the society. • Respondents may not be at home and may have to re-contacted or replaced by others. • Getting accurate response form the respondents due to their inherent problem is difficult. • Limited response from client. • There is a time limitation it is not possible to study whole thing I covered some special aspect as well as some topics.xlix | P a g e
  50. 50. FIELD METHODOLOGYThe methodology adopted in the field to collect the data represented diagrammaticallybelow: Segmentation of People Meeting with People Filling up questionnaire and Schedule TABULATION AND ANALYSISIn order to determine the willingness of the people to become FC for HDFC SLIC inNoida, data collected by surveying is treated as analysis. Response to the parameterlike professional, unemployed students, housewives, investment consultant, postoffice agent.l|P a g e
  51. 51. Willingness to be FC for HDFC Yes No TotalProfessional 2 28 30Working employees 2 33 35House wives 2 18 20Students 3 22 25Investment consultants 2 18 20Post office agents 3 12 15Others - - 10Total 14 131 155li | P a g e
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  56. 56. COMPETITIVE ANALYSISLIFE INSURANCE CORPORATION OF INDIA (LIC)LIC has an excellent money back policy which provides for periodic payments ofpartial survival benefits as long as the policy holder is alive. 20% of the sum assuredis payable after 5, 10, 15 and 20 years and the balance 40% is payable at the 20 th yearalong with accrued bonus. ( a 25 years term , 15% of the sum assured becomes payable after 5,10,15 and 20years and the balance 40% plus the accrued bonus becomes payable at the 25th year.An important feature of these types of policies is that in the event of the death of thepolicy holder at any time within the policy term the death claim comprises of full sumassured without deducting any of the survival benefit amounts which have alreadybeen paid. The bonus is also calculated on the full sum assured.HDFC SLIC does not have a money back policy. It could offer a money back planand capture some portion of this market. While marketing insurance products I foundthat many customers wanted to purchase these plans.LIC offers 66 different plans; plans are formulated for specific occasions – whole lifeplans, term assurance plans, money back plan for women, child plans, plans for thehandicapped individuals, endowment assurance plans, plans for high worthindividuals, pension plans, unit linked plans, special plans, social security schemes –diversified portfolio of products. HDFC SLIC could diversify its product portfolio. Itcould add more plans for high worth individuals and women.lvi | P a g e
  57. 57. ICICI PRUDENTIALICICI Prudential is a stiff competitor for HDFC SLIC. The company is a mergerbetween ICICI Bank which is the biggest private bank in India and Prudential Plcwhich is a global life insurance company.The company has an investment plan which is market related – Invest Shield Life. Inthis plan even if the market falls, the premium will be returned to investors. It is aguaranteed plan which ensures the company carefully invests your money. The stockmarket performance of ICICI Prudential is much better than HDFC SLIC. The returnson the growth fund were 46.28% compared to the 42.70% offered by HDFC SLIC.Customers are attracted by higher returns and this is a plus point for Prudential.The company is very well advertised. The advertisements are showcased in movies,television, newspapers, magazines, bill boards, radio etc. The company has anexcellent brand ambassador – Mr. Amitabh Bacchan. His promotion of the companybuilds trust and faith in the minds of our people.However the charges are very high in the plans offered by ICICI Prudential. It is 35%during the first year, 15% in the next year and 3% from the third year onwards. Also ahigher minimum premium of Rs. 8000 is charged. Hence the policies are notaccessible to the lower strata of the society.BIRLA SUN LIFEBirla Sun Life Insurance Company Limited is a joint venture between The AdityaBirla Group, one of the largest business houses in India and Sun Life Financial Inc., aleading international financial services organization. The local knowledge of theAditya Birla Group combined with the expertise of Sun Life Financial Inc., offers aformidable protection for your future. (Source: | P a g e
  58. 58. The Aditya Birla Group has a turnover close to Rs. 33000 crores with a marketcapitalization of Rs. 53400 crores (as on 31st March 2007). It has over 72000employees across all its units worldwide. It is led by its Chairman - Mr. KumarMangalam Birla. Some of the key organizations within the group are Hindalco andGrasim.Sun Life Financial Inc. and its partners today have operations in key marketsworldwide, including Canada, the United States, the United Kingdom, Hong Kong,the Philippines, Japan, Indonesia, India, China and Bermuda. It had assets undermanagement of over US$343 billion, as on 31st March 2007. The company is aleading player in the life insurance market in Canada.Being a customer centric company, BSLI has invested heavily in technology to buildworld class processing capabilities. BSLI has covered more than a million lives sinceinception and its customer base is spread across more than 1000 towns and cities inIndia. All this has assisted the company in cementing its place amongst the leaders inthe industry in terms of new business premium income. The company has a capitalbase of 520 crores as on 31st July, 2007.Its Flexi Life Line Plan offers life long insurance cover till the policy holder is 100years of age. There are guaranteed returns of 3% p.a. net of policy charges after every5 years from the eleventh policy year onwards. However the charges are very high.The initial charges for the first year are 65%. Hence the fund value is greatly reduced.lviii | P a g e
  59. 59. BAJAJ ALLIANZBajaj Allianz is a joint venture between Allianz AG with over 110 years of experiencein over 70 countries and Bajaj Auto, a trusted automobile manufacturer for over 55years in the Indian market. Together they are committed to offering you financialsolutions that provide all the security you need for your family and yourself. BajajAllianz is the number one private life insurer for the year 2005 – 2006. It is leading by78 crores. It has experienced a whopping growth of 216% in the last financial year.The company has sold 13, 00,000 policies and is backed by 550 offices across India.It offers travel insurance, motor insurance, home insurance, health and corporateinsurance. The mortality charges are lower than HDFC SLIC. The entry age could bezero years which allow even new born babies to be insured.TATA AIGTata AIG is a joint venture between the Tata group and American International GroupInc. In one of the plans the company offers hospital cash benefit wherein it will payRs. 2500 per day in case of hospitalization and Rs.12.5 lakhs in case the personsuffers from any critical illness. Annual premium is much less (about Rs. 6712) toavail such a good benefit. Charges are relatively low compared to HDFC SLIC forsome policies.The company offers high coverage plans at low cost. There is a plan even for a policyterm of 1 year. Your family can continue to enjoy their current lifestyle even in thecase of something happening to you. These plans are very flexible and HDFC SLICcould adopt this idea of insuring individuals for short periods of time. For example;there is a family of four. The only earning member is the father.lix | P a g e
  60. 60. He has just taken a loan from a bank of 20 lakhs to purchase a new home. He is ableto repay the loan with his current salary in 15 years. The problem arises if somethingwere to happen to him within these fifteen years. Not only will the family face theemotional and financial loss of their father but they will also have to repay the homeloan or risk being homeless.lx | P a g e
  62. 62. RESEARCH DESIGN INTRODUCTIONA Research Design is the framework or plan for a study which is used as a guide incollecting and analyzing the data collected. It is the blue print that is followed incompleting the study. The basic objective of research cannot be attained without aproper research design. It specifies the methods and procedures for acquiring theinformation needed to conduct the research effectively. It is the overall operationalpattern of the project that stipulates what information needs to be collected, fromwhich sources and by what methods. TITLE OF THE STUDY“Comparative analysis of HDFC standard life insurance company limited withother insurance company for HDFC standard life insurance company ltd.”lxii | P a g e
  63. 63. STATEMENT OF THE PROBLEMThis study was undertaken to identify which type of insurance plans HDFC SLICshould market to beat other insurance company in India. A survey was undertaken tounderstand the preferences of Indian consumers with respect to insurance. Whilemarketing policies the sole duty of an advisor/ agent is to provide insurance plans asper customer requirements.In effect plans (insurance products) should be flexible to suit individual requirements.This research tries to analyze some key factors which influence the purchase ofinsurance like the term of the policy, the type of company, the amount of annualpremium payable (capacity and willingness to spend), risk taking ability and theinfluence of advertising. Solutions and recommendations are made based onqualitative and quantitative analysis of the data. RESEARCH METHODOLOGYTYPE OF DATA COLLECTEDlxiii | P a g e
  64. 64. There are two types of data used. They are primary and secondary data. Primary datais defined as data that is collected from original sources for a specific purpose.Secondary data is data collected from indirect sources.PRIMARY SOURCESThese include the survey or questionnaire method, telephonic interview as well as thepersonal interview methods of data collection.SECONDARY SOURCESThese include books, the internet, company brochures, product brochures, thecompany website, competitor’s websites etc, newspaper articles etc. SAMPLINGSampling refers to the method of selecting a sample from a given universe with aview to draw conclusions about that universe. A sample is a representative of theuniverse selected for study.SAMPLE SIZEThe sample size for the survey conducted was 270 respondents. This sample size wastaken on 95% confidence level and 6 significant levels. Data universe for this samplelxiv | P a g e
  65. 65. is 10,00,000 which is approx population of Delhi excluding people below age of 18years.SAMPLING TECHNIQUERandom sampling technique was used in the survey conducted. PLAN OF ANALYSISTables were used for the analysis of the collected data. The data is also neatlypresented with the help of statistical tools such as graphs and pie charts. Percentagesand averages have also been used to represent data clearly and effectively. STUDY AREAThe samples referred to were residing in Noida. The areas covered were Sector 16Noida.lxv | P a g e
  66. 66. CHAPTER V MARKETING PROBLEMS MARKETING PROBLEMSThe old and out dated technique of Telemarketing is used to prospect customers.More modern techniques must be adopted. The company must sponsor shows andlxvi | P a g e
  67. 67. give presentations in corporate houses. The financial health check must be performedfor every prospect to assess his/her true financial position and needs. Some of theadvisors skip this vital step and the prospect ends up with a plan they do notappreciate and soon surrender or discontinue.Some of the main problems in marketing the policies are:  Large amount of competition (18 players in the market)  Other brands are well advertised and have higher recall value  LIC is considered a safer option  Face competition from banks and mutual funds  High premium policies are difficult to market  Incorrect perception about insurance  Interested prospects might have a lack of time and postpone investments  Customers get defensive if you cold call  Short term plans are available only at large premium  Customers do not have risk appetite to invest in shares  Some prospects have already invested and are not interested in further investments  Consumers don’t want to undertake medical examinations  Large amount of documentation  Customers do not like their money locked up for many years  Lack of awareness about the unit linked funds in the market  No money back plan present in the product portfolioSUGGESTIONS FOR IMPROVEMENT  Advertise about the company and its products – it motivates individuals to purchase insurancelxvii | P a g e
  68. 68.  Create a positive perception about insurance  Speak about the good features a plan offers like high returns, life cover, tax benefits, indexation, accident cover while prospecting customers  Try to sell the product/plan which the consumer requires and not the plan where the advisors benefit is higher  Improve the efficiency in operations  Bring out policies with small premiums payable for short periods of time – Rs. 5000 – Rs. 10000 per annum for 10 years  Attract the youth of India with higher returns on investment as returns are the motivating factor which influence purchase of insurance  Promote insurance in colleges and corporate houses  Promote HDFC SLIC as an Indian Company to build trust  HDFC SLIC could have a brand ambassador or a mascot to promote its services  Should have partial withdrawals from the first year onwards  Tap the rural market where there is large potential  Diversify product portfolio  Make products more straight forward – reduce complexitieslxviii | P a g e
  70. 70. AGE GROUP OF SURVEYED RESPONDENTSTABLE 1:Age group No. of Respondents18 - 25 years 12726 - 35 years 6736 - 49 years 4650 - 60 years 24More than 60 years 6lxx | P a g e
  71. 71. CHART 1:Analysis:From the chart above 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 of36 – 49 years.lxxi | P a g e
  72. 72. Therefore most of the respondents are relatively young (below 26 years of age). Theseindividuals could be induced to purchase insurance plans on the basis of its tax savingnature and as an investment opportunity with high returns.Individuals at this age are trying to buy a house or a car. Insurance could help themwith this and this fact has to be conveyed to the consumer. As of now manyconsumers have a false perception that insurance is only meant for people above theage of 50. Contrary to popular belief the younger you are the more insurance you needas your loss will mean a great financial loss to your family, spouse and children (incase the individual is married) who are financially dependent on you GENDER CLASSIFICATION OF SURVEYED RESPONDENTSTABLE 2: Particulars No. of Respondents Male 193 Female 77CHART 2:lxxii | P a g e
  73. 73. CUSTOMER PROFILE OF SURVEYED RESPONDENTSTABLE 3:Customer profile No. of respondentsStudent 62Housewife 5Working Professional 116Business 49Self Employed 24Government service employee 14CHART 3:lxxiii | P a g e
  74. 74. Analysis:From the chart above it can clearly be seen that 43% of the respondents are workingprofessionals, 23% are students and 18% are into business. Therefore the targetmarket would be working individuals in the age group of 18 – 25 years having surplusincome, interested in good returns on their investment and saving income tax. NO. OF RESPONDENTS WHO HAVE LIFE INSURANCE POLICY IN THEIR NAMETABLE 4: Person who have life insurance policy Yes 103 No 167CHART 4:lxxiv | P a g e
  75. 75. ANALYSIS:This graph shows that out of total 270 respondents only 103 or 38% respondents havelife insurance policy in their name. Rest all don’t have a single policy in their name.So there is a very big scope for life insurance companies to cover these people. So infuture business of life insurace will gro further. MARKET SHARE OF LIFE INSURANCE COMPANIESTABLE 5: LIFE INSURER NUMBER OF POLICIES HDFC STANDARD LIFE 4 BIRLA SUN LIFE 3 AVIVA LIFE INSURANCE 6 BAJAJ ALLIANZ 7 LIC 55 TATA AIG 6 ICICI PRUDENTIAL 12 ING VYSYA 6lxxv | P a g e
  76. 76. BHARTI AXA 2 OTHERS 2CHART 5:Analysis:In India, the largest life insurance company is Life Insurance Corporation of India. Ithas been in existence in India since 1956 and is completely owned by the Governmentof India. Today the organization has grown to 2048 offices serving 18 crore policiesand has a corpus of over 340000 crore INR.lxxvi | P a g e
  77. 77. ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCETABLE 6: Premium paid (p.a.) No. of respondents Rs. 5000 - Rs. 10000 40 Rs. 10001 - Rs. 15000 26 Rs. 15001 - Rs. 24900 18 Rs. 25000 - Rs. 50000 10 Rs. 50001 - Rs. 60000 4 Rs.60001 - Rs. 80000 2 Rs. 80001 - Rs. 100000 3CHART 6: ANNUAL PREMIUM PAID BY INDIVIDUALS FOR LIFE INSURANCElxxvii | P a g e
  78. 78. Analysis:From the chart above we find that, 39% of the respondents surveyed pay an annualpremium less than Rs. 10001 towards life insurance. 25% of the respondents pay anannual premium less than Rs. 15001 and 17% pay an annual premium less thanRs. 25000. Hence we can safely say that HDFC SLIC would be able to capture themarket better if it introduced products/plans where the minimum premium starts atRs. 5000 per annum.Only 19% of the respondents pay more than Rs. 25000 as premium and most productssold by HDFC SLIC have Rs.12000 as the minimum annual premium amount. Theyshould introduce more products like Easy Life Plus and Safe Guard where theminimum premium is Rs.6000 p.a. and Rs. 12000 p.a. respectively. This woulddefinitely increase their market share as more individuals would be able to afford thepolicies/plans offered. POPULAR LIFE INSURANCE PLANSTABLE 7:lxxviii | P a g e
  79. 79. Type of Plan No. of Respondents Term Insurance Plans 105 Endowment Plans 122 Pension Plans 16 Child Plans 8 Tax Saving Plans 19CHART 7: POPULAR LIFE INSURANCE PLANSlxxix | P a g e
  80. 80. Analysis:From the chart given above we can clearly see that 45% of the respondents holdendowment plans and 39% of the respondents hold term insurance plans. Endowmentplans are very popular and serve two purposes – life cover and savings.If the policy holder dies during the policy term the nominee gets the death benefit thatis, sum assured and accumulated bonus. On survival the policy holder receives thesurvival benefit with a bonus.A term plan is a pure risk cover plan wherein the insured pays a lower premium for ahigher sum assured. Term insurance is the cheapest form of insurance and helps thepolicy holder insure himself for a relatively low premium. For the returns sensitiveinvestor term plans do not find favor as they do not offer a return in case theindividual does not die during the policy term. AWARENESS OF UNIT LINKED INSURANCE PLANSTABLE 8:lxxx | P a g e
  81. 81. Awareness of Unit Linked Plans No. of Respondents Yes 154 No 116CHART 8: AWARENESS OF UNIT LINKED INSURANCE PLANSAnalysis:From the chart given above we find that 57% of the respondents are aware of unitlinked life insurance plans and 43% are not aware of such plans. These plans shouldbe promoted through advertising. The company can advertise through television,lxxxi | P a g e
  82. 82. radio, newspapers, bill boards and pamphlets. This would increase awareness andarouse curiosity in the minds of the consumer which would enable the company tomarket its products more effectively.Unit – linked plans are those where the benefits are expressed in terms of number ofunits and unit price. They can be viewed as a combination of insurance and mutualfunds. The number of units a customer would get would depend on the unit pricewhen they pay the premium.When the policy matures the individual gets his fund value. The value of his fund iscalculated by multiplying the net asset value and number of units held by them on thatday. CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUMTABLE 9:lxxxii | P a g e
  83. 83. Willingness to spend on premium No. of respondents Percentage Less than Rs. 6,000 41 15% Rs. 6,001 - Rs. 10,000 73 27% Rs. 10,001 - Rs. 25,000 110 41% Rs. 25,001 - Rs. 50,000 41 15% Rs. 50,001 - Rs. 1,00,000 5 2%CHART 9:CONSUMER WILLINGNESS TO SPEND ON LIFE INSURANCE PREMIUMAnalysis:From the graph above, we can clearly see that 41% of the respondents would bewilling to spend between Rs. 10001 – Rs. 25000 for life insurance. 27 % would bewilling to spend between Rs. 6001 – Rs. 10000 per annum. Only 15% would bewilling to spend more than Rs. 25000 per annum as life insurance premium.lxxxiii | P a g e
  84. 84. We could say that the maximum premium payable by most consumers is less than Rs.25000 p.a. This is further reduced as most customers have already invested with LIC,ICICI Prudential, Birla Sun Life, Bajaj Allianz etc.HDFC SLIC is faced with a large amount of competition. There are 18 insurancecompanies in India inclusive of LIC. Hence to capture a larger part of the market thecompany could introduce more reasonable plans with lesser premium payable perannum. CHART SHOWING IDEAL POLICY TERMTABLE 10: Ideal policy term No. of respondents 3 - 5 years 51 6 - 9 years 41 10 - 15 years 95 16 - 20 years 38lxxxiv | P a g e
  85. 85. 21 - 25 years 24 26 - 30 years 5 More than 30 years 3 Whole life Policy 13CHART 10: CHART SHOWING IDEAL POLICY TERMAnalysis:From the chart given above it can be seen that 35% of the respondents prefer a policyterm of 10 – 15 years, 19% prefer a term of 3 – 5 years and 15% prefer a term of 6 – 9years. This means that HDFC SLIC could introduce more plans wherein the premiumpaying term is less than 15 years.The outlook of insurance as a product should be changed from something which youpay for your whole life (whole life policy) and do not receive any benefit (thenominee only receives the benefit in case of your death) to an extremely usefulinvestment opportunity with the prospects of good returns on savings, tax savinglxxxv | P a g e
  86. 86. opportunities as well as providing for every milestone in your life like marriage,education, children and retirement. FACTORS THAT MOTIVATE RESPONDENTS TO PURCHASE INSURANCETABLE 11: Parameter No. of Respondents Advertisements 35 High returns 84 Advice from friends 46 Family responsibilities 89 Others 16CHART 11:Analysis:lxxxvi | P a g e
  87. 87. From the chart above it can be seen that 33% of the respondents purchase lifeinsurance to secure their families, 33% take life insurance to get high returns, 17%purchase insurance on the advice of their friends and 13% purchase insurance becauseof the influence of advertisements.The main purpose of insurance is to cover the financial or economic loss that occursto the family in case of the uncertain death of the policy holder. But now a days thistrend is changing. Along with protection (life cover), a savings element is being addedto insurance.With the introduction of the new unit linked plans in the market, policy holders getthe option to choose where their money will be invested. They can invest their moneyin the equity market, debt market, money market or a combination of these. The debtand money markets usually have low risk attached whereas the equity market is a highrisk investment option. PREFERRED COMPANY TYPE OF THE RESPONDENTSTABLE 12: Type of Company No. of Respondents Percentage Government Owned Company 127 47% Public Limited Company 62 23% Private Company 49 18% Foreign Company 32 12%CHART 12: PREFERRED COMPANY TYPE OF THE RESPONDENTSlxxxvii | P a g e
  88. 88. Analysis:From the graph above we find that 60% of the respondents preferred to purchaseinsurance from a government owned company, 29% of the respondents preferred topurchase insurance from a public limited company and only 4% of the respondentspreferred a foreign based company. Heavy advertising through television,newspapers, magazines and radio is required.lxxxviii | P a g e
  89. 89. MINIMUM EXPECTED RETURN ON INVESTMENTTABLE 13:Expected Returns No. of respondentsLess than 5% 55% - 10% 3911% - 15% 4616% - 20% 4921% - 25% 4626% - 30% 2731% - 40% 2241% - 50% 14More than 50% 22lxxxix | P a g e
  90. 90. CHART 13:Analysis:From the chart above it can clearly been seen that 18% of the respondents would like16 – 20% returns, 17% would like returns between 21 – 25% and 17% would likereturns of 11 – 15% on their investments. Therefore the average return on investmentshould be at least 16 – 20 %.Most consumers are willing to adapt to some amount of risk but still want someguaranteed returns. Therefore the bulk of investment should be made in the balancedxc | P a g e
  91. 91. fund with 50% debt and 50% equity. The returns on the Secure Fund are guaranteedas these involve investment is government securities and the debt market. But thereturns on these instruments are low (8 – 10%). If the company invests in shares,returns are higher (39%) but correspondingly risk borne by the policy holder is alsohigher. Therefore a good combination of the two instruments is often a wise choice. FINDINGS 1. Customers are less aware about the private insurance company in market. 2. Some customer likes to join HDFC as FCs because it is a Part-time job. 3. Many professions like CA, tax planner wants corporate agency rather than to be a financial consultant. 4. HDFC is too selective in making a FC rather than to appoint any one like LIC. 5. Customer don’t want to join as financial consultant because it’s on commission basis and they want the job on salary basis. 6. Educated customers are now vending towards private insurance Companies, due to the attractive packages and services provided by various new insurance companies. 7. LIC has created a branded image in 3-4 decades, due to which new insurance companies are facing trouble in capturing market share. 8. If the customers are joining HDFC the segment is more of tax consultant, investment for consultant and other people who are engaged in investment business that is because they want to diversity their portfolio.xci | P a g e
  92. 92. 9. HDFC SLIC is having good retention strategies for their financial consultant. SUGGESTIONS  Customers should be made aware of the brand name of Insurance company through advertisement.  The fear in the customer mind should be removed by company.  The insurance companies should try to nurture their brand name timely and attractive facility provide to customer.xcii | P a g e
  94. 94. FUTURE LINE OF RESEARCHThe future topics for research in the organization could be setting up of an appropriatead campaign. It is very vital to the companies’ success that the people of India knowabout HDFC SLIC, its products and their special features and how insurance ingeneral can help them in their future. The advertisements have to be emotionallyappealing. They might also include a celebrity. The brand name of HDFC could beused to give a push to HDFC SLIC and its products. The general perception ofinsurance as “inauspicious” should be done away with and individuals andcorporations accept insurance on power with other investment opportunities.The other area of research could be in the management of funds HDFC SLICpossesses and how it can maximize returns for its investors. A research project couldbe undertaken on how to ensure that the money gets invested in the right companiesand earns a medium – high return on investment. Another area of research could be ananalysis of the sales and marketing techniques used by HDFC SLIC. A large numberof changes could be introduced and this would help in saving operating costs andimproving the efficiency of the firm.xciv | P a g e
  95. 95. CHAPTER VIII CONCLUSIONxcv | P a g e
  96. 96. CONCLUSIONHDFC standard life insurance is first life insurance company in India. It hasbusinesses spread out across the globe. It was registered on 23rd December 2000. Itcurrently ranks number 4 amongst the insurers in India (Source: annual premiumprovided by the company)The company faces a large amount of competition. To sustain itself it must promoteits products through advertising and improve its selling techniques. Consumers mustbe aware of the new plans available at HDFC SLIC. The medium of advertising usedcould be television since most of its competitors use this tool to promote theirproducts. The company must be promoted as an Indian company since consumersseem to have more trust in investing in Indian firms.The unit linked concept must be specifically promoted. The general perception of lifeinsurance has to change in India before progress is made in this field. People shouldnot be afraid to invest money in insurance and must use it as an effective tool for taxplanning and long term savings.HDFC SLIC could tap the rural markets with cheaper products and smaller policyterms. There are individuals who are willing to pay small amounts as premium but theplans do not accept premiums below a certain amount. It was usually found that alarge number of males were insured compared to females. Individuals below the agexcvi | P a g e
  97. 97. of 30 (mostly male) were interested in investment plans. This was a generalconclusion drawn during prospecting clients. CHAPTER IX BIBLOGRAPHYxcvii | P a g e
  98. 98. BIBLOGRAPHYWeb-Site : www.tataaig.comMagazine – Insurance World The Outlook Moneyxcviii | P a g e
  99. 99. Secrets of Successful Insurance Sales by Mr. Jack Kinder CHAPTER X ANNEXURExcix | P a g e